Market Report 2016 Issue I by Cushman & Wakefield RED

MARKET REPORT - RED PROPERTY ADVISERS ISSUE I 2016 - COPENHAGEN

Following a year with large transactions and high activity, the beginning of 2016 promises a continuing trend on the investment market.

EXECUTIVE SUMMARY

HIGH IN-FLOW OF CAPITAL AND ACTIVE DOMESTIC PLAYERS In our first issue of this year, we reflect on 2015 with special focus on Q4 and give our projections for trends and activity for 2016. Overall, the investment market and occupier markets across all segments were better in 2015 than in 2014. Copenhagen prime yield levels for office and retail properties are in a European bottom-10 whilst the rent levels arguably still hold growth potential compared to other attractive capitals. Several new development projects in and near the city center may give evidence for higher prime office rents in the year to come and we expect the focus on the high-street retail units to be even higher in 2016.

flow of international capital. New global investors have entered the market in 2015 - Coller Capital, AEW and Heimstaden to mention a few – giving the domestic investors even fiercer competition. Despite this, the Danish pension funds and real estate companies have made their mark exemplified by Jeudan buying the Maersk office project in a sale and leaseback transaction at a highly competitive yield. The re-opening of the sale and leaseback market is our topic of focus in this issue of our market report.

INVESTMENT MARKET OFFICE

2015 Q3

2015 Q4

CHANGE

Prime yield (Copenhagen City) 4.50% 4.25% - 25 bp Investment volume in million 193 € 564 € + 371 € Vacancy (Copenhagen City) 8.10% 8.30% + 20 bp RETAIL 2015 Q3 2015 Q4 CHANGE Prime yield (Copenhagen High Streets) 3.75% Secondary yield (Copenhagen Side Streets) 4.75% Investment volume in million 302 €

3.60% 4.75% 124 €

- 15 bp 0 bp - 178 €

TRANSACTION VOLUME 2015 - DKK 50.9 BN 20

Enjoy the report!

ISSUE I 2016 2 / 27

Nicholas Thurø Managing Partner RED Property Advisers

BN DKK

The Danish mortgage system is still one of the most cost competitive in the world and allows for high leveraged returns compared to the property risk profile, which is why we experience a still increasing in-

8 4 0

Residential

Office

Retail

Other

Land

CONTENT ISSUE I FOCUS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

MACROECONOMICS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

INVESTMENT MARKET OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 RESIDENTIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 RETAIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

HOTEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 OCCUPIER MARKET OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 RETAIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 RETAIL - FOOTFALL ANALYSIS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

APPENDIX - DANISH TRANSLATION DANSK VERSION AF FOKUS ARTIKEL

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ISSUE I 2016 3 / 27

Danfoss distribution center was sold in a sale and leaseback agreement. RED Property Advisers was adviser on the transaction.

ISSUE I 2016 4 / 27

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I FOCUS

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 5 / 27

DANSK VERSION PÅ SIDE 25

ISSUE I FOCUS SALE AND LEASEBACK GAINING GROUND IN THE MARKET The yield compression that all segments of the Danish real estate market have experienced in the last couple of years has re-opened the market for sale and leaseback transactions – in 2015 several of the largest companies in Denmark made use of the market situation to release capital that previously had been tied up in real estate. RED examined the relationship between real estate prices and the rent level and the conclusions evokes the question if now is an optimal timing for sale and leaseback.

FIGURE 1: HISTORIC CBD OFFICE PRICE AND RENT LEVEL

THE CURRENT LOW-YIELD MARKET SITUATION

Note: The price is calculated as an implicit prime price, i.e. prime rent/prime yield. Source: RED Property Advisers

The Danish market for commercial real estate has experienced very positive movements in the last couple of years. The share of foreign investors is still growing and the competition is getting even fiercer. Whilst the unemployment in Denmark is in a decreasing trend, the demand for offices is increasing, reflecting a current strong office market where the vacancy risk in prime office assets is low. Investors looking into the office market are thus willing to acquire office properties at the lowest yield level observed since 2006 – a situation that companies not involved in the real estate business can take advantage of.

levels as well as the attractiveness of unlocking capital bound in real estate as the vertical distance between the two curves. A large gap translates into a period where a company interested in conducting a sale and leaseback receives a relatively more favorable price compared to the obligation the company undertakes with regards to rent – ceteris paribus. The rent level in Copenhagen is somewhat capped because of the continued availability of development possibilities close to the city center. This means that the attractiveness of a sale and leaseback primarily varies with financial factors. The attractive periods are therefore typically in periods with low interest rates, as we are currently experiencing, and the profitability of doing a sale and leaseback has not been greater in 26 years.

DKK/sqm.

5,000

35,000

4,500

Sale and leaseback transactions have not previously been as relevant as the current market suggests. The reason hereof is to be found in the price-to-rent level which measures the amount of capital a company potentially can release compared to the yearly paid rent. Figure 1 shows the historic price and rent

ISSUE I 2016 6 / 27

FOCUS

4,000

30,000

3,500

25,000

3,000

20,000

2,500

15,000

2,000 1,500

10,000

1,000

5,000

500

0 1980

PRICE-TO-RENT

DKK/sqm.

40,000

1985

1990

1995

Property value

We have observed an increased activity in sale and leaseback transactions, and in the box to the right we list some of the largest sale and leaseback transactions that took place in 2015.

2000

2005

2010

2015

Rent level (right axis)

and Danfoss entered sale and leaseback agreements. Maersk sold their new office construction at Amerika Plads and Danske Bank sold a portfolio of back-offices in Copenhagen and Aarhus. Besides the office segment, Danfoss exercised a purchase option on their distribution center in Rødekro to immediately conduct a sale and leaseback. Furthermore, in 2016 it is expected that Danske Bank will sell their headquarter at Holmens Kanal, and recently Nykredit announced that their headquarter at Kalvebod Brygge, Glaskuben and Krystallen, is put out to tender – expectedly as a sale and leaseback construction. With some of the largest and most recognized companies in Denmark leading the way, and with yields remaining at a low level, it is our expectations that we will see an increased activity of sale and leaseback transactions in 2016.

In 2015 both Maersk, Danske Bank

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

MAERSK AMERIKA PLADS OFFICE 16,000 SQM. DKK 585 M. DANSKE BANK BACK-OFFICE PORTFOLIO 146,000 SQM. DKK 1.5 BN. DANFOSS DISTRIBUTION CENTER 18,300 SQM. DKK 110 M. FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 7 / 27

MACROECONOMICS

ISSUE I 2016 8 / 27

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

MACROECONOMIC OVERVIEW LABOUR MARKETS IN NORTHERN EUROPE IMPROVING The unemployment rate in Denmark is still decreasing as a result of the improving economy. Despite local media addressing unemployment concerns in the outskirts of Denmark, the countrywide unemployment rate has lowered to a level around 6%.

”

MACROECONOMIC VARIABLES KEY VARIABLE

2014 Q3

2015 Q3

GDP Growth Rate y/y

2.3%

1.6%

Inflation Rate y/y

0.5%

0.4%

Unemployment Rate - Denmark

6.7%

6.3%

Unemployment Rate - Copenhagen Region

7.5%

7.1%

10 year Government Bond Short Term Mortgage Rate - 1 and 2 year bonds

...the current macroeconomic situation in Denmark is positive...

Comparing this level to the peer countries in Northern Europe, the level appears higher than in Germany, UK and Norway and a bit lower than in Sweden. Looking at a 5 year period, Norway is the only country where the unemployment has increased. Apart from Norway, Denmark is the country with the lowest 5y-improvement of approx. 1%. However, taking the structural unemployment into consideration there is potential for further improvement compared to the unemployment level around 4% in the period 2005-2008 in Denmark. Overall, the current macroeconomic situation in Denmark is positive and the capital markets are in an improving period with low interest rates encouraging more domestic investments.

FOCUS

MACROECONOMICS

Long Term Mortgage Rate - 30 year bonds

0.66%

0.61%

-0.06%

-0.16%

2.75%

3.09%

TREND

Source: Statistics Denmark, Association of Danish Mortgage Banks and The Danish National Bank

UNEMPLOYMENT IN NORTHERN EUROPEAN COUNTRIES 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3 Q3

Denmark

Germany

United Kingdom

Norway

Sweden

Source: Eurostat

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 9 / 27

INVESTMENT MARKET

ISSUE I 2016 10 / 27

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

INVESTMENT MARKET - OFFICE GREAT FINISH TO A SOLID INVESTMENT YEAR The Q4 investment volume in the office segment reinforced the trend we had seen throughout all of 2015; the office segment had a very strong year. With a significant Q4 volume of approx. DKK 4 bn, the total volume amounted to DKK 13.5 bn – more than a 25% increase from the investment volume in 2014. In 2015, the market was driven by high activity in the more established office areas inside Greater Copenhagen with a share of 70% of the volume. Albeit the main driver is still office properties in CBD as well as the Harbour areas, a significant amount of larger deals was conducted in the surrounding areas of Copenhagen in the second half of 2015. An example of this is the, ultimo 2015, sale and leaseback transaction of two of Danske Bank’s domicile properties in Glostrup and Høje-Taastrup at a price of approx. DKK 800 m, which were sold to the Swedish property fund Wihlborgs Fastigheter. Generally, the institutional investors continued to partake greatly with 36% of the volume while we also observed an increasing interest from the property funds. The office segment is still driven by domestic players with only 25% of the investment capital coming from foreign investors. The prime yield in Copenhagen City has been under pressure in the second half of 2015 and has dropped to around 4.25%, which we also expect to be the level in the near future.

FOCUS

MACROECONOMICS

INVESTOR BREAKDOWN – 2015 Others 10% Institutional Investors

Private Investors

36%

10%

13.5 BN DKK

Real Estate Companies 18%

Property Funds 25%

Source: RED Property Advisers

YIELDS SUBAREA

Q4 2013

Q4 2014

Q4 2015

Copenhagen City (CBD)

5.25%

5.00%

4.25%

Copenhagen E & W

5.75%

Frederiksberg

6.00%

5.75%

Harbour areas

5.00%

4.25%

South Harbour

6.00%

Ørestad

6.00%

5.75%

Copenhagen N & NW

6.50%

South and West of Copenhagen

7.25%

North of Copenhagen

5.25%

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 11 / 27

INVESTMENT MARKET - RESIDENTIAL LARGEST SEGMENT IN 2015 AFTER AN IMMENSE 4TH QUARTER As a consequence of a vast volume of almost DKK 9 bn in Q4, the total investment volume of 2015 amounted to DKK 19.3 bn, thus making residentials the largest investment segment by a significant margin. There has been several large transactions, and in 2015 we observed 9 transactions with lot-sizes above DKK 500 m. The Q4 volume almost equaled that of the previous 3 quarters, suggesting that investors indeed believe that the high condominium prices as well as the demand for housing will continue to grow and further push the market as it has been the case throughout all of 2015. The largest transaction within this segment was completed in the final quarter of the year, when UK-based Coller Capital acquired a portfolio of 22 residential properties located in Copenhagen and in the Northern part of Zealand. The price was not disclosed but is estimated in the level of DKK 2.2 bn. Furthermore, a large residential portfolio of 81 properties in Aarhus and Copenhagen was sold to Cosmo Ejendomme which is controlled by one of the heirs to the Lego business empire, Casper Kirk Johansen. The sales price of the portfolio is estimated to be above DKK 1.2 bn. The residential segment has in 2015 yet again attracted significant interest from foreign buyers. As in 2014, the share of foreign buyers in 2015 was high, accounting for 44% of the transaction volume.The segment was dominated by investments from property funds, which accounted for 57%, while real estate companies were behind a fifth of 2015’s transaction volume.

ISSUE I 2016 12 / 27

FOCUS

INVESTOR BREAKDOWN – 2015 Others Real Estate Companies

Institutional Investors

21%

19.3 BN DKK

Private Investors 17%

Property Funds 57%

Source: RED Property Advisers

YIELDS

PRIME MARKET RENT DKK/SQM SUBAREA

Q4 2015

SUBAREA

Q4 2015

Copenhagen City

2,000 - 2,200

Copenhagen Area - rent control

2.00 - 3.00%

Copenhagen E, W & N

1,600 - 1,800

Copenhagen Suburb - rent control

3.00 - 4.00%

Frederiksberg

2,000 - 2,200

Copenhagen Area - market rent

4.00%

North Harbour

2,000 - 2,200

Copenhagen Suburb - market rent

4.50%

South Harbour

1,400 - 1,600

Copenhagen S

1,400 - 1,600

North of Copenhagen

1,700 - 1,900

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

INVESTMENT MARKET - RETAIL FOREIGN ACQUISITIONS KEEP ACTIVITY HIGH Although the Q4 transaction activity was relatively quiet, the total transaction volume for 2015 rose slightly to DKK 8.5 bn from DKK 7.7 bn in 2014. Especially foreign buyers were an important factor for the higher activity throughout 2015 accounting for 68% of the total volume - the largest share of foreign investors in all segments. During the year we saw a number of large scale transactions such as the sale of Illum as well as the German property fund Patrizia’s acquisition of Galleri K in central Copenhagen at a price of DKK 1.4 bn. Although we did not see transactions of this magnitude during Q4 of 2015, a number of notable transactions took place exemplified with PensionDanmark’s acquisition of the Johannes Fog retail building in the Copenhagen suburb, Lyngby, in a sale and leaseback transaction, which proves that investors are also looking towards alternatives to the Copenhagen high streets. However, there is still great activity on the high streets elucidated by the sale of 2 properties on Strøget; the property fund Aberdeen bought Frederiksberggade 17 at a price of DKK 48 m, and the real estate company Jorck acquired Frederiksberggade 19 for DKK 69 m. This trend seems to continue into 2016 with the sale of Købmagergade 13 to German based property fund, AEW Europe - a newcomer in the Danish real estate market. Prime yields for the retail market around Strøget in central Copenhagen has further declined through 2015 to a level of around 3.50%-3.75%, while yields in other parts of the city have remained stable at around 4.75%-6.00%.

FOCUS

MACROECONOMICS

INVESTOR BREAKDOWN – 2015 Others

Institutional Investors

4% Real Estate Companies 12%

8.5 BN DKK

Users 38%

Property Funds 38%

Source: RED Property Advisers

YIELDS CITY

STREET/SUBMARKET

Q4 2013

Q4 2014

Q4 2015

Copenhagen

Strøget (incl. Vimmelskaftet)

4.75%

4.10%

3.60%

Copenhagen

Strøget (secondary pedestrian area)

5.25%

5.00%

4.75%

Copenhagen

Østerbrogade

5.50%

Copenhagen

Nørrebrogade

6.25%

6.00%

5.75%

Copenhagen

Købmagergade

4.75%

4.10%

3.60%

Copenhagen

Lyngby

5.50%

5.75%

Copenhagen

Suburban

6.75%

Aarhus

Søndergade

5.25%

5.00%

Odense

Vestergade

5.75%

5.50%

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 13 / 27

INVESTMENT MARKET - HOTEL THE DANISH HOTEL MARKET Throughout 2015, the hotel market in Copenhagen continued to show improvement in profitability, and with a limited hotel mass, it spurred interest to develop new room capacity, both by existing operators and new players looking into the market.

Average room rates rose 4.3% to DKK 841 in 2015 and occupancy levels rose to 77% from 74% last year. As a result revenue per available room (RevPAR) increased more than 10% to DKK 654, according to quarterly data from Nordic Hotel Consulting.

The total transaction volume reached DKK 930 m in 2015 and the biggest hotel project of the year was the Norwegian real estate company KLP’s acquisition of an existing property in Copenhagen’s meat packing district which will be demolished and rebuilt into a hotel with 370 rooms and operated by the Scandic hotel chain. The project is budgetted to DKK 610 m.

The positive development within this segment is expected to continue, as both the Copenhagen Cruise Terminal and Copenhagen Airport are expanding to accommodate the increasing amount of inbound tourism and business travellers.

HOTEL TRANSACTION VOLUME IN DENMARK BN DKK 4

Furthermore, the Danish pension fund PFA is considering to build a new property for hotel use in Copenhagen’s North harbour area, while the Danish pension fund Danica and U.S. based Blackrock is planning to include a new hotel at the former Post Terminal plot in central Copenhagen.

ISSUE I 2016 14 / 27

FOCUS

2012

2013

2014

2015

Source: RED Property Advisers

COPENHAGEN HOTEL MARKET

Another interesting project was the former Royal Danish Music Conservatory located in Central Copenhagen, which was sold to the Swedish real estate company Balder AB with the main purpose of converting it into a luxury hotel and spa, operated by Nobis. The Danish hotel chain ARP-Hansen bought an office property in central Copenhagen, which will be converted into a hostel with 280 rooms, while the Danish pension fund PensionDanmark at the end of 2015 acquired a hotel property in Roskilde for DKK 267 m. The hotel was, and will continue to be, operated by Comwell.

DKK 900 800 700 600 500 400 300 200 100 0

78% 76% 74% 72% 70% 68% 66% 64% 2012 ADR (in DKK)

2013 2014 RevPAR (in DKK)

2015 Occupancy (%)

COPENHAGEN HOTEL PIPELINE HOTEL

NO. OF ROOMS

Moxy

220

2017

Zleep Copenhagen Airport

12 room expansion

2017

Nobis Hotel - Niels Brocks Gade 1

2017

Arp-Hansen Hostel - Nyropsgade 38

280

2017

Scandic in the meatpacking district

370

2018

Radisson Blu Scandinavia

266 room expansion

TBA

Hotel Skt. Petri

30 room expansion

TBA

Cabinn Metro Hotel

550 room expansion

TBA

Tivoli Hjørnet

TBA

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

OPENING YEAR

APPENDIX

TRANSACTIONS

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 15 / 27

TRANSACTIONS OFFICE STREET NAME

LOCATION

DATE

SIZE (SQM)

PRICE VENDOR TYPE (M DKK)

VENDOR NAME

BUYER TYPE

BUYER NAME

Kalvebod Brygge 47

CPH W

2016/Q1

Not disclosed

615.0

Institutional Investor PFA

Property Fund

M&G Real Estate

Amerika Plads 29

CPH E

2015/Q4

16,000

Dampfærgevej 27-29

CPH E

2015/Q4

6,766

585.4

User

A.P. Møller Mærsk

Real Estate Company

Jeudan

189.0

Public Institution

Danske Regioner

Real Estate Company

Jeudan

Lersø Parkalle 100-110

CPH E

2015/Q4

24,539

Not disclosed

Sundkrogsgade 7-9

CPH E

2015/Q4

11,771

333.0

Institutional Investor Lærernes Pension

User

Danske Bank

Institutional Investor

PensionDanmark

Institutional Investor

Nytorv 5-7

Aalborg

2015/Q4

7,161

110.6

Real Estate Company Nordjyske Ejendomme A/S Institutional Investor

KLP Ejendomme PensionDanmark

Kannikegade 4/Skt.Clemens Torv 11

Aarhus

2015/Q4

7,196

210.9

User

Danske Bank

Real Estate Company

Bestseller

Europaplads 2

Aarhus C

2015/Q4

9,328

234.0

Private Investor

Property Fund

Standard Life

Ejby Industrivej & Girostrøget

Glostrup

2015/Q4

110,000

795.0

User

Danske Bank

Property Fund

Wihlborgs Fastigheter

8 Tallet, Business part

CPH S

2015/Q4

9,358

117.0

Private Investor

Real Estate Company

M. Goldschmidt

Tagensvej 135

CPH N

2015/Q4

16,419

83.7

Institutional Investor MP Pension

Institutional Investor

AP Pension

Åboulevarden 69

Aarhus C

2015/Q4

4,291

80.5

User

Danske Bank

Private Investor

Steen Mengel

Fiolstræde 44

CPH City

2015/Q3

6,285

204.0

User

DSEB

Real Estate Company

Jeudan

Nørregade 49

CPH City

2015/Q3

4,328

100.0

User

Ældre Sagen

Real Estate Company

Jeudan

Søndre Fasanvej 7

Frederiksberg

2015/Q3

12,000

284.7

Private Investor

Property Fund

Aberdeen

Sundkrogskaj 20

CPH E

2015/Q3

10,418

est. 210.0

User

Dansk Industri

Property Fund

Niam

Østergade 32

CPH City

2015/Q3

6,374

131.5

Property Fund

Patrizia

Institutional Investor MP Pension

LAND STREET NAME

PURPOSE

LOCATION

DATE

SIZE (SQM) EST. PRICE PR. SQM. OF BUILDING RIGHT

PRICE VENDOR NAME (M DKK)

Tuborg Syd- Strandvejen 42

Residential

Hellerup

2015/Q4

109,435

Vierdiget 2

Residential

Dragør

2015/Q4

27,475

5,429

89.5 Dragør Municipality

Lind & Risør A/S

Jernbanegade 12

Mixed

Køge

2015/Q4

7,107

Not disclosed

84.9 Køge Kyst (Realdania)

TK Development

Trekroner

Residential

Roskilde

2015/Q4

15,500

Not disclosed

Not disclosed Roskilde Municipality

Enghave Brygge

Mixed

CPH S

2015/Q3

176,000

2,690

230.0 JM

NREP & NPV

Sluseholmen 3

Residential

CPH SW

2015/Q3

38,692

4,738

275.0 Metro Danmark A/S

Danica

12,306

BUYER NAME

659.0 Carlsberg

Danica

NCC

HOTEL HOTEL NAME

LOCATION

DATE

PRICE PR. ROOM (DKK)

PRICE (M DKK)

VENDOR NAME

BUYER NAME

Hotel Opera

CPH City

Anneks Villa Strand

Hornbæk

2016/Q1

989,011

2015/Q4

937,500

90.0

ARP-Hansen Hotel Group

Hotel Sander’s

15.0

Gunner Ruben

Lennart Lajboschitz

Hotel Hornbækhus

Hornbæk

2015/Q4

Comwell Roskilde

Roskilde

2015/Q4

615,385

16.0

Gunner Ruben

Lennart Lajboschitz

1,679,245

267.0

AFK Koncernen

Hotel Opera

CPH City

2015/Q3

626,374

PensionDanmark

57.0

Danske Bank

ARP-Hansen Hotel Group

Nyropsgade 38*

CPH W

2015/Q3

Skelbækgade - Scandic Hotel*

CPH W

2015/Q3

Not applicable

180.0

Dansk Metal

ARP-Hansen Hotel Group

Not applicable

est. 200.0

Benjamin Capital

KLP Ejendomme

Niels Brocks Gade 1*

CPH W

2015/Q3

Not applicable

74.4

Meghraj

AB Balder

*Hotel development projects

ISSUE I 2016 16 / 27

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

RETAIL STREET NAME

LOCATION

DATE

SIZE (SQM)

PRICE VENDOR TYPE (M DKK)

VENDOR NAME

BUYER TYPE

BUYER NAME

Købmagergade 13, gf.

CPH City

2016/Q1

Private Investor

Property Fund

AEW Europe

Guldsmedgade 33

Aarhus C

2016/Q1

1,717

Nørgaardsvej 1C+3

Lyngby

2015/Q4

8,807 Not disclosed

Private Investor

User

Johannes Fog

Institutional Investor PensionDanmark

Frydenlunds Alle 1

Aarhus C

2015/Q4

5,210

Jagtvej 64

CPH N

2015/Q4

3,041

63.0

Private Investor

61.0

Developer

Mogens de Linde

Private Investor

Frederiksberggade 19

CPH City

2015/Q4

Frederiksberggade 17

CPH City

2015/Q4

830

68.8

Real Estate Company

Casa A/S

Real Estate Company Jorck

421

48.0

Private Investor

Property fund

450 Not disclosed 54

Aberdeen

RESIDENTIAL STREET NAME

LOCATION DATE

SIZE (SQM)

PRICE VENDOR TYPE (M DKK)

Portfolio (Sluseholmen, Teglholmen & CPH S Havneholmen)

2016/Q1

44,396

1,400.0

Den Gule By

BUYER TYPE

BUYER NAME

Property Fund

Niam

Real Estate Company

Heimstaden Danmark

2015/Q4

3,320

73.6

Public Institution

DSB Ejendomme

Real Estate Company

Kanalhuset ApS

Spinderiet 5 et al. (31 condominiums) Valby

2015/Q4

3,235

97.5

Property Fund

Marylebone

Real Estate Company

Dades

Den Norske Bank Portfolio

Zealand

2015/Q4

93,000 est. 2,200.0

Institutional Investor

Den Norske Bank

Property Fund

Coller Capital

Portfolio

Aarhus C

2015/Q4

73,472 Not disclosed

Distressed

Niels Jørgen Cramers under distress Private Investor

COSMO Ejendomme

Teglholmen Project

CPH S

2015/Q4

12,600 Not disclosed

Developer

FB Gruppen & RHB Development

Property Fund

Patrizia

Portfolio (4 properties in CPH City)

CPH City

2015/Q4

Not disclosed

760.0

Not disclosed

Stærevej 28A, Gråspurvevej 3-37

CPH NW

2015/Q4

Not disclosed

383.4

Property Fund

Patrizia

Property Fund

Core Bolig

Klostergaarden - Australiensvej 30

CPH E

2015/Q4

User

A/B Klostergaarden

Real Estate Company

Thylander

Gyngemose Parkvej 34-44

Søborg

2015/Q4

Not disclosed

262.6

Property Fund

Patrizia

Property Fund

Core Bolig

Gyngemose Parkvej 6A & B

Søborg

2015/Q4

4,102

106.2

Property Fund

Patrizia

Property Fund

Core Bolig

Islands Brygge residentials

CPH S

2015/Q4

21,000

300.0

Private Investor

Institutional Investor

Not disclosed

Langagervej 4

Aalborg

2015/Q4

6,794

113.0

Developer

A. Enggaard Ejendomme A/S

Private Investor

P/S PKAE Ejendom

Latinergården

Aarhus C

2015/Q4

10,100 Not disclosed

Developer

Latin's ApS

Developer

NRE Denmark

FOCUS

CPH SW

VENDOR NAME

MACROECONOMICS

12,750 Not disclosed

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 17 / 27

OCCUPIER MARKET

ISSUE I 2016 18 / 27

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

APPENDIX

OCCUPIER MARKET - OFFICE INCREASING TENANT ACTIVITY The positive momentum that we have seen over the course of 2014 and the beginning of 2015 in the Copenhagen office market - with decreasing vacancy rates - is now translating into more robust levels of occupier activity. In the fourth quarter of 2015, the vacancy in Copenhagen City increased slightly while Copenhagen Area experienced a small decrease. The high demand for prime office space in central Copenhagen has a positive effect on rent levels, and the market has shifted its balance from being in the hands of the tenant to one where tenants are willing to pay the asking rents. Furthermore, the key suburban cities such as Lyngby are facing rising levels of interest as they can offer good infrastructure connections in an attractive area close to the city of Copenhagen. Overall, the robust economic growth and the solid downward pressure on the unemployment rate supports the high occupier demand levels, which are expected to continue going into 2016.

SIGNIFICANT LEASES STREET NAME

LOCATION

DATE

SIZE (SQM) LANDLORD

Göteborg Plads 1

Harbour Area

2016/Q1

553

Midtermolen 3

Harbour Area

2015/Q4

Dampfærgevej 28

Harbour Area

2015/Q4

Skøjtevej 16-26

CPH Area

Kristen Bernikows Gade 6

CPH City

Industriparken 32 Birkerød Kongevej 2-4

TENANT

PFA, PensionDanmark & ATP

Brockstedt-Kaalund Advokater

2,992

Alm. Brand A/S

Not disclosed

1,134

PFA

e-Boks A/S

2015/Q4

2,980

PFA

Arriva Danmark A/S

2015/Q4

593

PFA

Chanel Denmark ApS

CPH Area

2015/Q4

8,784

Dades

Leo Pharma

CPH Area

2015/Q4

5,956

MP Pension

Bygningsstyrelsen

PRIME RENT DKK/SQM* SUBAREA

Q3 2015

Q4 2015

CHANGE

Copenhagen City (CBD)

1,650

1,700

3.03%

Copenhagen E & W

1,250

0.00%

Frederiksberg

1,200

1,250

4.17%

Harbour areas

1,800

0.00%

South Harbour

1,250

0.00%

Ørestad

1,200

1,300

8.33%

950

1,000

5.26%

900

0.00%

1,250

0,00%

Copenhagen N & NW South and west of Copenhagen North of Copenhagen *Base rents ex. service charges

VACANCY RATES AND UNEMPLOYMENT Office vacancy rates compared to unemployment in Copenhagen 12.00% 10.00% 8.00% 6.00% 4.00% 2.00%

Vacancy rate Copenhagen City

Vacancy rate Copenhagen Area

Q3 2015

Q1 2015

Q3 2014

Q1 2014

Q3 2013

Q1 2013

Q3 2012

Q1 2012

Q3 2011

Q1 2011

Q3 2010

Q1 2010

0.00%

Unemployment Copenhagen Area

Source: Statistics Denmark & Oline.dk

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 19 / 27

OCCUPIER MARKET - RETAIL HIGH-STREETS ATTRACTING MORE INTERNATIONAL BRANDS The Central Copenhagen retail market shows no signs of slowing down with both existing brands expanding as well as new domestic and international retailers entering the field. The renovation of Illum has not only increased the number of luxurious brands but has also helped raising the attractiveness of rental spaces in the area. During the last quarter of 2015, international brands such as G-Star and Size? opened new stores on Købmagergade. Additionally, national retailers like Unisport and Rezet opened stores on Strøget. Overall, the increasing number of well-known brands is contributing to strengthen Copenhagen as a shopping destination, where the side streets to the two traditional high-streets Købmagergade and Strøget are also transforming into attractive locations due to the natural limit of space in the primary locations. The limited availability of retail space on prime streets is also shown in the vacancy rates for both Copenhagen City, which is currently around the 3% mark, while the vacancy rate in the Copenhagen Area is at 4%. The low vacancy rate along with the increased demand after prime retail space supports the fact that we are still experiencing a landlord’s market in the prime locations of Copenhagen. These factors combined put a continued pressure on rent levels, which are expected to remain high in the first quarter of 2016.

SIGNIFICANT LEASES STREET NAME

LOCATION

DATE

SIZE (SQM)

NEW TENANT

Købmagergade 15

CPH City

Amagertorv/Illum

CPH City

2016/Q1

310

BCBG Maxazria

2016/Q1

N/A

Food-court including several tenants

Købmagergade 47

CPH City

Gothersgade 43

CPH City

2015/Q4

N/A

Size?

2015/Q4

189

Storm & Marie

Købmagergade 46 Vimmelskaftet 42

CPH City

2015/Q4

N/A

G-Star

CPH City

2015/Q4

N/A

Unisport

Vimmelskaftet 42A (Jorcks Passage)

CPH City

2015/Q4

N/A

Rezet Store

Pilestræde 52

CPH City

2015/Q4

N/A

Salotto42

Arne Jacobsens Allé 12/Fields

CPH S

2015/Q4

N/A

Victoria’s Secret

Støbegodsvej 1

CPH SW

2015/Q4

1,000

Supermarco

PRIME RENT DKK/SQM SUBAREA

Q3 2015

Q4 2015

CHANGE

Strøget - low end

10,000

0.00%

Strøget - average

17,500

0.00%

Strøget - high end

23,500

0.00%

Købmagergade - low end

7,500

0.00%

Købmagergade - average

14,000

0.00%

Købmagergade - high end

17,500

0.00%

Strøget Area (secondary pedestrian area)

6,250

0.00%

Østerbrogade

2,600

0.00%

Nørrebrogade

1,900

0,00%

VACANCY RATES AND CONSUMER CONFIDENCE Retail vacancy rates compared to consumer confidence in Copenhagen 15

5.00% 4.50%

4.00% 3.50%

3.00% 2.50%

2.00% 1.50% 1.00%

-5

0.50%

Vacancy rate Copenhagen City

Vacancy rate Copenhagen area

Source: Statistics Denmark & Oline.dk

ISSUE I 2016 20 / 27

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

APPENDIX

Q3 2015

Q1 2015

Q3 2014

Q1 2014

Q3 2013

Q1 2013

Q3 2012

Q1 2012

Q3 2011

Q1 2011

Q3 2010

-10 Q1 2010

0.00%

RED Property Advisers assisted Marylebone in the sale of 31 condominiums inside the shopping centre Spinderiet in Valby.

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

APPENDIX

ISSUE I 2016 21 / 27

FOOTFALL ANALYSIS PEDESTRIAN FLOW IN THE COPENHAGEN HIGH STREETS The last quarter of 2015 was a strong quarter in terms of footfall counts in the main shopping streets of Copenhagen. Black Friday really gained popularity among the shoppers and retailers, while a mild December temperature also spurred shoppers to come out.

Kultorvet

The detailed data show that the Black Friday event in particular was the main driver for the large footfall increase in this quarter, and since our methodology is focused on Fridays this event had a major impact. On this day, we saw 56% more people on Købmagergade compared to an average Friday during 2015 and 44% more on Strøget proving that the event has gotten a hold of the Danish shoppers and retailers and the large-scale success will without a doubt be followed up next year. Adjusted for the “Black Friday Effect”, the footfall count in fourth quarter of 2015 was up by 5% compared to the same quarter of 2014, and thus, we can conclude that the increase was broadly based throughout the quarter.

5,000

gad

BLACK FRIDAY

In terms of the late Christmas shopping effect, we saw how the footfall count during the last Friday before Christmas in 2015 was 5% higher compared to the corresponding Friday in 2014. The footfall count on the last Friday before Christmas in 2015, however, was still lower than in 2013, where the last Friday fell two days closer to Christmas than in 2015.

ager Købm

After having seen a relatively stable development in the number of footfalls around the high streets of Copenhagen between the fourth quarter of 2013 and 2014, fourth quarter of 2015 showed great improvement with a growth of 11% compared to the same period of 2014.

CHRISTMAS SHOPPING

During the quarter, we also witnessed the nexus of Købmagergade and Østergade (Amagertorv) outcompete the other busy places of Copenhagen. The crossing was by far the largest with almost 6,900 pedestrians on average passing by.

METHODOLOGY RED carries out the counts on Fridays at 4 pm with the purpose of registrering a development and conclude a level of footfall at different location on Strøget and Købmagergade.

Vim

The map shows the counting points and the average footfall per hour the last 12 months. The footfall is counted manually from both directions.

Gammeltorv

5,000

22 / 27

FOCUS

MACROECONOMICS Rådhuspladsen INVESTMENT  MARKET

e ad

erg

k eri

Fre

ISSUE I 2016

Nyg

OCCUPIER MARKET

APPENDIX

AVERAGE PEDESTRIAN COUNTS IN Q4 2014 AND 2015 NO.

STREET NAME

Q4 2014

Q4 2015

CHANGE

Østergade

4,037

4,379

+ 324

Amagertorv/Østergade

5,670

6,833

+ 1,163

Frederiksberggade

5,216

5,340

+ 125

Frederiksborggade/Købmagergade

5,218

5,659

+ 442

Rundetårn

5,907

Købmagergade/Silkegade

6,356

Vimmelskaftet/Amagertorv

7,024

5,400

Kgs. Nytorv

3,800

rga

e Øst

5,750 Købm e

gad

ager

gade

Øster 2.

6,250

erto Amag

6,250

mmelskaftet

BLACK FRIDAY FOOTFALL 10,000 8,000 6,000 4,000 2,000 0

Strøget

Købmagergade

Average Friday in 2015

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

Black Friday

APPENDIX

ISSUE I 2016 23 / 27

The iconic Hellerup Posthus was sold by DSB Ejendomme along with several other properties in 2015 - e.g. ”Den Gule By”. The price was DKK 40.5 m.

ISSUE I 2016 24 / 27

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER MARKET

APPENDIX

APPENDIX - DANISH TRANSLATION

FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE I 2016 25 / 27

ISSUE I FOKUS SALE AND LEASEBACK VINDER INDPAS PÅ MARKEDET Det danske ejendomsmarked har i de seneste år oplevet et konstant nedadgående pres på afkastniveauerne i de forskellige segmenter. Det lave afkastniveau har medført, at sale and leaseback aftaler igen viser sig at være meget attraktive – 2015 var året, hvor flere af de helt store danske virksomheder benyttede sig af muligheden for at frigøre kapital bundet i ejendomme. RED har undersøgt forholdet mellem ejendomspriserne og lejeniveauet, og konklusionerne leder til spørgsmålet, om dette er et optimalt tidspunkt for sale and leaseback.

FIGUR 1: HISTORISK CBD KONTOR PRIS- OG LEJENIVEAU DKK/kvm. 40.000

5.000

35.000

4.500 4.000

30.000

3.500

25.000

3.000

20.000

2.500

15.000

2.000 1.500

10.000

1.000

5.000

500

0 1980

Det danske erhvervsejendomsmarked har oplevet meget positive udviklinger i de seneste år. Andelen af udenlandske investorer bliver ved med at stige, og konkurrencen på markedet stiger i takt med, at der kommer nye og mere aggressive aktører til. Samtidig er arbejdsløsheden i Danmark faldende, hvorfor efterspørgslen efter kontorer stiger, hvilket afspejles i et stærkt kontormarked, hvor tomgangsrisikoen for prime kontorer vurderes lav. Investorer er derfor villige til at købe kontorejendomme til de laveste afkast, vi har set siden 2006 – en situation som virksomheder, der ikke har ejendomsinvestering som kerneforretning, kan udnytte. PRICE-TO-RENT Sale and leaseback har ikke tidligere været så relevant som i det nuværende marked. Dette skal forklares ved priceto-rent niveauet, der måler den mængde kapital, som en virksomhed potentielt kan frigøre i forhold til den årlige leje.

26 / 27

FOCUS

1985

1990

1995

Ejendomsværdi pr. kvm.

2000

2005

2010

2015

Leje pr. kvm. (højre akse)

Anm.: Prisen er beregnet som en implicit prime pris, dvs. prime leje/prime afkast. Kilde: RED Property Advisers

DE AKTUELLE LAVE AFKASTKRAV

ISSUE I 2016

DKK/kvm.

Figur 1 viser de historiske ejendomspriser og lejeniveauer for CBD prime kontorer, såvel som fordelen ved at frigøre kapital ved en sale and leaseback aftale, målt som den lodrette afstand mellem de to kurver. Et stort ”gap” skal forstås som en periode, hvor en virksomhed, som ønsker at lave et sale and leaseback, får den højeste pris/fortjeneste i forhold til den forpligtelse, som virksomheden påtager sig lejemæssigt – alt andet lige. Lejeniveauet er i København relativt konstant som følge af de mange udviklingsområder tæt på centrum, hvorfor det primært er finansielle faktorer, der afgør, hvor gunstigt et sale and leaseback kan være. De gunstige perioder er derfor typisk lavrenteperioder, som vi oplever nu, og som det fremgår, har gevinsten ved et sale and leaseback ikke været større i 26 år. Vi har observeret en øget aktivitet inden for sale and leaseback, og tabellen til højre viser nogle af de største sale and leaseback transaktioner, der blev gennemført i 2015.

MACROECONOMICS

INVESTMENT  MARKET

I 2015 foretog både Maersk, Danske Bank og Danfoss salg af ejendomme i sale and leaseback konstruktioner. Maersk solgte deres nybyggeri på Amerika Plads, og Danske Bank solgte en portefølje af back-office kontorer i København og Århus. Danfoss indgik en sale and leaseback aftale for deres distributionscenter ved Rødekro, idet de udnyttede en købsoption, for derefter at indgå i en ny sale and leaseback aftale. I 2016 forventes Danske Bank at sælge deres hovedkontor på Holmens Kanal, og i sidste uge annoncerede Nykredit, at deres hovedkontorer på Kalvebod Brygge, Glaskuben og Krystallen, ligeledes skal sælges – forventeligt udbudt som et sale and leaseback. Med nogle af de største virksomheder i landet som bannerførere og med fortsat lave afkastkrav er det vores opfattelse, at vi kommer til at se en øget aktivitet inden for sale and leaseback transaktioner i 2016.

OCCUPIER  MARKET

APPENDIX

MAERSK AMERIKA PLADS KONTOR 16.000 KVM. DKK 585 M. DANSKE BANK BACK-OFFICE PORTEFØLJE 146.000 KVM. DKK 1,5 MIA. DANFOSS DISTRIBUTIONSCENTER 18.300 KVM. DKK 110 M. FOCUS

MACROECONOMICS

INVESTMENT  MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE I 2016 27 / 27

RED PROPERTY ADVISERS P/S THE PROFESSIONAL AND EXPERIENCED CONSULTANCY IN THE COMMERCIAL REAL ESTATE MARKET. Our clients are mainly major professional investors in the Danish market, public and institutional investors, and a number of leading Danish and international business enterprises. Our core competences are sale of and advisory on investment properties, office letting, retail, valuation, tenant representation, and market analysis. The keywords are trustworthiness, quality, integrity, know-how, and independence. RED is an alliance partner of CUSHMAN & WAKEFIELD – one of the world’s leading commercial real estate companies. In Denmark RED undertakes work for CUSHMAN & WAKEFIELD’s global clients and any assignment for Danish clients anywhere in the world can be resolved in a strong, professional environment, supported by the important element of local market knowledge.

RED Property Advisers P/S Amaliegade 3, 5. floor 1256 København K 33 13 13 99 red@red.dk red.dk

MDE, Chartered Surveyors MRICS