Page 1

Research Erhverv Poul Erik Bech

MARKET UPDATE F E B R U A R Y

2 0 1 7


EDC MARKET UPDATE F E B R U A R Y

Contact us: Robert Neble Larsen CEO Tel: +45 33 30 10 54 Mail: rnl@edc.dk Copenhagen area: Thor Heltborg Head of Corporate Clients Tel.: +45 33 30 10 66 Mail: the@edc.dk North Zealand: Stephen Wielje Berthelsen Department Manager Tlf: +45 48 26 99 10 Mail: stbe@edc.dk Region Zealand: East, West and South Zealand John Borrisholt Regional Director Tlf.: +45 58 58 79 39 Mail: jsb@edc.dk Central Denmark Region: Søren Leth Pedersen Regional Director, Partner, MSc.(f), Chartered Surveyor, MDE Tel: +45 58 58 78 76 Mail: slp@edc.dk North Denmark Region: Frank Jensen Regional Director, Partner, CBA Tel: +45 58 58 75 72 Mail: frje@edc.dk Southern Denmark: Karsten L Jensen Regional Director, Partner, Tel: +45 58 58 74 07 Mail: klj@edc.dk Funen: Morten Nielsen Dept. Manager, Partner, Chartered Surveyor, MDE Tel: +45 58 58 78 56 Mail: monie@edc.dk Research: Thor Heltborg Head of Corporate Clients Tel.: +45 33 30 10 66 Mail: the@edc.dk

ejendomstorvet.dk/info/statistik

Forecasts Increasing Stable Decreasing

2 0 1 7

REMARKS FOR OUR ESTIMATES: The valuation of a property depends on various property specific attributes, including, but not limited to, the lease conditions, the tenant’s credit rating and the property’s condition. When valuing a property, the estimates should not be relied upon without seeking qualified, professional advice. However, the estimates can serve as useful input in the valuation process. Any reproduction of data in this report should be credited to EDC Erhverv Poul Erik Bech. Whilst data and estimates have been rigorously checked, EDC Erhverv Poul Erik Bech can take no responsibility for any inaccuracy within this report. Estimates and forecasts of rents and yields are as of 1. January 2017. Estimates are subject to change.

YIELDS, MARKET RENTS AND FORECASTS: LOCATION: Yield and market rent estimates covers properties with prime, secondary and tertiary location. FACILITY CLASS: Location aside, our estimates are based upon a segmentation of property facility classes; facility class A, B and C, where class A is the best facility class. Various variables for each property type have been taken into consideration with regards to determine the facility classes, such as: size, floor plan structure, year of construction, lifts, climate control, cabling infrastructure, staff facilities, customer facilities, parking facilities, building energy rating, ceiling height, general accessibility, general condition of the property, etc. A property with prime location and class A facilities has the best possible location in an area, the highest standard when it comes to facilities, is modern and ready to move into. This type of property will typically be traded at the lowest yield for the area, have the highest market rent and have a short reletting process. Naturally, yield and market rent estimates are subject to certain deviations depending on the exact location and property specific facilities. YIELD DEFINITION: All yields are net initial yields and is defined as the annualised rent generated by the property, after the deduction of estimated annual irrecoverable property outgoings, expressed as a percentage of the property valuation (property valuation is adjusted for the value of rental deposits and prepaid rent). For comparison purposes it is assumed that all properties are fully let at market-conform conditions. MARKET RENT ESTIMATES: All rents are headline rents, in other words the contracted gross rent receivable which becomes payable after any tenant incentives have expired. Market rent estimates are expressed in €/sq m/year. Figures have been rounded when converting from DKK (Danish Kroner) to €. It is assumed that all properties are let at market-conform conditions. FORECASTS: All forecasts reflect our expectations for the development over the next 3 to 6 months. RESIDENTIAL RENTAL PROPERTIES: In this report estimates are included for “Newer residential rental properties”, “Fully developed older residential rental properties” and “Older residential rental properties”. In Denmark residential rental levels cannot be determined freely and is subject to far reaching rent control. The major difference between the before mentioned types of residential rental property is that older residential rental properties are regulated by the provisions in the Danish rent act (Lejeloven) and the Housing Regulation Act (Boligreguleringsloven) concerning cost driven rental levels. Newer residential rental properties taken in to use no earlier than 1 April 1992 are subject to the rules concerning free market rent, pursuant to the Housing Regulation Act § 15 A and others.

DATA FOR VACANT COMMERCIAL SPACE ( VACANCY RATE) Source:Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED Statistics), data as of 1. January 2017. For more information we refer to ejendomstorvet.dk/info/statistik. The forecasts of the vacancy rates have been made by EDC Erhverv Poul Erik Bech and reflect our expectations for thedevelopment over the next 3 to 6 months.

EDC Research - February 2017 - page 2


EDC MARKET UPDATE F E B R U A R Y

2 0 1 7

Regions of Denmark and selected market areas

Capital Region of Denmark Region Zealand Aalborg

Southern Denmark Region Central Jutland Region Region North Jutland

Aarhus

Vejle

Kolding

Triangle Area

Copenhagen

Fredericia

Odense

EDC Research - February 2017 - page 3


EDC MARKET UPDATE OFFICE - FEBRUARY 2017

Office Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen

Facility class B

Facility class C

Facility class A

Facility class B

Facility class C

Yearly market rent in â‚Ź / sq m

Yield in %

Prime

4.25

5.00

5.25

300

230

170

Secondary

5.00

5.50

6.00

225

185

145

Tertiary

6.25

6.75

7.25

150

130

95 90

North Zealand Prime

7.25

7.75

8.25

165

105

Secondary

7.50

8.00

8.50

125

90

75

Tertiary

7.75

8.50

9.00

105

75

65 95

East Zealand Prime

6.50

7.00

8.00

165

125

Secondary

7.50

8.00

9.00

125

95

70

Tertiary

8.50

9.00

10.00

90

70

55

West and South Zealand Prime

7.50

8.00

8.50

125

90

55

Secondary

8.00

9.00

10.00

95

70

45

Tertiary

10.00

12.00

14.00

70

50

30

Aarhus Prime

4.50

5.00

5.50

210

170

135

Secondary

5.25

6.00

7.00

175

135

110

Tertiary

6.50

7.00

8.00

135

110

85

Aalborg Prime

5.50

6.25

7.25

150

130

105

Secondary

6.25

7.25

8.00

125

110

85

Tertiary

7.25

8.00

8.50

105

85

70 75

Triangle area Prime

6.75

7.00

7.25

145

105

Secondary

7.00

7.50

7.75

110

85

70

Tertiary

7.75

8.75

9.75

60

55

50 95

Odense Prime

6.00

7.00

8.00

155

110

Secondary

7.00

8.00

9.00

135

95

90

Tertiary

8.00

9.00

10.00

90

85

70

Source: EDC Erhverv Poul Erik Bech. Data as of 1. January 2017. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months

Vacant office space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m

As % of building stock

Central Copenhagen

421,600

7.2

North Zealand

121,000

East Zealand

30,900

West- and south Zealand

Change % QoQ

Change % YoY

-0.6

-1.0

7.6

0.4

-0.3

4.4

-0.9

-1.7

58,500

3.8

-0.2

-0.4

East Jutland

233,000

7.6

-1.5

-1.7

Region North Jutland

139,600

7.1

-0.4

-0.5

South Jutland

202,600

8.7

-0.2

0.2

Funen (including Odense)

135,600

9.0

-0.3

0.9

Forecast

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.

EDC Research - February 2017 - page 4


EDC MARKET UPDATE OFFICE - FEBRUARY 2017

Vacant office space in sq m, in % of building stock and forecast for the next 3-6 months 10% 135,600 sq m

9%

202,600 sq m

8%

233,000 sq m

121,000 sq m 421,600 sq m

139,600 sq m

7% 6% 5% 30,900 sq m

4%

58,500 sq m

3% 2% 1% 0% Central Copenhagen

North Zealand

East Zealand

West and South Zealand

East Jutland

Region North Jutland

South Jutland

Funen (including Odense)

Source: Vacancy data from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics). Data as of 1. January 2017. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.

Key vacancy figures from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics) Office

Building stock

Vacancy sq m

Change sq m QoQ

As % of building stock

Change in % QoQ

Central Copenhagen

5,876,900

421,600

-37,700

7.2%

-0.6%

Copenhagen area

3,735,000

453,900

-43,100

12.2%

-1.1%

North Zealand

1,586,200

121,000

6,300

7.6%

0.4%

115,600

2,600

100

2.3%

0.1%

11,313,700

999,100

-74,400

8.8%

-0.7% -0.9%

Bornholm Capital Region of Denmark

708,100

30,900

-6,900

4.4%

West- and south Zealand

East Zealand

1,559,600

58,500

-4,300

3.8%

-0.2%

Region Zealand

2,267,700

89,400

-11,200

3.9%

-0.5%

Funen (including Odense)

1,499,600

135,600

-3,900

9.0%

-0.3%

South Jutland

2,339,400

202,600

-5,200

8.7%

-0.2%

Southern Denmark Region

3,838,900

338,100

-9,200

8.8%

-0.2%

East Jutland

3,062,500

233,000

-45,100

7.6%

-1.5%

West Jutland

1,401,100

72,100

-7,900

5.1%

-0.6%

Central Jutland Region

4,463,600

305,000

-53,100

6.8%

-1.2%

North Jutland

1,955,400

139,600

-7,600

7.1%

-0.4%

Region North Jutland

1,955,400

139,600

-7,600

7.1%

-0.4%

23,839,300

1,871,300

-155,300

7.8%

-0.7%

Denmark, total

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - February 2017 - page 5


EDC MARKET UPDATE OFFICE - FEBRUARY 2017

Location segmentation for offices 8

201

Sotoften

Copenhagen

Aarhus

Skjoldelev

Lystrup

Olsted

15

46 18 E47

511

Sabro

3 20

Hellerup

Gladsaxe

Egaa

19

47

Bispebjerg

Borum

Brendstrup

Risskov

Nordhavn

Husum Utterslev

O2

Nørrebro

23

180

Yderup

Ydre Østerbro

Tilst

Amerika Plads

26

True

Indre Østerbro

Lyngby

Labing

Gellerup

Vanløse

Rødovre

Hasle

City

O3

O1

Frederiksberg

Brabrand

195

156 O2

Brøndbyøster E47

21

Vejby

Skejby

Tuborg Havn

16

Valby

Vesterbro

Aaby

E45

Sundbyvester

Marselisborg

151 Hvidovre

2

501

Stavtrup

Ormslev Stationsby

Sydhavn

Avedøre

Aarhus

Aarslev Mark

Ørestad Nord Havnefront Syd

1

Aabyhoj

Aarslev

Kalvebod Brygge

Vigerslev

21

505

Kasted

Geding

E45

Søborg

O4

17

19 20

Faarup

Gentofte

Mørkhøj

15

Kvottrup

O3

4

18

Lisbjerg

Kastrup

Ørestad City

E20

19

Ormslev

Aabo

17

170 2

Lemming Viby

22

20

Ørestad Syd

21

Holme

Tårnby

O2

E20

Bering

1 km

Hasselager

Kolt

Kbh. Lufthavn

1 km

451

Bjostrup Slet

Kattrup

501

Skaade

Prime locations

Secondary locations

Tertiary locations

Jegstrup

51

Trains

Tranbjerg Metro

Horning

Overballe

Osterby

Storhoj

Horret

The map for office properties in Copenhagen/Aarhus illustrates a location segmentation in prime, secondary and tertiary locations, where the prime area typically has the best locations for office property in Copenhagen/Aarhus. The location segmentation has been made by EDC Erhverv Poul Erik Bech. The location segmentation can change over time. The segmentation is our perception of general location segmentation and should not be perceived as a definitive segmentation of the best, good and below average locations.

Copenhagen

Aarhus

Yield in % Location

Facility class A

Facility class B

Facility class C

Location

Facility class A

Facility class B

Facility class C

Prime

4.25

5.00

5.25

Prime

4.50

5.00

5.50

Secondary

5.00

5.50

6.00

Secondary

5.25

6.00

7.00

Tertiary

6.25

6.75

7.25

Tertiary

6.50

7.00

8.00

Yearly market rent in € / sq m Location

Facility class A

Facility class B

Facility class C

Location

Facility class A

Facility class B

Facility class C

Prime

300

230

170

Prime

210

170

135

Secondary

225

185

145

Secondary

175

135

110

Tertiary

150

130

95

Tertiary

135

110

85

Source: Vacancy data from Ejendomstorvet-ED Statistics 4. quarter 2016. Data as of 1. January 2017 Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months

EDC Research - February 2017 - page 6


EDC MARKET UPDATE R E TA I L - F E B R U A RY 2 0 1 7

Retail Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen

Facility class B

Facility class C

Facility class A

Facility class B

Facility class C

Yearly market rent in â‚Ź / sq m

Yield in %

Prime

4.50

5.00

5.25

2,695

1,885

1,615

Secondary

5.75

6.00

6.50

500

340

270

Tertiary

7.00

7.50

7.75

150

130

110

Prime

7.00

7.50

8.00

340

165

125

Secondary

7.50

8.00

8.50

240

125

105

Tertiary

8.00

8.50

9.00

170

110

90

North Zealand

East Zealand Prime

6.00

7.00

8.00

475

340

270

Secondary

7.00

8.00

9.50

270

230

205

Tertiary

8.00

9.00

11.00

125

105

70

West and South Zealand Prime

6.75

7.50

8.50

245

205

165

Secondary

7.25

8.25

9.00

175

135

95

Tertiary

8.50

9.50

10.50

135

95

70 475

Aarhus Prime

4.50

4.75

5.00

1.010

675

Secondary

5.25

5.50

6.00

540

475

340

Tertiary

6.00

6.50

7.00

270

220

165

Prime

4.75

5.50

6.00

610

440

270

Secondary

6.25

6.50

7.00

175

145

95

Tertiary

7.25

7.75

8.25

85

70

60

Aalborg

Triangle area Prime

6.25

6.50

6.75

395

310

175

Secondary

6.50

6.75

7.00

220

135

110

Tertiary

7.25

7.75

8.25

95

70

70

Odense Prime

5.00

6.00

6.50

675

515

340

Secondary

6.00

6.75

7.50

405

270

175

Tertiary

8.00

9.00

10.00

110

85

55

Source: EDC Erhverv Poul Erik Bech. Data as of 1. January 2017. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.

Vacant retail space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m

As % of building stock

Central Copenhagen

40,600

3.2

0.4

0.3

North Zealand

46,800

4.3

-1.0

-0.8

East Zealand

31,700

7.1

0.5

0.4

West- and south Zealand

73,000

5.6

-0.8

-1.5

111,500

5.5

-0.1

-0.1

91,500

6.7

-0.4

-1.5

158,900

9.3

0.3

0.8

60,900

4.7

-0.2

-0.7

East Jutland Region North Jutland South Jutland Funen (including Odense)

Change % QoQ

Change % YoY

Forecast

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.

EDC Research - February 2017 - page 7


EDC MARKET UPDATE R E TA I L - F E B R U A R Y 2 0 1 7

Vacant retail space in sq m, in % of building stock and forecast for the next 3-6 months 10% 158,900 sq m

9% 8% 31,700 sq m

7%

91,500 sq m

6%

73,000 sq m

5%

111,500 sq m 60,900 sq m

46,800 sq m

4% 40,600 sq m

3% 2% 1% 0% Central Copenhagen

North Zealand

East Zealand

West and South Zealand

East Jutland

Region North Jutland

South Jutland

Funen (including Odense)

Source: Vacancy data from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics). Data as of 1. January 2017. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.

Key vacancy figures from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics) Retail Central Copenhagen Copenhagen area North Zealand Bornholm Capital Region of Denmark East Zealand

Building stock

Vacancy sq m

Change sq m QoQ

As % of building stock

Change in % QoQ

1,266,300

40,600

5,500

3.2%

0.4%

890,700

22,300

800

2.5%

0.1%

1,082,400

46,800

-10,300

4.3%

-1.0%

93,400

2,700

1,100

2.9%

1.2%

3,332,800

112,400

-2,900

3.4%

-0.1%

446,600

31,700

2,200

7.1%

0.5%

West- and south Zealand

1,307,000

73,000

-10,200

5.6%

-0.8%

Region Zealand

1,753,600

104,700

-8,000

6.0%

-0.4%

Funen (including Odense)

1,282,400

60,900

-2,200

4.7%

-0.2%

South Jutland

1,699,300

158,900

5,900

9.3%

0.3%

Southern Denmark Region

2,981,700

219,800

3,700

7.4%

0.2%

East Jutland

2,015,100

111,500

-2,200

5.5%

-0.1%

West Jutland

1,032,700

63,600

7,100

6.2%

0.7%

Central Jutland Region

3,047,800

175,100

4,800

5.7%

0.1%

North Jutland

1,367,600

91,500

-5,400

6.7%

-0.4%

Region North Jutland

1,367,600

91,500

-5,400

6.7%

-0.4%

12,483,400

703,500

-7,800

5.6%

-0.1%

Denmark, total

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - February 2017 - page 8


EDC MARKET UPDATE B O X R E TA I L - F E B R U A R Y 2 0 1 7

Box retail

BOX RETAIL: Box retail stores are typically located in external retail areas and selling goods that do not require unusually large quantities of floor space. In this publication, we do not include big box retailing with permission for selling items that require unusually large quantities of floor space according to the provisions in the Danish Planning Act (Planloven). Yield and rent estimates are stated as “above average”, “average”, “below average” for different areas (primary, secondary, tertiary).

Yield in %, yearly market rent in € / sq m and forecast for the next 3-6 months Above average Capital Region of Denmark

Average

Below Average

Above average

Average

Below Average

Yearly market rent in € / sq m

Yield in %

Prime

6.50

7.00

7.50

150

135

125

Secondary

7.00

8.00

9.00

110

95

85

Prime

6.75

7.25

7.75

165

135

70

Secondary

7.50

7.75

8.50

110

105

50

Prime

6.75

7.25

7.75

150

130

110

Secondary

7.50

7.75

8.50

105

85

65

Prime

6.75

7.75

8.50

110

100

90

Secondary

8.00

9.00

10.00

95

65

45

Prime

7.00

7.25

7.50

150

135

125

Secondary

7.75

8.00

8.25

110

95

85

Prime

6.50

7.00

8.00

165

125

110

Secondary

7.50

8.00

9.00

125

110

85

Prime

7.25

7.50

8.00

150

125

110

Secondary

7.50

7.75

8.50

95

85

70

Prime

7.50

8.00

8.50

150

125

110

Secondary

8.25

9.00

9.50

125

110

90

North Zealand

East Zealand

West and South Zealand

Central Jutland Region

Region North Jutland

South Jutland

Funen

Source: EDC Erhverv Poul Erik Bech. Data as of 1. January 2017.

EDC Research - February 2017 - page 9


EDC MARKET UPDATE I N D U S T R I A L & LOGI S TI C S FE B R U A RY 2017

Industrial & Logistics Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen

Facility class B

Facility class C

Facility class A

Facility class B

Facility class C

Yearly market rent in â‚Ź / sq m

Yield in %

Prime

7.00

7.75

8.25

75

65

50

Secondary

7.50

8.50

9.00

65

55

45

Tertiary

8.00

9.25

9.75

50

45

35

North Zealand Prime

7.50

8.25

8.75

70

55

45

Secondary

8.00

8.75

9.25

55

50

45

Tertiary

8.50

9.25

9.75

50

50

35

East Zealand Prime

7.00

7.50

8.00

70

55

45

Secondary

7.50

8.00

9.00

55

45

35

Tertiary

8.00

9.00

10.00

50

35

25

West and South Zealand Prime

7.50

8.50

9.50

65

55

45

Secondary

8.50

9.50

10.50

50

35

30

Tertiary

9.50

10.50

12.50

35

30

20

Aarhus Prime

7.25

7.75

8.50

55

45

35

Secondary

7.50

8.00

9.00

45

40

35

Prime

7.25

8.00

9.00

50

40

35

Secondary

8.75

9.25

10.25

35

35

25

Aalborg

Triangle area Prime

7.00

7.50

8.00

45

40

35

Secondary

8.00

8.50

9.00

40

35

35

Odense Prime

7.50

8.50

9.00

50

45

35

Secondary

8.50

9.50

10.50

40

35

20

Source: EDC Erhverv Poul Erik Bech. Data as of 1. January 2017. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months

Vacant industrial & logistics space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m

As % of building stock

Capital Region of Denmark

473,800

2.6

North Zealand

169,500

East Zealand

93,900

West- and south Zealand

Change % QoQ

Change % YoY

0.1

-1.4

4.1

0.4

-0.9

2.7

-0.2

0.0

150,700

1.5

0.0

-0.3

East Jutland

625,900

3.9

-0.1

0.1

Region North Jutland

226,800

1.7

0.1

-0.1

South Jutland

560,800

2.9

0.0

0.4

Funen (including Odense)

302,200

3.3

0.2

0.3

Forecast

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.

EDC Research - February 2017 - page 10


EDC MARKET UPDATE I N D U S T R I A L & LOGI S TI C S FE B R U A RY 2017

Vacant industrial & logistics space in sq m, in % of building stock and forecast for the next 3-6 months

5%

169,500 sq m

4%

625,900 sq m

302,200 sq m

3%

560,800 sq m 93,900 sq m

473,800 sq m

2%

226,800 sq m 150,700 sq m

1%

0% Central Copenhagen

North Zealand

East Zealand

West and South Zealand

East Jutland

Region North Jutland

South Jutland

Funen (including Odense)

Source: Vacancy data from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics). Data as of 1. January 2017. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.

Key vacancy figures from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics) As % of building stock

Change in % QoQ

Central Copenhagen

Industrial & Logistics

5,269,800

9,400

-3,200

0.2%

0.0%

Copenhagen area

7,799,300

293,200

1,300

3.8%

0.1%

North Zealand

4,166,400

169,500

16,400

4.1%

0.4%

838,000

1,700

-1,200

0.2%

-0.1%

18,073,500

473,800

13,400

2.6%

0.1%

3,489,300

93,900

-7,500

2.7%

-0.2%

Bornholm Capital Region of Denmark East Zealand West- and south Zealand Region Zealand Funen (including Odense)

Building stock

Vacancy sq m

Change sq m QoQ

9,878,500

150,700

3,500

1.5%

0.0%

13,367,800

244,500

-4,100

1.8%

-0.1%

9,276,100

302,200

16,700

3.3%

0.2%

South Jutland

19,373,300

560,800

100

2.9%

0.0%

Southern Denmark Region

28,649,400

863,000

16,900

3.0%

0.0%

East Jutland

16,166,400

625,900

-22,900

3.9%

-0.1%

West Jutland

12,930,200

340,100

-29,600

2.6%

-0.3%

Central Jutland Region

29,096,600

966,000

-52,500

3.3%

-0.2%

North Jutland

13,711,000

226,800

12,800

1.7%

0.1%

Region North Jutland

13,711,000

226,800

12,800

1.7%

0.1%

102,898,200

2,774,100

-13,500

2.7%

0.0%

Denmark, total

Source: Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics), data as of 1. January 2017. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - February 2017 - page 11


EDC MARKET UPDATE R E S I D E N T I A L R E N TA L P R O P E R T I E S F E B R U A RY 2 0 1 7

Yield in %, yearly market rent in €/sq m and forecast for the next 3-6 months

Residential rental properties

Newer residential rental properties Copenhagen

Facility class A

Prime

Facility class B

Yield in %

Secondary Tertiary North Zealand

Facility class A

Facility class B

Yearly market rent in € / sq m

4.00 4.50 5.00

4.50 5.00 5.25

265 240 205

230 205 170

4.75 5.00 5.25

5.00 5.50 5.75

205 185 150

175 155 145

5.00 5.50 6.00

5.50 6.25 7.50

165 150 110

150 125 85

5.50 6.50 7.00

6.50 7.50 8.50

150 130 105

125 110 85

4.00 4.50 4.75

4.25 4.75 5.00

225 185 165

190 150 135

4.25 4.75 5.50

4.50 5.25 6.00

170 135 125

145 115 110

5.25 6.25

5.75 6.50

165 125

145 110

4.50 5.50

5.25 6.00

185 145

130 115

Prime Secondary Tertiary East Zealand Prime Secondary Tertiary West and South Zealand Prime Secondary Tertiary Aarhus Prime Secondary Tertiary Aalborg Prime Secondary Tertiary Triangle area Prime Secondary Odense Prime Secondary Secondary

Older residential rental properties Facility class A Copenhagen Prime Secondary Tertiary

Facility class B

Facility class C

Fully developed older residential rental properties Facility class A

Yield in %

Facility class B

Yield in %

Facility class A

Facility class B

Yearly market rent in € / sq m

2.50 3.00 4.00

2.75 3.50 4.50

3.50 4.25 5.50

4.50 5.00 5.25

4.75 5.25 5.50

220 190 150

190 170 135

4.50 5.00 5.25

5.00 5.25 5.50

5.25 5.50 5.75

4.75 5.25 5.75

5.25 5.75 6.00

205 190 175

175 165 150

4.00 5.00 6.25

5.00 6.00 7.00

5.50 7.00 8.00

5.00 5.75 6.75

5.50 6.50 8.00

155 135 95

145 125 85

5.50 6.00 7.00

6.50 7.00 8.50

7.50 8.00 10.00

6.00 6.50 8.00

6.50 7.50 9.00

135 110 85

115 95 75

2.50 3.00 4.00

2.75 3.25 4.25

3.00 3.50 4.50

3.75 4.25 5.00

4.00 4.75 5.25

190 165 145

170 145 115

3.25 4.00 5.50

3.75 4.50 6.00

4.25 5.00 6.50

4.25 4.75 5.25

4.50 5.00 5.75

5.50 6.25 7.50

6.25 6.75 8.00

7.00 7.75 8.50

5.50 6.25 7.50

6.00 6.75 7.75

4.25 5.00

5.00 5.75

5.75 6.00

4.75 5.50

5.50 6.00

North Zealand Prime Secondary Tertiary East Zealand Prime Secondary Tertiary West and South Zealand Prime Secondary Tertiary Aarhus Prime Secondary Tertiary Aalborg Prime Secondary Tertiary Triangle area Prime Secondary Tertiary Odense Prime Secondary

Source: EDC Erhverv Poul Erik Bech. Data as of 1. January 2017. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.

EDC Research - February 2017 - page 12


EDC MARKET UPDATE F E B R U A R Y

2 0 1 7

Hard work, ethics and a solid business sense – were the three pillars on which I founded my company in 1978. These core values are still the same and their legitimacy has been confirmed by good results, solid growth and satisfied clients. Hard work is part of our culture which is deeply rooted throughout the company. Every day our employees do their utmost to provide our clients with knowledge-based advice and first-class service and our phones are open from 7 a.m. to 9. p.m. - 365 days a year. Our ethics mean you can have confidence in us; in our dedication and our business ethics, in our way of working together, and in our transparent processes that provide our clients with security and overview. A solid business sense is your guarantee for a satisfactory and profitable business outcome. Our focus is representing our clients and their interests in the most optimal way possible. The performance of our experienced specialists is continuously assessed with regards to competence, performance and negotiating skills to ensure our clients always have confidence in the quality of our services. Nationwide commercial real estate company – with local knowledge Our commitment to our core values has turned EDC Poul Erik Bech in to a nationwide company with a strong presence in Denmark. Our 16 commercial offices ensure that we have in-depth knowledge of the local area and the market as a whole. We continuously work actively and highly focused to have the industry’s most powerful network in order to be up to date with the changing market and our clients’ needs. We look forward to working with you.

Purchases International division

Poul Erik Bech Chairman

Selling of development projects

Developer advisory

Selling

Valuations (RICS)

EDC Property Invest – a complete solution for commercial property

Property & facilities management

Letting services

Sale & Lease Back Advisory

EDC Research - February 2017 - page 13


EDC MARKET UPDATE F E B R U A R Y

2 0 1 7

Why invest in Denmark

Why invest in Danish real estate? • Low transaction costs • High degree of market transparency and stability

The Danish mortgage system

• Low financing rates through Danish mortgage

credit institutions • Solid key economic indicators • AAA/A-1+ credit rating and stable outlook* *S&P as of September 2016

Low financing rates • Low origination costs • Low APR compared to the majority of European markets • Highly transparent, stable and liquid mortgage bond

market

Loan

Investment

Repayment. interest and margin

Bonds Repayment and interest

• Flexible loans on conditions close to funding

conditions of capital market players

Borrower

Mortgage institution

Investor

EDC Research - February 2017 - page 14


EDC MARKET UPDATE F E B R U A R Y

2 0 1 7

• Low financing rate: Bond yield plus a small markup

(margin) for the mortgage bank • Debt/value ratio: Financing through the mortgage

Low transaction costs

institutions, normally up to 60% of valuation

As buyer:

• Loan maturity: Min. 1 year (yearly refinancing), max. 20 years

Deed registration: 0.6% of purchase price + € 190

• Payment structure: Floating or fixed rates, with or

without quarterly principal repayments

Mortgage: 1.5% of the mortgage’s principal +€ 190

• Each new loan is in principle funded by the issuance of

new mortgage bonds of equal size and identical cash flow and maturity characteristics, called the Balance Principle. Proceeds from the sale of the bonds are passed on to the borrower and similarly, interest and principal payments are passed directly to investors holding mortgage bonds

Costs for own advisor, lawyer, agent etc. are typically very low As seller: Agent, lawyer etc. varies, but typically between 1 - 4% of purchase price depending on deal size

• The Danish mortgage institutions have existed since

1850 and are considered very strong and very low risk financial instruments

Denmark is known to have some of the lowest roundtrip property transactions costs

• In terms of volume outstanding, Denmark has the

second largest share of the mortgage bond market in Europe • There has never been an incidence of default on a

Danish mortgage bond

High degree of transparency Denmark is among the most transparent markets in Europe and worldwide. The transparent Danish market provides the investor with a secure and low risk environment for foreign direct investment. Investments in Denmark are conducted in a market which benefits from a highly transparent and stable legal and regulatory framework coupled with a simple transaction process. Lease structure

Solid key economic indicators

2016

2017

2018

GDP growth (%), yoy Denmark

1.0

EU

1.8

1.7

1.8

1.7

1.8

Unemployment rate (%) Denmark

6.1

5.9

5.6

EU

8.6

8.3

7.9

Current account balance (% of GDP) Denmark

6.5

6.4

6.3

EU

2.1

2.1

2.2

• Rent review every fourth year. Terms are flexible

Denmark

0.0

1.2

1.6

• It is possible to agree on a threshold for the rent. Eg.

EU

0.3

1.6

1.7

• Rent adjustment, normally adjusted yearly with the

rate of inflation or a fixed minimum rate

the rent cannot drop further than the rent in force at the start of the tenancy

Inflation (%)

Source: The Economic forecast (Autumn 2016) from the European Commission.

• The landlord and the tenant can freely agree on the rent

amount as long as the rent is not unreasonable or contrary to sound business practices • Lease length: There are no statutory restrictions on the

duration of a commercial lease agreement. It is normal to have interminable leases in place

EDC Research - February 2017 - page 15


• The leading real estate agency in Denmark in the areas of selling, leasing, valuation and advisory • Founded in 1978, operating nationwide across 16 commercial real estate branches, more than 50 residential real estate branches, and finally 3 residential real estate branches in France and Sweden. • Owner of the property management company LEA Ejendomspartner • More than 450 employees Our greatest strength is our nationwide presence and local knowledge with 70 commercial specialists servicing our clients. We are chartered surveyors, valuers and certified members of RICS. We especially deal with the following types of properties: • Investment properties, properties for rent and owner-user properties • Offices, high street retail, industrial & logistics and mixed-use properties • Residential rental properties • Land and development projects • Hotels, restaurants and other properties in the leisure sector We offer our clients a wide range of services: • Execution of investment transactions of single assets. portfolios and on a company level

• Due diligence

• Letting services

• Property and facilities management

• Valuations (RICS)

• Project development consultancy

• Capital structure advisory

• Sale and Lease Back

• Tenant and landlord representation • EDC Location Search • EDC PropertySWAP® • Research services • Bespoke consultancy and market study services

Office locations: Copenhagen +45 33 30 10 00 • 114@edc.dk

Herlev +45 44 57 03 37 • 278@edc.dk

Hillerod +45 48 26 99 10 • 342@edc.dk

Roskilde +45 46 33 33 33 • 403@edc.dk

Koge +45 55 35 55 53 • 469@edc.dk

Naestved +45 55 78 66 03 • 473@edc.dk

Odense +45 58 58 82 00 • 512@edc.dk

Kolding +45 76 33 80 10 • 603@edc.dk

Aabenraa +45 73 33 13 00 • 620@edc.dk

Sonderborg +45 58 58 80 20 • 641@edc.dk

Esbjerg +45 76 10 48 00 • 670@edc.dk

Vejle +45 75 83 13 11 • 710@edc.dk

Slagelse +45 58 52 82 00 • 474@edc.dk

Aarhus +45 87 30 99 30 • 802@edc.dk

Viborg +45 58 58 77 10 • 751@edc.dk

Aalborg +45 96 31 49 00 • 912@edc.dk

CHARTERED SURVEYORS & INTERNATIONAL PROPERTY CONSULTANTS

Read more: edc.dk/erhverv

English Market Update February 2017