Mark Baillie Head of Real Estate (Europe and North America) Real Estate Group European focus operational briefing and general update Presentation to investors and analysts 14 September 2007
Real Estate Group European snapshot In Europe, Macquarie Real Estate Group consists of two key operating divisions and a major joint venture: � Real Estate Capital (REC) — Business started July 2006 with 4 staff — London based with 15 staff plus 2 consultants (UK, Italy) — Two pronged business strategy: � Continue investment in Europe for existing products such as Macquarie Office Trust (MOF), Macquarie CountryWide Trust (MCW) and Macquarie Leisure Trust Group (MLE) - in the near future � Take advantage of the deregulation of real estate capital markets to create new products that supply long term, secure, income streams and have potential to form seed assets for REITs � Real Estate Structured Finance (RESF) — Business started January 2005 with 2 staff — A successful, focused strategy — 14 staff across 2 offices (London and Manchester) — 18 transactions approved since inception — Approximately £150 million commitments — Profitable from second year of operation � Joint Venture: Macquarie Global Property Advisors (MGPA) — Formed a JV with Macquarie Global Property Advisors July 2004 — Bermuda headquartered with European offices in London, Luxembourg, Paris and Frankfurt and additional associates in Munich with 58 staff — MGPA currently has our mandate to undertake real estate private equity funds management in Europe — REC works with MGPA, thereby leveraging a large global network 56
Real Estate Group European locations and staff* 7 Macquarie Real Estate & associates 89 Macquarie Real Estate & associates staff European locations 100 UK 90 London 80 Manchester 70 Luxembourg Luxembourg 60 Germany 50 Frankfurt Munich 40 30 France 20 Paris 10 Italy 0 Rome '04 '05 '06 '07 Aug-07 MGPA Real Estate Structured Finance Real Estate Capital * At August 2007. MGPA joint venture staff are not included in MBL headcount 57
Real Estate Group €1.8b current European investments (including associates) Poland (€747m assets) � Rondo 1 (Office) & Wilanów One (Residential development), Warsaw (MGPA) � Angel Wings, (Residential development) Wroc ł aw (MGPA) � 5 shopping centres (MCW) Germany (€430m assets) � Light Industrial Portfolio – Industrial/Office, Stuttgart & Kiel (MGPA) � Munich Tower – Office, Munich (MGPA) � 2 shopping centres (MCW) � Atrium Charlottenburg, Berlin-Charlottenburg (MOF) � Darmstadter Landstrasse, Frankfurt (MOF) ¹ France (€322.5m assets) � BalthazarCapitale – (Offices) Captial Sud (Office) Paris (MGPA) � Logiffine – Logistics in Valance, Lille & Mer (MGPA) Italy (€152m assets) � Macchi Building, Milan (MOF) ² Pan European (€127m assets) � Sony Portfolio – Office/Warehouse (MGPA) ¹ Frankfurt exchanged Jul 07, expected to settle Jan 08, ² Milan exchanged Mar 07, expected to settle end Sep 07 58
Real Estate Capital Real estate market snapshot European real estate market still split by geography and culture: � Second largest market by size but 27 different countries In short term, requires country by country � approach and sector by sector approach � Major markets only introduced REIT structures within last 12 months � REITs not yet acting as REITs � Immature dedicated REIT investor base both institutional and retail � Valuation methodologies still evolving � Growth of European REIT market not developing as quickly as other regions (due to low yields and higher interest rates) � Currently a hiatus in transactions as CMBS markets recalibrate As a consequence, Macquarie is seeing more � deal flow as certain types of investors exit the REIT legislation proposed market REIT legislation in place 59
Real Estate Capital Real estate market snapshot UK public (listed) real estate performance (% ch p.a) 60% Total Investment Grade ($b) AU/NZ 50% $329 UK $963 40% 30% 20% EU $4,659 US/CN 10% $5,691 0% -10% % of Institutional Holdings Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Listed Source: Macquarie Real Estate Research, EPRA Indices via Bloomberg, UBS US/CN 17% � Public to private opportunities exist provided you can understand the true underlying value, which may be changing in the current financial environment EU 8% � Europe is the second largest real estate market globally but has the lowest level of real estate securitisation AU/NZ � Combination of transition to securitised real estate and current market 56% UK volatility will lead to: 17% — Public to private opportunities in short term — Re-listing opportunities in medium to long term Sour ce: UBS Research – “The Case for Global Real Es tate” 60
Real Estate Capital Expertise and experience – platform for growth � Our global REIT funds management expertise and experience provide a competitive advantage in deregulating European real estate capital markets � We are leveraging this by: — Continuing to expand our Australian LPT’s (MOF, MCW, MLE) investments into Europe — Building on the ground resourcing to support this growth with country and sector expertise � Identifying and funding development of real estate operating platforms in markets of interest with view to create value from creation or on sale of a REIT � Taking advantage of current market volatility to acquire assets, platforms and human capital on a ‘value’ basis � Focus on the real estate component of alternate asset classes such as self-storage: — Long term management agreement with Storage King (largest self storage operator in Australia, and already 5 th largest in the UK) — Substantial MBL equity committed to grow the platform � Continue to work with MGPA to identify large scale co-investment opportunities across Europe Storage King self-storage facility, Dudley 61
Real Estate Structured Finance UK residential market snapshot � Overall strong fundamental residential demand - recent Government statistics show that there remains a material undersupply of dwellings across the UK � Reasonably stable economic outlook, with a scarcity of good product in many prime areas � UK overall price growth circa 10%, London 15% and London prime 28% over the past 12 months � General UK residential market expected to slow materially in line with the higher interest rates (five consecutive interest rate rises in the last year - base rate now 5.75% pa, which is the highest in 6 years) � Recent stress in financial markets may have an impact on the high-end residential markets � Scarcity of high-end stock, volume of established local wealth, plus further continued international wealth (Middle East, Russia etc) entering the UK, provides a broad base 62
Real Estate Structured Finance Deal snapshots Clapham Road, Stockwell, London: Atrium Apartments, Mainz, Germany: a redundant commercial office building, planning approval 604 apartment, university housing achieved for 240 residential apartments with end value £120m complex acquired for €12m with target sale price of €17m King Edward Hospital – Midhurst, West Sussex 5-6 Queens Gate Place, South Kensington, London: redundant hospital building, planning approval refurbishment of 6 residential apartments with end value received for 260 residential dwellings with end of £28m value of £130m 63
Real Estate Structured Finance Actively pursuing opportunities � Continue to increase key products — eg include further planning approval funding, slice/syndication funding, take out funding, loan securitisation, selective acquisition of complimentary businesses � Geographic expansion, second office opened in Manchester on 20 August 2007 � New European office to be assessed in line with establishment of UK licenced banking entity in 2008 � Leverage existing relationships to expand into continental Europe � Participate in European CMBS market as recalibration and restructuring occurs � Focus on good prime, urban and provincial based projects where other lenders may be pulling back � Capitalise on relationships with existing customers to seek out ‘value’ opportunities 64
Real Estate Group Asset snapshots Atrium Charlottenburg, Berlin-Charlottenburg: Macquarie Office Trust’s first acquisition in Germany Sourced by MGPA 65
Real Estate Group Asset snapshots Macchi Building, Milan - Artist Impression: Macquarie Office Trust’s first acquisition in Italy Sourced by MGPA 66
Real Estate Group Asset snapshots Dabrowka shopping centre, Katowice: One of Macquarie CountryWide’s 5 shopping centers in Poland Sourced by MGPA 67
Real Estate Group Asset snapshots Darmstadter Landstrasse, 108, Sachsenhausen Frankfurt: Macquarie Office Trust’s latest acquisition in Germany 68
Mark Baillie Head of Real Estate (Europe and North America) Q&A European focus operational briefing and general update Presentation to investors and analysts 14 September 2007
Recommend
More recommend
