APPENDIX Real Estate Market in Japan Japan Investment Briefing 13 - PowerPoint PPT Presentation

APPENDIX Real Estate Market in Japan Japan Investment Briefing 13 November 2012 | London

APPENDIX Market outlook 2 Opportunity in 2013 by sector Sector Space Market Capital Market Concentrated on Office Bottomed out prime buildings Residential Relatively stable Dominated by REITs Wide gap between Retail Sluggish retail sales prime area and others Logistics Strong demand Severe competition Hotel Recovered Not many transactions

APPENDIX REIT market 3 J-REIT Index (2010-2012) 3.11 Earthquake 1,200 1,150 1,100 1,050 1,000 950 900 850 800 Aug-2010 Oct-2010 Dec-2010 Feb-2011 Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-2011 Feb-2012 Apr-2012 Jun-2012 Aug-2012 Oct-2012 Source: Tokyo Stock Exchange

APPENDIX Yield gap 4 Tokyo is keeping stable and high yield gap. Tokyo New York - Midtown Singapore Yr/Mo Yr/Mo Yr/Mo Frankfurt London - City Hong Kong Yr/Mo Yr/Mo Yr/Mo Source: Colliers International, Deutsche Securities

APPENDIX Office market 5 Office Space Market Average Asking Rent Vacancy Rate (JPY/tsubo) 15.0% 15,000 14.0% Nagoya 14,000 Tokyo CBD 13.0% 13,000 12.0% 12,000 11.0% Osaka 10.0% Nagoya 11,000 9.0% Tokyo CBD 10,000 8.0% 9,000 7.0% Osaka 6.0% 8,000 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Source: CBRE

APPENDIX Office market 6 Cycle of Tokyo Office Market ④ ① Vacancy rises with � High 15,000 higher rent Rent declines with higher vacancy ③ ② 2009/3 3.8%, 14,400 Average asking rent [JPY / Tsubo] rent Cycle 2008/3 8-9 years 2.0%, 14,160 2003/3 14,000 2001/3 6.1%, 13,750 3.6%, 14,120 current 2011/3 2002/3 4.5%, 13,970 Low Rent rises with Vacancy declines lower vacancy with lower rent � 2004/3 � High � Low 5.9%, 13,410 Vacancy Rate 2005/3 2010/3 5.4%, 13,040 13,000 6.9%, 13,290 2007/3 2012/3 2.0%, 12,810 7.6%, 13,680 2006/3 3.2%, 12,700 12,000 0% 1% 2% 3% 4% 5% 6% 7% 8% Vacancy Rate [%] Source: CBRE Vacancy rates and average rents in Tokyo CBD March 2001 – June 2011

APPENDIX Office market 7 • Past : Rent decreased and vacancy rate increased • Now : Rent decreases and vacancy increases have slowed down Asking rent per tsubo and Vacancy rate 25,000 10% (Office, Tokyo central 5 wards, monthly) (円/坪) Japanese unit 1 Tsubo (JPY/tsubo/month) Vacancy rate 8% = 3.30578 sqm 8.9% [RHS] 22,901 JPY/tsubo (Aug. 2008) = 35.58 sqf 6% 10,000 JPY/Tsubo/month = 30.25 EUR/sqm/month 20,000 = 42.15 USD/sqf/year = 25.94 GBP/sqf/year 4% Average rent [LHS] 16,675 JPY/tsubo 2% (Sep. 2012) 17,529 JPY/tsubo (Oct. 2004) 15,000 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Miki Shoji Co., Ltd.

APPENDIX Office market 8 Rent decreases have also slowed Rent DI (properties managed by Xymax, Tokyo 23 wards) 78 78 78 78 Increased in 100 100 ほとんどの 66 66 66 66 nearly all ビルで上昇 84% 83% buildings 80 74% 80 ） 48 48 48 48 % （ 60 54% 60 合 Ratio of increased rent (%) 上昇した Decrease < Increase 割 22 22 22 22 ビルが多い Rent increased from the た 36% 40 40 し year before 25% 昇 20% All the rental contracts 20 20 -14 -14 -14 -14 上 6% 2% Decrease = Increase 上昇と下落 0 0 が同程度 -35 -35 -35 -35 -42 -42 -42 -42 6% -20 -20 17% ） 26% % （ 32% Decrease > Increase -40 -40 下落した 合 Ratio of decreased rent (%) ビルが多い 割 -82 -82 -82 -82 50% -60 -60 Rent decreased from the た 60% 62% し -96 -96 -96 -96 year before 落 -80 -80 All the rental contracts 下 Decreased in ほとんどの 88% nearly all ビルで下落 -100 -100 buildings 98% 2003年 2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年 Increase Decrease Taking Rent DI （ = increases – decreases) 上昇した割合 下落した割合 成約賃料DI Source: Xymax Real Estate Marketing Institute

APPENDIX Office market 9 Global comparison : average cap rate

APPENDIX Residential market 10 TSE Home Price Indices (Existing Condominiums) (Jan. 2000 = 100) 100 90 80 Tokyo Kanagawa 70 Chiba Saitama 60 200 2001 200 200 200 200 200 200 200 200 2010 2011 2012 Source: Tokyo Stock Exchange

APPENDIX Retail market 11 Annual Sales of Department Stores and Supermarkets (2002 = 0) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 -5 Annual Sales in JPY billion Overall Japan Japan Tokyo -10 2002 22,033 3,736 2003 21,759 3,646 2004 21,467 3,591 2005 21,328 3,576 -15 2006 21,145 3,547 Tokyo 2007 21,199 3,564 2008 20,951 3,490 2009 19,776 3,189 -20 2010 19,579 3,129 2011 19,593 3,027 Source: Ministry of Economy, Trade and Industry

APPENDIX Logistics market 12 Vacancy Rate Asking Rent (Large Multi-tenant Properties in Tokyo Metropolitan Area) (Medium and Large Properties in Tokyo Metropolitan Area) Tokyo Chiba Saitama Kanagawa Source: CBRE

APPENDIX Logistics market 13 Expected NOI Cap Rate for Multi-tenant Property in Tokyo’s Waterfront Source: CBRE quarterly survey vol. 35

APPENDIX Logistics market 14 Major Developments of Multi-tenant Lease Properties Project Name Developer City Inland or Land Area Gross Floor Completion Waterfront (sqm) Area (sqm) Prefecture Prologis Park Zama 2 Prologis Zama Inland 49,821 115,952 Aug. 2012 Kanagawa Logiport Kitakashiwa LaSalle Investment Management Kashiwa Inland 53,486 127,164 Oct. 2012 Chiba GLP Misato III Global Logistic Properties Misato Inland 38,901 93,831 May 2013 Saitama Tokorozawa Logistics Center Orix Real Estate Miyoshi Inland 51,820 72,126 April 2013 Saitama Kawagoe Logistics Center Orix Real Estate Kawagoe Inland 25,501 54,888 May 2013 Saitama SGH Logistics Kashiwa MLT2 SG Realty (Sagawa Express) Kashiwa Inland 103,734* 122,000 June 2012 Chiba D Project Sagamihara Daiwa House Sagamihara Inland 41,777 104,201 June 2012 Logistics Center Kanagawa Prologis Park Narashino 4 Prologis Narashino Waterfront 46,168 108,500 Aug. 2013 Chiba Ichikawa Shiohama Project Global Logistic Properties and Ichikawa Waterfront 52,921 121,086 Dec. 2013 Mitsui Fudosan Chiba GLP Atsugi Global Logistic Properties Atsugi Inland 44,511 107,657 Dec. 2013 Kanagawa Logiport Sagamihara LaSalle Investment Management Sagamihara Inland 94,197 210,826 Aug. 2013 and Mitsubishi Estate Kanagawa Source: CBRE

APPENDIX Hotel market 15 Occupancy Rate of Hotels in Japan Source: Japan City hotel Association

APPENDIX Hotel market 16 Buyers and Cap Rate by Hotel Types

APPENDIX Hotel market 17 Cap Rate of Full-service Hotels Source: Japan City hotel Association

APPENDIX Hotel market 18 Major Transactions of Hotels in Tokyo (2011) Month Hotel Guest Seller Buyer Price rooms (mil. JPY) Mar. Hotel Avanshell Akasaka 71 Lone Star Mitsubishi Estate - Mar. Hotel Ascent Shinjuku 63 Leopalace 21 Daiwa House Industry - Apr. Comfort Hotel Tokyo Higashi 259 Maya Investment Japan Hotel Fund 3,746 Nihonbashi Godo Kaisha Jun. Art Hotels Hamamatsucho 120 City Group Fortress Investment - Group Jun. Art Hotels Omori 220 City Group Fortress Investment - Group Jul. Ofu Hotel Kamata 92 Araigumi Aoki - Aug. Hotel Monterey Sanno 166 Sanno Estate Mitsubishi Corp. - Nov. Chisan Ground Akasaka 136 Lone Star Sotetsu Holdings - Dec. Asakusa Vista Hotel 136 Galileo Japan Trust Tokai Kanko 1,050 Dec. JAL City Yotsuya 185 Tokyo Tatemono United Urban Investment 4,200 Corp. Compiled by Jones Lang LaSalle based on public data

APPENDIX Finance market 19 Legal Final Maturity of CMBS (in JPY millions) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Compiled by Sumitomo Mitsui Trust Research Institute Co., Ltd. based on data by Japan Securities Dealers Association

APPENDIX Finance market 20 Changes in new loans for real estate and lending index of financial institutions New loans for capital expenditures of real estate industry (% change from same quarter previous year) (left side) Lending attitude DI (all industry, large companies) (right side) Lending attitude DI (real estate, large companies) (right side) Source: Compiled by RREEF Research based on data by Bank of Japan

APPENDIX Finance market 21 Real estate transaction volume and real estate lending index of financial institutions Transaction volume (12 month total, left) Lending attitude (6 months before, right) (in trillion JPY) Source: Compiled by RREEF Research based on data by Bank of Japan, Urban Research Institute Corporation, and Real Capital Analytics

APPENDIX Development 22 Construction Cost Earthquake Reconstruction Shortage of materials, skilled labours Increase in construction cost