Page 1

MARKET REPORT - RED PROPERTY ADVISERS Issue III 2014 - Copenhagen

The iconic brewery "Trekroner" is now in the market as a modern office building


EXECUTIVE SUMMARY

STILL HIGH DEMAND AND SECONDARY MARKETS TAKE OFF

"The investment volume is high, the vacancy rate is decreasing and yields are dropping."

As a result of the high demand for – and limited supply of – prime investment

objects, some investors have entered the secondary markets at a large scale. Our focus article in this issue elaborates on this subject and presents evidence for volumes in secondary markets. All in all we experience a strong investment market, a bettering office letting market and a general optimism towards the economy and business expectations. We are merely a year from the threat of a collapse of the Euro, in the midst of a diplomatic - potentially very real crisis - with Russia and close to a full blow military operation in the Middle East, but these factors do not seem to discourage investors at the moment. Perhaps the expected stability in Denmark is one of the reasons for the high demand we experience.

INVESTMENT MARKET OFFICE

2014 Q1 2014 Q2 CHANGE

Prime yield (Copenhagen City)

5.25%

5.00%

- 0.25 bp

Secondary yield (Copenhagen area)

7.25%

7.25%

0.00%

Investment volume in mill. (estimated)

273 €

194 €

-79 €

10.10%

8.80%

- 1.3 bp

Vacancy (Copenhagen City)

RETAIL

2014 Q1 2014 Q2 CHANGE

Prime yield (Copenhagen City)

4.50%

4.25%

Secondary yield (Copenhagen area)

6.25%

6.25%

0.00 bp

99 €

287 €

+ 188 €

Investment volume in mill. (estimated)

- 0.25 bp

TRANSACTION VOLUME LAST 12 MONTHS 1.400 1.200 1.000

M€

This issue of our market report confirms some of the positive trends that we as advisers, the investors and other actors in the market for commercial real estate experience these days. The investment volume is high, the vacancy rate is decreasing and yields are dropping. Prime properties – especially high street retail – are in great demand which has resulted in yield compressions at an unprecedented pace. The spread compared to other European metropolis such as London, Paris, Munich and Stockholm is, however, still high and the Danish mortgage financing is very attractive, hence we might experience further price increases in the quarters to come.

800 600

Enjoy the report! Nicholas Thurø Managing Partner RED Property Advisers

400 200 0

Retail

Office

Residential

Hospitality

Other

ISSUE III 2014


LIST OF CONTENT

ISSUE III FOCUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 MACROECONOMICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 INVESTMENT MARKET OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 RESIDENTIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 RETAIL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 HOTEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 OCCUPIER MARKET OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 RETAIL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 RETAIL - FOOTFALL ANALYSIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 APPENDIX - DANISH TRANSLATION DANSK VERSION AF FOKUS ARTIKEL. . . . . . . . . . . . . . . . . . . . . . . . . 22

ISSUE III 2014


ISSUE III FOCUS

ISSUE III 2014 1 / 24


DANSK VERSION PÅ SIDE 22 ISSUE III FOCUS THE SECONDARY MARKETS ARE BREATHING AGAIN For a long time the demand for prime assets has been high and now our latest transaction figures show that secondary located properties are being traded to a greater extent as well. During the period after the financial crisis there was a substantial decrease in transactions with secondary located properties, but this tendency has now changed and we expect the volume to increase further in the years to come.

FIGURE 1: SECONDARY LOCATED OFFICE PROPERTIES IN GREATER COPENHAGEN DKK MMDKK

4.500 4.000 3.500 3.000 2.500 2.000

During the period after the financial crisis the real estate market was characterized by limited access to financing and high risk aversion among investors. The result was a market dominated by few big and financially strong players, whom mainly focuses on prime properties in Copenhagen. As shown in Figure 1 transactions with secondary properties decreased significantly from 2008 to 2011. During 2012 the market seemed to soften up and especially during 2013 a significant bettering was observed with a transaction volume for secondary located properties in Greater Copenhagen that reached approx. DKK 2.5bn cf. Figure 1. Based on the transaction volume for the first 6 months of 2014 (DKK 1.9bn) we expect this positive trend to continue and the transaction volume in 2014 for secondary located commercial properties to subseed 2013.

"..attracts more investors looking to achieve a high return on investment..."

This development has various reasons. Primarily it is a result of a limited supply of prime properties compared to demand. As a result of the lack of prime properties the yield was compressed, which has lead the investors to search for new segments – including secondary located properties – in order to achieve higher yields. Due to the fact that mortgage loans for secondary located properties has been difficult to obtain, unless there was an existing loan that could

FOCUS

MACROECONOMICS

1.500 1.000 500 0 2008

2009

2010

2011

2012

2013

2014E

Source: RED Property Advisers

be taken over, investors haven’t sought this segment during the recent years. If mortgage cannot be achieved the acquisition must be financed with equity. This results in a lower return on equity compared to properties where mortgaging is e.g. 60 % of the purchase price. Recently, financially strong and more risk-tolerant investors such as Briggen, M7 / Oaktree, Wihlborgs and Niam have made investments in more secondary office areas, which has resulted in a greater confidence in the present market. This helps to increase transparency in the market and facilitating access to finance, which attracts more investors looking to achieve a high return on investment in secondary locations. FINANSIEL STABILITET SELLS OUT Since 2008, the market has also been strongly influenced by the liquidation company of the State, Finansiel Stabilitet. This has increased the supply and, with all things being equal, put pressure on the prices in the areas where Finansiel Stabilitet had bundles of properties sold. During the recent quarters Finansiel Stabilitet has liquidated massively and it is expected that Finansiel Stabilitet will be phased out during 2015. This will

INVESTMENT MARKET

bring the market one step closer to a "natural" condition. It should further be mentioned that of all transactions with secondary located office properties in Greater Copenhagen the part of which Finansiel Stabilitet was liquidating was 13.7% in 2013 and only 8.3% in 2014 so far. Likewise the focus on liquidation of Finansiel Stabilitet has contributed to an increased interest from a number of foreign investors. This has had a positive impact in the investment market in the form of new foreign entrants. POSITIVE TENDENCIES IN THE MARKET A number of economic indicators seem to support that the positive trend in the secondary markets will continue. For a while economists have announced that the Danish economy is recovering and the year of 2014 is expected to experience the highest growth since 2010. These positive outlooks for the Danish economy are also supported by the consumer behaviour. As illustrated in Figure 2, the sale of passenger cars are at the highest level in the past 10 years and has increased nearly 80% since the

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 2 / 24


crisis. Moreover, the percentage of more expensive cars has increased from 20% to nearly 25%. The economy is far less pressured than before and companies are doing better. The number of newly established companies is at a higher level than in 2009 (see Figure 2). Furthermore, the number of bankruptcies is declining steadily. The level of bankruptcies is developing toward the same level as before the crisis, reflecting a stronger economy and an adjustment of the restrictive lending policy led by the banks during the years immediately after the housing bubble.

FIGURE 2: SUPPORTING PARAMETERS Index: 2009 = 100

200 180 160 140 120 100 80 60 40 20

The positive trends in the Danish economy and among Danish companies, combined with better financing possibilities, has left its mark in the real estate market - both in the private market and in the investment market.

0

2005

2006

2007

2008

Foreclosures - Commercial real estate

2009

2010

2011

2012

Bankruptcies (companies)

2013

2014

No. of private cars sold

Source: Statistics Denmark

The number of forced sales with commercial properties increasing from 2007 to 2010 but has been decreasing ever since (Figure 2) with the expectation of further decrease in the coming years. Moreover, the percentage of forced sales on commercial properties is as low as 3.9% of the total forced sales for all properties, which is the lowest in the period between 2000-2014. Based on the trends and expectations of the market as well as the economy, we have positive anticipations for the market in the coming years. A market characterized by less restrictive access to financing, more investors with different risk profiles and a significant increase in transactions with secondary commercial properties encourages optimism.

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 3 / 24


MACROECONOMICS

ISSUE III 2014 4 / 24


MACROECONOMIC OVERVIEW EXPECTATIONS

To summarize, the expectations within the Danish business community are indeed positive. The question is just whether or not the expectations will be converted to real figures. Despite positive expectations, the GDP only increased by 0.5% in the first half of 2014 due to a descrease in 2nd quarter. However, the outlook for the GDP is positive and the GDP is expected to pick up by 1.4% in 2014.

FOCUS

MACROECONOMICS

2014Q3

2014Q3

2013Q1

2013Q1

2014Q1

2012Q3

2012Q3

2014Q1

2012Q1

2012Q1

2013Q3

2011Q3

2011Q3

2013Q3

2011Q1

2011Q1

2010Q3

2010Q1

2009Q3

2009Q1

2008Q3

2008Q1

2007Q3

2007Q1

2006Q3

2006Q1

2005Q3

-2

2005Q1

0

-4 -6 -8 -10 Source: Greens Analyseinstitut

EXPECTATION WITHIN THE ECONOMY (EMPLOYMENT: NET = RECRUITMENTS - DISMISSALS) 50 40 30 20 10 2010Q3

2010Q1

2009Q3

2009Q1

2008Q3

2008Q1

2007Q3

2007Q1

-20

2006Q3

0 -10

2006Q1

The general economic cyclical forecast, which is an indicator for the GDP, has since 1st quarter 2013 been at a positive level and was at 2.3 for 2nd quarter 2014 - a slight fall from the 1st quarter level at 2.9. The expected employment for the 6 months to come is at the highest observed level since 2011. Further, the expectations to the operating profit compared to last year have increased more than 25 %.

2

2005Q3

The figures show, in which direction several key parameters in the economy are expectedly moving according to more than 500 leaders in the Danish business community.

4

2005Q1

"...the expectations within the Danish business community are indeed positive."

6

2004Q3

In macroeconomics, it is a well-known fact, that the economy is depending on expectations to a wide extend. Since the economy is highly influenced by consumer expectations, investor expectations and the generel behavior of businesses, economic expectations are of great importance to the market psychology.

ECONOMIC CYCLICAL FORECAST (GDP INDICATOR)

2004Q3

In this issue of our market report the focus in the macro session is; What are the expectations within the economy?

-30 -40 -50 -60 Expectations for employment Source: Greens Analyseinstitut

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 5 / 24


INVESTMENT MARKET

ISSUE III 2014 6 / 24


INVESTMENT MARKET - OFFICE INSTITUTIONAL INVESTORS COUNTS 50 % OF THE OFFICE INVESTMENTS Positive trends in both the labour market and in consumer confidence have helped keep the economic growth elevated. Office trading volumes in the second quarter where dampened slightly from first quarter, albeit offices remain one of the more sought after property segments. Despite the drop in 2nd quarter the total volume for the year is higher than at the same time in 2013.

INVESTOR DISTRIBUTION - LAST 12 MONTHS (TOTAL VOLUME: 7.5 BN DKK)

2% 6% 19%

"Investors’ interest in Copenhagen City Centre is expected to remain high..."

1%

50%

16% Driven by domestic buyers, investor focus remains on high-quality, well-located properties in Copenhagen City and the harbour areas. However, due to several reasons the secondary market is becomming more attractive (cf. focus article). The prime yield went down in 2nd quarter from 5.25 % to 5.00 % for Copenhagen City. Secondary yields were stable too. Thus, the yield spread remains relatively large and the 'first-mover' investor may profit of relatively high yields. Investors’ interest in the Copenhagen City Centre is expected to remain high and the increasing demand combined with limited numbers of prime assets may result in yield compression in 2015. Further we expect a number of foreign investors to enter the office property market, in absence of especially prime retail assets. The most significant transaction in the past quarter is the 735 M portfolio acquisition of former SAS-buildings in Kastrup near the airport bought by PFA and Thylander. The seller of the portfolio was Landic Properties.

FOCUS

MACROECONOMICS

6%

Developer

Institutional investor

Private investor

Property fund

Public institution

Real estate company

User

Source:

RED Property Advisers

YIELDS SUBAREA

Q2 2012

Q2 2013

Copenhagen City (CBD)

5.00%

5.25%

5.00%

Copenhagen E & W

5.75%

5.75%

5.75%

Frederiksberg

6.00%

6.00%

6.00%

Harbour areas

5.00%

5.00%

5.00%

South Harbour

6.00%

6.00%

6.00%

Ørestad

6.00%

6.00%

5.75%

Copenhagen N & NW

6.50%

6.50%

6.50%

South and west of Copenhagen

7.75%

7.25%

7.25%

North of Copenhagen

5.25%

5.25%

5,25%

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

Q2 2014

ISSUE III 2014 7 / 24


INVESTMENT MARKET - RESIDENTIAL THE LARGEST INVESTMENT SEGMENT THE LAST 12 MONTHS Within the residential investment market property funds, real estate companies and intuitional investor continues to be the dominant investors, but also private investors have their market share.

INVESTOR DISTRIBUTION - LAST 12 MONTHS (TOTAL VOLUME: 9.6 BN DKK)

In the first half of 2014 DKK 2.9 bn net worth of residential properties were traded in Greater Copenhagen. Compared to the first half of 2013 it is a decrease of DKK 1.2 bn. The total transaction volume in Denmark for the first half of 2014 was DKK 4.5 bn compared to DKK 4.9 bn for the same period last year.

2%

1% 9%

"..there is generally a shortage of housing in the capital.."

28%

The investor-demand is still present, especially in (greater) Copenhagen, and is expected to continue to be so. Due to the fact that net 10-11,000 citizens per year is expected to move to Copenhagen, residential properties in Copenhagen are considered to be low-risk asset and attracts several investor types. Thus, the reason for the decreasing transaction volume in greater Copenhagen should be found in a relatively low supply rather than a decreasing demand. Prime yields and rent levels were stable the past quarter.

FOCUS

MACROECONOMICS

32%

28%

Institutional investor

Other

Private investor

Property fund

Real estate company

User

Source:

RED Property Advisers

PRIME MARKET RENT - DKK/SQM

YIELDS

SUBAREA

SUBAREA

Q2 2014

Q2 2014

Copenhagen City

1,800-2,000

Copenhagen Area - rent control

2.00 - 3.00%

Copenhagen E & W

1,600-1,800

Copenhagen Suburb - rent control

3.00 - 4.00%

Frederiksberg

1,800-2,000

Copenhagen Area - market rent

4.00%

North Harbour

1,800-2,000

Copenhagen Suburb - market rent

4.50%

South Harbour

1,400-1,600

Copenhagen S

1,400-1,600

Copenhagen N & NW

1,400-1,600

North of Copenhagen

1,700-1,900

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE III 2014 8 / 24


INVESTMENT MARKET - RETAIL HIGH ACTIVTY AMONG INTERNATIONAL INVESTORS The investment activity has indeed been high in the past months for retail investment properties. In the second quarter of the year the activity accelerated considerably, with approx. DKK 2.4 bn worth of retail assets. The international investors were once again active in the market, underlined by Cordea Savills’ DKK 1.2 bn investment in prime retail in Copenhagen City, including the acquisition from Meyer Bergman of 5 retail properties all located on Købmagergade for DKK 522 m. In total, 68% of the total retail transactions in first half of 2014 were performed by international investors.

INVESTOR DISTRIBUTION - LAST 12 MONTHS (TOTAL VOLUME 8.5 BN DKK)

18% 46% 31%

"...the prime yield is under pressure and is expected to decrease further."

5%

The investment market is generally stable, but due to the high demand for high street units at Strøget and Købmagergade the outlook is promising. Indeed, Denmark will remain a safe market to invest in and activity is likely to stay high throughout the year.

Institutional investor

Private investor

Property fund

Real estate company

Due to a limited supply compared to demand of prime retail assets, the prime yield is under pressure and is expected to decrease further. We forecast the transaction volume for more secondary located retail properties to increase, due to the lack of prime retail properties and due to the generel "hunt for yield".

FOCUS

MACROECONOMICS

Source:

RED Property Advisers

YIELDS CITY

STREET/SUBMARKET

Q2 2012

Q2 2013

Copenhagen

Strøget (incl. Vimmelskaftet)

5.00%

5.00%

4.25%

Copenhagen

Strøget (secondary pedestrian area)

5.00%

5.25%

5.00%

Copenhagen

Østerbrogade

5.50%

5.50%

5.50%

Copenhagen

Nørrebrogade

6.25%

6.25%

6.25%

Copenhagen

Købmagergade

5.00%

5.00%

4.25%

Copenhagen

Lyngby

5.50%

5.50%

5.75%

Copenhagen

Suburban

6.50%

6.75%

6.75%

Aarhus

Søndergade

5.25%

5.25%

5.25%

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

Q2 2014

ISSUE III 2014 9 / 24


Købmagergade 17-19 was part of a portfolio acquired by Cordea Savills

ISSUE III 2014 10 / 24


INVESTMENT MARKET - HOTEL IMPROVEMENT IN PERFORMANCE OF HOTELS IN COPENHAGEN In Denmark there are more than 43,000 hotel rooms to host foreign visitors. In Copenhagen alone there are approx. 20,000 hotel rooms. During the first 6 months of 2014 the hotels in Copenhagen have managed to increase their performance in all important parameters compared to the same period in 2013. In average, ADR increased with 7% while RevPAR increased 13% - indicating higher room prices and optimization of the hotel’s revenue. Also the percentage use of capacity increased - from 59% to 63% - which displays an ability to increase the sale of hotel rooms more than the increase in capacity; i.e. higher demand.

FIGURE 1: CAPACITY OF HOTEL ROOMS No . of hotel rooms

40.000

70

35.000

60

30.000

50

25.000

30

15.000

20

10.000

10

5.000 -

2000 2007 2008 2016E 2000 2001 2001 2002 2003 2004 2004 2005 2006 20072 0082 2009 009 2010 2011 20112 2012 012 2013 20132 2014E 014 2015E 2015 2016 (est.) (est.) (est.)

Denmark

Source:

HOTEL CAPACITY

Despite the financial crisis and a significantly increasing number of bankruptcies from 2008-2010, the capacity of hotel rooms has been increasing at a higher pace than before the crisis – especially in Copenhagen, where the capacity has increased with more than 6,000 rooms since 2008. This is an increase of 23% compared to 16.5% for Denmark in total in the same period. The growth in capacity is primarily driven

40

20.000

Due to the tourism seasons, the ADR, RevPAR and the use of capacity are significantly higher in May and June compared to the months from January to April.

A hotel’s ability to generate profit is highly affected by the capacity of hotel rooms and therefore the hotel's ability to utilize the demand. The latter is further affected by external and macroeconomic factors such as consumer confidence.

Use of capacity in % 80

45.000

Copenhagen

Use of capacity, Denmark

-

Use of capacity, Copenhagen

HVS London

DEMAND

by large and financially strong hoteloperators, such as Arp-Hansen and Cabinn, who also represent a great part of the pipeline.

In 2013 nearly 13 M people stayed in a hotel in Denmark. Approx. 7 M were of domestic origin and 6 M were foreign. The hotels are therefore not only affected by the economic situation in Denmark but just as much in foreign countries.

As illustrated in Figure 1 the capacity of hotel rooms is estimated to increase further with at least 7.6% in Denmark and 6.9% in Copenhagen over the next three years. At a European level more than 904 new hotels are in pipeline, which extends the total European capacity with more than 145,465 rooms. The greatest growth in capacity is expected to be in UK with 41,831 new rooms in pipeline. Following UK both Russia, Germany, Turkey, Italy and France are expected to increase with at least 4,000 rooms each.

When analyzing segments with regards to turnover it is important to notice, that guests on vacation has a lower daily spending than business travelers. In 2012 a visitor on vacation had an average daily spending of 1,230 DKK and a business traveler 1,813 DKK, while a congress member spent 3,100 DKK daily. This difference

TABLE 2: HOTEL PERFORMANCE, COPENHAGEN - KEY FIGURES

January

Februar

March

April

May

June

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

Use of capacity (in %)

45%

50%

47%

52%

50%

59%

61%

63%

71%

75%

78%

80%

ADR in DKK

670

715

654

728

651

717

750

730

834

878

819

916

RevPAR in DKK

325

379

338

406

363

450

496

505

660

721

696

798

ADR: Average Daily Rate RevPAR: Revenue pr. available room Source: NHC & Statistics Denmark

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE III 2014 11 / 24


can be explained from the fact that people on vacation often travel together with family and friends, with whom they stay in the same hotel room, while a business traveler or a congress member often travels alone and buys more expensive food. As shown in figure 2 the distribution of segments is very even in Copenhagen. In Copenhagen 55% of all hotel visitors are related to vacation while 43% are related to business.

FIGURE 2: DISTRIBUTION OF VISITORS IN COPENHAGEN

8%

2% 31%

"Since 2009 the capacity of hotel rooms has increased 14%..." 47%

Sweden is the biggest foreign market for hotel guests staying in Denmark followed by the other neighbor-countries Norway, UK and Germany. Together they account for more than 50% of all fore-ign visitors staying in a hotel. Besides a growth in number of hotel visitors from those markets, there has been a large increase in number of hotel visitors coming from the BRIK countries and strong economies such as Austria and Switzerland. The fastest growing market is China with an increase in hotel visitors of 182% since 2009. Since 2009 the capacity of hotel rooms has increased 14% compared to an increase in total number of hotel visitors of 29%. Together with the increasing demand for hotel rooms, this indicates that the hotels will be able to keep increasing their use of capacity and as a result of this bettering their performance.

12%

Business and congress (individual)

Business and congress (group)

Vacation (individual)

Vacation (group)

Other Source:

Statistics Denmark

FIGURE 3: NUMBER AND ORIGIN OF HOTEL GUESTS IN DENMARK No . of visitors 14.000.000 12.000.000 10.000.000 8.000.000 6.000.000 4.000.000 2.000.000 -

2008

2009 Domestic

Source:

FOCUS

MACROECONOMICS

20102 2010 International

0112 2011

0122 2012

013 2013

Total number of visitors

Statistics Denmark

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE III 2014 12 / 24


The office and retail project on Axeltorv 2 was recently sold to ATP and PFA for approx. DKK 1.5 bn.

ISSUE III 2014 13 / 24


TRANSACTIONS

ISSUE III 2014 14 / 24


TRANSACTIONS OFFICE SIZE (SQM)

PRICE (M DKK) VENDOR TYPE

STREET NAME

LOCATION

DATE

VENDOR NAME

BUYER TYPE

BUYER NAME

Vallensbæk Company House

Vallensbæk

2014/Q3

8,800

162 Developer

NCC Property Development

Institutional investor

PKA

Landskronagade 33-35

CPH East

2014/Q3

14,000

175 Institutional investor

MP Pension

Institutional investor

PensionDenmark

Holmboes Allé

Horsens

2014/Q3

12,000

Borups Alle 177

CPH NW

2014/Q3

26,000

Conf. User

Horsens Kommune

Private investor

Private investor

Conf. User

KPMG

Institutional investor

ATP

SAS Portfolio

Kastrup

2014/Q2

88,000

Kirstinehøj 56

Kastrup

2014/Q2

2,600

Landic Property

Institutional investor

PFA and Thylander

Confidential

Private investor

Esplanaden 6-8

CPH City

2014/Q2

9,061

Private investor

Lægernes Pensionskasse

Real estate company

Jeudan

Skolevej 6

Glostrup

2014/Q2

6,960

Havnegade 23-27 / Tordenskjoldsgade 34

University College Capital

Property fund

Niam

CPH City

2014/Q2

5,750

Danica Pension

Real estate company

Jeudan

Dusager 25

Aarhus

2014/Q2

11,667

Nybrovej 116

Kgs. Lyngby

2014/Q2

10,581

87 Bankruptcy

Dansk Erhvervsprojekt

Institutional investor

Industriens Pension

Phil og Søn

Property fund

Niam

Artillerivej 86

CPH SW

2014/Q2

16,317

Kultorvet 11-13 & Rosengården 2-4

95 Institutional investor

Finansiel Stabilitet

Real estate company

Private investor

CPH City

2014/Q2

3,638

64 Real estate company

Goldschmidt Ejendomme

Institutional investor

Pensionskassen For Lægesekretærer

Otto Mønsteds Plads 11

CPH W

2014/Q1

10,692

125 Institutional investor

Confidential

Institutional investor

AP Pension

735 Real estate company 42 Developer 156 Institutional investor 41 User Conf. Institutional investor 140 Developer

HOTEL PRICE PR. ROOM (DKK)

HOTEL NAME

LOCATION DATE

First Hotel Mayfair

CPH W

2014/Q2

Hotel Kong Frederik

CPH W

2014/Q1

809,090

Hotel Hvide Huse

Aalborg

2013/Q4

Confidential

Confidential Helnan Gruppen

CALUM

Hotel Aarslev

Brabrand

2013/Q4

Confidential

Confidential Helnan Gruppen

Danske Hoteller

Hotel Neptun

CPH City

2013/Q3

917,293

122 Sold by creditor

Ledernes Konference Center

Odense

2013/Q3

Confidential

Skt. Petri

CPH City

2013/Q2

2,037,201

2,300* First Hotels

Choice

Vesterbro

CPH W

2013/Q2

2,037,201

2,300* First Hotels

Choice

Amaranten (Sweden)

Stockholm

2013/Q2

2,037,201

2,300* First Hotels

Choice

First Hotel Kolding

Kolding

2013/Q2

643,939

85 Slotmøllen

Nordbo Huse

Scandic Esbjerg

Esbjerg

2013/Q2

625,850

92 Private investor

Private investor

Kokkedal Slot

Hørsholm

2013/Q1

Confidential

Confidential

PRICE (M DKK) VENDOR NAME Confidential K/S NorGani Hotel ApS 89 Norden

Confidential Ledernes Aktieselskab

Confidential Kjær & Lassen

BUYER NAME First Hotels Fritz Henrik Schur

Hildebrandt Family H. C. Andersens Kongres Center A/S

M. Goldschmidt Ejendomme

* Total portfolio price

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE III 2014 15 / 24


RETAIL SIZE (SQM)

PRICE (M DKK) VENDOR TYPE

STREET NAME

LOCATION

DATE

VENDOR NAME

BUYER TYPE

BUYER NAME

Lyngby Station (Arcade)

Kgs. Lyngby

2014/Q3

8,369

Østergade 33-35

CPH City

2014/Q3

1,925

215 Real estate company

DSB

Property fund

NREP

Aberdeen

Property fund

Disa grunden

Herlev

2014/Q2

44,000

Conf. Real estate company

Cordea Savills

Nordicom

Property fond

NREP

Frederiksgade 25

Aarhus

2014/Q2

4,692

Købmagergade 15

CPH City

2014/Q2

332

208 Real estate company

Private investor

Real estate company

AAA United

45.8 Property fund

Meyer Bergman

Property fund

Cordea Savills

Købmagergade 17-19

CPH City

2014/Q2

5,363

321.4 Property fund

Købmagergade 39

CPH City

2014/Q2

1,509

Meyer Bergman

Property fund

Cordea Savills

Private investor

Private investor

Private investor

Købmagergade 48

CPH City

2014/Q2

2,189

Købmagergade 60 / Østergade 38

162.4 Property fund

Meyer Bergman

Property fund

Cordea Savills

CPH City

2014/Q2

6,961

454.3 Institutional investor

ATP

Property fund

Cordea Savills

Amagertorv 29 m. fl.

CPH City

2014/Q1

5,926

Conf. Real estate company

Confidential

Real estate company

Jorcks Ejendomsselskab

Conf. Public institution

71 Private investor

RESIDENTIAL STREET NAME

SIZE (SQM)

LOCATION

DATE

Residential Portfolio

Various cities

2014/Q2

73,000

A.D. Burcharths Vej 15-31

Kolding

2014/Q2

7,760

Overgaden oven vandet/ Herman Triers plads

CPH Area

2014/Q2

14,425

Søborg Huse

Søborg

2014/Q2

3,780

Østerbrogade 163-165 / Hornemansgade 36

CPH East

2014/Q2

8,022

Residential Portfolio

CPH Area

2014/Q1

33,796

Strandvejen 82-86, 153 & Frederikkevej 1

Hellerup

2014/Q1

7,500

Amaliegade 24

CPH City

2014/Q1

2,541

PRICE (M DKK) VENDOR TYPE

VENDOR NAME

1,900* Institutional investor PensionDanmark

BUYER TYPE

BUYER NAME

Property fund

NREP

Conf. Institutional investor Lægernes Pensionskasse

Real estate company Confidential

188.5 Institutional investor Unipension

Property fund

CapMan

Private investor

Private investor

85 Developer

Sjælsø management

64.5 Institutional investor MP Pension

Real estate company Thylander

366 Property fund

Institutional investor Sampension

Aage V. Jensens Fond

148 Institutional investor Nykredit 51 Private investor

Stonewall Estate A/S

Real estate company Goldschmidt Ejendomme Private investor

Private investor

* Estimated price

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER  MARKET

APPENDIX

ISSUE III 2014 16 / 24


OCCUPIER MARKET

ISSUE III 2014 17 / 24


OCCUPIER MARKET - OFFICE HIGH ACTIVITY IN COPENHAGEN CITY AND AN OVERALL STABLE OFFICE MARKET The Danish economy improved further in the first half of 2014, albeit moderate compared with the levels seen in pre-recession years. The office property sector had more or less unchanged conditions in 2nd quarter – the market, which is still tenant-driven, is characterized by a need for incentives on offers, including fit-outs and rent-free periods, although prime rents remain unchanged. The occupier take-up in the office sector was robust over the 2nd quarter of 2014, with just over 334,000 sq. m of space leased. The figure helped push the first half of 2014’s gross take-up volume ahead by 43% compared with the same time last year. Copenhagen’s vacancy rate went down in 2nd and 3rd quarter, with the most notable decrease seen in the city centre whit a vacancy just under 9% in 3rd quarter. The properties available on the market are dominated by bigger premises, primarily as smaller occupiers remain active whereas international tenants are more hesitant.

STREET NAME

LOCATION

DATE

Hovedgaden 630 (Hedehusene)

Q2 2014

Greater CPH

2014/Q3

Grønningen 15

CPH City

2014/Q3

800

Kornmarksvej 1

Greater CPH

2014/Q3

28,500

Stamholmen 145-165 (Copenhagen Business Park) Greater CPH (renewal)

2014/Q3

15,000

Gammel Køge Landevej 22

CPH Area

2014/Q3

Valby Maskinfabrik

CPH Area

Valby Maskinfabrik

CPH Area

Danske Bank

DSV

M. Goldschmidt

Mærsk

Tribona

N/A

Valad Europe

IF Skadeforsikring

2,059

DFE

Københavns Brandvæsen

2014/Q3

2,000

DFE

GoExcellent

2014/Q3

1,032

DFE

Køge Handelsskole

PensionDanmark, ATP & PFA

Dansk Standard

Skanska

Pandora

SEB

Forsvaret

CPH Area

2014/Q3

Confidential

Havneholmen

CPH City

2014/Q3

10,000

Niels Juels Gade 9-13

CPH City

2014/Q2

1,100

Axeltorv 2

CPH Area

2014/Q2

16,000

ATP & PFA

Gorrissen Federspiel

Hedegaardsvej 88

CPH Area

2014/Q2

5,000

PFA og Thylander

Vestas

Dusager 4

Aarhus N

2014/Q2

4,900

ATP

Vestas og Mitsubishi

Nansensgade 19

CPH City

2014/Q2

7,000

Norrporten

Cph Business

Kalvebod Brygge

CPH City

2014/Q2

4,100

Norrporten

Patienterstatningen

Lautrupvang 1

Greater CPH

2014/Q2

15,000

Wihlborgs

Schneider Electric

Delta Park - Vallensbæk Company House

Vallensbæk

2014/Q2

2,000

PKA Pension

Ricoh Danmark A/S

Østergade 26

CPH City

2014/Q2

1,300

Kirkbi

Bygningsstyrelsen

Office vacancy rates compared to unemployment in Copenhagen

1,650

12,00%

Copenhagen E & W

1,250

10,00%

Frederiksberg

1,200

8% 8,00%

Harbour areas

1,800

6% 6,00%

South Harbour

1,250

4,00% 4%

Ørestad

1,200

2,00% 2%

950

0,00% 0%

Copenhagen N & NW South and west of Copenhagen

FOCUS

16,000

TENANT

Portland Tower

Copenhagen City

North of Copenhagen

SIZE (SQM) LANDLORD

VACANCY RATES AND UNEMPLOYMENT

PRIME RENT - DKK/SQM SUBAREA

SIGNIFICANT LEASES

900 1,250

MACROECONOMICS

INVESTMENT MARKET

Unemployment Copenhagen Area Office vacancy Copenhagen City Office vacancy Copenhagen Area

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 18 / 24


OCCUPIER MARKET - RETAIL INCREASING DEMAND FOR SECONDARY PEDESTRIAN AREA Economic activity was boosted by a recovery in several sectors and consumer spending increasing again by 2.0% following two consecutive quarters of contractions. The retail sector continued to record positive growth in 2nd quarter as sales grew by 2.6% in April and 1.9% in May.

"Occupier interest in the pedestrian areas of Copenhagen was indeed strong over the 2nd quarter."

Overall the market was largely stable in the past months, but prime rents in high streets is expected to increase due to the high demand and low supply. Occupier interest in the pedestrian areas of Copenhagen was indeed strong over the 2nd quarter. Among others Moss Copenhagen is opening a 1,500 sq. m Flagship Store at Højbro Plads 4. Further, the demand for secondary pedestrian locations such as Pilestræde and Fiolstræde was again evident, underlining a broadening in retailer interest outside the best pitches. Tenants are particularly searching for locations with a distinctive appearance in order to attract interest. Isabel Marant opened their first store in Denmark in late August located at the corner of Ny Østergade and Christian IX Gade.

STREET NAME

LOCATION

DATE

Købmagergade 54

CPH City

2014/Q3

SIZE (SQM) NEW TENANT 282

Gothergade 43

CPH City

2014/Q3

139

Cykel Mesteren

Fiolstræde 5 (expansion)

CPH City

2014/Q3

579

Netto

Købmagergade 32

CPH City

2014/Q3

227

Profil Optik

Højbro Plads 4

CPH City

2014/Q2

1,500

Østergade 7

CPH City

2014/Q2

295

Kr. Bernikows Gade 6

CPH City

2014/Q2

200

Hästens

Sortedams Dossering 3-9

CPH N

2014/Q2

N/A

Madklubben

Vesterbrogade 82

CPH W

2014/Q2

1,149

Normal ApS

Christian IX's Gade 8

CPH City

2014/Q2

113

Ecco

Moss Copenhagen Michael Kors

Isabel Marant

PRIME RENT - DKK/SQM SUBAREA

Q1 2014

Q2 2014

CHANGE

Strøget - low end

10,000

10,000

0.00%

Strøget - average

17,500

17,500

0.00%

Strøget - high end

23,500

23,500

0.00%

Købmagergade - low end

7,500

7,500

0.00%

Købmagergade - average

14,000

14,000

0.00%

Købmagergade - high end

17,500

17,500

0.00%

Strøget (secoundary pedestrain area)

6,250

6,250

0.00%

Østerbrogade

2,600

2,600

0.00%

Nørrebrogade

1,900

1,900

0.00%

VACANCY RATES AND CONSUMER CONFIDENCE 5,00%vacancy rates compared to consumer confidence in Copenhagen Retail

10

4,50% 4,00% 3,50% 3,00% 2,50% 2,00% 1,50% 1,00% 0,50% 0,00%

5 0 -5 -10 -15

Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

However, the market still has to contend with a limited supply of prime space, which forces retailers to seek space in secondary areas.

SIGINIFICANT LEASES

FOCUS

MACROECONOMICS

INVESTMENT MARKET

Consumer confidence index Retail vacancy Copenhagen City Retail vacancy Copenhagen Area

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 19 / 24


FOOTFALL ANALYSIS ANALYSIS OF THE LARGER PEDESTRIAN SHOPPING STREETS The footfall activity during the summer has increased the average number of pedestrians per hour around Amager Torv (see counting point 2). However, despite the good weather the average number of pedestrians at counting point 3 (Frederiksborggade/Købmagergade) has dropped further. The main reason is to be found in the construction work at Nørreport which Købmagergade by Kultorvet still suffers heavily from. The construction site has narrowed down the street entrance to only a few meters. Despite this, counting point 3 remains the second busiest point after Amagertorv. Counting point 1 and 4 are more or less stable.

AVERAGE PEDESTRIAN COUNT OVER THE SUMMER AREA NUMBER ON MAP

STREET NAME

APRIL-AUGUST 2013 APRIL-AUGUST 2014 CHANGE

1

Østergade

4,236

4,143

- 93

2

Amagertorv/Østergade

6,165

6,955

+ 790

3

Frederiksborggade/Købmagergade

5,379

5,049

- 330

4

Frederiksberggade

5,400

5,166

- 284

FOOTFALL COUNT Number of pedestrians per hour counted on specific locations

Comparing April-August 2014 with the same period last year, we see the same picture. Amagertorv keeps attracting more and more pedestrians and the average level for pedestrians at the counting point (no. 2) has increased by approx. 800 persons per hour. On the other hand, as mentioned, Købmagergade by Kultorvet has decreased by 330 persons per hour at counting point 3, since the same period last year.

8.000 7.000 6.000 5.000 4.000 3.000 2.000

1. Friday in September 2013

5. Friday in November 2013

3. Friday in Febuary 2014

3 °C

4 °C

21 °C

Frederiksborggade/Købmagergade

Østergade

2. Friday in May 2014

4. Friday in July 2014

10 °C

28 °C

Frederiksberggade

Amagertorv/Østergade

A Nørreport Israels Plads

Methodology

F bo red rg er ga ikde

S P T a d l i

3

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

Kultorvet Trinitatiskirken Rundetårn bm ag erg ad e

The map shows the 4 counting points. The footfall is counted manually from both directions.

Helligåndskirken

Kongens Nytorv

Vimmelskaftet Gammeltorv

Fr

2

1de

ga

ter

Øs

Magasin

rtorv

Amage

Det Kgl. Teater

Højbro Plads

Nytorv

d ga

rg

be

s rik e4 ed

e

e

ad

g Ny

Illum

Københavns Domhus

Rådhuspladsen Københavns Rådhus

FOCUS

MACROECONOMICS

INVESTMENT MARKET

Christansborg

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 20 / 24

S T g i m I

O T r a a y s

W T s g l h p m


APPENDIX - DANISH TRANSLATION

ISSUE III 2014 21 / 24


FOKUS RINGENE BREDER SIG - DE SEKUNDÆRE MARKEDER ÅNDER IGEN Der er tegn på, at ringene breder sig i økonomien. Efterspørgslen efter prime assets på ejendomsmarkedet har længe været høj, men vores seneste analyser viser, at der nu i langt højere grad også handles flere sekundært beliggende ejendomme. Man oplevede i årene efter krisen en enorm nedgang i salget af sekundært beliggende erhvervsejendomme, men denne tendens er nu vendt og forventes fortsat at være opadgående i de kommende år.

FIGUR 1: SEKUNDÆRT BELIGGENDE KONTOREJENDOMME I STORKØBENHAVN Mio. kr. M DKK 4.500 4.000 3.500 3.000 2.500 2.000 1.500

I årene efter krisen var ejendomsmarkedet præget af begrænset adgang til finansiering kombineret med en lav risikovillighed, hvorfor markedet var domineret af få store spillere, med et hovedfokus på prime ejendomme i København. Det fremgår tydeligt af figur 1, hvordan salget af sekundære kontorejendomme i Storkøbenhavn faldt i perioden 20082011. I 2012 synes markedet dog at bløde op og specielt i 2013 kan der konstateres en markant fremgang, hvor transaktionsvolumen nåede et niveau på ca. 2,5 mia. kr. for sekundære kontorejendomme i Københavnsområdet (jf. figur 1). Vi mener, denne tendens vil fortsætte og at transaktionsvolumen for sekundære erhvervsejendomme i 2014 forventeligt bliver endnu højere, hvor transaktionsvolumen for første halvår allerede er nået et niveau på 1,9 mia. kr.

"...tiltrækker flere investorer med udsigt til at kunne opnå et højt gearet afkast."

Der er flere årsager til denne udvikling. Først og fremmest skal det ses som et resultat af et manglende udbud af prime ejendomme i forhold til efterspørgslen. Eksempelvis er der en langt højere efterspørgsel efter prime ejendomme i indre København end udbuddet kan modsvare. Det manglende udbud, har skabt et pres på afkastet i en nedadgående retning, hvorfor flere investorer søger nye segmenter, herunder mere sekundært be-

FOCUS

MACROECONOMICS

1.000 500 0 2008

Kilde:

2009

2010

2011

2012

2013

2014 E

RED Property Advisers

liggende ejendomme, for at opnå højere direkte afkast. Sekundært beliggende ejendomme er et segment investorer ikke har efterspurgt de senere år, da belåning (gearing) af denne type ejendomme har været nærmest umuligt, med mindre der allerede var et eksisterende lån der kunne overtages. Når der ikke kan opnås finansiering, skal købet finansieres med egenkapital, hvilket resulterer i et lavt afkast på egenkapitalen sammenholdt med ejendomme, hvor der kan opnås en finansiering på eksempelvis 60 % af købesummen. Der er kommet større tillid til markedet i takt med, at kapitalstærke og mere risikovillige investorer som Briggen, M7/Oaktree, Wihlborgs og Niam har foretaget investeringer i de mere sekundære kontorområder, hvilket er medvirkende til at øge transparensen og omsætteligheden i markedet, hvilket letter adgangen til finansiering, og som igen tiltrækker flere investorer med udsigt til at kunne opnå et højt gearet afkast.

pres på priserne i nogle områder, hvor Finansiel Stabilitet har haft en række ejendomme, der skulle afvikles. Finansiel Stabilitet har over de seneste kvartaler afviklet kraftigt og det forventes, at Finansiel Stabilitet vil være afviklet i løbet af 2015. Dette vil bringe markedet et skridt nærmere en ”naturlig” tilstand. Hertil skal tilføjes, at andelen af handler med sekundært placerede kontorejendomme i Storkøbenhavn med Finansiel Stabilitet som afvikler, kun var 13,7 % i 2013 og i 2014 er faldet til 8,3 %. Finansiel Stabilitets fokus på afvikling har samtidigt bidraget til en øget interesse fra en række udenlandske investorer. Dette har haft en positiv påvirkning på udviklingen på investeringsmarkedet, i form af nye, udenlandske aktører på markedet. POSITIVE TENDENSER I MARKEDET

FINANSIEL STABILITET SÆLGER UD

En række økonomiske nøgletal synes at underbygge, at den positive trend på de sekundære markeder vil fortsætte.

Siden 2008 har markedet desuden været stærkt påvirket af statens afviklingsselskab Finansiel Stabilitet. Dette har øget udbuddet og, alt andet lige, lagt et

Længe har økonomer annonceret, at dansk økonomi er i bedring og 2014 forventes at blive det bedste vækstsår siden 2010. De positive forventninger

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 22 / 24


til dansk økonomi kan da også konstateres hos forbrugerne. Som det fremgår af figur 2, er eksempelvis salget af personbiler på dets højeste de sidste 10 år og er steget næsten 80 % siden krisen. Heraf er andelen af dyrere biler steget fra 20 % til næsten 25 %. Økonomien er langt fra så presset som tidligere og virksomheder klarer sig i stigende grad bedre. Antallet af nystartede virksomheder er på et højere niveau end 2009 (se figur 2). Ydermere er antallet af konkurser støt faldende. Niveauet for konkurser er på vej mod det niveau vi oplevede før krisen, hvilket vidner om en stærkere økonomi og lempelse i den hårde udlånspolitik bankerne førte i årene umiddelbart efter boligboblen. Disse positive tendenser i dansk økonomi og blandt danske virksomheder kombineret med bedre finansieringsmuligheder har sat sit præg på ejendomsmarkedet – både for private boliger men også for investeringsejendomme. Efter at have været stigende fra 2007 til 2010, har antallet af tvangsauktioner for erhvervsejendomme været faldende siden (figur 2) med forventninger om yderligere fald de kommende år. Endvidere er andelen af tvangsauktioner for erhvervsejendomme på sit laveste i hele perioden 2000-2014 med kun 3,9 % af de samlede tvangsauktioner.

FIGUR 2: UNDERBYGGENDE PARAMETRE Indeks: 2009=100

200 180 160 140 120 100 80 60 40 20 0

2005

2006

2007

2008

Tvangsauktioner - Erhvervsejendomme

Kilde:

2009

2010

2011

2012

Konkurser (virksomheder)

2013

2014

Antal solgte personbiler

Danmarks Statistikbank

På baggrund af tendenserne og forventninger i markedet såvel som i økonomien, har vi positive forventninger til markedet i de kommende år. Et marked præget af lempeligere adgang til finansiering, flere investorer med forskellige risikoprofiler og en signifikant stigning i salget af sekundære erhvervsejendomme er blandt de tendenser, der giver anledning til optimisme.

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 23 / 24


TAK FOR STEMMERNE Igen i år har vi haft fat i hammer og søm, for at få vores to nyeste anerkendelser op at hænge. Vi er glade for de nye awards, som EUROMONEY Awards for Excellence har tildelt os i kategorierne, Best Advisor for Agency & Letting in Denmark og Best Advisor for Valuation in Denmark.

THANK YOU FOR THE VOTES We are pleased with the new awards which EUROMONEY Awards for Excellence has awarded us in the categories, Best Advisor for Agency & Letting in Denmark and Best Advisor for Valuation in Denmark.

FOCUS

MACROECONOMICS

INVESTMENT MARKET

OCCUPIER MARKET

APPENDIX

ISSUE III 2014 24 / 24


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.

ISSUE III 2014 25 / 25

Market Report III 2014  
Market Report III 2014