NEWSISSUE 32 | November 2009

REVIEW- Real Estate to Real Politique

Rt Hon Sir John Major- Capital structure- Investors- Opportunities- Current affairs

- Distant challenges Anatole Kaletsky

EPRA’s 2009 Annual Conference

Cautious yet optimistic

2. EPRA NEWS / 32 / 2009

EPRA mEmbERs

AustrAliAMacarthurCook•Stockland•Univ. of Western Sydney, •Property Research CentreValad Property Group•Vanguard Investments Australia•

AustriACA Immobilien Anlagen•Conwert Immobilien Invest•

BelgiumBefimmo•Banque de Groof•Cofinimmo•Leasinvest Real Estate•Solvay Brussels School of •Economics & Management

BrAZilIguatemi Empresa De Shopping •Center SA

British virgin islAndsDolphin Capital Investors•Eastern Property Holdings•

CAnAdAOPTrust•Presima (CDP Capital)•

FinlAndCitycon•CREF Center for Real Estate •Investment & Finance/HankenKTI Finland•Sponda•

FrAnCeAcanthe Developpement•Affine•AffiParis•Altarea SCA•ANF•Baker & McKenzie•BNP Paribas Real Estate•Credit Agricole Immobilier•EUROSIC•Foncière des Régions•Foncière Paris France•Gecina•ICADE•IEIF•Klépierre•Mercialys•ORCO Property Group•Silic•Société de la Tour Eiffel•Société Foncière Lyonnaise•Société Générale•Unibail-Rodamco•Université Paris Dauphine•

germAnyAIG International Real Estate•Alstria Office•Beiten Burkhardt•RREEF Investment•Deutsche Euroshop•Deutsche Wohnen•DIC Asset•Eurocastle Investment•

Fair Value REIT•Heitman•GAGFAH•IRE|BS Immobilienakademie•IVG Immobilien•MEAG MUNICH ERGO •AssetManagement GmbHPATRIZIA Immobilien•POLIS Immobilien•PricewaterhouseCoopers•Real Estate Management •Institute at the European Business SchoolRothschild•SEB Asset Management•

greeCeBabis Vovos – International •Construction GroupEurobank Properties REIC•Lamda Development•National Bank of Greece•Pasal Development•Trastor Real Estate Investment•

hong KongUniversity of Hong Kong, •Dept. of Real Estate & Construction

isrAelGazit-Globe•

itAlyBeni Stabili•Pirelli & C. Real Estate•

netherlAndsAPG Investments•Amsterdam School of Real •EstateBouwfonds Asset Management•BPF Bouwinvest•CB Richard Ellis•CITCO•Clifford Chance•Cordares Vastgoed•Corio•Deloitte Real Estate•Ernst & Young European •Real Estate GroupEurocommercial Properties•Fortis Investment Management•ING REIM Europe•Kempen & Co•KPMG Accountants•LaSalle Investment Management•Loyens & Loeff•MN Services•Nieuwe Steen Investments•PGGM•ProLogis•Redevco Europe Services•Royal Bank of Scotland•Spazio Investment•SPF Beheer•University of Maastricht•VastNed Group•Wereldhave•

norwAyedgeCAPITAL•Norwegian Property•

russiAPIK•

singAporeKeppel Land•National University of Singapore, •Dept. of Real Estate

south AFriCAGrowthpoint•

spAinFundación ESADE•Grupo LAR•Inmobiliaria Colonial•Metrovacesa•Parquesol Inmobiliaria y •ProyectosRenta Corporacion•TESTA (Grupo Sacyr •Vallehermoso)

swedenAberdeen Property Investors•Castellum•Klövern AB•

switZerlAndCUREM•PSP Swiss Property•Sal. Oppenheim Real Estate•Strategic Capital Management•Swiss Capital Alternative • Investments AGSwiss Prime Site•Zublin Immobilien Holding•

united ArAB emirAtesAbu Dhabi Investment Authority•Al Qudra Real Estate•

united KingdomAMP Capital Brookfield•Asset Value Investors•Aviva Investors•Baker & McKenzie•Bank of America•Barclays Capital•BDO Stoy Hayward•Big Yellow Group•Berwin Leighton Paisner•British Land•Brixton•Cass Business School•Citigroup•Credit Suisse First Boston•Derwent London•Deutsche Bank•Evolution Group•Fortress•GIC Real Estate•Goldman Sachs•Grainger•Grosvenor•Hammerson•Henderson Global Investors•Ignis Asset Management•Invista Real Estate IM•JPMorgan•JPMorgan Cazenove•Land Securities•Liberty International•Linklaters•

M3 Capital Partners•Macquarie Real Estate•Mapeley Estates•M&G Investment Management•Morgan Stanley•Nabarro Nathanson•Principal Global Investors•ProLogis European Properties•RGI International•Quintain Estates & Development•Safestore•Scottish Widows Investment •PartnershipSJ Berwin•Safestore•Shaftesbury•SEGRO•Speymill Group•Standard Life Investments•Thames River Capital•UBS Investment Bank•University of Cambridge, •Dept. of Real EstateUniversity of Reading, Centre for •Real Estate ResearchWorkspace Group•

usAAEW Capital Management•Cincinatti University•Cohen & Steers Capital •ManagementCornerstone Real Estate Advisors•Duff & Phelps•European Investors•Fidelity Mgmt & Research•Forum Partners IM•FPL Advisory Group•Green Street Advisors•ING Clarion Real Estate •SecuritiesMIT Center for Real Estate•Real Capital Analytics•Real Foundations•Rockefeller Group Investment •Management Corp.Russell Investment Group•Simon Property Group•SNL Financial•Taberna Realty Finance Trust•The Tuckerman Group•The Wharton School, Zell-Lurie •Real Estate Center, Univ. of PennsylvaniaWestfield Group•

As oF novemBer 2009

EPRA NEWS / 32 / 2009 3.

CONtENts

Credits

editor:Dominic Turnbull

Article CreditsPhilip Charls

Steve Hays

Please send your comments and suggestions to:

info@epra.com

design & layoutKamiel van Kessel

info@kamielvankessel.com

Sander de Haan

info@dtp74.nl

photogrAphyJoke Emmerechts

printingSmiet-Offset BV, Den Haag

NEWSISSUE 32 | November 2009

eprA’s Address:Boulevard de la Woluwe 62, 1200 Brussels, BELGIUMTel.: +32 (0) 2739 10 10Fax: +32 (0) 2739 10 20info@epra.comwww.epra.com

NEWSUpdate from Philip Charls 5

View from the Bridge 8

Anatole Kaletsky 10

Capital Structure 11

New EPRA Chairman 12

Investors 13

EPRA annual awards 14

Analyst Scorecard 17

Academic Session 18

Gala Dinner 20

Rt Hon Sir John Major 23

Opportunities 25

Current Affairs 26

SAVE THE DATE

eprA AnnuAl ConFerenCe

SEPTEMBER 02-03, 2010

Amsterdam

Gecina, a leading European Real Estate Investment Trust

COMMERCIAL REAL ESTATE

Value of property holding: €6,688 million

Total fl oor space: 1,165,677 sqm.

RESIDENTIAL

Value of assets (unit valuations): €4,573 million

Total fl oor space: 1,082,288 sqm.

LOGISTICS

Value of property holding: €555 million

Total fl oor space: 1,016,785 sqm.

HEALTHCARE & HOTELS

Value of property holding: €621 million

Total fl oor space: 300,390 sqm.

www.gecina.fr

Gecina, listed on Euronext Paris, owns and manages property holdings worth nearly €12.5 billion as at December 31, 2008.

Boom, bust, boom? In uncertain times, how you respond to market ups and downs could make all the difference. We can help you ride the storm. With an integrated team of real estate advisory, fi nance, tax and assurance professionals across 140 countries, we can help you tackle market situations as they arise. This means, wherever you are, whatever the conditions, your business can achieve its full potential.

Are you prepared for what’s next?

www.ey.com

© 2009 Ernst & Young LLP. All Rights Reserved.

EPRA NEWS / 32 / 2009 5.

It’s no coincidence that the EPRA

conference was held in a purely

functional business-focused setting.

Remember, this time last year the

rulebook had just been shredded and

cast out among Lehman’s staff boxes

on the streets of New York. So EPRA

swiftly changed conference country,

pricing and gear. I don’t think I am

being too cavalier if I whisper quietly

that the market is now edging to-

wards a more positive outlook – and

the mood throughout our secluded

annual gathering reflected this cau-

tious optimism.

The benefits of hosting a platform

that brings together the entire sector

will play out over the months to

come. Critical insight was shared and

challenged regarding market direc-

tion and appropriate strategy – the

networking of two short days often

sets the agenda for the year. Thank

you to all those to gave up their time

to attend and contribute to the col-

lective understanding of our market.

The opportunities and potential of

the coming months and years are

clearly exciting.

I would also like to take this op-

portunity to also thank Serge Fautré

for his contribution over the past

five years. Under his Chairmanship,

guidance and input, EPRA has gone

from strength to strength. On a

personal level, it has been a pleasure

to work with him in my first two

years in office. Finally, I would like

to thank our sponsors, especially

our headline sponsors: Cofinimmo,

Cohen & Steers, Credit Suisse, Ernst &

Young, Foncière des Régions, Gecina,

Macquarie, Unibail-Rodamco and

Westfield. Their support is essential

for the pre-planning and executing of

the conference.

This was the first time the Annual

Conference has been held in EPRA’s

‘home’ country. The Association’s

move to Belgium in July has already

afforded us a good working relation-

ship with the European Commis-

sion.

The ground is now being pre-

pared for the gathering next year,

when we will hold the event at the

Hilton Hotel in Amsterdam. All EPRA

members are welcome, and I expect

we’ll be reflecting on a far healthier,

transparent and investable sector

than we find it today.

NEws

update from philip ChArls

Philip Charls, EPRA CEO

The opportunities and

potential of the coming

months and years are

clearly exciting.

SAVE THE DATE

eprA AnnuAl ConFerenCe

SEPTEMBER 02-03, 2010

6. EPRA NEWS / 32 / 2009

REviEw

The mood was upbeat

as EPRA’s members

gathered near Brussels for

the Association’s recent

annual conference.

A year can be a very long time – just

consider the close of last year’s gath-

ering in Stockholm, which heralded

the collapse of Lehman Brothers a

few days later unleashing a hur-

ricane through the financial markets

and the global economy.

In time for this year’s gathering,

staged outside Brussels in Septem-

ber, the FTSE EPRA/NAREIT UK Index

had soared over 90% since its floor

on March 09, and the Continental

European index was up around 70%.

With UK property stocks narrowing

their wide discounts to NAV to near

par, or moving to a premium, there

was more talk of growth and op-

portunities than gloom over recapi-

talisation and the still dire economic

background.

The Dolce La Hulpe Hotel and

Conference Centre was an appropri-

ate setting for the event. Like the

markets, Dolce has risen Phoenix-like

in the middle of the Forest of Soignes

following years of neglect after IBM

left its former training centre in

2002. Belgian investment company

Banimmo Real Estate, 50% owned

by EPRA member Affine in Paris, has

breathed new life into the former dis-

tressed property with an imaginative

change of use and refurbishment.

relieF is AheAd

By Steve Hays, Bellier Financial, Amsterdam

eprA’s 2009 AnnuAl ConFerenCe

There was more talk of growth

and opportunities than gloom

over recapitalisation and the still

dire economic background.

EPRA NEWS / 32 / 2009 7.

8. EPRA NEWS / 32 / 2009

But he warned the industry that it

needed to regulate itself more closely

after the excesses of recent years or

face a tougher regulatory environ-

ment imposed upon it. Fautré said

he was proud to have served in the

chairman’s role over the last four

years and trusted that he was leav-

ing a stronger and more organised

association than the one he had

inherited.

EPRA CEO Philip Charls then

welcomed delegates to the “Belgian

Outback,” saying the choice of a

more austere and business-like en-

vironment this year was more fitting

than a luxurious city-centre hotel

given the very challenging market

conditions members have found

themselves in. EPRA cut the costs

of conference sponsorship and entry

fees by about 25% this year, and at-

tracted around 350 attendees.

Back in July, the Association

moved its office to Brussels from

Amsterdam to be at the heart of the

European Union decision-making

process, and to sit just a two-hour

train journey away from its main

membership base in the Netherlands,

France, Germany and the UK.

OPENiNg REmARks

view From the Bridge

Outgoing EPRA Chairman Serge Fautré

captured the mood of the conference in

his opening remarks when he said there

is finally light at the end of the tunnel.

EPRA NEWS / 32 / 2009 9.

Charls said EPRA had achieved a

great deal over the past year in areas

ranging from lobbying over proposed

IASB lease accounting rules to

corporate governance. Some 65%

of the membership is now using

EPRA’s Best Practice Recommenda-

tions (BPR) and he urged the other

35% to step onboard. EPRA’s research

team has also significantly expanded

its statistical offerings, most recently

to include monthly NAV data. He

concluded his speech highlighting

Fautré’s dedication to EPRA and

announced that Guillaume Poitrinal,

Chief Executive of Unibail-Rodamco,

would be the Association’s new

chairman.

“If the CEO of Europe’s biggest

property company wishes to take

on the job of EPRA Chairman on

top of his already busy schedule, I

think that is a great compliment on

where EPRA now stands,” Charls

concluded.

10. EPRA NEWS / 32 / 2009

The keynote speech for the

first day of the conference

was once again provided

by Anatole Kaletsky,

founding partner and chief

economist of GaveKal

Dragonomics, a Hong

Kong-based investment

boutique, and also Editor-

at-Large of The Times

newspaper in the UK.

Reflecting on his presentation on the

same platform in Stockholm one

year before, where he said economic

recovery was underway just days

before the Lehman Brothers debacle,

Kaletsky remarked ironically: “I

would like to to say I was right all

along, I just predicted recovery ten

to 20 months too early!”. Now time

and circumstance have come full

circle.

Kaletsky pointed to the results of

the key US ISM Purchasing Managers

Survey which had just been an-

nounced, showing an index result of

over 50%, which indicates that both

US manufacturing and its economy

are expanding – for the first time

since May, 2008.

He said ‘double-dip’ recessions

are rare, but they can happen as in

1993 and 1995, but this is unlikely

with bond yields now normalising.

The main threats to the nascent

economic recovery remain global

imbalances between the surplus

and deficit countries and structural

impediments to economic flexibility

such as the revival of militant trade

unionism and the OPEC oil cartel

which contributed to stagflation in

the 1970s.

Kaletsky said the chances for ris-

ing inflation were increasing for two

to three years out, but that should

be positive for hard assets such as

property.

kEyNOtE sPEAkER

distAnt ChAllenges

‘Double-dip’ recessions are

rare. They can happen as

in 1993 and 1995, but this

is unlikely with bond yields

now normalising.

EPRA NEWS / 32 / 2009 11.

The first panel session of

the conference looked at

the capital markets

in relation to real estate

and was moderated

by independent advisor

John Carrafiell.

Panel member David Brush of RREEF

said the credit markets were starting

to loosen up: “Up to the end of Q1

you couldn’t even get your lender

on the phone, but since then things

have begun to free-up a little. There

is activity in the restructuring of ex-

isting portfolios, but not much new

lending. If it’s up to EUR 50 million

then it might be okay, though above

that it’s almost impossible unless it’s

backed by the balance sheet.”

Bernd Knobloch of Germany’s

HRE said the main threat to banks

from the European real estate market

was yet to come, with debt taken at

the peak of the market in 2006-07

needing to be refinanced five years

forward. With the loans being done

at 90% LTV, most of them remain

well under water and the banks are

sitting on losses of 20% to 30%.

Peter van Rossum, CFO of Unibail-

Rodamco, said it was clear that some

confidence is creeping back into the

market, noting his own company’s

successful private placement of

convertible bonds back in April, but

he said it was vital for companies to

have a strong relationship with their

house bank.

The CMBS market remains almost

completely closed as a source of

financing and shows few indications

of loosening up, although there are

some signs of life in Germany’s

pfandbriefen market, Zubin Irani

of Westbrook Capital Partners com-

mented.

David Brush said he expected

the refinancing still required by the

European private equity market to

lead investors to push managers for

consolidation among smaller funds,

but he doubted that this would lead to

a wave of IPOs because of the lack of

internal management in the vehicles.

“Lehman was the start and we’re

only 12 months into the rebalancing

cycle. In the 1990s downturn it took

two years, so it’s still early days in

the adjustment process and we’ve got

a way to go yet,” he concluded.

The main threat to banks from the European

real estate market was yet to come, with debt

taken at the peak of the market in 2006-07

needing to be refinanced five years forward.

CAPitAL stRUCtURE

deBt dilemmAs

12. EPRA NEWS / 32 / 2009

resilienCe in the storm

“I hope we don’t indulge in the

same market excesses again; but we

also did it in the 1970s, 1980s and

1990s, it just seems to be part of the

game.” Poitrinal said EPRA needed

to do more to promote the industry’s

strengths to investors, particularly in

areas such as the Middle East, and

to continue to lobby governments to

extend the number of REIT regimes.

“Governments are going to have

to increasingly raise taxes to finance

their deficits and we need to empha-

sise that REITs aren’t tax free and

that tax is paid at the investor level

on dividends even when companies

make losses.”

Poitrinal pledged that he would

really involve himself in the strategic

direction of EPRA over the next two

years to help the organisation adapt

itself to the new market environ-

ment and to deal with governments

seeking increased regulation of the

industry.

Poitrinal was followed to the po-

dium by Patrick Kanters, Managing

Director of Global Real Estate at APG

Investments in the Netherlands, who

briefed the conference on progress

in the Global Environmental Real

Estate Survey and the Environmental

Performance Index, backed by both

EPRA and INREV.

He said that with 35% of global

greenhouse gas emissions estimated

to come from the global property

sector, the initiatives were about

property companies practising

what they preach. The incentive for

companies to get involved stemmed

from the increasing number of stud-

ies that show strong links between

levels of sustainability and financial

performance.

PERsPECtivEs

The European listed real estate sector has shown

remarkable resilience in the face of the severe global

economic crisis of the past year, with none of EPRA’s

members going bankrupt, incoming EPRA chairman

Guillaume Poitrinal told the conference.

EPRA NEWS / 32 / 2009 13.

Brough said the property sector had

the largest underweight position in his

portfolio, because of its dependence

on broad macroeconomic trends.

With unemployment projected to rise

in the UK, and probably in Continental

Europe as well, out to 2014, and with

rents falling, he saw few attractions

for the investor in the sector.

“I try and value on a P/E basis,

NAV is for the birds,” he said.

Patrick Kanters acknowledged

that the diversification of APG’s real

estate portfolio hadn’t supported

values during the crisis, but said

the company invested in bricks and

mortar to generate real returns over

the long-term, rather than trying to

play short-term market fluctuations.

Ian Coull CEO of SEGRO, said

property companies had to create

value by working their assets and

that SEGRO had been fortunate in its

market timing by selling off its big-

gest asset in the US in August, 2007.

“In the second-half of 2007 there was

a lot of demand for companies to re-

turn money to shareholders through

share buybacks, and we resisted that

and used special dividends to return

the US money.”

Coull was backed by Guillaume

Poitrinal who said property compa-

nies had to outperform the direct

markets. He pointed to the resurrec-

tion of conference venue Dolce La

Hulpe as a property management

success story.

“My problem with property

companies is that they are collectors.

They want to show their competitors

that ‘my shopping centre is bigger

than yours’ and the CEOs have

worked out that the bigger the com-

pany the more they get paid,” Brough

countered.

Coull remained on the platform to

brief members on this year’s EPRA

CEO meeting, held in Brussels. He

said there were 18 attendees including

the chief executives of Europe’s four

largest listed property companies.

Subjects under discussion ranged

from developing common standards

of reporting, to shareholder value

and investors relations.

Coull urged more CEOs to partici-

pate in next year’s meeting and said

the group could probably be built-up

to a maximum of 25.

property investors Are ‘trophy ColleCtors’

iNvEstORs

Delegates returned from their coffee break on the first day to be treated to

a provocative investors panel, notable for the strident views of Schroders

UK Midcap equities fund manager Andy Brough.

Moderated by John Carrafiell.

14. EPRA NEWS / 32 / 2009

The aim of the Awards is to improve

awareness of the BPR and raise the

bar of financial reporting in publicly

listed real estate companies across

Europe.

The winner of the ‘Best Annual

Report’ was Land Securities, with

commendations to British Land and

SEGRO. The quality of the annual

reports surveyed was very high, par-

ticularly amongst the top six compa-

nies where the final scores were very

close, based on compliance with the

BPR. To differentiate further between

them, the extent to which the compa-

nies embraced the spirit of the BPR in

promoting transparency and clarity

in reporting was also considered.

The award for the ‘Most Improved

Annual Report’ went to Sponda,

the Finnish property investment

company, with commendations

to Mucklow and Big Yellow. This

award recognises those companies

which have most improved their

annual reports and the information

provided to shareholders and the

investor community.

introduction to the AwardsA detailed process was undertaken

by the Deloitte real estate assurance

team to assess the annual reports

of the 80 companies included in

the FTSE EPRA/NAREIT Developed

Europe Index.

The top six companies in each

category were presented to the EPRA

Jury for discussion and conclusion

on the eventual winners. The EPRA

Jury was chaired by Claire Faulkner,

real estate partner at Deloitte, with

members representing analysts,

experts and economists from across

Europe.

PGGM again sponsored the

Annual Report Awards and we

would like to thank them for their

continued support.

Key points arising from the survey

The bar has been raised even •higher with improved financial

reporting across the spectrum and

narrative reporting giving greater

transparency.

UK corporates continue to set the •standard, with the top three places

being awarded to UK companies.

However, Dutch companies showed

greater consistency and earned the

highest average scores. Greece,

Norway, Germany and Sweden all

have well below average scores and

should look to their UK and Dutch

counterparts for guidance on how

to catch up with their peers.

Whilst companies are recognising •the need to issue results more

quickly in response to market

pressure, there has been limited

improvement in this area with a

few notable exceptions.

There are early signs that com- •panies are streamlining annual

reports to aid clarity, with portfolio

and CSR information being pub-

lished separately.

95% of companies now apply •the fair value model which en-

hances comparability in financial

reporting.

There is significant room for •improvement in reporting of key

performance indicators (KPIs).

The lack of identifiable KPIs in

many companies and differences

in calculation result in a lack of

comparability of performance.

50% of the largest companies are •consistently reporting EPRA NAV

metrics. However, fewer than 10%

of companies reported on all three

of the EPRA diluted NAV, diluted

triple NAV (NNNAV and diluted

EPS measures.

the FutureNew BPR were issued in May 2009,

adoption of which will be con-

sidered in the Awards for the next

financial year. Significant changes in

the May 2009 updated BPR include

the following:

Introduction of additional perform- •ance measures section in the BPR,

including:

Definition of net initial yield -

Definition of vacancy rates -

Clearer documentation of the -

objectives and calculation in

respect of EPRA EPS and NAV

Disclosure of reversionary potential •in absolute terms

Clearer disclosure on development •property including original book

value and book value in the finan-

cial statements

rAising the BAreprA AnnuAl report AwArds 2008/09

REPORtiNg AwARds

The EPRA conference in Brussels saw the

presentation of the EPRA 2008/09 Annual

Report Awards, following a review by

Deloitte of 80 annual reports of real estate

companies across Europe.

Hans Op t’ Veld of PGGM,

co-sponsor of the awards

with Deloitte.

EPRA NEWS / 32 / 2009 15.

0

20

40

60

80

100

EPRA dilutedEPS

EPSEPRA dilutedNNNAV

EPRA dilutedadjusted NAV

NAV

2008/09

2007/08

0

10

20

30

40

50

60

70

80

Greece

Norway

German

y

Swed

en

Belgium

Italy

Europea

n Averag

e

France

Switz

erlan

d

United Kingd

om

Finlan

d

Austria

Netherl

ands

Average score 2007/08

Average score 2008/09What was the average score per country?

What percentage of companies provided

EPS and NAV figures compared to last

year

Further information The full Deloitte report on the EPRA Annual Report Awards 2008/09 can be seen athttp://www.deloitte.co.uk/epra

For any further information on the Awards or the findings of the Deloitte review, please contact Claire Faulkner at Deloitte. She is happy to meet with finance teams to discuss our findings and ways of improving individual company financial reporting in future.

Claire Faulkner, Deloitte+44 (0) 20 7007 0116cfaulkner@deloitte.co.uk

Best Annual reportLand Securities is the largest UK

Real Estate Investment Trust by

market capitalisation, and has a

total commercial property portfolio

worth just under £10 billion.

In addition to receiving the high-

est score in respect of compliance

with the EPRA BPR, Land Securities’

annual report stood out in relation

to their close rivals, providing a full

narrative and telling the story be-

hind the performance in the year,

engendering belief in the company

and presenting a user friendly yet

innovative reporting style.

Highly CommendedBritish Land

SEGRO

most improved Annual reportSponda owns, leases and develops

office, retail and logistics property

in the largest cities in Finland and

Russia.

Sponda was the clear winner in this

category showing marked improve-

ment in its reporting. Of note, is the

inclusion of EPRA NAV measures,

clear definition and discussion of

business strategy and the introduc-

tion of a risk management section.

Highly commendedBig Yellow

Mucklow

Award winners

16. EPRA NEWS / 32 / 2009

EPRA NEWS / 32 / 2009 17.

Scott Crowe of Cohen &

Steers moderated the one

session guaranteed to

pit reality against vision,

interpretation and credibility.

Harm Meijer, property equities ana-

lyst at JP Morgan, bravely returned

to the stage again this year for the

Analyst Scorecard session.

This gives the industry an opportunity

to take pot-shots at the performance

of the analyst community, and Meijer

likened it to a deer breaking from the

woods in front of the huntsmen.

He said that analysts tended to

develop a reputation for being better

in particular areas such as price tar-

geting or market fundamentals and

investors work this out over time.

But Timon Drakesmith of the UK’s

Great Portland Estates, advised equity

analysts to steer clear of pronouncing

on market fundamentals as they are

unlikely to know these as well, or

have access to as much information,

as the companies that operate in

them. However, he added that Great

Portland would not develop banking

relationships with banks that did not

have good sell-side equity analysts

that really understood the property

markets.

Christoph Kullman of France’s

Foncière des Régions pointed out

it was very important for listed

companies to develop relationships

with all equity analysts and to have

conversations with them before they

writeup their analysis.

Steve Buller of fund manager Fidel-

ity, then provided a ‘tongue-in-cheek’

checklist of analysts’ attributes. He

ranked them in importance from

providing market background colour

and information on deal flow, to

having “nice charts,” some valuation

estimates and access to corporates.

“Analysts are great rumour mongers,

lay-on nice trips to companies taking

the hassle out of the logistics - and

some are even good stock pickers”,

he concluded.

ANALysts

sCoring the AnAlysts

18. EPRA NEWS / 32 / 2009

ACAdEmiCs

ACAdemiC session

He said that the Society and EPRA

have been working closely together

on its Journal of European Real

Estate Research, to which all EPRA

members have access, and that next

year they will be producing a special

issue on listed real estate in Europe.

In the first presentation of the

panel, Alessandro Bronda, Head of

Global Investment at Aberdeen Prop-

erty Investors, gave his company’s

view on the outlook for the direct

property market in Europe.

“We forecast total return on a

five-year basis for prime property. In

our view, there is going to be a big

gap between everything that is prime

and everything that is not prime. Two

years ago the gap between prime and

secondary virtually vanished because

of the huge investor demand. We

expect prime to recover first because

that is what everyone has a prefer-

ence for and secondary will take

much longer to recover,” he said.

Bronda said the UK is the first

of the major European markets to

stabilise, after capital values fell by

45%, and Aberdeen expects this to be

followed by France, Europe’s second

largest and most liquid investment

market.

In contrast, Spain is expected

to recover in 12 months time after

values have fallen by another 24%,

while Eastern Europe, including

Russia, may have to wait for 2011 for

recovery.

“We’re convinced capital markets

will stabilise well ahead of the letting

markets. Unemployment and uncer-

tainty will increase this year, next

year and probably also in 2011. So

rents will continue to fall and incen-

tives will increase.” Bronda forecast

average total returns of just over 6%

for the coming five-year period, on

an unleveraged and local currency

basis.

He was followed by Sotiris Tsolacos

of the Property & Portfolio Research

consultancy service, which provides

forecasts on a quarterly basis for 180

markets globally. Tsolacos argued that

real estate stock indices are clearly

strongly influenced by general stock

market trends, more than direct prop-

erty, but PPR looks at the probability

of market bubbles bursting with refer-

ence to transaction indices, such as

CoStar and Real Capital Analytics.

He said PPR’s model had indicated

a strong likelihood that the previous

real stocks bubble was likely to burst

in 2005, and had investors acted on

that they would have avoided the

market crash in 2007, but would of

course missed out on the strong

returns in the intervening period.

Giacomo Morri of Italy’s leading

business school, SDA Bocconi, took a

very different approach to the other

panellists and looked at the influence

As analysts and industry slugged

it out in the main auditorium, the

more sedate proceedings of the

Academic Session got underway in a

separate room. Eamonn D’Arcy of the

University of Reading and Executive

Director of the European Real Estate

Society moderated the session.

EPRA NEWS / 32 / 2009 19.

“We’re convinced capital markets

will stabilise well ahead

of the letting markets.”

A major French listed property company with unique characteristics:Long-term A portfolio with major office focus and specialized assetmanagement teamsCollaborative Leading tenants and strong financial partnersResponsible Invest in human capital and environmental performance

IR Contacts:Philippe Le Trung philippe.letrung@fdr.fr

Sébastien Bonnetonsebastien.bonneton@fdr.fr

To know more about us:www.foncieredesregions.fr

FONCIÈRE DES RÉGIONS

FONCIÈRE PARTENAIRE

F r a n c e T é l é c o m • E D F • S u e z E n v i r o n n e m e n t • T e l e c o m I t a l i a • A c c o r • D a s s a u l t S y s t è m e s • I B M • E i f f a g e …

1bn rental income 892 employees 16.7bn of assets

Des

ign-

prod

uctio

n:

8930

. Pho

to cr

edit:

Ph. G

uign

ard/

1313

, O. O

uada

h, R

oom

Ser

vice

s 3D

– W

ilmot

te et

Ass

ocié

s.

8930_EPRA_06:8930_FDR_EPRA 29/04/09 15:50 Page 1

of the increased speed in information

flows and behavioural factors in the

current crisis.

Just 15 years ago the Internet didn’t

exist and it’s only five years since

we’ve been receiving e-mails and

news on mobile devices, he noted.

This vast increase in the speed of

transmission of information has lead

to more volatility in markets, such as

the daily 5% rise or fall in equities

that followed the Lehman collapse,

which didn’t occur in previous mar-

ket crises, he argued.

Morri said this enhances the role

of human psychology in the market

and pointed to the example of dis-

counts to NAV in the Italian listed

real estate sector, which had been

quite stable at around 20% prior to

the onset of the credit crisis in 2007.

Subsequently the NAV discounts

widened to between 40% to 45% and

have not recovered, perhaps due to

the market’s perception that the listed

real estate was disproportionately af-

fected by the crisis relative to other

equities sectors.

He urged that both the speed

of information transmission and

behavioural finance studies be given

a greater role in future academic real

estate research.

20. EPRA NEWS / 32 / 2009

gAlA dinner

Conference delegates rounded off the first day

of the EPRA conference with a visit to the

centre of Brussels for cocktails and the Gala

Dinner amongst the Rubens and Breugels in

the spectacular setting of the Royal Museum

of Fine Arts.

gALA diNNER

EPRA NEWS / 32 / 2009 21.

Unibail-Rodamco, the leading listed European commercial property operator, investor and developer. Active in three major business lines: shopping centres, offices and convention-exhibition centres.

n° 1 listed European

commercial property company, part of the

French CAC 40 Euronext 100

and Dutch AEX index

12 countries

in operations

www.unibail-rodamco.com

UR - Pub Corporate.indd 1 16/07/09 9:51:54

Landmark retaildestinations...

www.westfield.comWestfield London

Westfield Stratford CityWestfield Sydney

With 119 shopping centres across the globe with a gross valueof around c30bn, the Westfield portfolio includes some of theworld’s most exciting retail and lifestyle destinations.

In the UK, Westfield has eight centres including the recentlyopened Westfield London. With an iconic, undulating roof andover 280 speciality shops and 49 places to dine, it is changingthe face of shopping in the capital.

Westfield’s transformation of retail in London will continue in2011 with the opening of Westfield Stratford City, anchoredby John Lewis, Waitrose and Marks & Spencer, it will comprise300 shops and act as the gateway to the Olympic Park.

Westfield_EPRA_A5_ad0109:Westfield_EPRA_A5_ad0109 22/1/09 10:33 Page 1

EPRA NEWS / 32 / 2009 23.

Sir John Major said that after 15 years

of growth, the world economy had

suffered a profound shock with the

breath-taking speed and breadth of

the crisis that broke in earnest last

summer. Free market capitalism

had taken a bad hit with millions of

people let down and the imprudent

bailed out, he added.

“This is bound to bring changes

to the system we know. China is

emerging from the recession better

than any other economy and this

will have a political as well as an

economic effect. Expect China to

take a more active political role.”

Sir John said that higher taxes

and interest rates are inevitable to

finance the huge fiscal deficits that

have been built-up by governments,

but he didn’t expect rates to rise in

the short-term over the next two

years. He also didn’t rule out sharply

increasing inflation to cut debt

burdens once the current crisis lies

behind us.

“As recovery gathers pace you’ll

start to see price increases in raw ma-

terials and inflation building back in

the system… As savings rise, govern-

ments will have to raise interest rates

in debt-drenched economies and so I

wouldn’t be surprised to see interest

rates and inflation at much higher

levels in three to five years.”

“As savings rise, governments

will have to raise interest rates

in debt-drenched economies

and so I wouldn’t be surprised

to see interest rates and inflation

at much higher levels in

three to five years.”

kEyNOtE sPEAkER

reAl estAte to reAl politique

Former British Prime

Minister, the Rt Hon

Sir John Major, opened

the second day of the

EPRA conference with

grand ‘tour d’horizon’

of current affairs.

24. EPRA NEWS / 32 / 2009

Convention, challenged.

Macquarie Capital (Europe) Limited (MCEL) is authorised and regulated by the UK Financial Services Authority. It is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia), and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited (MBL) ABN 46 008 583 542. MBL does not guarantee or otherwise provide assurance in respect of the obligations of MCEL.

Conventional wisdom dictates choosing between the focus, specialisation and innovation of a boutique or the reach, flexibility and resources of a global firm. Macquarie believes conventional thinking is best left for conventional times.

With real depth of specialised real estate expertise in addition to a full-service suite of private capital markets, equity capital markets and debt capital markets capabilities, Macquarie offers its clients

both focus and flexibility. Our culture of innovation combines the entrepreneurial energy of a boutique with the capabilities of a leading global financial services firm to deliver innovative strategic solutions and the resources necessary to implement them.

In these unconventional times, find out how Macquarie can give your business a competitive edge.

www.macquarie.com/eu

www.cofinimmo.com

©w

ww

.hd

mh

.eu

Cofinimmo welcomes EPRA to Brussels!

EPRA:Directory 30/01/09 12:33 Page 1

EPRA NEWS / 32 / 2009 25.

listed mArKet weAthering the storm Better thAn non-listed Funds

He said while listed property stocks

made up about 17% of the world

market, non-listed funds had grown

to nearly the same size over the

past decade, but now faced bigger

problems.

Listed companies with their lower

cost of capital had been able to raise

more financing in recent months.

In the UK, companies have suc-

ceeded in attracting EUR 5 billion in

refinancing, while non-listed funds

have achieved EUR 1 billion. In Con-

tinental Europe the non-listed sector

has raised more, but it is generally

expected listed companies will raise

more next year.

“At times like these the listed

market should thrive because it

has access to capital on terms the

private market doesn’t,” commented

Jon Zehner of Area Property.

Gerhard Niesslein of Germany’s

IVG said there is now a lot of pressure

to change the fee model in private eq-

uity funds, with lower management

fees weighted more towards the back

end of the fund term.

Panellists generally agreed that

there had been a big improvement

in the management of listed prop-

erty companies since the 1990s, with

Stephen Vernon of Green Property

saying they had been transformed in

terms of strategy, transparency and

governance.

But he warned that the market

had now entered a period of “false

calm” with ultra-low interest rates

supporting unrealistic loan deals the

banks had done during the boom,

which means lenders are going

to inherit a lot of real estate when

more normal conditions resume

because of the sharp fall in underly-

ing equity.

This is a massive problem, Jos

Short of Internos Real Investors

concurred: “A rolling loan gathers

no moss. A lot of banks are rolling

loans and will continue to do so for

the next five years.”

“A rolling loan gathers no moss.”

OPPORtUNitiEs

Moderator Andrew Baum of

the Henley Business School and

the University of Reading, kicked-off

the second day’s panel sessions

with a look at the relative

experiences of the listed and non-

listed real estate markets in the

financial and economic crisis.

26. EPRA NEWS / 32 / 2009

NEws

Patrick Sumner of Henderson Glo-

bal Investors wondered whether

recovery from this market recession

is going to mirror the sharp up-

swing seen following the downturn

of 1993, when stock prices moved

quickly from a 50% discount, to

NAV to a 20% plus premium.

Gerard Groener of Dutch Corio

said prices in Continental Europe

had not risen as nearly as high as

those in the UK, and there had been

a much greater divergence in the

performance of prime and second-

ary assets this time around, but not

as much in the way of distressed

sales as he had expected since the

crisis broke.

Clarence Dixon of Hatfield

Philips noted that banks are still

running scared, but there is some

lending liquidity starting to trickle

back in markets like Germany, but

not in the UK. He said he expected

difficulties with non-performing

loans to be concentrated around

2011/2012 and that could be when

the blood may run in the streets.

Serge Fautré said the bottom line

for pension funds who have been

investing heavily in the government

and corporate bond markets during

the crisis, was to achieve 1% to 2%

more for their real estate investments.

In his closing summing-up of the

conference’s proceedings, EPRA’s

Philip Charls said the mood had

been far more upbeat than in other

similar gatherings he had attended

and that this was probably due to

European REIT models passing their

first great stress test. He ended by

announcing that next year’s EPRA

conference will be held in Amster-

dam, September 02-03.

CURRENt AFFAiRs

into the lAst round

EPRA ANNUAL CONFERENCESEPTEMBER 02-03, 2010

For the final discussion session of the

conference, panellists were treated to

rapid-fire questioning from moderator

Dan Thomas of the Financial Times.

NOT INVESTMENT ADVICE OR A RECOMMENDATION OR OFFER OF ANY COHEN & STEERS PRODUCT OR SERVICE.

Cohen & Steers, Inc. is a publicly traded (NYSE ticker: CNS) investment manager of income-oriented portfolios. Founded in 1986, we maintain a strategic focus on real estate securities through global and regional portfolios. We also manage alternative investment strategies, such as global real estate long-short and global private real estate multimanager portfolios. Additional investment strategies include listed infrastructure and large cap value equity strategies. Headquartered in New York City, with offices in London, Brussels, Hong Kong and Seattle, Cohen & Steers serves individual and institutional investors through separate accounts, sub-advised portfolios, offshore funds and limited partnerships.

We offer customized real estate solutions to meet investor needs:

cohenandsteers.com

Dividends & Diversi�cation

Joseph Houlihan

Managing Director CEO-Europe

+ 44 (0) 32 2 6790660jhoulihan@cohenandsteers.com

Paul Osborne

Senior Vice President and Head of Institutional Marketing-Europe

+ 44 (0) 207 460 6371posborne@cohenandsteers.com

For more information, please contact:

Global Real Estate Securities

Global (ex. U.S.) Real Estate Securities

U.S. Real Estate Securities

European Real Estate Securities

Asia Pacific Real Estate Securities

Global Real Estate Long-Short

Global Private Real Estate Multimanager

This advertisement has been approved solely for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Credit Suisse Securities (Europe) Limited of One Cabot Square, London E14 4QJ. ©2009 CREDIT SUISSE GROUP and/or its affiliates. All rights reserved.

Making the most of challenging markets needs precise planning and an ability to see the complete picture. Our global intelligence, local insight, integrated approach and full spectrum of products and services mean that we can structure and deliver the solution that’s best for you. Whatever, wherever, in real estate, Credit Suisse is the one name you need to know.

For more information, please contact: Wenceslao Bunge +44 (0)20 7883 8729, wenceslao.bunge@credit-suisse.com

Doremus Credit Suisse 148.5x210mm EPRA Conference ad CSV 02 P 51344a Proof 04 24-04-2009

Some think separate areas.

We think all under one roof.

Headline Sponsors

Standard Sponsors

tHankS to our SponSorS

www.epra.com

ANNUALCONFERENCE

EPRA