RED Danish Investment Atlas 2019 by Cushman & Wakefield RED

DANISH INVESTMENT ATLAS 2019

Kære læser, Velkommen til ”RED – Danish Investment Atlas 2019” som samler en række af vores tidligere publikationer i én. Vi bruger mange ressourcer på at indsamle og kvalitetssikre data om de enkelte transaktioner på det danske marked og på de kommende sider kan du - baseret på vores omfattende data og analyser - få et detaljeret indblik i det kommercielle danske ejendomsmarked - segment for segment. Alle data er ligeledes tilgængelige på vores hjemmeside, hvor du selv kan sammensætte dine grafer i vores ”dynamiske analyseværktøj”. Rapporten er opbygget som et let tilgængeligt opslagsværk, hvor du enten hurtigt kan skabe dig et overblik over et enkelt segment eller fordybe dig i detaljerne. Kontor-, retail-, bolig- og hotelsegmenterne har hvert sit afsnit, hvor du kan

Få overblik over investeringsmarkedets udvikling i Se den geografiske fordeling og de største investorer i Læse om de største transaktioner i Få en status på segmentets lejesituation, lejeniveauer mv. i Fordybe dig i vores valgte fokus for segmentet i Læse om vores forventninger til segmentets udvikling i Se de 30 største transaktioner, afkast-niveauer mv. i

”Investeringsmarkedet 2018” ”Volumen & Investorer 2018” ”Top 5 transaktioner” ”Lejemarkedet” ”Highlights” ”Forventninger til 2019” ”Transaktioner og nøgletal”

God læselyst. Nicholas Thurø Managing Partner

Dear reader, Welcome to "RED - Danish Investment Atlas 2019" which brings together a number of our previous publications in one. We use many resources to collect and quality assure data on the individual transactions in the Danish market, and on the coming pages - based on our extensive data and analyses - you can get detailed insight into the Danish market for commercial real estate - segment by segment. All data is also available on our website, where you can assemble your own charts in our "dynamic analysis tool". The report is structured as an easily accessible reference work, where you can either get a quick overview of a single market or immerse yourself in the details. The office, retail, residential and hotel segments each have their own sections where you can

Get an overview of developments in the investment market in "The Investment market 2018" See the geographical distribution and the largest investors in "Volume and investors 2018" Read about the largest transactions in "Top 5 transactions" Get a status on the segment's occupier situation in "Occupier market" Immerse yourself in our chosen topic for the segment "Highlights" Read about our xpectations for the segment in "Outlook for 2019" See the 30 largest transactions, yield levels etc. in "Transactions and key figures"

Enjoy reading Nicholas Thurø Managing Partner

+45 33 13 13 99 // red@cw-red.dk

EXECUTIVE SUMMARY EXECUTIVE SUMMARY

2018 sænkede tempoet // Slow-down in 2018

I 2018 faldt investeringsvolumen i det danske ejendomsmarked med 16% i forhold til rekordåret 2017. Alle segmenter, med undtagelse af grundsalg, oplevede en reduktion af volumen. Størst var faldet i retailsegmentet, der næsten blev halveret. Dette dækker dog over, at 2017 indeholdt en meget stor transaktion med ATPs køb af 50% af Danicas centre. Ser vi bort fra denne handel, var faldet på 14%. Bolig og kontor i hver sin geografiske retning i 2018 Boligsegmentet faldt 6% i transaktionsvolumen og kontorsegmentet faldt med beskedne 1%. Den geografiske fordeling af den investerede kapital ændrede sig dog markant for de to segmenter. Boligsegmentet oplevede en nedgang i transaktionsvolumen i Storkøbenhavn og Aarhus, hvor den samlede

In 2018, the investment volume in the Danish real estate market dropped by 16% compared to the record year 2017. All segments, with the exception of plot sales, experienced a reduction in volumes. The largest decrease was recorded in the retail segment, which was almost halved. This, however, covers the fact that 2017 contained a very large transaction with ATP's purchase of 50% of Danica's shopping centres. Disregarding this trade, the decline was 14%. Residential and office in separate geographical directions in 2018 The residential transaction volume dropped 6% and the office segment declined by a modest 1%. However, the geographical distribution of the invested capital changed significantly for the two segments. The residential segment saw a decrease in transaction volume in Greater Copenhagen and Aarhus, where the total volume dropped 19% from DKK 30.1 bn in

4 // RED - Danish Investment Atlas 2019

volumen faldt 19% fra 30,1 mia. kr. i 2017 til 24,3 mia. kr. i 2018 – mens resten af landet oplevede en stigning på 39% fra 8,9 mia. kr. til 12,4 mia. kr. Anderledes udviklede det sig inden for kontorsegmentet – hvor Storkøbenhavn og Aarhus blev styrket med en fremgang på 11% til 15,7 mia. kr. i 2018 fra 14,2 mia. kr. i 2017 – mens resten af landet faldt 44% i volumen fra 4,1 mia. kr. til 2,3 mia. kr. i 2018. Investorerne i kontorsegmentet har, i en tid med mere nervøsitet på de finansielle markeder, søgt tilbage til core assets i storbyerne, mens investorerne i boligsegmentet i højere grad har søgt investeringer uden for storbyerne for at opnå et højere direkte afkast og indkøbe boliger til en lavere pris per kvadratmeter end de historisk høje

2017 to DKK 24.3 bn in 2018 - while the rest of the country saw an increase of 39% from DKK 8.9 bn to DKK 12.4 bn. Development within the office segment was significantly different – here, Greater Copenhagen and Aarhus were strengthened with an increase of 11% from DKK 14.2 bn in 2017 to DKK 15.7 bn in 2018 - while the rest of the country dropped 44% in volume from DKK 4.1 bn to DKK 2.3 bn in2018.

priser, vi oplever i København og Aarhus. En stigning på knap 50% i transaktionsvolumen for grunde i 2018, vidner om en fortsat stor tillid til det danske ejendomsmarked, hvor specielt ejendomsselskaberne og de institutionelle investorer køber grunde for at øge deres afkast ved at træde tidligere ind i fødekæden.

Total transaction volume 2018 BN DKK

Share of total volume

Development from 2017

Residential

36.7

48%

-6%

Office

18.0

23%

-1%

Retail

8.6

11%

-49%

Industrial

6.5

-25%

Land

4,3

49%

Hotel

2.0

-62%

Other

0.9

-25%

77.0

100%

-16%

Total Source: C&W | RED

In a time of more anxiety in the financial markets, office investors have searched for core assets in the cities, while investors in the residential segment have primarily sought investments outside the cities to achieve a higher direct return and acquire residential at a lower price per square meter than the historically high prices, we currently experience in Copenhagen and Aarhus.

An increase of almost 50% in transaction volume for plots in 2018 testifies to a continued high level of confidence in the Danish real estate market, where property companies and institutional investors, in particular, are acquiring plots to increase their returns by entering into the supply chain at an earlier stage.

OFFICE Geographic breakdown 2018 OFFICE VOLUME

Volume

18.0 BN DKK

Danish 65%

Change

Copenhagen

8.5

Greater Copenhagen

4.2

Aarhus

3.0

35%

Rest of Denmark

2.3

-44%

Foreign 35%

Investment highlights 2018

Outlook 2019

Largest deal Bankinvest aquisition of 10% of PFA portfolio

Prime rent

Largest investor Klรถvern

1.5 2.3

BN DKK

RESIDENTIAL

Prime yield

Geographic breakdown 2018

Transaction volume

RESIDENTIAL VOLUME

36.7 BN DKK

Volume Copenhagen

17.2

RETAIL Geographic breakdown 2018 RETAIL VOLUME

8.6 BN DKK

Danish 41%

Volume Copenhagen

Change

3.3

Greater Copenhagen

0.6

-37% -85%

Aarhus

1.5

52%

Rest of Denmark

3.2

-54%

-18%

Greater Copenhagen

2.3

-22%

Aarhus

4.8

-23%

12.4

39%

Rest of Denmark Danish 45%

Change

Foreign 55%

Investment highlights 2018

Outlook 2019

Largest deal Heimstaden's aquisition of the fund TG Partners III

Prime rent

Largest investor Heimstaden

1.5 7.8

BN DKK

Prime yield Transaction volume

BN DKK

Foreign 59%

Investment highlights 2018

Outlook 2019

Largest deal Danske Shoppingcentre's aquisition of herningCentret

Prime rent

Largest investor Danske Shoppingcentre

1.1 1.4

BN DKK

Prime yield Transaction volume

BN DKK

6 // RED - Danish Investment Atlas 2019

Vores forventninger til 2019 // Expectations for 2019

KONTOR // OFFICE God efterspørgsel, stabile lejeniveauer og uændret afkast // Positive demand, stable rents and unchanged yields

Vi oplever i øjeblikket en meget høj efterspørgsel efter kontorer i størstedelen af København med lav tomgang til følge. Vi forventer, at efterspørgslen efter velbeliggende kontorer vil fortsætte i 2019, mens der vil være et overudbud af kontorer i områderne langs Ring 3. Vi forventer svagt stigende lejeniveauer i København og uændrede niveauer i de øvrige områder.

We are currently experiencing very high demand for office in the majority of Copenhagen, resulting in low vacancy rates. We expect demand of the well-located offices to continue in 2019, while there will be a surplus of offices in the areas around Ring 3. We expect vaguely increasing rents in Copenhagen and unchanged levels in the remaining areas.

Vi forventer uændrede afkast på kontorejendomme i 2019. Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og en øget rente vil medføre et opadgående pres på afkastkravet.

We expect unchanged yields for office properties in 2019. We do not expect investors to accept a lower risk premium for office properties - in spite of high demand - seeing that the current interest rate is at a low and increased interest rates will lead to upward pressure on the yield demand.

RETAIL // RETAIL Tomgang, søgning efter mindre enheder og pres på afkast // Vacancy, search for smaller entities and yield pressure

Vi forventer, at det fysiske retail marked fortsat vil være udfordret i 2019, hvilket vil medføre en stigende tomgang – også på gode placeringer. Men på trods heraf forventer vi, at vi i 2019 vil se:

We expect that the physical retail market will continue to be challenged in 2019, which will lead to an increase in vacancy rates - also in prime locations. In spite of this, we expect that in 2019 we will see:

tørst efterspørgsel i København og Aarhus – hvor nye brands, som S led i deres omnichannel-strategi, ønsker at etablere sig Højere efterspørgsel efter mindre enheder Shoppingcentre vil have fokus på at skabe flow gennem udvidelse af oplevelser, services og som distributionshub for omnichannel

Første års afkast på retail ejendommene vil være stigende og i løbet af 2019 ligge 20-30 basispoint over de laveste niveauer vi har set i 2017 og 2018.

he greatest demand in Copenhagen and Aarhus T Higher demand for smaller units Shopping centres will focus on creating flow through more experiences, services and as a distribution hub for omnichannel

The initial yield for retail properties will increase and during 2019 it will reach 20-30 basis points above the lowest levels of 2017 and 2018

BOLIG // RESIDENTIAL Stor efterspørgsel, men stagnerende leje og fokus på driftsafkast // Great occupier demand, but stagnant rent and focus on operating return Der vil fortsat være stor efterspørgsel efter boliger i København i 2019, men boliglejen har nået sit maksimum. Hovedparten af de boligsøgende har ikke mulighed for at betale den leje, som der estimeres i mange nye projekter og investorerne har svært ved at udleje de store boliger. Vi forventer, at lejen i de store udviklingsområder som Ørestad og Sydhavnen kommer under pres i 2019.

Demand in the residential sector will continue in Copenhagen in 2019, but the rent level has reached its maximum. The majority of residential demand are people who cannot afford the rent level currently estimated on several new projects, and investors are having difficulties letting the larger residences. We expect the rent level in the major development areas such as Ørestad and Sydhavnen to come under pressure in 2019.

Investeringsmarkedet vil være præget af investorer med fokus på det løbende driftsafkast fremfor frasalgscases. Både København og de 15-20 største byer i Danmark vil være i fokus.

The investment sector will be characterized by investors focusing on operating returns rather than divestments. Copenhagen and the 15-20 largest cities in Denmark will be in focus.

8 // RED - Danish Investment Atlas 2019

INDHOLD CONTENTS

Investeringsmarkedet 2018 // Investment market 2018 ��10 Volumen & Investorer 2018 // Volume & investors 2018 �� 14 Nervøsitet på de finansielle markeder påvirker ejendomsmarkedet // Financial market anxiety affects the property market �� 16 Boliger og København har drevet væksten // Residential and Copenhagen has driven growth �� 18 Investorer vil købe - ikke sælge // Investors want to buy - not sell ��20

ANNUAL REVIEW

ÅRSOVERBLIK // ANNUAL REVIEW

KONTOR // OFFICE Investeringsmarkedet 2018 // Investment market 2018 �� 26

Lejemarkedet // Occupier market �� 32 Highlights // Highlights ��34

OFFICE

Volumen & Investorer 2018 // Volume & investors 2018 �� 28 Top 5 transaktioner 2018 // Top 5 transactions 2018 ��30

Forventninger til 2019 // Expectations for 2019 ��36 Transaktioner og nøgletal // Transactions and key figures ��38

RETAIL

Volumen & Investorer 2018 // Volume & investors 2018 ��44

Highlights // Highlights �� 52 Forventninger til 2019 // Expectations for 2019 ��56 Transaktioner og nøgletal // Transactions and key figures �� 60

Investeringsmarkedet 2018 // Investment market 2018 ��64 Volumen & Investorer 2018 // Volume & investors 2018 ��66 Top 5 transaktioner 2018 // Top 5 transactions 2018 ��68 Lejemarkedet // Occupier market ��70 Highlights // Highlights �� 72 Forventninger til 2019 // Expectations for 2019 �� 76

RESIDENTIAL

BOLIG // RESIDENTIAL

Transaktioner og nøgletal // Transactions and key figures ��80

HOTEL Volumen & Investorer 2018 // Volume & investors 2018 ��86 Top 5 transaktioner 2018 // Top 5 transactions 2018 ��88 Highlights // Highlights �� 90 Forventninger til 2019 // Expectations for 2019 �� 92 Transaktioner og pipeline // Transactions and pipeline ��94

HOTEL

Investeringsmarkedet 2018 // Investment market 2018 ��84

Investeringsmarkedet 2018 // Investment market 2018 �� 10 Volumen & Investorer 2018 // Volume & investors 2018 �� 14 Nervøsitet på de finansielle markeder påvirker ejendomsmarkedet // Financial market anxiety affects the property market ��16 Boliger og København har drevet væksten // Residential and Copenhagen has driven growth ��18 Investorer vil købe - ikke sælge // Investors want to buy - not sell �� 20

ANNUAL REVIEW

ÅRSOVERBLIK // ANNUAL REVIEW

OVERBLIK - INVESTERINGSMARKEDET 2018 ANNUAL REVIEW - INVESTMENT MARKET 2018 ANNUAL REVIEW

Den samlede transaktionsvolumen for investeringsejendomme i Danmark er for 2018 opgjort til 77 mia. kr. og dermed reduceret med ca. 16% i forhold til rekordåret 2017, hvor der blev handlet ejendomme for 92 mia. kr ( figur 1).

Mindre, men fortsat stærk, aktivitet fra udenlandske investorer Udenlandske investorer opkøbte for knap 34 mia. kr. i 2018 svarende til 45% af transaktionsvolumen i 2018, hvilket er en nedgang på knap 17 mia. kr. i forhold til figur 1). De danske investorer øgede deres 2017 ( investeringer med knap 2 mia. kr. i 2018 til et samlet niveau på ca. 43 mia. kr. – svarende til en dansk investeringsandel på samlet 55% af investeringsvolumen i 2018. Investorerne opfatter fortsat det danske ejendomsmarked som attraktivt. Særligt det stabile politiske miljø, den generelle økonomiske vækst samt den lave finansieringsrente via det danske realkreditsystem er faktorer, som tiltaler investorerne.

Ejendomsfonde var de mest aktive Ejendomsfondene – som primært dækker over figur 2) af udenlandsk kapital - var med 39% ( transaktionsvolumen de mest aktive investorer på det danske ejendomsmarked i 2018. Især bolig- og retailejendomme var i høj kurs hos ejendomsfondene, som stod for henholdsvis 52% og 42% af de respektive markeder.

som med 42% af den samlede investeringsvolumen, figur 3). dominerer markedet volumenmæssigt ( Især boligudlejningsejendomme i København er i høj kurs med en samlet transaktionsvolumen på 17,2 mia. kr. svarende til 22% af den samlede volumen i Danmark.

København i høj kurs Det er fortsat ejendomsmarkedet i København,

Figure 2: Danish transactions - Investor type breakdown 2018 Other 8% Private investor 11% Institutional investor 14%

The total transaction volume for investment properties in Denmark totaled DKK 77 bn in 2018 and was thus reduced by approx. 16% compared to the record year of 2017, when property transactions reached DKK 92 bn (figure 1).

77.0

Investors still consider the Danish real estate market attractive. In particular, the stable political environment, general economic growth and the low financing rate via the Danish mortgage system are factors that appeal to investors.

12 // RED - Danish Investment Atlas 2019

28%

BN DKK

Property fund

Foreign investors cooling off but still warm Foreign investors acquired Danish properties for just below DKK 34 bn in 2018, corresponding to 45% of total transaction volume, which is a decrease of just below DKK 17 bn ( figure 1). Danish investors increased their investments by just below DKK 2 bn in 2018 to a total level of approx. DKK 43 bn - equivalent to a Danish investment share of 55% of the total investment volume in 2018.

Real estate company

39% Source: C&W | RED

Property funds most active

Copenhagen residential dominates the market

With 39% ( figure 2) of the transaction volume, property funds - which primarily includes foreign capital - were the most active investors in the Danish real estate market in 2018. Residential and retail properties in particular were popular among the property funds, who accounted for 52% and 42% of the respective markets.

With 42% of the total investment volume, the Copenhagen market continues to dominate transactions. In particular, Copenhagen residential is popular with a total transaction volume of DKK 17.2 bn equivalent to 22% of the total volume in Denmark ( figure 3).

Investment market 2018  Volume & investors 2018 u Highlights u Expectations for 2019 u

Figure 1: Total Danish transaction volume 2012-2018

ANNUAL REVIEW

100 92.0 90 77.0

80 68.8

BN DKK

70 60

54.9

44%

56%

34.9

31.5

30 18.4

42%

10 76% 0

45%

44%

58% 20

55%

56%

61%

62%

39%

38%

2013

2014

24% 2012

2015 Foreign

Source: C&W | RED

2016

2017

2018

Denmark

Figure 3: Total Danish transaction market - geographic breakdown 2016-2018 50 2016 45 2017

40 35

2018

BN DKK

2017

38%

25 55%

62%

2018

39%

45%

61%

2017

15 2018

2016

10 5

35%

56%

65%

44%

60% 40%

0 Copenhagen

Greater Copenhagen

2017 2016 96% 4%

52%

2018 2016

78%

68%

73%

32%

27%

Aarhus

48%

71% 29%

22%

Rest of Denmark

Source: C&W | RED

ANNUAL REVIEW

Tre investorer dominerer markedet De tre mest aktive investorer på det danske ejendomsmarked var Heimstaden, Blackstone og NIAM, som tilsammen handlede for 16,2 mia. svarende til 21% af den samlede volumen. Heimstaden har i 2018 investeret massivt i danske boligejendomme, bl.a. med købet af Thylanders TG Partners III portefølje, dele af Grønttorvet i Valby fra FB gruppen og NREPs Nordic Living portefølje. Den amerikanske kapitalfond Blackstone har de senere år købt og renoveret en lang række beboelsesejendomme i hovedstaden og gennemførte i 2018 imponerende 67 handler til en samlet værdi af 5,2 mia. kr. Også NIAM har fokuseret på boligejendomme og har bl.a. erhvervet en portefølje i de jyske byer Silkeborg, Randers, Vejle og Horsens, samt en række mindre ejendomme og porteføljer.

Figure 4: Breakdown in price range 2018 (2017) 2018 Price Range (M DKK)

No. of transactions

Volumes (M DKK)

0-5

1,279

2,178

5 - 10

212

1,501

159

2,251

Færre af de helt store handler Der blev i 2018 gennemført 2.261 handler med investeringsejendomme i Danmark, hvilket er knap 6% færre end i 2017 ( figur 4). Især antallet af de helt store ejendomshandler er reduceret i forhold til 2017, mens ejendomme og porteføljer med en værdi på 50-500 mio. kr. er steget.

10 - 20 20 - 50 50 - 100 100 - 200

Three investors dominate the market The three most active investors in the Danish real estate market were Heimstaden, Blackstone and NIAM, which accounted for a combined DKK 16.2 bn, corresponding to 21% of total volume. In 2018, Heimstaden invested heavily in Danish residential properties, among other things, with the acquisition of Thylander's TG Partners III portfolio, parts of Grønttorvet in Valby from the FB group and NREP's Nordic Living portfolio. In recent years, American capital fund Blackstone has bought and renovated a large number of residential properties in the capital and in 2018 completed an impressive 67 transactions with a total value of DKK 5.2 bn. NIAM has also focused on residential properties and has, among other things, acquired a portfolio in the cities of Jutland Silkeborg, Randers, Vejle and Horsens, as well as a number of smaller properties and portfolios.

Fewer major transactions In 2018, 2,261 transactions were completed in Denmark, which is almost 6% fewer than in 2017 ( figure 4). The number of very large real estate transactions in particular have been reduced compared to 2017, while properties and portfolios with a value of DKK 50-500 m has increased.

14 // RED - Danish Investment Atlas 2019

200 - 300 300 - 400 400 - 500 500 - 1,000 < 1,000 Total

(1,244) (194) (228)

220

(2,090) (1,409) (3,310)

7,016

(347)

(12,068)

191

13,692

(163)

(11,695)

116

15,831

10,130

(140) (33)

(18)

12 (9)

(18)

(18,889)

(8,026)

5,396 (5,946)

5,449 (4,198)

7,974

(12,194)

5,574

(8)

(12,161)

2,261

76,992

(2,402)

(91,986)

Investment market 2018  Volume & investors 2018 u Highlights u Expectations for 2019 u

ANNUAL REVIEW 15

OVERBLIK - VOLUMEN & INVESTORER 2018 ANNUAL REVIEW - VOLUME & INVESTORS 2018 ANNUAL REVIEW

Transactions (BN DKK)

AALBORG

Foreign 0%

2.1

BN DKK

Danish 100%

2017

2018

Copenhagen

39.9

32.1

-19%

Greater Copenhagen

16.3

10.6

-35%

Other Zealand

8.8

5.0

-44%

Funen

3.4

3.2

-7%

Aarhus

10.4

10.8

Aalborg

2.4

2.1

-12%

Other Jutland

10.8

13.2

22%

Total

92.0

77.0

-16%

Source: C&W | RED

GREATER COPENHAGEN

AARHUS

Foreign 27%

Foreign 40%

10.8 BN DKK

14% Danish 60%

OTHER ZEALAND Foreign 10%

OTHER JUTLAND FUNEN

13.2 BN DKK

17%

Danish 71%

10.6 BN DKK

14% Danish 73%

Foreign 29%

Change

Foreign 27%

5.0

Danish 90%

BN DKK

6% COPENHAGEN

3.2

BN DKK

Danish 73% Foreign 61%

32.1

Danish 39%

BN DKK

42%

Source: C&W | RED

16 // RED - Danish Investment Atlas 2019

Investment market 2018 u Volume & investors 2018  Highlights u Expectations for 2019 u

Investor

Origin

Volume (M DKK)

No, of transactions

Heimstaden

7,800

Blackstone

5,200

NIAM

3,200

DADES

2,900

Koncenton

2,700

PFA Ejendomme

2,500

Core Bolig

2,400

Klövern

2,300

BankInvest

2,000

N/A

Danske Shoppingcentre

1,400

*if possible portfolios are split into individual transactions

Source: C&W | RED

Denmark - Top 10 investors 2012-2018*

Investor

Origin

Volume (M DKK)

No, of transactions

Heimstaden

22,600

NIAM

14,200

Patrizia

11,000

ATP

9,900

NREP

8,800

Core Bolig

8,000

Aberdeen Standard Investments

8,000

Blackstone

7,700

131

PensionDanmark

7,300

PFA Ejendomme

6,900

*if possible portfolios are split into individual transactions

119

Source: C&W | RED

ANNUAL REVIEW

Denmark - Top 10 investors 2018*

NERVØSITET PÅ DE FINANSIELLE MARKEDER PÅVIRKER EJENDOMSMARKEDET ANNUAL REVIEW

FINANCIAL MARKET ANXIETY AFFECTS THE PROPERTY MARKET

Fokus på amerikanske renter Efter en lang årrække med stigende priser på markederne for alle aktivtyper – såvel aktier og obligationer som ejendomme - har den seneste periode været præget af nervøsitet på de finansielle markeder, hvilket blandt andet har sat sit præg på aktiemarkederne i 4. kvartal 2018. De finansielle markeder følger udviklingen på en lang række nøgletal verden over, og et af de nøgletal, som alle analytikere har blikket rettet imod, er forskellen mellem den amerikanske tre måneders og 10 års rente figur 5). Er forskellen i den korte og lange rente ( lille, er rentekurven flad, hvilket er et udtryk for, at investorerne er bekymrede for økonomien og dermed accepterer at binde deres penge på langt sigt til en lav rente. Rentekurven følges tæt, fordi den forud for de sidste seks recessioner i USA har været negativ 6-24 måneder forud for recessionen.

Fokus on American interest rates After a long period of increasing market prices for all asset types – equities, bonds and properties - the recent period has been characterized by financial market anxiety, which, among other things, left its mark on the equity markets in Q4 2018. The financial markets follow developments on a large number of key figures worldwide, and one key figure that all analysts have focused on is the difference between the U.S. 3-month and 10 year interest. If the difference in short and long-term interest rates is small, the interest curve is flat, which indicates that investors are concerned about the economy and thus agree to bind their money in the long term at a low interest rate. The interest curve is closely monitored because, prior to the last six recessions in the US, it was negative 6-24 months ahead of the recession ( figure 5).

18 // RED - Danish Investment Atlas 2019

Den amerikanske rentekurve er i øjeblikket meget flad og tæt på nul, hvilket bekræfter nervøsiteten på markederne. Perioder med recession påvirker ejendomsmarkederne, idet lejerne inden for kontor, retail og industri i disse perioder oplever nedgang, hvilket igen reducerer arealbehovet og presser markedslejen. Dette medfører, at investorerne stiller krav om større risikopræmie, hvilket påvirker prissætningen, uagtet at finansieringsrenten fortsat måtte være lav. Den amerikanske rentekurve er dog fortsat positiv og det danske ejendomsmarked har et godt fundament med en lav tomgang og lav gearing hos investorerne. Men vi har set toppen af priserne for denne omgang og markedet er ved at vænne sig til mere normale tilstande.

Høje ejendomspriser sænker tempoet På europæisk plan – såvel som i Danmark – faldt transaktionsvolumen i 2018. Er det udtryk for at der

The US interest curve is currently flat and close to zero, confirming market anxiety. Periods of recession affect real estate markets, with office, retail and industry tenants experiencing a decline, which in turn reduces the space requirement and pushes market rent. This means that investors demand greater risk premium, which affects pricing, even though the funding rate remains low. However, the US yield curve is still positive and the Danish real estate market has a solid foundation with low vacancy rates and low degree of investor leverage. In addition, we have probably seen the top of the prices and the market is getting attuned to more normal conditions.

High property prices slows down the pace In Europe - as well as in Denmark - the transaction volume dropped in 2018. Does this mean that no capital is targeting real estate, but instead allocated to other asset classes? No, we actually experience

ikke er kapital, der søger mod fast ejendom, men i stedet allokeres til andre aktivklasser? Nej, vi oplever faktisk det modsatte. Der er historisk meget kapital figur 6), allokeret til investering i fast ejendom ( men investorerne har svært ved at finde ejendomme, som de vurderer er fair prissat. Dette medfører, at kapitalen akkumuleres og investorerne afventer – hvilket vurderes at være en af de primære årsager til nedgangen i transaktionsvolumen på såvel dansk som europæisk plan.

Men aktivitetsniveauet er fortsat højt… På trods af en faldende transaktionsvolumen, i såvel Danmark som det øvrige Europa, er aktivitetsniveauet meget højt og den meget lave rente betyder, at det fortsat er attraktivt at investere i fast ejendom. Et aktiv, som til dels er inflationssikret og som genererer et løbende afkast i modsætning til de fleste øvrige aktivklasser.

the opposite. There is a record amount of capital allocated to investing in real estate ( figure 6), but investors find it difficult to find properties that they estimate to be fairly priced. This means that the capital is accumulated and investors are waiting - which is considered to be one of the primary reasons for the decline in both Danish and European transaction volumes.

But activity remains high…. Despite a declining transaction volume, in Denmark as well as the rest of Europe, activity is high and the low interest rate means that it is still attractive to invest in real estate. An asset that is partly inflation-proof and which generates an ongoing return as opposed to most other asset classes.

Investment market 2018 u Volume & investors 2018 u Highlights  Expectations for 2019 u

Figure 5: U.S. 10-year treasury minus 3-month yield 1978-2019 ANNUAL REVIEW

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

5 4 3 2 1 0 -1 -2 -3

Jan 2019

Jan 2015

Jan 2008

Source: Federal Reserve, Cushman & Wakefield Research

Jan 2001

Jan 1994

Jan 1987

Jan 1980

-4

Recession

U.S. 10-year treasury minus 3-month yield

Figure 6: Global capital allocated for investment in commercial real estate 2012-2018 350 294 3%

300 256 229 3% 202 5%

US BN

200

13% 150

250 3%

250

136 6% 15%

100

196 5%

11%

56%

21%

12%

23% 62%

13% 26%

26%

12%

26%

24%

59%

61%

2016

2017

59% 29% 53%

58% 50

0 2012

2013

Source: Preqin, Cushman & Wakefield Research

2014

2015 North America

Europe

Asia

2018 Rest of the world

BOLIGER OG KØBENHAVN HAR DREVET VÆKSTEN RESIDENTIAL AND CPH HAS BEEN THE GROWTH DRIVER ANNUAL REVIEW

På det danske ejendomsmarked udgør retail, kontor og boliger de tre store segmenter. I 3. kvartal 2015 udgjorde de tre segmenter stort set en lige stor andel af markedet med en transaktionsvolumen for hvert segment på ca. 11 mia. kr. – målt som et 12 måneders rullende gennemsnit ( figur 7).

Boligvolumen femdoblet på tre år Siden 2015 har boligsegmentet taget fart og været den primære driver for væksten i den danske transaktionsvolumen. På mindre end tre år fra 2. kvartal 2015 til 1. kvartal 2018 steg transaktionsvolumen for boligejendomme med knap 500% fra 8,1 mia. kr. til 39,7 mia. kr. Det foreløbige højdepunkt for boligsegmentet lå således i 1. kvartal 2018 – men efter en høj transaktionsvolumen i 4. kvartal 2018 er kurven vendt og det bliver interessant at se, hvorvidt det høje niveau forsætter i 2019.

- 2017 ( figur 8) oplevet en kraftig vækst i volumen på 290%. Men perioderne dækker over forskellige karakteristika i forhold til, hvem, der investerer, og hvor. I perioden 1992 - 2005 udgjorde Københavns andel af den samlede transaktionsvolumen i gennemsnit 38% årligt, mens vi i perioden 2012-2016 har oplevet at hele 58% af den samlede danske transaktionsvolumen er investeret i København ( figur 8). Hvorfor denne udvikling? Investorsammensætningen og adgangen til fremmedkapital har ændret sig. I perioden 1992 - 2005 var det danske ejendomsmarked nærmest udelukkende båret af danske investorer og langt flere, mindre investorer, end vi ser i dag. I den periode var adgangen til fremmedkapital til belåning af fast ejendom i provinsen væsentligt nemmere, hvilket medførte en øget likviditet/omsættelighed.

København tiltrækker investeringerne

Svær adgang til finansiering i provinsen

Op til finanskrisen oplevede det danske marked en kraftig stigning i transaktionsvolumen på 300% i perioden 2002 - 2006. Tilsvarende har vi i perioden 2013

I perioden efter finanskrisen er det danske ejendomsmarked præget af store danske og internationale investorer. Deres fokus har primært været rettet mod

In the Danish market, retail, office and residential constitute the three leading segments in commercial real estate. In the third quarter of 2015, the three segments accounted for almost equal proportions of the market with a transaction volume of approx. DKK 11 bn - measured as a 12-month rolling average ( figure 7) .

action volume of 300% in the period 2002 - 2006 ( figure 8). Similarly, in the period 2013 - 2017, we have experienced a sharp growth in volume of 290%. But the periods cover different characteristics in relation to investors and preferred areas.

Residential volume multiplied by five in three years Since 2015, the residential segment has taken off as the primary driver for growth in the Danish transaction volume. In less than three years from Q2 2015 to Q1 2018, the transaction volume for residential properties increased by almost 500% from DKK 8.1 bn to DKK 39.7 bn. The preliminary peak for the residential segment was thus in Q1 2018 - but after a high transaction volume in the fourth quarter of 2018, the curve has reversed and it will be interesting to see whether the high level continues in 2019.

Copenhagen is attracting investments In the period leading up to the financial crisis, the Danish market experienced a sharp increase in trans-

20 // RED - Danish Investment Atlas 2019

In the period 1992 - 2005, Copenhagen's share of the total transaction volume averaged 38% annually, while in the period 2012-2016 a significant 58% of the total Danish transaction volume was invested in Copenhagen ( figure 8). Why this development? Investor composition and access to foreign capital have changed. In the period 1992 - 2005, the Danish real estate market was almost entirely carried by Danish investors and far more, smaller investors than today. During that period, access to foreign capital for real estate in the province was significantly easier, resulting in increased liquidity/marketability.

Limited access to provincial financing Subsequent to the financial crisis, the Danish real estate market is characterised by large Danish and international investors. Their focus has primarily been

København som det mest likvide og sikre marked. I samme periode er bankernes og realkreditinstitutternes udlånsvillighed og -evne til fast ejendom i provinsen skærpet, som følge af Basel-komiteens nye krav, der fordrer, at kreditinstitutter skal holde mere kapital i reserve, når de foretager mere risikobetonede udlån (provinsen), end når de udlåner til mere sikre projekter (København). Det er derfor blevet sværere for mindre investorer og privatpersoner at belåne investeringsejendomme i provinsen, hvilket er kommet til udtryk i lavere omsættelighed. Disse to faktorer er den primære årsag til, at København har tegnet sig for så stor en andel af transaktionsvolumen i perioden 2012 - 2016.

Investorerne tilbage til de største byer I 2017, hvor vi oplevede en rekordhøj transaktionsvolumen i Danmark, var stigningen båret af, at de store investorer søgte ud i landet for at investere i ejendomme, der gav et højere direkte afkast som alternativ til den store konkurrence blandt investorerne om ejendommene i København. Men i 2018, hvor de finansielle markeder oplevede øget nervøsitet, trak investorerne sig igen tilbage til de mere sikre markeder i de største byer.

Copenhagen as the most liquid and secure market. During the same period, lendability in the province has been tightened as a result of the Basel Committee's new requirements, requiring credit institutions to hold more capital in reserve when making more risky lending (provincial properties) than when they lend to more secure projects (Copenhagen properties). It has therefore become more difficult for smaller investors and individuals to obtain loans for investment properties in the province. These two factors are the primary reason why Copenhagen has subscribed for such a large share of the transaction volume in the period 2012 - 2016.

Investors return to the largest cities In 2017, when we saw a record high transaction volume in Denmark, the increase was due to the large investors targeting secondary markets with higher direct yields as an alternative to the large competition among investors for Copenhagen assets. But in 2018, when the financial markets experienced increased anxiety, investors withdrew to the safer markets in the largest cities.

Investment market 2018 u Volume & investors 2018 u Highlights  Expectations for 2019 u

Figure 7: Transaction volume for retail, office and residential 2012-2018 (illustrated as 12-month rolling average) 45

ANNUAL REVIEW

40 35

Billions

30 25 20 15 10 5 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012

2013

2014

2015

Retail

2016

Oﬃce

2017 Residential

2018 Retail (excl. of the ATP/Danica deal

Source: C&W | RED

Figure 8: Total transaction volume for Denmark 1992-2018 - Copenhagen share highlighted 100

80%

70%

Average share 2012-2016 = 58%

60% 70 50%

Average share 1992-2005 = 39%

40%

30%

30 20% 20 10%

10 0

Total transaction volume

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

0% 1992

Billions

Copenhagen as share of the total volume

Source: C&W | RED

INVESTORER VIL KØBE - IKKE SÆLGE INVESTORS WANT TO BUY - NOT SELL ANNUAL REVIEW

RED INVESTOR SURVEY Fortsat investeringsappetit – trods afdæmpede forventninger RED har spurgt de største og mest aktive investorer på det danske marked om deres forventninger til 2019. 60% af de adspurgte investorer forventer i 2019 at øge deres portefølje – mens 34% forventer uændret porteføljestørrelse. Kun 6% af respondenterne forventer at reducere deres portefølje og der er således ikke udsigt til, at det i 2019 bliver nemmere at få opkøbt investeringsejendomme ( figur 9) . Af investorundersøgelsen fremgår det, at investorerne vurderer, at markedsforholdene for udlejning af kontor, bolig og retail er blevet sværere over de seneste 12 måneder. På trods af dette vurderer hele 95% af de adspurgte investorer, at værdien af deres

portefølje vil stige eller være uændret i de kommende figur 10). Investorerne vurderer seks måneder ( således markedsforholdene så gunstige, at de som minimum kan opretholde deres værdier.

forventer bedre finansieringsvilkår til finansiering af nye ejendomme eller refinansiering af eksisterende ejendomme, mens de resterende 11% forventer skærpede finansieringsvilkår ( figur 11).

Direkte adspurgt om hvilke markedsforhold, de forventer vil påvirke markedsværdien af deres portefølje de kommende seks måneder, svarer 54%, at de forventer en reduktion af deres tomgang og 44% forventer en stigning i markedslejen for deres ejendomme. Tilsvarende forventer kun 10% af respondenterne, at de vil opleve øget tomgang og alene 6% forventer fald i markedslejen.

For at få et dybere indblik i investorernes forventninger til henholdsvis retail-, kontor- og boligmarkedet i 2019 henvises til afsnittene om de enkelte segmenter, hvor resultaterne af forventningsundersøgelsen fremgår af afsnittet "Forventninger til 2019".

Investorerne forventer uændrede finansieringsvilkår Hele 80% af investorerne forventer uændrede vilkår for finansiering af fast ejendom. 9% af investorerne

Figure 9: Investor Confidence Index - Portfolio size

Figure 10: Investor Confidence Index - Portfolio value

What is your objective with regard to the size of your portfolio in terms of acquisition/disposal during the next 6 months?

How do you see the value of your portfolio developing during the next 6 months (aside from any acquisition/disposal)

100%

Increase: more acquisition than disposal

60%

42% Improving

Stable: as much disposal as acquisition Decrease: more disposal than acquisition

Unchanged 53%

Worsening

34% 6%

5% 2019

22 // RED - Danish Investment Atlas 2019

2019

Investment market 2018 u Volume & investors 2018 u Highlights u Expectations for 2019 

Continued investment appetite – in spite of dampened expectations RED has asked the largest and most active investors in the Danish market about their expectations for 2019. 60% of the respondents expect to increase their portfolio in 2019 - while 34% expect unchanged portfolio sizes. Only 6% of the respondents expect to reduce their portfolio and there is thus no prospect that it will be easier to acquire investment properties in 2019 ( figure 9) . The investor survey shows that investors consider that market conditions for letting office, residential and retail have become more difficult over the past 12 months. In spite of this, as many as 95% of respondents estimate that the value of their portfolio

will increase or remain unchanged for the next six figure 10). Respondents thus judge the months ( market conditions favorable enough to at least maintain values.

ents expect improved financing conditions for new properties or refinancing existing properties, while the remaining 11% expect stricter financing conditions ( figure 11).

When asked which market conditions they expect to affect the market value of their portfolio over the next six months, 54% respond that they expect a reduction in vacancy and 44% expect an increase in market rent for their properties. Similarly, only 10% of respondents expect that they will experience increased vacancy and only 6% expect a decline in market rent.

For a deeper insight into investor expectations for the 2019 retail, office and residential markets respectively, we refer to the sections on the individual segments, where the results of the survey are shown in the section "Expectations for 2019".

Investors expect unchanged financing conditions As many as 80% of respondents expect unchanged terms for real estate financing. 9% of the respond-

Figure 11: Investor Confidence Index - Financing conditions What is the future outlook for your financing compared with your current financing? (In terms of the financing of new acquisitions or the refinancing of your existing properties.)

100%

The Cushman & Wakefield | RED Investor Confidence Index The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2017 and 2018. The index monitors expectations from highly active investors

in the Danish market for the next six months. Improved conditions 80%

Unchanged conditions Worsening conditions

The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market. We conduct the survey on a biannual basis, allowing us to

11%

track changes and interpret what they mean for the market 2019

and how to best respond when making investment decisions.

ANNUAL REVIEW

RED INVESTOR SURVEY

ANNUAL REVIEW 24 // RED - Danish Investment Atlas 2019

Investment 2018 u Volume & investors 2018 u Highlights u Expectations for 2019 u

ANNUAL REVIEW 25

KONTOR // OFFICE Investeringsmarkedet 2018 // Investment market 2018 �� 26 Top 5 transaktioner 2018 // Top 5 transactions 2018 �� 30 Lejemarkedet // Occupier market ��32 Highlights // Highlights �� 34 Forventninger til 2019 // Expectations for 2019 �� 36 Transaktioner og nøgletal // Transactions and key figures �� 38

OFFICE

Volumen & Investorer 2018 // Volume & investors 2018 �� 28

KONTOR - INVESTERINGSMARKEDET 2018 OFFICE - INVESTMENT MARKET 2018

Stor interesse for kontorinvesteringer blandt danske investorer Investeringsvolumen toppede i Danmark i 2016. Sidenhen har der været tale om en relativt flad udvikling. I 2018 udgjorde den danske transaktionsvolumen for kontorer ca. 18 mia. kr., svarende til et marginalt fald på 2% mod et fald på knapt 4% fra 2016 til 2017 ( figur 12).

OFFICE

Uagtet et samlet fald har de danske investorer øget deres investeringer i kontorejendomme siden 2012 og stod for ca. 65% af transaktionsvolumen i 2018, svarende til investeringer for 11,8 mia. kr. Det svenske ejendomsselskab Klövern står dog for nogle af årets største transaktioner på kontormarkedet med købet af Codanhus og NIAMs Nordic Core Plus portefølje bestående af kontorejendomme i Ørestad, Vanløse, Holte og Albertslund.

Stadigt flere ejendomsselskaber køber kontor Vi har i 2018 oplevet en stigende andel af ejendomsselskaber på det danske kontormarked ( figur 13),

hvilket primært er båret af nye aktører, bl.a. BankInvest, der med købet af 10% af PFAs ejendomsportefølje stod for årets største kontorhandel på 1,5 mia. kr. Klöverns køb af Codanhus til 1,44 mia. kr. er dermed årets næststørste handel.

Udenlandske investorer søger tilbage mod København Kontorejendomme i de centrale dele af København betragtes som prime investeringer, hvilket fremgår af en stigende transaktionsvolumen i København.

havn er faldet fra 70% i 2017 til 58% i 2018, er andelen af udenlandske investorers transaktioner i København steget fra 30% til 42% i perioden ( figur 14). De udenlandske investorers aktivitet uden for København og Aarhus faldt 41% fra 2017 og 2018 og understreger den klassiske ”flight to quality”. Efter at investorerne i opgangstider søgte mod sekundære markeder i jagt på højere afkast søger de i det nuværende marked tilbage mod sikker havn i de største byer.

Mens danske investorers andel af volumen i Køben-

Figure 13: Office - Investor type breakdown 2018

Other 8%

Real estate company

Private investor

36%

Danish investors drawn to office properties Danish office investment volumes peaked in 2016. Since then, development has been relatively flat, although with a slight downward trend. In 2018, the Danish transaction volume for offices amounted to approx. DKK 18 bn, corresponding to a marginal decline of 2% against a decrease of almost 4% from 2016 to 2017 ( figure 12). In spite of a total decline, Danish investors have increased their investments in office properties since 2012 and accounted for approx. 65% of transaction volume in 2018, corresponding to investments at a total value of DKK 11.8 bn. However, Swedish property company Klövern is responsible for some of the largest office transactions of the year with the acquisition of Codanhus and NIAM's Nordic Core Plus I office property portfolio in Ørestad, Vanløse, Holte and Albertslund – all in Greater Copenhagen.

Institutional investor 21%

18.0 BN DKK

Property fund 26% Source: C&W | RED

of 10% of PFA's property portfolio accounted for the largest office transaction of the year at DKK 1.5 bn. Klövern's purchase of Codanhus at DKK 1.44 bn was the second largest transaction of the year.

Foreign investors targeting Copenhagen

Still more property companies buy offices

Office properties in the central parts of Copenhagen is perceived as prime investments, which is illustrated by an increased transaction volume in Copenhagen.

In 2018, we have seen an increasing share of real estate companies on the Danish office market ( figure 13), which may primarily be ascribed to new players such as BankInvest, which with the purchase

While the Danish investor share of volume in Copenhagen has dropped from 70% in 2017 to 58% in 2018, the foreign investor transaction share in Copenhagen

28 // RED - Danish Investment Atlas 2019

has increased from 30% to 42% during this period ( figure 14). Foreign investor activity outside Copenhagen and Aarhus dropped 41% from 2017 and 2018 and underlines the classic flight to quality. While investors targeted secondary markets in search of higher returns during the economic recovery, they now, in the current market, return to safe haven in the largest cities.

Investment market  Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Figure 12: Office - Total transaction volume 2012-2018 20 19.0 18.3

18.0

16 14.2

BN DKK

12 10.7 10 55%

45%

OFFICE

65%

39%

35%

4.7

70%

30%

2 0

61%

6.4

85% 92% 8%

92% 8%

15%

2012

2013

2014

2015 Foreign

Source: C&W | RED

2016

2017

2018

Danish

Figure 14: Office - Historic geographic breakdown 2016-2018

2016

BN DKK

2018 2017

8 50% 6

50% 2017

4 70% 2

2018

2017

58%

30%

42% 2016 29% 71%

53%

47%

2016

Copenhagen Source: C&W | RED

Greater Copenhagen Foreign

55% 2016

100%

2018 2017

87% 13% Aarhus

100%

87% 13%

2018

45% 88% 12%

Rest of Denmark

Danish

KONTOR - VOLUMEN & INVESTORER 2018 OFFICE - VOLUME & INVESTORS 2018 Foreign 35%

18.0 OFFICE VOLUME

KONTOR - VOLUMEN & INVESTORER 2018 OFFICE - VOLUME & INVESTORS 2018 Foreign 35%

18.0 OFFICE VOLUME

BN DKK

AARHUS

3.0

Foreign 0%

BN DKK

17%

Danish 65%

Danish 100%

COPENHAGEN

Foreign 42%

8.5

Danish 58%

BN DKK

47%

GREATER COPENHAGEN Foreign 47%

JUTLAND & FUNEN Foreign 57%

4.2 BN DKK

1.9

BN DKK

11%

23% Danish 53%

Danish 43%

OTHER ZEALAND Foreign 0%

0.4

Danish 100%

BN DKK

2% Source: C&W | RED

BN DKK

OFFICE

AARHUS

3.0

Foreign 0%

BN DKK

17%

Danish 65%

Danish 100%

COPENHAGEN

Foreign 42%

8.5

Danish 58%

BN DKK

47%

GREATER COPENHAGEN Foreign 47%

JUTLAND & FUNEN Foreign 57%

4.2 BN DKK

1.9

BN DKK

11%

23% Danish 53%

Danish 43%

OTHER ZEALAND Foreign 0%

0.4

Danish 100%

BN DKK

2% Source: C&W | RED

30 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors  Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Office transactions (BN DKK)

Investorerne søger igen mod de største byer Mens 2017 bød på store investeringer uden for de største byer (København og Aarhus), var fokus i 2018 igen rettet mod København og Aarhus, hvor der er stor tiltro til lejemarkedet og forventninger om lejestigninger for de bedste beliggenheder og mest moderne ejendomme. I Aarhus steg transaktionsvolumen med 35% fra 2017 til 2018, mens stigningen udgjorde 9% for København. Mens investeringsaktiviteten var stabil i det storkøbenhavnske område, faldt aktiviteten i resten af landet på trods af en generel positiv konjunkturudvikling på landsplan.

Prime markets n the cities continue to attract investors While 2017 offered major investments outside the largest cities (Copenhagen and Aarhus), in 2018 focus was yet again in Copenhagen and Aarhus, where confidence in the rental market is solid along with expectations of rental increases for the best locations and most modern properties.

2017

2018

Copenhagen

7.8

8.5

Greater Copenhagen

4.2

Other Zealand

1.7

0.4

-80%

Aarhus

2.2

3.0

35%

Jutland & Funen

2.4

1.9

-19%

18.3

18.0

-2%

Total

Change

Source: C&W | RED

OFFICE

In Aarhus, the volume of transactions increased by 35% in 2018, while the increase was 9% for Copenhagen. While investment activity was stable in the Greater Copenhagen area, activity in the rest of the country declined despite general positive development on a national level.

Office - Top 5 investors 2018*

Investor

Origin

Klövern

Volume (in M DKK)

No. of transactions

2,346

BankInvest

1,500

N/A

DADES

1,485

AIP Asset Management

1,200

Pensam

975

*if possible portfolios are split into individual transactions

Source: C&W | RED

Office - Top 5 investors 2012-2018*

Investor

Origin

Volume (in M DKK)

No. of transactions

PensionDanmark

5,700

NIAM

4,700

Jeudan

4,500

Wihlborgs

3,800

DADES

3,700

*if possible portfolios are split into individual transactions

Source: C&W | RED

KONTOR - TOP 5 TRANSAKTIONER 2018 OFFICE - TOP 5 TRANSACTIONS 2018 10% of PFA's portfolio PFA's investeringer i danske erhvervsejendomme nåede i 2018 et niveau, hvor der var behov for en rebalancering. I den forbindelse solgte PFA i maj 2018 10% af deres portefølje til BankInvests nyligt børsnoterede BI Erhvervsejendomme. Der er tale om en cross-borderportefølje bestående af kontor- og retailejendomme.

OFFICE

In 2018, the Danish pension fund PFA's investments in Danish commercial real estate reached a level that prompted a need for diversification. In this connection, PFA sold 10% of their portfolio to BankInvest's newly listed BI Erhvervsejendomme in May 2018. This is a cross-border portfolio consisting of office- and retail properties.

Price DKK: 1,500,000,000

Investor: BankInvest

Sq m: N/A

Vendor: PFA Ejendomme

Codanhus, Copenhagen In February 2018, the Swedish property company Klövern AB bought Codanhus from DADES at a price of DKK 1.44 bn. When it was built in 1961, the 21-floor Codanhus in Frederiksberg was Denmark's tallest office building. The property has a total area of approx. 41,000 sqm, of which approx. 10,000 sqm is parking. In 2008, former owner DADES took over the property from Danish insurance company Codan, which named the property Codanhus.

Photo: Lokalebasen

32 // RED - Danish Investment Atlas 2019

Price DKK: 1,440,000,000

Investor: Klövern

Sq m: 41,000

Vendor: DADES

Investment market u Volume & investors u Top 5 transactions  Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Coop Portfolio - Sønderhøj In June 2018, property investment company DADES entered into an agreement with Coop to take over the property complex Sønderhøj and Mega Syd in southern Aarhus. The investment comprises a total floor area of more than 81,000 sqm, which contains both office properties and educational campuses, as well as the possibility of developing new residential and office space. The area also includes approx. 10,000 sqm of parking areas under construction.

Investor: DADES

Sq m: 81,000

Vendor: Coop Invest

OFFICE

Photo: Google Earth

Price DKK: 1,300,000,000

Novo Nordisk office South Korean AIP Asset Management bought one of Novo Nordisk's offices in Søborg shortly before Christmas 2018. The investment is AIP's first in Denmark and in the Nordic region. The property is fully let to Novo Nordisk. The sellers are the Danish institutional investors Velliv, Tryg, PBU and AP Pension. The first of the three properties was built in 2006, and subsequently the property was further developed with two adjoining buildings in 2009 and 2015, respectively.

Photo: Henning Larsen Architects

Price DKK: 1,200,000,000

Investor: AIP Asset Management

Sq m: 50,000

Vendor: Tryg, Velliv, PBU & AP Pension

Tietgens Have, Copenhagen The distinctive property complex Tietgens Have located directly opposite Nordhavn Station, changed hands in early autumn when PenSam bought it from NIAM. The property is mainly let to public tenants, including SKAT (Danish tax authorities), DIIS (Danish Institute for International Studies) and the City of Copenhagen. For PenSam, this is a strategic investment in an office property, which both now and in the future is expected to benefit from the central location in Copenhagen and the continued expansion of the Nordhavn district.

Photo: Berlingske

Price DKK: 975,000,000

Investor: PenSam

Sq m: 42,000

Vendor: NIAM

KONTOR - LEJEMARKEDET OFFICE - OCCUPIER MARKET

Mindre kontorer og kortere bindingsperioder

OFFICE

Den primære driver for efterspørgslen på kontorlokaler er udviklingen i beskæftigelsen inden for de traditionelle kontor- og serviceerhverv. De senere års meget positive udvikling i konjunkturerne har resulteret i en stigende beskæftigelse, der nu manifesterer sig i en stærk efterspørgsel på kontorlokaler. Den stærke efterspørgsel kan aflæses direkte i tomgangstallene, der ifølge Ejendomstorvet primo 2019 udgør 5,8% for København og 7,5% for Storkøbenhavn, hvilket begge er historisk lave. Den stigende beskæftigelse ses både hos de etablerede virksomheder, men også blandt det store antal nystartede virksomheder som, ifølge opgørelser fra Danmarks Statistik, er observeret siden 2011. Mange af disse nystartede virksomheder har oplevet høje vækstrater og dermed stigende antal medarbejdere, men er samtidig også bevidste om behovet for fleksible løsninger i forhold til deres arealforbrug. Dette ses tydeligt i markedet, hvor der efterspørges fleksibilitet i lejemålsstørrelsen og korte uopsigeligheder. Behovet for fleksibilitet og korte

Smaller offices and shorter lease contracts The primary driver for office space demand is the level of employment in the traditional office and service industries. Recent years' very positive business and economic development has resulted in increased levels of employment, which is now manifesting itself in strong demand for office space. The strong demand can be seen directly in the vacancy figures, which at the beginning of 2019 amounted to 5.8% for Copenhagen and 7.5% for Greater Copenhagen, according to Danish property portal Ejendomstorvet. Increasing employment is seen both among established companies, but also among the large number of start-ups which, according to Statistics Denmark, has been observed since 2011. Many of these startup companies have experienced high growth rates and thus an increasing number of employees, but are also aware of the need for flexible office solutions. This is clearly seen in the market, where size flexibility and short non-termination is in demand. The need for flexibility and short non-termination

34 // RED - Danish Investment Atlas 2019

uopsigeligheder fra de små og mellemstore virksomheder har resulteret i en stigende efterspørgsel på skalerbare lejemål i flerbrugerejendomme og deciderede kontorfællesskaber.

Høj efterspørgsel i City Stigende beskæftigelse og høj økonomisk vækst medfører, at virksomhederne på et strategisk plan forsøger at optimere deres mulighed for at tiltrække og fastholde talentfulde medarbejdere gennem valget af beliggenhed og kvaliteten af de fysiske rammer for arbejdspladsen. De ændrede bosætningsmønstre de seneste årtier har medført at mange unge og nyetablerede børnefamilier vælger at bosætte sig i København og de nære omegnskommuner, hvor der er kort afstand til det store udbud af bylivsfunktioner og med lavt tidsforbrug på pendling. Den primære efterspørgsel på kontorlokaler er, i tråd med denne udvikling, centreret omkring CBD og brokvartererne, men også områder som

from small and medium-sized businesses has resulted in an increasing demand for scalable leases in multi-user properties and co-working spaces.

High occupier demand in Copenhagen City Increasing employment rates and high economic growth force companies to focus on optimising their recruitment capacity, including the ability to retain talented staff through the choice of location and quality of the physical environment for the workplace. Altered settlement patterns over the past few decades have led to many young and newly established families with children settling in Copenhagen and the neighboring municipalities, with proximity to the wide range of city life functions and with a minimum commute. Primary demand for office space is, in line with this development, centred around CBD and inner Copenhagen, but also areas such as Carlsberg Byen, Christianshavn, Nordhavn, Ørestad and Valby are in

Carlsberg Byen, Christianshavn, Nordhavn, Ørestad og Valby efterspørges. Som et af de få områder uden for København oplever Kgs. Lyngby ligeledes stærk efterspørgsel som følge af god infrastrukturel tilgængelighed og udbud af moderne ejendomme.

Stigende lejeniveau Den stigende efterspørgsel på centralt beliggende kontorlokaler har, som nævnt, resulteret i faldende tomgang, og, sammen med et begrænset omfang af spekulativt nybyggeri, har det resulteret i stigende lejeniveauer både på primære og sekundære ejendomme. Markedslejen for prime kontorer er steget med ca. 10% siden ultimo 2015 og ligger nu på ca. 1.700 – 1.900 kr./m² ekskl. driftsomkostninger. For sekundære kontorer ligger markedslejen i niveauet 1.100 - 1.500 kr./m² ekskl. driftsomkostninger. Oven i de stigende markedslejeniveauer har der ligeledes været stigninger i de samlede driftsomkostninger, herunder ejendomsskatterne, hvilket har medført, at den samlede lejebetaling, set fra lejers side, er steget væsentligt.

demand. As one of a few areas outside Copenhagen, Kgs. Lyngby also has strong occupier demand as a result of good infrastructure accessibility and supply of modern properties.

Increasing rent levels Increasing demand for centrally located office space has, as mentioned, resulted in declining vacancy rates coupled with a limited amount of speculative construction, resulted in rising rental levels on both primary and secondary properties. Market rent for prime offices has increased by approx. 10% since end-2015 and is now at approx. DKK 1,700 - DKK 1,900 per sq m excl. operating costs. For secondary offices, market rent is in the region of DKK 1,100 - DKK 1,500 per sqm excluding operating costs. In addition to increasing market rent levels, we have also seen increases in total operating costs, including property taxes, which means that total rent payment, from the tenant, has increased significantly.

Investment market u Volume & investors u Top 5 transactions u Occupier market  Highlights u Expectations for 2019 u Transactions and key figures u

Office - Prime base rent Q1 2019 Street name

Base rent DKK* 1,850

Kalvebod Brygge

1,700

North Harbour and Amerika Plads

1,900

Frederiksberg

1,450

Copenhagen E

1,500

Copenhagen W and Carlsberg

1,600

Copenhagen N

1,300

Copenhagen NW

1,200

Islands Brygge

1,450

Ørestad

1,500

South Harbour

1,300

Valby

1,350

Amager East and Copenhagen Airport

1,425

Tuborg Harbour

1,600

Kgs. Lyngby

1,450

Ring 3

1,100

*Excl. service charges

OFFICE

CBD – City center and Christianshavn

14 3

5 7

Source: C&W | RED

6 12

13 12

16 10

KONTOR - HIGHLIGHTS OFFICE - HIGHLIGHTS

Laveste risikopræmie i otte år

OFFICE

Gennem de seneste par år er der observeret faldende afkastkrav på prime-kontorejendomme i København samt stor interesse fra både danske og internationale investorer. På trods af, at udviklingen i afkastet for prime-kontorejendomme i København var relativt jævn figur i perioden 2010-2015 og derefter faldende ( 15), dækker afkastet over en relativt stor variation i risikopræmien ved investering i kontorsegmentet. Ved at sammenholde forskellen mellem den ”risikofri rente” og ”prime-afkast tillagt inflation” kan udviklingen i risikopræmien belyses. Prime-afkastet tillægges inflation, idet ejendomsinvestering, som følger den løbende inflatoriske regulering af lejen, betragtes som inflationssikret investering, modsat eksempelvis obligationer og aktier. Som det fremgår af figuren ( figur 16), er der store udsving i risiko-præmien, hvilket i de fleste tilfælde kan forklares ved anormale markedsforhold.

Lowest risk premium in eight years Over the past few years, decreasing yield requirements have been observed for prime office properties in Copenhagen, with great interest from both Danish and international investors. Despite the fact that the development in prime Copenhagen office yields was relatively even during 2010-2015 and then declining ( figure 15), the yield covers a relatively large variation in the risk premium when investing in the office segment. The development in the risk premium is highlighted by comparing the difference between the "risk-free interest rate" and " prime-yield plus inflation". Prime yield is added to inflation, as property investment which follows the ongoing inflationary regulation of the rent, is regarded as inflation-proof investment, as opposed to, for example, bonds and shares.

36 // RED - Danish Investment Atlas 2019

I de tidlige 1980’ere fungerede ejendomsinvestering som investorernes sikring mod høje inflationsrater, hvilket betød, at der var negative risikopræmier på prime-kontor i denne periode. I nyere tid er der ligeledes eksempler på en lav risikopræmie, særligt i årene 2006 og 2007, hvilket var et resultat af den (over) optimisme, som på det tidspunkt dominerede de fleste aktivmarkeder, herunder ejendomsmarkedet. Denne optimisme, kombineret med rigelig og billig adgang til finansiering, affødte en - i nyere tid - historisk lav risikopræmie. I perioden 2011 til 2015 var afkastet på prime-kontorejendomme flad, mens risikopræmien steg markant, hvilket var udtryk for en periode med faldende renter. Dermed opnåede ejendomsinvestorerne et væsentligt højere afkast på ejendomme i forhold til den risikofrie rente. De ejendomsinvestorer, som benyttede sig af fremmedkapital finansiering, opnåede et væsentligt højere direkte afkast på den investerede egenkapital.

As can be seen from the figure ( figure 16), there are historically large fluctuations in the risk premium, which in most cases can be explained by abnormal market conditions. In the early 1980s, real estate investment functioned as hedges against high inflation rates for the investors, which meant that prime office experienced negative risk premiums during this period. In recent times, there are also examples of a low risk premium, particularly in the years 2006 and 2007, which was a result of the (over) optimism that dominated most asset markets at the time, including the real estate market. This optimism, coupled with ample and cheap access to finance, prompted a - in recent times - historically low risk premium. In the period 2011 to 2015, prime office yields were flat, while the risk premium increased markedly which signified a period of declining interest rates.

Faldende afkast og risikopræmie Siden 2015, hvor risikopræmien for prime-kontorejendomme toppede, er præmien nu faldet til det laveste niveau i otte år. Denne udvikling kan tilskrives kombinationen af faldende afkastkrav på ejendommene koblet med faldende inflation i en periode med en stabil risikofri rente. Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og et øget rente vil medføre et opadgående pres på afkastkravet.

Thus, real estate investors achieved a significantly higher return on properties in relation to the risk-free interest rate. The real estate investors who made use of foreign capital financing achieved a substantially higher direct yield on invested equity.

Decreasing yields and risk premium Since 2015, when the prime office risk premium peaked, the premium has now dropped to its lowest level in eight years. This development can be attributed to the combination of decreasing yield requirements on the properties coupled with decreasing inflation in a period with a stable risk-free interest rate. We do no expect investors to accept a lower risk premium for office properties - in spite of high demand - seing that the current nterest rate is at a low and ncreased interes rates will lead to upward pressure on the yield demand.

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights  Expectations for 2019 u Transactions and key figures u

Figure 15: Office - Prime yield Copenhagen 2000-2018 Prime afkast kontorejendomme 2000-2018 8% 8% 7% 7% 6% 6% 5% 5% 4% 4%

CBD

3% 3% 2% 2% 1% 1%

2000

2005

2010

2015

2018

OFFICE

0% 0%

2018

Source: C&W | RED

Figure 16: Office - Prime risk premium 1980 - 2018 7% 6% 5%

IT bubble

Lehman Brothers

Tax reductions and interest rate reduction

"Kartoﬀelkuren"

3% 2% 1% 0% -1% -2% -3% -4% -5% 1980 Source: C&W | RED

1985

1990

1995

High inflation

2000

2005

Easy access to finance

2010

2015

2018

Limited access to finance

KONTOR - FORVENTNINGER TIL 2019 OFFICE - EXPECTATIONS FOR 2019 New ways of woking I en tid med hastig teknologisk udvikling og ”new ways of working” sker der en kontinuerlig udvikling og redefinering af de fysiske rammer for arbejdspladsen og mulighederne for at arbejde hvor som helst og når som helst. Resultatet er en forventning om markante ændringer i det fysiske kontormiljø og virksomhederne genovervejer deres ejendomsstrategier.

Stigende efterspørgsel – også på utidssvarende kontorer

Uændrede afkast for kontor

På baggrund af den stigende beskæftigelse, herunder en forbedret iværksætterkultur, forventes der en stigende efterspørgsel på kontorlokaler - også blandt de mindre og ældre ejendomme, der ikke nødvendigvis kan tilbyde samme arealeffektivitet og udbud af fælles faciliteter.

OFFICE

Virksomhedernes udfordringer med at tiltrække og fastholde kvalificeret arbejdskraft kræver en flersidet strategi og ventes bl.a. at blive løst gennem den såkaldte "gig-økonomi", som kendetegnes ved høj grad af freelancearbejde, hvor arbejdstageren er uafhængig og sælger sin arbejdskraft fra opgave til opgave frem for at blive fastansat.

I forhold til eksempelvis Stockholm og Oslo, har København den fordel, at der er mulighed for at imødekomme et stigende behov for både bolig og erhvervsarealer i nær tilknytning til CBD i de kommende årtier. Det betyder, at en stigende efterspørgsel ikke automatisk resulterer i stigende lejeniveauer, men i højere grad en stabil lejeudvikling.

Samtidig søger virksomhederne løbende at reducere sine omkostninger gennem en reduktion af det gennemsnitlige arealforbrug pr. medarbejder. Den traditionelle kontorarbejdsplads står derfor over for store forandringer i bestæbelserne på at opnå besparelser og samtidig imødekomme de yngste generationer. De vigtigste trends, som vil påvirke fremtidens kontor, er:

RED INVESTOR SURVEY

Projektorienterede arbejdsformer Fleksibilitet Fællesskab, co-working og videndeling Gig-økonomien og kortere ansættelsesforhold

Investorerne forventer stabil efterspørgsel RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres forventninger til kontorefterspørgslen blevet en smule mindre optimistisk. I 1. kvartal 2019 forventede 52% af investorerne stigende efterspørgsel mod hele 80% i 1. kvartal 2018. Næsten halvdelen (46%) af investorerne forventer i dag en flad udvikling i efterspørgslen på kontorlokaler ( figur 17).

Størstedelen af investorerne (73%) forventer i 1. kvartal 2019 uændrede afkast i 2019 mens de resterende investorer er ligeligt delt mellem forventningen om respektive stingende og faldende afkast ( figur 18).

FORVENTNINGER TIL 2019 God efterspørgsel, stabile lejeniveauer og uændret afkast Vi oplever i øjeblikket en meget høj efterspørgsel efter kontorer i størstedelen af København med lav tomgang til følge. Vi forventer, at efterspørgslen efter de velbeliggende kontorer vil fortsætte i 2019, mens der vil være et overudbud af kontorer i områderne langs ring 3. Vi forventer svagt stigende lejeniveauer i København og uændret niveauer i de øvrige områder. Vi forventer uændrede afkast på kontorejendomme i 2019. Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og et øget rente vil medføre et opadgående pres på afkastkravet.

Figure 17: Investor Confidence Index - Office occupier demand Figure 18: Investor Confidence Index - Office yields With regard to the occupier market for office space during the next 6 months, the demand on the occupier market will:

100%

With regard to the development of yields for office properties during the next 6 months, market yields will:

100%

20%

14%

46% Worsen

Increase

65%

Show little or no change 80%

73%

Decline

Improve 52% 28% Q1 2018

Q1 2019

38 // RED - Danish Investment Atlas 2019

Remain Stable

13% Q1 2018

Q1 2019

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019  Transactions and key figures u

New ways of working In a time of rapid technological development and new ways of working, there is continuous development and redefining of the physical framework for the workplace and the possibilities of working anywhere and anytime. The result is an expectation of significant changes in the physical office environment and companies are reconsidering their property strategies.

At the same time, companies are constantly seeking to reduce their property-related costs by focusing on efficiency through a reduction of the average square metre per workstation. Therefore, the traditional office workplace faces major changes and future offices are expected to be much more efficient to accommodate younger and future generations. The most important trends that will affect future office space are: Project-oriented working methods Flexibility Community, co-working and knowledge sharing Gig economy and shorter employment

Due to rising employment, including an improved entrepreneurial culture, increasing demand for office space is expected - also among the smaller and older properties, which may not necessarily offer the same space efficiency and supply of common facilities. In relation to e.g. Stockholm and Oslo, Copenhagen has the advantage that it is possible to meet an increasing need for both residential and commercial areas in close proximity to the CBD area in the coming decades. This means that increasing demand does not automatically result in rising rent levels, but to a greater extent a stable rental development.

RED INVESTOR SURVEY Investors expect table occupier demand Twice a year, RED conducts a survey of expectations among the largest and most active investors in Denmark. Over the past year, their expectations of office demand have become slightly less optimistic, albeit to a lesser extent. In Q1 2019, 52% of nvestors expected rising demand against a total of 80% in Q1 2018. Almost half (46%) of nvestors today expect development in demand for office space to be flat ( figure 17).

decreasing returns, this share has dropped to 13% in Q1 2019 ( figure 18).

EXPECTATIONS FOR 2019 Solid demand, table rents and unchanged yields We are currently experiencing very high demand for office in the majority of Copenhagen, resulting in low vacancy rates. We expect demand of the well-located offices to continue in 2019, while there will be a surplus of offices in the areas around ring 3. We expect vaguely increasing rents in Copenhagen and unchanged levels in the remaining areas. We expect unchanged yields for office properties in 2019. We do not expect investors to accept a lower risk premium for office properties - in spite of high demand - seeing that the current interest rate is at a low and increased interest rates will lead to upwardpressure on the yield demand.

Unchanged office yields The majority of respondents (73%) expect unchanged yields in Q1 2019. The share has increased from 65% in Q1 2018. While 28% in Q1 2018 expected

The Cushman & Wakefield | RED Investor Confidence index The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2018 and 2019. The index monitors expectations from highly active investors in the Danish market for the next six months. The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market. We conduct the survey on a biannual basis, allowing us to track changes and interpret what they mean for the market and how to best respond when making investment decisions.

OFFICE

The corporate challenges in attracting qualified labour requires a multilateral strategy and is expected, among other things, to be solved through the so-called "gig economy", which is characterized by a high degree of freelance work, where the employee is independent and sells his/her labour from task to task rather than being permanently employed.

Increasing occupier demand – also for outdated offices

KONTOR - TRANSAKTIONER OG NØGLETAL OFFICE - TRANSACTIONS AND KEY FIGURES Office - top 30 transactions 2018

OFFICE

Asset name

Area

Date

10% af PFA's ejendomsportefølje

Across Nation

May

Codanhus

Frederiksberg

February

Coop Portefølje (Sønderhøj)

Viby

Novo Nordisk HQ

Søborg

Tietgens Have

Vestas HQ

7 8

Size sqm

N/A

Price DKK

Investor

Vendor

1,500,000,000 BankInvest

PFA Ejendomme

41,000

1,440,000,000 Klövern

DADES

June

81,000

1,300,000,000 DADES

Coop Invest

December

50,000

1,200,000,000 AIP Asset Management

Tryg, Velliv, PBU & AP Pension

Copenhagen E

September

42,000

975,000,000 PenSam

NIAM

Aarhus

December

61,066

875,000,000 JØP & DIP

Sampension & Solstra Capital

Office Portfolio

Copenhagen Area

July

34,141

735,000,000 Klövern

NIAM

Klampenborgvej 205

Lyngby

June

24,259

640,000,000 PFA Ejendomme

BRFkredit

Company House

Kolding

April

18,929

341,000,000 NIAM

Private investor

Ole Maaloes Vej 3

Copenhagen N

July

11,146

325,000,000 PensionDanmark

Private investor

GLL Real Estate Partners

Carlsberg Byen, Harild Hus

Carlsberg Byen

July

7,675

307,000,000

Carlsberg Byen, Købke Hus

Carlsberg Byen

July

7,029

281,160,000 Partners

Carlsberg Byen Ejendomme

Sundkrogskaj 20

Copenhagen E

March

8,607

265,000,000 Pædagogernes Pension

NIAM

Enigheden

Copenhagen NW

June

10,075

247,000,000 Obel-LFI Ejendomme

NIAM

Telenor HQ

Copenhagen SW

July

10,507

Studiestræde 38

CBD

February

Gammel Kongevej 74A

Frederiksberg

December

Willemoesgadekarréen

Aarhus

August

Fisketorvet 2

Odense

March

Frederiks Plads 36

Aarhus

December

Amerika Plads 38

North Harbor

Stationsalleen 40

Herlev

Gyngemose Parkvej 62 og 80-88

Søborg

May

Tonsbakken 12

Skovlunde

Flakhaven 1

Odense

GLL Real Estate

Carlsberg Byen Ejendomme

241,000,000 JØP & DIP

Other

5,465

238,000,000 CapMan

KAB

6,086

214,000,000 Angelo Gordon

JØP

17,153

200,000,000 Private investor

Freja Ejendomme

7,836

185,000,000 DADES

Aberdeen Standard Investments

5,351

175,000,000 PensionDanmark

NCC

December

6,033

173,420,000 Klövern

Eitzen Invest

March

6,797

169,000,000 PensionDanmark

Lemvigh-Müller

33,655

150,000,000 Fontaine

Private investor

January

12,610

136,000,000 CapMan

User

October

5,586

133,000,000 Karsten Bill

M7 Real Estate & H.I.G.

18,646

130,000,000

De Forenede Ejendomsselskaber

Frederikssundsvej 272

Brønshøj

June

Trekronergade 126

Valby

January

8,223

129,000,000 C. W. Obel Ejendomme

NIAM

Finsensvej 15

Frederiksberg

May

5,571

123,000,000 Copi Group

Aage V. Jensens Fond

Lygten 37

Copenhagen NW

June

6,588

117,000,000 C. W. Obel Ejendomme

NIAM

Sct. Mathias Gade 17A & 19A

Viborg

November

4,015

40 // RED - Danish Investment Atlas 2019

99,000,000 Private investor

Private investor

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures 

Office - prime rent and yield levels Q1 2019 Street name

Base rent DKK*

Yield level**

1,850

4.00% - 4.25%

Kalvebod Brygge

1,700

4.00% - 4.25%

North Harbour and Amerika Plads

1,900

4.00% - 4.25%

Frederiksberg

1,450

4.25% - 4.50%

Copenhagen E

1,500

4.25% - 4.50%

Copenhagen W and Carlsberg

1,600

4.00% - 4.25%

Copenhagen N

1,300

5.25% - 5.75%

Copenhagen NW

1,200

5.25% - 5.75%

Islands Brygge

1,450

4.25% - 4.75%

Ørestad

1,500

4.50% - 5.00%

South Harbour

1,300

4.50% - 5.00%

Valby

1,350

4.75% - 5.25%

Amager East and Copenhagen Airport

1,425

5.00% - 5.50%

Tuborg Harbour

1,600

4.50% - 5.00%

Kgs. Lyngby

1,450

4.50% - 5.00%

Ring 3

1,100

5.50% - 6.00%

OFFICE

CBD – City center and Christianshavn

Source: C&W | RED *Excl. service charges **In case of share transactions, this will impact yields, due to defered taxees.

RETAIL Investeringsmarkedet 2018 // Investment market 2018 �� 42 Top 5 transaktioner 2018 // Top 5 transactions 2018 �� 46 Lejemarkedet (inklusiv strøgtælling) // Occupier market (inclusive footfall) �� 48 Highlights // Highlights ��52 Forventninger til 2019 // Expectations for 2019 �� 56 Transaktioner og nøgletal // Transactions and key figures ��60

RETAIL

Volumen & Investorer 2018 // Volume & investors 2018 �� 44

RETAIL - INVESTERINGSMARKEDET 2018 RETAIL - INVESTMENT MARKET 2018 Transaktionsvolumen faldt 14% I Danmark toppede investeringsvolumen i retailsegmentet i 2017. Den meget høje transaktionsvolumen i 2017 var præget af Danicas salg af 50% af sin centerportefølje til ATP til samlet 6,9 mia. kr. Fratrukket denne store handel lå transaktionsvolumen i 2017 dog fortsat over 10 mia. kr. I 2018 oplevede retailsegmentet på landsplan en transaktionsvolumen på ca. 8,6 mia. kr., svarende til en nedgang på ca. 14% i forhold til 2017, såfremt vi ekskluderer Danica/ ATP-handlen ( figur 19).

storers aktivitet i 2018, er investeringerne uden for Storkøbenhavn faldet markant fra 5,1 mia. kr. i 2017 til lige under 1 mia. kr. i 2018 ( figur 20).

Ejendomsfonde fortsat de mest aktive inden for retail Overordnet set er investeringerne i retailmarkedet fortsat præget af ejendomsfonde, som tegner sig for 42% af den samlede volumen, efterfulgt af de figur 21). De institutionelle investorer med 23% (

institutionelle investorer har investeret sparsomt i retailsegmentet i de seneste mange år (med undtagelse af ATP/Danica i 2017), men med Danske Shoppingcentres køb af herningCentret er de igen synlige på retailmarkedet. Ejendomsselskaber, som Dades og Pears, stod for 19% af volumen, hvilket er den højeste andel for ejendomsselskaber i de seneste fem år.

Danske investorer køber op – mens de udenlandske investorer har sænket tempoet Især den udenlandske kapital havde mindre appetit på retail i 2018, idet deres investeringsvolumen faldt fra 7,7 mia. kr. i 2017 til 3,5 mia. kr. i 2018. Danske investorer øgede derimod deres volumen i retailsegmentet fra 2,4 mia. kr. i 2017 (ekskl. Danica/ATP) til 5,1 mia. kr. i 2018. Ser vi på de udenlandske inve-

Figure 20: Retail - Investor type breakdown 2018

Other 3% Private investor

Property fund

13%

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42% Real estate company 19%

8.6 BN DKK

Institutional investor 23%

Transaction volume droped by 14% In Denmark, retail investment volumes peaked in 2017. The high Danish transaction volume in 2017 was characterized by Danica's sale of 50% of its shopping centre portfolio to ATP at a total DKK 6.9 bn. However, deducting this large single deal, the transaction volume in 2017 remained above DKK 10 bn. In 2018, the national retail segment experienced a transaction volume of approx. DKK 8.6 bn, corresponding to a decrease of approx. 14% compared to figure 2017, if we exclude the Danica/ATP deal ( 19).

Danish investors are buying – while foreign investors have slowed down Foreign capital in particular demonstrated less appetite for retail in 2018, as their investment volume

44 // RED - Danish Investment Atlas 2019

Source: C&W | RED

dropped from DKK 7.7 bn in 2017 to DKK 3.5 bn in 2018. In contrast, Danish investors increased their volume in the retail segment from DKK 2.4 bn in 2017 (excluding Danica/ATP) to DKK 5.1 bn in 2018. If we look at the activity of foreign investors in 2018, investments outside the Greater Copenhagen area dropped significantly from DKK 5.1 bn in 2017 to just below DKK 1 bn in 2018 ( figure 20).

Property funds remain the most active in retail Overall, investments in the retail market are still char-

acterized by property funds, accounting for 42% of the total volume, followed by institutional investors figure 21). Institutional investors have at 23% ( invested sparingly in the retail segment over the past many years (with the exception of ATP/Danica in 2017). However, with Danske Shoppingcentre's purchase of the herningCenter, they are visible on the retail market again. Real estate companies, such as DADES and Pears, accounted for 19% of total retail volume, which is the highest share for real estate companies over the past five years..

Investment market  Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Figure 19: Retail - Transaction volume 2012-2018

16.9 At a total of DKK 6.9 bn, Danica’s sale of 50% of its shopping centre portfolio to ATP comprised 41% of the total transaction volume in 2018.

16 14

BN DKK

12 41%

9.2

8.7

8.6

7.8

14%

25%

45%

75%

43% 65% 57%

43%

41%

57%

59%

2.5 35%

41%

65%

2012

2013

2014

Danish

2016

2017

2018

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Foreign

Source: C&W | RED

2015

ATP/Danica

Figure 21: Retail - Geographic breakdown of foreign investments 2012-2018 7 6

BN DKK

5 4 3 2 1 0 2012 Source: C&W | RED

2013

2014 Rest of Denmark

2015

2016

2017

2018

Greater Copenhagen

RETAIL - VOLUMEN & INVESTORER 2018 RETAIL - VOLUME & INVESTORS 2018 Foreign 41%

8.6 RETAIL VOLUME

BN DKK

AARHUS Foreign 28%

Danish 59%

1.5

BN DKK

17%

GREATER COPENHAGEN

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Danish 72%

Foreign 17%

0.6 BN DKK

Danish 83%

JUTLAND & FUNEN Foreign 11%

2.7

Danish 89%

COPENHAGEN

BN DKK

Foreign 81%

32%

OTHER ZEALAND Foreign 5%

0.5

3.3

Danish 19%

BN DKK

39%

Danish 95%

BN DKK

5% Source: C&W | RED

46 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors  Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Retail transactions (BN DKK)

København dominerer retailinvesteringerne Med 39% af den samlede volumen, er Københavns Kommune det geografiske område med højest aktivitet, mens Fyn og den øvrige del af Jylland (ekskl. Aarhus) står for imponerende 32% af volumen (knap 2,7 mia. kr.). Denne meget store andel skal dog ses i lyset af Danske Shoppingcentres køb af herningCentret til over 1 mia. kr.

Copenhagen dominates retail investment With 39% of total retail volume, Copenhagen Municipality is the geographical area with the highest activity, while Funen and the rest of Jutland (excluding Aarhus) accounts for an impressive 32% of the investment volume (almost DKK 2.7 bn). However, this substantial proportion must be seen in the light of Danske Shoppingcentre's purchase of the herningCenter for more than DKK 1 bn.

2017

2018

Copenhagen

5.3

3.3

-37%

Greater Copenhagen

3.8

0.6

-85%

Other Zealand

3.0

0.5

-84%

Aarhus

0.9

1.5

52%

Jutland & Funen

3.9

2.7

-30%

16.9

8.6

-49%

Total

Change

Source: C&W | RED

Reail - top 5 investors 2018*

Origin

Danske Shoppingcentre

Volume (in M DKK)

No. of transactions

1,368

DADES

900

Hines

845

Aachener Grundvermögen

565

BankInvest

500

N/A

*if possible portfolios are split into individual transactions

Source: C&W | RED

Retail - top 5 investors 2012-2018*

Investor

Origin

ATP

Volume (in M DKK)

No. of transactions

7,600

Patrizia

2,900

ECE

2,900

Central Group

2,700

Aberdeen Standard Investments

2,600

*if possible portfolios are split into individual transactions

Source: C&W | RED

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Investor

RETAIL - TOP 5 TRANSAKTIONER 2018 RETAIL - TOP 5 TRANSACTIONS 2018 herningCentret Årets største retail transaktion er Danske Shoppingcentres køb af herningCentret i sommeren 2018. Med 80 millioner besøgende gennem tiden, er herningCentret et af midtjyllands dominerende shoppincentre og er af flere omgange, senest i 2017, kåret som årets shoppingcenter med Danmarks bedste aktiviteter. Den nye ejer overtog centret den 1. oktober efter godkendelse fra konkurrencemyndighederne. Danske Shoppingcentre ejes af ATP Ejendomme og Danica Ejendomme, som med herningCentret nu ejer 17 shoppingcentre i Danmark og dermed cementerede deres position som Danmarks største shopping centerejer. The largest retail transaction of the year is Danske Shoppingcentre's (Danish Shopping Centres’) purchase of the herningCenter in the summer of 2018. With 80 million visitors over the years, the herningCenter is one of Central Jutland's dominant shopping centres and has been voted shopping centre of the year several times, most recently in 2017, with Denmark's best activities. The new owner took over the centre on October 1 after competition authority approval. Danske Shoppingcentre is owned by pension funds ATP Ejendomme and Danica Ejendomme. With the acquisition of the herningCenter, Danske Shoppingcentre now owns 17 shopping centres in Denmark. Thus, rendering the real estate company the largest shopping centre owner in Denmark.

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Price DKK: 1,057,500,000

Investor: Danske Shoppingcentre

Sq m: 26,100

Vendor: Private Investors

Coop Portfolio - Mega Syd In June 2018, the private property investment company DADES bought the large area Sønderhøj and Mega Syd near Aarhus. The investment comprises a total property area of over 120,000 sqm, includes both offices, educational campuses and 36,698 sqm retail, as well as the possibility of developing residential and office space. The area also includes approximately 10,000 square metres of parking areas in construction.

Photo:Coop

48 // RED - Danish Investment Atlas 2019

Price DKK: 900,000,000

Investor: DADES

Sq m: 36,700

Vendor: Coop Invest

Investment market u Volume & investors u Top 5 transactions  Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Freja Portfolio The international investor Hines, has acquired Købmagergade 44-46 and 50 in Copenhagen City from property company Freja Ejendomme, that sells former government buildings. With the acquisition of the properties, previously home of the University of Copenhagen, the ambition is to restore the properties and establish high-quality retail, hotel and residential accommodation.

Price DKK: 845,000,000

Investor: Hines

Sq m: 20,200

Vendor: Freja Ejendomme

Købmagergade 45-47, Copenhagen

Price DKK: 565,000,000

Investor: Aachener Grundvermögen

Sq m: 6,250

Vendor: Aberdeen Standard Investments

10% of PFA's property portfolio Pension fund PFA's investments in Danish commercial real estate in recent years reached a level in 2018, which made PFA rebalance their investments. In this connection, in May 2018, PFA sold 10% of their portfolio to BankInvest's newly listed BI Erhvervsejendomme. This is a cross-border portfolio consisting of office and retail properties.

Price DKK: 500,000,000

Investor: BankInvest

Sq m: N/A

Vendor: PFA Ejendomme

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The property on the corner of Købmagergade and Skindergade in Copenhagen City was sold in February 2018 to German investor Aachener Grundvermögen, who since 1973 has acquired centrally located properties in major cities of Germany, Austria, Switzerland and the Netherlands. It is a newly refurbished combined retail and residential property, fully developed and let to e.g. Calvin Klein, size? and H & M’s Weekday.

RETAIL - LEJEMARKEDET RETAIL - OCCUPIER MARKET

Fortsat god lejerinteresse på prime beliggenheder

Still solid occupier demand for prime locations

I Danmark er prime retail koncentreret omkring strøgområderne ved Amagertorv, Østergade og Købmagergade i København.

In Denmark, prime retail is centred in the high streets around Amagertorv, Østergade and Købmagergade in Copenhagen.

Golden Goose Deluxe Brand og Jimmy Choo har begge i 2018 sikret sig en placering på Købmagergade tæt på Amagertorv i hjertet af København. Derudover har velkendte mærker, som Daniel Wellington, Axel Arigato og Paustian, placeret flagskibsforretninger i sidegaderne omkring Købmagergade. Efter mange års søgning efter det perfekte sted har det japanske tøjmærke Uniqlo endelig etableret sin flagskibsbutik i Louises Hus på Vimmelskaftet 38 og forventer at åbne i foråret 2019.

Golden Goose Deluxe Brand and Jimmy Choo have both secured a location on Købmagergade close to Amagertorv and have therefore become part of the highly luxurious high street pitch. Moreover, wellknown brands such as Daniel Wellington, Axel Arigato, and Paustian are locating flagship stores in the streets surrounding Købmagergade. After years of searching for the perfect location, Japanese clothing brand Uniqlo has finally found the ideal location for their new flagship store in Denmark in Louises Hus on Vimmelskaftet 38 and are expected to open in spring 2019.

Varierende tomgang på Københavns strøggader

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Generelt ser vi store variationer i lejeefterspørgsel omkring Strøget. Nogle dele af Strøget oplever stigende tomgang, mens andre oplever stærk lejeefterspørgsel og lav tomgang. Tomgangsprocenten er et udtryk for den observerede tomgang i strøgejendommenes stueetage, hvilke normalvis betragtes som absolutte butiksarealer. Tomgangsprocenten tager således ikke højde for, at eksempelvis Georg Jensens butik på Amagertorv 4 omfatter både ejendommens stueetage samt 1. sal. På Amagertorv har vi således på udgivelsestidspunktet observeret samlet 690 m² ledigt i stuen, hvilket i forhold til en samlet arealmasse på 10.611 m² udgør en tomgangsprocent på 6,5%. Den lave udlejningsaktivitet fra Gammeltorv til Rådhuspladsen fortsætter, og tomgangen for dette område er steget siden 1. kvartal 2016. Det er endnu ikke kendt, hvilken form for indflydelse åbningen af den nye Metro Cityring i 2019 vil have på området. I 2018 så vi en stigning i lejeniveauet, der især er koncentreret omkring de primære dele af Strøget. Endvidere har Købmagergade oplevet en højere stigning i forhold til Strøget i løbet af de seneste år.

50 // RED - Danish Investment Atlas 2019

Varied vacancy levels for Copenhagen high streets In general, we see large variations in occupier demand for Copenhagen high streets. Some parts of Strøget are experiencing rising vacancy while others experience strong occupier demand and low vacancy levels. The vacancy rate is an expression of observed vacancy in the ground floor of the buildings, which are normally regarded as pure store areas. The vacancy rate does not take into account, for instance, that Georg Jensen's store on Amagertorv 4 comprises both the property's ground floor and the 1st floor. At Amagertorv, at the time of publication, we have observed a total 690 sqm vacancy in he ground floor, which, with a total area of 10,611 sqm, constitutes a vacancy rate of 6.5%. The low leasing activity from Gammeltorv to City Hall Square continues as vacancy in this area has been rising since Q1 2016. It is yet uncertain what impact the opening of the new Metro City line in 2019 will have on the area. In 2018, we saw an increase in the rent level, which is mainly concentrated around the primary parts of Strøget. In addition to this, Købmagergade has seen a higher increase compared to Strøget in recent years.

Retail - Prime rent and vacancy Q1 2019 Street name

Rent level Zone A

Vacancy Jan 2019

Amagertorv

33,000

6.5%

Østergade

30,000

2.1%

Købmagergade

26,000

7.4%

Vimmelskaftet

22,000

17.8%

Nygade

22,000

10.4%

Frederiksberggade

18,000

19.9%

Frederiksborggade

18,000

6.3%

Kronprinsensgade

11,000

N/A

Berlingske block

9,000

N/A

Grønnegade

8,000

N/A

Østerbrogade

5,000

N/A

Gammel Kongevej

4,000

N/A

Nørrebrogade

4,000

N/A

Lyngby

8,500

N/A

Source: C&W | RED

Methodology Zone A - Prime rent is estimated on the basis of ITZA guidelines and in this case indicates the value of the most expensive area in the model. However, properties in Denmark are rarely comparable 1:1, hence the depth of zone A (the area subject to generate the prime rent) may vary, but the value is typically determined to be between 6 m (20 ft) and 9 m (30 ft). The vacancy rate is given by an observed amount of vacant square metres in the ground ﬂoor of high street properties relative to the total amount of square metres in the ground ﬂoor of properties in the respective street. Hence, retail areas on any other levels are not included in this assessment.

Investment market u Volume & investors u Top 5 transactions u Occupier market  Highlights u Expectations for 2019 u Transactions and key figures u

RETAIL 51

RETAIL - STRØGTÆLLING RETAIL - HIGH STREET FOOTFALL

FREDERIKSBORGGADE/KØBMAGERGADE

KULTORVET

RUNDETÅRN

PILESTRÆDE/KRONPRINSENSGADE

KØBMAGERGADE/LØVSTRÆDE

RETAIL

KØBMAGERGADE/KRONPRINSENSGADE

KØBMAGERGADE/SILKEGADE

AMAGERTORV

VIMMELSKAFTET/AMAGER TORV

NYGADE GAMMELTORV

FREDERIKSBERGGADE

52 // RED - Danish Investment Atlas 2019

2019 opening

Investment market u Volume & investors u Top 5 transactions u Occupier market  Highlights u Expectations for 2019 u Transactions and key figures u

Kronprinsensgade-effekten På trods af stigende konkurrence fra online-salg samt fortsat omfattende anlægsbyggeri i indre by, som forstyrrer trafikken, oplevede Københavns strøggader et fortsat stærkt footfall i 2018. Alle områder omkring Amagertorv og Købmagergade oplevede i 2018 et footfall på ca. 5.000 forbipasserende pr. time, hvilket er med til at gøre

The effect of Kronprinsensgade Despite growing competition from online sales and ongoing extensive construction in central Copenhagen disrupting traffic, Copenhagen’s high streets experienced a continued strong footfall in 2018. In 2018, all areas surrounding Amagertorv and Købmagergade experienced a footfall of approx. 5,000 passengers per hour, which has a significant effect

lepunkt 10), der med knap 3.200 forbipasserende i timen har et - for en sidegade - meget høj flow. Dette vidner dels om attraktiviteten af Købmagergade omkring den nyudviklede ”Postgården” mv., men vidner ligeledes om attraktiviteten af sidegaderne i området, særligt båret af Kronprinsensgade, men også af Berlingske-Karréen, Galleri K mv., som i de senere år har skabt et stærkt alternativ til high street retail-beliggenhederne.

in rendering these streets some of the most interesting retail locations in Denmark. One surprising trend, however, is the strong footfall on the corner of Købmagergade and Kronprisensgade (count 8) with an average 6,200 passing by per hour, which is more than 20% higher than the nearby counts on Købmagergade (count 6 and 9). This is based on the high traffic in Kronprinsensgade and Pilestræde (count 10), which with just below 3,200 passing by

per hour has a distinctly high flow for a side street. This demonstrates the attractiveness of Købmagergade around the newly developed “Postgården” etc., but also shows the attractiveness of the side streets in the area, particularly by Kronprinsensgade, but also by the Berlingske block, Galleri K etc., which in recent years have become strong alternatives to high street retail locations.

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disse gader til nogle af de mest interessante retail-lokationer i Danmark. En overraskende tendens er dog det meget stærke footfall, der ses på hjørnet af Købmagergade og Kronprinsensgade (tællepunkt 8) med hele 6.200 forbipasserende i gennemsnit pr. time, hvilket er mere end 20% højere end de nærliggende tællepunkter på Købmagergade (tællepunkt 6 og 9). Årsagen til dette skal findes i den trafik, som skabes via Kronprinsensgade og Pilestræde (tæl-

Average footfall counts per hour

ØSTERGADE

2018

Methodology 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. The footfall is counted manually from both directions.

5,315

5,416

4,886

5,036

5,253

4,833

5,740

6,198

4,960 3,179

Source: C&W | RED 53

RETAIL - HIGHLIGHTS RETAIL - HIGHLIGHTS

Forbrugeren er online Vi lever i en stadigt mere digitaliseret verden, hvor en stor del af vores færden er virtuel. Hvert minut afsendes eksempelvis 187 millioner e-mails og 1,1 millioner mennesker får enten et højre- eller venstre-swipe på Tinder. Denne aktivitet og digitale virkelighed påvirker den traditionelle detailhandel, som udfordres af vores færden i den virtuelle verden. Det mest oplagte eksempel er de 266.000 timers Netflix, som verdens befolkning ser hvert minut! Denne udvikling udfordrer traditionelt flow-TV og har for flere år siden udkonkurreret Blockbuster og salget af DVD´er.

Danskerne købte stort ind på nettet i 2018

RETAIL

I 2018 beløb det samlede forbrug for dansk e-handel, ifølge betalingssystemet DIBS, sig til hele 133,5 mia. kr.

The consumer is online We live in an increasingly digitalised world, where a large part of our activities is virtual. Every minute, 187 million emails are sent and 1.1 million people are swiped left or right on Tinder.. This activity and digital reality affects traditional retail industry, which is challenged by our virtual world activities. The most obvious example is the 266,000 hours of Netflix that the world's population watch every minute! This development challenges traditional flow TV and has - several years ago - outperformed Blockbuster and the sale of DVDs.

The Danes shopped heavily online in 2018 According to the payment system DIBS, total Danish e-commerce consumption amounted to DKK 133.5 bn in 2018.

54 // RED - Danish Investment Atlas 2019

Danskernes køb af rejser udgør hele 50% af det samlede e-handelsforbrug i 2018, mens varer og tjenester udgør henholdsvis 35% og 15%. Danskerne shopper fysiske varer i stor stil online, hvor særligt beklædning, elektronik samt varer inden for krop og helse ligger højt på listen. Også tjenester som TVog musikstreaming er populære, såvel som abonnementsbaserede ydelser. Blandt andet abonnerede 37% af danskerne på transport, herunder metro og tog, i 2018, mens 13% købte dagligvarer.

Traditionel tankegang truet Retailmarkedet har altid været drevet af, hvor mange fodgængere, der passerer en given beliggenhed. Jo mere trafik, jo højere potentiel omsætning og jo bedre betalingsevne havde detailhandleren, hvilket i sidste ende betød højere lejeniveau for beliggenheden. Denne markedsanskuelse er stærkt udfordret, idet stor trafik i dag ikke er ensbetydende med

Danish travel purchases accounts for as much as 50% of total e-commerce consumption in 2018, while goods and services account for 35% and 15%, respectively. The Danes are prone to shop largescale physical goods online, where special clothing, electronics as well as body and health goods are high on the list. Also services, such as TV and music streaming are popular, as well as subscription-based services. Among other things, 37% of Danes subscribed to transportation, including metro and train, in 2018, while 13% shopped for groceries.

Traditional thinking is challenged The retail market has always been driven by footfall. The more traffic, the higher the potential turnover and the better the ability to pay, which ultimately meant higher rental levels for the location. This market view is highly challenged, however, as high foot-

høj omsætning i butikken. I nogle situationer fordi kunden alene bruger butikken som showroom og køber produktet på nettet – eller i værste fald hos en konkurrent - og i andre situationer fordi den enkelte butik ikke formår at gøre indkøbet til en oplevelse gennem eksempelvis digital integration, caféhjørne eller lignende. Endelig kan et uinteressant butiksmiks betyde, at kunden fortsætter til et mere interessant og appellerende retail-område. Som retailer i dag, er beliggenhed, naboer, såvel som en digital strategi afgørende for overlevelse og en succesfuld forretning. Samtidig ændrer behovet for retail-arealer sig som følge af ændrede handelsmønstre.

fall does not necessarily mean high shop turnover today. In some cases, the customer merely uses the store as a showroom and performs the purchase online - or in the worst case from a competitor - and in other cases, the individual store is unable to make the purchase an experience through, for example, digital integration, a corner café or similar experience-based initiatives. Finally, an uninteresting blend of shops can make the customer continue to a more interesting and appealing retail area. For a retailer today, location, neighbouring shops, as well as a digital strategy are crucial for survival and a successful business. At the same time, the need for retail space changes as a result of changing shopping patterns.

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights  Expectations for 2019 u Transactions and key figures u

APPS DOWNLOADED EMAILS SENT

187 Million 156 Million

MESSAGES

38 Million

375,000

SPENT ONLINE

$862,823

342,000

$751,522

This is what happens in

SNAPS CREATED

2.40 Million 2.40 Million

VIEWS

936,073

SWIPES

1.10 Million

internet seconds

174,000

2018

HOUR WATCHED

VIDEOS VIEWED

4.30 Million

2017

266,000 70,017

4.10 Million

VOICE-FIRST DEVICES SHIPPED

67 50

RETAIL

0.99 Million

SCROLLING INSTAGRAM

TEXT MESSAGES

18 Million TWEETS SENT

LOGINS

481,000

973,000

452,000

16 Million

900,000

Source: Lori Lewis, Vice President, Social Media for Modern Luxury

Butiksmønstret ændrer sig Historisk skulle detailhandlende (kæder) være repræsenteret i alle handelsområder for at ”ramme kunden” og optimere deres omsætning. I dag oplever vi to tendenser:

Landsdækkende detailhandlere går fra mange mindre enheder til færre større enheder på de mere regionale/centrale beliggenheder kombineret med digital tilstedeværelse. Strøggadernes detailhandlere søger mindre enheder på op til 300 m² eller samler flere enheder i store flagskibsbutikker.

De to tendenser reducerer det samlede behov for retail-arealer i Danmark og presser især handelslivet i de mindre byer/handelsområder og de mindre shoppingcentre. Her ventes butikkerne at opleve et pres på omsætningen i den fysiske butik, hvilket

afføder et nedadrettet lejepres hos udlejer. På strøggaderne i de største byer ventes overudbudet af retaillejemål over 500 m² at opleve et nedadgående lejepres, mens de helt små og bedst placerede retaillejemål vil opleve størst interesse.

Omniexperience bliver afgørende Den fysiske butik er ikke død – men den skal være mere end en butik. Samspillet mellem digitale platforme og den fysiske forretning er en afgørende faktor for butikkens succes – et begreb, som omtales som "phytigal reality." Det skal være muligt at “sælge online” offline. Eksempelvis skal kunden i butikken med det samme kunne få overblik over lager, farver og leveringstid på et produkt, som ikke er i butikken. Eller modtage et tilbud på produktet, som er præsenteret i butikken, direkte på mail med alle specifikationer og herefter acceptere og betale online, som eksempelvis møbelkæden Bolia.com praktiserer.

Det kræver stort arbejde at trække kunderne til butikken og fastholde dem. En vej til kunderne er via de sociale medier, hvor der forbindes med kunden, produkter præsenteres og kunderne trækkes til den fysiske og/eller digitale butik. Butikkerne skal levere meget høj personlig service og professionel vejledning for at adskille sig fra de rene digitale handelsplatforme. Et af de bedste beviser på, at den fysiske butik overlever er det forhold, at nogle af de mest succesfulde digitale detailhandlere, som Amazon og Boozt, åbner fysiske butikker. Magasinet Insider-Trends. com har lavet en liste over 45 top-brands, som er startet som online-butikker og i dag har åbnet fysiske butikker*.

* Læs den på www.insider-trends.com/top-45-online-retailers-who-went-offline

RETAIL

Lots of shops in many locations

56 // RED - Danish Investment Atlas 2019

One flagship store in a dominant centre

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights  Expectations for 2019 u Transactions and key figures u

”Physical retail isn´t dead. Boring retail is” Steve Dennis, Forbes.com

RETAIL

The shopping patterne is changing Historically, retailers (chains) was represented in all trading areas to "reach the customer" and optimise revenue. Today we experience two trends:

Nationwide retailers go from numerous smaller units to a few large units at the more regional/ central locations combined with digital presence. High street retailers are looking for smaller units of up to 300 sq m or gather several units in large flagship stores.

The two tendencies reduce the overall need for retail space in Denmark, and particularly pressurise commercial life in the smaller towns/trading areas and the smaller shopping centres. Here, the stores are expected to experience downward pressure on sales in the physical store, which causes a contin-

uous lease pressure on the landlord. On the high streets of the largest cities, the excess supply of retail leases over 500 sq m is expected to experience downward lease pressure, while the small and best placed retail leases will experience the greatest interest.

Omniexperience is essential The physical store is not dead - but it must be more than a store. The interaction between digital platforms and the physical business is a crucial factor in the success of the store - a concept that is referred to as "phytigal reality." It must be possible to "sell online" offline. For example, the customer in the store must be able to get an immediate overview of stock, colours and delivery time of a product that is not in the store. Or receive an offer for the product, which is presented in the store, directly by mail with all specifications and then accept and pay online.

This is something that, for instance, the furniture chain Bolia.com practices. It takes much work to pull the customers to the store and keep them there. A gateway to the customer is social media, where the retailer may connect with the customer, present products and draw the customer to the physical and/or digital store. The stores need to provide high personal service and professional guidance to distinguish themselves from the purely digital trading platforms. One of the best pieces of evidence that the physical store will survive is the fact that some of the most successful digital retailers, such as Amazon and Boozt, now open physical stores. The magazine Insider-Trends.com has made a list of 45 top brands that have started as online stores and now have opened physical stores*.

* Read it at www.insider-trends.com/top-45-online-retailers-who-went-offline

RETAIL - FORVENTNINGER TIL 2019 RETAIL - EXPECTATIONS FOR 2019

Færre retailarealer på sigt Retail har altid været en dynamisk sektor, og det vil den fortsat være. Hvor detailhandlerne igennem mange år kæmpede om de bedste placeringer, står kampen fremover ligeledes på at få skabt den bedste omnichannel-strategi, da de fysiske placeringer ikke kan stå alene. I udlandet oplever man mange steder alt for mange retail-kvadratmeter i forhold til efterspørgslen. Det har i USA medført tomme shoppingcentre og at op imod 30% af alle shopping centre vurderes lukningstruede.

i Danmark har vi for mange retail-kvadratmeter i forhold til behov og efterspørgsel.

Specialiserede investorer Køb af retailejendomme er ikke kun investering i fast ejendom. Det er investering i en aktivklasse, som fremover vil kræve endnu mere aktiv forvaltning, erfaring og løbende investeringer. Vi forventer derfor færre retailinvestorer, men at de bliver mere professionelle og specialiserede.

RED INVESTOR SURVEY

krav på retailejendomme, hvilket primo 2019 er afløst af en forventning til stigende afkast (faldende priser) figur 23). Et fra knap 50% af respondenterne ( markant holdningsskifte.

FORVENTNINGER TIL 2019 Vi forventer, at det fysiske retailmarked fortsat vil være udfordret i 2019, hvilket vil medføre en stigende tomgang – også på gode placeringer. I 2019 forventer vi at se:

Markant holdningsskifte blandt investorerne I Danmark har opførelsen af nye shoppingcentre været begrænset som følge af en restriktiv planlov, hvis formål er at bevare detailhandlen i bymidten. I Danmark har vi således alene 368 m² shoppingcenter pr. 1.000 indbyggere, hvilket er det laveste i Norden. I Finland er tallet 433 m², i Sverige 455 m² og i Norge hele 921 m², hvilket er den højeste tæthed i Europa.

RETAIL

Det danske detailmarked vil således ikke opleve samme ekstreme pres på de fysiske butikker, som man oplever i USA eller Storbritannien, men også

RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres syn på retailsektoren blevet markant mere pessimistisk – både for så vidt angår den forventede efterspørgsel fra lejernes side og prisudviklingen. Primo 2018 forventede kun 4% af investorerne lavere lejeefterspørgsel og ringere udlejningsvilkår. Nu forventer 50% af investorerne en forværring af vilkår og lejeefterspørgsel figur 22). På investeringssiden forventede 2019 ( 79% af respondenterne primo 2018 uændret afkast-

Størst efterspørgsel i København og Aarhus – hvor nye brands, som led i deres omnichannel-strategi, ønsker at etablere sig Højere efterspørgsel efter mindre enheder Shoppingcentre vil have fokus på at skabe flow gennem udvidelse af oplevelser, services og som distributionshub for omnichannel Første års afkast på retail ejendommene vil være stigende og i løbet af 2019 ligge 20-30 basispoint over de laveste niveauer vi har set i 2017 og 2018.

Figure 22: Investor Confidence Index - retail occupier demand

Figure 23: Investor Confidence Index - retail yields

With regard to the occupier market for retail space during the next 6 months, the demand on the occupier market will:

With regard to the development of yields for retail properties during the next 6 months, market yields will:

100%

48%

50%

Increase

Worsen 70%

Show little or no change 46%

26%

4% Q1 2018

Q1 2019

58 // RED - Danish Investment Atlas 2019

79%

Remain Stable

Improve

48% 17%

4% Q1 2018

Q1 2019

Decline

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019  Transactions and key figures u

Less retail space over time Retail has always been, and will continue to be, a dynamic sector. For several years, retailers have been struggling for the best locations, the battle now stands on creating the best omnichannel strategy since the physical locations cannot stand alone. Abroad, many places experience excess retail square metres in relation to demand. In the US, it has led to empty shopping centres and the fact that up to 30% of all shopping centres are considered to be closure-threatened. In Denmark, construction of new shopping centres has been limited due to a restrictive district planning which is meant to preserve city centre retail trade. In Denmark, we have only 368 sq m shopping centre per 1,000 inhabitants, which is the lowest in the Nordic region. In Finland, the figure is 433 sq m, in Sweden 455 sq m and in Norway a total of 921 sq m, which is the highest density in Europe.

by an expectation of increasing yields (lower prices) figure 23). A from just under 50% of investors ( significant change in attitude.

Specialized investors Buying retail properties is not just real estate investment. It is an asset class investment that will require even more active management, experience and investments in the future.

RED INVESTOR SURVEY

EXPECTATIONS FOR 2019 We expect that the physical retail market will continue to be challenged in 2019, which will lead to an increase in vacancy rates - also in prime locations. In 2019 we expect that we will see:

Significant shift in sentiment among investors

RED performs a biannual expectation survey among the largest and most active investors in Denmark. Over the past year, their view of the retail sector has become significantly more pessimistic - both in terms of expected occupier demand and yield development. At the beginning of 2018, only 4% of investors expected lower occupier demand and worse letting terms. Now, 50% of investors expect worse terms and occupier demand in 2019 ( figure 22). On the investment side, 79% of investors at the beginning of 2018 expected unchanged yields on retail properties, which in early 2019 was replaced

The greatest demand in Copenhagen and Aarhus Higher demand for smaller units Shopping centres will focus on creating flow through more experiences, services and as a distribution hub for omnichannel Initial yield for retail properties will increase and during 2019 it will reach 20-30 basis points above the lowest levels of 2017 and 2018

RETAIL

Thus, the Danish retail market will not experience the same extreme pressure on the physical stores as experienced in the US or UK, but we also have

surplus of retail square metres in relation to need and demand.

RETAIL 60 // RED - Danish Investment Atlas 2019

RETAIL

RETAIL - TRANSAKTIONER OG NØGLETAL RETAIL - TRANSACTIONS OG KEY FIGURES

Retail - Top 30 transactions 2018 Asset name

Area

Date

Size sq m

Price DKK

Vendor Private Investors

RETAIL

herningCentret

Herning

July

26,128

Coop Portfolio - Mega Syd

Viby

June

36,698

900,000,000 DADES

Coop Invest

Købmagergade 44-46 & 50

CBD

May

20,214

845,000,000 Hines

Freja Ejendomme

Købmagergade 45-47

CBD

February

10% of PFA's portfolio

Across Nation

May

Portfolio of 18 Silvan properties

Across Nation

November

Boltens Gaard

CBD

March

9,353

Frederiksborggade 5

CBD

November

2,839

277,700,000 Real Estate

50 % of Randers Storcenter

Randers

October

Købmagergade 39

CBD

June

Graham Bells Vej 3 og Randersvej 229

Aarhus

September

Brogade 7

Køge

July

Østerbrocentret

Copenhagen E

November

Ahornvej 1A

Hørsholm

Silkeborgvej 128

Herning

Algade 11-15

Aalborg

March

West Market

Copenhagen W

November

Kronprinsensgade 4-6

CBD

March

2,550

98,500,000 Jeudan

Private investor

Postgaarden

Lyngby

October

1,476

90,000,000 Thylander Gruppen

Private investor

Søndergade 45

Aarhus C

August

1,987

89,500,000 Investments

Real estate company

Haslevej 3

Aarhus

December

3,644

88,000,000 Private Investor

Tryg Forsikring

Dandyvej 9

Vejle

October

8,259

85,000,000 Bauhaus

Private investor

Frederikshavnsvej 290

Hjørring

April

11,205

83,000,000 TopDanmark

Private investor

Thors Bakke 2

Randers

June

3,869

78,283,333 Private Investor

Private investor

Rådhustorvet 3

Vejle

December

3,149

74,000,000 Private Investor

Private investor

Dalumvej 46

Odense

August

3,000

65,000,000 Coop Danmark

Other

6,240 N/A 89,000

13,228

Aachener

565,000,000 Grundvermögen

Aberdeen Standard Investments

500,000,000 BankInvest

PFA Ejendomme

400,000,000 Pears

Ferguson Properties

300,000,000 Blackstone

SF Management

Union Investment Danske

Frep Holdings Canada

275,000,000 Shoppingcentre

AP Pension

246,000,000 Generali

Private investor

240,000,000 Cordea Savills

Private investor

7,300

182,500,000 Private Investor

Private investor

6,800

168,000,000 Core Bolig

Jeudan

August

5,006

139,803,450 Private Investor

Rema 1000

January

11,325

135,000,000 TopDanmark

Peter Halvorsen

2,760

124,200,000 Wagner Ejendomme

User

9,235

100,000,000 NREP

Private investor

1,703 10,568

Aberdeen Standard

Keystone Investment Management

1,820

60,000,000

3,409

58,000,000 Private Investor

Herman Zinck

57,875,000 IKEA

Private investor

49,500,000 Allan Warburg

Private investor

Frederiksborggade 52

CBD

June

Vestergade 82-85

Odense

January

IKEA - Building rights

Esbjerg

December

42,960

Rosenvængets Alle 6

Copenhagen E

December

1,718

62 // RED - Danish Investment Atlas 2019

1,057,500,000

Investor Danske Shoppingcentre

De Forenede Ejendomsselskaber

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures 

Retail - Prime rent and vacancy levels Q1 2019 Rent level DKK - Zone A

Vacancy

Amagertorv

33,000

6.5%

Østergade

30,000

2.1%

Købmagergade

26,000

7.4%

Vimmelskaftet

22,000

17.8%

Nygade

22,000

10.4%

Frederiksberggade

18,000

19.9%

Frederiksborggade

18,000

6.3%

Kronprinsensgade

11,000

N/A

Berlingske

9,000

N/A

Grønnegade

8,000

N/A

Østerbrogade

5,000

N/A

Gammel Kongevej

4,000

N/A

Nørrebrogade

4,000

N/A

Lyngby

8,500

N/A

RETAIL

Street name

Retail - Yield levels Q1 2019 Street name

Yield level*

Copenhagen - Prime high street (Amagertorv, Købmagergade and Østergade)

3,00%

Copenhagen - High street (Vimmelskaftet, Nygade and Frederiskborggade)

3.25%

Copenhagen - Secondary high street (Frederiksberggade)

3.75%

Copenhagen - High street area (Kronprinsensgade)

4.00%

Copenhagen - Østerbrogade

4.25%

Copenhagen - Gl. Kongevej

4.25%

Copenhagen - Nørrebrogade

4.75%

Copenhagen area - Lyngby

4.50%

Source: C&W | RED

*In case of share transactions, this will impact yields, due to defered taxees.

Investeringsmarkedet 2018 // Investment market 2018 �� 64 Volumen & Investorer 2018 // Volume & investors 2018 �� 66 Top 5 transaktioner 2018 // Top 5 transactions 2018 �� 68 Lejemarkedet // Occupier market �� 70 Highlights // Highlights ��72 Forventninger til 2019 // Expectations for 2019 ��76 Transaktioner og nøgletal // Transactions and key figures ��80

RESIDENTIAL

BOLIG // RESIDENTIAL

BOLIG - INVESTERINGSMARKEDET 2018 RESIDENTIAL - INVESTMENT MARKET 2018 Boligsegmentet, der siden 2015 har udgjort det største segment, var med en transaktionsvolumen på 36,7 mia. kr. i 2018 igen det mest handlede aktiv. Det er et marginalt fald fra de 39 mia. kr., der blev handlet for i 2017 ( figur 24) .

Udenlandske investorer stadig mest aktive trods nedgang De udenlandske investorer har gennem de seneste seks år gradvist investeret mere og mere i boligudlejningsejendomme. I 2012 investerede udlændinge for 1,9 mia. kr. i danske boligudlejningsejendomme – hvilket i 2017 var mangedoblet til 24,3 mia. kr. Denne opadgående kurve er dog knækket i 2018, hvor de udenlandske investorer ”kun” investerede for 20,1 mia. kr. i boligudlejningsejendomme, svarende til en nedgang på godt 17%, om end de fortsat står for 55% figur 25) . af den samlede volumen i segmentet ( Omvendt har de danske investorer med en volumen på 16,6 mia. kr. investeret for knap 14% mere i boligudlejningsejendomme end i 2017.

Danske investorer øger investeringerne uden for København

den 2012 til 2017 har boliginvesteringerne i København og Storkøbenhavn udgjort samlet 76 mia. kr., svarende til knap 50% af den samlede volumen. I 2018 faldt Københavns andel til 47% fra 54% i 2017. Ser man på København og Storkøbenhavn som et samlet marked, er andelen faldet fra 61% til 53% fra 2017 til 2018. Denne udvikling skyldes, at de danske investorer har øget deres investeringer udenfor København fra 10,4 mia. kr. i 2017 til 13 mia. kr. i 2018 (

figur 26) – mens de udenlandske investorer i samme periode har reduceret deres investeringer i samme område fra 10,6 mia. kr. til 9 mia. kr.

Hvor er de institutionelle investorer? I 2018 udgjorde de institutionelle investorer alene 5% af den samlede investeringsvolumen i boligudlejningsejendomme og i 2017 var andelen endnu lavere. De institutionelle investorer ses ikke tydeligt

Figure 25: Residential - Investor type breakdown 2018 Other 3% Private investor 12% Institutional investor 5%

København har i de senere år været det foretrukne område for investeringer i boligsegmentet. I perio-

Real estate company

36.7

28%

BN DKK

Property fund 52%

RESIDENTIAL

The residential segment has been the most popular segment since 2015. With a transaction volume of DKK 36.7 bn in 2018, the residential market was once again the most traded segment. This is a marginal decline from the DKK 39 bn that was traded in 2017 ( figure 24).

Foreign investors cooling off but still the most active Over the past six years, foreign investors have gradually invested more and more in Danish residential properties. In 2012, foreign investments totaled DKK 1.9 bn in Danish residential properties. In 2017, this number was multiplied by thirteen to DKK 24.3 bn. However, this upward trend was broken in 2018, when foreign investors "only" invested DKK 20.1 bn in Danish residential properties, corresponding to a decrease of just over 17%. Foreign investors, however, still account for 55% of the total volume in 2018 ( figure 25). Conversely, with a volume of DKK 16.6 bn, Danish investors invested for almost 14% more in

66 // RED - Danish Investment Atlas 2019

Source: C&W | RED

Danish residential properties than in 2017.

Danish investors increase investments outside of Copenhagen In recent years, Copenhagen has been the preferred area for residential investments. During the period 2012 - 2017, residential investments in Copenhagen and Greater Copenhagen totaled almost DKK 76 bn corresponding to just under 50% of the total volume. From 2017 to 2018, the share dropped from 61% to figure 26). If we isolate Copenhagen, the 53% ( share of total residential investment volume dropped from 54% to 47% during the same period. This development is caused by Danish investors having increased their investments outside Copenhagen from DKK 10.4 bn in 2017 to DKK 13 bn in 2018 - while foreign investors have reduced their investments

outside Copenhagen from DKK 10.6 bn to DKK 9 bn in the same period.

Where are the institutional investors? In 2018, institutional investors accounted for only 5% of total investment volume in the residential market, and in 2017 the share was even lower. The institutional investors are not visible in the transaction volume, however they are investing, but they primarily do so through self-development or project financing of major urban development areas, such as Grønttorvet and Carlsberg Byen. Over the past four years, Danish institutional investors have acquired residential plots for more than DKK 5 bn - corresponding to approx. 30% of the total volume of plots for construction - which testifies to the appetite for developing their own projects.

Investment market  Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Figure 24: Residential - Transaction volume 2012-2018 40

39.0 36.7

i transaktionsvolumen, idet de i langt højere grad gennem egenudvikling eller projektfinansiering af større byudviklingsområder, såsom Grønttorvet og Carlsberg Byen.

28.8

30 BN DKK

I de seneste fire år har danske Institutionelle investorer købt for mere end 5 mia. kr. byggegrunde – svarende til ca. 30% af den samlede volumen indenfor byggejord, hvilket vidner om appetitten på egen udvikling.

38% 25

62%

20.7

45% 55%

15 PensionDanmark og Danica har været de mest aktive institutionelle investorer med opførelse af egne boliger til både salg og udlejning, mens PenSam, PKA og AP Pension i højere grad har projektfinansieret og indgået i partnerskaber om opførelse af nye boliger udviklet af developere.

8.6

63% 78%

58%

10.9 57% 47%

9.9

42%

43%

53%

37%

22% 2012

2013

2014

2015 Foreign

Source: C&W | RED

2016

2017

2018

Danish

Figure 26: Residential - Investments outside of Copenhagen 2012-2018

BN DKK

RESIDENTIAL

PensionDanmark and Danica have been the most active institutional investors with the construction of their own residential projects for both sale and letting, while PenSam, PKA and AP Pension have to a greater financed projects and entered into partnerships with developers for the construction of new residential projects.

10 8 6 4 2 0 2012

Source: C&W | RED

2013

2014

2015 Foreign

2016

2017

2018

Danish

BOLIG - VOLUMEN & INVESTORER 2018 RESIDENTIAL - VOLUME & INVESTORS 2018

Foreign 55%

AALBORG

Foreign 0%

1.4

BN DKK

RESIDENTIAL VOLUME

36.7

Danish 100%

BN DKK

AARHUS

4.8

Foreign 53%

BN DKK

13%

Danish 45%

Danish 47%

GREATER COPENHAGEN

2.3

JUTLAND Foreign 36%

BN DKK

Foreign 28%

6.1

OTHER ZEALAND

BN DKK

RESIDENTIAL

17%

Danish 72%

Foreign 5%

Danish 64%

COPENHAGEN

8% Foreign 77%

1.8

BN DKK

Danish 95%

BN DKK

FUNEN Foreign 30%

3.1

17.2

Danish 23%

BN DKK

Danish 70%

47%

Source: CW | RED

68 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors  Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Årets mest aktive investorer De mest aktive investorer i 2018 var Heimstaden, Blackstone og Koncenton, som med 15,4 mia. kr. tilsammen tegnede sig for 42% af den samlede transaktionsvolumen fordelt på imponerende 141 transaktioner. De tre markante investorer har begrænset indbyrdes konkurrence om ejendommene, da de fokuserer på hver sit segment. Heimstaden har primært fokus på nyopførte ejendomme i Storkøbenhavn, mens Blackstone køber op i den gamle boligmasse i København, og Koncenton har fokus på alle de større byer i Danmark, hvor de erhverver nyopførte boligejendomme, der leverer et stabilt afkast.

Most active investors of the year The most active investors of 2018 was Heimstaden, Blackstone and Koncenton. At a total of DKK 15,4 bn, the three investors accounted for 42% of total transaction volume and an impressive 141 total transactions. The three significant investors have limited competition for the properties as they focus on different segments. Heimstaden is primarily targeting newly constructed properties in Greater Copenhagen, while Blackstone is aquiring historic residential in Copenhagen. Koncenton is focusing on all the major cities in Denmark, where they acquire newly built residential properties that deliver a stable operating return

Residential transactions (BN DKK) 2017

2018

20.9

17.2

-18%

Greater Copenhagen

3.0

2.3

-22%

Zealand

2.3

3.1

39%

Funen

1.5

1.8

20%

Aarhus

6.2

4.8

-23%

Aalborg

1.7

1.4

-18%

Jutland

3.4

6.1

80%

39.0

36.7

-6%

Copenhagen

Total

Change

Source: C&W | RED

Residential - Top 5 investors 2018*

Investor

Origin

Volume (in M DKR)

No. of transactions

Heimstaden

Blackstone

4,900

Koncenton

2,700

Niam

2,600

Core Bolig

2,100

*if possible portfolios are split into individual transactions

Source: C&W | RED

Residential - Top 5 investors 2012-2018*

Investor

Origin

Volume (in M DKR)

No. of transactions

Heimstaden

22,600

119

Core Bolig

7,800

Patrizia

7,700

Blackstone

6,900

Niam

6,400

*if possible portfolios are split into individual transactions

Source: C&W | RED

RESIDENTIAL

7,800

BOLIG - TOP 5 TRANSAKTIONER 2018 RESIDENTIAL - TOP 5 TRANSACTIONS 2018 TG Partners III I december 2018 solgte Thylander Gruppen fonden TG Partners III til norske Heimstaden for en pris på 1,520 mia. kr. Porteføljen omfatter 25 ejendomme, fordelt på 1.400 boliger, 50 erhvervslejemål og knap 1.000 parkeringspladser.

In December 2018, Thylander Gruppen sold the fund TG Partners III to the Norwegian company Heimstaden with a price of DKK 1.520 bn. The portfolio comprises 25 properties, divided into 1,400 flats, 50 commercial leases and almost 1,000 parking spaces.

Price DKK: 1,520,000,000

Investor: Heimstaden

Sq m: 116,600

Vendor: Thylander Gruppen

RESIDENTIAL

Grønttorvet, Valby & Teglholmen In February 2018, FB Gruppen sold three properties to Heimstaden at just below DKK 1.2 bn. Two of the properties are part of a project on Grønttorvet (Copenhagen’s vegetable market), while the other is located on The Copenhagen harbour area Teglholmen. The properties on Grønttorvet comprise a property with 189 student flats, a building with 195 traditional flats and the property at Teglholmen comprises 105 flats. In total, FB Gruppen has sold 489 flats to Heimstaden and they are ready for occupancy at the end of 2019.

Visual: Polyform Arkitekter

70 // RED - Danish Investment Atlas 2019

Price DKK: 1,185,000,000

Investor: Heimstaden

Sq m: 34,000

Vendor: FB Gruppen

Investment market u Volume & investors u Top 5 transactions  Occupier market u Highlights u Expectations for 2019 u Transactions and key figures u

Nordic Living In October 2018, NREP sold portfolio to Heimstaden at a total of DKK 1.1 bn. The portfolio consists of eight residential properties with 377 flats and five commercial leases at a total of approx. 38,000 sqm. The properties are located across the country (Copenhagen, Aarhus, Vejle, Lyngby, Måløv and Frederiksberg).

Price DKK: 1,128,000,000

Investor: Heimstaden

Sq m: 37,800

Vendor: NREP

Frederiksberg Boligfond In December 2018, Frederiksberg Boligfond sold "Peter Bangs Hus", "Svalegården" and "Den Sønderjyske City" with a total of 424 flats and 15 commercial leases to Blackstone. The selling price for the three properties in Frederiksberg was just under DKK 1 bn.

Price DKK: 950,000,000

Investor: Blackstone

Sq m: 41,400

Vendor: Frederiksberg Boligfond

In the beginning of 2018, Heimstaden acquired a portfolio of 275 flats divided into two new developed properties, "Schades Have", Amager and "Kløverbladsparken", Valby. Heimstaden acquired the properties from Danish pension fund, AP Pension.

Visual: Schades Have, Arkitema

Price DKK: 900,000,000

Investor: Heimstaden

Sq m: 34,700

Vendor: AP Pension

RESIDENTIAL

AP Pension Portfolio

BOLIG - LEJEMARKEDET RESIDENTIAL - OCCUPIER MARKET

Storbyen tiltrækker folk De større byer har gennem de seneste mange år oplevet en positiv befolkningsvækst drevet af jobmuligheder, bedre infrastruktur, uddannelsesinstitutioner, og byliv. Specielt København har formået holde på nuværende indbyggere selv efter de har stiftet familie. Alt i alt en nettotilflytning skabt af tiltrækning af nye indbyggere såvel som fastholdelse. Befolkningsvæksten har i en lang årrække sat ejerboligpriser såvel som lejeboligpriserne i København under et opadgående pres, som har skabt en enorm byggeaktivitet.

ikke alene Københavns kommune, der tilbyder en lang række udviklingsområder, men ligeledes flere omkringliggende kommuner langs den kommende letbane fra Ishøj til Lyngby, hvor der forventes at blive udviklet flere hundrede tusinde kvadratmeter bolig.

Fortsætter prisstigningerne?

Fortsat mange udviklingsområder

Investorerne betragter lejen per m², hvorimod lejerne fokuserer på en samlet leje per måned. Det, som lejerne er villige til at betale i husleje, kaldes boligbyrden og for udlejningsboliger oplever investorerne, at familieboliger til en månedlig husleje på kr. 15.500 + forbrug er svære at udleje.

Sydhavnen og Ørestaden er ved at være færdigudviklet med henholdsvis 275.000 m² og 125.000 m² bolig, hvorimod der i Nordhavn kun er udviklet 10% af den samlede kapacitet på 40.000 boliger. Det er

Nye boligudlejningsejendomme har oplevet en stor stigning i lejeniveauer de seneste par år, primært drevet af en enorm efterspørgsel. Derfor estimeres

The large cities attract people

RESIDENTIAL

Over the past many years, the large cities have experienced a positive population growth driven by job opportunities, educational institutions, and the much sought-after city life. Copenhagen, in particular, has managed to maintain residents even after marriage and children. All in all, a migration created by attraction as well as retention of residents. For a number of years, population growth has contributed to increasing owner-occupied as well as rental housing prices in Copenhagen, which has created an enormous construction activity.

Large number of development areas Sydhavnen and Ørestaden are being developed with 275,000 sqm and 125,000 sqm respectively, whereas in Nordhavn only 10% of the total capacity has been developed. While the city of Copenha-

72 // RED - Danish Investment Atlas 2019

gen has a large number of development areas to offer, several hundred thousand square metres of residential properties are expected to be developed in neighboring municipalities, along the upcoming light rail.

Will prices rise indefinitely? Investors consider the market through rent per sqm whereas tenants focus on total monthly expenses. What people are willing to pay in rent may be referred to as the rental burden. This is the percentage of disposable income (income after tax) people allocate to rental expenditure. Investors find apartments at a monthly rent of DKK 15,500 (excluding heat, water, etc.) difficult to let. New rental properties have experienced a large increase in rental levels over the past few years,

der for mange nye projekter en højere leje end de boligsøgende er villige til at betale. Efterspørgslen afdæmpes i takt med øget udbud af nye lejligheder både i København, men også i omegnskommunerne, hvor nye projekter skyder op med lavere månedlig husleje. I de boligområder i København hvor der pt. opføres rigtig mange lejligheder som eksempelvis i Ørestad og Sydhavnen, forventer vi et lejepres i 2019. Men idet vi vurderer, at folk finder det mere attraktivt at bosætte sig i København fremfor udkantsområderne, vil investorerne forholdsvist let kunne få udlejet ledige boliger ved en moderat reduktion af lejen.

primarily driven by enormous demand. Therefore, several new projects are estimated to have a higher rental level than what people are able to pay. This demand is subdued as the supply of new flats increases in Copenhagen but also in the surrounding municipalities, where new projects arise with lower monthly rent levels. In certain areas in Copenhagen where development activity of residential properties is high, such as Ørestad and Sydhavnen, we expect a downward pressure on the rent in 2019. However, in our assessment that people find it more attractive to settle in Copenhagen rather than the outskirts, investors will be able to let available flats relatively easy by reducing the rent.

Investment market u Volume & investors u Top 5 transactions u Occupier market  Highlights u Expectations for 2019 u Transactions and key figures u

3 9 5 8

Residential - Prime market rent Q1 2019 Subarea

Rent level DKK 2,000 - 2,200

Copenhagen E, W & N

1,700 - 1,900

Copenhagen NW

1,500 - 1,700

Copenhagen S

1,700 - 1,900

Frederiksberg

1,900 - 2,100

North Harbour

1,900 - 2,100

South Harbour

1,600 - 1,800

Valby

1,600 - 1,800

Vanløse

1,500 - 1,700

4 RESIDENTIAL

Copenhagen City

Source: C&W | RED

BOLIG - HIGHLIGHTS RESIDENTIAL - HIGHLIGHTS Skal investorerne frygte de nye offentlige vurderinger? Et forhold, der har haft meget stor bevågenhed i I forliget ”Tryghed om boligbeskatning” af 2. maj Alle ejendomstyper i København vil opleve en medierne og har skabt usikkerhed på boligmarke2017 mellem regeringen og Socialdemokraterne, stigning i grundværdierne, og grundskyldssatsen det, er de nye offentlige vurderinger. Medierne har Dansk Folkeparti og Radikale Venstre, er anført skal således nedsættes for København, således at brugt meget spalteplads på beretninger om, at især følgende; provenuet er uændret. Såfremt alle ejendomstypers grundværdierne for etageboligerne i Købengrundværdier stiger lige meget, vil alle havn er alt for lave og vil blive fire gange så ejendomme, efter indførelse af det nye vurhøje i det nye system. Skatteministeriet har deringssystem, fortsat skulle betale samme ”Den gennemsnitlige grundskyldspromille forventes offentliggjort eksempler på, hvor meget de grundskyld som i dag. Såfremt en ejendomsat falde fra 26 promille til knap 16 promille. Samtidig forventer, at de samlede ejendomsskatter type oplever en øget grundskyld, medfører reduceres loftet over grundskyldspromillen fra 34 (grundskyld og ejendomsværdiskat) vil dette, at en anden ejendomstype har fået til 30 promille, mens undergrænsen på 16 promille stige for ejerboliger. Heraf fremgår det, at de reduceret sin grundskyldsudgift. afskaffes. Promillerne vil blive fastsat kommunestørste stigninger forventes i Storkøbenhavn og Aarhus. Men vil det også ramme boligudVi forventer derfor ikke at boligudlejningsspecifikt, så de højere vurderinger ikke øger grundlejningsejendommene? ejendommene vil komme til at opleve en skyldsprovenuet i kommunen.” nævneværdig stigning i grundskyldsudgiften Grundskyldsprovenuet er maksimeret med de nye offentlige vurderinger, da alle For en ejerlejlighed eller et hus, der bebos af ejeren, Københavns kommunes grundskyldsprovenu må grunde i København generelt er vurderet for lavt og udgør ejendomsskatten grundskyld og ejendomssåledes ikke øges, men alene omfordeles. Det er det samlede provenu for kommunen ikke må stige. værdiskat, mens en ejer af en udlejningsejendom korrekt, at grundværdierne for etageboliger er lave i alene betaler grundskyld. Boligudlejnings-investoren forhold til de reelle værdier og vil blive højere med de er derfor kun interesseret i den forventede stigning i nye vurderinger. Grundværdierne for kontor- og regrundskylden under det nye vurderingssystem. tail-ejendomme er dog ligeledes for lave i København.

Should investors fear the new public assessments?

RESIDENTIAL

One factor that has caught massive media and The settlement "Security in housing taxation" of 2 values for office and retail properties in Copenhagen public attention and prompted uncertainty in the May 2017 between the Danish Government and the are also too low. All property types in Copenhagen residential market is the new public assessments. Social Democrats, the Danish People's Party and will experience an increase in site values, and site The media has reported that, in particular, site values Radical Liberals, states the following; taxation rate must thus be reduced for Copenhagen for Copenhagen multi-storey housing are to maintain proceeds unchanged. If site values too low and will be multiplied by four under of all property types increase at the same rate, “The average site taxation premium is expected to the new system. The Ministry of Taxation all properties will have the same site taxation decrease from 26 per mille to just under 16 per mille. has published the expected increase of total as today, after the introduction of the new property taxes (site taxation and taxable assessment system. If one property type exAt the same time, the site taxation premium cap is revalue) of owner-occupied homes. According periences increased site taxation, this means duced from 34 to 30 per mille, while the lower limit of to this, the largest increases are expected in that another type of property has reduced its 16 per mille is abolished. The levels will be determined Greater Copenhagen and Aarhus. But will it site taxation expense. by the municipality, so that the higher assessments also affect rental properties? will not increase the site taxation premium in the Therefore, we do not expect that residential Site taxation proceeds are maximised rental properties will experience a significant municipality. " For a freehold flat or a house inhabited by increase in site taxation expenditure under the owner, the property tax is constituted the new public assessments, since all Copenby site taxation and taxable value, while an owner The municipality of Copenhagen’s site taxation hagen sites are generally valued too low and total of a rental property only pays site taxation. The premium thus cannot be increased, but only redisrevenue for the municipality cannot increase. residential investor is therefore only interested in the tributed. It is true that site values of multi-storey expected increase in the site taxation under the new housing are low in relation to real values and will assessment system. incease with the new assessments. However, site

74 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights  Expectations for 2019 u Transactions and key figures u

RESIDENTIAL Photo: Christoffer Regild

10 FUTURE RESIDENTIAL TRENDS 3

5 CO2

SERVICES AND FACILITIES There is a growing tendency to prioritize additional services and facilities that may be booked and used as needed. It may be anything from fitness room, orangery, small gardens, pool, tennis court, sauna and guest apartment to caretaker or concierge services.

CITY FACILITIES In the cities, facilities such as own parking space, boat space, garden, roof terrace or extra storage space are increasingly in demand.

CONSTRUCTIONAL SUSTAINABILITY Many municipalities demand that housing and neighborhoods must be sustainable. DGNB certification, the UN world goals, recycled materials, biodiversity and less CO2 emissions are increasingly becoming regulatory requirements.

RESIDENTIAL LIFE STYLE In the future, we will place greater emphasis on adapting accommodation to a particular lifestyles or life needs, such as senior housing, community housing, youth housing, sustainable housing, micro-housing, town houses etc. To a larger and larger extent, we wish to identify with the places and homes in which we live.

76 // RED - Danish Investment Atlas 2019

COMMUNITIES Many home buyers will demand community-based homes. Obligating communities for which you pay through work eďŹ&#x20AC;ort or slightly higher running costs are welcome. The community thought is attractive as long as participation in the joint activities is voluntary.

Key factors for future residential projects and areas

UN GLOBAL GOALS The UN Global Goals for Sustainable Development are 17 goals, which point us towards a more sustainable future, where no one is left behind. These goals are increasingly aﬀecting housing construction – e.g. item 11 focuses on "Sustainable cities and communities".

PROP TECH PropTech, a contraction of Property and Technology, is a term predicted to have a significant impact on the property market in the future, particularly through optimization of sustainable building operation. An example of a global company that has already combined new technology with the real estate sector is Airbnb.

SPEED AND PROXIMITY Proximity to public transport as well as fast transportation to traffic and business hubs is gaining value as cities grow and become increasingly crowded.

RESIDENTIAL

SUSTAINABILITY FOR THE HOME OWNER Increasing numbers of home buyers prioritize a sustainable home, particularly when recently constructed. It is of higher and higher value that the home is certified – e.g. DNGB and consists of healthy and environmentally viable materials. Younger buyers will demand sustainable and responsible construction.

CLIMATE FRIENDLYNESS Green outdoor areas surrounding homes and the inclusion of the landscape in the residential area is a growing value. Climate-friendly solutions in the outdoor environments, such as rainwater collection, bee and insect hotels that promote biodiversity will also be increasingly valuable.

BOLIG - FORVENTNINGER TIL 2019 RESIDENTIAL - EXPECTATIONS FOR 2019

Strammere udlånsregler til ejerboliger har holdt hånden under boliglejen Ejerboligmarkedet i København har oplevet næsten en fordobling af priserne siden lavpunktet i 2012 ( figur 27). Denne kraftige prisstigning er dog afløst af stagnerende og let faldende priser siden maj 2018. Opbremsningen i boligmarkedet skyldes især Finanstilsynets stramning af udlånsreglerne i 2016 til boligkøbere i vækstområderne København og Aarhus. Her blev der indført en udlånsbegrænsning på fire gange husstandsindkomsten, hvilket har gjort det svært for især førstegangskøbere at komme ind på boligmarkedet. De nye reglers effekt kan også måles på antallet af boligsalg i København, som faldt fra ca. 1.700 ejerlejlighedssalg i København i 3. kvartal 2017 til 1.300 i 3. kvartal 2018 – et fald i antal handler på ca. 25%.

Stramningerne på ejerboligmarkedet har medført, at flere bliver nødt til at leje en bolig i København og Århus, hvilket igen har opretholdt en høj efterspørgsel og leje på udlejningsboliger.

Ørestaden, opføres i øjeblikket rigtig mange lejligheder med samme karakteristika, og vi forventer, at boliglejen i disse områder kommer under pres med en svagt faldende leje i 2019 til følge.

Boliglejen kommer under pres

Investorer og boligmæglere forventer faldende ejerlejlighedspriser

Der er bred enighed om, at efterspørgslen efter boliger i København overstiger udbuddet trods en stor pipeline af nye boliger de kommende år. Det er ikke ensbetydende med, at de boligsøgende kan eller er villige til at betale den markedsleje som forventes i de enkelte projekter. Dertil kommer, at der i omegnskommunerne langs den nye letbane planlægges en lang række nye boligområder som kan tilføre hovedstadsområdet flere tusinde nye boliger. I de store udviklingsområder, som Sydhavnen og

Tighter lending rules or freehold flats has sustained residential rent levels

RESIDENTIAL

The owner-occupied housing market in Copenhagen has experienced almost a doubling of prices since the 2012 low ( figure 27). However, this sharp price increase has been replaced by stagnant and slightly decreasing prices since May 2018. The slowdown of the housing market is mainly due to the Danish Financial Supervisory Authority's 2016 tightening on lending rules for home buyers in the growth areas of Copenhagen and Aarhus. Here, a loan limitation of four times the household income was introduced, which has made it difficult for especially first-time buyers to enter the housing market. The impact of the new rules can also be measured on the number of housing sales in Copenhagen, which fell from approx. 1,700 flat sales in Copenhagen in Q3 2017 to 1,300 in Q3 2018 - a transaction decrease of approx. 25%.

78 // RED - Danish Investment Atlas 2019

The tightening of the owner-occupied housing market has led more people to rent a home in Copenhagen and Aarhus, which in turn has maintained high demand and rent for rental housing.

Residential rents will be pressured There is broad consensus that demand for housing in Copenhagen exceeds supply despite the large new housing pipeline in the coming years. However, this does not mean that homeowners can pay the expected market rent on the individual projects. In addition, in the surrounding municipalities along the new light rail, a large number of new residential areas are planned which may add many thousands of new residential properties to the metropolitan area. In the major development areas, such as Sydhavnen and Ørestaden, numerous flats are currently being built with the same characteristics, and we expect

I DEs tendensundersøgelse fra 4. kvartal 2018, forventer 76% af boligmæglerne i København og Frederiksberg prisfald i 2019. Tilsvarende forventer hovedparten af de aktive investorer på det danske marked at ejerlejlighedspriserne vil falde. I RED Investor Survey har vi spurgt til forventningen til udviklingen i ejerlejlighedspriserne. I 1. kvartal 2018 forventede 70% af investorerne prisstigninger hvilket pr. 1. kvartal 2019 er afløst af kun 10%, som forventer prisstigninger. Til gengæld forventer over figur 50% af investorerne prisfald på ejerboliger ( 28).

the residential rent in these areas to come under pressure and we will experience a slight decline in rent levels in 2019.

Investors and estate agents expect decreasing property prices In DE’s (Danish Association of Real Estate Agents) trend survey from Q4 2018, 76% of Copenhagen and Frederiksberg estate agents expect decreasing prices in 2019. Similarly, the majority of active investors in the Danish market expect freehold flat prices to decrease. In RED Investor Survey, we have asked for the expectation for the freehold flat prices. In Q1 2018, 70% of the investors expected price increases. ( figure 28). In Q1 2019, this has been replaced by only 10% expecting price increases. Conversely, over 50% of investors expect price declines in freehold flat prices.

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019  Transactions and key figures u

Figure 27: Residential - Development of sqm prices for freehold flats, index 100 = 2010

170 160 150 140 130 120 110 100 90

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: Boligsiden & Realkredit Danmark

Figure 28: Investor Confidence Index - Residential prices With regard to the development of sqm prices for owner occupied freehold flats during the next 6 months, prices will: Prices will decrease with at least 5%

Prices will decrease between 0.1-4.9%

RESIDENTIAL

Q1 2018

Unchanged

Q1 2019 Prices will increase between 0.1-4.9%

Prices will increase with at least 5%

10%

20%

30%

40%

50%

60%

70%

80%

Source: C&W | RED

Hvordan påvirkes investeringsejendommene – hvis ejerboligpriserne falder i værdi? Prisen på de nyopførte boligudlejningsejendomme afhænger af en kombination af beliggenhed, leje, drift, afkast samt m² prisen for ejerlejligheder i området. Jo større rabat man kan få til ejerlejlighedsmarkedet, jo lavere afkast kan investorerne acceptere, da der er udsigt til en fremtidig fortjeneste ved salg af de enkelte lejligheder (alt andet lige). I de senere år har vi oplevet kraftigt stigende priser på boligudlejningsejendomme i takt med at huslejeniveauet, såvel som ejerlejlighedspriserne, er steget. I det opadgående marked med stor efterspørgsel har investorerne accepteret en mindre og mindre rabat i forhold til ejerlejlighedspriserne. Vi forventer fortsat stor efterspørgsel efter boligudlejningsejendomme i 2019 uagtet udsigt til svagt faldende ejerlejlighedspriser og lejepres. Vores forventning er, at investorerne fortsat er indstillet på at erhverve nye boligejendomme til relativt lave afkast som følge af den fortsat lave rente. Investorerne vil i højere grad end tidligere have sikkerhed for lejeniveauet, enten i form af verifikation af lejeniveauer i nærområdet eller i form af lejegarantier fra sælger.

Hvem køber i 2019? For første gang i mange år så vi i 2018, at de danske investorer var mere aktive end de udenlandske investorer, og at de samtidig øgede deres investeringer udenfor København. De danske investorer, som

har drevet den fremgang, er investorer som køber boliger for at opnå et stabilt afkast, frem for fokus på fortjeneste ved løbende frasalg af ejerlejligheder. I et marked med stagnerende ejerlejlighedspriser, kan det være svært for den investor, som investerer med henblik på løbende frasalg, at opnå det ønskede afkast på egenkapitalen, som ofte er højere end kravet fra en core investor, der alene fokuserer på driftsafkast. Vi forventer, at de mest aktive boliginvestorer i 2019 bliver de danske og udenlandske investorer, som fokuserer på driftsafkast fremfor frasalgscases.

RED INVESTOR SURVEY

FORVENTNINGER TIL 2019 Der vil fortsat være stor efterspørgsel efter boliger i København i 2019, men boliglejen har formentlig nået sit maksimum. Hovedparten af de boligsøgende har ikke mulighed for at betale den leje som der estimeres i mange nye projekter og investorerne har svært ved at udleje de store boliger. Vi forventer at lejen i de store udviklingsområder som Ørestad og Sydhavnen kommer under pres i 2019. Investeringsmarkedet vil være præget af investorer med fokus på det løbende driftsafkast fremfor frasalgscases. Både København og de 15-20 største byer i Danmark vil være i fokus.

Flere investorer forventer faldende lejerefterspørgsel RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres syn på boligsektoren ændret, både hvad angår lejeefterspørgsel og prisudvikling. Primo 2018 forventede ingen investorer lavere lejeefterspørgsel. Nu forventer 21% af investorerne lavere lejeefterspørgsel i 2019 ( figur 29).

Flere investorer forventer stigende afkast På investeringssiden forventede 79% af investorerne primo 2018 uændret afkastkrav på boligudlejningsejendomme, hvilket primo 2019 er afløst af en forventning om stigende afkast (faldende priser) fra knap 48% af investorerne og kun 48%, som forventer uændrede afkast ( figur 30).

RESIDENTIAL

Figure 29: Investor Confidence Index - Residential occupier demand Figure 30: Investor Confidence Index - Residential yields With regard to the occupier market for residential space during the next 6 months, the demand on the occupier market will:

100%

With regard to the development of yields for residential properties during the next 6 months, market yields will:

100%

4% 21% 48%

62%

Worsen 60%

Show little or no change

Increase 79%

Remain Stable

Improve

48%

38% 19% Q1 2018

Q1 2019

80 // RED - Danish Investment Atlas 2019

17%

4% Q1 2018

Q1 2019

Decline

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019  Transactions and key figures u

How would a decrease in freehold flat prices affect residential properties? The price of newly constructed rental properties depends on the yield and the value of the underlying flat value in the case of independent freehold flat sales. The greater "discount" per sqm in relation to freehold flat prices, the lower expected return for investor, as there is potential for future profit on the sale of the individual flats (everything else being equal). In recent years, we have seen sharp increases residential property prices as rent levels, as well as freehold flat prices, have increased. In the ascending market with high demand, investors have accepted smaller and smaller discounts compared to freehold flat prices.

while also increasing their investments outside Copenhagen. The Danish investors behind this growth invest in residential properties to achieve a stable and secure direct cash flow, rather than focusing on profits through ongoing divestment of freehold flats In a market with stagnant freehold flat prices, it may be difficult for the investor investing with the purpose of ongoing divestment to achieve the desired return on equity, which is often higher than the requirement of a core investor focusing solely on operating returns. In 2019, we expect the most active residential investors to be the Danish and foreign investors focusing on operating returns rather than divestments.

RED INVESTOR SURVEY

We expect continued high demand for residential rental properties in 2019 despite the potential for declining freehold flat prices and rental pressure. We expect investors to still be prepared to acquire new housing properties at a relatively low yield as a result of the continued low interest rates, but they will, to a greater extent than before, demand rental level security - either in the form of a convincing underwriting of comparable rentals in the immediate area or in the form of rent guarantees from the seller.

Investors expect decreasing occupier demand

Who will buy 2019?

More investors expect increasing yields

In 2018, we saw Danish investors being more active than foreign investors for the first time in many years

On the investment side, 79% of investors expected unchanged return on residential properties at the

Twice a year, RED conducts an expectation survey among the largest and most active investors in Denmark. Over the past year, their view of the residential sector has changed significantly, both in terms of occupier demand and price development. At the beginning of 2018, no respondents expected lower occupier demand. Now, 21% of investors expect lower occupier demand in 2019 ( figure 29).

beginning of 2018, which was replaced by an expectation of rising returns (price reductions) in early 2019 from just under 48% of investors and only 48%, expecting unchanged returns ( figure 30).

EXPECTATIONS FOR 2019 Demand in the residential sector will continue in Copenhagen in 2019, but the rent level has reached its maximum. The majority of residential demand are people who cannot afford the rent level currently estimated on several new projects, and investors are having difficulties letting the larger residences. We expect the rent level in the major development areas such as Ørestad and Sydhavnen to come under pressure in 2019. The investment sector will be characterised by investors focusing on operating returns rather than divestments. Copenhagen and the 15-20 largest cities in Denmark will be in focus.

RESIDENTIAL

BOLIG - NØGLETAL OG TRANSAKTIONER RESIDENTIAL - KEY FIGURES AND TRANSACTIONS Residential - Top 30 transactions 2018 Asset name

Area

Date

TG Partners III

Jutland

December

Size sq m

Price DKK

Investor

Vendor

116,631

1,520,000,000

Heimstaden

Thylander Gruppen

Grønttorvet, Valby & Teglholmen

Copenhagen

February

34,000

1,185,000,000

Heimstaden

FB Gruppen

Nordic Living

Denmark

October

37,797

1,128,000,000

Heimstaden

NREP

Frederiksberg Boligfond

Frederiksberg

December

41,367

950,000,000

Blackstone

Frederiksberg Boligfond

Schades Have & Kløverbladsparken

Copenhagen

February

34,710

900,000,000

Heimstaden

AP Pension

Birch Ejendomme Portfolio

Jutland

December

38,400

800,000,000

NIAM

Birch Ejendomme

Residential Portfolio

Copenhagen

July

22,267

700,000,000

Blackstone

Private investor

TG Partners V

Copenhagen

March

20,672

675,000,000

Blackstone

Thylander Gruppen

Project Pecunia

Copenhagen

June

21,038

590,000,000

Blackstone

Jyske Bank

Gøteborg Allé 9

Aarhus

July

17,000

560,000,000

Europa Capital

Konstruct

Poppelstykket 8

Valby

June

16,500

550,000,000

Koncenton

Private investor

Tagensvej 129-137

Copenhagen N

June

16,075

500,000,000

Heimstaden

AP Pension

Ringertoften 10 m.ﬂ.

Copenhagen NW

June

28,444

490,000,000

Heimstaden

Ringertoften A/B

2E Group boligprojekter

Greater Copenhagen

January

18,000

450,000,000

Property fund

2E Group

Biblioteksparken

Aarhus

June

11,800

450,000,000

Patrizia

Developer

Bolværket

Copenhagen SW

September

10,529

429,500,000

Aberdeen Standard Investments

PenSam

Vibenshus

Copenhagen E

August

12,737

425,400,000

Core Bolig

PenSam

Æbeløgade 20 m.ﬂ.

Copenhagen E

June

11,566

421,000,000

KFI

Domusnova

Valby Maskinefabrik

Valby

July

9,298

350,000,000

Patrizia

Keystone Investment Management & Europa Capital Private investor

RESIDENTIAL

Søren Frichs Vej 51

Åbyhøj

May

9,434

344,437,500

Private investors

TG Partners VI

CBD

January

10,308

342,669,000

Thylander Gruppen

Private investor

Valsehuset

Valby

February

9,500

340,000,000

Heimstaden

Europa Capital

Enggaarden

Køge

September

12,500

331,250,000

PFA Ejendomme

Bonava

Lindevangshusene 2-48

Taastrup

December

21,312

330,000,000

Thylander Gruppen

Private Investor

Ib Schønbergs Allé 1

Valby

July

7,400

318,000,000

DFI (Deutsche Finance International)

Koncenton

Kordegarden

Risskov

February

13,252

313,000,000

NIAM

Johnny Bihl

Flegmade 18-20

Vejle

December

18,752

300,000,000

PFA Ejendomme

Adsbøll Enterprise

Dalgas Boulevard 3-5

Frederiksberg

July

10,575

293,000,000

Heimstaden

Thyra Danebod A/B

Montagehalsvej

Valby

December

8,000

280,000,000

Europa Capital

De Forenede Ejendomsselskaber

Sadolin Have

Copenhagen S

May

7,461

260,000,000

Heimstaden

Private investor

82 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors u Top 5 transactions u Occupier market u Highlights u Expectations for 2019 u Transactions and key figures 

Residential - Rent and yield levels Q1 2019 Subarea

Rent level DKK

Yield*

Copenhagen City

2,000 - 2,200

3.25%

Copenhagen E, W & N

1,700 - 1,900

3.75%

Copenhagen NW

1,500 - 1,700

4.50%

Copenhagen S

1,700 - 1,900

3.75%

Frederiksberg

1,900 - 2,100

3.50%

North Harbour

1,900 - 2,100

3.50%

South Harbour

1,600 - 1,800

3.75%

Valby

1,600 - 1,800

3.75%

Vanløse

1,500 - 1,700

3.75%

Source: C&W | RED

*In case of share transactions, this will impact yields, due to defered taxees.

RESIDENTIAL 83

Investeringsmarkedet 2018 // Investment market 2018 �� 84 Volumen & Investorer 2018 // Volume & investors 2018 �� 86 Top 5 transaktioner 2018 // Top 5 transactions 2018 �� 88 Highlights // Highlights ��90 Forventninger til 2019 // Expectations for 2019 �� 92 Transaktioner og pipeline // Transactions and pipeline �� 94

HOTEL & LESIURE

HOTEL

HOTEL - INVESTERINGSMARKEDET 2018 HOTEL - INVESTMENT MARKET 2018

Nedgang i transaktionsvolumen, men høj byggeaktivitet Året 2018 bød på en markant nedgang i transaktionsvolumen for hotelejendomme, som samlet set udgjorde i underkanten af 2 mia. kr. i 2018 mod godt figur 31). Nedgangen vurderes 5 mia. kr. i 2017 ( dog ikke at kunne tilskrives manglende interesse fra investorerne, men snarere manglende udbud, især af prime hotelejendomme. Det bemærkes ligeledes, at 2017 var præget af en række store handler, herunder norske Wenaasgruppens køb af Hotel Bella Sky for 1,6 mia. kr., norske Strawberry Fields' (nu Nordic Choice Hotels) overtagelse af det femstjernede Hilton-hotel ved Københavns Lufthavn for ca. 800 mio. kr. og svenske Balders køb af fire københavnske hoteller – Copenhagen Plaza, Richmond Hotel, Mercur Hotel og Star Hotel - for i alt ca. 700 mio. kr..

I 2018, var Pareto Securities køb af det nye Scandic hotelprojekt beliggende i Scanport tæt på Københavns lufthavn til omkring 720 mio. kr., klart den største hoteltransaktion, og udgjorde 37% af volumen for 2018. Årets næststørste handel var PFA og Topdanmarks køb af Carlsberg Byens Hotel Ottilia, som drives af Brøchner Hotels, for 495 mio. kr. Samlet set vurderes den markante nedgang i transaktionsvolumen således ikke at være udtryk for et svagt marked i 2018. Snarere er det udtryk for, at 2017 var et meget stærkt år, og 2018 ikke bød på samme omfang af mulige hotelinvesteringer. Investeringslysten indenfor hotelsegmentet vurderes således fortsat stærk.

hotel-segmentet i disse år.

Store danske operatører udvikler selv

København og Storkøbenhavn driver markedet

Ejendomsfonde og institutionelle investorer køber hoteller Af den samlede transaktionsvolumen i 2018 stod ejendomsfonde og institutionelle investorer for 79% af handlerne, fordelt med 40% til ejendomsfonde og figur 32). Det 39% til institutionelle investorer ( skal her bemærkes, at hoteltransaktioner udgør et væsentligt mindre marked end eksempelvis kontor, residential og retail, fordelt på få, men store ejendomme, hvorfor datagrundlaget ikke bør tolkes som udtryk for en tendens, men snarere et øjebliksbillede af hotelmarkedet i 2018.

At volumen i hotelsegmentet er relativt begrænset skal også ses i lyset af, at de største hoteloperatører i Danmark såsom Arp-Hansen og Cabinn som udgangspunkt selv udvikler og ejer deres egne hoteller. Dette holder i sagens natur transaktionsvolumen nede, men ændrer ikke på, at Cabinn mv. i disse år er særdeles aktive med at udvikle nye hoteller i særligt København. I det hele taget er byggeaktiviteten uagtet den lave transaktionsvolumen - høj indenfor

Af den samlede transaktionsvolumen ligger 76% af investeringerne i København og Storkøbenhavn ( figur 33). Dog er PensionDanmarks køb af Hotel Comwell i Kolding den tredjestørste handel og E. Bank Lauridsens køb af Hotel Britannia i Esbjerg ligger som nummer fem i tabellen. Igen bemærkes, at opgørelsen er baseret på ganske få transaktioner.

Lower transaction volume, but high construction actvity

trades as a whole is actually somewhat higher.

currently high within the hotel segment.

The year 2018 saw a significant decrease in transaction volume for hotel properties, which in total amounted to just under DKK 2 bn in 2018 against figure 31). Howmore than DKK 5 bn in 2017 ( ever, the decline is not considered to signify lack of interest, but rather lack of supply, especially of prime hotel properties.

In 2018, Pareto Securities’ acquisition of the new Scandic hotel project, located in Scanport close to Copenhagen Airport, at around DKK 720 m, was the largest hotel transaction, and represented 37% of the 2018 volume. This year's second largest transaction was PFA and Topdanmark's purchase of Carlsberg Byen’s Hotel Ottilia, which is run by Brøchner Hotel at DKK 495 m. The transaction volume decrease is thus not considered to signify a weak market in 2018. Rather, it indicates that 2017 was a very strong year, and 2018 did not offer the same scope of possible hotel investments. Investor interest within the hotel segment is still considered strong.

Property funds and institutional investors are targeting hotels

Hertil bemærkes det, at den angivne transaktionsvolumen ikke indeholder handler med ejendomme, der efterfølgende konverteres til hotel, hvorfor volumen for hotelorienterede handler som helhed reelt er noget større.

HOTEL

It is also crucial to acknowledge the fact that 2017 was characterised by a number of major trades, including the Norwegian Wenaasgruppen’s acquisition of Hotel Bella Sky at DKK 1.6 bn, Norwegian Strawberry Fields’ (now Nordic Choice Hotels) acquisition of the five-star Hilton hotel at Copenhagen Airport for approx. DKK 800 m and Swedish Balder's acquisition of four Copenhagen hotels - Copenhagen Plaza, Richmond Hotel, Mercur Hotel and Star Hotel - at a total of approx. DKK 700 m. Added to this, it should be noted that the stated transaction volume does not include any transactions of properties that are subsequently converted to hotel, meaning that the volume of hotel-oriented

86 // RED - Danish Investment Atlas 2019

Large Danish operators develop own projects The fact that the volume in the hotel segment is relatively limited must also bake into consideration the fact that the largest hotel operators in Denmark, such as Arp-Hansen and Cabinn, generally develop and own their hotels. This naturally keeps transaction volume low, regardless of e.g. Cabinn's developing new hotels in Copenhagen in particular. As a whole, building activity - despite low transaction volume - is

Of the total transaction volume, property funds and institutional investors account for 79% of transactions, with 40% for institutional investors and 39% for real estate funds ( figure 32). It should be noted here that hotel transactions constitute a significantly smaller market than, for example, office, residential and retail, spread over a few, but relatively large properties. For this reason, the data basis should not be interpreted as expressing a trend, but rather a snapshot of the hotel market in 2018.

Copenhagen and Greater Copenhagen rule the market Of the total transaction volume, 92% of the investfigure 33). ments were made in Copenhagen ( However, PensionDanmark's acquisition of Hotel Comwell in Kolding is the third largest transaction and E. Bank Lauridsen's acquisition of Hotel Britannia in Esbjerg is number five in the table. Again, it is noted that the market is based on very few transactions.

Investment market  Volume & investors u Top 5 transactions u Highlights u Expectations for 2019 u Transactions and pipeline u

Figure 31: Hotel - Transaction volume 2012-2018

6 5.2 5 20%

Billions

80%

3.0

2.5 24% 76%

1.5

1.4

1.2 1 66% 0

2.0

37%

49%

63%

51%

2014

2015

73%

61%

27%

39%

34% 2012

2013

Source: C&W | RED

2016

Foreign

Figure 32: Hotel - Investor type breakdown 2018

2017

2018

Danish

Figure 33 Hotel - Geographic breakdown 2018

Other 2%

Real estate company

Private investor

12%

Institutional investor 39%

2.0

Rest of Denmark 24%

Copenhagen 36%

Property fund 40%

BN DKK

Greater Copenhagen

Source: C&W | RED

HOTEL

40%

Source: C&W | RED

HOTEL - VOLUMEN & INVESTORER 2018 HOTEL - VOLUME & INVESTORS 2018

Foreign 39%

2.0 HOTEL VOLUME

BN DKK

Danish 61% GREATER COPENHAGEN Foreign 100%

0.8 BN DKK

Danish 0%

40%

REST OF DENMARK Foreign 0%

0.5 BN DKK

24%

COPENHAGEN Danish 100%

Foreign 0%

0.7

Danish 100%

BN DKK

36%

HOTEL Source: C&W | RED

88 // RED - Danish Investment Atlas 2019

Investment market u Volume & investors  Top 5 transactions u Highlights u Expectations for 2019 u Transactions and pipeline u

Hotel transactions (BN DKK) 2017

2018

Change

Copenhagen

3.9

0.7

-83%

Greater Copenhagen

0.7

0.8

Rest of Denmark

0.5

-8%

Total

5.2

2.0

-63%

Source: C&W | RED

Hotel - Top 5 investors 2018*

Investor

Origin

Volume (in M DKK)

No. of transactions

Pareto Securities

720

PFA Ejendomme & Topdanmark

495

PensionDanmark

225

Secure Fondmæglerselskab

130

E. Bank Lauridsen

*if possible portfolios are split into individual transactions

Source: C&W | RED

Hotel - Top 5 investors 2012-2018*

Investor

Origin

Volume (in M DKK)

No. of transactions

Nordic Choice Hotels

3,300

Wenaasgruppen

1,600

KLP Ejendomme

1,000

AB Balder

900

Pareto Securities

700

*if possible portfolios are split into individual transactions

Source: C&W | RED

HOTEL

HOTEL - TOP 5 TRANSAKTIONER 2018 HOTEL - TOP 5 TRANSACTIONS 2018 Scandic Scanport Årest største hotelhandel var den norske investeringsbank Pareto Securities køb af Skanskas hotelprojekt Scandic Scanport i december 2018 for 720 mio. kr. gennem selskabet City Danmark, som Pareto har etableret. Når hotellet står klar i december 2020 vil det rumme 357 værelser fordelt på 25.200 m² Heraf vil de 19.000 m² indeholde hotel- og konferencefaciliteter og de resterende 6.200 m² vil være kælder og parkeringskælder. Pareto Securities overtager 1. februar 2021 og Scandic har underskrevet en 20-årig lejekontrakt. The largest hotel transaction of the year was Norwegian investment bank Pareto Securities' acquisition of Skanska's hotel project Scandic Scanport in December 2018 at DKK 720 m through the company City Denmark, which Pareto has established. When the hotel is ready in December 2020, it will accommodate 357 rooms spread over 25,200 sq m of which the 19,000 sqm will contain hotel and conference facilities and the remaining 6,200 sqm are marked for basement and underground parking. On February 1, 2021, Pareto Securities takes over and Scandic has signed a 20-year lease.

Photo: Skanska

Price DKK: 720,000,000

Investor: Pareto Securities

Sq m: 25,200

Vendor: Skanska

Hotel Ottilia In the summer of 2018, pension funds PFA and TopDanmark bought the four-star Hotel Ottilia in Carlsberg Byen at DKK 495 m. Both companies are co-owners of the development company Carlsberg Byen. In addition to the exclusive boutique hotel of 10,455 sqm, to be run by Brøchner Hotels, there are also restaurant, retail, spa and café areas in the three properties that total 14,287 sqm, which are included in the deal with Carlsberg Byen P/S. The investment is also part of the work to diversify PFA's Danish commercial property portfolio.

HOTEL

Price DKK: 495,000,000

Photo: Arkitema

90 // RED - Danish Investment Atlas 2019

Sq m: 14,300

Investor: PFA Ejendomme & Topdanmark Vendor: Carlsberg Byen P/S

Investment market u Volume & investors u Top 5 transactions  Highlights u Expectations for 2019 u Transactions and pipeline u

Comwell Kolding With an investment of DKK 225 m in Comwell Kolding, PensionDanmark added its third Comwell hotel property to the portfolio. PensionDanmark has already invested in the Comwell hotels in Roskilde and Holte. Comwell in Kolding has 180 rooms and is planning an extension of 120 rooms in a 15-storey hotel tower, in order to keep up with demand of both conference guests and individual hotel guests. The existing rooms will also be refurbished, the restaurant and conference facilities are being expanded, and a new auditorium is expected to be built. The expansion is expected to become DGNB Gold certified.

Photo: Comwell

Price DKK: 225,000,000

Investor: PensionDanmark

Sq m: 18,250

Vendor: Comwell

Best Western Plus Hotel City The well-known and popular Best Western Plus Hotel City Copenhagen changed owners in the spring of 2018. Eva Grimsehl and Claus Hegelund Bruun took over the operation of the award-winning hotel, which will continue to be part of Best Western after more than 60 years as a family-owned hotel. Former owner, John Mortensen, sold the hotel to a company, which has entered into a long-term operation agreement with Eva Grimsehl and Claus Hegelund Bruun. Both have solid operational and commercial experience from a number of management positions in the hotel industry, and Claus Hegelund Bruun has been responsible for Best Western Plus Hotel City Copenhagen for the past five years.

Photo: Best Western

Price DKK: 129,600,000

Investor: Secure Fondsmæglerselskab

Sq m: 2,500

Vendor: Private investor

Hotel Britannia Esbjerg Esbjerg's iconic hotel at the town square, Hotel Britannia, also known as "the town hotel", changed ownership in the summer of 2018 from the Dam Jensen family to another local family, Bank Lauridsen. Thus, the town's leading hotel remains on local hands as it has been since its construction in 1965. Previously, the Nyborg family also owned the hotel, while Bangs Gård A/S, which is owned by Mads Dam Jensen and Mia Dam Karkov, children of the well-known real estate agent, Eivind Dam Jensen, has owned the hotel since 2000.

Investor: E. Bank Lauridsen

Sq m: 5,800

Vendor: Private investor

HOTEL

Photo: Hotel Britannia

Price DKK: 90,000,000

HOTEL - HIGHLIGHTS HOTEL - HIGHLIGHTS

Hotelejendomme stadigt mere efterspurgte blandt investorerne I takt med, at priserne stiger på bolig-, kontor og retail-ejendomme, har både danske og udenlandske investorer søgt mod alternative ejendomsinvesteringer og i de senere år har der været stigende fokus på hotelejendomme. Dette skal især ses i lyset af de relativt lange lejekontrakter med solide lejere, de fortsat lidt højere afkast på hotelejendomme, samt den høje belægningsgrad, især i Københavnsområdet, hvor belægningsprocenten nærmer sig 90% i de gode kvartaler og flere steder ligger over 80% beregnet på årsbasis ( figur 34). Hertil kommer, at både Københavns lufthavn og Københavns krydstogtsterminal aktuelt er i gang med at udvide for at imødekomme det øgede antal af turist- samt forretningsrejsende, hvorfor den positive udvikling i antal besøgende forventes at fortsætte. Investorinteressen ligger således i god tråd med den generelle udvikling i turismen og efterspørgslen efter hotelværelser i København.

København er verdens bedste København blev i oktober 2018 kåret som verdens bedste by-destination af den internationale rejseguide, Lonely Planet. En kåring som denne kan føre til endnu flere turister i 2019 og 2020, hvilket vil bidrage positivt til en allerede opadgående kurve. Ikke blot hoteller vil få gavn af øget turisme – også restauranter

Hotels increasingly in demand among investors

HOTEL

Concurrently with increasing prices on residential, office and retail properties, both Danish and foreign investors have sought alternative real estate investments and recent years have seen increasing focus on hotel properties. This should be seen particularly in the light of the relatively long lease contracts with solid tenants, the still slightly higher return on hotel properties, and high occupancy rates, especially in the Copenhagen area, where the rate approaches 90% in the good quarters and in many places is more figure than 80% calculated on an annual basis ( 34). In addition, both Copenhagen Airport and the Copenhagen cruise terminal are currently expanding to meet the increased number of tourist and business travelers, which is why the positive trend in the num-

92 // RED - Danish Investment Atlas 2019

og butikker i hovedstaden vil kunne øge deres omsætning, såfremt de formår at tiltrække turisterne.

rekordår. 2016 var ligeledes første år, hvor hotelbranchens EBITDA kom over 2 mia. kr.

Milliardoverskud i hotelbranchen for tredje år i træk

Hotelbranchen blev samlet set meget hårdt ramt af finanskrisen, og tabte penge hvert eneste af årene i perioden 2008-2013, hvor branchen tilsammen tabte 1,7 mia kr..

Hotelbranchens omsætning opgøres hvert år af Danske Brancheanalyse. Opgørelsen for 2018 ventes at foreligge efter sommeren 2019. Tal fra Danmarks Statistik viser dog allerede nu en kontinuerlig, sæsonkorrigeret stigning i antallet af hotelovernatninger fra juni til november 2018, som er senest opgjorte tal ( figur 35). Antallet af overnatninger er steget med over 20% de sidste fem år i København.

Branchens største overskud blandt hoteloperatørerne tilfaldt Arp-Hansen Hotel Group, der tjente 286,3 mio. kr. i 2017. Det næststørste overskud fik Cabinn med 92,7 mio. kr., Scandic lander på en tredjeplads med 65,6 mio. kr. og det enkeltstående Copenhagen Admiral Hotel, der tjente 58,5 mio. kr. ligger på tabellens nummer fire.

For tredje år i træk kunne hotelbranchen, ifølge Dansk Brancheanalyses gennemgang af landets 233 største hotelselskaber, i 2017 fejre et samlet årligt overskud på over 1 mia. kr. Hotelbranchens overskud i 2017 blev på 1,5 mia. kr. Hotel - Top 4 operators Det er faktisk kun branchens næstbedste resultat, da der blev tjent 2,1 mia. kr. i 2016. En mindre del af branchens overskud blev dog tjent på opskrivninger af hoteArp-Hansen Hotel Group lejendommenes værdi, og hvis vi skærer ned til hotelbranchens driftsresultat før Cabinn afskrivninger, også kaldet EBITDA, blev Scandic 2017, som aktuelt er seneste opgørelse, et rekordår med en EBITDA på 2,5 mia. Copenhagen Admiral Hotel kr., hvilket er en stigning på 5% i forhold Source: Dansk Brancheanalyse til 2,4 mia. kr. i 2016, der var det tidligere

ber of visitors is expected to continue. Thus, investor interest is in line with the general development in tourism and demand for hotel rooms in Copenhagen.

Copenhagen is best in the world In October 2018, Copenhagen was named the world's best city destination by the international travel guide, Lonely Planet. An election of this kind may lead to even more tourists in 2019 and 2020, which will contribute positively to an already upward-sloping curve. Not only hotels will benefit from increased tourism - also restaurants and shops in the capital will be able to increase turnover if they manage to attract the tourists.

Third year with billion kroner turnover The turnover of the hotel industry is calculated each year by Dansk Brancheanalyse (Danish Industry Analysis). The 2018 review is expected to be availa-

2017 Proﬁt M DKK 286.3 92.7 65.6 58.5

ble after the summer of 2018. Figures from Statistics Denmark already show a continuous, seasonally adjusted increase in the number of bednights from June to November 2018, which are the most recent figur 35). The number of Copenhagen figures ( bednights has increased by more than 20% over the past five years. For the third consecutive year, according to Dansk Brancheanalyse’s analysis of the country's 233 largest hotel companies, the hotel industry celebrated an annual profit of more than DKK 1 bn in 2017, which is the most recent report. In 2017, hotel industry profit was DKK 1,5 bn. In fact, this is only the second best result, since DKK 2.1 bn was reached in 2016. However, a small part of the industry's profit was based on revaluations of the hotel properties. If we only include the operating profit before depreciation, also known as EBITDA, 2017 was a record year with an EBITDA

Investment market u Volume & investors u Top 5 transactions u Highlights  Expectations for 2019 u Transactions and pipeline u

Figure 34: Hotel - Occupancy rate – Copenhagen City 2015-2018 100% 90% 80% 70% 60%

2017M11

2018M01

2018M03

2018M05

2018M07

2018M09

2018M11

2017M07

2017M10

2018M01

2018M04

2018M07

2018M10

2017M09

2017M07

2017M04

Tendency

Source: Statistics Denmark

2017M05

2017M03

2017M01

2016M11

2016M09

2016M07

2016M05

2016M03

2016M01

2015M11

2015M09

2015M07

2015M05

2015M03

2015M01

50%

Occupied rooms

Figure 35: Hotel - Copenhagen City bednights 2013-2018 2,000,000 1,800,000 1,600,000

1,200,000 1,000,000 800,000

Source: Statistics Denmark

Not seasonally adjusted

2017M01

2016M10

2016M07

2016M04

2016M01

2015M10

2015M07

2015M04

2015M01

2014M10

2014M07

2014M04

2014M01

2013M10

2013M07

2013M04

600,000

HOTEL

Overall, the hotel industry was severely affected by the financial crisis and reported losses every single year in the period 2008-2013, when the industry as a whole lost DKK 1.7 bn. The largest hotel operator profit was attributed to the Arp-Hansen Hotel Group, which earned DKK 286.3 m in 2017. The second largest profit was Cabinn with DKK 92,7 m, Scandic comes in at third place with DKK 65,6 m, and the Copenhagen Admiral Hotel, which earned DKK 58,5 m, takes spot number four.

1,400,000

2013M01

of DKK 2,5 bn, which is a 5% increase to the DKK 2,4 bn in 2016, which was the previous record year. 2016 was also the first year that the hotel industry EBITDA exceeded DKK 2 bn.

Seasonally adjusted

HOTEL - FORVENTNINGER TIL 2019 HOTEL - EXPECTATIONS FOR 2019 Stærk konkurrence og høj belægningsgrad Hotelmarkedet i København er generelt et meget konkurrencepræget marked, hvor vi ser et stort antal operatører i alle prisklasser, og hvor nogle af de største aktører har valgt selv at eje deres egne hoteller, bl.a. Arp-Hansen Group og Cabinn (Niels Fennet). Det stigende antal af turister og forretningsrejsende har, sammen med det hidtidige værelsesudbud, presset belægningsgraden op i et historisk højt niveau, hvilket, alt andet lige, har en positiv effekt på både hotellernes omsætning og interessen fra investorerne.

Flere værelser på vej, men også stigende efterspørgsel Kapaciteten af hotelværelser i København er, ifølge figur 36) steget med over Danmarks Statistik ( 30% siden 2008, og det forventes, at der fremadrettet fortsat vil være en markant høj efterspørgsel på hotelværelser til trods for den høje aktivitet med nyopførelser indenfor hotelsegmentet. I perioden 2020-2022 hvor der tilføres ca. 6.600 nye værelser til det københavnske hotelmarked - hvilket udgør en stigning på yderligere knap 30% i værelseskapaciteten i hovedstadsområdet frem til udgangen af 2021 ( figur 36) - vil vi forventeligt opleve en nedgang i

Strong competition and high occupancy rates The Copenhagen hotel market is generally a competitive market, where we see countless players in all price ranges, and where some of the largest players have chosen to own their own hotels, amongst others Arp-Hansen Group and Niels Fennet (Cabinn). The increasing number of tourists and business travelers, coupled with the somewhat limited room supply, has pushed up occupancy rates to a historically high level, which, all things being equal, has a positive effect on both hotel turnover and investor interest.

More rooms on the way, but also increasing demand

HOTEL

According to Statistics Denmark, Copenhagen hotel room capacity has increased by more than 30% figure 36), and continued markedly since 2008 ( high demand for hotel rooms is expected in the future , despite high activity in new construction within the hotel segment. In the period 2020-2022 approx. 6,600 new rooms for the Copenhagen hotel market, which represents an increase of just under figure 36). We thus 30% in the room capacity ( expect to experience a decline in occupancy rates.

94 // RED - Danish Investment Atlas 2019

belægningsprocenterne. Dette vurderes dog som et overgangsfænomen, da netop øget kapacitet erfaringsmæssigt tiltrækker endnu flere kunder på lidt længere sigt, eksempelvis fordi branchen i ydersæsoner bliver bedre i stand til at modtage de helt store konferencer i København. Også den store indsats for at tiltrække flere nye direkte flyruter til København vil medvirke til en stigning i antallet af besøgende. Aktuelt står hotelbranchen fortsat for den største andel af antal overnatninger i Danmark, men brugen af Airbnb er steget markant over de seneste par år, hvor både private og forretningsfolk flittigt benytter den private indlogeringstjeneste. Den markante vækst i antallet af Airbnb-brugere indikerer en forholdsvist stor efterspørgsel efter billige overnatningsmuligheder; noget som langt de fleste hoteller har svært ved at imødekomme. Dette er således også én af årsagerne til, at der aktuelt opføres adskillige budgethoteller i København.

Stærk investorinteresse Investeringer i hotelejendomme har, med undtagelse af 2018, været stigende siden 2014, i takt med et stigende antal turister, forretningsrejsende og dermed belægningsgrader. Som tidligere beskrevet, vurderes nedgangen i transaktionsvolumen i 2018 som et

However, this is considered a transitional phenomenon, since increased capacity is known to attract even more visitors in the slightly longer term, for example because the industry is able to receive the large conferences in Copenhagen during the off-season. Also, the great effort to attract more new direct flights to Copenhagen will contribute to an increase in the number of visitors. Currently, the hotel industry continues to account for the largest proportion of bednights in Denmark, but the use of Airbnb has increased significantly over the past couple of years, where both private and business people are using the private accommodation service frequently. The marked growth in the number of Airbnb users indicates relatively high demand for cheap accommodation, something that most hotels find difficult to meet. Hence, this is one reason that there is currently being built several budget hotels in Copenhagen.

Strong investor interest With the exception of 2018, Investments in hotels, have been increasing since 2014, concurrently with an increasing number of tourists, business travelers

udtryk for manglende udbud af hotelejendomme til salg, frem for manglende efterspørgsel. Tværtimod oplever vi hos RED stigende efterspørgsel efter hotelejendomme, typisk fra udenlandske investorer, men også fra de store danske ejendomsselskaber og pensionskasser, som søger risikospredning.

Forventninger til 2019 Med en forventet kapacitetsstigning på 30% over de næste tre år, forventer vi, at der er grundlag for en stabil til stigende transaktionsvolumen, da flere både danske og internationale investorer kommer på banen i disse år. Vi forventer som udgangspunkt stabile afkast, men det kan med erfaringer fra de øvrige nordiske lande ikke udelukkes, at det merafkast i niveauet +0,5% som investorer historisk har krævet ved investeringer i hotelejendomme, i forhold til tilsvarende investeringer i kontorejendomme med lange lejekontrakter, vil blive reduceret på sigt. Dette vil således være en potentiel upside for hotelinvestorerne. Omvendt må man på den korte bane forvente visse udsving i belægningsgaden, som følge af de mange nye værelser som tilføres det københavnske marked i de kommende år.

and thus occupancy rates. As previously described, the decline in transaction volume in 2018 is assessed as an expression of a lack of supply of hotel properties for sale, rather than a lack of demand. On the contrary, at RED, we are experiencing increasing demand for hotel rental properties, typically from foreign investors, but also from the large Danish property companies and pension funds seeking risk diversification.

Expectations for 2019 We generally expect stable yields, but, drawing on experience from the other Nordic countries, it cannot be ruled out that the surplus yield of around + 0.5% that investors have historically demanded for hotel properties, compared to similar investments in office properties with long leases, will be reduced over time. This will thus represent a potential upside for the hotel investors. On the other hand, in the short run certain fluctuations in the ccupancy rate must be expected, as a result of the many new rooms that will be supplied to the Copenhagen market in the coming years.

Investment market u Volume & investors u Top 5 transactions u Highlights u Expectations for 2019  Transactions and pipeline u

Figure 36: Hotel - Copenhagen City rooms 2008-2021

25.000

20.000

15.000

10.000

5.000

0 2008

2009

Source: Statistics Denmark

2010

2011

2012

2013

2014

Number of rooms

2015

2016

2017

2018

2019

2020

2021

Expected rooms inclusive pipeline

HOTEL 95

HOTEL - TRANSAKTIONER OG PIPELINE HOTEL - TRANSACTIONS AND PIPELINE

Hotel - Top 5 transactions 2018 Asset name

Area

Scandic Scanport

Kastrup

25,200

720,000,000 Pareto Securities

Skanska

Hotel Ottilia

Carlsberg Byen

14,300

495,000,000 PFA Ejendomme & Topdanmark

Carlsberg Byen

Comwell Kolding

Kolding

18,300

225,000,000 PensionDanmark

Comwell

Best Western Plus Hotel City

CBD

2,500

129,600,000 Secure FondsmÃ¦glerselskab

Private investor

Hotel Britannia

Esbjerg

5,800

HOTEL 96 // RED - Danish Investment Atlas 2019

Size sq m

Price DKK

Investor

90,000,000 E. Bank Lauridsen

Vendor

Private investor

Investment market u Volume & investors u Top 5 transactions u Highlights u Expectations for 2019 u Transactions and pipeline 

Hotel - New developments in Copenhagen 2018-2021 Hotel and address

No. of rooms

NIMB (Tivoli Corner)

(room expansion)

2018

Charlottehaven

(apartment expansion)

2018

Moxy

220

2018

Scandic Meatpacking

370

2018

585

2018

Brøchner Hotels, Herman K - Bremerholm 6 Arp-Hansen, Wakeup - Kalvebodbrygge Total in 2018

1.264

Scandic Falconer

332

2019

CitizenM - Dagmarhus

230

2019

Zleep Copenhagen Arena

198

Arp-Hansen, Wakeup Borgergade

220

Brøchner Hotels, Hotel Ottilia - Carlsbergbyen

156

2019

Guldsmeden Hotels - Islands Brygge

200

2019

Total in 2019

2019 (room expansion)

2019

1,336

Nordic Choice Hotels - Tietgensgade 37

390

2020

Comfort Copenhagen Airport Hotel

500

2020

Hilton Copenhagen City (Strandgade 7)

400

2020

357

2020

Scandic Copenhagen Airport Total in 2020

1,647 632

2021

Paper Island - Christianshavn

125

2021

1.200

TBA

493

TBA

Cabinn - Kalvebodbrygge Comwell - Nordhavn Total

HOTEL

Scandic Spectrum Copenhagen - Kalvebod Brygge

6,572

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