MARKET REPORT ISSUE II ,914 sq m office space has been let out at Tuborg Boulevard 12 in Hellerup to the law firm Lundgrens

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1 MARKET REPORT 3,914 sq m office space has been let out at Tuborg Boulevard 12 in Hellerup to the law firm Lundgrens

2 EXECUTIVE SUMMARY HIGH ACTIVITY WITH INCREASING INTEREST FOR MINOR SEGMENTS INVESTMENT MARKET High activity in the investment market is still the headline with the Q1 volume of 2017 amounting to approx. DKK 12.6 bn, which is slightly lower than Q1 last year. Prime yield levels for office and retail properties remain at a low level. This combined with a lack of prime investment opportunities within these segments and a high capital placement need from the investor side, have made way for investments in other segments. So far in 2017, the investment volume share of other segments than the traditional big segments - residential, office and retail is at the highest level in several years. This is the focus point of the article of this Issue, where we explain how hotel transactions for instance are booming as well as what characterizes investments in this segment. In continuation hereof, the industrial/ logistic segment is on the rise following many years of slow activity, and as such we have included an investment market section on this segment in this Issue as well. Furthermore, we strongly recommend to visit our new website and try out our new dynamic analysis tool, with which you can perform your own analysis of the transaction market. Enjoy the report! OFFICE 2016 Q Q1 CHANGE Prime yield (Copenhagen City) 4.25% 4.00% -25 bp Investment volume in million Vacancy (Copenhagen City) 8.30% 7.20% -110 bp RETAIL 2016 Q Q1 CHANGE Prime yield (Copenhagen High Streets) 3.50% 3.00% -50 bp Secondary yield (Copenhagen Side Streets) 4.75% 4.50% -25 bp Investment volume in million INDUSTRIAL 2016 Q Q1 CHANGE Prime yield (Copenhagen Area) 7.00% 6.25% -75 bp Prime yield (Triangle Area) 7.25% 6.50% -75 bp Investment volume in million TRANSACTION VOLUME (BN DKK) Q Q DKK 63.7 BN ~ EUR 8.5 BN Nicholas Thurø Managing Partner RED Cushman & Wakefield Residential Office Retail 5 Land 4 Other 3 Indu. 2 / 29

3 CONTENT ISSUE II FOCUS... 5 MACROECONOMICS... 9 INVESTMENT MARKET OFFICE RESIDENTIAL RETAIL INDUSTRIAL TRANSACTIONS OCCUPIER MARKET OFFICE RETAIL RETAIL - FOOTFALL ANALYSIS APPENDIX - DANISH TRANSLATION DANSK VERSION AF FOKUS ARTIKEL / 29

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 / 29

5 ISSUE II FOCUS 5 / 29

6 DANSK VERSION PÅ SIDE 28 ISSUE II FOCUS MINOR SEGMENTS ON THE RISE Since 2014, the big 3 - Residential, Office, and Retail have constituted 76% of the Danish transaction volume, while yields have simultaneously reached what appears to be a temporary bottom level. This, combined with a high need for capital placement from the investor side has made investors increasingly looking towards other segments such as Hotels and Logistics. INCREASING INTEREST AND ACTIVITY In the last couple of years, Residential, Office and Retail transactions have dominated the investment volume with a total share of 78%-83%. However, the tendency of an increased interest in other segments such as Hotels and Industrial/Logistic that was already showing in 2016, has exploded into 2017 with the Residential, Office and Retail segments constituting just 58% of the year-to-date volume. This is partly a consequence of some interesting new waves in the market; Logistic assets with long leases are now very sought-after and institutional investors have an appetite for Hotels a segment, which they have not traditionally been involved in. TRANSACTION VOLUME Other 24% Residential, Office & Retail 76% 100% 80% 60% 40% 20% 0% 17% 83% According to Nicholas Thurø, Managing Partner at RED Cushman & Wakefield, the increasing interest in other segments is a natural consequence of the current state of the market: When you have a low supply of prime assets in the most sought-after segments combined with a high need for capital placement, it is only natural that investors look at opportunities elsewhere. HISTORICALLY LOW YIELD LEVELS HAVE AN IMPACT The increased interest in other segments is happening at the same time as yield-levels for prime office and retail assets have dropped to a historical low. Nicholas Thurø recognizes this as another reason for the increased interest in other segments: Investors are of course looking at where they can obtain the most attractive risk-adjusted returns, and with retail- and office yield levels being at what appears to be a bottom, other segments might hold better investment prospects depending on how the investor assess the risk factors SHARE OF TRANSACTION VOLUME 19% 81% 22% 78% 42% 58% H1 Residential, Office & Retail present. The graph below shows the current risk premium paid for prime hotels and logistic assets compared to office- and retail assets. So what are the risk-factors to be considered in the hot segments? In the remainder of this article we have focused on highlighting key investment fundamentals pertaining to Hotels. 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Other PRIME YIELD LEVELS 6.25% % 4.00% 3.00% Retail Office Hotel Industrial FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 6 / 29

7 HOTELS INSTITUTIONAL INVESTORS NOW PRESENT Hotel properties are considered a form of hybrid property asset, in which there is a combination of property risk and business risk associated with the investment. Hotels are driven by a hotel operator who is typically the tenant or owner. Thereby the risk assessment of a hotel property investment is different to other types of properties like office- retail- and industrial properties in the sense that the demand from a tenant perspective is limited to one type of tenant; hotel operators. The additional risk factors that are reflected in the investor yield for hotel properties in particular can be summed up to the following: - The number of potential tenants (hotel operators) are limited - The number of potential investors are limited, as the number of investors in the market for hotel investments is typically restricted to those with insight and activities within the business. However, this is not so much the case as it used to be. - The hotel market s sensitivity to macroeconomic fluctuations and other shocks, e.g. terrorist attacks, natural disasters, boycotts etc. Hotel rents are often turnover-based, which is why the hotel performance directly affects the investor s return. Inherently, the hotel industry is highly supported by tourism, which has been very strong in Copenhagen the last couple of years. As a result, the pipeline for new hotels being added to the market is on the highest level in a long time. Similarly, hotel transactions have been on the rise the last couple of years and amounted to DKK 2.4 bn in This trend is expected to continue, which is also evident by some large deals already in 2017 including the sale of Generator Hostel in Copenhagen, DKK BN % of the Hilton Hotel near Copenhagen Airport as well as the recent sale of Bella Sky at approx. DKK 1.5 bn. A noteworthy development within hotel investments is the increasing interest from institutional investors. Globally, institutional investors have been highly active in this segment, however, it is not a segment where the Danish institutional investors have traditionally been involved. Yet, the current promising state of this segment and the obviously fierce competition in other segments have triggered the investment appetite within the hospitality segment in Denmark as well. In this regard, it is essential to understand, that the investors typically only acquire the property and not the actual hotel operation. Last year PensionDanmark and ATP acquired Hotel Marriott in Copenhagen while PFA has invested in several hotel projects in Copenhagen. According to Michael Nielsen, CEO at...we will continue to see good activity within the minor segments, where especially Hotel assets in the larger cities still have an attractive risk profile. HOTEL TRANSACTION VOLUME H1 ATP Ejendomme, hotel conversions of existing office buildings are also of interest: We consider the combination of a relatively high rent level and long non-termination periods as an interesting alternative and supplement to office properties in today s market. However, it is crucial that we can put together the right product of operator, hotel brand, rent and non-termination period, and of course location. Additionally, the usual prerequisites for good property investment regarding building qualities, etc. are also considered. OUTLOOK At RED Cushman & Wakefield, we are confident that we will continue to see good activity within the minor segments, where especially Hotel assets in the larger cities still have an attractive risk profile. The still improving transparency of the market also helps the confidence of investors to look towards other segments than their traditional core ones. Feel free to visit our website and try our new Dynamic Analysis Tool, where it is possible to track the investment volume in the different segments and see whether the minor segments will continue along the same lines as H1 of FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 7 / 29

8 RED Cushman & Wakefield facilitated the sale of Nørre Søgade 29 where the tenants made use of the right of first refusal and formed a cooperative housing association. The former Le Mans racing driver Tom Kristensen was one of the sellers. 8 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

9 MACROECONOMICS 9 / 29

10 MACROECONOMIC OVERVIEW ECONOMIC UPTURN CONTINUE TO MANIFEST The Danish economy continue its modest, but steady advancement and GDP growth is expected to pick up in the coming years. The upturn is, by the Danish National Bank, characterized as balanced, but the growth potential is also limited due to structural factors in the economy. Denmark s GDP grew by 1.3% in 2016 according to the latest data released by Statistics Denmark, and while this is slightly lower than in 2015, it is mainly attributed to lower demand from export markets. To stress the fact that growth is in fact picking up, the Danish National Bank now forecasts growth of 1.6% in both 2017 and This is an upward revision from previous estimates of 1.4% and 1.5%. The beginning of 2017 is further evidence to the fact that the economy is advancing. GDP grew by 2.2% in the first quarter of 2017 compared to the same quarter a year ago. The growth was mainly driven by private consumption and export. Employment went up by almost 50,000 people last year and the accumulated figure, since the beginning of 2013, has now reached 135,000. The rise in employment is solely driven by the private sector, well spread across industries, although transport, commerce and the construction industry are some that have experienced a very good development. The domestic demand continues to develop positively, mainly driven by low interest rates, higher disposable incomes and higher savings and wealth deposits. MACROECONOMIC VARIABLES KEY VARIABLE A YEAR AGO MOST RECENT TREND GDP Growth Rate y/y 1.60% 1.20% Inflation Rate y/y 0.50% 0.30% Unemployment Rate - Denmark 6.50% 6.60% Unemployment Rate - Copenhagen Region 6.30% 7.20% 10 year Government Bond 0.48% 0.30% Short Term Mortgage Rate - 1 and 2 year bonds -0.23% -0.54% Long Term Mortgage Rate - 30 year bonds 2.65% 2.38% Source: Statistics Denmark, Association of Danish Mortgage Banks and The Danish National Bank 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% 1.9% % 2011 GDP GROWTH IN REAL TERMS 0.2% For an extended period, the private real estate market has shown good progress, although the speed of progress has been divided. According to the Danish National Bank, real estate prices grew on average by 4% nationally in 2016, while the prices in Copenhagen on average grew by 8%. This difference in the magnitude of the growth has been observable for the last couple of years. The high growth rates seen for Copenhagen 0.9% GDP - real growth % 1.7% 1.6% 1.3% are mostly attributed high population growth and a bettering of the economy. However, recent years of residential development in Copenhagen have resulted in that 2016 saw the most completed new residential units in the city since The Danish National Bank expects the high construction activity to continue and thus price increases are expected to be at a slower pace going forward. 10 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

11 INVESTMENT MARKET 11 / 29

12 INVESTMENT MARKET - OFFICE A CONTINUOUS HIGH LEVEL OF SALE & LEASEBACK DEALS Investment activity in the office segment in Q reached approx. DKK 1.7 bn and continued to be dominated by Danish investors. The Q1 volume was mainly dominated by institutional investors led by Sampension and Soltra Capital Partners acquisition of Vestas Wind Systems headquarters in Aarhus. The acquisition amounted to DKK 737 M and the sale was structured as a Sale & Leaseback (S&L), hence Vestas stays as tenant. S&L deals offer multiple benefits for occupiers, primarily because such deals allow the occupier to free up funds tied to real estate to invest in core business operations as well as increasing the occupier s flexibility. Current prices of well-located and fully let office properties are very high and as such the occupier s incentive to divest is also high. 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. We expect this trend to continue well into 2017, because of these favorable benefits both for the occupier and investor. Although the Q volume was mainly dominated by institutional investors, real estate companies have dominated the office segment during the last 12 months, which reached approx. DKK 17.5 bn and increased by approx. 30% compared to the previous year (Q Q1 2016), where the total volume amounted to approx. DKK 12.4 bn. Yield levels appear to have stabilized around 4% for prime assets in Copenhagen. We expect this level to endure in the short term. INVESTOR BREAKDOWN Q Q Property Funds 16% Source: RED Cushman & Wakefield PRIME YIELDS Private Investors 8% Institutional Investors 18% Others 7% 17.5 BN DKK SUBAREA Q Q Q Copenhagen City (CBD) 4.75% 4.25% 4.00% Copenhagen E & W 5.75% 5.50% 5.00% Frederiksberg 5.75% 5.50% 5.00% Harbour areas 4.75% 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% 6.00% South and West of Copenhagen 7.25% 7.25% 7.00% North of Copenhagen 5.25% 5.25% 5.00% Real Estate Companies 53% DANISH INVESTORS - 63 % FOREIGN INVESTORS - 37 % 0% 20% 40% 60% 80% 100% FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 12 / 29

13 INVESTMENT MARKET - RESIDENTIAL RESIDENTIAL PROPERTIES STILL IN HIGH DEMAND The residential segment is still the largest in terms of total transaction volume across all segments. Following a strong performance in the past three quarters, particularly in Q4 2016, the residential transaction volume reached DKK 4.1 bn in Q The continued high activity in this segment has led to a total volume of approx. DKK 24.3 bn over the last 12 months. This is a similar level as the previous year (Q Q1 2016) and the residential segment is thus still very much favored by the investors. Property funds were the most active investors over the last 12 months closely followed by real estate companies. Institutional investors have also been active in the residential segment over the last 12 months as they have accounted for approx. 23% compared to the previous year (Q Q1 2016), where they only accounted for 6%. The residential investment activity was propped by the Swedish real estate company Heimstaden during Q Heimstaden paid approx. DKK 1.2 bn for three turn-key residential projects on Islands Brygge of 30,000 sqm in total distributed on 265 apartments and 2,500 sqm for commercial use. Another substantial residential transaction in Q was Patrizia s acquisition of a 15,000 sqm residential development project on the Teglholmen peninsula in the Sydhavnen district of Copenhagen. INVESTOR BREAKDOWN Q Q Institutional Investors 23% Source: RED Cushman & Wakefield Private Investors 11% PRIME MARKET RENT DKK/SQM SUBAREA Q Others 5% 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 Real Estate Companies 30% Property Funds 31% DANISH INVESTORS - 53 % FOREIGN INVESTORS - 47 % 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 / 29

14 INVESTMENT MARKET - RETAIL FOREIGN INVESTORS CONTINUE TO DOMINATE IN Q The beginning of 2017 seems to follow the same trajectory as both 2016 and 2015 with a strong interest for retail assets from especially foreign investors. Foreign investors accounted for approx. 87% of the total transaction volume in this segment in Q compared to 75% for the last four quarters, which is very similar to the previous year (Q Q1 2016), where foreign investors accounted for approx. 73%. The investment volume for the last 12 months reached approx. DKK 8.7 bn, and was clearly dominated by property funds. Especially noticeable this quarter was McDonald s sale of its Nordic restaurants to British private equity firm Terra Firma Capital for DKK 922 m. Also notable was the global property fund Hines acquisition of five prime high-street assets in Copenhagen at a price of approx. DKK 885 m. Once again, investments in high street assets boosted the overall retail volume. We still experience pressure on the yields and we might therefore see further compression to the very core prime products. INVESTOR BREAKDOWN Q Q Real Estate Companies 10% Private Investors 11% Institutional Investors 7% Others 3% 8.7 BN DKK Property Funds 69% DANISH INVESTORS - 25 % FOREIGN INVESTORS - 75 % 0% 20% 40% 60% 80% 100% Source: RED Cushman & Wakefield PRIME YIELDS STREET/SUBMARKET Q Q Q Strøget (incl. Vimmelskaftet) 4.00% 3.50% 3.00% Strøget area 5.00% 4.75% 4.00% 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% 4.75% SHOPPING CENTRES Copenhagen 5.00% 4.75% 4.00% FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 14 / 29

15 INVESTMENT MARKET - INDUSTRIAL A SEGMENT ON THE RISE During the first quarter of 2017 we have seen a high investment activity in the industrial/logistics sector. The total transaction volume rose to DKK 1.3 bn, thus reaching the second-highest quarterly volume since The foreign property funds dominated the segment with a 84% share. The transaction activity in Q1 was propped up by M7 Real Estate and Blackstone s acquisition of the DaRE Portfolio that includes prime industrial assets scattered around Copenhagen and the Triangle area in Jutland. This deal alone amounted to DKK 950 M. The demand for industrial/logistic assets have been growing in recent years and we still see significant interest from investors towards this segment as they believe that the risk adjusted returns are looking more and more attractive. INVESTOR BREAKDOWN Q Q Real Estate Companies Private Investors 10% 7% Others 6% Institutional Investors 2% 3.3 BN DKK Property Funds 75% To satisfy the increasing demand for prime industrial properties, Copenhagen Airport intends to develop a 170,000 sqm logistics park surrounding the airport, while Køge Municipality also aims to release a new batch of 800,000 sq. m. land for logistics purposes. Source: RED Cushman & Wakefield DANISH INVESTORS - 25 % FOREIGN INVESTORS - 75 % 0% 20% 40% 60% 80% 100% Prime yields for modern logistics properties with long leases are facing a downward pressure. Prime yields in the Copenhagen area are now at a level of 6.25%, while at 6.50% in the Triangle area in Jutland. PRIME MARKET RENT DKK/SQM SUBAREA Q Copenhagen Area 575 Triangle Area 475 Aarhus Area 425 Modern logistics properties with long leases PRIME YIELDS SUBAREA Q Copenhagen Area 6.25% Triangle Area 6.50% Aarhus Area 6.75% Modern logistics properties with long leases FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 15 / 29

16 Patrizia acquired 251 condominiums in Copenhagen and Aarhus from Core Bolig. The aerial view shows Applebys Plads on Christianshavn in Copenhagen where 116 of the condominiums are located. 16 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

17 TRANSACTIONS 17 / 29

18 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) Unknown foreign Office Portfolio Valby Q2 9, Other Edlund Unknown foreign investor Hedeager 1-5 & Kystvejen 29 Århus 2016/Q2 23, Real Estate Company C.W. Obel investor Institutional Investor PensionDanmark Christiansgade Holmens Kanal 302 CPH Aarhus City C 2016/Q1 Q2 49,065 3,192 Est. 1, Real User estate company C.W. Danske ObelBank Real Property estate company Fund DADES Standard Life Investments Hedeager Albanigade Odense Aarhus N 2016/Q1 61,080 4, User Institutional Investor Vestas Danica Wind Pension Systems A/S Institutional Private Investor investor Sampension Karsten Bill & Solstra Rasmussen Capital Peter Rytterkasernen Bangs Vej Frederiksberg Odense 2016/Q1 5,345 8, Institutional Investor De Danica Forenede Pension Ejendomsselskaber 117 Real estate company Institutional Private Investor investor Pensam Karsten Bill Rasmussen Dag Hammarskjolds Allé 28 Porthusgade 1 CPH E Aalborg 2015/Q4 Q1 1,596 7, Private Investor 77 Private investor Fritz Henrik Schur Private Investor Public Institution Real estate company The Turkish Embassy Skovly Ejendomme Overgaden Oven Vandet 60A CPH City 2015/Q4 8, Public Institution The Danish Armed Forces Private Investor Lennart Lajboschitz Vestergade (Søkvæsthuset) 4-6 CPH City Q1 2, Private investor Private Investor Property fund Copenhagen Capital A/S Store Kongensgade 22 CPH City 2015/Q4 1, Real Estate Company De JL Forenede Ejendom Ejendomsselskaber Peter Bangs Vej Frederiksberg Q1 2, Real estate company Institutional Other Fund investor Pensam Erik & Susanna Olesens Almenvelgørende Fond Datavej Store Kongensgade CPH Birkerød City 2015/Q4 Q1 8,008 1, Private Private investor Investor Private Private Investor Investor Private Real investor Estate Company Fritz Jeudan Schur Bredgade Stormgade CPH CPH City City 2015/Q4 Q1 1,740 2, Private Public investor Institution Private Freja Ejendomme Investor Real Property estate company Fund Copenhagen Artha Kapitalforvaltning Property Investment Nybrogade Strømmen 12 6 Nørresundby CPH City 2015/Q4 Q1 11,404 1, Institutional User investor Realkreditrådet RTX A/S Real Private estate Investor company Karberghus K/S Strømmen Enrum Slot Vedbæk Q1 2, Public institution Finansiel Stabilitet Private investor Private Investor Lokesvej 15 Åbyhøj Q1 4, User Per Aarsleff A/S User Danske Fragtmand 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) Bagsværdlund Bagsværd Q2 9, Developer Calum Real estate company Heimstaden Hedeager 1-5 & Kystvejen 29 Århus 2016/Q2 23, Real Estate Company C.W. Obel Institutional Investor PensionDanmark Duegården Frederiksberg Q2 21, Other Nykredit Real estate company Akelius Residential Property AB Holmens Kanal 2 CPH City 2016/Q1 49,065 1,400.0 User Danske Bank Property Fund Standard Life Investments Hostrup Have Frederiksberg Q2 64,777 1,690 Other Nykredit Real estate company Heimstaden Albanigade 30 Odense 2016/Q1 4, Institutional Investor Danica Pension Private Investor Karsten Bill Rasmussen HD Ejendomme - Mixed Portfolio Denmark Q2 Est. 356,000 Est. 4,200 Real estate company HD Ejendomme A/S Property fund NIAM Rytterkasernen 11 Odense 2016/Q1 8, Institutional Investor Danica Pension Private Investor Karsten Bill Rasmussen Ø-Huset CPH S Q2 27, Developer Skanska AB Real estate company Heimstaden Dag Hammarskjolds Allé 28 CPH E 2015/Q4 1, Private Investor Fritz Henrik Schur Public Institution The Turkish Embassy Residential Portfolio Aalborg E Q2 3,920 Est. 71 Private investor Private Investor Private investor Private Investor Overgaden Oven Vandet 60A CPH City 2015/Q4 8, Public Institution The Danish Armed Forces Private Investor Lennart Lajboschitz Core III - Residential Portfolio Denmark Q1 Est. 24,000 Confidential Property fund Core Bolig Property fund Patrizia (Søkvæsthuset) Bryggens Bastion CPH S Q1 30,000 1,200 Real estate company Bach Gruppen Real estate company Heimstaden Store Kongensgade 22 CPH City 2015/Q4 1, Real Estate Company JL Ejendom Other Fund Erik & Susanna Olesens Almenvelgørende Bjerglandsbyen Brønshøj Q1 11, Developer RHB Development Real estate company Heimstaden Fond Residential Store Kongensgade Portfolio 62 CPH Randers City 2015/Q4 Q1 18,475 1, Property Private fund Investor NDP Private Asset Investor Management Property Real Estate fund Company NIAM Jeudan Bytoften Stormgade 1 10 CPH Risskov City 2015/Q4 Q1 10,178 2,374 Est Private Public investor Institution Private Freja Ejendomme Investor Private Property investor Fund Private Artha Investor Kapitalforvaltning Guldsmedgade Strømmen 6 1 & Klostertorvet Nørresundby 2015/Q4 11, User RTX A/S Private Investor K/S Strømmen Aarhus C Q1 3, Private investor Private Investor Real estate company West Star Property 4 og 4B Tordenskjoldsgade 30 CPH City Q1 1, Private investor Private Investor Private investor Bo Ladegaard Bendtsen Edithsvej 2B Glostrup Q1 2, Real estate company Duras A/S Private investor Private Investor Bio-karréen - Brogade 17 & Kullinggade 4 Svendborg Q1 6, Developer Living Development Private investor Erik Skjærbæk Sophienberg Slot Rungsted Kyst Q1 3, Private investor Private Investor Developer ELF Development Store Kongensgade CPH City Q1 1, Private investor Private Investor Private investor Bo Ladegaard Bendtsen Classensgade 5 CPH E Q1 1, Private investor Private Investor Property fund Keystone Investment Management A/S Turesensgade 6 CPH City Q1 1, User Andelsboligforening Private investor Private Investor Vesterbrogade 77 CPH W Q1 2, Private investor Private Investor Private investor Private Investor 18 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

19 RETAIL STREET NAME LOCATION DATE SIZE (SQM) PRICE (M DKK) VENDOR TYPE VENDOR NAME BUYER TYPE BUYER NAME McDonald's Portfolio Denmark Q1 31,638 Est. 921 User McDonalds Property fund Terra Firma Stand-alone Grocery Shop Portfolio Taastrup Retail Park - Without IKEA Denmark Q1 Est. 12,000 Est. 250 Developer Innovater Property fund Sinai Group Taastrup Q1 7,981 Est. 200 User IKEA Property fund Pradera Lyngby Hovedgade 63 Kgs. Lyngby Q1 4,200 Est. 147 Private investor KPC Institutional investor PensionDanmark Købmagergade 7 CPH City Q1 807 Confidential Private investor Familien Amdrup Property fund Confidential Tårnby Torv 3-9 Tårnby Q1 8, User Dansk Supermarked Institutional investor AP Ejendomme Toftegårds Alle 5-9 Valby Q1 3, Private investor Private Investor Property fund Alma Property Partners HOTEL HOTEL NAME LOCATION DATE PRICE PER ROOM (DKK) PRICE (M DKK) VENDOR NAME BUYER NAME Hotel Bella Sky CPH S Q2 1,847,291 1,500 Solstra Wenaasgruppen Hotel Portfolio - Star, Mercur, Richmond and Plaza CPH W Q2 1,606, Hotel Property Group AB Balder Quality Airport Hotel Kastrup Q2 Est. 1,150,000 Est. 280 European Properties A/S Midstar 40% of Hotel Hilton, CPH Airport Kastrup Q1 Est. 2,700,000 Est. 413 Københavns Lufthavne A/S Strawberry Fields Generator Hostel Copenhagen CPH City Q1 Est. 1,500,000 Est. 258 Patron Capital Ltd Queensgate Investments LAND STREET NAME PURPOSE LOCATION DATE SIZE (SQM. OF BUILDING RIGHT) PRICE PER SQM. OF BUILDING RIGHT PRICE VENDOR NAME BUYER NAME (M DKK) Østerbro 41 Residential Odense C Q2 34,500 Est. 5,000 Est. 173 Coop Danmark Unknown Investor Rolighedsvej 1 Residential Ballerup Q2 11,500 Est. 3,500 Est. 40 Freja Ejendomme A/S DADES Teglholmsgade 38 Residential CPH SW Q1 15,500 6, NCC Artha 40% of land for Nordic Choice Hotel, CPH Airport Hotel Kastrup Q1 7,200 Est. 6,500 Est. 47 Københavns Lufthavne A/S Strawberry Fields INDUSTRIAL STREET NAME LOCATION DATE SIZE (SQM) PRICE (M DKK) VENDOR TYPE VENDOR NAME BUYER TYPE BUYER NAME DaRE Portfolio 2017 Denmark Q1 217, Property fund M7 Real Estate & Oaktree Property fund M7 Real Estate & Blackstone Greve Main 30 Greve Q1 12, Other Nykredit Property fund NREP Fabriksvej 4 Odense Q1 13,000 Est. 65 User Brenderup Unknown Investor Unknown Investor Nøglegårdsvej 1 Lynge Q1 7, User Hamelin A/S Property fund Solstra FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 19 / 29

20 4,580 sqm office space in a new office property located directly to the highway in Lyngby with Formula Auto as neighbor, is currently in the market for letting. 20 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

21 OCCUPIER MARKET 21 / 29

22 OCCUPIER MARKET - OFFICE SHARED WORKSPACE A NEW TREND FOR OCCUPIERS The increasing trend of independent workers used by companies that are expanding their workforce in periods of peak demand has developed a new type of office lease; Office communities. A community that offers work desks, offices, meeting facilities and a wide range of services built for sharing ideas and knowledge. An example of this is WeWork, a workspace designed for fresh ideas, organic networking, and month-to-month flexibility. WeWork is located all over the world with locations in Europe but has not yet laid eyes on Denmark. In Denmark, we have seen examples of traditional office hotels, but only a few examples of shared communities. Noho in the Meat Packing District in Copenhagen is an example of an office community with the main purpose of sharing and creating with other mindlike people. This increasing tendency is a result of a new way of thinking of which research showing that 70% of millennials might reject traditional employment/business and choose to work independently. The younger generation wants freedom to choose the type of work to do and the flexibility to work when and where they want. We expect to see this trend more in Denmark in the next few years, where flexibility and sharing is a part of the sharing economy, and property owners needs to take this into account. In the traditional office segment the activity is high and vacancy rates are stil quite low. SIGNIFICANT LEASES STREET NAME LOCATION DATE SIZE (SQM) LANDLORD TENANT La Cours Vej 7 Frederiksberg 2017/Q2 5,547 Fokus Asset Management Edlund Tuborg Boulevard 12 CPH Area 2017/Q2 3,914 PKA Lundgrens Bredevej 2 CPH Area 2017/Q1 10,667 PKA NNE Pharmaplan A/S Kalvebod Brygge 35 CPH V 2017/Q1 5,582 Datea Bygningsstyrelsen Roholmsvej 19 CPH Area 2017/Q1 3,958 Castellum Iveco Danmark A/S Kalvebod Brygge 43 CPH V 2017/Q1 3,673 Castellum Genmab A/S Kalvebod Brygge 45 CPH V 2017/Q1 2,500 Castellum BASF Rigensgade 11 CPH City 2017/Q1 1,614 Rigensgade 11 A/S Meyers Catering & Compass Human Resources Group Sundkrogsgade 21 CPH East 2017/Q1 1,421 Danica Ejendomsselskab Bird&Bird Grønningen 1 CPH City 2017/Q1 1,095 Thylander Gruppen A/S Wibroe Duckert & Partners Bygmestervej 10 CPH NV 2017/Q1 978 Fokus Asset Management Fonden for socialt ansvar Rosenborggade 15 CPH City 2017/Q1 760 Catella Altor Equity Partners A/S Langagervej Aalborg 2017/Q1 5,500 N/A GomSpace VACANCY RATES AND UNEMPLOYMENT Office vacancy rates compared to unemployment in Copenhagen 5.00% 12.00% 4.50% 4.00% 10.00% 3.50% 8.00% 3.00% 2.50% 6.00% 2.00% 1.50% 4.00% 1.00% 2.00% 0.50% 0.00% 0.00% Q Q Q Q Q Q4 Q Q Source: Statistics Denmark & Oline.dk PRIME RENT DKK/SQM Q2 Q Q Q4 Q Q Q Q SUBAREA Q Copenhagen City (CBD) 1,750 Copenhagen E & W 1,250 Frederiksberg 1,300 Harbour areas 1,850 South Harbour 1,300 Ørestad 1,350 Copenhagen N & NW 1,200 South and west of Copenhagen 950 North of Copenhagen 1,300 Q Q Q Q1 Q Q Q3 Q Q Q1 Q Q Q Q Q Q Q Vacancy rate Copenhagen City Vacancy rate Copenhagen area Vacancy rate Copenhagen City Vacancy rate Copenhagen Area Unemployment Copenhagen Area Q2 Q Q Q4 Q Q Q *Base rents ex. service charges 22 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

23 OCCUPIER MARKET - RETAIL ØSTERGADE WILL BENEFIT FROM THE NEW METRO LINE Kongens Nytorv has been undergoing construction for almost a decade. The continual development of the infrastructural City Circle Line has had a huge impact on the area. The first part of Østergade, stretching from Kongens Nytorv to Bremerholm, is considered either the beginning or the end of Strøget and has been the home for the city s luxury retailers since the late 19th century. Today, the street can be related to as the sleeping giant as the construction of Kongens Nytorv has hauled the natural development of the area. Now, Kongens Nytorv is expected to be completed next year and the neighbours seem to anticipate the completion and embrace the wait by refurbishing the stores. Both Hugo Boss, Tommy Hilfiger and the Danish watchmaker Klarlund has recently invested large amounts in redoing the spaces, preparing them for when the street is again blooming. The Copenhagen Metro has recently unveiled the plans for the Kongens Nytorv Station, which includes a relocation of the main stairs forcing the pedestrians towards Strøget, which will be benefitting Østergade exclusively. SIGNIFICANT LEASES STREET NAME LOCATION DATE SIZE (SQM) NEW TENANT Waterfront Hellerup 2017/Q1 N/A Istid Strandgade 83 - Krøyers Plads CPH City 2017/Q1 525 Føtex Food Købmagergade 45 CPH City 2017/Q1 130 Calvin Klein Jeans Jægersborggade 57 CPH N 2017/Q1 110 The Coffee Collective Axel Towers CPH City 2017/Q2 N/A AOC Klampenborgvej 215 Lyngby 2017/Q2 1,500 Power Postgården CPH City 2017/Q2 1,325 Arket - H&M Strandvejen 141 Hellerup 2017/Q2 423 Skjern Bank Ny Østergade 32 CPH City 2017/Q2 199 Ace & Tate Pilestræde 35 CPH City 2017/Q2 148 Viu Eyewear Magasin CPH City 2017/Q2 100 Lagkagehuset Købmagergade 7 CPH City 2017/Q2 46 Atelier Rebul 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% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Q Q Q3 Q Q Q1 Q Q Q Q Q Q Q Q Q Q4 Q Q Q2 Q Q Q4 Q Q Q2 Q Q Q4 Q Q Q Q Q Q Q Q Q Q3 Q Q Q1 Q Q Vacancy rate Copenhagen City Vacancy rate Copenhagen area Consumer confidence index Source: Statistics Denmark & Oline.dk FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 23 / 29

24 FOOTFALL ANALYSIS KØBMAGERGADE EXPERIENCED THE LARGEST INCREASE IN FOOTFALL COUNTS Overall, Copenhagen high streets have experienced a marginal increase in footfall counts in Q compared to Q This increase can be seen in conjunction with the fact that some construction work across the Copenhagen high streets have been completed, thereby opening the streets for better access and flow. The highest footfall increase is seen in the area around Rundetårn and Frederiksborggade/ Købmagergade, where the number of counts has increased by approx counts. Kultorvet ager Købm e gad Even though some construction work has been completed, there are still ongoing obstacles influencing the footfall, hereunder the construction of the new metro stations at the City Hall Square and Gl. Strand as well as the current renovation of Postgården. Looking forward, we expect that as the different construction works are completed, there will be an increase in the footfall count in the respective areas. 4. 5,500 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. 4,800 e ad F 24 / 29 FOCUS sb rik e red MACROECONOMICS INVESTMENT MARKET Rådhuspladsen g erg OCCUPIER MARKET APPENDIX

25 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 3,065 3, Amagertorv/Østergade 5,578 5, Frederiksberggade 5,274 4, Frederiksborggade/Købmagergade 4,936 5, Rundetårn 4,740 5, Købmagergade/Silkegade 5,280 5, Vimmelskaftet/Amagertorv 6,366 6, Købmagergade/Valkendorfsgade 3,982-9 Købmagergade/Løvstræde 5, Pilestræde/Kronprinsensgade 2,668-2, , Kgs. Nytorv 4,000 ade 1. sterg Ø 3, ,300 Købm ager gade e gad Øster 2. ertorv Amag 7. 6,400 5,700 elskaftet AVERAGE FOOTFALL COUNT 8,000 6,000 4,000 2,000 0 Summer months Christmas shopping 2014 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET 2015 Total average 2016 APPENDIX 25 / 29

26 THE LETTING OF POSTGAARDEN H&M, a company amongst the largest fashion retailers in the world, has chosen Copenhagen as one of the first four cities to be subject to their new investment, ARKET. Opening in 2017, RED Cushman Wakefield assisted the landlord with the deal. Next door in Postgaarden, French cosmetic store Sephora has opened the first Danish independent store in June. Also in this case, RED Cushman Wakefield assisted the landlord. 26 / 29 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

27 APPENDIX - DANISH TRANSLATION 27 / 29

28 ENGLISH VERSION AT PAGE 6 UDGIVELSE II FOKUS DE MINDRE SEGMENTER STORMER FREM De 3 store segmenter - Bolig, Kontor og Retail har siden 2014 udgjort 76% af den danske transaktionsvolumen, mens afkastkravene samtidig er nået det, der ligner et foreløbigt bundniveau. I kombination med investorernes store kapitalplaceringsbehov har dette øget investorernes interesse for andre segmenter såsom hoteller og logistik. 100% 80% 60% 17% ANDEL AF TRANSAKTIONSVOLUMEN 19% 22% 42% ØGET INTERESSE OG AKTIVITET 40% 83% 81% 78% 58% Bolig-, kontor- og retailtransaktioner har i de seneste år domineret den samlede transaktionsvolumen med en samlet andel på 78%-83%. Nu ser vi dog, at den øgede interesse for andre segmenter såsom hoteller og industri/logistik, der allerede begyndte at vise sig i 2016, for alvor har taget fart i 2017, hvor bolig-, kontor- og retailtransaktioner samlet blot udgør 58% af den foreløbige volumen i 2017 (år til dato). Årsagen til denne udvikling skal til dels findes i nogle interessante tendenser i markedet; Logistikejendomme med lange lejekontrakter er voldsomt efterspurgte, og institutionelle investorer har nu fået TRANSAKTIONSVOLUMEN Øvrige segmenter 24% Bolig, Kontor & Retail 76% 20% 0% appetit for hoteller, som traditionelt set ikke er et segment, de før har været involveret i. Den øgede interesse for øvrige segmenter er en naturlig konsekvens af den nuværende markedssituation ifølge Nicholas Thurø, Managing Partner hos RED Cushman & Wakefield: Når udbuddet af prime aktiver indenfor de mest efterspurgte segmenter er lavt kombineret med et højt kapitalplaceringsbehov, så er det kun naturligt, at investorerne kigger efter muligheder andre steder. HISTORISK LAVE AFKASTKRAV PÅVIRKER Den øgede interesse for øvrige segmenter sker samtidig med, at afkastkravene for prime kontor- og retailejendomme er faldet til et historisk lavt niveau. Nicholas Thurø angiver også dette som en af årsagerne til tendensen: Investorerne er selvfølgelig på udkig efter, hvor de kan opnå de mest attraktive risikojusterede afkast, og når prime afkast for retail og kontor er nede i, hvad der ligner et bundniveau, er andre segmenter måske H1 Bolig, Kontor & Retail mere interessante alt efter, hvordan den pågældende investor vurderer den hertil forbundne risiko. Grafen nedenfor illustrerer den risikopræmie, der aktuelt betales for prime hotel- og logistikejendomme sammenlignet med prime kontor- og retailejendomme. Så hvilke risikofaktorer bør der holdes øje med i de hotte segmenter? I den resterende del af artiklen vil vi belyse nogle af de betragtninger, der er vigtige at gøre sig i forhold til hotelinvesteringer. 7,00% 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% Øvrige segmenter PRIME AFKASTNIVEAUER 6,25% ,50% 4,00% 3,00% Retail Kontor Hotel Industri FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 28 / 29

29 HOTELLER - INSTITUTIONELLE INVESTORER ER NU TIL STEDE Hotelejendomme betragtes som en form for hybridt ejendomsaktiv, hvor der er en kombination af ejendomsspecifikke risici og forretningsspecifikke risici associeret med investeringen. Hoteller drives af en hoteloperatør, som typisk er lejer eller ejer. Således er risikobetragtningen for investering i en hotelejendom anderledes end den for øvrige typer ejendomme såsom kontor-, retail- og logistikejendomme i den forstand, at efterspørgslen fra lejersiden er begrænset til én type lejere; hoteloperatører. De ekstra risikofaktorer, der er indeholdt i afkastkravet specifikt for hotelejendomme, kan opsummeres til følgende: - Antallet af potentielle lejere (hoteloperatører) er begrænset. - Antallet af potentielle investorer er begrænset, idet antallet af hotelinvestorer typisk er begrænset til dem, der har indsigt og aktiviteter i hotelbranchen. Dette er dog ikke i så høj grad tilfældet som tidligere. - Hotelmarkedets følsomhed overfor makroøkonomiske udsving og andre chok, fx terroristangreb, naturkatastrofer, boykots etc. Hotellejer er ofte omsætningsbaserede, hvorfor hotellers præstation direkte influerer på investorernes afkast. I sagens natur er hotelindustrien i høj grad påvirket af turisme, som har været særdeles stærk i København i de senere år. Som resultat heraf er pipelinen for nye hoteller på det højeste niveau længe. Hoteltransaktionsvolumen har samtidig været kraftigt stigende de senere år og beløb sig til 2,4 mia. kr. i Denne trend forventes at fortsætte, hvilket også forsvares af de store handler, der allerede har været i 2017 inklusiv salget af Generator Hostel i København, 40% af Hilton Hotel tæt ved lufthavnen samt det nylige salg Bella MIA. KR. 3,0 2,5 2,0 1,5 1,0 0,5 0, Sky til en estimeret pris på ca. 1,5 mia. kr. En bemærkelsesværdig udvikling på hotelinvesteringsmarkedet er den øgede interesse fra institutionelle investorer. Globalt set har institutionelle investorer længe været særdeles aktive i dette segment, hvilket dog ikke har været tilfældet i Danmark. Dog har de lovende tendenser i hotelsegmentet, samt den åbenlyse hårde konkurrence indenfor de traditionelt store segmenter, nu også udløst de institutionelle investorers appetit indenfor dette segment i Danmark. Det er i denne forbindelse essentielt at forstå, at investorerne typisk blot køber ejendommen og ikke selve den tilhørende hoteldrift. PensionDanmark og ATP købte sidste år Hotel Marriott i København, mens PFA investerede i flere hotelprojekter i København. Ifølge Michael Nielsen, Adm. Direktør hos ATP Ejendomme, har eventuelle hotelkonverteringer af eksisterende kontorejendomme også interesse: Kombinationen...den stigende aktivitet indenfor de mindre segmenter vil fortsætte, hvor specielt hotelejendomme i større byer stadig vurderes at have en attraktiv risikoprofil. HOTELTRANSAKTIONSVOLUMEN H1 af relativ høj leje og lange uopsigeligheder ser vi i dagens marked som et interessant alternativ og supplement til kontorejendomme. Det er dog afgørende, at vi kan sammensætte det rigtige produkt af operatør, hotelbrand, husleje og uopsigelighed, samt naturligvis beliggenhed. Hertil kommer de sædvanlige forudsætninger for en god ejendomsinvestering om bygningskvaliteter m.v.. FORVENTNINGER Hos RED Cushman & Wakefield forventer vi, at den stigende aktivitet indenfor de mindre segmenter vil fortsætte, hvor specielt hotelejendomme i større byer stadig vurderes at have en attraktiv risikoprofil. Den fortsat øgede markedstransparens hjælper samtidig investorer til at kigge mod andre segmenter end deres traditionelle coresegmenter. Prøv endelig vores nye Dynamiske Analyseværktøj på vores hjemmeside, hvor det bl.a. er muligt at tracke transaktionsvolumen fordelt på forskellige segmenter og se, om de mindre segmenter vil fortsætte i sammen spor som hidtil i FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 29 / 29

30 TRY OUR NEW DYNAMIC ANALYSIS TOOL AT RED.DK RED Cushman & Wakefield has throughout the years worked structured and intense to increase the transparency on the Danish commercial real estate market. Due to our solid market knowledge, thoroughness and well tested method, we are able to collect the vast majority of all commercial real estate transactions in Denmark. RED CUSHMAN & WAKEFIELD