Mark Baillie. Real Estate Group. Head of Real Estate (Europe and North America) European focus operational briefing and general update

Transcription

1 Mark Baillie Head of Real Estate (Europe and North America) Real Estate Group European focus operational briefing and general update Presentation to investors and analysts 14 September 2007

2 56 Real Estate Group European snapshot In Europe, Macquarie Real Estate Group consists of two key operating divisions and a major joint venture: Real Estate Capital (REC) Business started July 2006 with 4 staff London based with 15 staff plus 2 consultants (UK, Italy) Two pronged business strategy: Continue investment in Europe for existing products such as Macquarie Office Trust (MOF), Macquarie CountryWide Trust (MCW) and Macquarie Leisure Trust Group (MLE) - in the near future Take advantage of the deregulation of real estate capital markets to create new products that supply long term, secure, income streams and have potential to form seed assets for REITs Real Estate Structured Finance (RESF) Business started January 2005 with 2 staff A successful, focused strategy 14 staff across 2 offices (London and Manchester) 18 transactions approved since inception Approximately 150 million commitments Profitable from second year of operation Joint Venture: Macquarie Global Property Advisors (MGPA) Formed a JV with Macquarie Global Property Advisors July 2004 Bermuda headquartered with European offices in London, Luxembourg, Paris and Frankfurt and additional associates in Munich with 58 staff MGPA currently has our mandate to undertake real estate private equity funds management in Europe REC works with MGPA, thereby leveraging a large global network

3 Real Estate Group European locations and staff* 7 Macquarie Real Estate & associates European locations 89 Macquarie Real Estate & associates staff 100 UK London Manchester Luxembourg Luxembourg Germany Frankfurt Munich France Paris Italy Rome '04 '05 '06 '07 Aug-07 MGPA Real Estate Structured Finance Real Estate Capital * At August MGPA joint venture staff are not included in MBL headcount 57

4 Poland ( 747m assets) Germany ( 430m assets) Light Industrial Portfolio Industrial/Office, Stuttgart & Kiel (MGPA) Munich Tower Office, Munich (MGPA) 2 shopping centres (MCW) Atrium Charlottenburg, Berlin-Charlottenburg (MOF) Darmstadter Landstrasse, Frankfurt (MOF) ¹ France ( 322.5m assets) BalthazarCapitale (Offices) Captial Sud (Office) Paris (MGPA) Logiffine Logistics in Valance, Lille & Mer (MGPA) Real Estate Group 1.8b current European investments (including associates) Rondo 1 (Office) & Wilanów One (Residential development), Warsaw (MGPA) Angel Wings, (Residential development) Wrocław (MGPA) 5 shopping centres (MCW) Italy ( 152m assets) Macchi Building, Milan (MOF) ² Pan European ( 127m assets) Sony Portfolio Office/Warehouse (MGPA) ¹ Frankfurt exchanged Jul 07, expected to settle Jan 08, ² Milan exchanged Mar 07, expected to settle end Sep 07 58

5 Real Estate Capital Real estate market snapshot European real estate market still split by geography and culture: Second largest market by size but 27 different countries In short term, requires country by country approach and sector by sector approach Major markets only introduced REIT structures within last 12 months REITs not yet acting as REITs Immature dedicated REIT investor base both institutional and retail Valuation methodologies still evolving Growth of European REIT market not developing as quickly as other regions (due to low yields and higher interest rates) Currently a hiatus in transactions as CMBS markets recalibrate As a consequence, Macquarie is seeing more deal flow as certain types of investors exit the market REIT legislation proposed REIT legislation in place 59

6 Real Estate Capital Real estate market snapshot Total Investment Grade ($b) 60% UK public (listed) real estate performance (% ch p.a) UK $963 AU/NZ $329 50% 40% 30% 20% EU $4,659 US/CN $5,691 10% 0% % of Institutional Holdings Listed US/CN 17% EU 8% -10% Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Source: Macquarie Real Estate Research, EPRA Indices via Bloomberg, UBS Public to private opportunities exist provided you can understand the true underlying value, which may be changing in the current financial environment Europe is the second largest real estate market globally but has the lowest level of real estate securitisation AU/NZ 56% UK 17% Combination of transition to securitised real estate and current market volatility will lead to: Source: UBS Research The Case for Global Real Estate Public to private opportunities in short term Re-listing opportunities in medium to long term 60

7 61 Real Estate Capital Expertise and experience platform for growth Our global REIT funds management expertise and experience provide a competitive advantage in deregulating European real estate capital markets We are leveraging this by: Continuing to expand our Australian LPT s (MOF, MCW, MLE) investments into Europe Building on the ground resourcing to support this growth with country and sector expertise Identifying and funding development of real estate operating platforms in markets of interest with view to create value from creation or on sale of a REIT Taking advantage of current market volatility to acquire assets, platforms and human capital on a value basis Focus on the real estate component of alternate asset classes such as self-storage: Long term management agreement with Storage King (largest self storage operator in Australia, and already 5 th largest in the UK) Substantial MBL equity committed to grow the platform Continue to work with MGPA to identify large scale co-investment opportunities across Europe Storage King self-storage facility, Dudley

8 62 Real Estate Structured Finance UK residential market snapshot Overall strong fundamental residential demand - recent Government statistics show that there remains a material undersupply of dwellings across the UK Reasonably stable economic outlook, with a scarcity of good product in many prime areas UK overall price growth circa 10%, London 15% and London prime 28% over the past 12 months General UK residential market expected to slow materially in line with the higher interest rates (five consecutive interest rate rises in the last year - base rate now 5.75% pa, which is the highest in 6 years) Recent stress in financial markets may have an impact on the high-end residential markets Scarcity of high-end stock, volume of established local wealth, plus further continued international wealth (Middle East, Russia etc) entering the UK, provides a broad base

9 63 Real Estate Structured Finance Deal snapshots Atrium Apartments, Mainz, Germany: 604 apartment, university housing complex acquired for 12m with target sale price of 17m Clapham Road, Stockwell, London: a redundant commercial office building, planning approval achieved for 240 residential apartments with end value 120m King Edward Hospital Midhurst, West Sussex redundant hospital building, planning approval received for 260 residential dwellings with end value of 130m 5-6 Queens Gate Place, South Kensington, London: refurbishment of 6 residential apartments with end value of 28m

10 64 Real Estate Structured Finance Actively pursuing opportunities Continue to increase key products eg include further planning approval funding, slice/syndication funding, take out funding, loan securitisation, selective acquisition of complimentary businesses Geographic expansion, second office opened in Manchester on 20 August 2007 New European office to be assessed in line with establishment of UK licenced banking entity in 2008 Leverage existing relationships to expand into continental Europe Participate in European CMBS market as recalibration and restructuring occurs Focus on good prime, urban and provincial based projects where other lenders may be pulling back Capitalise on relationships with existing customers to seek out value opportunities

11 65 Real Estate Group Asset snapshots Atrium Charlottenburg, Berlin-Charlottenburg: Macquarie Office Trust s first acquisition in Germany Sourced by MGPA

12 66 Real Estate Group Asset snapshots Macchi Building, Milan - Artist Impression: Macquarie Office Trust s first acquisition in Italy Sourced by MGPA

13 67 Real Estate Group Asset snapshots Dabrowka shopping centre, Katowice: One of Macquarie CountryWide s 5 shopping centers in Poland Sourced by MGPA

14 68 Real Estate Group Asset snapshots Darmstadter Landstrasse, 108, Sachsenhausen Frankfurt: Macquarie Office Trust s latest acquisition in Germany

15 Mark Baillie Head of Real Estate (Europe and North America) Q&A European focus operational briefing and general update Presentation to investors and analysts 14 September 2007