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					  COVER
                                                                         NEWS
                                                                          ISSUE 38
                                                                          MARCH/APRIL 2011




         FEATURES                                                 REFERENCE
          -   Judgement Day – IAS 12                               - Member offers
          -   Finding the right blend                              - Events
          -   Lease accounting: Millennium bug or game changer?    - FTSE EPRA/NAREIT Global
          -   Listed property and AIFMD – in or out?                 Real Estate Indices




                                                                   GUEST EDITOR
                                                                   Steffen Sebastian




Is the German open-ended real
   estate fund an anachronistic
            investment vehicle?
                                                                                                           EPRA	MEMBERS
                                                                                 AS OF MARCH 2011




   AUSTRALIA                         •	Deutsche Wohnen                   •	Univ. of Maastricht               •	GIC Real Estate
   •	Univ. of Western Sydney,        •	DIC Asset                         •	VastNed                           •	Clearance Capital
     Property Research Centre        •	GAGFAH                            •	Wereldhave                        •	Goldman Sachs International
   •	Valad Property Group            •	Hamborner                                                             •	Grainger
   •	Vanguard Investments            •	Heitman                           NORWAY                              •	Green Street Advisors
                                     •	IREBS International RE Business   •	EdgeCapital                       •	Grosvenor Group
   AUSTRIA                            School                             •	Norwegian Property                •	Great Portland Estates
   •	CA Immobilien Anlagen           •	IVG Immobilien                                                        •	Hammerson
   •	Conwert Immobilien Invest       •	MEAG Real Estate Management       RUSSIA                              •	Henderson Global Investors
   •	Sparkassen Immobilien           •	PATRIZIA Immobilien               •	Renaissance Capital               •	Ignis Asset Management
                                     •	POLIS Immobilien                                                      •	Invista Real Estate Investment
   BELGIUM                           •	PricewaterhouseCoopers            SINGAPORE                            Management
   •	Banque De Groof                 •	Real Estate Management            •	Keppel Land Limited               •	JPMorgan
   •	Befimmo                          Institute                          •	National Univ. of Singapore       •	JPMorgan Cazenove
   •	Cofinimmo                       •	RREEF Investment                                                      •	Land Securities
   •	Leasinvest Real Estate          •	SEB Asset Management              SOUTH-AFRICA                        •	Liberty International
   •	Solvay Business School          •	TAG Tegernsee                     •	Growthpoint Properties            •	Linklaters
     (Brussels Univ.)                                                                                        •	Macquarie Real Estate
                                     GREECE                              SPAIN                               •	M&G Investment Management
   BRAZIL                            •	Eurobank Properties REIC          •	Fundación ESADE                   •	M3 Capital Partners
   •	Iguatemi Empresa De             •	Lamda Development                 •	Inmobiliaria Colonial             •	Morgan Stanley
     Shopping Center                 •	National Bank of Greece           •	Neinver                           •	Nabarro
                                       Property Services                 •	Parquesol Inmobiliaria y          •	Principal Global Investors
   BRITISH VIRGIN ISLANDS            •	Pasal Development                   Proectos                          •	Prologis European Properties
   •	Dolphin Capital Investors       •	Trastor REIC                      •	TESTA Inmuebles & Renta           •	Quintain Estates & Development
   •	Eastern Property Holdings                                                                               •	Safestore
                                     HONG KONG                           SWEDEN                              •	SEGRO
   CANADA                            •	Univ. of Hong Kong, Dept.         •	Aberdeen Property Investors       •	Shaftesbury
   •	OPTrust                           of RE & Construction                Holding                           •	Standard Life Investments
   •	Presima                                                             •	Castellum                         •	Thames River Capital
                                     IRELAND                                                                 •	Tristan Capital
   FINLAND                           •	Nation Pensions Reserve Fund      SWITZERLAND                         •	UBS
   •	Citycon                                                             •	Center for Urban & RE             •	Univ. of Cambridge, Dept. of
   •	CREF Center for Real Estate     ISREAL                                Management                         Land Economy
     Investment & Finance            •	Gazit Globe                       •	Euro Institute of RE Management   •	Univ. of Reading, Centre for RE
   •	KTI Finland                                                         •	PSP Swiss Property                 Research
   •	Sponda                          ITALY                               •	Sal. Oppenheim RE                 •	Workspace Group
                                     •	Beni Stabili                      •	Swiss Capital Alternative
   FRANCE                            •	Immobiliare Grande                  Investments                       USA
   •	Acanthe Developpement             Distribuzione                     •	Swiss Prime Site                  •	AEW Capital Management
   •	Affine                          •	Pirelli RE                        •	Strategic Capital Management      •	Alvarez & Marsal
   •	AffiParis                                                           •	University of Geneva              •	Cohen & Steers Capital
   •	Altarea                         LUXEMBOURG                          •	Züblin Immobilien Holding           Management
   •	Amundi                          •	Orco Property Group                                                   •	Columbia Business School
   •	ANF Immobilier                                                      TURKEY                              •	Cornerstone Real Estate Advisers
   •	Baker & McKenzie                NETHERLANDS                         •	Emlak Konut                       •	Duff & Phelps
   •	BNP Paribas                     •	Amsterdam School of RE            •	Emlak/Toki                        •	European Investors Incorporated
   •	Cegereal                        •	APG Asset Management                                                  •	Fidelity Management &
   •	EUROSIC                         •	Atrium European Real Estate       UAE                                   Research.
   •	Foncière des Regions            •	BPF Bouwinvest                    •	Abu Dhabi Investment Authority    •	Forum Partners Investment
   •	Foncière Paris France           •	CB Richard Ellis                                                        Management
   •	Gecina                          •	Citco Nederland                   UNITED KINGDOM                      •	FPL Advisory Group
   •	ICADE                           •	Clifford Chance                   •	Alvarez & Marsal                  •	Host Hotels & Resorts
   •	IEIF                            •	Corio                             •	AMP Capital Brookfield            •	ING Clarion Real Estate
   •	Klépierre                       •	Deloitte Real Estate              •	Asset Value Investors               Securities
   •	Mazars                          •	Ernst & Young European Real       •	Aviva Investors                   •	MIT Center for Real Estate
   •	Mercialys                         Estate Group                      •	Bank of America                   •	Real Capital Analytics
   •	Predica                         •	Eurocommercial Properties         •	Barclays Capital                  •	Real Foundations
   •	Unibail-Rodamco                 •	Fortis Investment Management      •	BDO Stoy Hayward                  •	Rockefeller Group Investment
   •	Silic                           •	Houthoff Buruma                   •	Berwin Leighton Paisner             Management Corp.
   •	Société de la Tour Eiffel       •	ING REIM Europe                   •	Big Yellow Group                  •	Russell Investment Group
   •	Société Foncière Lyonnaise      •	Kempen & Co                       •	British Land                      •	SNL Financial
   •	Société Générale                •	KPMG Accountants                  •	Cass Business School              •	The Tuckerman Group
   •	Université de Paris-Dauphine    •	LaSalle Investment Management     •	Capital & Counties Properties     •	Univ. of Cincinnati
                                     •	Loyens & Loeff                    •	Citigroup                         •	Westfield Group
   GERMANY                           •	MN Services                       •	Clearance Capital                 •	WP Carey
   •	AIG International Real Estate   •	Nieuwe Steen Investments          •	CLS Holdings                      •	Zell-Lurie RE Center at Wharton
   •	Alstria Office REIT             •	PGGM                              •	Credit Suisse Securities
   •	Beiten Burkhardt                •	Prologis                          •	Derwent London plc
     Rechtsanwaltsgesellschaft       •	Royal Bank of Scotland Group      •	Deutsche Bank
   •	Colonia Real Estate             •	Redevco Europe Services           •	Eurocastle Investment
   •	Deutsche EuroShop               •	Spazio Investments                •	Evolution Group



 2. EPRA NEWS 37 2010
2. _ EPRA NEWS / /29 //2008
                           CONTENTS




                                                  NEWS
                                                  ISSUE 38 | MARCH/APRIL 2011




                                                                        GUEST EDITOR
                                                                        Is the open-ended real estate fund
                                                                        an anachronistic investment vehicle?                           4

                                                                        NEWS                                                           10

CREDITS
Editor & Production Manager
                                                                        FEATURES
Dominic Turnbull                                                        Insight to the year ahead                                      14
Guest Editor                                                            Judgement Day – IAS 12                                         20
Steffen Sebastian
                                                                        Finding the right blend                                        23
Article Credits
Matt Williams,             Alexandra Pobortscha
                                                                        Lease accounting: Millennium bug or game changer?              26
Fraser Hughes              Éamonn D’Arcy                                EPRA’s underlying geographical exposure                        31
Alex Moss                  Ali Zaidi
Jan Willem van             Mark Wist                                    Listed property and AIFMD – in or out?                         35
Kranenburg                 Tony Singh
Jaap Kuin                  Laurens te Beek                              Fostering constructive engagement                              40
Uwe Stoschek               Ad Buisman
                                                                        New addition to EPRA Finance team                              42
Please send your comments and suggestions to:                           My word is my bond                                             43
info@epra.com
                                                                        Hybrid models for property investment                          46
Design & LayOut
Fuse Consulting Limited                                                 Diary Outreach Far East                                        50
18 Greek Street
London
W1D 4DS
jules@fuseconsulting.net                                                REFERENCE PAGES
Printers                                                                Analysts tables                                                51
PCM Ltd
                                                                        Member Offers                                                  57
                                                                        Events                                                         58
                                                                        FTSE EPRA/NAREIT Global Real Estate Indices                    60




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                                                                                                                      EPRA NEWS / 38 / 2011   3.
                                                         GUEST	EDITOR




                              IS THE OPEN-ENDED
                               REAL ESTATE FUND
                              AN ANACHRONISTIC
                           INVESTMENT VEHICLE?
                                    Open-ended real estate funds hold EUR
                                  96 billion in real assets at the time of this
                                 writing. For the sake of comparison: There
                              are but three REITs listed in Germany, and the
                                 combined market value of their real assets
                                        currently adds up to EUR 2.5 billion.




4. EPRA NEWS / 38 / 2011
                                                                                            Click here for
                                                                                            contents page.




                                                                                    GUEST EDITOR
                                                                                  Steffen Sebastian
Many observers, most notably inter-      Fonds reported a TER of just 0.41%
national ones, are taking a critical     for the 2009 financial year, whereas
view of the powerful position that       Warburg-Henderson Deutschland
open-ended real estate funds have        Fonds Nr. 1 showed a figure four
in Germany.                              times as high at 1.55%.

    Indeed, experts agree almost             REITs, by contrast, are character-
unanimously that the dominance of        ised by a much more affordable fee
the open-ended real estate fund is       structure. For one thing, the costs
one of the reasons why REITs have        of subscribing listed REIT shares
had such a hard time to establish        are minimal. Moreover, a REIT will
themselves in Germany. Some              charge neither a management fee
even go so far as to suggest that        nor premiums on transactions costs.
open-ended real estate funds have        This is explained to the fact that a
virtually smothered the REIT as a        REIT is simply not run by a company
vehicle – even though the latter has     whose income consists essentially
qualities principally superior to        of investor fees. Of course, a REIT
open-ended real estate funds.            has management costs in the form
                                         of salaries. Another drawback of
    In addition to the much-discussed    open-ended funds is that the statu-
liquidity problems, I believe the fee    tory liquidity requirements impact
structure of the open-ended real         their income basis. These require
estate funds merits criticism more       open-ended real estate funds to keep
than anything else. When subscrib-       no less than 5% of their assets in
ing fund shares, investors tend to       securities available on short notice.
pay an up-front fee between 5-6%,        In normal times, the cash share is
most of which goes toward the sales      considerably higher though – up to
effort. On top of that, a fund of this   50% in peak times. REITs guarantee
type will levy another fee whenever      their liquidity through stock trading,
shares are bought or sold, usually       and therefore need not keep cash
the equivalent of 1.0%. Add to this      reserves on hand that yield little
the standard acquisition expenses        interest.
that a fund will have to pay when
buying or selling property.                  So far, the cost and income gap
                                         between REITs and open-ended
   In sum, the transactions costs        real estate funds has hardly been
associated with an investment in         analysed. Until two years ago, their
an open-ended real estate fund are       demonstrable track-record of always
higher than those involved when          having realised positive returns
investing in a REIT.                     on investment in spite of all odds
                                         surrounded open-ended real estate
    Then there are ongoing manage-       funds like a nimbus. Ever since
ment fees that a fund will often         some funds did suffer first-time
map by itemising a total expense         losses and proved unable to guaran-
ratio (TER). The TER tends to vary       tee their liquidity, the shortcomings
considerably from one fund to the        of the product have been the subject
next. For instance, Aachener Grund-      of public debate.                   >



                                                                                                      EPRA NEWS / 38 / 2011   5.
                              Yet having realised that open-       that Germans nurse vis-à-vis listed      it is rather regrettable that the
                           ended real estate funds are a com-      investments. Stock market risks and      regulations of German REITs remain
                           paratively costly investment vehicle,   the steep price fluctuations of REITs    so very inflexible. They represent
                           one need not necessarily jump to        or of listed real estate companies       another reason why REITs have
                           the conclusion that they will swiftly   have caused open-ended real estate       been unable to properly exploit the
                           lose in significance. Many people       funds to look like an investment         present market opportunities.
                           base their investment decisions on      of decidedly stable value. The fact
                           the recommendations of their finan-     that open-ended real estate funds            In my opinion, the fund closures
                           cial advisers. The latter, however,     involve no stock market risk is an       and wind-ups will therefore prompt
                           have a vested interest in earning       important advantage in the eyes of       a market correction and a further
                           the highest possible commissions.       many German investors.                   consolidation within the open-
                           So REITs will continue to take the                                               ended real estate fund segment
                           backseat to open-ended real estate         To appraise the value of their real   rather than boost the listed sector
                           funds unless the nature of the finan-   assets, the funds hire surveyors who     in any meaningful way. Indeed, the
                           cial advisory system in Germany         are, at least formally, independent.     open-ended funds will continue to
                                                                   This has a levelling effect on share     be the dominant investment vehicle
                                                                   prices, which in turn calms inves-       for indirect real estate investments
 Some suggest that open-                                           tors. However, nothing has hurt the      for many years to come.
                                                                   reputation of German surveyors
 ended real estate funds have                                      as badly as the recent crisis of         Please note that the Guest Editor page
                                                                   Germany’s open-ended real estate         is a space for outside comment on listed
 virtually smothered the REIT                                      funds.                                   real estate, and does not necessarily
                                                                                                            reflect the opinion of EPRA.
 as a vehicle – even though                                           Doubts over the accuracy of the
                                                                   valuations and the corresponding
 the latter has qualities                                          fear of value adjustments are an
                                                                   important reason why many inves-
 principally superior to open-                                     tors pulled substantial amounts of         Steffen Sebastian is Professor
                                                                   money out of the funds. A number           of Real Estate Finance at the
 ended real estate funds.                                          of funds got into trouble this way,        IRE|BS International Real Estate
                                                                   and had to close down. Actually,           Business School and director
                                                                   the present weakness of the open-          at the Centre for Finance at
                           undergoes a radical change. For the     ended funds could also have a              the University of Regensburg,
                           time being, nothing suggests that       positive effect. They might translate      Germany. He is also a research
                           such change is imminent.                into a window of opportunity for           associate of the ZEW Centre
                                                                   other investment vehicles on the           for European Economic
                              At least as important a role in      German market. So far, only direct         Research, Mannheim.
                           the decade-spanning success story       investments and closed-end funds
                           of open-ended real estate funds         have benefitted from the situation,        sebastian@real-estate-finance.de
                           is played by a deep-seated dread        though. Before this background,




6. EPRA NEWS / 38 / 2011
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                                                                                              contents page.




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                        T +32 (0)2739 1010 • F +32 (0)2739 1020                                          EPRA NEWS / 38 / 2011   7.
 UPDATE FROM
 PHILIP CHARLS                                                                                             Philip Charls, EPRA CEO




                           We’ve just had three EPRA Insight       the fragmentation of REIT regimes       in Europe! Open-ended funds and
                           events across Europe, which were        across Europe. This means mem-          SpecialFonds are predominant in
                           designed to focus minds on this         bers in countries with an efficient     Germany for a number of reasons,
                           year’s challenges. Following their      REIT regime should mobilise their       including the considerable influence
                           success, I can see EPRA’s position      business partners and steer govern-     of banks and investors’ aversion to
                           and role as more fundamental than       ment policies to promote the local      perceived risk. Like an unwieldy
                           ever.                                   regime as a model of inspiration        rusty car, this situation will become
                                                                   for European neighbours that have       more and more difficult to fix
                              2010 was a year full of success      not yet introduced a REIT regime, or    especially since it is not backed
                           for EPRA. We have improved the          where existing REIT regimes are not     by a strong performance case. In
                           quality of our work and significantly   as effective as that they should be.    the last few years, the listed sector
                           increased our visibility and influ-                                             in Europe has consistently over
                           ence among our European partners.           Take France for example - clearly   performed the non-listed sector in
                           Despite the harsh economic condi-       it is the listed champion in Europe.    terms of both capital growth and
                                                                   A market of over EUR 50 billion, 50     total return. This is notably due to
                                                                   listed property firms, phenomenal       a successful recapitalization, and
              Commission, Parliament                               growth since the introduction of the    the healthy state of the listed sector
                                                                   SIIC, France is a country in Europe     which continues to be best in class
              and Council alike rarely                             with the largest proportion of the      in terms of transparency, liquidity
                                                                   underlying assets held by the sec-      and management quality.
            understand the distinction                             tor: 6.10% as compared with an EU
                                                                   average of around 3%. This success          Furthermore, with a number of
            between our industry and                               is down to the efforts of French real   funds having suspended redemp-
                                                                   estate and organisations like the       tions lately and a new law making
                 the ‘financial’ sector.                           FSIF that led to the introduction of    GOEFs indeed less likely to fail
                                                                   the SIIC and defended it for almost     again but at the expense of flexibil-
                                                                   ten years with the French authori-      ity and liquidity, we are convinced
                           tions in recent years, our member-      ties. Their dedication and success      it is essential for us to contribute as
                           ship remains constant at around         inspires us at the European level.      much as we can to unlocking this
                           200. This stability is in itself an     After all, real estate across Europe    situation and facilitate the German
                           achievement, and demonstrates we        still doesn’t hold the position it      listed RE in achieving its full poten-
                           clearly offer considerable value to     deserves.                               tial. Feedback we get from investors
                           our members.                                                                    globally is they would welcome this
                                                                       A case in point is the German       and are keen to up their holdings in
                              We also have great expectations      listed property sector. With only       the German listed sector.
                           on them. We need greater involve-       1.5% of German real estate in listed
                           ment from our members as torch-         companies, our sector is simply            On a broader level, our strategy
                           bearers for the sector, to overcome     atrophied in the largest economy        for promoting the sector remains



8. EPRA NEWS / 38 / 2011
                                                                                                              Click here for
                                                                                                              contents page.




structured around three main areas:     that are unclear and promote the         been restructured to accommodate
Reporting and Regulatory Affairs;       unique features the sector offers to     our best academics. Their mandate
Research, Indices and Investor          avoid being simply treated as invest-    is to ensure that the quality of our
Outreach; Events and Networking.        ment funds.                              publications is best in class. The
                                                                                 monthly output from the EPRA
   Throughout 2010 we had an               We respond to public consulta-        research team has also broadened
unprecedented level of interaction      tions; we are meeting with European      in 2010. In addition to the regular
with the European authorities           institutions; we formulate our stance    monthly statistical bulletin, chart
and international organisations:        with the assistance of our members;      books, and reviews, we added the
European Commission, IASB and           and we mobilise the Press. We            NAV, Transactions and LTV Reports.
others. The strong involvement of       participate actively in public debate
our members has led to tangible         and policy to safeguard the interests        On the index side, the FTSE EPRA
progress in a number of areas.          of our industry in legislation such      / NAREIT Global Real Estate is wide-
                                        as the AIFM Directive, the OTC           ly recognised as the benchmark for
    Last year we streamlined our Best   Derivatives Regulation, the reform       investment in listed real estate. The
Practice Recommendations (BPRs)         of pension funds and many others.        index is constantly improving and
and focused on better performance                                                attracting more and more investors
indicators. We also initiated the de-       Our sector is being reluctantly      for its reliability, consistency and
velopment of recommendations and        forced to come to terms with the         transparency.
specific indicators of sustainability   cumulative impact of the AIFM
that should be finalised by the end     Directive, Derivatives regulation,          From an investors outreach
of first semester.                      Solvency II and Basel III to name        point of view, of course Europe
                                        just a few. That’s despite the fact      remains our primary target, but our
    We continue to develop our          that it is not the obvious intended      industry is globalised and we need
relationship with the IASB and are      or direct target of any of them. This    to promote the European sector
working hard to protect the environ-    comes at a time when the sector is       with investors from other regions,
ment in which our members operate.      busy trying to deal with issues that     including the US and Asia. Our visits
Our success on Lease Accounting is      really are very relevant and crucial     to these areas provide an opportu-
perhaps the most obvious recent         for the property sector and the          nity to broaden our investor base. In
example but it is not alone. EPRA       real economy (like addressing the        2010 we met with more than 1,500
is working with its counterparts in     environmental impact of property         contacts during such visits – the lat-
other regions within REESA in many      development and operational build-       est taking place in China and Japan
other areas: Fair Value measure-        ings).                                   in December.
ment, amendments to IAS 40, joint
ventures to name a few.                     Our sector is healthy, and we’d          Our next trip to the Asia-Pacific
                                        like to keep it that way. It is there-   region will take place in April and
    Our industry advocacy function      fore imperative that the regulatory      include Korea, Japan and Australia.
in Brussels has also considerably       authorities, whether at national or      Also supporting this investment
expanded. The wave of legislative       European level, understand the           drive, EPRA regularly organises
initiatives that has emerged in         benefits of REITs for tax revenue but    seminars and other events that build
response to the financial crisis of     also for the economy in general. We      and strengthen relationships in our
2008 is significant in its volume as    are launching a study looking into       industry. Our Annual Conference in
in its scope. Commission, Parliament    the socio-economic benefits of REIT      September is the culmination of these
and Council alike rarely understand     regimes.                                 networking opportunities; a constant
the distinction between our industry                                             reminder to all that it is people which
and the financial sector. We must          On the research side, our Work-       make this sector tick.
constantly educate, explain issues      ing Committee on Research has



                                                                                                                           EPRA NEWS / 38 / 2011   9.
                                                                                                            NEWS




  IN THE NEWS
                            LEASE	ACCOUNTING	EXPOSURE	DRAFT:	
                            REESA	RESPONSE	SUBMITTED
                            B    ack in December, EPRA submit-
                                 ted its response to the IASB/
                            FASB’s proposed changes to the
                                                                    EPRA Director of Finance Gareth
                                                                    Lewis attended a Roundtable meet-
                                                                    ing with the IASB in London where
                                                                                                            based outcome approach that would
                                                                                                            have been highly subjective and
                                                                                                            which would have resulted in com-
                            lease accounting rules, on behalf of    he had the opportunity to discuss       plicated calculations and periodic
                            the Real Estate Equities Securitiza-    EPRA’s views on the proposed            re-adjustments.
                            tion Alliance (REESA). As well as       changes with the IASB and FASB
                            expressing support for the exclusion    Boards as well as other industry            Similarly, the lease term has
                            of property lessors who report their    representatives.                        been redefined from “the longest
                            investment property at fair value,                                              possible” lease term to “the non
                            the letter also expressed serious          Recently the Boards met (on          cancellable period... together with
                            concerns with the proposed new          December 15-18) and made tentative      any options...(where) there is a sig-
                            leasing framework and the impact        decisions that will greatly simplify    nificant economic incentive for an
                            that this could have on property        the proposed lease accounting and       entity to exercise the option” or for
                            lessors at cost and property tenants.   reduce subjectivity. On contingent      an entity not exercise an option to
                                                                    rents the boards have decided only      terminate the lease. These changes
                               REESA recommended a number           to include contingent rents due         mark significant improvements on
                            of simplifications to the proposed      to index/rates, payments that are       the original proposal. We believe
                            model including the treatment of        “reasonably certain”’, and contin-      that on top of the exclusion for
                            contingent rents and lease renewals.    gent rents “which lack commercial       Investment Property at Fair Value,
                            The REESA submission can be ac-         substance”. The original proposal       this represents positive outcomes of
                            cessed here. On December 17, 2010,      would have required a probability-      our lobbying activities.




                              NEW	RULES	ON	                                                                TAXATION	OF	
                                                                                                           CROSS-BORDERS	
                              BELGIAN	REITS                                                                DIVIDENDS	
                              A    royal decree on Belgian REITs was published early-January. Under
                                   the new legal REIT framework, a number of positive changes have
                                                                                                           DISTRIBUTION
                              been introduced. Existing Belgian REITs can now create joint ventures
                              with institutional investors in a way similar to what already exists in
                              the French and Dutch REITs regimes. The other important change re-
                                                                                                           T    he     European    Commission
                                                                                                                recently published a consulta-
                                                                                                           tion on the Taxation problems that
                              lates to the rules on equity raising which should improve access to the      arise when dividends are distributed
                              capital markets.                                                             across borders to portfolio and in-
                                                                                                           dividual investors. The consultation
                                  These new rules shorten the minimum period for an open offer from        is open until April 30, 2011. EPRA
                              a three weeks period to three days. After this period the company is         is currently assessing whether this
                              free to do a straight public offering/book building for any part that is     occasion provides us a useful op-
                              not taken up by the existing shareholders. This would appear to be a         portunity to promote the positives
                              more efficient process for raising capital than exists in other European     surrounding European REIT regimes
                              REIT regimes.                                                                in this respect. Access the public
                                                                                                           consultation here.



10.
10. EPRA NEWS / 38 / 2011
                                                                                                             Click here for
                                                                                                             contents page.




                                                                                                                  RA	NE




                                                                                                                              W
                                                                                                       EP


                                                                                                                                    	ADD
STRENGTH	IN	GOOD	                                                                  EPRA	will	
                                                                                   relocate	to	the	                     RE
GOVERNANCE                                                                         following	address	
                                                                                   as	of	April	01.	
                                                                                                                           SS
T   he CFA Institute has released
    a report on the improving
governance of Asian REITs which
                                       unit holders’ rights. Regulators and
                                       industry participants in prospective
                                       and existing REIT markets must es-
                                                                                   Square de Meeus 23,
                                                                                   B-1000
we believe holds true for all REITs.   tablish robust governance structures        Brussels
While real estate investment trusts    to minimise risk of expropriation by        +32 (0) 2739 1010
provide many benefits to investors,    insiders and strengthen unit holders’
these benefits can be clouded by       rights. The full report can be found
poor governance that can weaken        here on our website.                        All phone numbers
                                                                                   remain the same.


EPRA	
                                           social performance). Deadline: 24
                                           January 2011. See the consultation
                                           page here.                             REESA	RESPONDS	
                                       •


IN	THE	
                                           Green Paper towards adequate,
                                           sustainable and safe European          -	IASB/FASB	
                                           pension systems – See the consul-      CONSULTATION	ON	
                                           tation paper on the Commission
                                                                                  TRANSITION	ISSUES/
RING                                       website here and EPRA’s response       	
                                           on our website.                        EFFECTIVE	DATES
                                       •   Packaged Retail Investment Prod-



E    PRA’s ongoing effort to boost
     the visibility of the listed
                                           ucts Initiative – Proposed next
                                           steps in improving the European
                                           regulation of the retail investment
                                                                                  I  n a joint letter with the other
                                                                                     organisations in REESA, EPRA
                                                                                  has submitted a response to
real estate in EU circles continues        market, raising investor protection    the IASB/FASB on transition
apace. We are actively participating       standards and improving existing       issues and effective dates. We
in various policy debates which            measures consistency across the        underlined our support for the
affect the sector, and monitoring          different retail investment seg-       exclusion from the Leases ED
others in the pipeline. Here is an         ments. Deadline: January 31, 2011.     of investment property held at
outline of some recent Commission      •   Taxation problems that arise           fair value under IAS 40. We also
public consultations where we have         when dividends are distributed         reiterated the significant impact
enabled Europe-wide reactions,             across borders to portfolio and        that the Leases ED would have
and provided regulators with a             individual investors – Deadline:       on lessors that are covered by
window on the arguments, opinion           April 30, 2011. See the consultation   the standard and sought further
and supporting materials of our            document here.                         concessions on effective dates.
membership. Follow these on the        •   Green Paper on the future of VAT
Commission’s website here.                 – Current VAT system and ways              EPRA proposed that compa-
                                           to improve its coherence with the      nies should have three full years
• Disclosure   of    Non-Financial         single market and its capacity to      to test-run systems, with the ear-
  Information by Companies –               generate revenue whilst reducing       liest application being January
  Ways to improve the disclosure           compliance costs. Deadline: May        01, 2015 - if the June 2011 target
  by enterprises of non-financial          31, 2011. See the Green Paper here.    date for finalisation is met - with
  information (environmental and                                                  an option to adopt earlier.



                                                                                                                          EPRA NEWS / 38 / 2011   11.
                                                                                                                                                  11.
                                                                                                                NEWS




                                                                                                               INDEX	
                                                                                                               PERFORMANCE	
                                                                                                               OVER	THE	
                                                                                                               YEAR	2010

                                                                                                               H      ere’s a snapshot of the perform-
                                                                                                                      ance of the European market
                                                                                                               over the last year:
                                                                                                               • Europe returned 16.94%. On a
                                                                                                                 country level, heavyweights UK
                                                                                                                 (+8.82%) and France (+14.21%)
                                                                                                                 under-performed, and Sweden
                                                                                                                 (+68.66%)        and      Switzerland
                                                                                                                 (+51.66%) over-performed.
                                                                                                               • On a sector level, European Office
                                                                                                                 funds performed best with a return
                                                                                                                 of +35.61%, followed by Healthcare
                                                                                                                 with +27.24%. European Specialty
                                                                                                                 took a loss of -32.80% and Indus-
                                                                                                                 trial slipped -5.90%.
                                                                                                               • Regarding the investment focus,
                            MAPPING	OUT	A	COMMON	PATH                                                            the European rental sector outper-
                                                                                                                 formed the non-rentals, with returns
                            Late last year, on the 50th Anniversary of the US REIT, EPRA’s CEO
                            Philip Charls (left) presented to of NAREIT’s Steven Wechsler a 300-                 of +17.35% and 5.08% respectively.
                            year old map of Europe. With common roots and shared challenges,                   • Regarding the emerging markets in
                            the gift illustrates our ongoing relationship and commitment to work                 Europe, the performance was in
                            together to enhance the position of listed real estate, globally.                    line with the developed markets, a
                                                                                                                 return of +16.25%



                            OPTIMISE	YOUR	INVESTMENT
                            N     AREIT has launched its Real
                                  Estate Portfolio Optimizer.
                            This downloadable tool enables
                                                                     market real estate provides. Conse-
                                                                     quently, portfolios concentrated in
                                                                     private equity real estate funds have
                            investors to compare the returns,        exhibited a sub-optimal risk /return
                            volatility and Sharpe ratio (risk-       profile. Putting approximately one-
                            adjusted return) of different real       third of real estate in publicly traded
                            estate portfolios.                       REITs delivers better risk-adjusted
                                                                     returns for investors that tradition-
                               Real estate portfolios that are       ally rely on private real estate.         of portfolio allocations to publicly
                            too heavily concentrated in private                                                traded REITs and private equity core,
                            equity real estate lack the diversifi-      It calculates the actual portfolio     value-added, and opportunistic
                            cation benefits that a more effective    performance on the basis of more          funds.
                            balance of public and private            than 176,000 possible combinations            Click here for more information.



12.
12. EPRA NEWS / 38 / 2011
      SEGRO is proud to support EPRA




      Europe’s leading provider of flexible business space




SE4029_EPRA_ad_240211_AW.indd 1                                       24/02/2011 10:42




                 It’s all about local knowledge.




                                                               see page 19
                                                             www.epra.com
                                                                                          FEATURES




                                    INSIGHT TO THE
                                       YEAR AHEAD
                                                 The opening weeks of 2011                series of discussions. This year the
                                                    welcomed in a series of               positives rang out across the circuit
                                                                                          of EPRA events. In Amsterdam,
                                                  European EPRA seminars                  Harm Meijer was upbeat for the
                                                   aimed at focusing minds                coming 2-3 years, and saw France
                                                       and expertise on the               and Germany as particularly inter-
                                                                                          esting. London’s Toby Courtauld
                                                      developments within                 stated unequivocally that being a
                                                        individual markets.               REIT now “is a great place to be!”

                                                 Real estate and finance execs in             And as ever, all manner of
                                                 London, Amsterdam and Paris were         scenarios for financing were tabled;
                                                 encouraged to turn out in force -        with John Lutzius in London sug-
                                                 EPRA members and non-members             gesting a clear winner being those
                                                 alike - to join the discussion on        reliant on asset-specific finance. Ian
                                                 the direction and opportunities the      Marcus expected more tie-ups with
                                                 listed real estate sector is likely to   Institutional capital; but viewed
                                                 present. The format was the same         a horizon of increasing property
                                                 as in previous years; only this time     allocations from the USD 7 trillion
                                                 the EPRA Insight series added Paris      worth of Sovereign Wealth funds.
                                                 to the line-up of relaxed, after work,   Other cross-event issues were leas-
                                                 and free-of-charge networking op-        ing lengths, Lease Accounting regu-
                                                 portunities.                             lations & Solvency II in the pipeline
                                                                                          and Prime vs. Secondary. On the
                                                     The quality of all the panelists,    very European demographic ques-
                                                 and their willingness to state hard      tion, Gerard Groener was far from
                                                 numbers so early in the year, re-        downbeat, pointing out that          >
                                                 flected a combative and entertaining




                                In all, around
                             550 people were
                               present for the
                            panel discussions,
                            Q&A and canapés.




14. EPRA NEWS / 38 / 2011
Click here for
contents page.




      Photos by
      Dominic Turnbull
      and Vincent Turin




          EPRA NEWS / 38 / 2011   15.
              “Ignore the averages.
            With the right products
           and the right managers
        you can make good returns
                   going forward.”
                                         David Atkins, Hammerson




                                                                    you can enjoy a roaring success in       the right managers you can make
                                                                    a mediocre environment as it really      good returns going forward.”
                                                                    comes down to micro-economics
                                                                    and business fundamentals.                  We at EPRA would like to
                                                                                                             express our thanks to Nabarro,
                                                                        Hammerson’s David Atkins             Loyens & Loeff and Foncière des
                                                                    summed up much of the mood at            Régions for their assistance at every
                                                                    this year’s event series. The persist-   level; contributing to the excellent
                                                                    ence and affects of inflation and        turnout, ambiance and quality of
                                                                    therefore monetary policy will be        the networking on hand. In times of
                                                                    important. The debt situation will       uncertainly, debt, tax and regulatory
                                                                    touch even the best capitalised,         challenges, we feel it critical that
                                                                    yet ultimately the prosperity of the     the sector is informed and remains
                                                                    tenant amid today’s austerity is key.    a cohesive industry positioned well
                                                                    “But Ignore the averages” he ad-         to adapt and embrace opportunities
                                                                    vised, “with the right products and      in 2011.

                            LONDON                                  AMSTERDAM                                PARIS
                            MODERATOR                               MODERATOR                                MODERATOR
                            John	Waples                             Dirk	Brounen                             Pascale	Besses-Boumard
                            Managing Director, Financial Dynamics   Professor of Finance & Real Estate,      Chief Editor, La Tribune
                            & former Sunday Times Editor            Rotterdam School of Management
                            PANEL                                   PANEL                                    PANEL
                            David	Atkins                            Gerard	Groener                           Christophe	Kullmann
                            CEO, Hammerson                          CEO, Corio                               CEO, Foncière des Régions
                            Ian	Marcus                              Jaap	Blokhuis                            Guillaume	Poitrinal
                            Managing Director, Investment Banking   CEO, Redevco                             CEO, Unibail-Rodamco
                            division, Credit Suisse                 Patrick	Kanters                          Christophe	Clamageran
                            John	Lutzius                            Managing Director,                       CEO, Gecina
                            CEO, Green Street Advisors              APG Asset Management                     Pierre	Fleuriot
                            Toby	Courtauld                          Harm	Meijer                              CEO, Credit Suisse in France
                            CEO, Great Portland Estates             Head of European Real Estate Research    Olivier	Wigniolle
                                                                    Equities, JP Morgan                      Director General, Allianz RE France




16. EPRA NEWS / 38 / 2011
  FEATURES                                                                                                        Click here for
                                                                                                                  contents page.




                A SECTOR OF
             WITH ONE VOICE
                                                                                                    by Fraser Hughes


       Considering that our               estate should comprise a meaningful        such as the EPRA Best Practices (BPR)
  company and investment                  portion of this allocation to the real     and KPIs further enhance transpar-
                                          estate asset class. Alex Moss and I        ency for investors. Investors may
manager members tour the                  have written (p23) about the impor-        also consider management costs of
   same potential investors               tance of understanding all types of        their real estate investment – direct/
 as us, we are mindful that               potential real estate investment - the     unlisted and listed and how do they
                                          four quadrants - and we believe that       compare?
we must all be aligned and                investors will increasingly incorpo-
 aware of the forceful array              rate mixes of listed, bonds and debt       Know the full story
of materials and arguments                to achieve their underlying real estate    Other core features of listed RE relate
                                          exposure. Based on our discussions,        to the long-term performance of the
 supporting a commitment                  we outline our key messages and            listed sector vs. bonds, equities and
        to listed real estate.            reasons why listed real estate should      other forms of RE investment. Focus
                                          get a healthy piece of the pie.            on market valuations provides an
We are on the road throughout the                                                    indication of potential opportunities
year visiting a broad range of inves-         Dividends and cash-flow are            in the market, for example, discounts
tors. We meet with Government Pen-        crucial in the current environment.        to Net Asset Value, plus the fact that
sion funds, company pension funds,        Versus global bonds and equities,          unlevered listed portfolios match the
pension associations, pension fund        REITs offer attractive yields. Investors   performance of IPD direct metrics.
consultants, insurance companies,         look for quality tenants underpin-
investment management companies,          ning this cash-flow, with a healthy          Stock price volatility increased
SWFs, high net worth individuals,         interest in potential earnings growth    during the crisis and has returned to
retail investors, general investors,      and dividend cover ratios. Of course,    normal levels as the economy has
policy makers and opinion leaders.        there is a clear difference between      stabilised. Volatility increased in all
On a regular basis, we invite invest-     landlord-type companies and pure         liquid asset classes – equities, com-
ment managers together to discuss         developers – the focus being on the      modities, gold and oil. We believe
their experiences with investors and      former. Looking at the cash-flow, the    that direct and unlisted markets are
the range of issues potential investors   discussion of the inflation hedge na-    not immune and experience far more
face and ask. For example, we held        ture of real estate investment arises.   stress and turbulence, compared
three investor meetings in London,        It is an inflation hedge due to rents    against reported smoothed valua-
Amsterdam and Paris in January.           being linked to CPI, which feeds into    tions. Developments by IPD, MIT and
                                          dividend growth.                         Green Street on transaction-based or
Allocation imbalance                                                               hybrid indices aim to provide more
We estimate that the value of global          Investors like the transparency accuracy in the future – we welcome
financial assets to be in the region of   associated with listed real estate in- these advances.
USD 220 trillion. This includes equi-     vestment – of course this may vary
ties, private debt, bonds, private eq-    from country and company, but in             The sector offers investors great
uity and real estate – we exclude cash    general we believe that the reporting opportunities to diversify allocations
deposits. Of this total, we estimate      and regulatory structures that listed across sectors and countries, with
that real estate comprises around 13%.    companies must adhere to provide access to developed and emerging
Compare this against global alloca-       an excellent base on which to build. markets. Finally, we believe that the
tions to real estate investment of ap-    Listed companies will operate under listed sector recapitalised well over
proximately 10% and you could argue       REIT legislation, accounting rules, the crisis and is well prepared to take
allocations should increase to meet       FSA/Stock Exchange rules, corporate advantages going forward. The ability
the ‘natural’ weight going forward.       governance guidelines and increas- to raise capital, whether it be equity,
                                          ingly sustainability recommendation debt or through bond issuance has
   Our position is that listed real       and guidelines. In addition, initiatives been well documented.



                                                                                                                               EPRA NEWS / 37 / 2010   17.
        Foncière des régions

        Foncière partenaire
        Through its established expertise and human resources, Foncière des Régions has succeeded in cultivating tenants partnerships with major companies from
        France and around the world, including France Télécom, Thalès, Accor, EDF, Dassault Systèmes, Suez Environnement and IBM. Foncière des Régions works
        with them to design adapted and innovative property solutions with a dual objective: to enhance the quality of its portfolio and conceive tomorrow’s real estate.




                                                                                                                                                                                  10328. Crédits photo : O. Ouadah, Artefactory Lab, J. Biletta.
                                                                 stRategiC partner

           Real estate reference                                                                                         Responsible company




                                                                                                                                                                                  Conception – réalisation
                                                                        www.foncieredesregions.fr




10328_AP_FDR_2.indd         2                                                                                                                                          23/02/11          14:




                                                                    SAVE THE DATE
                                                                        SEPTEMBER 01-02, 2011

                                                                    The	main	event	for	European	listed	real	estate	of	
                                                                    the	 year.	 EPRA’s	 conference	 brings	 together	 the	
                                                                    world’s	largest	property	companies,	analysts	and	
                                                                    financiers.	It’s	the	prime	networking	event	where	
                                                                    what	 you	 know,	 who	 you	 know	 and	 precisely	
                                                                    when	you	knew	them	both	take	on	a	new	mean-
                                                                    ing	in	today’s	evolving	economic	climate.	

                                                                    Registrations	will	be	available	online	in	a	few	
                                                                    weeks	time.




          18. EPRA NEWS / 38 / 2011
                                                         Click here for
                                                         contents page.




:16                           EPRA ANNUAL
                           CONFERENCE 2011
                                  SEPTEMBER 01-02, 2011
                                             LONDON
      • Analysis
      • Current	Affairs	&	Sustainability
      • Forecasts	&	Networking
      • Investment	opportunities
      • Economic	commentary
      • Regulation
                                     Headline Sponsors




       Standard Sponsors



                                                                  EPRA NEWS / 38 / 2011   19.
                                                                                                      FEATURES




                                        JUDGEMENT DAY
                                               – IAS 12
                                      Benjamin Franklin      Investors in real estate preparing       other acquired assets and assumed
                             famously assured us that,       their accounts under international       liabilities, deferred tax liabilities
                                                             standards are particularly sensitive     must be recognised at their nomi-
                                 in life, only death and     to this, especially if different tax     nal value. The unequal valuation
                                taxes are certain. Since     rates apply for rental income and        of these deferred tax liabilities
                                  it is true that, despite   gains on a sale. The applicable          normally results in goodwill as a
                                                             standard (known as IAS 12) obliges       technical figure”.
                               rumours to the contrary,      accountants to estimate the amount
                               accountants are human,        of taxation that would be payable            The Swedish property company
                            they will certainly face the     when their properties are realised       Castellum also highlighted the prob-
                                                             as cash – whether that realisation       lem in its 2009 financial statements
                             former. However many of         is through receiving rent from the       by stating that: “In the balance sheet
                            them have long concluded         tenants or from a future sale. This      the deferred tax liability is based on
                                    that reporting taxes,    is known as ‘deferred taxation’ and      [the assumption] that all properties
                                                             can be a substantial liability on the    are sold today with worst possible
                                   especially in the real    balance sheet. For example, the          taxation outcome, i.e. a direct sale.
                            estate sector, is often more     Polish company, Globe Trade Center       The effective tax is lower because of
                            to do with judgement than        reported a deferred taxation liability   both the possibility to sell properties
                                                             of EUR 117 million at December 31,       in a tax-efficient manner, and the
                                                certainty.   2009 which represented some 11% of       time factor that causes the tax to be
                                                             net assets. Similarly, PSP Swiss Prop-   discounted. At present, the actual
                                                             erty reported a liability of EUR 406     discounted deferred tax liability is
                                                             million, this being 16% of net assets.   considered to be approx. 5%, giving
                                                                                                      a value of SEK 537 million which
                                                             Theoretical accounting                   is considerably lower than the SEK
                                                             These significant amounts are usu-       2,824 million accounted for.”
                                                             ally difficult to interpret and may
                                                             be discounted by users of financial          In any event, whatever view is
                                                             statements. For example, many real       taken about deferred taxation liabili-
                                                             estate companies present an EPRA         ties, the calculation of it requires an
                                                             Net Asset Value (NAV) in their finan-    investor to have a clear idea of when
                                                             cial statements in which deferred        and how their investment property
                                                             taxation liabilities are removed. This   will be sold. This can rarely be said
                                                             is of course a subjective assessment,    with any certainty, so a good deal
                                                             but it is certainly the case that the    of judgement is called for - and it is
                                                             required calculation does not allow      important because in many jurisdic-
                                                             the accountant to take into account      tions rental income and gains on a
                                                             the expected amount and timing of        property sale are assessed under
                                                             any tax payments – often resulting       different tax rates and the amount of
                                                             in what some would describe as           the property value deductible for tax
                                                             ‘theoretical’ accounting.                is different.

                                                                Immofinanz, the Austrian prop-        A step forward
                                                             erty company, was quite outspoken        In fact, international accounting
                                                             on this matter in its 2009 annual        standard setters have long recog-
                                                             report when it said: “In contrast to     nised that for investment property



20. EPRA NEWS / 38 / 2011
                                                                                                               Click here for
                                                                                                               contents page.




                                                                                    From January 2012, the rules
                                                                                    will include a rebuttable
                                                                                    presumption that taxation
measured at fair value (the predomi-       include a rebuttable presumption         on investment property
nant approach) it is difficult to          that taxation on investment property
establish how those values may be          measured using fair value model          measured using fair
recovered in order to determine any        should be determined on the basis
associated deferred tax. Recent Ernst      that its value will be recovered         value model should be
& Young surveys of IFRS financial          through sale.
statements in the real estate sector                                                determined on the basis that
indicate that few companies explic-            The presumption is rebutted if it
itly say how they deal with this mat-      is held in a company whose busi-         its value will be recovered
ter – and this has long been the case.     ness model is to use the investment
In the UK, the financial statements        property to generate rentals over        through sale.
of property companies Hammerson            time, rather than realise its value
and Liberty International (both in         through a sale. The standard setters
2005 prior to their entry into the         have not provided an example of
UK REIT regime) took completely            a business model meeting these
opposite approaches:                       criteria, but acknowledged that the
                                           amendment may give rise to cases
    Hammerson set out that they            where the value of an investment
calculated deferred taxation “on the       property is assumed to be recovered
basis that properties will be realised     entirely through sale, even though
predominantly through sale” and            an entity expects it to be recovered
provided GBP 406 million (being 7%         partly through receiving rentals.
of their real estate portfolio’s value).   Consequently there are still likely to
Conversely, Liberty International          be interpretation differences – per-
disclosed that: “The group does not        haps because some may argue that
provide for deferred tax on invest-        any real estate investor from time to
ment properties by reference to the        time sells assets, and as a result no
tax that would be due on the sale          property investment company could        Matt Williams, Director, UK Real
of the investment properties” and          rebut the assumption of realisation      Estate Group, Ernst & Young LLP
provided GBP 856 million (being            by sale.
12% of their real estate portfolio’s                                                Matt is a director in Ernst and
value). Comparability under these             In general, however, companies        Young’s real estate group in
circumstances is much reduced.             that previously found it difficult to    London and provides assurance
                                           calculate deferred taxation should       services to a wide range of
    In December 2010, international        welcome this amendment as it does        clients from private equity real
accounting standard setters issued         give a little more certainty.            estate funds to public listed
an amendment to IAS 12 called ‘De-                                                  property companies. Matt is
ferred Tax: Recovery of Underlying         What’s missing?                          a member of Ernst & Young’s
Assets’ to specifically address this       The amendment is also notable for        global IFRS committee and is an
issue. The aim of the amendment            what it does not contain. In many        author of the global publication
is to provide a practical solution for     jurisdictions it is common for           ‘International GAAP’. Matt is also
jurisdictions where entities currently     properties to be bought and sold by      a member of the British Property
find it difficult and subjective to        transferring ownership of a separate     Federation’s finance committee.
determine the expected manner of           legal entity formed to hold that prop-
recovery for investment property.          erty (a ‘single asset’ entity), rather   mwilliams5@uk.ey.com
From January 2012, the rules will          than the property itself.            >



                                                                                                                         EPRA NEWS / 38 / 2011   21.
                                                                      Deferred taxation is a complex and
                                                                      uncertain calculation, the result
                                                                      of which is often said to bear little
                                                                      resemblance to the actual ‘value’ of
                                                                      any inherent tax liability in a real
                                                                      estate portfolio.


                                A single asset entity may be          are available where the assets is
                            formed for a number of reasons.           sold separately or in a single asset
                            For example, the insertion of a           entity. Consequently for the last six
                            single asset entity between that          years the position has at least been
                            ‘real’ owner and the property may         ambiguous, especially as it was
                            limit the ‘real’ owner’s liability for    indicated during the development of
                            obligations arising from ownership        this IAS 12 amendment that it would
                            of the property. More pertinently for     contain guidance on this issue.
                            accounting for deferred taxation, it
                            may also provide shelter from tax             Unfortunately, when published,
                            liabilities arising on disposal of the    the amendment did not provide any        Ad Buisman, Partner,
                            property since, in many jurisdic-         guidance. Accordingly, there still       Ernst & Young Accountants LLP
                            tions, the sale of shares is taxed at a   might still be circumstances where       and Global Director of Real
                            lower rate than the sale of property.     deferred taxation is calculated on       Estate Assurance
                                                                      the sale of the shares of a single as-
                                This raises the question whether,     set entity. In such cases, no deferred   Ad is a member of the leader-
                            in determining the expected manner        tax liability would be recognised at     ship team of Ernst & Young’s
                            of recovery of a property for the         all if the tax consequences of sell-     European Real Estate (RHC)
                            purposes of IAS 12, a company may         ing the single asset entity would be     Group as well as a member of
                            have regard to the fact that a prop-      nil - even if that entity would have     the Global RHC Management
                            erty held by a ‘single asset’ entity      recognised fair value gains on its       committee. He joined Ernst
                            can be disposed of by disposing of        properties which would be taxable        & Young in January 1994 and
                            the shares of the entity rather than      if and when the properties were          provides professional real estate
                            the asset itself. In the absence of de-   sold at that value. It is unclear if     and construction services in
                            tailed guidance the general, but not      this is the outcome the standard         the fields of Auditing, Corporate
                            exclusive, practice is for companies      setters intend.                          Real Estate Advisory Services
                            to account for deferred taxation on                                                and Transaction Support. In his
                            the basis of a property, rather than          Deferred taxation is a complex       capacity as EMEIA Construction
                            a share, sale. This is because where      and uncertain calculation, the result    Leader Ad also annually chairs
                            consolidated financial statements         of which is often said to bear little    the European CFO Round Table
                            are prepared the asset in the balance     resemblance to the actual ‘value’ of     for Construction & Engineering.
                            sheet is the property held by, not the    any inherent tax liability in a real
                            shares in, the single asset entity. In    estate portfolio. The amendment          Ad is a member of the Best
                            reality, however, single asset entities   moves the game on a little, but the      Practics Committee of EPRA,
                            are generally sold with a significant     lack of guidance in at least one key     leads Ernst & Young Global
                            discount on the nominal tax liability.    area for real estate investors means     IFRS Real Estate & Construction
                                                                      reporting this form of taxation does     interpretation desk and is
                               This issue has been a live one         not yet live up to Benjamin Frank-       also Global director for RHC
                            ever since, in their July 2005 meeting,   lin’s assertion.                         assurance services.
                            standard setters promised to provide
                            guidance when different deductions                                                 ad.buisman@nl.ey.com



22. EPRA NEWS / 38 / 2011
FEATURES                                                                                                                   Click here for
                                                                                                                           contents page.




FINDING THE
RIGHT BLEND
       This article looks at   By way of background, it should           Figure 1 - Value of financial assests
 blending listed and direct    be remembered that real estate
                               accounts for around 14% of financial                                                              l Real Estate 14%
    property exposure. We      assets by value, but that most insti-                                                             l Private Equity 1%
      look at the tools and    tutional real estate allocations are                                                              l Equities 33%

      options available for    significantly below this.                                                                         l Private Debt 32%
                                                                                                                                 l Govn Bonds 20%
    combining or blending      Real Estate Investment Options –
listed and direct exposure     the four quadrants
   to one specific property    Investors have for a while now had
                               many options in which to obtain
   market, in this case, the   real estate exposure. However, there
      UK in a simple rules-    are two specific catalysts which
            based strategy.    have stimulated a surge in interest       Source: McKinsey Global Institute, Bloomberg, EPRA,

                               in combining a more liquid, listed
                               element with direct exposure. Firstly,     Blending Direct and Listed –
                               the inevitable move from Defined           relative returns
                               Benefit to Defined Contribution Pen-       We believe the best approach to
                               sions schemes which have a greater         examine the issue of blending the
                               liquidity requirement, and require         four quadrants is to select one
                               a form of real estate allocation that      country and blend just two options
                               can provide exposure to the asset          initially. We would also emphasis
                               class in a more easily tradeable           the key point that we are not sug-
                               form. Secondly, the redemption is-         gesting that is necessary to combine
                               sues which many Property Funds             all four quadrants across all regions
                               faced has led to product developers        to provide effective solutions to spe-
                               seeking to capture fund flows by           cific product liquidity requirements.
                               creating a more liquid product.            At its simplest, listed exposure can
                                                                          be added to enhance liquidity of a
                                   A recent example would be press        product to meet investor require-
                               reports of Schroders creating a high       ments, or a trading strategy can be
                               yielding fund investing in listed          developed to arbitrage between the
                               real estate for investors. It specifi-     two areas. As a first step, we look at
                               cally seeks to reduce the volatility of    the UK direct market – represented
                               having to sell illiquid assets to          by the IPD All Property Index and
                               provide liquidity for investors. As a      the UK listed market – represented
                               blended property allocation based          by the FTSE EPRA/NAREIT UK Index.
                               on the four quadrants approach is
                               still relatively new and evolving,             The UK has the longest time
                               there is a continued requirement for       series on both the direct and
                               research and analysis in the area          listed side. In addition, the data
                               and it is important to recognise that      sets are widely regarded as most
                               the level of data and liquidity avail-     representative of each market.
                               able for different markets is vari-        Figure 3 outlines the straightforward
                               able. Figure 2 aims to summarise           rolling ten-year performance of
                               the main characteristics of each           the UK direct and listed sector, un-
                               form of investment.                        lagged1 – both capital and total >



                                                                                                                                     EPRA NEWS / 38 / 2011   23.
                            Figure 2 - Real Estate Investment Quadrant – characteristics
                                                               PRIVATE                                                     PUBLIC
                                          Direct Real Estate Ownership                             Listed Property Companies
                                              • Greater control                                         • Transparency
                                              • Labour intensive                                        • Liquidity
                                              • Capital intensive                                       • Diversification at low cost
                                              • Ownership of maintenance operations                     • Lower management costs
                                              • High income                                             • High income – particularly REITs
                              EQUITY          • Illiquid                                                • Med/long proxy for direct
                                                                                                        • Easy to benchmark
                                          Indirect Real Estate (Private Funds)                          • Lack of control
                                               • Direct property characteristics                        • Short term volatility correlation to equities
                                               • Diversification
                                               • External management
                                               • Illiquid
                                               • Less direct control
                                               • Higher costs
                                          Direct & Indirect Lending                                Listed Debt Securities
                                               • Secured loans                                          • Diversified exposure easy to achieve
                                               • Favourable market conditions                           • Liquidity
                                                 (attractive spreads)                                   • Reasonable transparency (credit agencies)
                                               • Ability to tailor credit profile through mix of        • Strong correlation to movements in
                                                 senior & mezzanine                                       interest rates

                                          Direct Lending (Senior & Mezzanine)                      Corporate Bonds
                                              • Greater control than indirect                          • Wide range of credit quality, based on
                              DEBT            • Difficult to achieve diversification                     issuers, sector, region, etc
                                              • Lending platform expensive                             • Unsecured obligation

                                          Debt Fund Investing                                      CMBS
                                                   • More cost effective at smaller scale             • Ability to tailor credit exposure by
                                                   • Diversification easier to achieve                  class/tranche
                                                  • Less ability to target and control investments    • Detailed understanding of securitisation
                                                                                                        documents required
                                          Source: Morgan Stanley, EPRA                                • Market remains closed

                            returns. This provides an initial         property as starting point. A series of    listed market over the period and
                            overview of returns, unadjusted           thresholds is calculated around the        employing the trading strategy3, it is
                            for either risk, management costs,        long term average discount to NAV          possible to outperform both the
                            or liquidity. The FTSE EPRA/NA-           (-18%) over the entire period. This can    direct and listed markets by some
                            REIT UK Index outperforms IPD UK          of course be recalibrated throughout       margin. In figure 3 we display the re-
                            for a significant period of the           the course of the strategy.                sults of the strategy, clearly showing
                            analysis – 2000 to 2010. On the other                                                that the blended portfolio generates
                            hand, IPD UK total return outperforms         An upper and lower threshold           significantly better cumulative total
                            the FTSE EPRA/NAREIT UK total return.     is set at two thirds of one standard       returns than either direct property
                            The listed sector trades within the       deviation – approximately 9%,              or property shares. This approach
                            boundaries of the direct benchmark.       either side of the long-term average       generates - an average annual return
                                                                      discount. The weighting to listed          premium of over 100 basis points
                            Mixing the blend – a rules-based          property is adjusted 150bps for each       over that on direct property over this
                            trading strategy                          month that listed property trades          32-year period.
                            While the chart above shows the           below (or above) the thresholds.
                            “raw returns” historically and the        For example, if the discount to                As might be expected, the volatil-
                            stages of the cycle where listed and      NAV trades at 20% for a cumulative         ity of the returns generated by the
                            direct generate superior and infe-        five months period, 7.5% extra is          simulated portfolio sits between
                            rior performance, the next step is to     allocated to the listed allocation.        that on direct property4 and that
                            examine how a simple rules based          Once discounts to NAV trades within        on listed property5. Yunus, Hansz &
                            strategy can arbitrage between the        the upper and lower band weights           Kennedy (2010) analysed the long-
                            two markets. At a strategic level, we     revert to 50/50.2                          run relationships and short-run link-
                            use a simple portfolio comprising                                                    ages between the private and listed
                            50% direct property and 50% listed           By combining the direct and             real estate markets of Australia,



24. EPRA NEWS / 38 / 2011
                                                                                                                                                                                      Click here for
                                                                                                                                                                                      contents page.


Figure 3 - Annualised rolling 10-year performance
20.0%                                                                                                                                              20.0%
                      EPRA Price vs. IPD Capital, 73% of time EPRA outperformance
                      EPRA TR vs. IPD TR, 9% of time EPRA outperformance

15.0%                                                                                                                                              15.0%




10.0%                                                                                                                                              10.0%




 5.0%                                                                                                                                              5.0%




 0.0%                                                                                                                                              0.0%
     2000             2001        2002          2003        2004          2005            2006        2007          2008     2009          2010



 -5.0%                                                                                                                                             -5.0%




-10/0%                                                                                                                                             -10/0%
                       ■ FTSE    EPRA/NAREIT UK Price Index                             ■ UK IPD Capital Growth All Property
                       ■ FTSE    EPRA/NAREIT UK TR Index                                ■ UK IPD Total Return All Property



Netherlands, United Kingdom and                                                         nals from the four quadrants, their
the United States. Results indicate                                                     correlation and liquidity and the
the existence of long-run relation-                                                     specific advantages and limitations
ships between the public and pri-                                                       to be aware of when blending them
vate real estate markets of each of                                                     together.
the countries under consideration.6                                                 1
                                                                                      Yunus, Hansz & Kennedy (2010) - Short-run analyses
                                                                                    also reveal significant causal relationships between
                                                                                    private and public markets of all countries under
Summary                                                                             consideration. As expected, it was found that price
                                                                                    discovery occurred in the public real estate market
We believe that we are now seeing                                                   in that it leads but is not led by its private real estate
                                                                                    market counterpart.
the first products developed that                                                   2
                                                                                      This analysis was first published in issue 34 of the
seek to combine underlying real                                                     EPRA Newsletter – May 2010. The article was written by
                                                                                    Martin Allen, now at Deutsche Bank Property Research.
estate exposure with the investor                                                   3
                                                                                      This simulation did not allow for transaction costs,
                                                                                    and full allowance for these would reduce the return
requirement for liquidity. Given                                                    premium generated. On the other hand, it should also
the importance of liquidity in DC                                                   be possible to come up with a more sophisticated                        Fraser Hughes
                                                                                    algorithm that generates a higher return premium.
schemes, and their expected growth                                                  4
                                                                                      Volatility using the valuation based methodology –                    Director at the European Public
                                                                                    we estimate that ‘real volatility’ is significantly higher
we also believe that attention is                                                   when taking into account significant economic events                    Real Estate Association (EPRA)
firmly focussed on providing a                                                      and low transactions or lack of liquidity.                              based in Brussels, Belgium
                                                                                    5
                                                                                      The market movements experienced by stocks
(more) liquid real estate solution                                                  provide an opportunity to buy into property at levels
                                                                                    that could never be achieved in the direct market.
for this market, and that the listed                                                6
                                                                                      The research also states that for all countries,                      f.hughes@epra.com
sector will play an important role in                                               investors would not have realized long-term portfolio
                                                                                    diversification benefits from allocating funds in both
providing this liquidity. In the next                                               the private and public real estate markets since these
                                                                                    assets are substitutable over the long run!
article we will look at pricing sig-


Figure 4 - Total returns from simulated portfolio compared with
those from direct property and property shares
10,000                                                                                                                                             10,000




 1000                                                                                                                                              1000
                                                                                                                                                            Alex Moss
                                                                                                                                                            Head of Macquarie Global
                                                                                                                                                            Property Securities Analytics
                                                                                                                                                            and Head of European
                                                                                                                                                            Property Research

                                                                                                                                                            alex.moss@macquarie.com
  100                                                                                                                                              100
        1977   1979     1981     1983    1985    1987     1989     1991    1993         1995   1997   1999   2001     2003   2005   2007    2009
Source: Martin Allen / EPRA / IPD




                                                                                                                                                                                               EPRA NEWS / 38 / 2011   25.
                                                                                                      FEATURES




                                                               LEASE ACCOUNTING:
                              MILLENNIUM BUG OR
                                 GAME CHANGER?
                                        On November 08,      We set out the investment thesis that    Boards, this model:
                                        2010, we issued a    lease accounting will trigger cost in-   1) leads to lack of comparability,
                                                             creases and inflated balance sheets      2) disregards relevant information
                                   comprehensive report      in 2013/14, which could trigger com-     about rights and obligations, and
                             called “Lease accounting:       panies to buy back real estate, to       3) does not give any visibility as to
                                  Game changer” on the       optically fix balance sheets provided    the financial liability leaving users
                                                             they have cash pots, steady earnings     touse ‘rule of thumb’ calculations
                                 lease accounting topic,     and a good equity basis, also on the     such as multiplying the annual rent
                                        with the objective   back of low prevailing interest rates.   by six to eight.
                                    to provide generalist    Especially after writing on a com-
                                                             plex topic like lease accounting, one        On August 17, 2010, the Boards
                               investors and our client      continues to think about one’s own       issued a joint Exposure Draft (ED)
                                     base insight on how     assumptions and forecasts. After         following their earlier discussion pa-
                                   earnings and balance      engaging in more discussions with        pers issued in March 2009. The ED
                                                             industry players and seeing interest     sets out the proposal on accounting
                                     sheets of users with    rates increase significantly over the    changes to leases: users of leased
                               large leased asset bases      past four months, we find a need         assets will be required to record
                                  will be impacted, and      to add two words to our thinking of      leases as a right of use (ROA) asset
                                                             lease accounting: “millennium bug”.      and calculate a NPV for all expected
                              to assess how listed real      Hence the title: “Lease accounting:      lease payments in a corresponding
                                estate companies could       Millennium bug or game changer?”         liability.
                               be affected by changing       We will explain this addition in the
                                                             conclusion.                                  The Boards recently met on Feb-
                            tenant behaviour. So what                                                 ruary 15-18 and in an apparent climb
                                    is the situation now?    IASB/FASB have proposed a lease          down have tentatively decided to
                                                             accounting model – operating             remove some of the most controver-
                                                             leases to disappear                      sial elements of the proposed lease
                                                             The IASB/FASB have launched an           accounting.
                                                             unprecedented number of proposals
                                                             for accountancy changes, in a stated         The revised proposal will
                                                             official effort to:                      require all leases to be capitalized
                                                             1) improve existing accounting           with reference to the following:
                                                             standards, and                           1) the revised lease term is defined
                                                             2) bring more convergence to IFRS        as the ‘non cancellable lease’
                                                             and US GAAP.                             term together with any options to
                                                                                                      extend the lease or not to exercise
                                                                Both Boards have long waged a         a right to terminate the lease. This
                                                             war against operating leases, and        is in contrast to the definition in
                                                             for many years the IASB has been         the ED which would have required
                                                             determined to bring operating            ‘the longest possible’ lease term.
                                                             leases on balance sheet. Currently,      2) the boards have tentatively de-
                                                             users of leased assets can structure     cided that lease payments include
                                                             lease agreements to avoid recording      “contingent rentals”, such as yearly
                                                             a lease liability, as the current IFRS   indexation, turnover and usage
                                                             recognises operating (not on bal-        based rents that are ‘reasonably
                                                             ance sheet) and capital leases (on       certain’, payments under “residual
                                                             the balance sheet). According to the     value guarantees” (if damages are



26. EPRA NEWS / 38 / 2011
                                                                                                                                                              Click here for
                                                                                                                                                              contents page.


Chart 1 : Example of how costs                                            3,000                                                                                   40%
will be inflated the first years of                                                                                                                               30%
                                                                          2,500
the lease                                                                                                                                                         20%
                                                                          2,000
Source: RBS estimates                                                                                                                                             10%

                                                                          1,500                                                                                   0%

                                                                                                                                                                  -10%
                                                                          1,000
                                                                                                                                                                  -20%
                                                                            500
                                                                                                                                                                  -30%

                                                                              0                                                                                   -40%
                                                                                      01    02        03       04     05   06    07        08      09       10
                                                                                           New model, amortisation                New model, interest
                                                                                           Old model, rent expenses                   New vs Old in costs (RHS)


done to an asset, they must be                                actual numbers not disclosed by arrangements. In addition, the model
paid for), and “term option penal-                            IASB/FASB), which is a shame in will result in serious distortions such
ties” that are reasonably certain to                          our view.                              as front-ending cost/revenue patterns
be incurred. The estimated rental                                                                    and, for example, companies with
streams using the previous variables                              Indeed, we believe after reading a lower risk profile presenting a
are discounted using the                                      the “comment letter summary” higher lease liability due to having a
    a) incremental borrowing rate of                          released by the IASB/FASB in Janu- lower discount risk. In this and other
a company, or                                                 ary 2011, that most respondents to ways comparability between com-
    b) the rate the lessor charges the                        the exposure draft are supportive panies is not in any way improved,
lessee (i.e. the yield on the asset).                         of a joint effort to develop a single, complexity is increased rather than
3) the boards recognise that there                            comprehensive and converged lease decreased, and information needed
are two types of lease: a finance                             accounting model for both US GAAP is not at hand by preparers. Although
lease and ‘other than finance lease’                          and IFRS. Most respondents to the many comment letters support a
(in effect operating lease). The                              exposure draft supported the recog- change from the status quo, almost
Boards have modified the treatment                            nition of lease obligations. It seems everybody is negative on the ex-
of ‘other than finance leases’ to                             that almost all users already make posure draft. Indeed many believe
give a P&L recognition pattern that                           adjustments to capitalise operating that the proposal simply replaces
is similar to operating leases today.                         leases on the statement of financial one imperfect accounting standard
                                                              position and so they support the with another imperfect accounting
   There was a four-month com-                                new “right-of-use” (RoU) model in standard.
ment period on the exposure draft,                            principle.
which ended on the December 15,                                                                                        The boards should make
2010. The most recent count shows                                While the tentative decisions
that the Boards received 782 com-                             agreed by the board on February 17                       clear that ‘other than finance
ment letters. About half of these                             go some way towards simplifying
comments come from the US, and                                the proposed lease accounting there                      leases’ are in fact what
roughly 55% of them come from                                 remain fundamental flaws. Most
preparers (companies who actually                             importantly the accounting does                          we all know them to be,
apply the accountancy rules), and                             not reflect the business of property
only a negligible numbers from                                companies - that are not financing                       operating leases.
actual users, i.e. investors and                              companies- and lessees who do not
analysts (we estimate less then 5%,                           view operating leases as finance
                                                                                                                       Lessees and their P&Ls and
Chart 2 : Example of industries affected – median increase in
                                                                                                                       balance sheets – the essential
interest-bearing debt
                                                                                                                       flaws in lease accounting
                                                                                                                       Rental payments will be replaced by
70%
                                                                                                                       interest and amortisation. The lease
60%                                                                                                                    accounting model triggers an upfront
50%                                                                                                                    cost pattern, with costs in the first
40%                                                                                                                    years of the lease significantly higher
                                                                                                                       (on a ten-year lease, the effect can be
30%
                                                                                                                       up to 25% higher cost in year 1), and
20%                                                                                                                    last years significantly lower.
10%

  0%
                                                                                                                           Users with large leased asset
              Retail and     Professional      Other     Transportation   Wholesale    Accomodation        Average     bases will see pre-tax costs increase
                Trade          Service        Services        and          Trade
                                                          Warehousing                                                  10-25% in 2013/14 under the old >
Source: PwC, Rotterdam School of Management




                                                                                                                                                                         EPRA NEWS / 38 / 2011   27.
                       The model is flawed as subjectivity reigns,
                      comparability between companies is not in
                      any way improved, complexity is increased
                         rather than decreased, and information
                             needed is not at hand by preparers.

                            Table : Why lease accounting is flawed,                                                     proposal of the Boards. Following
                            and could change tenant behaviour                                                           their meetings on February 16-17 the
                                                                                                                        Boards have indicated that ‘other
                             Step	1:	Where	we	in	theory	agree,	albeit	we	preferred	the	previous	model                   than finance leases’ will have a
                             Change:	                                                                                   P&L pattern similar to operating
                             - record operating leases on the balance sheet, bring all leases on the balance sheet      leases today i.e. by straight lin-
                             - no “grandfathering” of leases, meaning leases signed before new IFRS rule will have      ing the lease liability/recevable.
                               to be capitalised as well                                                                In either case, the front-ending
                             Quantitative	consequence:                                                                  revenue/cost pattern remains for
                             - debt increase average 58% (median 8%)                                                    finance leases. Balance sheets and
                             - costs increase 10-25% in year 1 due to upfront cost pattern under the old proposal.      net debt/EBITDA multiples will be
                             The current proposal says that for operating leases costs can be straight lined, in line   inflated on our estimates. For some
                             with operating leases today. We are happy to see this change.                              industries, the effects are severe.
                             - in environment with rising rents/inflation, costs will be permanently overstated         PwC estimates that the median in-
                             Step	2:	Examples	of	where	the	IASB/FASB	have	taken	it	too	far                              crease in reported interest-bearing
                             Methodology	used	to	calculate	the	NPV	of	rental	streams:	                                  debt for retailers is 64%, and 28%
                             - discount rate used                                                                       for professional services.
                               as there will be a lack on info on yields on buildings, the incremental borrowing
                               cost is used. This first widely varies between companies, but inflates the NPV as           Our reservation on the model is
                               incremental borrowing cost is lower then property yields.                                that lessors and lessees will need
                             - contingent rentals included                                                              to account for the leases as financ-
                               The Boards have tentatively decided to include only contingent rents based on            ing arrangements (with an interest
                               rates/index, reasonably assured contingent rents, payments which lack                    charge) even though investment
                               commercial substance.                                                                    property companies do not see
                             - lease term with renewal options                                                          themselves as financing companies
                               the Boards have tentatively decided to include only the non-cancellable lease            and lessees do not see their operat-
                               period together with any options where there is an economic incentive to extend          ing’ lease payments as finance
                               the lease or not to exercise a right to terminate the lease.                             costs but operating costs. The
                             Consequence:	                                                                              boards should recognise that ‘other
                             - debt increases more than stakeholders will anticipate based on the “6-8 times            than finance leases’ are what most
                               time rule of thumb”                                                                      us know to be- operating leases. It
                             - balance sheets and profit and loss accounts will be more complex. The “new P&L”          is not immediately clear whether
                               doesn’t reflect underlying profitability, and does not improve user friendliness.        the tentative decisions to present in
                             - comparability between companies does not improve, but rather diminishes                  the P&L ‘other than finance leases’
                             Step	3:	Impact	on	different	industries                                                     using a pattern that is in line with
                             Retail, transport, wholesale trade, leisure, telecoms, airlines and banking sector will    current operating leases suggests
                             be hardest hit as these are industries most reliant on heavy leasing.                      that no interest will be recognised.
                             Step	4:	Tenant	behaviour?                                                                  We would welcome this change.
                             Scenario	1:	The	millennium	bug
                             Investors will get used to new reality. Underlying cash flow doesn’t change, except for    Lessees and stakeholders
                             some investments in IT, ERP systems and accountancy, gathering information on leases       What if Sir David Tweedie, current
                             Scenario	2:	The	game	changer                                                               head of the IASB, decides to retire
                             Investors will continue to focus on PE ratio’s and stated balance sheet metrics (net       in June 2011 with a big bang: lease
                             debt/EBITDA), and the complexity and lack of comparison between companies will             accounting according to the last
                             not be tackled by investors. Hence, companies will try to “cook the books”, by for         published exposure draft? In the
                             example going for outright property purchases.                                             US, the FASB can enforce any new
                             Source: RBS estimates                                                                      rule, whereas in Europe, the EC has



28. EPRA NEWS / 38 / 2011
                                                                                                                   Click here for
                                                                                                                   contents page.




to sign off on any new IFRS before it     will react negatively, because lease       words, we need to bear in mind
will be voted in the European Par-        liabilities are higher than the “six-to-   we don’t live in a perfect world
liament (and there is no history yet      eight times rent rule of thumb”, but       with perfect information, something
of proposals that are voted against,      also that PE ratios are going to be        that the lease accounting proposal
and probably lease accounting will        elevated. In ten years time, nobody        seems to assume when coming up
not be the first). Having established     is going to remember the old IFRS          with such a complex proposal.
that balance sheets are going to be       and investors might focus on the PE
inflated and costs in the first years     multiple at that time.                         We believe we need to make a
of the adaptation (so from 2013/14)                                                  distinction between retailers, and
are significantly going to be inflated,   There are two scenario’s possible.         users of office space. Retailers will
next we need to make a call on how        Scenario 1: The millennium bug sce-        no doubt be the industry hardest
the tenant landscape will look like       nario, would say that we shouldn’t         hit in terms of median increase in
in four years time.                       bother too much, given the Boards          reported interest-bearing debt, 64%
                                          have mitigated the most controver-         on median numbers (vs. average
   We said that debt will increase        sial elements of the lease account-        number of 8%), according to a PwC
on average 58%. We first believe          ing on contingent rents and leases.        / Rotterdam School of Management
banks will not withdraw any financ-       The significant amount of negative         study. Early December 2010, the
ing. Lenders already take lease           feedback on the exposure draft sug-        EPRA requested PwC to conduct
obligations into consideration, and       gests that companies may present           interviews with selected retailers, to
so do credit rating agencies. In the      two P&Ls, one old one, and one new         discuss in detail the impact of the
end, cash flow creates capacity to        one. The old one is an almost perfect      more complex areas of the proposed
repay loans and support interest          representation of underlying earn-         guidance.
payments. The proposal is not (in         ings, and hence, share prices won’t
theory) affecting cash flows.             change that much. It’s completely             In our view, key takeaways are
                                          human to be afraid of new, radical         that:
   We do not foresee a large shift        changes, but in time, and provided         1) retailers do not view property
to shorter lease contracts of fewer       that there is good investor education      leases as a financing arrangement
renewal options. If companies want        (and today that is not the case), the      but a function of selling space and
to engage in “structuring”, the only      impact could be limited.                   operational and cost flexibility to
way to decrease the lease liability is                                               their retail formulas,
to engage in leases without renewal          Scenario 2: This is much more           2) many properties leased are high-
options. This creates rent risk on        daunting, the game changer sce-            end streets and malls, and not avail-
renewal period. Also, shorter lease       nario. In this scenario, investors         able for purchase,
durations leave tenants exposed to        will not comprehend the sudden
rent risk, but also risk that the ten-    debt burden on companies’ balance              Buying real estate could be ideal
ant loses out on valuable real estate.    sheets and hit on costs, and will          for companies with,
                                          discount those companies where             1) substantial real estate holdings,
    We could say lease accounting         the lease liability is higher then         2) real estate that is strategic for the
will give changes to P&L and balance      previously anticipated. In the end,        operations of the business, and/or
sheet, but all non-cash related. Why      the stock market is about percep-          strategically placed, and
bother? We have to bear in mind           tion. Companies are broken up into         3) sufficient capital.
that IFRS is currently obligatory only    various pieces because the different
for listed companies. Listed compa-       divisions are separately worth more            As retailers occupy space in
nies have shareholders and a daily        than the combination. Investors            shopping malls and high streets,
share price that will vary depending      have a one-year time frame, and in-        space not often for sale, leasing is
on how the sentiment is. We believe       vestment decisions are made based          the only option and buying property
there is a risk that share prices         on short-term thinking. In other           is not feasible. The decision will >



                                                                                                                                EPRA NEWS / 38 / 2011   29.
   Chart 3 :
   Most likely
   decision making
   framework for
   companies when
   it comes to buy-
   ing real estate,
   in our view



                            Source: RBS estimates



                            be possible though for office build-    More optimistic about the future             The last published time table by
                            ings. Buying real estate could be       Most of the comments we encoun-          both Boards states that a final stand-
                            jump-started by the current low cost    tered to the exposure draft (and 782     ard is expected by mid 2011. Given
                            of capital, very good state of bal-     comment letters is a lot) are nega-      Sir Tweedie’s long held ambition
                            ance sheets (net debt/EBITDA ratio’s    tive on the way the lease liability      to see operating leases on balance
                            are projected to be the lowest since    is calculated. A lot of criticism has    sheet and his prominent role as IASB
                            2003 in 2012/13). Also, the lease       been put that both Boards have           chairman, his retirement in June
                            accounting introduces a lot of debt     been emphasising meeting specific        will no doubt put pressure on the
                            (or atleast the appearance of debt)     project time-lines, instead of provid-   IASB to reach this timeline although
                            on the balance sheet. Buying assets     ing a high quality standard. They        the massive negative criticism and
                            can be done with cash, backed by        communicated that significant            comments from the board suggest
                            equity. This creates a ‘cleaner’ bal-   changes are needed to the ED if          that an extension may also be
                            ance sheet, at least on appearance.     the Boards are to proceed with a         likely. Indeed the FASB has publicly
                                                                    comprehensive standard on leases.        stated it “may look into postponing
                                                                                                             some decisions, given the negative
        The board’s overriding aim                                      The recent decision to simplify      feedback”.
                                                                    the accounting for contingent rentals
            should be to ensure the                                 and renewal options reduces some             We understand the Boards are
                                                                    of the pain and indicates that the       determined to go ahead with this
        quality of accounting above                                 Boards may be willing to make fur-       standard, however they should not
                                                                    ther adjustments to address some of      lose sight of the serious concerns
          timelines and other goals                                 the concerns raised in the comment       prepares and users have about the
                                                                    letters. Furthermore the Boards have     proposed accounting. The Boards’
                                                                    indicated that further field-testing     overriding aim should be to ensure
                               The following chart illustrates      will be performed on elements of         the quality of accounting above
                            the way in which we think compa-        the proposals (one of the key recom-     timelines and goals. Prepares and
                            nies will make a decision when it       mendations of respondents) assess-       users have legitimate concerns
                            comes to buying real estate.            ing the cost/benefit of changes that     that the accounting does not reflect
                                                                    the board may make in the final          their business and that it will lead
                                                                    standard.                                to serious distortions and every
                                                                                                             possible means should be made to
                                                                                                             reflect this. In the end, accountancy
                                                                    Jan Willem is a property equity          is a tool for all stakeholders to as-
                                                                    analyst with regional specialisation     sess the financial performance of a
                                                                    France, the Nordics and Italy.           company.
                                                                    He joined the Property team at
                                                                    ABN AMRO in 2006, which was
                                                                    transferred to the Royal Bank of
                                                                    Scotland following the merger in
                                                                    2008. He holds a Master of Science
                                                                    in Finance & Investments from the
                                                                    Rotterdam School of Management.

                                 Jan Willem van Kranenburg          jan.j.willem.van.kranenburg
                                 Property Equity Analyst            @rbs.com




30. EPRA NEWS / 38 / 2011
FEATURES                                                                                           Click here for
                                                                                                   contents page.




EPRA’s UNDERLYING
GEOGRAPHICAL EXPOSURE
AND SUCCESS OF DIVERSIFICATION


           In a time when     Although we recognise the need to         companies with concentrated asset
         geographical and     assess the micro-economic environ-        exposure have underperformed di-
                              ment of assets to be able to make a       versified companies in the long run.
 sovereign exposure is in     balanced judgment, we believe that
   the spotlight of equity    on an EPRA-wide level we can only             The EPRA index weights of coun-
      and debt markets, it    realistically discriminate to the level   tries sometimes differ substantially
                              of countries and asset classes. We        from the underlying asset exposure
   is important to have a     therefore have categorised all assets     in that country, a mismatch caused
  detailed understanding      (around EUR 230 billion) owned by         mainly by assets not domestically
       of the geographical    EPRA member companies by seg-             owned, effects of free-float capped
                              ments and by country of location.         index weighting, leverage on real
    asset exposure of the                                               estate companies’ balance sheets
  companies that are the          One of the key findings is that       and trading discounts to Net Asset
        constituents of the   the country weightings in the EPRA        Value (NAV). We have compared
                              index (as defined by the cumulative       the distribution of assets owned by
       FTSE EPRA/NAREIT       weight of companies listed in one         all EPRA index members with their
             Europe index.    country) sometimes substantially          countries’ respective market cap
                              differs from the relative amount          weight in the index to see where
                              of assets held by EPRA member             surprises may be found.
                              companies in that country. In
                              other words, the underlying or ‘see-         Companies listed in the UK,
                              through’ exposure of companies is         France and the Netherlands are the
                              different from country weights of         main weights of the index. But look-
                              the EPRA index. Also, we find that        ing at the economic exposure an >



                                                                                                               EPRA NEWS / 38 / 2011   31.
                                 Table : EPRA vs Assets     COUNTRY              EPRA MKT             ASSET WEIGHT         ABS
                                                                                 CAP RATE             OF COUNTRY           DIFFERENCE
                                                            UK                   34.3%                25.4%                9.0%
                                                            FRA                  29.4%                25.7%                3.7%
                                                            NETH                 10.8%                3.5%                 7.3%
                                                            SWIT                 6.5%                 5.3%                 1.2%
                                                            SWED                 6.1%                 7.4%                 -1.2%
                                                            GER                  3.6%                 11.7%                -8.1%
                                                            BELG                 3.5%                 3.6%                 -0.1%
                                                            OEST                 1.9%                 1.4%                 0.5%
                                                            FIN                  1.5%                 2.3%                 -0.8%
                                                            ITA                  0.9%                 5.0%                 -4.1%
                                                            NOR                  0.7%                 1.1%                 -0.5%
                                                            SP                   0.4%                 3.6%                 -3.2%
                                                            GRC                  0.3%                 1.0%                 -0.7%
                                                            Total	     	         100%	    	           96.9%	   	           3.1%


          We would qualify the EPRA                       investor in the index faces, it          lower free-float weightings. The
                                                          becomes clear that the UK and            segment distribution in Germany is
              index as a conservative                     The Netherlands have a far higher        also markedly different from that
                                                          weighting in the index than the rela-    of the other countries, as 57% of
              index, with a defensive                     tive share of total assets owned by      assets held in Germany are residen-
                                                          EPRA members in those countries.         tial in nature vs. 12% of total assets
              spread of assets mostly                     Therefore, the economic relevance        for the EPRA average. The higher
                                                          of the UK and The Netherlands for        leverage on the residential portfolios
          concentrated in the higher                      investors in the EPRA index is less      explains a large part of the low Ger-
                                                          than would be expected based on          man weight in the EPRA. Other fac-
           rated countries of Europe.                     the market cap weighting. Reasons        tors are the immaturity of the Ger-
                                                          for this are for example high free-      man listed real estate market and the
                                                          float weightings for the UK and          presence of the German Open Ended
                                                          Dutch listed names, as well as a         Funds (GOEFs) that hold a significant
                                                          propensity of the Dutch listed com-      portion of the German CRE market.
                                                          panies to hold assets outside of The
                                                          Netherlands (i.e. Eurocommercial             Looking at the percentage of
                                                          Properties and Corio)                    assets owned by companies in the
                                                                                                   country of listing as a measure of
   Figure 1 - Sector breakdown                            The weight flip-side                     geographical dispersion, then the
                                                          On the other hand, the exposure to       most international companies are
                                      l Industrial 7%     Italy, Germany and Spain is higher       listed in the Netherlands (27% of as-
                                      l Residential 12%   than we expected on the basis of         sets domestically owned) and Aus-
                                      l Other 7.7%        the EPRA weights. In the case of         tria (33%), followed by France (73%).
                                      l Office 36%        Italy and Spain, the reason for the      On average, 20% of EPRA compa-
                                      l Retail 37%        discrepancy is mostly due to the         nies’ assets are located outside the
                                                          lack of locally listed companies         listing country.
                                                          and their balance sheet issues,
                                                          combined with the fact that much         Peripheral exposure of the EPRA
                                                          of the Spanish and Italian asset base    index remains very low.
                                                          is held by foreign investors. For both   When considering the sovereign
   Source: RBS/EPRA                                       countries, 55% of assets included in     risk EPRA member companies are
                                                          the EPRA index are owned by foreign      exposed to, we can quickly forget
                                                          listed companies.                        about Greece, and Portugal. The
                                                                                                   combined asset exposure of com-
                                                             Germany is a more special case.       panies making up the EPRA is only
                                                          The country asset share vs. the          1%. Corrected for the exposure of
                                                          EPRA weighting of its listed com-        its domestic players (illiquid com-
                                                          panies has the highest discrepancy       panies and facing serious financing
                                                          at 8%. Several factors contribute        issues), Spain makes up a modest
                                                          to this, including high leverage         1.9% of total EPRA-owned assets,
                                                          of German listed companies and           instead of 3.6%; and Italy, corrected



32. EPRA NEWS / 38 / 2011
                                                                                                               Click here for
                                                                                                               contents page.




for domestic exposure, makes up
2.7%, instead of 5%. There is no
exposure to Ireland. Therefore,
exposure to Portugal, Italy, Ireland,
Greece and Spain remains low (10%
including domestic exposure and
5% excluding).

   On the whole, the exposure the
EPRA index offers does not equal
an evenly distributed ‘European
exposure’ as the core European
countries – France, UK, Germany,
Nordics, Switzerland, Belgium,
Netherlands and Austria – contain
around 90% of total assets owned.        with 73% of local assets held in          cap players like Unibail-Rodamco,
We would qualify the EPRA index          retail properties. In absolute terms      Klepierre and Foncière des Regions
as a conservative index, with a          the largest asset classes are UK retail   have expanded more internationally
defensive spread of assets mostly        property at EUR 26 billion, closely       and hold 74% of their assets domes-
concentrated in the higher rated         followed by French retail and offices     tically. On the company level, we
countries of Europe.                     at EUR 24 billion each, each making       find that more than half or 48 out of
                                         up approx. 10% of total asset held        the 82 companies in the EPRA index
Office and retail properties make        by EPRA companies that add up to          have assets located just in their
up 73% of the EPRA assets,               around EUR 230 billion.                   country of listing. Significant among
evenly split                                                                       these companies are the UK and
Another interesting aspect of explor-    How diversified is the real estate        German listed companies. Out of 30
ing the segmentation of the index is     sector and where is diversification       UK listed companies, 24 have assets
the split between the different real     more popular?                             only in the UK and for the German
estate asset classes. For the whole      In general we believe institutional       companies, seven out of eight only
EPRA universe, the asset segmenta-       investors have a preference for           have assets in Germany. In terms of
tion is 37% retail, 36% office, 7% in-   focused exposure when investing           asset class diversification, there are
dustrial/logistics, 12% in residential   in real estate stocks. We therefore       fewer companies just focused on
assets and 8% in other real estate.      would expect companies that have          one real estate segment: just 19 out
The other asset class refers to the      the ability to invest in volume           of the 82 companies are focused on
more ‘exotic’ real estate that among     domestically to do so. This would         one segment.
others contains nursing homes,           then naturally apply to French
leisure, parking and restaurants.        and UK listed companies, as these             We constructed a ranking of the
                                         countries house the largest               EPRA index member companies to
    Countries that show large devia-     investment markets.                       measure asset concentration. We
tions from the average are Germany                                                 apply a widely used concentration
with 57% of German assets invested          As can be expected, the large,         measurement tool called the ‘Herfin-
in residential real estate and Swit-     more liquid investment market in          dahl-index’ to construct a ranking of
zerland and Belgium where respec-        the UK has led companies to retain        asset concentration amongst EPRA
tively 63% and 60% of local assets       more domestic exposure (92% of            member companies. In this calcula-
are invested in office real estate.      asset owned by UK listed compa-           tion we consider asset class (office,
The highest concentration in retail      nies are located in the UK), while        retail, etc) and country diversifica-
assets is found in The Netherlands       French companies, led by the large        tion as equally “different” and >



                                                                                                                            EPRA NEWS / 38 / 2011   33.
                            Figure 2 - Performance high to low diversification
                            400

                            350

                            300

                            250

                            200

                            150

                            100

                              50

                                0


                            Source: RBS/EPRA
                                                        concentrated exposure                           diversified exposure
                                                               each asset class per country ranks as     share price returns of highly diverse
                                                               a separate category. This means that      and highly focused companies.
                                                               a single asset class company, with        When comparing two baskets of ten
                                                               assets in just one country scores a       companies, with the highest and
                                                               1. Wereldhave is the most diversified     lowest concentration coefficients,
                                                               company in the EPRA and scores            we find an interesting fact. The
                                                               0.14. The average EPRA index score        basket of more diversified compa-
                                                               for all companies is 0.52.                nies has shown significant price
                                                                                                         outperformance over the past
                                                                   For the UK listed companies the       ten years.
          We would qualify the EPRA                            average diversification measure
                                                               stands at 0.51, indicating substan-           The price return of the more
              index as a conservative                          tial segment diversification in the       diversified companies (average
                                                               absence of geographical diversifica-      score of 0.21) was 83% or 6.3% p.a.,
              index, with a defensive                          tion. For German listed companies         outperforming the basket of least
                                                               this number averages at 0.81, indicat-    diversified companies (average score
              spread of assets mostly                          ing a highly concentrated segment         of 0.92) that showed a 4.1% price
                                                               and geographical exposure, namely         return p.a. Part of the outperform-
          concentrated in the higher                           in German residential real estate.        ance was caused by the fact that
                                                               French and Dutch listed companies         the top ten of the more diversified
           rated countries of Europe.                          follow with average scores of 0.46        companies includes some of the
                                                               and 0.25 respectively.                    most successful real estate compa-
                                                                                                         nies over the past decade including
                                                                  A simple test of the success of        Unibail-Rodamco, Klepierre and
                                                               diversification or concentration of       Foncière des Regions.
                                                               asset exposure is comparing the



                                                                                                         Jaap Kuin is a real estate equity
                                                                                                         analyst covering the Dutch and Bel-
                                                                                                         gian property sector. He joined the
                                                                                                         RBS Real Estate team in Amsterdam
                                                                                                         in 2008. Previously he worked for
                                                                                                         Lehman Brothers in London. Kuin
                                                                                                         holds a Masters degree in Financial
                                                                                                         Economics from Erasmus University
                                                                                                         in Rotterdam.

                                                                                                         jaap.kuin@rbs.com




34. EPRA NEWS / 38 / 2011
 FEATURES                                                                                              Click here for
                                                                                                       contents page.




LISTED PROPERTY AND AIFMD
– IN OR OUT?




     After a year and a half      The preamble of AIFMD suggests           management industry which was
          of intense debates,     that its scope of application is con-    only partially regulated until now.
                                  fined to entities managing AIF as a      Asset Managers not previously
       the European finance       regular business (AIFM), regardless      affected will need to procure for a
      ministers have agreed       of whether the AIF is internally or      regulatory capital of at least EUR
              on a text for the   externally managed or of whether         125,000 (EUR 300,000 in the case
                                  it is listed or not. Hence, the scope    of an internally managed AIF).
      Alternative Investment      of application of AIFMD is rather        Even small managers managing
   Fund Managers Directive        broad. From the legal perspective        small exempt funds will face reg-
         (AIFMD) which was        this raises the concern, that the        istration and exhaustive reporting
                                  definition of the AIF could capture      requirements.
  adopted by the European         substantially all listed property
   Parliament on November         companies, including REITs. Such             According to the AIFMD, asset
 11, 2010. The Directive will     an interpretation would imply            managers shall provide periodic re-
                                  considerable momentum of risk            porting to national regulators includ-
affect any alternative asset      that significant damages be caused       ing details of illiquid assets, lever-
  manager wherever in the         to listed property companies and of      age and risk management methods.
  world it is based, seeking      undermining the efficient function-      Hence, managers’ processes as well
                                  ing of the European listed real estate   as internal and external reporting
         to raise institutional   sector as whole. Also, investors may     to investors and regulators across
            capital in Europe.    be confused as to clearly distin-        a wide range of business areas will
                                  guishable product types of regularly     require considerable enhancement.
                                  traded stock and funds.                  Under the AIFMD, risk management
                                                                           shall be separated from other units
                                  What is new under AIFMD?                 and act on the basis of a sound
                                  AIFMD introduces a substantially         risk management policy. While the
                                  new legal framework for the asset        precise scope of depository’s >



                                                                                                                    EPRA NEWS / 38 / 2011   35.
                            liability remains to be agreed in the    internal management, indefinite           business plan, risk profiles, funding
                            Level 2 implementing measures,           life, constituted with capital divided    rules and transparency are already
                            the range of responsibilities of cus-    into tradable securities. Activities of   binding and enforceable on the
                            todians and depositories has been        the European listed property sector       listed companies under the existing
                            significantly increased.                 have been embedded in a compre-           European legislation. All relevant
                                                                     hensive legal framework long before       information of listed entities is to be
                                In addition, AIFM will need to       the first debate on the regulatory        published and made available to the
                            create a remuneration policy which       scheme of fund managers started.          regulatory authorities by mandatory
                            establishes adequate remuneration                                                  law (e.g. MiFID, Transparency Direc-
                            structures. The implementation of            According to the current Eu-          tive and Market abuse Directive).
                            a formal liquidity process, annual       ropean and national legislation,          The latter grants comprehensive pro-
                            reports and extensive requirements       listed companies are subject to the       tection for private and institutional
                            of disclosure to investors are the key   rigorous regulatory regime of public      investors.
                            challenges to be managed by AIFM         markets which allows them to ac-
                                                                                                                   According to the Prospectus Di-
                                                                                                               rective 2003/71/EC, listed companies
     Such an interpretation would imply considerable                                                           are required to publish a prospectus
                                                                                                               in case of securities being offered
         momentum of risk that significant damages                                                             to the public or admitted to trading.
                                                                                                               Directive 2004/39/EC on markets in
          be caused to listed property companies and                                                           financial instruments establishes
                                                                                                               wide-ranging organisational re-
       of undermining the efficient functioning of the                                                         quirements for investment firms
                                                                                                               performing investment services and
          European listed real estate sector as whole.                                                         activities, reporting requirements in
                                                                                                               respect of transactions in financial
                                                                                                               instruments and transparency
                            until 2013, when the AIMFD is likely     cess new capital through markets          requirements in respect of transac-
                            to come into force in the EU. AIFMD      where shares can be traded and            tions in shares taking place on regu-
                            represents a significant alteration to   new capital can be raised publicly        lated markets. These provisions are
                            the business environment for the         through public offering procedures.       supplemented by additional require-
                            global asset management industry,        Consequently, the very nature of list-    ments of the Market Abuse Directive
                            subjecting alternative funds and         ed companies is very different from       2003/6/EC stipulating provisions on
                            their managers evidently to the          the unlisted real estate fund sector,     misuse of information by issuers
                            regulatory net. So far, one may agree    where the share capital is marketed       and transaction reporting.
                            that there is some legitimacy to         as fund units through distribution
                            change the world of fund managers.       agents like placement agents.                 Furthermore, the European legis-
                                                                                                               lator has set up a solid framework
                            Listed property - the unique             Regulation framework of listed            of provisions, which provide for the
                            nature of the segment                    companies                                 protection of investors from poten-
                            The listed property sector can be        The sector of listed property             tial conflicts of interest of certain
                            divided into two main players - or-      companies is in its entirety suf-         entities whose shares are listed
                            dinary listed property companies         ficiently regulated with respect to all   in a regulated market (Directive
                            and listed REITs. In operational         important aspects of transparency         2007/44/EC on procedural rules and
                            terms, there is very little difference   and organisational matters. Require-      evaluation criteria for assessment of
                            between these two vehicles. Both         ments regarding the management            acquisitions and increase of hold-
                            are regular listed companies with        qualifications, minimum equity,           ings in the financial sector; Direc-



36. EPRA NEWS / 38 / 2011
                                                                                                            Click here for
                                                                                                            contents page.




                                                                                 AIFMD represents a
                                                                                 significant alteration to
                                                                                 the business environment
                                                                                 for the global asset
                                                                                 management industry.
                                                                                 Prospectus Directive (i.e. limited
                                                                                 disclosure obligations to investors:
                                                                                 article 23.3 AIFMD; grandfathering
                                                                                 provisions with regard to marketing
                                                                                 requirements of an EU AIF: article
                                                                                 59.2 AIFMD). Unfortunately, how-
                                                                                 ever, no comprehensive transitional
tive 2004/25/EC on takeover bids;       tion of existing legislation, create     provisions comparable to those
Directive 2003/125/EC regarding fair    inappropriate compliance burden          of closed end funds have been
presentation of investment recom-       and generate additional costs and        included in the Directive.
mendations and the disclosure of        expenses with no discernible
conflicts of interest; Commission’s     benefit, thus impeding the efficient         Looking closer at the wording
Regulation (EC) 1287/2006 on record     functioning of the public market.        of the Directive shows, feasible
keeping obligations for investment                                               solutions suitable to exclude
firms, transaction reporting, market    AIFMD scope: carve-outs for the          listed companies from the scope the
transparency, admission of financial    listed sector?                           AIFMD seem to be possible. How-
instruments to trading). In addition,   Unsurprisingly, during the draft-        ever, the wording of the Directive
the Regulation 1606/2002/EC obliges     ing process the stakeholders have        allows a wide margin of discretion
listed companies to apply the Inter-    repeatedly pointed out that there        as to applicable exclusions, which
national Financial Reporting Stand-     is no justification at all to include    inevitably requires not only clarifi-
ards (IFRS) for consolidated finan-     the listed sector in the scope of        cation within the upcoming Level 2
cial reports and Directive 2006/43/     the AIFMD. However, the European         implementing measures but also on
EC requires financial reports to        legislator in defence has opted for      the national level during the imple-
be audited by authorised external       a pragmatic approach, by deliber-        mentation process.
auditors.                               ately leaving open the issue of listed
                                        companies and defining the scope         (i) Exemption 1: Definition
    The above said provides conclu-     parameters in broad terms.               “Defined investment policy”
sive evidence that there is neither                                              AIFMD applies to AIFM, which
justification nor need to subject          Nevertheless, EU legislator has,      manage one or more alternative
listed real estate companies to any     nonetheless recognised the very          investment funds (AIF). So, what
kind of additional authorisation,       special nature of listed companies       is a fund? Under the Directive, AIF
ongoing management or transpar-         by introducing, albeit too few, ex-      means any collective investment
ency requirements as stipulated by      emptions for AIF’s whose securities      undertaking (including investment
the relevant AIFMD provisions. As       are offered to the public and who        compartments thereof), not being an
a matter of fact, such requirements     are therefore required to publish a      UCITS raising capital from a number
are producing unnecessary duplica-      prospectus in accordance with the        of investors, with a view to >



                                                                                                                         EPRA NEWS / 38 / 2011   37.
                       The AIFM Directive contains several                                                  excluding normal operating compa-
                                                                                                            nies from the scope of the Directive,
                carve-outs which may be taken as starting                                                   thus referring evidently only to those
                                                                                                            investment policies which are com-
           points to help develop appropriate approaches                                                    monly drafted and implemented
                                                                                                            by the asset management industry.
            for the exclusion of the listed companies from                                                  Whereas in a case of a (typically
                                                                                                            external managed) closed-end or
                 the scope of AIFMD on the national level.                                                  open-end fund, the fund manager
                                                                                                            executes a pre-defined investment
                                                                                                            strategy, which is given to investors
                            investing it in accordance with a      kind of constitutional document set      as part of their decision to invest in
                            defined investment policy for the      up by the company may be falling         a company and which requires the
                            benefit of those investors.            under that definition. Any property      approval of investors or regulatory
                                                                   or other holding company (regard-        authority in order for that policy
                               Hence, the definition of an AIF     less of the industry sector in which     to be changed, the case of a listed
                            requires that the managed invest-      it operates), whose activities include   company is substantially different.
                            ment fund applies a “defined invest-   investment, may therefore be said
                            ment policy” for the benefit of the    to implement a “defined investment           The statutes of a (typically
                            investors. Unfortunately the AIFMD     policy”, although the only concern       internally managed) listed com-
                            does not contain any definition of     of such constitutional document          pany with own staff and business
                            the term “defined investment poli-     would be to determine the broad          infrastructure resources are not
                            cy”. This implies the risk that any    range of allowed business strategy       established for an agreed limited
                                                                   as will be further determined and        period of life as with ordinary in-
                                                                   revised by the management of the         stitutional funds. Depending on the
                                                                   company as for any regular corpo-        business purpose and subjective
                                                                   rate entity.                             interpretation of strategy by such in-
                                                                                                            dividuals as board members, MDs,
                                                                       However, these uncertainties in      CEOs, CFOs etc, a listed company
                                                                   interpretation should not prevent        can change the company’s strategy
                                                                   from making appropriate distinc-         substantially. The business purpose
                                                                   tions: A “defined investment policy”     of a listed company is no different
                                                                   of a fund is clearly distinguishable     from any other industrial company.
                                                                   from a statutory purpose where           In contrast, managers of “real” funds
                                                                   the actual ongoing business strat-       have no or very limited discretion to
                                                                   egy will be constantly interpreted       change direction since they are act-
                                                                   and determined by the board and          ing on the basis of narrowly defined
                                                                   management of the company as for         investment strategy documented in
                                                                   a regular corporate entity. This may     the prospectus.
                                                                   or may be not changed from year to
                                                                   year. It may result in entering new          The above said should be used
                                                                   markets, M&A activities, rights issu-    to excluding listed companies
                                                                   ance, any capital markets borrowing      from the scope of the AIFMD. The
                                                                   whatsoever.                              structure of an investment policy
                                                                                                            set up by a classical closed-end
                                                                      The criterion of a “defined in-       fund is significantly different from
                                                                   vestment policy” therefore aims at       the rather general business purpose



38. EPRA NEWS / 38 / 2011
                                                                                                                   Click here for
                                                                                                                   contents page.




                               Uwe Stoschek joined Pricewa-                                   Alexandra Pobortscha is a
                               terhouseCoopers (PwC) in 1994.                                 Senior Consultant in PwC’s
                               Uwe is PwC’s Global Real Estate                                Regulatory Consulting
                               Tax Leader and Real Estate                                     Team.
                               Industry Leader EMEA. He is a
                               member of the EPRA (European                                   alexandra.pobortscha@
                               Public Real Estate Association)                                de.pwc.com
                               Tax Board.

                               uwe.stoschek@de.pwc.com

contained in the articles of as-           in the company’s annual report or         A conclusion required
sociation of a listed company. It is       other official documents.                 The shares of listed property com-
therefore desirable that a conceptual          While the provision clearly refers    panies are bought and sold at stock
clarification will be introduced by        to listed companies, article 2 (2)        exchanges, by investors all over the
the European legislator in the Level       also requires that the holding com-       globe. If the shares of a listed property
2 implementing measures, where             pany carries out a business strategy      company were subject to additional
the specific types of AIFM have to         through its subsidiaries, associated      supervisory requirements, such as
be determined by the ESMA.                 companies or its participations.          imposed by the AIFMD, this could
                                           Strangely, this implies that compa-       result in consequences on the sector,
(ii) Exemption 2:                          nies holding real estate assets direct-   the business itself and the efficient
Holding Companies                          ly do not qualify for this exemption.     functioning of the public market.
Some corporate forms of listed             Moreover, it is questionable in how       Investors would be confused since a
companies may be able to qualify           far the term “business strategy” can      clear profile of a fund product would
for a “holding company” exemption          be construed as any kind of real          disappear.
in the AIFM Directive. Article 2 (2)       estate investment activity. Clearly,
of the AIFMD stipulates, that the          listed property companies have a              The inclusion of the listed sector
provisions of the new regulation are       business strategy, or would anybody       within the scope of the AIFMD has
not applicable to holding compa-           disagree? However, while being            been widely criticised by stakeholders
nies. Article 4 (1) (r) of the Directive   desirable for purposes of our analy-      since existing legal provisions provide
defines holding companies as “Com-         sis, such an understanding would          a sufficient regulatory framework
panies with shareholdings in one           rather lead to a general exemption,       to address the concerns of investors
or more other companies the com-           which was not intended by the             who participate in companies whose
mercial purpose of which is to carry       legislator as the Recitals indicate.      shares are traded publicly. The AIFM
out a business strategy or strategies                                                Directive contains several carve-outs
through its subsidiaries, associated          Although there are substantial         which may be taken as starting
companies or participations in or-         arguments that certain listed             points to help develop appropriate
der to contribute to their long-term       companies could comply with the           approaches for the exclusion of the
value and which is either: (i) a com-      prerequisites set by article 2 (2)        listed companies from the scope
pany whose shares are admitted             AIFMD, the scope of this provision is     of AIFMD on the national level. It
to trading on a European regulated         vague and therefore rather difficult      seems desirable that a conceptual
market and which is operating for its      to define. Level 2 guidance can be        clarification will be introduced by
own account; or (ii) not established       expected as the term business strat-      the European Legislator through a set
for the main purpose of generating         egy requires interpretation generally     of unambiguous and concise Level 2
returns for its investors by means         to make sense of it.                      implementing measures, which facili-
of divestment of its subsidiaries or                                                 tate viable regulatory solutions for the
associated companies” as is ev dent                                                  listed sector.



                                                                                                                                 EPRA NEWS / 38 / 2011   39.
                                                                                                    FEATURES




                                       FOSTERING CONSTRUCTIVE ENGAGEMENT

                                  WITH THE REAL
                                ESTATE RESEARCH
                                    COMMUNITY
                                 A new EPRA Research       Since its inception EPRA has pri-           refined through a wider consulta-
                               Committee has recently      oritised active engagement with             tion with the EPRA membership
                                                           this community via initiatives such         possibly at the annual confer-
                                 been formed drawing       as the academic circle and through          ence
                                   on inputs from both     a significant number of research            (c) Putting in place a supporting
                                 academic and private      relationships with individual re-           research infrastructure in terms
                                                           searchers. However, much of what            of a clear code of ethics and
                                  sector researchers. A    has happened has been largely               formal ground rules for the EPRA
                                    key objective of the   spontaneous in character.                   research programme
                             committee is to formalise                                                 (d) Communicating the research
                                                               As the activities of EPRA have          agenda to the wider research com-
                            and improve the channels       expanded, it has become necessary           munity and targeting research.
                               of engagement between       to take such relationships to a new
                                  EPRA and the Global      level as a means of securing optimal        This is the most immediate and
                                                           research engagement for the EPRA         pressing task for the EPRA research
                                   Real Estate Research    membership and ensuring that the         committee
                                            Community.     research priorities of the listed sec-
                                                           tor are accurately addressed. Within        Secondly, to identify appropri-
                                                           this context the research committee      ate forums for communication and
                                                               has set itself a number of tasks     engagement, specifically in terms of
                                                                   as a means of achieving such     direct inputs to EPRA events such
                                                                      goals.                        as the annual conference but also
                                                                                                    at wider industry, academic, educa-
                                                                          Firstly, to formulate a   tional and governmental platforms.
                                                                            three-year research     In the academic realm the commit-
                                                                             agenda which serves    tee has discussed the possibility of
                                                                             both to formalise      sponsoring a special edition of an
                                                                             current research and   appropriate research journal as a
                                                                             which clearly com-     mechanism for raising the status
                                                                            municates      EPRA’s   and profile of EPRA research within
                                                                           research priorities to   the academic research community.
                                                                         the wider real estate
                                                                       research        community.       Thirdly, to engage with a range of
                                                                    This involves a number of       organisations with common research
                                                                specific elements.                  interests as a means of being aware
                                                              (a) Taking stock of both past and     of research initiatives elsewhere
                                                              current research projects which       and also to identify synergies and
                                                              have had an EPRA involvement          opportunities      for   cooperation.
                                                              and from this developing an ac-       This list would obviously include
                                                              curate assessment of what we          NAREIT and APREA but should
                                                              know and where the significant        extend to INREV, IPD, the Investment
                                                              knowledge gaps exist.                 Property Forum (IPF) and the both
                                                              (b) Identifying relevant research     the European Real Estate Society
                                                              priorities which can be further       (ERES) and its six sister societies



40. EPRA NEWS / 38 / 2011
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                                                                                                                 contents page.




through the International Real Estate       As the activities of EPRA have expanded, it
Society (IRES).
                                            has become necessary to take our research
    Fourthly, to launch a limited
number of EPRA early career re-             relationships to a new level as a means of
search fellowships as mechanism
for supporting young researchers            securing optimal research engagement for
develop research related to the
EPRA Research Agenda. At a wider            the EPRA membership and ensuring that
level such an initiative would serve
to raise the profile of EPRA and its        the research priorities of the listed sector are
research programme with the next
generation of real estate research-         accurately addressed.
ers. It may also deliver in terms of
yielding fresh thinking and innova-
tive approaches which address key           This is likely to deliver significant        While these goals are inevitably
research priorities.                        benefits to EPRA in terms of raising      ambitious, they are neverthe-
                                            its profile with a cohort from which      less achievable. Collectively they
   Finally, to explore the possibility of   the real estate sectors future leaders    will serve to raise the profile of
launching a competitive EPRA-brand-         and practice innovators are likely to     EPRA and its research programme
ed summer internship programme as           emerge. While not directly research-      and ultimately deliver best
a mechanism for raising the profile of      related, the committee is well placed     practice cutting-edge research to its
EPRA and its members with the cur-          to successfully execute such an           membership.
rent generation of real estate students     initiative given the educator expertise
in Europe’s top real estate schools.        contained within it.


                                            Éamonn D’Arcy is the CB Richard
                                            Ellis Fellow in International
                                            Real Estate in the School of Real
                                            Estate and Planning at the Henley
                                            Business School, University of
                                            Reading and chair of the EPRA
                                            research committee. He was
                                            recently elected to the EPRA Board
                                            of Directors and has served on the
                                            board of the European Real Estate
                                            Society (ERES) for over ten years.
                                            He is also the current president
                                            of the International Real Estate
                                            Society (IRES).

                                            p.e.darcy@henley.reading.ac.uk




                                                                                                                              EPRA NEWS / 38 / 2011   41.
                                                                                                         FEATURES




                           NEW ADDITION TO
                         EPRA FINANCE TEAM
                                                                  Mohamed Abdelrahim joins EPRA          performance measures.”
                                                                  from Orco Property Group, an EPRA
                                                                  member based in Luxembourg. His            Over the coming months Mo-
                                                                  appointment is in recognition of the   hamed will be putting the finishing
                                                                  growing importance of the EPRA         touches on additional BPR guidance
                                                                  Best Practices Recommendations         which provides further background
                                                                  (BPR) and EPRA’s representative        on the BPR, FAQs and best practice
                                                                  activities towards the IASB/FASB       examples. It is clear from meetings
                                                                  and other regulators. Mohamed’s        with members and advisors that
                                                                  main responsibilities are managing     this guidance will be greatly appre-
                                                                  and promoting the EPRA BPR as well     ciated and it is hoped that an initial
                                                                  as EPRA’s continued efforts to pro-    version will be on the EPRA website
                                                                  tective and enhance the reporting      very soon.
                                                                  environment for the listed property
                                                                  sector.                                   On the lobbying side, Mohamed
                                                                                                         was involved in EPRA’s response to
                                                                      Mohamed was raised in Brussels     the Lease ED, which he helped to
                                                                  and is fluent in French and his na-    finalise, and the recent submission
                                                                  tive Arabic. He has a Bsc. Manage-     to the boards on Transition Issues
                                                                  ment (Int. Business Economics) from    and Effective dates. The response on
                                                                  the Manchester Business School         transitions issues aims to provide
                                                                  and a Chartered accountant (ACA)       further concessions for companies
                                      In late-2010 EPRA was       qualification from Deloitte, London.   covered by the new lease account-
                                   pleased to announce the        He says: ”I am delighted to be back    ing. He continues to follow IFRS
                                                                  in my home-town of Brussels and to     developments and liaise with
                                       addition of Mohamed        be part of the EPRA team working       members and advisors on important
                                       Abdelrahim, our new        with industry leaders and represent-   reporting issues that may be of
                                   Finance Manager to join        ing our members.”                      concern.

                                       EPRA’s Reporting and          Since joining EPRA, Mohamed         The BPR Additional Guidance will
                                    Regulation team, led by       Abdelrahim has already been heav-      help users in apply the BPR.
                                               EPRA Director,     ily involved in EPRA’s response
                                                                  to the Leases Exposure Draft and       mohamed.abdelrahim@epra.com
                                                Gareth Lewis.     EPRA’s recent drive to simplify
                                                                  and improve the BPR - responding
         Percentage of companies
                                                                  to queries, meeting CFOs and
50%
                                                                  investors. According to Mohamed:
40%                                                               “Since EPRA undertook the exten-
                                                                  sive exercise in 2010 to simplify
30%                                                               the BPR and focus on industry KPIs,
                                                                  we’ve received very positive feed-
20%                                                               back. There are clear indications
                                                                  that in the 2011 reporting season we
10%                                                               will see a big step-up in the number
                                                                  of companies applying the BPR for
 0%
                   EPRA diluted     EPRA diluted   EPRA diluted
                                                                  the first time, improving their BPR
                   adjusted NAV       NNNAV            EPS        disclosure and adopting the agreed



      42. EPRA NEWS / 38 / 2011
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                                                                                                                 contents page.




                                        MY WORD
                                        IS MY BOND
In 2009, companies in the
 FTSE EPRA Europe Index
     raised a record EUR 8
  billion equity in difficult
       capital markets - this
attracted a lot of attention
 for the listed sector. Now
  bonds are turning heads
         as the dust settles.

The dramatic equity activity of 2009    Compared with outstanding equity               Bond markets solid - globally
was the first time since the launch     of the three regions, the EMEA pro-            Issues that are heavily over-
of the FTSE EPRA Europe Index that      portion is fairly similar and accounts         subscribed are strong signals that
more capital was raised through the     for 14%. The Americas, collectively,           corporate bonds and convertibles
equity market compared against          represent a significantly higher               continue to comprise an important
the corporate bond market. (Figure      share in outstanding debt compared             proportion of the liabilities on
1). Last year property companies        to equity. One could conclude that             the balance sheet. Bond issues by
returned to the ‘norm’ by again         the corporate bonds market of North            property companies are continuing
tapping the corporate bonds market.     America is relatively more advanced            to attract interest and have been
Due to continued difficulty in the      as compared against other regions.             making the headlines over the past
debt markets, we expect companies                                                      12 months.
to issue corporate bonds going
forward, and subsequently take up       Issues that are heavily over-subscribed are
a higher proportion of the balance
sheet than historically. As the ma-     strong signals that corporate bonds and
jority of debt issued in 2006-2007
is set to mature while restrictive      convertibles continue to comprise an important
regulatory measures take effect. In
addition, we see increased interest     proportion of the liabilities on the balance sheet.
in the corporate bond market and
we expect secondary liquidity to
deepen in the future.                   Figure 1 - Capital raised EPRA Europe USD

   On a global level, USD 183 billion
of corporate bonds are outstanding
for FTSE EPRA/NAREIT Global
Index constituents – this relates
to 1,153 issues as of February 2011.
The developed market companies
have issued the bulk of the amount
and account for 93%. On a regional
level, Americas corporate bonds is
61%, while Asia (22%) and EMEA
(17%) combined is just under 40%.                         ■ Debt   Issue   ■ Equity   & Rights Issue    EPRA Europe Index




                                                                                                                            EPRA NEWS / 38 / 2011   43.
                  Table 1     ISSUER DESCRIPTION              SERIES                COUNTRY                REGION            FACE OUTSTANDING (USD)
                              WESTFIELD GROUP                 Developed             Australia              Asia Pacific          $ 1,400,000,000.00
                              WESTFIELD GROUP                 Developed             Australia              Asia Pacific          $ 1,400,000,000.00
                              SIMON PROPERTY GROUP LP         Developed             United States          Americas              $ 1,250,000,000.00
                              HCP INC                         Developed             United States          Americas              $ 1,200,000,000.00
                              ALDAR PROPERTIES PJSC           Emerging              UAE                    EMEA                  $ 1,021,102,500.00
                              KLEPIERRE SA                    Developed             France                 EMEA                  $ 954,380,000.00
                              HAMMERSON PLC                   Developed             United Kingdom         EMEA                  $ 954,380,000.00
                              CAPITALAND LTD                  Developed             Singapore              Asia Pacific          $ 941,640,000.00
                              KLEPIERRE SA                    Developed             France                 EMEA                  $ 939,518,940.00
                              CAPITALAND LTD                  Developed             Singapore              Asia Pacific          $ 941,640.000.00
                              SIMON PROPERTY GROUP LP         Developed             United States          Americas              $ 900,000,000.00

                  Table 2     ISSUER DESCRIPTION              SERIES                COUNTRY                REGION            FACE OUTSTANDING (USD)
                              KLEPIERRE SA                    Developed             France                 EMEA                  $ 954,380,000.00
                              HAMMERSON PLC                   Developed             United Kingdom         EMEA                  $ 954,380,000.00
                              KLEPIERRE SA                    Developed             France                 EMEA                  $ 939,518,940.00
                              UNIBAIL RODAMCOSE               Developed             France                 EMEA                  $ 865,759,000.00
                              UNIBAIL RODAMCOSE               Developed             France                 EMEA                  $ 865,759,000.00
                              KLEPIERRE SA                    Developed             France                 EMEA                  $ 818,040,000.00
                              UNIBAIL RODAMCOSE               Developed             France                 EMEA                  $ 783,955,192.24
                              GECINA                          Developed             France                 EMEA                  $ 681,700,000.00
                              GECINA                          Developed             France                 EMEA                  $ 681,700,000.00
                              UNIBAIL RODAMCOSE               Developed             France                 EMEA                  $ 681,700,000.00


                                In the US, HCP REIT raised the       bonds last year. Gecina raised EUR           Bond capital
                            largest ever amount by a prop-           500 million in a single issue - offer-       A result of the financial crisis is
                            erty trust in unsecured notes in         ing a coupon of 4.25% with a maturity        lower leverage ratios of the property
                            January. The senior unsecured notes      of five years in January 2011. The issue     sector. At the same time the tradi-
                            achieved net proceeds of USD 2.4         was over-subscribed by more than             tional lenders - namely banks - have
                            billion and an average yield of 4.8%.    six times, and highlighted the healthy       become more conservative and
                            Simon Property’s USD 500 million         interest in real estate backed debt.         selective. Although the European
                            offering was upsized to a USD 1                                                       listed sector with its current LTV of
                            billion, on the back of demand from          The story is no different in the         46% coupled with strong manage-
                            an unusually wide range of institu-      emerging markets, where the cur-             ment teams may enjoy preference,
                            tional investors. Last month, in Asia,   rent amount outstanding for FTSE             the banks may be more restrictive.
                            the margin over government bonds         EPRA/NAREIT Global Emerging                  Basel III, effective in 2012, will
                            dropped to 26 basis points, from 230     Markets stocks is USD 12 billion.            raise capital requirements for
                            bps in April 2009 for J-REITs bonds.     Growthpoint Properties of South Af-          banks which could result in higher
                            It should be noted that the Japanese     rica raised ZAR 500 million with the         costs for the borrower. Financing
                            REIT sector was, and continues to        first corporate bond to be issued by         through bonds can extend the loan
                            be, heavily backed by the govern-        a local property company to finance          maturity; some bonds reach a 50-
                            ment. Comparable premium for US          the largest single property deal in          year duration, compared against a
                            REITs has narrowed to 199 basis          South Africa. The issue, consisting          much shorter average commercial
                            points from 1,079 in the same period     of senior unsecured bonds with               loan duration. Fixed coupons issues
                            European firms raised their high-        four-year maturity was nearly four           enable companies to ‘lock-in’ attrac-
                            est amount since 2006 in corporate       times over-subscribed.                       tive rates.

                            Piechart 1 - Bonds outstanding           Piechart 2 - Freefloat Market Cap           Piechart 3 - Bonds Outstanding
                            amount USD                               USD                                         Amount USD




                            l Asia 22% l EMEA 17% l Americas 61%     l Asia 39.02% l EMEA 14.1% l Americas 61%   l Developed 93% l Emerging 7%




44. EPRA NEWS / 38 / 2011
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                                                                                                                                     contents page.

Figure 2 - Capital Raised by                                                              Figure 3 - Outstanding amounts
US REITs (USD)                                                                            in EMEA bonds - USD
$30


$25
                                                                                          Europe
$20


$15

                                                                                          Global
$10
                                                                                 Europe
$5
                                                                                                   0%            20%             40%         60%          80%            100%
$-
                                                                                 Global
                                                                                                               ■ Bullet       ■ Convertable        ■ Callable
      2003     2004    2005     2006       2007    2008   2009     2010    YTD
                                   ■ Debt     ■ Equity
                                                                                          0%         20%       40%        60%          80%    100%

                                                                                                   ■ Bullet   ■ Convertable     ■ Callable

    Not surprisingly, according to           hikes can be secured by opting for Piechart 4 - Outstanding
the EPRA capital structure study             floating-rate bonds.               amounts in EMEA bonds - USD
of listed companies, the primary
criteria for selecting one source of             Callables are less preferred by
capital over another is cost. Financ-        investors as their issuers are able
ing assets and developments with             to call in outstanding bonds in
available free cash comes above all          favourable conditions, when market
other types of finance. Following            lending rates fall at the expense
this, companies prefer to raise cash         of the bonds holders. The amount
by selling assets. Thirdly, property         of callable bonds issued by EPRA             l Finland 2% l UAE 3% l Austria 4%
companies look at raising new debt.          Europe is only 2% - in stark contrast        l Belgium 1% l France 38%
Issuing new shares to raise equity           to the global average of 33%. Finally,       l Netherlands 8% l Switzerland 5%
is number fourth preferred method.           16% of bonds issued are in the form          l Germany 1% l UK 38%
This pecking order explains the situ-        of convertibles, leading to an equity
ation in 2009.                               stake at maturity. The average matu-
                                             rity in Europe for bond issued last
    Relative market stabilisation in         year was ten years.
2010 also restored the norm for the
European property sector - EUR 5.5               The Solvency II directive (effec-
billion was raised compared to EUR           tive 2013) will have an adverse effect
3.5 billion in equity. Interestingly,        on the equity investors. Solvency II
US REITs continue to raise more in           will require insurers and (possibly)
equity than debt. The CMBS market            pension funds to keep a buffer (cash
played a bigger role in the US and           or gilts) of 40 cents for every EUR
still has to recover (perhaps it will        1 invested in shares. Bond invest-
never recover!) to the pre-crisis level.     ments in the same companies are
                                             not included in this legislation.
   Companies in the EMEA region              Bonded the REIT way
have bonds outstanding worth EUR
30 billion with Developed markets                EPRA      Europe       constituent
comprising the vast majority. Table          companies have an average LTV of
2, Regional heavyweights, France             43%, and only 10% of outstanding                  Ali	Zaidi joined the research
and UK, make up 75% of the total             total debt maturing in the coming                 team on October 2007. His
amount outstanding. All of the top           12 months. Strong recurring cash                  initial projects were working on
ten company slots are occupied by            flows, robust balance sheets and the              the emerging market indices for
UK and French REITs.                         ability to access capital all stack up            the FTSE EPRA/ NAREIT Global
                                             well for listed property companies.               Real Estate Index and the
Investor side - stability                    Whether REIT bonds fall under fixed               European Corporate Govern-
From an investor’s viewpoint, REIT           income or real estate allocations, all            ance report. Zaidi holds a BA
bonds offer an interesting set of            depends on the investor. Looking                  in Economics and Business and
opportunities. Stable returns in             at both, the investor and issuer                  completed his MSc in Interna-
the form of coupons and a known              side, the corporate bonds market                  tional Finance at the University
maturity date represent an efficient         will be very interesting in the                   of Amsterdam.
method for gaining exposure to               midst of today’s evolving financial
prime European assets. In addi-              regulations.                                      a.zaidi@epra.com
tion, protection from interest rate



                                                                                                                                                         EPRA NEWS / 38 / 2011   45.
                                                                                                    FEATURES

                                                                                                    View from Asia-Pacific




                                        HYBRID MODELS
                                         FOR PROPERTY
                                          INVESTMENT
                                   The global property1    Through investment in global             Australian property market
                                       market provides     property, investors can gain further     The Australian property market
                                                           exposure and diversification benefits    accounts for around 2% of global
                             investment opportunities      as individual countries or regions       investment grade property2. It has
                            to supplement a domestic       follow different economic cycles.        total assets of approximately $256
                                   property investment     Since real estate cycles do not          billion and is constituted across a
                                                           typically evolve in tandem between       range of vehicles including unlisted
                             portfolio when compared       countries, investing on a global basis   property funds, syndicated invest-
                                      with other assets.   expands the investment opportuni-        ment structures as well as a well-
                            Investing in non-domestic      ties from a purely domestic focus.       developed listed property market3.

                              property provides access     An Australian case study                     Table 1 shows the sector break-
                                    to a larger range of   The following article outlines the       down for Australian direct and Aus-
                            property sectors; diversity    current metrics of the Australian        tralian listed property. The global
                                                           property market; examines the            property sector breakdown is also
                                of reputable tenants as    historical performance of unlisted       shown and highlights the significant
                                 well as accessing non-    and listed property markets within       weights across all sectors.
                            aligned underlying growth      Australia; considers the merits
                                                           and drawbacks of an unlisted                 Australian direct property is
                                factors of international   approach to property investment,         heavily weighted towards retail and
                                             economies.    and outlines the advantages              office with a smaller allocation to
                                                           associated with the inclusion of         industrial and specialist sectors.
                                                           listed property within a direct
                                                           property portfolio - a hybrid, or        Demand in Australia
                                                           blended property model. An out-          Demand in Australia for property
                                                           look for Australian listed property      stems in part from high superan-
                                                           is provided which serves as a            nuation savings brought about by
                                                           broad indicator of global listed         Australia’s compulsory superannua-
                                                           market trends.                           tion savings scheme. The allocation



46. EPRA NEWS / 38 / 2011
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                                                                                                                                                    contents page.




Table 1 – Sector breakdown – asset type
     SECTOR                                GLOBAL DIRECT                          AUST DIRECT             AUST LISTED
                                           PROPERTY (%)                           PROPERTY (%)            PROPERTY (%)
    Retail                                 33                                     47                      61
    Office                                 35                                     42                      23
    Industrial                             17                                     9                       14
    Residential                            10                                     -                       -
    Mixed Use / Other*                     5                                      2                       2
    Total	      	                          100	               	                   100	               	    100
Source: ING REIM, 2009; PCA, 2010; UBS, 2010

*Mixed Use / Other – includes hotel/leisure, agriculture, development sites, car parks, petrol stations




to property by Australian superan-                                        Rollover risk exists also – there is           tors with daily unit pricing, high
nuation investors is around 9.5% of                                       no certainty that the unit-holder              liquidity as well as quarterly divi-
total superannuation assets or $117                                       majority aligns with an individual             dend payments, typically providing
billion as at June 2010. Institutional                                    investor’s requirements regarding              a strong income boost to investment
investment in Australian property                                         the rollover or fund termination and           portfolios.
represents in excess of 50% of the                                        consequent liquidity. There are often
available investment grade property.

Australian unlisted property                                              REITs provide investors with daily unit pricing,
Traditionally, Australian unlisted
property has shown synthetically                                          high liquidity as well as quarterly dividend
low correlations with other asset
classes, provided relatively stable                                       payments, typically providing a strong income
capital reflecting low volatility of
returns – though in part attributable                                     boost to investment portfolios.
to the relative infrequency of valu-
ations, and represented an effective
means for diversification within a                                        foreign investor restrictions which                Some institutional investors
real estate investment portfolio.                                         can act as an impediment. Local                seek to exploit the dividend paying
                                                                          knowledge is critical in real estate           nature of REITs via dividend yield
Drawbacks                                                                 management and appropriate local               plays. This is typified by investors
However, direct real estate, particu-                                     representation is important.                   purchasing REIT stocks just prior to
larly in an unfamiliar non-domestic                                                                                      the payment of a distribution, with
jurisdiction, carries some limitations                                    Australian listed property                     a view to capturing the income and
and disadvantages.                                                        Investors accessing the property               selling the stock post-distribution.
                                                                          marketplace through allocations                The strategy is centred on the
    Liquidity will always be a con-                                       to listed property have sought                 premise that the stock price will
straint as is the reversion risk of the                                   relatively stable earnings alongside           in some cases fall by less than the
timing of scheduled fund horizon.                                         capital security. REITs provide inves-         value of the distribution.        >



                                                                                                                                                                EPRA NEWS / 38 / 2011   47.
                               The wide ranging accessibility                   as reductions in debt, the AREITs         tralian listed property for periods
                            of REIT investments through stock                   currently offer attractive income         over 30 years to January 2011.
                            exchanges combined with the liquid                  yields while trading closer to NAV            On the basis of these data, the re-
                            nature of listed vehicles has enabled               (circa 7% discount as of December         lationship between the returns from
                            the creation of indexed property                    2010).                                    Australian unlisted property and
                            products which track the perform-                                                             Australian listed property is weak,
                            ance of the benchmark – ie, ETFs.                       With valuations stabilising, ARE-     with correlations diminishing over
                            This form of investment is currently                ITs are positioned to reduce current      lengthier terms. For investors seek-
                            not possible in Australian unlisted                 discounts moving in 2011. However,        ing to enhance risk-adjusted returns,
                            property markets.                                   some see a lack of investor confi-        investing in assets that do not
                                                                                dence in the AREIT market to deliver      exhibit the same pattern of perform-
                            Liquidity premium                                   on direct property market returns         ance effectively reduces volatility of
                            The pricing of listed securities is                 combined with the negative spill          a total portfolio.
                            subject to a range of factors includ-               over effects of the broader equity
                            ing capital management activities of                markets means discounts to NTA            A hybrid model
                            REIT managers, variance between                     could continue in 2011. In addition,      A hybrid model for property invest-
                            market expectations of expected                     managers facing high interest costs       ment incorporates allocations to
                            earnings and actual earnings as                     will require further debt reductions      both listed and unlisted property. It
                            well as investor sentiment. Although                as well as asset sales to achieve to      allows investors to access the ben-
                            liquidity is available, investors in                bolster earnings.                         efits associated with each form
                            REITs can be faced with a variable                                                            of property investment, whilst
                            liquidity premium - as evident in                   AREITs vs. Australian unlisted            reducing the drawbacks typically
                            listed markets throughout the recent                property                                  experienced within each asset class.
                            financial crisis.4                                                                            By allocating a proportion of a
                                                                                Correlations of returns                   portfolio to listed property, the
                            Outlook for AREITs                                  Table 3 details the unlagged correla-     liquidity constraints arising from the
                            Following the successful major                      tion of returns from Australian direct    corresponding allocation to direct
                            recapitalisation of the sector, as well             property with the returns from Aus-       property can be offset. Meanwhile,

                            Table 3 – Global property correlations
                                                                ASSET CLASS                                    AUSTRALIAN UNLISTED PROPERTY
                                                                                             5 YEARS    10 YEARS   15 YEARS   20 YEARS   30 YEARS
                              Australian Listed Property                                     0.26       0.31       0.30       0.20       0.14
                            Source: S&P/ASX, 2011; Atchison Consultants, 2011




48. EPRA NEWS / 38 / 2011
                                                                                                                                 Click here for
                                                                                                                                 contents page.




Table 4 – Asset allocation analysis – global direct and global listed
                                                       P1 (%)     P2 (%)    P3 (%)         P4 (%)          P5 (%)          P6 (%)
  Australian Unlisted Property                         0          10         20             30             40              50
  Australian Listed Property                           100        90         80             70             60              50
  Total                                                100        100        100            100            100             100


  Expected Return                                      6.8        6.8        6.9            6.9            7.0             7.0
  Volatility                                           4.3        4.1        4.5            5.3            6.4             7.6
  Change in Return (% From P1)                         -          0.7        1.4            2.2            2.9             3.6
Source: Atchison Consultants, 2010

the overall volatility arising from
the listed contribution will be               Table 4 shows on an historical         1
                                                                                       For the purposes of this paper, global property
                                                                                     denotes investment grade non-domestic real estate.
dampened by the allocation to             basis that by allocating a proportion      2
                                                                                       Source: EPRA, 2010
unlisted property. In this way, listed    of a representative unlisted property      3
                                                                                       Listed property accounts for approximately 21% of
                                                                                     Australia investment grade real estate.
and unlisted property will work to        portfolio to listed property, there is     4
                                                                                       At the end of 2007, AREITs were trading at a discount
                                                                                     to NAV of 5%, but diminished earnings expectations
complement each other within an           a positive impact on the expected          and weakening property values resulted in a 30% dis-
investment portfolio.                     return of the portfolio. Portfolio P4      count 12 months later. The price of liquidity increased
                                                                                     substantially as market fundamentals deteriorated.
                                          has a 30% allocation to listed prop-
    To illustrate, optimisation analy-    erty which leads to a 2% increase in
sis has been undertaken evaluating        the return potential compared to the
the impact of introducing an Austral-     unlisted only Portfolio P1.
ian listed property allocation into                                                                                  Mark	Wist
a range of investment portfolios.             Volatility of returns increases                                        Over a 20-year
Table 4 shows returns and volatility      with increased allocations to                                              career as a profes-
of returns for six alternate portfolios   Australian listed property. However                                        sional, Mark Wist
using historical returns and volatil-     this is attributable to the inherent                                       has developed
ity of returns based on 20 years          nature of the pricing of listed                                            expertise in invest-
historical data to December 2010.         securities which are valued daily                                          ment analysis and
Australian unlisted property returns      and influenced by a range of market                                        evaluation, investment
have been modelled using the Mer-         factors including sentiment and ex-                                        consultancy, research,
cer Unlisted Property Funds Index         pectations. The relative volatility of                                     asset management,
while Australian listed property re-      unlisted property is lower as a result         property valuation, risk assessment & govern-
turns have been modelled using the        of the lower frequency of smoothed             ance, corporate advisory, strategy creation/
S&P / ASX 200 A-REIT Accumulation         valuation in addition to the absence           implementation, fund manager appraisal,
Index.                                    of contribution from market factors.           construction/project management and due
                                                                                         diligence analysis specialising in real estate. He
                                             Through the inclusion of listed             is a Chartered Surveyor and Registered Valuer.
                                          property in an unlisted real estate
                                          portfolio, investors will achieve              mark.wist@atchison.com.au
                                          increased      liquidity;   enhanced
                                          diversification benefits, regular cash                                   Tony	Singh
                                          dividends in addition to gaining ac-                                     Tony Singh joined
                                          cess to a broader range of investible                                    Atchison Consultants
                                          forms of property.                                                       as an Investment
                                                                                                                   Analyst in October
                                                                                                                   2009. Tony provides
                                                                                                                   research and analysis
                                                                                                                   pertaining to property
                                                                                                                   investment and finan-
                                                                                                                   cial markets. Prior to
                                                                                         this Tony was a research analyst with Melbourne
                                                                                         based marketing firm The Klein Partnership. He
                                                                                         completed a Bachelor of Business (Economics
                                                                                         and Finance) (Applied) from RMIT University.

                                                                                         tony.singh@atchison.com.au




                                                                                                                                               EPRA NEWS / 38 / 2011   49.
                                                                                                            FEATURES




                                                        Diary
                  OUTREACH
                   FAR EAST
     As part of our ongoing efforts to highlight the potential
      of the European listed property sector, EPRA’s Fraser
        Hughes and Philip Charls completed an end-of-year
                               investor tour in the Far East.




                                                                    CIC - Excellent relationship-
                            Tuesday, December 07
                            The team first met with the ARES In-

                                                                    building, and a commitment to
                            ternational Committee (the Japanese
                            property association) to support our

                                                                    review European investments.
                            engagement with Japanese pension
                            funds. This was the preamble to
                            an EPRA presentation to over 50
                            pension funds and 300 delegates
                            highlighting the benefits of the        Thursday, December 09                   Friday, December 10
                            listed real estate market. As always,   On to Beijing, China, the EPRA duo      The Korea National Pension
                            take up of the FTSE EPRA/NAREIT         joined with Ian Marcus of Credit        System (KNPS) enjoyed our
                            indices continues to grow, with a       Suisse and their local investment       attentions – a top-then global
                            particular demand for insight into      heads Lian Yi and Sun Jianyong.         pension fund by AUM. Again, educa-
                            Europe’s fundamental data such as       Of note was an interest in the          tion was sought on the relationship
                            NAV vs. Price and LTV.                  historic performance aspects, e.g.      between the direct and listed market.
                                                                    yields, listed vs. other asset class,   KNPS was followed by the Korea
                            Wednesday, December 08                  and the relationship between the di-    Investment Corporation (KIC).
                            A further 60 delegates from invest-     rect and listed market. China Invest-
                            ment management companies were          ment Corporation was our next host
                            addressed as part of a combined         - one of the world’s largest SWFs.
                            EPRA/FTSE/Northfield event. Des-        Excellent relationship-building, and
                            igned to attract fund managers and      a commitment to review European
                            product developers, feedback was        investments.
                            excellent and there was a clear
                            need for the EPRA offering and          Note to self: Next push to represent
                            education of the European sector.       European listed sector out East – April 2011.


50. EPRA NEWS //38 //2011
    EPRA NEWS 38 2011
                                                                                                  Click here for
                                                                                                  contents page.




ANALYST ROUND-UP
– ARE YOU COVERED?

      The following table       The scope is the FTSE EPRA/NA-        last time we produced the analyst
      shows the coverage        REIT Europe Index constituents by     coverage matrix 12 months ago.
                                European bank’s research/analyst      Subsequently, we have updated
         list as it currently   teams. We obtained coverage lists     the list and plan to maintain a
stands. Please note that        from the major banks active in        ‘live’ service on the new version
     stocks can be added        sector directly and searched on       of www.epra.com to be launched
                                various data vendors and compa-       in the coming months.
  or deleted to coverage        ny websites for analyst coverage
  lists and subsequently        of individual companies. In addi-        We encourage banks and the
this table, in its current      tion, we also contacted company       companies themselves to update
                                investor relations departments        us on a regular basis to ensure our
       form, has a limited      directly – response was very good.    overview is accurate – whether or
      shelf-life. However,      This article aims to provide an       not they are index constituents.
    we encourage banks          update of this survey.

    to update us directly       Overview
with their coverage list,       In terms of the numbers of            Call to Action:
 enabling EPRA publish          companies covered the analyst         • Companies: who covers you?
                                community, we cover the 83 index      • Banks: who do you cover?
      an accurate list on:      constituents. Since last year’s          Do update us regularly on:
           www.epra.com.        edition, Dutch bank Kempen & Co,               ltb@epra.com
                                with the launch of their UK cover-
                                age, has takes the lead in terms
                                of absolute number of companies
                                covered: 48. Goldman Sachs,
                                JPMorgan and Bank of America
                                Merrill Lynch come in at second
                                place with 34 property companies
                                under coverage.

                                    Currently, of the 83 European
                                real estate companies that are in-     Laurens te Beek
                                cluded in the FTSE EPRA/NAREIT         Laurens te Beek holds a BA in
                                Developed Europe Index, only one       Business Economics and a MSc
                                is not being tracked by an analyst:    in Economics from University of
                                UK-based Daejan Holdings. This         Amsterdam. He started his career
                                is an improvement over last year,      at Euronext Indices BV where he
                                when four out of 79 constituents       gained extensive knowledge of
                                were not covered. In terms of          the FTSE EPRA/NAREIT Global
                                market capitalisation, this means      Real Estate Index. He then
                                that currently 99.82% of the index     worked as an International Ana-
                                is covered, as compared to 99.53%      lyst at European Investors Inc. In
                                last year.                             May 2006 Laurens joined EPRA.

                                Conclusion                             Contact:
                                We have seen regular demand            ltb@epra.com
                                for the analyst coverage since the     +32 (0)2739 1011



                                                                                                                        38 2011    51.
                                                                                                                                  51.
                                                                                                            EPRA NEWS / 32 / 2010 _
                                                                                                                                                                                                                                                                                    REFERENCES

    ANALYST COVERAGE TABLE




                                                                                                                                                                                                           Royal Bank of Scotland




                                                                                                                                                                                                                                                                                                                                          Aurel Leven Securities




                                                                                                                                                                                                                                                                                                                                                                                        Green Street Advisors
                                                                                              % Free Float Weight




                                                                                                                                                                                                                                                                                                             Exane BNP Paribas
                                                                       Index Constituent?




                                                                                                                                                                                                                                    Société Générale
                                                                                                                                                        Bank of America




                                                                                                                                                                                                                                                       Morgan Stanley
                                                                                                                             Goldman Sachs




                                                                                                                                                                                                                                                                                                                                                                   CA Cheuvreux
                                                                                                                                                        Merrill Lynch




                                                                                                                                                                                Crédit Suisse

                                                                                                                                                                                                ABN AMRO




                                                                                                                                                                                                                                                                                                                                                                                                                Macquarie
                                                                                                                                                                                                                                                                        Peel Hunt
                                                                                                                                             JPMorgan




                                                                                                                                                                                                                                                                                           Petercam
                                                                                                                    Kempen




                                                                                                                                                                                                                                                                                                                                 Matrix
                                                                                                                                                                                                                                                                                    HSBC
                                                  Full Mkt Cap




                                                                                                                                                                          UBS




                                                                                                                                                                                                                                                                                                                                                                                  ING
                                                                                                                                                                                                                                                                                                      Citi
    Company                             Country        (EURm)

    Unibail - Rodamco                   FRA            13,111.68    13,111.68                13.87%                  Y         Y              Y              Y            Y       Y              Y            Y                       Y                  Y                          Y       Y                  Y                             Y                       Y                     Y                     Y
    Land Securities Group               UK            6,303.53      6,303.53                  7.09%                  Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y        Y                  Y                                                        Y                     Y
    British Land Co                     UK            5,648.34      5,648.34                  6.24%                  Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y        Y                  Y                                                        Y                     Y
    Corio                               NETH           4,376.79     4,376.79                  4.63%                  Y         Y              Y              Y            Y       Y              Y            Y                       Y                  Y                                  Y                  Y                             Y                       Y            Y        Y                     Y
    Hammerson                           UK            3,598.69      3,598.69                  4.03%                  Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y        Y                                                                           Y                     Y
    Capital Shopping Centres Group      UK            3,808.46      2,856.34                   3.13%                 Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y                           Y                                                        Y                     Y
    Segro                               UK             2,764.74     2,764.74                  2.99%                  Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y        Y                                                                           Y
    Klepierre                           FRA              5,197.31   2,598.66                  2.84%                  Y         Y              Y              Y            Y       Y              Y            Y                       Y                  Y                          Y       Y                  Y                             Y                       Y                     Y                     Y
    PSP Swiss Property                  SWIT          2,490.39      2,490.39                  2.74%                  Y         Y              Y                           Y                                                                              Y                                                     Y
    Fonciere Des Regions                FRA             4,173.75    2,086.87                  2.23%                  Y         Y              Y              Y                                                Y                       Y                  Y                                                     Y                             Y                       Y            Y
    Swiss Prime Site                    SWIT           2,737.86     2,053.40                  2.26%                  Y                                                    Y
    Derwent London                      UK              1,827.42    1,827.42                  2.06%                  Y         Y              Y              Y            Y       Y                                                                      Y               Y          Y                 Y                           Y                                                        Y
    Castellum                           SWED           1,683.42     1,683.42                  1.83%                  Y         Y                                          Y                                   Y                                          Y                                                                                                           Y
    Gecina                              FRA           5,568.89      1,670.67                   1.78%                 Y         Y                             Y                                                                        Y                  Y                                                     Y                             Y
    Icade                               FRA            4,153.30     1,661.32                   1.76%                 Y         Y                                                  Y                           Y                       Y                  Y                                  Y                  Y                             Y                       Y
    Wereldhave                          NETH            1,521.94    1,521.94                   1.63%                 Y         Y              Y              Y            Y       Y              Y            Y                       Y                                                     Y                                                Y                       Y            Y
    Dt Euroshop Na                      GER             1,419.86    1,419.86                   1.51%                 Y                                       Y            Y       Y              Y                                    Y                                             Y       Y                                                Y                                    Y                              Y
    Great Portland Estates              UK               1,381.01   1,381.01                  1.48%                  Y         Y              Y              Y            Y       Y                                                   Y                  Y               Y          Y                 Y                           Y                                                        Y
    Eurocommercial Properties           NETH            1,372.74    1,372.74                  1.48%                  Y         Y              Y              Y            Y       Y              Y            Y                                                                             Y                  Y                                                     Y            Y        Y                     Y
    Cofinimmo                           BELG            1,315.04    1,315.04                  1.42%                  Y         Y              Y              Y            Y       Y              Y            Y                       Y                  Y                                  Y                  Y                                                                  Y                              Y
    Mercialys                           FRA           2,543.88      1,271.94                  1.34%                  Y         Y                                                                 Y            Y                       Y                                             Y       Y                  Y                             Y                       Y                                           Y
    Silic                               FRA            1,643.83     1,232.87                    1.31%                Y         Y                             Y                                   Y            Y                       Y                                                     Y                  Y                             Y                       Y
    Hufvudstaden A                      SWED           1,626.38     1,219.79                   1.32%                 Y         Y                                          Y                      Y            Y                                                                                                                                                      Y
    Fabege                              SWED           1,202.42     1,202.42                    1.31%                Y         Y                                          Y                                   Y                                          Y                                                                                                           Y
    Shaftesbury                         UK               1,195.37   1,195.37                    1.31%                          Y              Y              Y            Y       Y                                                                                      Y          Y                 Y                           Y                                                        Y
    Capital & Counties Properties       UK              1,070.37    1,070.37                    1.13%                                         Y              Y            Y       Y                                                                      Y               Y                                                                                                                 Y
    Ca Immobilien                       OEST           1,066.91     1,066.91                    1.13%                Y         Y
    Sponda Oyj                          FIN           1,049.80      1,049.80                   1.21%                 Y         Y                             Y            Y                      Y            Y                                                                                                                              Y
    Befimmo (Sicafi)                    BELG           1,009.92     1,009.92                  1.08%                  Y                                                            Y              Y            Y                       Y                                                     Y                                                                                     Y
    Conwert Immobilien Invest           OEST               974.31   974.31                    1.04%                  Y         Y              Y                                   Y                                                                                                 Y                                                        Y                       Y                                           Y
    Vastned Retail                      NETH              966.75    966.75                     1.01%                 Y         Y              Y              Y                    Y              Y            Y                                                                             Y                                                                                     Y
    Deutsche Wohnen AG                  GER                921.52   921.52                    0.93%                  Y         Y                             Y            Y       Y                                                                      Y                          Y                                                                                                                            Y
    Kungsleden                          SWED               914.41   914.41                    1.00%                  Y         Y                                          Y                      Y                                                                                                                                           Y                       Y
    London & Stamford Property          UK                 818.18   818.18                   0.86%                                                           Y                    Y                                                                      Y               Y                            Y                           Y
    Wihlborgs Fastigheter               SWED               764.91   764.91                    0.83%                  Y                                                                                        Y
    Gagfah                              GER           1,809.45      723.78                    0.78%                  Y         Y              Y              Y                    Y                                                                                                 Y                                                                                                                            Y
    Allreal Hld N                       SWIT           1,425.65     712.83                    0.78%                                                                       Y
    ProLogis European Properties        NETH              943.44    707.58                     0.77%                 Y                        Y                                                  Y            Y                                                                             Y                                                                                     Y        Y
    Azrieli Group                       ISR            2,274.78     682.43                    0.75%
    Beni Stabili                        ITA            1,304.62     652.31                    0.74%                  Y         Y              Y                                                               Y                       Y                                                                        Y                                                     Y            Y
    Nieuwe Steen Inv                    NETH              640.64    640.64                    0.69%                  Y                                                            Y              Y            Y                                                                             Y                                                                                     Y
    F&C Commercial Property Trust       UK                 814.21   610.65                    0.66%
    Norwegian Property ASA              NOR              608.66     608.66                    0.67%                  Y                                                                                        Y
    Citycon                             FIN                758.15   568.61                    0.62%                  Y         Y                                          Y                                   Y                                                                                                                              Y
    Big Yellow Group                    UK                489.91    489.91                    0.54%                            Y              Y              Y                                                                                           Y               Y                            Y                           Y
    Klovern AB                          SWED              566.12    424.59                   0.48%
    Unite Group                         UK                383.33    383.33                    0.41%                                           Y              Y            Y                                                                              Y               Y                            Y                           Y
    Helical Bar                         UK                 377.10   377.10                   0.40%                                            Y              Y                                                                                                           Y                            Y                           Y
    TAG Immobilien AG                   GER               374.24    374.24                    0.43%                  Y
    Grainger                            UK                498.91    374.19                   0.40%                                            Y              Y                                                                                                           Y                            Y                           Y
    Warehouses De Pauw                  BELG              493.96    370.47                    0.39%                  Y                                                                           Y                                                                                          Y                                                Y                                    Y
    Workspace Group                     UK                345.96    345.96                    0.35%                                           Y              Y                                                                                                           Y          Y                 Y                           Y
    Societe de la Tour Eiffel           FRA                341.29   341.29                    0.36%                  Y         Y                             Y                                                                                                                              Y
    Alstria Office                      GER               662.20    331.10                    0.36%                  Y                        Y                                   Y              Y                                    Y                                             Y
    UK Commercial Property Trust        UK              1,101.29    330.39                    0.36%
    Safestore Holdings                  UK                306.33    306.33                    0.33%                  Y                                       Y                                                                                                           Y                            Y                           Y
    St.Modwen Properties                UK                402.68    302.01                    0.33%                                           Y              Y                                                                                                           Y                            Y                           Y
    Development Securities              UK                289.30    289.30                   0.30%                                            Y              Y            Y                                                                                              Y                                                        Y
    DIC Asset AG                        GER                375.93   281.95                    0.32%                  Y                                                                           Y                                    Y                                             Y
    Inmobiliaria Colonial S.A.          SP               1,761.31   264.20                    0.29%                                                                       Y
    Quintain Estates and                UK               261.54     261.54                   0.28%                                            Y              Y                                                                                                           Y                                                        Y
    Development
    Technopolis                         FIN             255.44      255.44                   0.27%                                                                                               Y
    Vastned Off/Ind                     NETH            238.08      238.08                   0.24%                   Y                        Y                                                  Y            Y                                                                             Y                                                                                     Y
    Primary Health Prop.                UK              234.50      234.50                   0.25%                                                                                                                                                                       Y
    ING UK Real Estate Income Trust     UK              205.60      205.60                   0.22%
    Immobiliare Grande Distribution     ITA             453.97      181.59                   0.20%                                            Y                                                                                       Y                                                                         Y                                                    Y
    Colonia Real Estate                 GER              174.80     174.80                   0.09%                                                                                Y                                                                                                 Y
    Minerva                             UK               168.63     168.63                   0.20%                                                                                                                                                                       Y
    Intervest Offices                   BELG             330.41     165.20                   0.18%                                                                                               Y
    Daejan Hdg                          UK              536.10      160.83                   0.18%
    CLS Holdings                        UK               319.52     159.76                    0.17%
    Invista Foundation Property Trust   UK                157.79    157.79                    0.17%
    Wereldhave Belgium                  BELG            388.44      155.37                    0.17%                  Y                                                                           Y                                                                                                                                                                                Y
    Patrizia Immobilien                 GER             294.64      147.32                   0.16%                                            Y                                                                                                                                     Y
    Zueblin Immobilien Holding AG       SWIT              177.23    132.92                   0.15%
    Eurobank Properties Real Estate     GRC             396.50      118.95                    0.13%                                                                                                                                                                                                   Y
    Investment Co
    Leasinvest                          BELG             267.12     106.85                   0.12%                   Y                                                                           Y                                                                                          Y                                                Y                                    Y
    Standard Life Inv Prop Inc Trust    UK                87.23     87.23                    0.09%                                                                                                                                                                                                                                Y
    Mucklow (A.& J.)Group               UK              209.58      83.83                    0.09%                                                                        Y                                                                                              Y
    IRP Property Investments            UK              102.88      77.16                    0.09%
    Affine                              FRA              137.03     68.51                    0.07%                   Y                                                                                                                Y
    ISIS Property Trust Ld              UK                90.33     67.75                    0.07%
    Lamda Develop/R                     GRC              170.33     51.10                    0.05%                                                                                                                                                                                  Y

    Total                                             117,231.27    92,376.93               100.00%                 48       34              34            34             30    26              24         23                       23                 22               22          21     18         17      17                 17        16                      16             15     14                     14
    Coverage %




 52. EPRA NEWS 38 2011
52. _ EPRA NEWS // 32 //2010
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                          14
                                                                                                                                                                                                                                                                                       Oriel Securities




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                          13
                                                                                                                                                                                                                                                                                       Barclays Capital




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                          13
                                                                                                                                                                                                                                                                                       Berenberg Bank




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                          14
                                                                                                                                                                                                                                                                                       Evolution Securities




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                          11
                                                                                                                                                                                                                                                                                       Numis Securities




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                                                                                                                                                                                           Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                                           Y




                          12
                                                                                                                                                                                                                                                                                       Rabo Securities




                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                                               Y




                                                                   Y
                                                                                                       Y
                                                                                                                                                           Y
                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                               Y




                          11
                                                                                                                                                                                                                                                                                       Deutsche Bank




                                                                           Y
                                                                                                               Y
                                                                                                                                                                                                       Y
                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y




                          10
                                                                                                                                                                                                                                                                                       Liberum Capital




                                                                                                                                                                                                                                                               Y




                                                               Y
                                                                                                                                                                   Y
                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y




                          10
                                                                                                                                                                                                                                                                                       Nomura




                               Y
                                                                                   Y
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                           Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                          10
                                                                                                                                                                                                                                                                                       Nordea Equity




                          9
                                                                                                                                                               Y
                                                                                                                                                                                           Y




                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                           Y
                                                                                                                                                                       Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                                       ABG Sundal Collier




                          9
                                                                                                                                                               Y




                               Y
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                           Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                                       DnBNOR Markets




                          9
                                                                                                                                                                                                                                   Y




                                                   Y
                                                                   Y
                                                                                       Y
                                                                                                       Y
                                                                                                                           Y
                                                                                                                                                           Y
                                                                                                                                                                           Y
                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                                                       DZ Bank




                          9
                                                                                                                                                                                                                                                               Y




                                                                                                               Y
                                                                                                                                                                   Y
                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y



                                                                                                                                                                                                                                                                                       Panmure Gordon




                          9
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                           Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                                       SEB Enskilda




                          8
                                                   Y
                                                                   Y
                                                                                       Y
                                                                                                       Y
                                                                                                                           Y
                                                                                                                                                           Y
                                                                                                                                                                           Y
                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                                                       Bankhaus Lampe




                          8
                                                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                                                       Y




                                                                                           Y
                                                                                                                       Y
                                                                                                                                                                                                       Y
                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Collins Stewart




                          8
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y


                                                                                                                                                                                                                                                                                       Danske Markets




                          8
                                                                                                                                                                                                                                                   Y




                                                                                               Y
                                                                                                               Y
                                                                                                                               Y
                                                                                                                                       Y
                                                                                                                                                                                                       Y
                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Execution Noble




                          8
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Handelsbanken




                          8
                                               Y
                                                           Y
                                                                                                                   Y
                                                                                                                                                                               Y
                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                                           Y




                                                                                                                                                                                                                                                                                       KBC Securities




                          8
                                       Y

                                   Y
                                           Y
                                                       Y
                                                                       Y
                                                                                                   Y
                                                                                                                                               Y
                                                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       Singer Capital




                          8
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Swedbank




                          8
                                                                                                           Y
                                                                                                                                                                                                               Y
                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       Tradition Securities




                          7
                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       AlphaValue




                          7
                                                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                                               Y
                                                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Day by Day




                          7
                                                                                   Y
                                                                                                                                   Y
                                                                                                                                           Y
                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Evli Bank




                          7
                                                   Y
                                                                                       Y
                                                                                                       Y
                                                                                                                                                                           Y
                                                                                                                                                                                   Y
                                                                                                                                                                                               Y
                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       UniCredit Researrch




                          6
                                                                                                                                   Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Alandsbanken




                          6
                                                                                                                                   Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Carnegie




                          6
                                                                   Y
                                                                                       Y
                                                                                                       Y
                                                                                                                                                           Y
                                                                                                                                                                           Y
                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       Commerzbank




                          6
                                                                                                                                                                                                                           Y




                               Y
                                                                               Y
                                                                                                                                                                               Y
                                                                                                                                                                                                                                       Y
                                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       Keijser Securities




                          6
                                                                                                                                                                                                                                   Y



                                                                                                                                                                                                                   Y
                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                                                                   Y




                                                                                                                                                                                                                                                                                       Kepler Capital
                                                                                                                                                                                                                                                                                                                                       Click here for
                                                                                                                                                                                                                                                                                                                                       contents page.




                                                                                                                                                                                                                                                                                       Oehman




                          6
                               Y
                                                                                                                                   Y
                                                                                                                                                               Y
                                                                                                                                                                       Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                           Y
                                                                                                                                                                                                                                               Y




                                                                                                                                                                                                                                                                                       Fondkommission




            38 2011
                          5
                                               Y
                                                           Y
                                                                                                                   Y
                                                                                                                                                                                       Y
                                                                                                                                                                                                                       Y




                                                                                                                                                                                                                                                                                       Bank Degroof




EPRA NEWS / 32 / 2010 _
                                                                                                                                                                                                                                                                                                              ANALYST COVERAGE TABLE




53.
 53.
                                                                                                                                                                                                                                                                                                                  REFERENCES

    ANALYST COVERAGE TABLE




                                                                                                                                                                                                                                                                                         Zuercher Kantonalbank

                                                                                                                                                                                                                                                                                                                 Arbuthnot Securities
                                                                                              % Free Float Weight




                                                                                                                                                                                                                                                                   Vontobel Securities
                                                                       Index Constituent?




                                                                                                                                                                                                                                                                                                                                                                                                       Theodoor Gilissen
                                                                                                                                                                                                     Bankhaus Metzler




                                                                                                                                                                                                                                                                                                                                        Cenkos Securities
                                                                                                                                                    Seymour Pierce




                                                                                                                                                                                                                        Charles Stanley




                                                                                                                                                                                                                                                                                                                                                                                                                                                       Banco Sabadell
                                                                                                                                                                                                                                                    HSH Nordbank
                                                                                                                    Close Borthers




                                                                                                                                                                                     WestLB Equity
                                                                                                                                     M.M. Warburg




                                                                                                                                                                     Silvia Quandt




                                                                                                                                                                                                                                                                                                                                                                            Pohjola Bank




                                                                                                                                                                                                                                                                                                                                                                                                                           Baader Bank

                                                                                                                                                                                                                                                                                                                                                                                                                                         Banca Akros
                                                                                                                                                                                                                                                                                                                                                                                           Solventis
                                                                                                                                                                                                                                                                                                                                                                  Metzler
                                                                                                                                                                                                                                          Fairfax
                                                  Full Mkt Cap




                                                                                                                                                                                                                                                                                                                                                            FIM
    Company                             Country        (EURm)

    Unibail - Rodamco                   FRA            13,111.68    13,111.68                13.87%                                                                                                                                                                                                                                                                                                                                                      Y
    Land Securities Group               UK            6,303.53      6,303.53                  7.09%                                                                                                                       Y                                                                                         Y
    British Land Co                     UK            5,648.34      5,648.34                  6.24%                                                                                                                       Y                Y
    Corio                               NETH           4,376.79     4,376.79                  4.63%
    Hammerson                           UK            3,598.69      3,598.69                  4.03%                                                                                                                       Y
    Capital Shopping Centres Group      UK            3,808.46      2,856.34                   3.13%                                                  Y                                                                   Y
    Segro                               UK             2,764.74     2,764.74                  2.99%                                                                                                                                        Y
    Klepierre                           FRA              5,197.31   2,598.66                  2.84%
    PSP Swiss Property                  SWIT          2,490.39      2,490.39                  2.74%                                                                                                                                                                   Y                     Y
    Fonciere Des Regions                FRA             4,173.75    2,086.87                  2.23%
    Swiss Prime Site                    SWIT           2,737.86     2,053.40                  2.26%                                                                                                                                                                   Y                     Y
    Derwent London                      UK              1,827.42    1,827.42                  2.06%
    Castellum                           SWED           1,683.42     1,683.42                  1.83%
    Gecina                              FRA           5,568.89      1,670.67                   1.78%
    Icade                               FRA            4,153.30     1,661.32                   1.76%
    Wereldhave                          NETH            1,521.94    1,521.94                   1.63%                                                                                                                                                                                                                                                                                                     Y
    Dt Euroshop Na                      GER             1,419.86    1,419.86                   1.51%                  Y                Y                               Y               Y               Y                                              Y                                                                                                            Y                                                        Y
    Great Portland Estates              UK               1,381.01   1,381.01                  1.48%                                                                                                                                                                                                                 Y
    Eurocommercial Properties           NETH            1,372.74    1,372.74                  1.48%                                                                                                                                                                                                                                                                                                      Y
    Cofinimmo                           BELG            1,315.04    1,315.04                  1.42%
    Mercialys                           FRA           2,543.88      1,271.94                  1.34%
    Silic                               FRA            1,643.83     1,232.87                    1.31%
    Hufvudstaden A                      SWED           1,626.38     1,219.79                   1.32%
    Fabege                              SWED           1,202.42     1,202.42                    1.31%
    Shaftesbury                         UK               1,195.37   1,195.37                    1.31%                                                 Y
    Capital & Counties Properties       UK              1,070.37    1,070.37                    1.13%
    Ca Immobilien                       OEST           1,066.91     1,066.91                    1.13%
    Sponda Oyj                          FIN           1,049.80      1,049.80                   1.21%                                                                                                                                                                                                                                                        Y                 Y
    Befimmo (Sicafi)                    BELG           1,009.92     1,009.92                  1.08%
    Conwert Immobilien Invest           OEST               974.31   974.31                    1.04%
    Vastned Retail                      NETH              966.75    966.75                     1.01%
    Deutsche Wohnen AG                  GER                921.52   921.52                    0.93%                   Y                                                Y               Y                                                              Y
    Kungsleden                          SWED               914.41   914.41                    1.00%
    London & Stamford Property          UK                 818.18   818.18                   0.86%                                                    Y
    Wihlborgs Fastigheter               SWED               764.91   764.91                    0.83%
    Gagfah                              GER           1,809.45      723.78                    0.78%                                    Y                                               Y               Y                                                                                                                                                                                    Y
    Allreal Hld N                       SWIT           1,425.65     712.83                    0.78%                                                                                                                                                                   Y                     Y
    ProLogis European Properties        NETH              943.44    707.58                     0.77%
    Azrieli Group                       ISR            2,274.78     682.43                    0.75%
    Beni Stabili                        ITA            1,304.62     652.31                    0.74%                                                                                                                                                                                                                                                                                                                                       Y
    Nieuwe Steen Inv                    NETH              640.64    640.64                    0.69%
    F&C Commercial Property Trust       UK                 814.21   610.65                    0.66%
    Norwegian Property ASA              NOR              608.66     608.66                    0.67%
    Citycon                             FIN                758.15   568.61                    0.62%                                                                                                                                                                                                                                                         Y                 Y
    Big Yellow Group                    UK                489.91    489.91                    0.54%                                                                                                                                                                                                                                        Y
    Klovern AB                          SWED              566.12    424.59                   0.48%
    Unite Group                         UK                383.33    383.33                    0.41%
    Helical Bar                         UK                 377.10   377.10                   0.40%                                                                                                                                         Y
    TAG Immobilien AG                   GER               374.24    374.24                    0.43%                   Y                Y                               Y                                                                              Y
    Grainger                            UK                498.91    374.19                   0.40%
    Warehouses De Pauw                  BELG              493.96    370.47                    0.39%
    Workspace Group                     UK                345.96    345.96                    0.35%                                                   Y                                                                                                                                                                                    Y
    Societe de la Tour Eiffel           FRA                341.29   341.29                    0.36%
    Alstria Office                      GER               662.20    331.10                    0.36%                                    Y                                               Y               Y                                                                                                                                                           Y                        Y                               Y
    UK Commercial Property Trust        UK              1,101.29    330.39                    0.36%
    Safestore Holdings                  UK                306.33    306.33                    0.33%
    St.Modwen Properties                UK                402.68    302.01                    0.33%
    Development Securities              UK                289.30    289.30                   0.30%                                                                                                                                                                                                                  Y                      Y
    DIC Asset AG                        GER                375.93   281.95                    0.32%                                                                    Y               Y               Y                                                                                                                                                           Y                        Y
    Inmobiliaria Colonial S.A.          SP               1,761.31   264.20                    0.29%                                                                                                                                                                                                                                                                                                                                                      Y
    Quintain Estates and                UK               261.54     261.54                   0.28%
    Development
    Technopolis                         FIN             255.44      255.44                   0.27%                                                                                                                                                                                                                                                          Y                 Y
    Vastned Off/Ind                     NETH            238.08      238.08                   0.24%                                                                                                                                                                                                                                                                                                        Y
    Primary Health Prop.                UK              234.50      234.50                   0.25%                                                                                                                                         Y
    ING UK Real Estate Income Trust     UK              205.60      205.60                   0.22%
    Immobiliare Grande Distribution     ITA             453.97      181.59                   0.20%                                                                                                                                                                                                                                                                                                                                        Y
    Colonia Real Estate                 GER              174.80     174.80                   0.09%                    Y                                                Y                                                                              Y
    Minerva                             UK               168.63     168.63                   0.20%
    Intervest Offices                   BELG             330.41     165.20                   0.18%
    Daejan Hdg                          UK              536.10      160.83                   0.18%
    CLS Holdings                        UK               319.52     159.76                    0.17%                                                   Y
    Invista Foundation Property Trust   UK                157.79    157.79                    0.17%
    Wereldhave Belgium                  BELG            388.44      155.37                    0.17%
    Patrizia Immobilien                 GER             294.64      147.32                   0.16%                    Y                Y
    Zueblin Immobilien Holding AG       SWIT              177.23    132.92                   0.15%                                                                                                                                                                    Y                     Y
    Eurobank Properties Real Estate     GRC             396.50      118.95                    0.13%
    Investment Co
    Leasinvest                          BELG             267.12     106.85                   0.12%
    Standard Life Inv Prop Inc Trust    UK                87.23     87.23                    0.09%
    Mucklow (A.& J.)Group               UK              209.58      83.83                    0.09%
    IRP Property Investments            UK              102.88      77.16                    0.09%
    Affine                              FRA              137.03     68.51                    0.07%
    ISIS Property Trust Ld              UK                90.33     67.75                    0.07%
    Lamda Develop/R                     GRC              170.33     51.10                    0.05%

    Total                                             117,231.27    92,376.93               100.00%                   5                5              5                5               5                4                  4               4          4               4                      4                       3                     3                3      3          3             3             3                  2             2             2
    Coverage %




 54. EPRA NEWS 38 2011
54. _ EPRA NEWS // 32 //2010
                          2
                                                      Y
                                                                                          Y
                                                                                                                                              Equita SIM




                          2
                                                                                                              Y
                                                                                                                  Y
                                                                                                                                              Erste Bank




                          2
                                  Y
                                                                                                                      Y
                                                                                                                                              Gilbert Dupont




                          2
                                                              Y
                                                                                                                              Y
                                                                                                                                              GSC Research




                          2
                                                      Y
                                                                                          Y
                                                                                                                                              Mediobanca




                          2
                                              Y
                                                                                                  Y
                                                                                                                                              Neue Zuercher




                          2
                                                              Y
                                                                                                      Y
                                                                                                                                              Solventis




                          2
                                                                                                              Y
                                                                                                                  Y
                                                                                                                                              SRC Research




                          2
                                                  Y
                                                                          Y
                                                                                                                                              VFB




                          1
                              Y
                                                                                                                          Y
                                                                                                                                              AEK




                          1
                                                          Y
                                                                                                                                              Ahorro Corporation




                          1
                              Y
                                          Y
                                                                                                                                              Alpha Finance




                          1
                                                                      Y
                                                                                                                                              Altium Capital




                          1
                                                                                      Y
                                                                                                                                              Arctic Securities




                          1
                                      Y
                                                                                                                                              Arden Partners




                          1
                                                                                                                                  Y




                                                                                                                                              Avior Research




                          1
                                                                                          Y
                                                                                                                                              Banca Leonardo




                          1
                                                          Y
                                                                                                                                              Banesto Bolsa




                          1
                                                          Y
                                                                                                                                              BBVA




                          1
                                                                              Y
                                                                                                                                              Brewin Dolphin




                          1
                                                                  Y
                                                                                                                                              Cazenove




                          1
                                                                                                          Y
                                                                                                                                              CBSeydler




                          1
                                                                                              Y
                                                                                                                                              CLAL Finance




                          1
                                                                                                                                      Y




                                                                                                                                              CS Capital




                          1
                                                                                              Y
                                                                                                                                              DS Securities




                          1
                                                                                      Y
                                                                                                                                              Edge Capital Markets




                          1
                                                                                                                              Y




                                                                                                                                              Equinet Institute




                          1
                                                                                  Y
                                                                                                                                              Erik Penser




                          1
                                                                      Y
                                                                                                                                              Espiritu Santo




                          1
                                                                                      Y


                                                                                                                                              First Securities

                                                                                                                                              GBC Investment




                          1
                                                                                                                              Y




                                                                                                                                              Research




                          1
                                                                                                                              Y




                              Y
                                                                                                                                              Hamburger Sparkasse




                          1
                                                                                              Y




                                                                                                                                              I.B.I.
                                                                                                                                                                                              Click here for
                                                                                                                                                                                              contents page.




                          1
                              Y
                                                                                                                                          Y




                                                                                                                                              Independent Research




            38 2011
                          1
                                                                                          Y




                                                                                                                                              Intermonte




EPRA NEWS / 32 / 2010 _
                                                                                                                                                                     ANALYST COVERAGE TABLE




55.
 55.
                                                                                                                                                                                                                                                                                                               REFERENCES

    ANALYST COVERAGE TABLE




                                                                                                % Free Float Weight
                                                                         Index Constituent?




                                                                                                                                 Meitav Investment




                                                                                                                                                                                                                       Pegasus Securities




                                                                                                                                                                                                                                                                                                                                                          Warburg Research
                                                                                                                                                                      Mirabaud Finance




                                                                                                                                                                                                                                                                          Psagot Investment




                                                                                                                                                                                                                                                                                                                                                                             Wood & Company
                                                                                                                                                                                                                                                                                                               Standard & Poor's
                                                                                                                                                                                                                                                     Piraeus Securities




                                                                                                                                                                                                                                                                                                                                                                                              Puilaetcodewaay
                                                                                                                                                                                                   Pareto Securities




                                                                                                                                                                                                                                                                                              Raiffeisenbank
                                                                                                                                                     Migdal Capital




                                                                                                                                                                                                                                                                                                                                   TSAF/Viel
                                                                                                                                                                                                                                            PHD AM
                                                                                                                      Investec




                                                                                                                                                                                                                                                                                                                                               Viscardi
                                                                                                                                                                                         Natixis




                                                                                                                                                                                                                                                                                                                                                                                                                Total
                                                    Full Mkt Cap
      Company                             Country        (EURm)

      Unibail - Rodamco                   FRA            13,111.68    13,111.68                13.87%                                                                                                                                                                                                            Y                                                                                              30
      Land Securities Group               UK            6,303.53      6,303.53                  7.09%                                                                                                                                                                                                                                                                                                           27
      British Land Co                     UK            5,648.34      5,648.34                  6.24%                                                                                                                                                                                                                                                                                                           26
      Corio                               NETH           4,376.79     4,376.79                  4.63%                                                                                     Y                                                                                                                                                                                                                     26
      Hammerson                           UK            3,598.69      3,598.69                  4.03%                                                                                                                                                                                                                                                                                                           25
      Capital Shopping Centres Group      UK            3,808.46      2,856.34                   3.13%                                                                                                                                                                                                                                                                                                          25
      Segro                               UK             2,764.74     2,764.74                  2.99%                                                                                                                                                                                                                                                                                                           22
      Klepierre                           FRA              5,197.31   2,598.66                  2.84%                                                                                                                                                                                                                               Y                                                                           25
      PSP Swiss Property                  SWIT          2,490.39      2,490.39                  2.74%                                                                                                                                                                                                                                                                                                           10
      Fonciere Des Regions                FRA             4,173.75    2,086.87                  2.23%                                                                                                                                                                                                                                                                                                           14
      Swiss Prime Site                    SWIT           2,737.86     2,053.40                  2.26%                                                                                                                                                                                                                                                                                                            4
      Derwent London                      UK              1,827.42    1,827.42                  2.06%                                                                                                                                                                                                                                                                                                           20
      Castellum                           SWED           1,683.42     1,683.42                  1.83%                                                                                                                                                                                                                                                                                                           17
      Gecina                              FRA           5,568.89      1,670.67                   1.78%                                                                                                                                                                                                                                                                                                          10
      Icade                               FRA            4,153.30     1,661.32                   1.76%                                                                                                                                                                                                                                                                                                          13
      Wereldhave                          NETH            1,521.94    1,521.94                   1.63%                                                                                                                                                                                                                                                                                                          19
      Dt Euroshop Na                      GER             1,419.86    1,419.86                   1.51%                                                                                    Y                                                                                                                                                                                                                     32
      Great Portland Estates              UK               1,381.01   1,381.01                  1.48%                                                                                                                                                                                                                                                                                                           22
      Eurocommercial Properties           NETH            1,372.74    1,372.74                  1.48%                                                                                                                                                                                                                                                                                                           20
      Cofinimmo                           BELG            1,315.04    1,315.04                  1.42%                                                                                                                                                                                                                                                                                                           16
      Mercialys                           FRA           2,543.88      1,271.94                  1.34%                                                                                                                                                                                                                                                                                                           15
      Silic                               FRA            1,643.83     1,232.87                    1.31%                                                                                                                                                                                                                                                                                                         12
      Hufvudstaden A                      SWED           1,626.38     1,219.79                   1.32%                                                                                                                                                                                                                                                                                                          17
      Fabege                              SWED           1,202.42     1,202.42                    1.31%                                                                                                                                                                                                                                                                                                         17
      Shaftesbury                         UK               1,195.37   1,195.37                    1.31%                                                                                                                                                                                                                                                                                                         18
      Capital & Counties Properties       UK              1,070.37    1,070.37                    1.13%                                                                                                                                                                                                                                                                                                          8
      Ca Immobilien                       OEST           1,066.91     1,066.91                    1.13%                                                                                                                                                                                                                                                                        Y                                 7
      Sponda Oyj                          FIN           1,049.80      1,049.80                   1.21%                                                                                                                                                                                                                                                                                                          18
      Befimmo (Sicafi)                    BELG           1,009.92     1,009.92                  1.08%                                                                                                                                                                                                                                                                                           Y                9
      Conwert Immobilien Invest           OEST               974.31   974.31                    1.04%                                                                                                                                                                                           Y                                                                                                               14
      Vastned Retail                      NETH              966.75    966.75                     1.01%                                                                                                                                                                                                                                                                                                          12
      Deutsche Wohnen AG                  GER                921.52   921.52                    0.93%                                                                                                                                                                                                                                                                                                           18
      Kungsleden                          SWED               914.41   914.41                    1.00%                                                                                                                                                                                                                                                                                                           16
      London & Stamford Property          UK                 818.18   818.18                   0.86%                                                                                                                                                                                                                                                                                                            10
      Wihlborgs Fastigheter               SWED               764.91   764.91                    0.83%                                                                                                                                                                                                                                                                                                           12
      Gagfah                              GER           1,809.45      723.78                    0.78%                                                                                                                                                                                                                                                                                                           17
      Allreal Hld N                       SWIT           1,425.65     712.83                    0.78%                                                                                                                                                                                                                                                                                                            4
      ProLogis European Properties        NETH              943.44    707.58                     0.77%                                                                                                                                                                                                                                                                                                           8
      Azrieli Group                       ISR            2,274.78     682.43                    0.75%                              Y                   Y                                                                                                                    Y                                                                                                                                    6
      Beni Stabili                        ITA            1,304.62     652.31                    0.74%                                                                                                                                                                                                                                                                                                           13
      Nieuwe Steen Inv                    NETH              640.64    640.64                    0.69%                                                                                                                                                                                                                                                                                                            7
      F&C Commercial Property Trust       UK                 814.21   610.65                    0.66%                                                                                                                                                                                                                                                                                                            2
      Norwegian Property ASA              NOR              608.66     608.66                    0.67%                                                                                                Y                                                                                                                                                                                                          10
      Citycon                             FIN                758.15   568.61                    0.62%                                                                                                                                                                                                                                                                                                           15
      Big Yellow Group                    UK                489.91    489.91                    0.54%                                                                                                                                                                                                                                                                                                           10
      Klovern AB                          SWED              566.12    424.59                   0.48%                                                                                                                                                                                                                                                                                                            12
      Unite Group                         UK                383.33    383.33                    0.41%                                                                                                                                                                                                                                                                                                            9
      Helical Bar                         UK                 377.10   377.10                   0.40%                                                                                                                                                                                                                                                                                                             6
      TAG Immobilien AG                   GER               374.24    374.24                    0.43%                                                                                                                                                                                                                                                                                                            8
      Grainger                            UK                498.91    374.19                   0.40%                                                                                                                                                                                                                                                                                                             8
      Warehouses De Pauw                  BELG              493.96    370.47                    0.39%                                                                                                                                                                                                                                                                                                            8
      Workspace Group                     UK                345.96    345.96                    0.35%                  Y                                                                                                                                                                                                                                                                                        14
      Societe de la Tour Eiffel           FRA                341.29   341.29                    0.36%                                                                                                                                                                                                                                                                                                            5
      Alstria Office                      GER               662.20    331.10                    0.36%                                                                                                                                                                                                                                                                                                           19
      UK Commercial Property Trust        UK              1,101.29    330.39                    0.36%                                                                                                                                                                                                                                                                                                            2
      Safestore Holdings                  UK                306.33    306.33                    0.33%                                                                                                                                                                                                                                                                                                           11
      St.Modwen Properties                UK                402.68    302.01                    0.33%                                                                                                                                                                                                                                                                                                            6
      Development Securities              UK                289.30    289.30                   0.30%                                                                                                                                                                                                                                                                                                            10
      DIC Asset AG                        GER                375.93   281.95                    0.32%                                                                                                                                                                                                                                           Y                                                               17
      Inmobiliaria Colonial S.A.          SP               1,761.31   264.20                    0.29%                                                                   Y                                                                                                                                                                                                                                        6
      Quintain Estates and                UK               261.54     261.54                   0.28%                                                                                                                                                                                                                                                                                                             4
      Development
      Technopolis                         FIN             255.44      255.44                   0.27%                                                                                                                                                                                                                                                                                                             5
      Vastned Off/Ind                     NETH            238.08      238.08                   0.24%                                                                                                                                                                                                                                                                                                             9
      Primary Health Prop.                UK              234.50      234.50                   0.25%                                                                                                                                                                                                                                                                                                             4
      ING UK Real Estate Income Trust     UK              205.60      205.60                   0.22%                                                                                                                                                                                                                                                                                                             2
      Immobiliare Grande Distribution     ITA             453.97      181.59                   0.20%                                                                                                                                                                                                                                                                                                             7
      Colonia Real Estate                 GER              174.80     174.80                   0.09%                                                                                                                                                                                                                                                                                                            10
      Minerva                             UK               168.63     168.63                   0.20%                                                                                                                                                                                                                                                                                                             2
      Intervest Offices                   BELG             330.41     165.20                   0.18%                                                                                                                                                                                                                                                                                                             4
      Daejan Hdg                          UK              536.10      160.83                   0.18%                                                                                                                                                                                                                                                                                                             0
      CLS Holdings                        UK               319.52     159.76                    0.17%                                                                                                                                                                                                                                                                                                            1
      Invista Foundation Property Trust   UK                157.79    157.79                    0.17%                                                                                                                                                                                                                                                                                                            2
      Wereldhave Belgium                  BELG            388.44      155.37                    0.17%                                                                                                                                                                                                                                                                                                            3
      Patrizia Immobilien                 GER             294.64      147.32                   0.16%                                                                                                                                                                                                                                                        Y                                                    9
      Zueblin Immobilien Holding AG       SWIT              177.23    132.92                   0.15%                                                                                                                                                                                                                                                                                                             3
      Eurobank Properties Real Estate     GRC             396.50      118.95                    0.13%                                                                                                                                                                                                                                                                                                            2
      Investment Co
      Leasinvest                          BELG             267.12     106.85                   0.12%                                                                                                                                                                                                                                                                                                             7
      Standard Life Inv Prop Inc Trust    UK                87.23     87.23                    0.09%                                                                                                                                                                                                                                                                                                             2
      Mucklow (A.& J.)Group               UK              209.58      83.83                    0.09%                                                                                                                                                                                                                                                                                                             3
      IRP Property Investments            UK              102.88      77.16                    0.09%                                                                                                                                                                                                                                                                                                             1
      Affine                              FRA              137.03     68.51                    0.07%                                                                                                                                         Y                                                                                                                                                                   4
      ISIS Property Trust Ld              UK                90.33     67.75                    0.07%                                                                                                                                                                                                                                                                                                             1
      Lamda Develop/R                     GRC              170.33     51.10                    0.05%                                                                                                                      Y                             Y                                                                                                                                                        3

      Total                                             117,231.27    92,376.93               100.00%                   1            1                  1                 1               2            1                    1                1            1                   1                  1                 1                 1           1            1                 1                 1
      Coverage %




 56. EPRA NEWS 38 2011
56. _ EPRA NEWS // 32 //2010
                                                                                                                                                                                          Click here for
                                                                                                                                                                                          contents page.


                                                  MEMBERS OFFERS
                                                  EPRA association membership not only offers anyone in the member organisation full access to the EPRA
                                                  website/archive, regular research, economic, regulatory and index statistics updates; but much more.
                                                  The following pages list several events and publication offers which are open to members.



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                                                                                                                                                                                                         EPRA NEWS / 32 / 2010 _
                                                                                                                                                                                                                     38 2011                                        57.
                                                                                                                                                                                                                                                                   57.
                                                                                       REFERENCES




                                                              MAPIC – The international market for retail real
  MIPIM – The world’s property market – 22nd edition          estate - 17th edition
  Date: March 08-11, 2011                                     Date: November 16-18, 2011
  Palais des Festivals, Cannes, France                        Palais des Festivals, Cannes, France

  MIPIM is the leading marketplace for investors,             MAPIC brings together the key players in retail real es-
  developers, local government and other real estate          tate, in one place and at one time, providing major busi-
  professionals, which provide a unique opportunity for       ness opportunities on a global scale. It attracts 7,400 key
  industry decision-makers to meet, develop long-term         retail property professionals from 67 countries, among
  relationships and showcase their latest development         them 2,000 retailers, 750 specialised investors and 100
  projects.                                                   local authorities

  Be part of the real estate industry’s most proven busi-     MAPIC covers the largest selection of development sites
  ness platform to promote your business and showcase         in city centres, outskirts, out of town areas, stations,
  your projects to 18,000 active professional from 81         airports and leisure centres; as well as accelerates
  countries, identify profitable ventures, and close deals    networking and business building by combining exhibi-
  in four intensive days.                                     tion, conferences, events and an online community.

  EPRA members attending MIPIM for the first time will        This unique event provides opportunities to acquire
  benefit from:                                               more market intelligence, make more contacts, and con-
  • Free entrance to the exhibition area                      clude more deals in three days than in three months.
  • Year-round access to MIPIMWorld, our online data-
    base and networking tool                                  www.mapic.com

  This offer is strictly limited to investors and financial
  institutions and restricted to one person per company
  per country.

  Please check eligibility by contacting Alexandra            MIPIM ASIA –
  Benmoussa on: +33 (0141 90 44 36, or at: alexandra.         The world’s property market in Asia Pacific
  benmoussa@reedmidem.com. A formal invitation will           November 15-17, 2011
  then be sent to you accordingly.                            Hong Kong Convention & Exhibition Centre, Hong Kong

  www.mipim.com                                               Access the best business opportunities at the world’s
                                                              leading Asian property market.

                                                              MIPIM Asia 2011, while building on the strengths of last
                                                              years’ events, will offer new features, new content and
                                                              enhanced networking and business opportunities:
                                                              • Face-to-face targeted meetings with 2,000 influential
                                                                real estate professionals.
                                                              • A unique platform to spark deals and partnerships
                                                                with over 500 international investors, corporate end-
                                                                users, hotel groups and retailers.
                                                              • A showcase of the most lucrative development
                                                                projects from 46 countries.



58. EPRA NEWS / 33 / 2010
                                                                                          Click here for
                                                                                          contents page.




• A comprehensive conference programme designed
  to help you stay ahead of the curve and develop a
  winning strategy.



                                                           Cityscape Abu Dhabi
                                                           The Cityscape Abu Dhabi Real Estate Investment and
                                                           Development Exhibition and Summit is set for its fifth
                                                           edition from April 17-20, at the Abu Dhabi National
                                                           Exhibition Centre.

                                                           The event is a platform for discussion and face-to-face
                                                           interaction for senior-level real estate investors, devel-
                                                           opers and professionals. The four-day event includes an
                                                           exhibition, a summit, workshops and multiple network-
                                                           ing opportunities such as the Investor Round Tables, the
                                                           CEO Networking Breakfast, Networking Lunch, Welcom-
                                                           ing Reception and more.

                                                           EPRA members have been granted complimentary ac-
                                                           cess to the following 2011 events:
                                                           • Cityscape Abu Dhabi Welcoming Reception (April 16)
Reality                                                    • Middle East Real Estate Summit (April 17-20)*
Date: May 24-26, 2011                                      • Cityscape Abu Dhabi Exhibition (April 17-20)
Brussels, Belgium                                          • Investor Round Tables (April 17-20)
                                                           • CEO Networking Breakfast (April 18)
REALTY provides you with a complete overview of            • Cityscape Awards for Real Estate in the Middle East
what Belgium has to offer in real estate investment op-      and North Africa (April 18)
portunities. Last edition welcomed 3,500 institutional     • Cityscape Abu Dhabi Cocktail Party (April 19)
investors, end users and public authorities. Although      • (Total value USD 1,740)
small in scale compared to other international shows,
REALTY creates unique opportunities to engage in face-     Visit : www.cityscapeabudhabi.com/epra
to-face networking and to sound out business potential.    for further details on various functions.
REALTY is a must-attend event for top investors world-
wide with an interest in Belgian real estate.              Please note: this offer is limited and will be allocated
                                                           on a first come first served basis. Priority will be given
EPRA members attending REALTY will benefit from:           to those who RSVP by March 17. To take up this offer,
• Free entrance to exhibition area, conference sessions,   please send an email with your EPRA membership and
  met & greets and networking events.                      contact details quoting “EPRA” to: csinvestorrelations@
• Two free nights’ accommodation (Hotel Le Plaza ****)     iirme.com. You will then receive a call or email to proc-
  and personalised shuttle service.                        ess your registration.
                                                           * Subject to company profile

Check eligibility by contacting Annelies Dedecker on:
+32(0)9241 94 26, or at: annelies.dedecker@artexis.com.

This invitation is strictly limited to investors and fi-
nancial institutions, and restricted to two persons per
company per country.

www.realty-brussels.com



                                                                                                  EPRA NEWS / 33 / 2010   59.
                                                                                                                                                                                                     REFERENCES


                                    FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                    GLOBAL

                                 400
                                              GLOBAL Global TR (USD) 123.8%
                                                EPRA/NAREIT
                                 350                 EPRA/NAREIT North America TR (USD) 108.5%
                                                     EPRA/NAREIT Asia TR (USD) 172.8%
Index Value (rebased to 100)




                                 300                 EPRA/NAREIT Europe TR (EUR) 67.1%


                                 250



                                 200



                                 150



                                 100



                                  50
                                    Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11




                                       Top 5 and Bottom 5 Performers
                                                                                                     investment                                Price Return     Total Return        Total Rtn (%)      Total Rtn (%)      Total Rtn (%)            Div Yld (%)
                                       Company                                    Country            Focus              Sector                     (%)              (Jan)                    YTD                  -1Y                -3Y               Jan
                                       Q Patrizia Immobilien                      Germany            Rental             Residential                  28.39              28.39             28.39                57.51               4.34                   0.00
                                       Q Minerva                                  UK                 Non-Rental         Diversified                   26.18              26.18             26.18              38.89               -10.50                  0.00
                                       Q First Industrial Realty *                USA                Rental             Industrial                     16.67              16.67            16.67               99.61             -28.69                   0.00
                                       Q Inmobiliaria Colonial S.A.               Sweden             Rental             Diversified                   14.55              14.55             14.55              -61.82             -65.93                   0.00
                                       Q Douglas Emmett                           USA                Rental             Office                         11.02              11.02            12.23                34.71              -5.02                  0.02
                                       q City Developments                        Singapore          Non-Rental         Diversified                    -9.55              -9.55            -9.55                 5.97                -NA-                 0.01
                                       q Fabege                                   Sweden             Rental             Office                       -10.25             -10.25              -7.70              64.77                 9.07                 0.03
                                       q Agree Realty Corp *                      USA                Rental             Retail                        -11.23             -11.23             -3.51             28.99                -0.28                  0.09
                                       q Capital Shopping Centres Group *         UK                 Rental             Retail                        -11.97             -11.97            -11.97                7.25             -14.36                  0.04
                                       q Japan Prime Realty Inv. *                Japan              Rental             Office                       -12.04             -12.04               -7.10             33.86                -3.09                 0.06


                                       Top 10 on Market Cap
                                                                                                     investment                               Market Cap                            Total Rtn (%)      Total Rtn (%)      Total Rtn (%)            Div Yld (%)
                                       Company                                    Country            Focus              Sector                  (EUR m)          (%) Weight                  YTD                  -1Y                -3Y               Jan
                                       1 Sun Hung Kai Props                       Hong Kong          Non-Rental         Diversified                     0.70               0.70               2.79             32.30              12.09                    0.02
                                       2 Simon Property Group *                   USA                Rental             Retail                          1.97               1.97              3.50               43.01              8.78                    0.03
                                       3 Westfield Group *                        Australia          Rental             Retail                           2.71               2.71            10.96               12.44              3.06                    0.10
                                       4 Mitsubishi Estate                        Japan              Non-Rental         Diversified                     2.92               2.92               3.72               6.40             -9.99                    0.01
                                       5 Mitsui Fudosan                           Japan              Non-Rental         Diversified                     3.03               3.03              4.39               10.10              -6.71                   0.01
                                       6 Unibail-Rodamco *                        France             Rental             Diversified                    -5.81              -5.81              -0.41               6.83              4.06                    0.06
                                       7 Vornado Realty Trust *                   USA                Rental             Diversified                      5.71             6.54               8.56              39.86               2.82                    0.03
                                       8 Equity Residential Props *               USA                Rental             Residential                     4.31               4.31               7.70             74.57              16.93                    0.03
                                       9 Public Storage *                         USA                Rental             Self Storage                    7.45               7.45              10.12             41.05              14.35                    0.03
                                       10 HCP *                                   USA                Rental             Health Care                    0.82               0.82               4.59               35.73              9.86                    0.05


                                       Indices
                                                                                                                                               Market Cap          Close Value      Total Rtn (%)      Total Rtn (%)      Total Rtn (%)            Div Yld (%)
                                       Index Description                                                                                         (EUR m)               Jan                   YTD                  -1Y                -3Y               Jan
                                       EPRA/NAREIT Europe TR (EUR)                                                                                89,413.34            2120.06               15.45              17.70             -11.24                   4.18
                                       EPRA/NAREIT Asia TR (USD)                                                                                 306,179.92             2352.2              13.95              14.66               -11.67                 3.41
                                       EPRA/NAREIT North America TR (USD)                                                                        337,107.80             3476.5              25.49              43.36               -5.34                  3.69
                                       EPRA/NAREIT Global TR (USD)                                                                              768,453.88            2,851.93               18.18             24.74               -9.25                  3.65




                                       Regional Breakdown by Market Cap                                           Investment Focus Market Cap Breakdown                                      Investment Focus
                                                                                                                                                                                             Sector Breakdown Market Cap Breakdown

                                                                            Asia            38.8%                                                     Global Non-Rental 25.2%                                                      Global Industrial        4.4%
                                                                                                                                                                                                                                   Global Residential       9.8%
                                                                            Europe          15.2%                                                     Global Rental     74.8%
                                                                                                                                                                                                                                   Global Speciality        1.4%
                                                                            North America   45.8%
                                                                                                                                                                                                                                   Self Storage             2.3%
                                                                            Middle East     0.1%                                                                                                                                   Global Retail           22.2%
                                                                                                                                                                                                                                   Global Office           14.2%
                                                                                                                                                                                                                                   Global Lodging/Resorts 3.3%
                                                                                                                                                                                                                                   Global Industrial/Office 1.1%
                                                                                                                                                                                                                                   Global Healthcare        5.9%
                                                                                                                                                                                                                                   Global Diversified      35.4%




                                60. EPRA NEWS 38 2011
                               60. _ EPRA NEWS // 32 //2010
                                                                                                                                                                         Click here for
                                                                                                                                                                         contents page.

                                                                                             FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                                                                                                                                                                                           ASIA


          GLOBAL                                                                                                                                                                                                           500


                 EPRA/NAREIT Hong Kong TR (HKD) 321.3%
                 EPRA/NAREIT Japan TR (JPY) 101.1%
                                                                                                                                                                                                                           400
                 EPRA/NAREIT Singapore TR (SGD) 175.8%




                                                                                                                                                                                                                                  Index Value (rebased to 100)
                 EPRA/NAREIT Australia TR (AUD) -6.0%

                                                                                                                                                                                                                           300




                                                                                                                                                                                                                           200




                                                                                                                                                                                                                           100




                                                                                                                                                                                                                           0

Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11




   Top 5 and Bottom 5 Performers
                                                                  investment                              Price Return      Total Return        Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
   Company                                    Country             Focus             Sector                    (%)               (Jan)                    YTD                 -1Y                -3Y             Jan
   Q Charter Hall Office reiT *               Australia           Rental            Office                         9.47                9.47             9.47                5.76            -22.97                5.69%
   Q ING Office Fund *                        Australia           Rental            Office                           8.11                8.11           15.14                4.75             -5.37               6.50%
   Q United Urban Investment *                Japan               Rental            Diversified                     7.90                7.90          26.65               66.76                17.91              4.98%
   Q New World China Land                     Hong Kong           Non-Rental        Diversified                     7.88                7.88          10.27               35.29                3.02               2.22%
   Q Mori Trust Sogo REIT *                   Japan               Rental            Office                          7.55                7.55          12.40                 11.56            -0.33                5.34%
   q FKP Property Group                       Australia           Non-Rental        Diversified                    -7.02               -7.02           -4.21               17.00            -14.59                3.02%
   q Allgreen Properties                      Singapore           Non-Rental        Diversified                    -7.63               -7.63          -4.24                 -3.42              8.45               3.67%
   q Yanlord Land Group                       Singapore           Non-Rental        Diversified                   -8.33               -8.33           -8.33               -12.50               -NA-               1.09%
   q City Developments                        Singapore           Non-Rental        Diversified                   -9.55               -9.55            -9.55                 5.97              -NA-               0.70%
   q Japan Prime Realty Inv. *                Japan               Rental            Office                       -12.04              -12.04              -7.10            33.86              -3.09                6.23%


   Top 10 on Market Cap
                                                                  investment                               Market Cap                           Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
   Company                                    Country             Focus             Sector                   (EUR m)            (%) Weight               YTD                 -1Y                -3Y             Jan
   1 Sun Hung Kai Props                        Hong Kong          Non-Rental        Diversified                    0.70                0.70              2.79             32.30              12.09                2.08%
   2 Westfield Group *                         Australia          Rental            Retail                           2.71                2.71          10.96              12.44               3.06                9.55%
   3 Mitsubishi Estate                         Japan              Non-Rental        Diversified                    2.92                2.92              3.72              6.40              -9.99                 0.77%
   4 Mitsui Fudosan                            Japan              Non-Rental        Diversified                    3.03                3.03             4.39               10.10               -6.71               1.32%
   5 Hongkong Land Hldgs                       Hong Kong          Rental            Office                        -2.49               -2.49            -0.28              53.52              18.40                2.27%
   6 Sumitomo Realty & Dev                     Japan              Non-Rental        Diversified                    2.68                2.68               3.71            24.83              -4.95                1.00%
   7 Wharf Holdings                            Hong Kong          Non-Rental        Diversified                     -1.51               -1.51            -1.51            52.59               -NA-                 1.70%
   8 Hang Lung Properties                      Hong Kong          Non-Rental        Diversified                    -5.91               -5.91           -3.96               31.74              19.73               2.08%
   9 Capitaland                                Singapore          Non-Rental        Diversified                   -2.96               -2.96             -1.48              -5.31                4.15              2.92%
   10 Stockland Trust Group *                  Australia          Non-Rental        Diversified                    0.00                0.00             6.22                2.52              -3.97               6.28%


   Indices
                                                                                                           Market Cap          Close Value      Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
   Index Description                                                                                         (EUR m)               Jan                   YTD                 -1Y                -3Y             Jan
   EPRA/NAREIT Australia TR (AUD)                                                                             70,186.87             1308.97               2.45              5.76             -17.76                 6.51
   EPRA/NAREIT Hong Kong TR (HKD)                                                                           944,009.55               2738.6               0.07             29.74               0.88                 2.3
   EPRA/NAREIT Japan TR (JPY)                                                                              679,9203.85              2137.33               1.49             16.20             -11.58                2.42
   EPRA/NAREIT Singapore TR (SGD)                                                                            51,098.66              1592.74              -3.35              8.03              -3.50                3.08




   Country Breakdown by Market Cap                                             Investment Focus Market Cap Breakdown                                     Investment Focus
                                                                                                                                                         Sector Breakdown Market Cap Breakdown

                                         New Zealand      0.2%                                                      Asia Non-Rental 60.0%                                                    Retail       17.3%
                                                                                                                                                                                             Residential 4.6%
                                         Australia        22.2%                                                     Asia Rental     40.0%
                                                                                                                                                                                             Office       13.0%
                                         Japan            26.4%
                                                                                                                                                                                             Industrial    4.1%
                                         Hong Kong        38.5%                                                                                                                              Diversified 60.9%
                                         Singapore        12.7%




                                                                                                                                                                                                EPRA NEWS / 32 / 2010 _
                                                                                                                                                                                                            38 2011         61.
                                                                                                                                                                                                                           61.
                                                                                                                                                                                                      REFERENCES

                                      FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                      EUROPE
                               500

                                                      EPRA/NAREIT Sweden TR (SEK) 285.8%
                                                      EPRA/NAREIT France TR (EUR) 227.9%
                                400
                                                      EPRA/NAREIT Netherlands TR (EUR) 120.7%
Index Value (rebased to 100)




                                                      EPRA/NAREIT UK TR (GBP) 24.2%

                                300




                                200




                                100




                                0
                                     Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11




                                       Top 5 and Bottom 5 Performers
                                                                                                        investment                             Price Return      Total Return        Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
                                       Company                                     Country              Focus           Sector                     (%)               (Jan)                    YTD                 -1Y                -3Y             Jan
                                       Q Patrizia Immobilien                       Germany              Rental          Residential                  28.39                28.39           28.39                57.51              4.34                  0.00%
                                       Q Minerva                                   UK                   Non-Rental      Diversified                   26.18                26.18           26.18              38.89             -10.50                  0.00%
                                       Q Inmobiliaria Colonial S.A.                Sweden               Rental          Diversified                   14.55                14.55           14.55              -61.82            -65.93                  0.00%
                                       Q Safestore Holdings                        UK                   Rental          Self Storage                   10.19                10.19           14.21               8.57              -0.34                 3.46%
                                       Q Beni Stabili                              Italy                Rental          Office                          9.95                 9.95          12.32                17.81              3.36                  2.16%
                                       q Quintain Estates                          UK                   Non-Rental      Diversified                     -7.14                -7.14            -7.14           -33.62            -40.87                  0.00%
                                       q Klovern AB                                Sweden               Rental          Diversified                    -7.35                -7.35          -3.68               36.46              13.36                  3.97%
                                       q Hufvudstaden A                            Sweden               Rental          Office                         -7.83                -7.83           -5.16              36.70               8.31                 2.90%
                                       q Fabege                                    Sweden               Rental          Office                       -10.25               -10.25             -7.70             64.77               9.07                 2.84%
                                       q Capital Shopping Centres Group *          UK                   Rental          Retail                        -11.97               -11.97          -11.97                7.25            -14.36                 4.49%


                                       Top 10 on Market Cap
                                                                                                        investment                              Market Cap                           Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
                                       Company                                     Country              Focus           Sector                    (EUR m)           (%) Weight                YTD                 -1Y                -3Y             Jan
                                       1 Unibail-Rodamco *                          France              Rental           Diversified                    -5.81               -5.81            -0.41              6.83                4.06                 5.74%
                                       2 Land Securities *                          UK                  Rental           Diversified                     0.07                0.07            4.23               9.68               -17.57                4.15%
                                       3 British Land *                             UK                  Rental           Diversified                     -1.14               0.10            5.60              24.78               -9.84                 5.01%
                                       4 Corio *                                    Netherlands         Rental           Retail                        -0.79               -0.79              4.73              12.91                1.82               5.56%
                                       5 Hammerson *                                UK                  Rental           Retail                         2.88                2.88             6.82               17.52             -13.63                3.65%
                                       6 Capital Shopping Centres Group *           UK                  Rental           Retail                        -11.97              -11.97           -11.97               7.25            -14.36                 4.49%
                                       7 PSP Swiss Property                         Switzerland         Rental           Office                         -1.67               -1.67              1.93            25.43               10.07                3.66%
                                       8 SEGRO *                                    UK                  Rental           Industrial                      4.16                4.16            9.26              -0.34             -27.98                 4.73%
                                       9 Klepierre *                                France              Rental           Retail                          -1.61               -1.61            3.02                3.11             -4.37                 4.71%
                                       10 Swiss Prime Site                          Switzerland         Rental           Office                          -1.72               -1.72            -1.72             21.31                11.71              0.00%


                                       Indices
                                                                                                                                                Market Cap          Close Value      Total Rtn (%)     Total Rtn (%)      Total Rtn (%)          Div Yld (%)
                                       Index Description                                                                                          (EUR m)               Jan                   YTD                 -1Y                -3Y             Jan
                                       EPRA/NAREIT UK TR (GBP)                                                                                     27,457.72            1626.34              -0.98              11.76             -15.09                  3.84
                                       EPRA/NAREIT Netherlands TR (EUR)                                                                            9745.96              3262.48              -0.96             14.85               0.90                   5.83
                                       EPRA/NAREIT France TR (EUR)                                                                                23,215.62             4494.55              -2.36              10.77               3.61                  5.18
                                       EPRA/NAREIT Sweden TR (SEK)                                                                                56,670.14             5994.46              -5.25             42.94               11.77                  3.79




                                       Country Breakdown by Market Cap                                               Investment Focus Market Cap Breakdown                                     Investment Focus
                                                                                                                                                                                               Sector Breakdown Market Cap Breakdown

                                                                              United Kingdom    35.6%                                                    Europe Non-Rental 4.0%                                                      Speciality          0.4%
                                                                                                                                                                                                                                     Self Storage        0.9%
                                                                              Nederlands        10.8%                                                    Europe Rental     96%
                                                                                                                                                                                                                                     Retail             22.8%
                                                                              France            25.8%
                                                                                                                                                                                                                                     Residential         3.4%
                                                                              Austria           2.2%                                                                                                                                 Office             18.3%
                                                                              Sweden            7.1%                                                                                                                                 Lodgings/Resorts      0%
                                                                              Other countries   18.5%                                                                                                                                Industrial          4.0%
                                                                                                                                                                                                                                     Healthcare          0.3%
                                                                                                                                                                                                                                     Diversified        49.9%




                                62. EPRA NEWS 38 2011
                               62. _ EPRA NEWS // 32 //2010
                                                                                                                                                                         Click here for
                                                                                                                                                                         contents page.
                                                                                            FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                                                                                                                                                         NORTH AMERICA
                                                                                                                                                                                                                              300

         GLOBAL United States TR (USD) 100.9%
           EPRA/NAREIT
         GLOBAL Canada TR (CAD) 132.9%
           EPRA/NAREIT
                                                                                                                                                                                                                              250




                                                                                                                                                                                                                                    Index Value (rebased to 100)
                                                                                                                                                                                                                              200




                                                                                                                                                                                                                              150




                                                                                                                                                                                                                              100




                                                                                                                                                                                                                        50
Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11




 Top 5 and Bottom 5 Performers
                                                                investment                                Price Return     Total Return        Total Rtn (%)      Total Rtn (%)      Total Rtn (%)          Div Yld (%)
 Company                                      Country           Focus              Sector                     (%)              (Jan)                    YTD                  -1Y                -3Y             Jan
 Q First Industrial Realty *                  USA               Rental             Industrial                    16.67               16.67           16.67               99.61             -28.69                  0.00%
 Q Douglas Emmett                             USA               Rental             Office                        11.02               11.02           12.23               34.71               -5.02                  2.17%
 Q Extra Space Storage *                      USA               Rental             Self Storage                 10.52                10.52           14.54              75.59                 13.15                2.08%
 Q Duke Realty Corp *                         USA               Rental             Office Mixed                  9.95                 9.95           14.04              25.53              -10.58                  4.96%
 Q Hospitality Properties *                   USA               Rental             Lodging/Resorts                7.94                9.90            11.85             16.50                -5.28                  7.24%
 q Campus Crest Communities                   USA               Rental             Residential                  -5.85                -5.85           -4.94            #DIV/0!                 -NA-                 0.96%
 q Pennsylvania Real Estate *                 USA               Rental             Retail                       -5.99                -5.99           -2.89              57.48               -13.70                 4.39%
 q Orient Express Hotel                       USA               Rental             Lodging/Resorts              -6.39                -6.39           -6.39              24.59               -38.17                 0.00%
 q Getty Realty *                             USA               Rental             Retail                         -7.16                -7.16          -1.09             43.44                 9.67                  6.61%
 q Agree Realty Corp *                        USA               Rental             Retail                       -11.23               -11.23            -3.51           28.99                -0.28                   8.77%


 Top 10 on Market Cap
                                                                investment                                Market Cap                           Total Rtn (%)      Total Rtn (%)      Total Rtn (%)          Div Yld (%)
 Company                                      Country           Focus              Sector                   (EUR m)           (%) Weight                YTD                  -1Y                -3Y             Jan
 1 Simon Property Group *                     USA               Rental             Retail                          1.97                1.97            3.50               43.01                8.78                  3.15%
 2 Vornado Realty Trust *                     USA               Rental             Diversified                     5.71               6.54             8.56              39.86                2.82                   3.13%
 3 Equity Residential Props *                 USA               Rental             Residential                    4.31                4.31              7.70              74.57              16.93                  3.38%
 4 Public Storage *                           USA               Rental             Self Storage                   7.45                7.45             10.12             41.05               14.35                  2.94%
 5 Boston Properties *                        USA               Rental             Office                          9.61                9.61            12.14             48.84                3.40                   2.12%
 6 Host Hotels & Resorts *                    USA               Rental             Lodging/Resorts                3.58                3.58             3.69               74.81               5.40                  0.22%
 7 HCP *                                      USA               Rental             Health Care                    0.82                0.82             4.59               35.73               9.86                   5.01%
 8 Avalonbay Communities *                    USA               Rental             Residential                    3.00                3.00              6.18             55.98                11.32                 3.08%
 9 Ventas *                                   USA               Rental             Health Care                    5.68                5.68              9.67             36.39                11.73                 3.86%
 10 Kimco Realty *                            USA               Rental             Retail                         0.28                0.28              5.27             50.00              -15.49                  3.98%


  Indices
                                                                                                           Market Cap          Close Value     Total Rtn (%)      Total Rtn (%)      Total Rtn (%)           Div Yld (%)
  Index Description                                                                                          (EUR m)               Jan                  YTD                  -1Y                -3Y              Jan
  EPRA/NAREIT Canada TR (CAD)                                                                                34,979.08             4136.98               3.04             28.45                7.99                   5.36
  EPRA/NAREIT United States TR (USD)                                                                        336 312.34             3542.61                3.16             39.97               1.22                   3.43




 Country Breakdown by Market Cap                                             Investment Focus Market Cap Breakdown                                      Investment Focus
                                                                                                                                                        Sector Breakdown Market Cap Breakdown

                                        United States   90.6%                                                 North America Non-Rental 97.3%                                                   Speciality           3.0%
                                                                                                              North America Rental      2.7%                                                   Self Storage         4.7%
                                        Canada          9.4%
                                                                                                                                                                                               Retail              26.2%
                                                                                                                                                                                               Residential         16.4%
                                                                                                                                                                                               Office              13.8%
                                                                                                                                                                                               Lodgings/Resorts     6.9%
                                                                                                                                                                                               Industrial           4.8%
                                                                                                                                                                                               Industrial/Office    2.4%
                                                                                                                                                                                               Healthcare          12.8%
                                                                                                                                                                                               Diversified          9.0%




                                                                                                                                                                                                 EPRA NEWS / 32 / 2010 _
                                                                                                                                                                                                             38 2011          63.
                                                                                                                                                                                                                             63.
                                                                                                                                                                                                        REFERENCES

                                      FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                      EMERGING MARKETS

                               250

                                                     EPRA/NAREIT AIM TR (USD) -53.6%
                                                     EPRA/NAREIT Emerging Market TR (USD) 93.7%
                               200
Index Value (rebased to 100)




                                150




                                100




                                 50




                                 0
                                     Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07                      Jul 07    Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10                            Jul 10   Oct 10     Jan 11




                                      Top 5 and Bottom 5 Performers
                                                                                                     investment                            Price Return         Total Return           Total Rtn (%)     Total Rtn (%)    Total Rtn (%)        Div Yld (%)
                                      Company                                   Country              Focus                 Sector              (%)                  (Jan)                       YTD                 -1Y              -3Y           Jan
                                      Q LBS Bina Group BHD                      Malaysia             Non-rental            Diversified            12.07                      12.07            12.07             -19.25              8.78          0.00%
                                      Q Tebrau Teguh Bhd                        Malaysia             Non-rental            Diversified            10.14                      10.14            10.14             22.56             -8.39           0.00%
                                      Q Glomac Bhd                              Malaysia             Non-rental            Diversified             9.70                       9.70             9.70             40.37              12.47          3.52%
                                      Q SP Setia                                Malaysia             Non-rental            Diversified             7.90                       7.90             7.90             60.40             11.06            1.75%
                                      Q Hung Poo Real Estate Development        Taiwan               Non-rental            Diversified              7.01                       7.01             7.01              9.32            12.63           7.09%
                                      q IVRCL Assets & Holdings                 India                Non-rental            Diversified           -24.41                     -24.41           -24.41            -49.25            -31.25           0.00%
                                      q Orbit Corporation                       India                Non-rental            Diversified          -25.00                     -25.00           -25.00             -58.89            -45.10           2.50%
                                      q Unitech                                 India                Non-rental            Diversified           -27.33                     -27.33           -27.33              -35.17         -49.79            0.42%
                                      q Aldar Properties PJSC                   UAE                  Non-rental            Diversified           #N/A                       #N/A             #N/A               #N/A                -NA-           3.07%
                                      q Ansal Properties & Infrastructure       India                Non-rental            Diversified           -30.91                     -30.91           -30.91              -37.15         -43.40            1.20%


                                      Top 10 on Market Cap
                                                                                                     investment                             Market Cap                                 Total Rtn (%)     Total Rtn (%)    Total Rtn (%)        Div Yld (%)
                                      Company                                   Country              Focus                 Sector             (EUR m)                (%) Weight                 YTD                 -1Y              -3Y           Jan
                                      1 PDG Realty S/A Empreendimentos           Brazil              Non-rental            Diversified            -9.25                      -9.25            -9.25              22.85            18.97                1.12%
                                        e Participacoes Ord
                                      2 Growthpoint Prop Ltd                     South Africa        Rental                Diversified             -6.11                      -6.11             -6.11            30.25            12.70               7.04%
                                      3 Cyrela Brazil Realty S/A Empreendi-      Brazil              Non-rental            Diversified            -15.74                     -15.74           -15.74             -12.75           -5.86               2.56%
                                        mentose e Participacoes Or
                                      4 Redefine Income Find                     South Africa        Rental                Diversified             0.86                       0.86             21.19            20.35               5.49              7.50%
                                      5 BR Malls Participacoes S/A Ord           Brazil              Rental                Retail                 14.92                      14.92            53.43              69.17             8.98               0.75%
                                      6 Gafisa                                   Brazil              Non-rental            Residential             8.05                       8.05               0.71            8.80              -1.83              0.85%
                                      7 DLF                                      India               Non-rental            Diversified              -7.51                      -7.51           -2.78             -4.61            -27.75              0.57%
                                      8 Emaar Properties                         UAE                 Non-rental            Diversified             -NA-                       -NA-              -NA-             -NA-               -NA-               5.12%
                                      9 SP Setia                                 Malaysia            Non-rental            Diversified             7.90                       7.90              7.90            60.40              11.06               1.75%
                                      10 MRV Engenharia e Participacoes SA       Brazil              Non-rental            Residential             3.36                       3.36            18.95             53.49             12.80               1.03%


                                      Indices
                                                                                                                                            Market Cap              Close Value        Total Rtn (%)     Total Rtn (%)    Total Rtn (%)        Div Yld (%)
                                      Index Description                                                                                       (EUR m)                   Jan                     YTD                 -1Y              -3Y           Jan
                                      EPRA/NAREIT Emerging Market TR (USD)                                                                   53,684.33                     1991.38             -13.02             13.21           -3.36                 2.6
                                      EPRA/NAREIT AIM TR (USD)                                                                               21,859.63                     1823.72             -12.28              5.14          -12.86                 1.79




                                      Country Breakdown by Market Cap                                                Global Breakdown by Country
                                                                                                                                                           Brazil            31.2%
                                                                          Asia Pacific       40.7%
                                                                                                                                                           China             11.0%
                                                                          Europe              7.0%                                                         Egypt              0.7%
                                                                          Middle East/Africa 20.0%                                                         India              7.8%
                                                                          Americas           37.6%                                                         Indonesia          3.8%
                                                                                                                                                           Malaysia           7.2%
                                                                                                                                                           Mexico             6.3%
                                                                                                                                                           Philippines        5.4%
                                                                                                                                                           Poland             1.2%
                                                                                                                                                           South Aftrica     15.3%
                                                                                                                                                           South Korea          0%
                                                                                                                                                           Thailand           5.2%
                                                                                                                                                           Turkey             0.3%
                                                                                                                                                           Taiwan             0.4%
                                                                                                                                                           UAE                4.0%




                                64. EPRA NEWS 38 2011
                               64. _ EPRA NEWS // 32 //2010
                                                                                                                                 Click here for
                                                                                                                                 contents page.
                                                               FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
                                                                                                                                    TOTAL MARKET



                           2009 GDP          2009 GDP       2009 Real Estate               31 Jan 11            31 Jan 11                31 Jan 11                31 Jan 11
Countries                     ($ Bn)      per capita ($)              ($ Bn)    Total Listed ($ Bn)    No. of Companies      Index Mkt Cap ($ Bn) Total RE v Listed RE (%)
Japan                         4,806             37,696                2,162                  165.0                 113.0                      83                    7.63%
Hong Kong/China               4,532              3,492                1,058                  172.0                200.0                       121                 16.25%
South Korea                      962            20,106                  403                    1.0                  12.0                        -                  0.25%
India                          1,230              1,145                 198                    8.0                  16.0                        -                  4.04%
Australia                        928            46,414                  418                   76.0                 65.0                       70                  18.20%
Taiwan                           340            15,050                  129                    4.0                  31.0                        -                  3.09%
Indonesia                        492              2,178                  98                    0.1                 30.0                         -                   0.14%
Thailand                          257            4,007                   63                    4.0                 140.0                        -                  6.36%
Malaysia                          197             7,724                  60                    0.7                  88.0                        -                    1.17%
Singapore                         181            41,514                 163                   38.0                  50.0                      40                  23.36%
New Zealand                       125            31,122                  60                    3.2                   8.0                       1                   5.22%
Pakistan                          155               965                  24                       -                     -                       -                  0.00%
Philippines                       155             1,749                  29                    4.0                  52.0                        -                  13.91%
Vietnam                            80               961                   12                      -                     -                       -                  0.00%
Total Asia-Pacific           14,440              19,479               4,877                 476.0                 805.0                       315                  9.76%

Germany                        3,380            41,008                1,521                   26.0                  41.0                         6                    1.71%
United Kingdom                 2,472               41,119             1,391                   62.0                 124.0                       44                   4.46%
France                         2,661            42,560                1,198                   73.0                  62.0                       32                    6.10%
Italy                           2,144            36,924                965                      6.0                   8.0                        1                  0.62%
Spain                           1,474            34,281                663                    22.0                  15.0                          -                 3.32%
Russia                          1,352              9,259                437                     5.0                      -                        -                  1.14%
Netherlands                      802             49,157                 361                    13.0                 12.0                        13                  3.60%
Switzerland                       473           63,542                  213                     8.0                  11.0                        8                   3.75%
Belgium                           472           45,585                  212                     6.0                 19.0                         4                  2.83%
Sweden                            441           49,089                  199                    13.0                 15.0                         9                  6.55%
Turkey                            647              9,041               208                         -                12.0                          -                 0.00%
Austria                           384            46,915                  173                   11.0                  13.0                        3                  6.37%
Poland                            450             11,658                 157                    6.0                   8.0                         -                 3.82%
Norway                            399            87,249                 180                     4.0                   6.0                        1                  2.23%
Denmark                           316            58,315                 142                     2.0                   5.0                         -                  1.41%
Greece                            325           30,564                  146                     2.2                   6.0                        0                  1.50%
Ireland                           245            59,861                  110                     2.1                  1.0                         -                  1.91%
Finland                           246             47,231                  111                   3.0                   5.0                        3                   2.71%
Portugal                          235           22,329                  102                        -                     -                        -                 0.00%
Czech Republic                    190             18,519                  77                       -                     -                        -                 0.00%
Hungary                            137           13,604                   50                    0.3                   2.0                         -                 0.52%
Romania                             171            7,667                  52                    0.5                      -                        -                 0.97%
Ukraine                            139            2,862                   30                       -                     -                        -                 0.00%
Slovakia                            88           16,346                   35                       -                     -                        -                 0.00%
Slovenia                            49          24,400                    22                       -                     -                        -                 0.00%
Luxembourg                          53          113,930                   24                       -                  1.0                         -                 0.00%
Bulgaria                             47            6,222                   13                      -                     -                        -                 0.00%
Total Europe                  19,792             37,805              8,790                   265.1                366.0                       123                   3.02%

Egypt                             112             1,374                   19                   11.0                  2.0                         -                 57.40%
Israel                           149             21,132                  63                     4.1                     -                        -                   6.53%
Morocco                           85             2,684                    18                    3.0                     -                        -                 16.54%
South Africa                     261             5,258                    70                   8.6                   7.0                         -                  12.35%
Total Africa/Middle East         607            30,447                   171                  26.8                   9.0                         -                 15.69%


Mexico                           977               9,311                 316                   0.1                   3.0                         -                  0.03%
Brazil                         1,503             8,059                  464                    0.7                 26.0                          -                   0.15%
Argentina                        294              7,599                   89                   0.6                   2.0                         -                  0.67%
Venezuela                        288             11,549                 100                       -                     -                        -                  0.00%
Colombia                         224              5,478                   61                      -                     -                        -                  0.00%
Chile                            164             10,373                   55                   0.3                  17.0                         -                  0.54%
Peru                              122             4,395                   31                      -                 6.0                          -                  0.00%
Total Latin America            3,572             8,464                 1,116                    1.7                54.0                          -                  0.15%

United States                 14,104             48,130               6,347                  377.0                 195.0                     336                    5.94%
Canada                         1,397            43,468                  629                  55.0                  45.0                        35                   8.75%
Total Nth America             15,501             47,710               6,976                 432.0                 240.0                       371                   6.19%

World                        53,970                     -            21,952                1,190.5                    0.1                 46,578                    2.56%




                                                                                                                                                      EPRA NEWS / 32 / 2010 _
                                                                                                                                                                  38 2011      65.
                                                                                                                                                                              65.
                                                                                                                                                                  REFERENCES

     FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
     TOTAL MARKET

     Global real estate vs equities & bonds

        150




        125




        100




         75




         50




         25
                                JP Morgan Global Bonds 14%

                                FTSE World 7%

                                FTSE EPRA/NAREIT Global RE -1%
          0

            Jan 08       Apr 08     Jul 08      Oct 08          Jan 09      Apr 09        Jul 09       Oct 09       Jan 10          Apr 10            Jul 10       Oct 10   Jan 11


            Rolling 10-years risk/return local currencies - countries
      15%                                                                                                                          Finland
                                                                             France
                                                                         Sweden                                                                       Hong Kong
                                                                                                       Nth Am RE         US
                                                                               Netherlands
      10%                                                         Belgium
                                                      Switzerland                 Global RE                                                   Singapore
                                                                          Europe RE
                                                                                                   Canada
       5%                      Global Bonds
                                                                                                   Asia RE                                    Italy
                                                                                                                              Japan
                                                                              Australia
                                                        Global Equities                                                            UK
       0%
                                  5%                10%                    15%               20%                   25%                   30%                      35%          40%   45%   50%
                                                                                                                                                   Germany
      -5%



     -10%



     -15%
                                                                                                             Risk (St Deviation)




                Underlying Real Estate                                                    Listed Real Estate
                                                Asia Pacific         22%                                                      Asia Pacific         40%
                                                Europe               40%                                                      Europe               22%
                                                Middle East/Africa    1%                                                      Middle East/Africa    2%
                                                Latin America         5%                                                      Latin America         0%
                                                North America        32%                                                      North America        36%




 66. EPRA NEWS 38 2011
66. _ EPRA NEWS // 32 //2010
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                                                                                                                              38 2011    67.
                                                                                                                                        67.
                                                                                                                  EPRA NEWS / 32 / 2010 _
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