Duet Private Equity Ltd

September 2010

Rob Clayton, Director

APB Annual Seminar: The Need for Non-Bank Sources of Capital for Real Estate Debt

Our Sponsors

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Duet Group

DUET is an alternative asset and wealth management firm established in 2002.

Total AUM is in excess of $2bn.

Duet has sponsored 17 funds including private equity, real estate, hedge funds and structured investments

Forum Partners

Forum Partners is a global real estate investment management firm established in 2002.

Total AUM over $2bn on behalf of institutional and individual investors worldwide

Forum Partners specializes in investing in leading and emerging listed and private real estate companies, and has invested in over 70 companies in 21 countries in Asia, Europe and North America.

Sponsors

The FundThe Fund

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Source: Real Estate Capital

European Real Estate Debt Fund

Topics

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1. Commercial Real Estate

– How much is it?

– What is it?

– Who did it?

– Where is it?

– What is it secured by?

2. Bank lending today

3. The ‘importance’ of CRE lending

4. CRE lending growth 2000 – 2009

5. Banks’ need to de-gear

6. Regulation

Topics

Around €1trn of European CRE debt Around 15% in CMBS and 85% in banksSlightly more than 50% situated in UK and GermanyAround 50% due to be refinanced by end 2013

European CRE Debt

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Loans Outstanding:

Who Did it? Where is it?

Non UK Assets UK Assets Non UK CMBS UK CMBS

Source: Standard & Poor's

UK34%

Germany24%

Rest of Europe

42%

UK Germany Rest of Europe

Commercial Real Estate Debt in Europe

Source: CBRE

European CRE Debt

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What Is It?

‘High’ LTV debt: 40%

‘Perfect Storm’ debt: 20%

Commercial Real Estate Debt in Europe

Source: CBRE

Asset Market Background: UK

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Real Estate Asset & Debt Market Conditions

Source: CBRE

CBRE Monthly Index, Capital Growth CBRE Monthly Index Prime and Secondary – Capital Growth to June 2010

Source: CBRE

Asset Market Background: Europe

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Real Estate Asset & Debt Market Conditions

CBRE Eurozone Capital Value Index

Source: CBRE

•Aareal •Eurohypo

•Aviva •Fortis

•Barclays Bank •Handelsbanken

•Bayerische Landesbank •Helaba

•Berliner Hyp •HSBC

•BLME •ING

•Calyon •Landesbank Berlin

•Canada Life •LBBW (Stuttgart)

•Coutts & Co •Munich Hyp

•DEKA •Nationwide BS

•Deutsche •Nord LB / Deutsche Hypo

•Deutsche Pfandbrief •Santander

•Deutsche Postbank •Societe General

•DG Hyp •West Immo

Bank Lending to UK Commercial Real EstateLenders

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Source: Duet, September 2010

Split of UK CRE loans outstanding at the end of 2008 split by lending institution

Current Lenders include:

Source: Goldman Sachs Research estimates

CRE Lending Growth

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Source: Goldman Sachs, Bank of England, Jones Lang LaSalle

Bank Lending to UK Commercial Real Estate

December 2000 – CRE lending accounted for 20% of lending to UK non-financials

March 2009 CRE lending accounted for 40%

Debt Market Growth

The Need to De-Leverage

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Degearing

Source: ECB, Morgan Stanley Research

Funding Gap Total Senior Debt Maturing, 2010-12 (€m)

Source: Dealogic, DataStream, Barclays Capital

* Not covered, estimates are Datastream consensus

Regulation

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Regulation

Source: FT Research / BIS