Presentation office market Prague, Brno & Ostrava Prepared for: Confidential Client 9 th August 2012
Prague Office Market Summary Q2 2012 Figures TOTAL Stock (sq m) 2.86 mln Existing vacant space (sq m) 344,900 Vacancy rate 11.52% Total leasing activity (sq m) 71,100 Net absorption (sq m) 59,400 New completions (sq m) 60,100 Space U/C (sq m) 135,200 Prime rents (EUR/sq m/month) 20 - 21 Prime Office Rents in Prague Office Hubs (EUR/ sq m/ month) City Pankrac Chodov Smichov Butovice Karlin Dejvice Holesovice Vysocany Centre Budejovicka Opatov Andel Stodulky Evropska 21.00 17.50 14.75 17.50 14.50 16.75 15.00 14.25 14.25 Source: CBRE, PRF, data as of Q2 2012 CBRE | Page 2
Prague Office Hubs Vysocany -Prosek- Letnany Holesovice Dejvice - Evropska Karlin City Centre Nove Andel - Butovice - Smichov Stodulky Pankrac - Budejovicka Chodov - Opatov Source: CBRE CBRE | Page 3
Future growth of Prague office stock New supply 15Y new supply average Total stock 350 3 500 300 3 000 Total stock in thousand sq m 250 2 500 thousand sq m 200 2 000 150 1 500 100 1 000 50 500 0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (f) 2013 (f) Source: CBRE, Source: CBRE, PRF, data as of Q2 2012 PRF CBRE | Page 4
Prague Office Market Trend Total Leasing Activity New Supply Net Absorption Vacancy Rate 350 18 16 300 14 250 in thousand sq m 12 vacancy rate (%) 200 10 150 8 100 6 50 4 0 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 H1 2012 -50 0 Source: CBRE, PRF, data as of Q2 2012 Net absorption is: total occupied stock at time = 0 minus total occupied stock at time minus 1 CBRE | Page 5
Headline Rents on Prime Property by Hub Vysocany Holesovice Butovice - Stodulky Chodov - Opatov Pankrac - Budejovicka Dejvice - Evropska Karlin Smichov - Andel City Centre 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 €/sqm/month Source: CB Richard Ellis. CBRE | Page 6
Map of sample properties and SSC´s locations 14 13 10 9 15 8 11 12 3 Buildings: 1. BB Centrum Beta 2. The Park Bud ě jovická 3 3. Kav č í Hory 4. 1 2 5 5. Office Park Nové 7 3 1 Butovice 6 4 6. City West – Finep 7. City West – CPI 2 8. Argo Alpha 9. Marina Office Centre 10. Classic 7 11. River Garden 12. Futurama SSC´s locations: 13. Harfa Office Park 1- Siemens, Accenture, SAP, CSC, JNJ Global Business Services 14. Prosek Point 2- Telefonica, DHL, Microsoft, Honeywell, Barclays 15. Balabenka 3- Deutsche Boerse CBRE | Page 7
Fit out works The calculation includes: 100% 80%:20% 50%:50% 20%:80% Standard (celluar : open (celluar : open (celluar : open • Internal construction (office) space) space) space) • Power distribution • Structured cabling High 300/m2 280/m2 230/m2 180/m2 • Cooling (including server) Middle 210/m2 195/m2 160/m2 130/m2 • Carpets • Project plan Low 150/m2 140/m2 120/m2 100/m2 • MaR • Electrical security system Prices are quoted in EUR • Fire protection system • Entrance system Office Furniture EUR per work station The calculation includes: High level EUR 2200 • Basic desk sized 1600*800mm Mid level EUR 1200 • Mobile container Basic level EUR 560 • Low cabinet • Basic chair Moving w/o furniture EUR 90 / 50 • Reception made of laminated materials Dilapidation costs EUR 100 – 150/m2 • Kitchen made of laminated materials, Reception EUR 5000 both upper and lower section including basic appliances Kitchen EUR 3000 CBRE | Page 8
Brno office market Office Stock Total modern office space in Brno at the end of 2011 amounted to 354,600 sq m of which 79% was of Class A quality. New Supply In 2011 only one fully pre-leased office project, totalling 2,700 sq m, was delivered to the market – Administrativni budova Brno Nove Sady. Lease Transactions In 2011 TLA stood 7.4% above the three year average. However, the 33,000 sq m leased in 2011 represented a y-o-y decrease of 31.4%. The largest deals were CB&I (5,500 sq m) in Spielberk Office Centre, the expansion of a current tenant (2,300 sq m) in The Forum Business Park, the renegotiation of ANF Data (2,300 sq m) in Brno Businesss Park and KBC (2,000 sq m) in Campus Science Park. Vacancy Rate As at 2011 year-end, the vacancy rate stood at 11.02% (a drop of 0.18% y-o-y). It was the lowest level since our record began in 2005. Space Under Construction At the end of 2011, approximately 46,800 sq m of office space was under construction of which 36,400 sq m is planned to be delivered in 2012. The largest office scheme under construction is Spielberk Tower comprising 16,600 sq m. Rents We feel that the achievable prime rent stands at 12 EUR/ sq m/ month 2011 year-end data Stock (sq m) 354,600 Space U/C (sq m) 46,800 Take-up (sq m) 33,000 New Supply (sq m) 2,700 Vacancy Rate 11.02% Prime Rent 12.00 EUR/ sq m/ month CBRE | Page 9
Brno general leasing information � LEASE LENGTH Lease term is typically 5 years, sometimes up to ten years, with fixed rentals and predetermined annual indexations. The option for renewal is negotiable. � OCCUPANCY COSTS Rent is quoted in EUR / sq m / month, occasionally in Czech koruna (CZK / sq m / month), payable quarterly / monthly in advance (annual indexation based on HICP). 20% VAT is charged on top of rent. Free Rent is typically up to one month free for each year of the lease term. � OPERATING COSTS Service charge typically include operating, maintaining, cleaning and repairs, Property / Real Estate Tax, and finally building / property insurance. VAT of 20% or 10% is charged on top of service charges. � UTILITIES Utilities include for example electricity and air-conditioning in leased area, for which tenant pays actual, metered consumption. � LANDLORD / TENANT WORKS (FIT-OUT) The landlord usually provides open plan layout, raised floors, suspended ceilings, ceiling lighting, A/C units. Tenant’s fit out works Cost for Class A buildings normally range from 250–500 EUR / sq m including construction, cabling, design fees, etc. Fit out cost to be partially off-set by Landlord‘s fit-out contribution (as incentive). CBRE | Page 10
Area Map Brno and sample buildings 1. Spielberk 2. Campus 3. Brno Business Park 4. Vienna Point II. 5. Titanium Brno Main Train Station 5 1 2 3 Brno Airport Direction Prague 4 Direction Bratislava/Vien na CBRE | Page 11
Ostrava Office Market Office Stock At the end of Q4 2011, modern office stock in Ostrava stood at ca. 115,000 sq m. Approximately 74% of total office space was of class A quality. New Supply In 2011 three new projects with a total of 5,700 sq m were delivered to the market; Administrativni budova Biskupska (3,400 sq m), Intoza Building (1,300 sq m) and Administrativní budova Revirni bratrske pokladny, zdravotni pojistovny (1,000 sq m). Lease Transactions 2011 total leasing activity (TLA) in Ostrava was driven by Class A, new built office premises in which 94% of transactions took place. TLA in 2011 reached 24,500 sq m, representing an increase of 83% y-o-y. The largest deals were a new lease of approximately 16,600 sq m in IQ Buildings signed by Tieto Czech; 3,377 sq m newly leased in Administrativni budova Biskupska by Dalkia and 1,432 sq m leased by Autocont in Orchard Building Vacancy Rate As of Q4 2011, 21,100 sq m of modern office space, representing a vacancy rate of 18% was immediately available in Ostrava. The vacancy rate of Class A buildings stood at 21% unlike only 10% of Class B office space was immediately available at the end of 2011. Space under construction There are currently two large projects under construction with completion scheduled for 2012; Nova Karolina Park (24,600 sq m), which is being built on a speculative basis and Tieto Tower (IQ Buildings – 22,600 sq m), with 73% pre leases in place. Rents We feel that achievable prime rent in Ostrava stands at 11.50 EUR/ sq m/ month 2011year-end data Stock (sq m) 114,800 sq m Space U/C (sq m) 48,400 sq m Take-up in 2011 (sq m) 24,500 sq m New Supply (sq m) 5,700 sq m Vacancy Rate 18% Prime Rent 11.50 EUR/ sq m/ month CBRE | Page 12
Ostrava general leasing information � LEASE LENGTH Lease term is typically 5 years, sometimes up to ten years, with fixed rentals and predetermined annual indexations. The option for renewal is negotiable. � OCCUPANCY COSTS Rent is quoted in EUR / sq m / month, occasionally in Czech koruna (CZK / sq m / month), payable quarterly / monthly in advance (annual indexation based on HICP). 20% VAT is charged on top of rent. Free Rent is typically up to one month free for each year of the lease term. � OPERATING COSTS Service charge typically include operating, maintaining, cleaning and repairs, Property / Real Estate Tax, and finally building / property insurance. VAT of 20% or 10% is charged on top of service charges. � UTILITIES Utilities include for example electricity and air-conditioning in leased area, for which tenant pays actual, metered consumption. � LANDLORD / TENANT WORKS (FIT-OUT) The landlord usually provides open plan layout, raised floors, suspended ceilings, ceiling lighting, A/C units. Tenant’s fit out works Cost for Class A buildings normally range from 250–500 EUR / sq m including construction, cabling, design fees, etc. Fit out cost to be partially off-set by Landlord‘s fit-out contribution (as incentive). CBRE | Page 13
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