ITALIAN INVESTMENT MARKET Setting the scene Italy Investment - PowerPoint PPT Presentation

ITALIAN INVESTMENT MARKET “Setting the scene” Italy Investment Briefing – London, 20 June 2012

CAPTAL GENERAL OVERVIEW MARKETS GROUP House View � BRAVE NEW WORLD � UNCERTAINTY AND CAUTION � FINANCIAL STRESS � EURO ZONE REMAINS � EURO SURVIVES � POLITICAL CHANGES � SOCIAL UNREST “ ” AN UNPLEASANT COCKTAIL TO DO BUSINESS CUSHMAN & WAKEFIELD

CAPTAL GLOBAL ECONOMIC SITUATION MARKETS GROUP Source: Moody’s Current Status – April 2012 “ MOVEMENT OF EQUITY ” EXPANSION RECOVERY AT RISK RECESSION CUSHMAN & WAKEFIELD

CAPTAL GENERAL OVERVIEW MARKETS GROUP House View “ On an European stage, Sweden, UK, Germany and France were again most in demand as perceived “safe havens” as investors look to minimize risk. ” ANNUAL VOLUMES QUARTERLY VOLUMES Poland Italy Spain Spain Italy Poland Volumes 2011 - € Billion 2011 Netherlands Netherlands Q1 2012 2010 Volumes 2010 - € Billion Q1 2011 Sweden France Sweden France Germany Germany UK UK € 0 € 2,000 € 4,000 € 6,000 € 8,000 € 10,000 € 12,000 ** * € 0 € 10 € 20 € 30 € 40 € 50 * € / Billion ** € / Million CUSHMAN & WAKEFIELD

CAPTAL INVESTMENT VOLUME COMPARISON MARKETS GROUP Q1 2011 – Q1 2012 +192% -23% “ +73% +56% No Spring time for -37% European Property. -42% -88% Nordics and Germany will -28% +32% remain in focus for 2012. -7% -96% +2% ” -5% -97% -42% -50% +156% -51% -83% - 61% -26% +39% -74% -67% CUSHMAN & WAKEFIELD

CAPTAL ITALIAN GENERAL INVESTMENT OVERVIEW MARKETS GROUP The Italian real estate investment market is in a state of transition. The biggest challenge for investors is securing debt financing for transactions. The Euro zone sovereign debt crisis, banking crisis and lack of political unity on a wider European stage has and will continue to affect the Italian economy. We believe Italy will “weather the storm” due to its fundamentals. Domestic Institutional and Private investors will remain active, but risk adverse. Traditional International Cross border investors have retreated. CUSHMAN & WAKEFIELD

CAPTAL INVESTMENT MARKET IN ITALY MARKETS GROUP 2003 – Q1 2012 Volume Invested in Italy (all sectors) and N°of transactions 2003 - Q1 2012 197 12,000 200 148 10,000 10,807 150 150 122 8,000 9,169 87 104 103 85 80 6,000 100 5,449 5,092 4,720 4,000 4,427 4,168 4,157 3,727 50 20 2,000 482 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 2012 Volume N. of transactions Annual Comparison (€ million) 2007 2008 2009 2010 2011 Q12011 Q1 2012 Office € 4,950 € 2,270 €1,700 €1,690 €1,900 € 464 € 244 € Retail € 2,470 € 1,320 €1,372 1,420 € 2,130 € 701 € 61 Industrial € 745 € 430 €315 € 123 € 235 € 24 - Hospitality €1,050 € 927 € 215 € 325 € 57 - € 177 Other € 1,550 € 499 €121 € 545 € 66 € 60 - Total € 10,700 € 5,500 € 3,700 € 4,100 € 4,400 € 1,250 € 482 CUSHMAN & WAKEFIELD

CAPTAL INVESTMENT MARKET IN ITALY MARKETS GROUP Sector analysis Q1 2011 vs Q1 2012 € 800,000,000 � Q1 investment volumes down by over € 700,000,000 60%. € 600,000,000 � Q2 to date sees little recovery. On a like € 500,000,000 for like basis 2011 investment volumes Q1 2011 € 400,000,000 were in the region of € 2.2 Billion. Q1 2012 Q2 to date € 300,000,000 � Retail and office sectors most affected. € 200,000,000 � Hospitality has seen significant activity € 100,000,000 mostly due to roll over of transactions € 0 from the previous year. Retail Office Hospitality Industrial Other Q1 2011 Q1 2012 Q2 to date � Industrial activity fragmented, very few € 701,344,000 € 60,800,000 € 39,000,000 Retail € 464,450,000 € 243,700,000 € 9,000,000 prime opportunities available with limited Office - € 177,000,000 € 148,000,000 Hospitality investor interest. € 24,400,000 - - Industrial € 60,000,000 - € 157,500,000 Other CUSHMAN & € 1,250,194,000 € 481,500,000 € 353,500,000 Total WAKEFIELD

CAPTAL TRANSACTIONS SUMMARY Q1 2012 & TO DATE MARKETS GROUP Total GLA Price Gross Name City Buyer (m2) € /Mln Yields Via Brera 18 Milan Fabrica Immobiliare Sgr 2,020 17.1 Vacant Via Innocenzo Golfarelli 86 Forlì Private 2,454 2.8 7.7% Via A. Vespucci Milan Beni Stabili Gestioni SGR 13,000 42 6.39% Carabinieri Via Torino Rome Cassa dei Commercialisti - 23 - Palazzo ex Cirio Rome SS Lazio 2,500 3 - OFFICE Via Hope 1 Sanremo Private Italian 3,700 6 - Viale Regina Giovanna 27-29 Milan Fabrica immobiliare Sgr 20,100 45.5 7.80% Via Ghisalba Rome Fund - 8.3 6% Milanofiori 2000 - Building U15 Milan Generali 10,000 33 6.40% Nuovo Palazzo della Prefettura L'Aquila L'Aquila INAIL - 20 Vacant Palazzo di Giustizia Potenza Private Italian - 32 - Via Brodolini 4-7 Rome BNP Paribas 5,000 11 6.65% Via Caravaggio 44 Pescara Private Italian 6,800 3.5 - Palazzo Nettuno Brescia Nettuno Srl - 5.5 - Total 252.7 Price Total GLA Gross Name City Buyer € /Mln (m²) Yields RETAIL Gallery Gallarate and Gallery San Giuliano Milan Carrefour Property Italia 5,000 13 c.a. 9% Bari – Via Sparano High Street Bari Private 4,434 37 c.a. 5.2% Alessandria – Mediaworld Alessandria LFPI 4,850 4 - Corsico – Ex Emmelunga Milan Private 4,855 11 - Firenze High Street Firenze Private - 35 Total 100 CUSHMAN & WAKEFIELD

CAPTAL INVESTMENT MARKET OVERVIEW 2011 MARKETS GROUP INVESTORS ANALYSIS - 2011 VS. 2007 (all sectors) 35% 65% “ INTERNATIONAL Domestic institutional and NATIONAL 12% 88% private investors are the driving PRIVATES ” INSTITUTIONAL force. 28% 72% INTERNATIONAL NATIONAL 24% 76% PRIVATES INSTITUTIONAL 2011: € 4,4 billion 2007: € 10,7 billion CUSHMAN & WAKEFIELD

€ 472 mln CAPTAL INVESTMENT MARKET IN ITALY MARKETS GROUP Significant transactions 2011 House View € 140 mln Retail (HS) 52,600 sqm Retail (SC) € 130 mln 48,500 sqm €115 mln Office Retail € 82 mln 36,000 sqm 170,000 sqm Retail (SC) Joint Venture 20,500 mq Cremona Milano Milano Chieti Roma Cremona Po La Rinascente Megalò Via dei Normanni Segrate Eurocommercial Westfield / Gruppo Stilo First Atlantic ECE Mittel Re Sgr Properties CUSHMAN & WAKEFIELD

CAPTAL CHALLENGES FOR ITALY MARKETS GROUP CONCERNS WHY REAL ESTATE � � Austerity package / recession – slow Core income producing real estate is growth in the short term defensive – investors moving out of equities � � Finance from banks remains limited “Flight to quality buildings” in order to reduce � risks Changing “goal post” – IMU, tax changes… � � Quality well leased buildings will continue to European debt crisis – confidence generate cashflow � Fractured political system � Risk management requires diversification CUSHMAN & WAKEFIELD

CAPTAL INVESTMENT OPPORTUNITIES FOR THE FUTURE MARKETS GROUP House View Investors with experience in Italy can use the environment to expand Re-pricing will occur, especially with International vendors Value add office opportunities exist, but will require finance package Prime core retail remains resilient Disposals by financial houses, but pace will be slow CUSHMAN & WAKEFIELD

CAPTAL INVESTOR SNAPSHOT MARKETS GROUP “ CROSS BORDER INVESTORS RETREATING, DOMESTIC FUNDS TERM EXPIRING , GERMAN FUNDS LIQUIDATING, STATE PROPERTIES TO BECOME AVAILABLE ” € 1,400 PRIME OFFICES € 1,200 € 1,000 YIELDS RENTS € 800 6.05% 6.00% 6.00% 5.00% 5.50% 5.25% € 600 4.95% 4.00% 4.50% € 400 € 200 € 0 “ RE-PRICING WILL OCCUR ” CUSHMAN & WAKEFIELD

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CAPTAL CHANGES TO OUR BUSINESS MARKETS GROUP � INVESTORS AND OCCUPIERS WILL BE SLOW MAKING DECISIONS - “DEVIL IN THE DETAIL” � OCCUPIERS WILL VALUE PROFESSIONAL, PROACTIVE OWNERS WHO ADAPT TO THE NEW ENVIRONMENT � OPPORTUNITIES WILL ARISE FOR NEW PLAYERS TO ENTER THE MARKET - “RE-PRICING / PARTNERSHIPS / CLUB DEALS COMMON” � SOME OF THE BIGGEST CHALLENGES FOR 2012 MAY NOT EVEN BE KNOWN YET!! CUSHMAN & WAKEFIELD

www.cushmanwakefield.com MARIACRISTINA LARIA MRICS Partner, Valuation & Advisory Cushman & Wakefield LLP Via Filippo Turati 16/18, 20121 Milano Tel: +39 02 63799 283 mariacristina.laria@eur.cushwake.com