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Research Erhverv Poul Erik Bech

MARKET UPDATE Q 4

2 0 1 8


EDC MARKET UPDATE Q 4

Contact us: Jørgen Jørgensen Director Tel: +45 33 30 10 25 Mail: jjo@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: Claus Fenger Dept. Manager, Partner, Chartered Surveyor, MDE Tel: +45 58 58 74 04 Mail: cfe@edc.dk Funen: Morten Nielsen Dept. Manager, Partner, Chartered Surveyor, MDE Tel: +45 58 58 78 56 Mail: monie@edc.dk Research: Morten Nielsen Business Consultant Tel: +45 58 58 80 70 Mail: mon@edc.dk ejendomstorvet.dk/info/statistik

Tendencies Increasing Stable

2 0 1 8

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 Q4 2018. 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. TENDENCIES: All tendencies are based upon the historical trend between this and previous quarter. 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 July 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 Q4 2018. For more information we refer to ejendomstorvet.dk/info/statistik.

Decreasing

EDC Research - Q4 2018 - page 2


EDC MARKET UPDATE Q 4

2 0 1 8

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 - Q4 2018 - page 3


EDC MARKET UPDATE O FFI C E

Q 4

2018

Office Yield in %, yearly market rent in â‚Ź / sq m and the last quarters historical tendency 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

4.00

4.50

5.00

325

265

205

Secondary

5.00

5.25

5.50

245

210

165

Tertiary

6.00

7.50

8.50

165

115

85

North Zealand Prime

7.50

7.75

8.25

135

105

90

Secondary

7.75

8.00

8.75

125

90

75

Tertiary

8.00

8.50

9.25

105

75

65

Prime

6.75

7.50

8.00

175

110

70

Secondary

7.50

8.50

9.50

125

85

50

Tertiary

9.00

9.50

10.50

85

50

40 55

East Zealand

West and South Zealand Prime

7.50

8.00

8.50

125

90

Secondary

8.50

9.50

10.50

95

65

45

Tertiary

10.50

12.00

14.00

65

50

30

Aarhus Prime

4.50

5.00

5.50

215

185

145

Secondary

5.00

5.75

7.00

185

135

110

Tertiary

6.50

7.00

7.75

150

110

85 105

Aalborg Prime

5.50

6.25

7.25

150

130

Secondary

6.25

7.25

8.00

125

110

85

Tertiary

7.25

8.00

8.50

105

85

70

Triangle area Prime

6.25

6.50

6.75

165

115

75

Secondary

7.00

7.50

7.75

125

95

70

Tertiary

7.75

8.75

9.75

60

55

50

Prime

5.75

7.00

8.00

155

110

95

Secondary

7.00

8.00

9.00

135

95

90

Tertiary

8.00

9.00

10.00

90

85

70

Odense

Source: EDC Erhverv Poul Erik Bech. Data as of Q4 2018. Tendencies: All tendencies represent the historical trend between this and previous quarter.

Vacant office space in sq m and in % of building stock

Central Copenhagen North Zealand

Vacancy sq m

As % of building stock

Change % QoQ

353,300

6.0

0.3

Change % YoY 0.3

77,900

4.8

-0.2

-2.1

East Zealand

28,500

3.9

0.1

0.2

West- and south Zealand

80,600

5.1

0.2

1.4

East Jutland

258,600

8.4

0.3

0.7

Region North Jutland

106,100

5.4

0.1

-0.2

South Jutland

188,200

8.0

-0.3

-1.0

Funen (including Odense)

123,500

8.3

1.2

-2.0

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. Changes quarter on quarter and year on year.

EDC Research - Q4 2018 - page 4


EDC MARKET UPDATE O FFI C E

Q 4

2018

Vacant office space in sq m and in % of building stock 10% 9% 258,600 sq m 188,200 sq m

8%

123,500 sq m

7% 6%

353,300 sq m 106,100 sq m 80,600 sq m

5%

77,900 sq m 28,500 sq m

4% 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 Q4 2018.

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

5,996,400

353,300

21,000

6.0%

0.3%

Copenhagen area

3,784,900

381,000

3,300

10.1%

0.1%

North Zealand

1,606,700

77,900

-1,400

4.8%

-0.2%

114,400

2,400

-200

2.1%

-0.2%

11,502,400

814,600

22,600

7.1%

0.1%

726,400

28,500

1,100

3.9%

0.1%

Bornholm Capital Region of Denmark East Zealand West- and south Zealand

1,568,100

80,600

3,700

5.1%

0.2%

Region Zealand

2,294,500

109,000

4,600

4.8%

0.2%

Funen (including Odense)

1,492,800

123,500

18,000

8.3%

1.2%

South Jutland

2,360,100

188,200

-6,400

8.0%

-0.3%

Southern Denmark Region

3,852,900

311,600

11,400

8.1%

0.3%

East Jutland

3,066,800

258,600

13,000

8.4%

0.3% -1.1%

West Jutland

1,408,500

57,100

-15,300

4.1%

Central Jutland Region

4,475,300

315,700

-2,300

7.1%

0.0%

North Jutland

1,953,800

106,100

3,400

5.4%

0.1%

Region North Jutland

1,953,800

106,100

3,400

5.4%

0.1%

24,079,000

1,657,000

39,800

6.9%

0.1%

Denmark. total

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - Q4 2018 - page 5


EDC MARKET UPDATE O F F I C E

Q 4

2018

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

Aabo

17

E20

19

Ormslev

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

4.00

4.50

5.00

Prime

4.50

5.00

5.50

Secondary

5.00

5.25

5.50

Secondary

5.00

5.75

7.00

Tertiary

6.00

7.50

8.50

Tertiary

6.50

7.00

7.75

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

325

265

205

Prime

215

185

145

Secondary

245

210

165

Secondary

185

135

110

Tertiary

165

115

85

Tertiary

150

110

85

Tendencies: All tendencies represent the historical trend between this and previous quarter.

EDC Research - Q4 2018 - page 6


EDC MARKET UPDATE R E TA I L

Q 4

2018

Retail Yield in %, yearly market rent in â‚Ź / sq m and the last quarters historical tendency 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

3.75

4.50

5.00

2,685

1,880

1,610

Secondary

5.50

5.75

6.50

500

340

270

Tertiary

7.00

7.50

7.75

165

145

125

Prime

7.50

7.75

8.25

380

150

110

Secondary

7.75

8.00

8.50

235

125

105

Tertiary

8.00

8.50

9.00

170

110

90

North Zealand

East Zealand Prime

6.00

7.00

8.00

380

305

205

Secondary

7.50

8.00

10.00

270

205

135

Tertiary

9.00

9.50

11.50

115

85

55

Prime

6.75

7.50

9.00

245

205

135

Secondary

7.50

9.00

10.00

175

125

65

Tertiary

8.75

10.00

11.00

95

55

45 470

West and South Zealand

Aarhus Prime

4.50

4.75

5.00

1,075

740

Secondary

5.25

5.50

6.00

605

470

340

Tertiary

6.00

6.50

7.00

270

215

165

Prime

4.50

5.50

6.00

605

440

270

Secondary

6.25

6.50

7.00

175

145

95

Tertiary

7.25

7.75

8.25

85

70

60

Prime

6.00

6.25

6.50

405

325

165

Secondary

6.50

6.75

7.00

215

125

95

Tertiary

7.25

7.75

8.25

95

70

70

Aalborg

Triangle area

Odense Prime

5.00

6.00

6.50

675

510

340

Secondary

5.75

7.00

8.00

340

245

175

Tertiary

8.00

9.00

10.00

110

85

55

Source: EDC Erhverv Poul Erik Bech. Data as of Q4 2018. Tendencies: All tendencies represent the historical trend between this and previous quarter.

Vacant retail space in sq m and in % of building stock. Vacancy sq m

As % of building stock

Change % QoQ

Central Copenhagen

50,100

4.0

-0.6

Change % YoY 0.5

North Zealand

54,500

5.0

-1.0

0.5 -0.5

East Zealand

28,700

6.3

-0.4

West- and south Zealand

85,000

6.5

0.4

1.6

113,600

5.6

0.1

0.2

East Jutland Region North Jutland

111,900

8.2

0.9

1.7

South Jutland

156,900

9.2

0.4

0.7

80,500

6.3

0.5

0.7

Funen (including Odense)

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. Changes quarter on quarter and year on year.

EDC Research - Q4 2018 - page 7


EDC MARKET UPDATE R E TA I L

Q 4

2018

Vacant retail space in sq m and in % of building stock 10% 156,900 sq m

9% 111,900 sq m

8% 7% 28,700 sq m

85,000 sq m

6%

113,600 sq m 54,500 sq m

5% 4%

80,500 sq m

40,100 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 Q4 2018.

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

1,245,500

50,100

-5,500

4.0%

902,600

35,400

2,100

3.9%

-0.6% 0.2%

1,096,300

54,500

-10,800

5.0%

-1.0%

92,500

3,800

0

4.1%

0.0%

3,336,900

143,800

-14,200

4.3%

-0.5%

458,200

28,700

-1,600

6.3%

-0.4%

West- and south Zealand

1,314,100

85,000

5,300

6.5%

0.4%

Region Zealand

1,772,300

113,700

3,700

6.4%

0.2%

Funen (including Odense)

1,276,600

80,500

7,100

6.3%

0.5%

South Jutland

1,714,300

156,900

7,000

9.2%

0.4%

Southern Denmark Region

2,991,000

237,400

14,100

7.9%

0.4%

East Jutland

2,018,000

113,600

3,200

5.6%

0.1%

West Jutland

1,038,100

65,400

-5,700

6.3%

-0.6%

Central Jutland Region

3,056,100

179,000

-2,500

5.9%

-0.1%

North Jutland

1,366,400

111,900

11,900

8.2%

0.9%

Region North Jutland

1,366,400

111,900

11,900

8.2%

0.9%

12,522,700

785,900

13,000

6.3%

0.1%

Denmark. total

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - Q4 2018 - page 8


EDC MARKET UPDATE B O X

R E TA I L

Q4

2018

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 the last quarters historical tendency Above average North Zealand

Average

Below Average

Above average

Average

Below Average

Yearly market rent in € / sq m

Yield in %

Prime

7.50

7.75

8.25

145

125

70

Secondary

7.75

8.00

8.50

110

105

50

Prime

6.75

7.25

7.75

150

130

110

Secondary

7.50

7.75

9.00

105

85

65

Prime

7.00

7.75

8.50

110

100

65

Secondary

8.00

9.00

10.00

95

65

45

Prime

6.50

7.00

7.50

147

133

120

Secondary

7.00

8.00

9.00

107

93

80

0

0

0

East Zealand

West and South Zealand

Capital Region of Denmark

0

Region Zealand Prime

6.75

8.00

9.00

147

107

93

Secondary

8.00

9.00

10.00

93

80

60

Prime

7.00

7.25

7.50

147

133

120

Secondary

7.75

8.00

8.25

107

93

80

Prime

6.50

7.00

8.00

160

120

107

Secondary

7.50

8.00

9.00

120

107

80

Prime

7.25

7.50

8.00

147

120

107

Secondary

7.50

7.75

8.50

93

80

67

Prime

7.50

8.00

8.50

147

120

107

Secondary

8.25

9.00

9.50

120

107

87

Central Jutland Region

Region North Jutland

South Jutland

Funen

Source: EDC Erhverv Poul Erik Bech. Data as of Q4 2018. Tendencies: All tendencies represent the historical trend between this and previous quarter.

EDC Research - Q4 2018 - page 9


EDC MARKET UPDATE I N D U S T R I A L & LOGI S TI C S Q 4 2 0 18

Industrial & Logistics Yield in %, yearly market rent in â‚Ź / sq m and the last quarters historical tendency 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

6.75

7.50

8.00

90

65

55

Secondary

7.25

8.25

8.75

70

60

45

Tertiary

8.00

9.25

9.75

55

45

40

North Zealand Prime

6.50

8.00

8.75

80

55

45

Secondary

7.00

8.50

9.25

65

55

45

Tertiary

8.50

9.00

9.75

55

50

35

Prime

7.00

8.00

8.50

85

65

45

Secondary

8.00

8.00

9.00

65

45

35

Tertiary

9.00

9.50

10.50

50

35

25 45

East Zealand

West and South Zealand Prime

7.50

8.50

9.50

65

55

Secondary

8.50

9.50

10.50

50

35

30

Tertiary

9.50

10.50

12.50

30

25

20

Aarhus Prime

6.80

7.50

8.00

60

50

45

Secondary

7.00

7.75

8.50

55

45

40

Aalborg Prime

7.00

8.00

9.00

55

45

35

Secondary

8.75

9.25

10.25

45

35

25

Triangle area Prime

7.00

7.50

8.00

55

45

40

Secondary

8.25

8.75

10.00

40

35

30

Odense Prime

6.50

8.50

9.00

55

45

35

Secondary

8.25

9.50

10.50

40

35

20

Source: EDC Erhverv Poul Erik Bech. Data as of Q4 2018. Tendencies: All tendencies represent the historical trend between this and previous quarter.

Vacant industrial & logistics space in sq m and in % of building stock

Capital Region of Denmark North Zealand

Vacancy sq m

As % of building stock

Change % QoQ

322,900

1.8

-0.6

Change % YoY -0.4

85,700

2.0

-1.5

-0.8

East Zealand

109,100

3.0

0.1

0.6

West- and south Zealand

178,000

1.8

-0.1

0.2

East Jutland

375,300

2.3

-0.2

-0.8

Region North Jutland

172,200

1.3

0.0

-0.5

South Jutland

431,600

2.2

0.2

-0.2

Funen (including Odense)

165,600

1.8

0.0

-0.1

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. Changes quarter on quarter and year on year.

EDC Research - Q4 2018 - page 10


EDC MARKET UPDATE I N D U S T R I A L & LOGI S TI C S Q 4 2 0 18

Vacant industrial & logistics space in sq m and in % of building stock

5%

4%

109,100 sq m

3%

375,300 sq m

431,600 sq m

85,700 sq m

2%

322,900 sq m

178,000 sq m

165,600 sq m

172,200 sq m

1%

0% Central Region of Denmark

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 Q4 2018.

Key vacancy figures from Ejendomstorvet-ED Statistikken (Ejendomstorvet-ED statistics) Industrial & Logistics

Building stock

Vacancy sq m

Change sq m QoQ

As % of building stock

Change in % QoQ

Central Copenhagen

5,183,100

6,400

-9,900

0.1%

-0.2%

Copenhagen area

7,903,500

228,400

-38,000

2.9%

-0.5%

North Zealand

4,220,000

85,700

-62,200

2.0%

-1.5%

830,000

2,400

0

0.3%

0.0%

18,136,700

322,900

-110,100

1.8%

-0.6%

Bornholm Capital Region of Denmark East Zealand

3,579,500

109,100

5,900

3.0%

0.1%

West- and south Zealand

9,932,700

178,000

-5,000

1.8%

-0.1%

Region Zealand Funen (including Odense)

13,512,200

287,100

800

2.1%

0.0%

9,234,500

165,600

-3,800

1.8%

0.0%

South Jutland

19,544,600

431,600

37,300

2.2%

0.2%

Southern Denmark Region

28,779,100

597,200

33,500

2.1%

0.1% -0.2%

East Jutland

16,189,200

375,300

-21,500

2.3%

West Jutland

12,998,400

243,300

6,700

1.9%

0.1%

Central Jutland Region

29,187,600

618,600

-14,800

2.1%

-0.1%

North Jutland

13,699,700

172,200

-1,400

1.3%

0.0%

Region North Jutland

13,699,700

172,200

-1,400

1.3%

0.0%

103,315,300

1,998,000

-91,900

1.9%

-0.1%

Denmark. total

Source: Ejendomstorvet-ED-Statistikken (Ejendomstorvet-ED-statistics), data as of Q4 2018. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.

EDC Research - Q4 2018 - page 11


EDC MARKET UPDATE R E S I D E N T I A L R EN TA L P R O P E RT I ES Q 4 2 0 1 8

Yield in %, yearly market rent in € / sq m and the last quarters historical tendency

Residential rental properties

Newer residential rental properties Facility class A Copenhagen

Facility class B

Yield in %

Prime Secondary Tertiary

Facility class A

Facility class B

Yearly market rent in € / sq m

3.75 4.25 4.75

4.25 4.75 5.00

265 235 205

230 205 170

4.00 4.25 4.75

5.00 5.50 5.75

215 190 165

175 155 150

4.75 5.00 5.50

5.25 6.25 7.50

215 185 110

170 125 85

5.25 6.00 7.00

6.50 7.50 8.50

170 130 105

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

170 150 125

145 115 110

4.75 5.50

5.25 6.00

165 135

145 130

4.50 5.25

5.25 6.00

175 150

130 115

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 Odense Prime 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

2.00 2.50 3.50

2.25 3.25 4.25

3.25 4.00 5.50

4.00 4.25 5.00

4.25 4.50 5.25

225 195 165

195 175 150

3.75 4.00 4.50

4.50 5.25 5.50

5.25 5.50 5.75

4.00 4.50 5.75

5.25 5.75 6.00

215 205 175

175 165 150

2.75 4.00 5.00

3.00 4.50 6.00

4.00 5.00 6.00

4.50 5.25 7.25

5.25 7.00 8.25

195 135 95

155 125 85

4.25 5.25 7.00

5.25 7.00 8.50

7.50 8.00 10.00

5.50 6.50 8.00

6.50 7.50 9.00

170 110 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

195 165 145

175 145 115

2.75 4.00 5.50

3.50 4.50 6.00

4.00 5.00 6.50

4.00 4.75 5.25

4.25 5.00 5.75

155 130 115

135 115 105

5.25 5.50 7.25

5.75 6.50 8.00

6.50 7.75 8.50

5.50 6.25 7.50

6.00 6.75 7.75

4.00 4.50

4.50 5.25

5.25 6.00

4.50 5.25

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 Q4 2018. Tendencies: All tendencies represent the historical trend between this and previous quarter.

EDC Research - Q4 2018 - page 12


EDC MARKET UPDATE Q 4

2 0 1 8

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 - Q4 2018 - page 13


EDC MARKET UPDATE Q 4

2 0 1 8

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 - Q4 2018 - page 14


EDC MARKET UPDATE Q 4

2 0 1 8

• 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

2017

2018

2019

GDP growth (%), yoy Denmark

2.2

EU

2.4

1.2

1.6

2.2

2.0

Unemployment rate (%) Denmark

5.7

5.2

4.9

EU

9.1

7.4

7.0

Current account balance (% of GDP) Denmark

7.8

6.1

6.2

EU

3.5

3.5

3.3

• Rent review every fourth year. Terms are flexible

Denmark

1.1

0.8

1.5

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

EU

1.5

1.8

1.9

• 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 (Spring 2018) 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 - Q4 2018 - page 15


Erhverv Poul Erik Bech

• The leading real estate agency in Denmark in the areas of selling, leasing, valuation and advisory • Founded in 1978, operating nationwide across 17 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 500 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

Slagelse +45 58 58 75 50 • 474@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

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

Profile for EDC Poul Erik Bech

Market Update UK Q4 2018  

Market Update UK Q4 2018