PRIVATE EQUITY & HEDGE FUND OFFICE MARKET UPDATE LONDON

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1 PRIVATE EQUITY & HEDGE FUND OFFICE MARKET UPDATE LONDON March 2012 OVERVIEW We are seeing more start up hedge funds coming to the market for office space. It remains to be seen whether this is a seasonal spike post bonus season or a more sustained increase. The level of AUM for a start up is wide ranging from $100m up to $5bn and typically dictates whether the requirements are focused on new product from the landlord or plug and play options with shorter leases. There continue to be a few high value deals in the market including Altima Partner s, 6th floor space (8,869 sq ft) at 23 Savile Row, which is rumoured to be under offer to an unnamed hedge fund at 110 per sq ft. Private Equity requirements are being driven by a combination of expansion and lease events with Carlyle Group and Bridge Point Capital in the market for 40-50,000 and 25,000 sq ft respectively. Availability in Mayfair & St James s plateaued during the final quarter. Availability is tight and by year end available space stood at 789,000 sq ft, which equates to a vacancy rate of 3.4%. Take-up in the final quarter was disappointing, with just 87,000 sq ft leased. This brings the annual volume to just less than 500,000 sq ft, below the five year average (570,000 sq ft). Hedge Funds leased 75,000 sq ft during the year in a total of 11 transactions. The Mayfair & St James s submarket is driven by smaller requirements, with 70% of leasing activity for units less than 10,000 sq ft during the Hedge Funds are no exception, with an average transaction size of just over 6,700 sq ft during MARKET SNAPSHOT WEST END STATISTICAL Summary (Q data) Market Rolling 12 month take-up Take-up Y-o-Y % Change Total Vacancy Rate Supply Y-o-Y % Change Prime Rent (psf) Y-o-Y % Change Mayfair & St James s 493,377-23% 3.4% -25.1% % West End 3,364,203-10% 4.5% -25.6% 62.50* 11% City Core 2,122,719-54% 11.3% 27.5% % *Figure based on average rent over 9 West End monitoring points

2 Q HEDGE FUND AND FINANCIAL SERVICES LEASING ACTIVITY Tenant Address SF Submarket Carval Investors 25 Great Pulteney Street 5,288 Soho Doyen Capital 12 Charles II Street 5,007 Mayfair & St James s Egerton Capital 5 Stratton Street 6,071 Mayfair & St James s Findlay Park Partners 28 King Street 8,700 Mayfair & St James s Freepoint Commodities Buckingham Place Road 6,189 Victoria Generation Investment Management 20 Air Street 21,326 Soho Pimco Europe 11 Baker Street 63,409 North Of Oxford Street Santander Bank 2 Portman Street 19,188 Mayfair & St James s 2011 WEST END FINANCIAL SERVICES LEASING ACTIVITY BY SUBMARKET

3 NEW LEASE AVAILABILITIES Address Old Bond Street 103 Wigmore Street 52 Conduit Street Mayfair North of Oxford Street Mayfair W1 W1 W1 Available Floors 5 th 9 th 1 st Owner Ilife Property Duke Street Capital Starwood Capital Floor 3,636 sq ft 7,000 sq ft 2,045 sq ft Term New Lease Until Feb 2018 Until Feb 2016 Landlord New Lease Sublease Sublease Comments Grade A fitted offices. Grade A fitted office suite. Grade A office suite. Floor Plan

4 NEW LEASE AVAILABILITIES Address 23 Savile Row 6 Duke Street 33 Cavendish Square Mayfair St James s Mayfair W1 SW1 W1 Available Floors 6 th 2 nd Part 16 th Owner Altima Partners Lord North Street Centaurus Capital Floor 6 th (4,864-8,869 sq ft) 4,590 sq ft 4,161 sq ft Term Until June 2019 Thru June 2014 Until Feb 2016 Landlord Sublease Sublease Sublease Comments New build offering high High quality fit out in place High quality fit out in place quality Grade A floor plates. Under offer at 110 per sq ft Floor Plan

5 MARKET TRENDS AND CONDITIONS Rental Trends Mayfair & St James s Prime Rents Mayfair & St James s prime rents remained stable during the final quarter at per sq ft. Prime rents increased by 8% year on year and will continue to come under pressure in the main due to a lack of supply. In the second half of 2011, there were 6 Hedge Fund transactions in Mayfair & St James s, with an average achieved rent of approximately 85 per sq ft, up from 72 in the first half of the year. The highest rent paid was almost 107 per sq ft at 5 Stratton Street, where Egerton Capital leased just over 6,000 sq ft on a 10 year deal. Further rental growth is anticipated for prime Mayfair & St James s rents, although the pace will be marginal in 2012, before picking up into 2013 and On average growth of 5.5% per annum is anticipated over the next five years.

6 MARKET TRENDS AND CONDITIONS Financial Services Lettings In Terms Of Number of Transactions- Mayfair & St James s 2011 Private Equity 7% Hedge Funds 41% Financial Services 52% Despite the sovereign debt crisis and slow economic growth impacting on the performance of some of the biggest hedge funds in 2011, institutional investors remain committed to investing in hedge funds, with the size of the industry reportedly reaching pre-crisis 2006 levels. Hedge funds have responded to investor demands for better risk management, more transparency, greater liquidity and higher-quality operations and as a result the attractiveness of hedge funds as an investment option is increasing. Established private equity remains a focus for capital, as investors look to diversify into higher returns and to outperform the market. On average just under 200,000 sq ft per annum has been let to hedge funds and private equity firms over the last five years in Mayfair & St James s. The submarket dominates activity- with almost two-thirds of hedge fund and private equity lettings over this period for space in Mayfair & St James s. ABOUT THIS PUBLICATION This monthly report is dedicated to providing timely real estate information to the hedge fund community. Subscription is free with registration to