CapMan s real estate strategy Jukka Iivari, Chairman of CapMan Real Estate Oy, Industrial Advisor 1
Agenda CapMan s real estate strategy Case examples 2
CapMan Real Estate in figures (30 September 2007) Capital under management - incl. both equity and debt layers Cumulative portfolio at cost Additional commitments Number of properties in portfolio Cumulative number of exits made Consulting fees 1 Jan - 30 Sep 2007 1.1 billion 132.4 million 255.5 million 14 22 1.6 million Capital under management, million 1,200 1,000 800 600 400 200 Share of CapMan s overall portfolio at cost, 794.4 million 17% The funds have additional commitments of 255.5 million 0 2005 2006 09/2007 3
Profile of buyers in Finnish property market between 2003 Q3/2007 100 % Distribution of transactions of portfolios and individual buildings by transaction price 80 % 60 % 40 % 20 % 0 % 2003 2004 2005 2006 Q3/2007 Institutional investors Property companies Corporations International investors Construction companies Domestic funds Other Source: KTI (Major Transactions) 4
Positioning of real estate players in Finland Market value of properties, M <500 500 1,500 > 1,500 Varma Ilmarinen Tapiola OP Group Veritas LGPI Etera Nordea Life Pohjola Fennia Suomi Life Sampo Life Sponda Citycon J.Tallberg VVO Auratum ICE Capital Sato CapMan Aberdeen Renor Technopolis YHasunnot Niam Aareal JER Redevco Teesland Sampson NERP Nordisk Renting NV Kiinteistösij. Boultbee Wereldhave Curzon Allianz Rodamco Delek Doughty& Genesta Hanson Kenmore SEB JP Morgan Keops Ejendoms Merill Invest Lynch W.P. Carey Whitehall Pramerica Svea DEGI iii Funds Institutional investors Listed property companies Domestic non-listed Property companies/funds International investors & property funds Investor type Source: CapMan analysis 5
Dedicated team with complementary backgrounds Deal flow team Jorma Lehtonen Fund Director Deputy Managing Director Management & leasing team Lea Jokinen Director, Real Estates Development & services team Markku Hietala Head of CapMan Real Estate Managing Director Commercial team Matti Karlsson Shopping Centre Director Project management team Jorma Konsti Director, Construction contracting Henrik Winberg Commercial Director Tuija Fräntilä Manager Juhani Erke Project Manager Marjo Kankaanranta Marketing Manager Mika Heiska Project Manager Mika Matikainen Manager Norma Holmberg Marketing Manager Petri Rignell Advisor Kirsi Keskitalo Shopping Centre Consultant Jorma Kajander Project Manager Kalle Myllymäki Manager Pertti Myllymäki Senior Consultant Tommi Seppänen Consultant Sanna Kinnunen Marketing Planner Noora Kuvaja Project Engineer Mervi Roiha-Muilu Analyst Hanna-Mari Raitanen Marketing Assistant Liisa Nikkanen Shopping Centre Consultant Heikki Liukkonen Project Manager Pirjo Vesinen Shopping Centre Consultant Jukka Mertanen Project Manager Jukka Iivari Chairman of the Board Industrial Advisor Finances Heidi Lepäntalo CFO Riitta Parviainen Financial Manager Additional support in e.g. fundraising and fund administration provided by CapMan Group s Investor Services unit Noora Viranko Project Engineer 6
Investment focus of CapMan Real Estate funds CapMan Real Estate I Ky Vintage year 2005 Fund size 500 million of which invested and committed capital 447 million by 30 September 2007 Main focus is on office properties with medium risk/return profile in Helsinki metropolitan area Value added fund Nine domestic investors CapMan RE II Ky Vintage year 2006 Fund size 600 million of which invested and committed capital 245 million by 30 September 2007 Main focus is on commercial and logistic property development in Finland Opportunistic fund 11 domestic investors 7
Current portfolio and exits CapMan Real Estate I Fund (lettable area 87,539 m 2 ) CapMan RE II Fund (lettable area 142,687 m 2, excl. Kivistö) Current portfolio Kalevankatu 20, Helsinki Malminkaari 9, Helsinki Kauppakeskus Entresse, Espoo Mastolan logistiikkakeskus, Vantaa Parolantie 104, Hämeenlinna Kasarmikatu 4, Hämeenlinna Tokmannin Viinikankatu 49, logistikkakeskus, Tampere Mäntsälä Lönnrotinkatu 20, Helsinki Ludviginkatu 3 5, Helsinki Elimäenkatu 9A and 9B, Helsinki Hankasuontie 3, Helsinki Kauppakeskus Skanssi, Turku Ylistönmäentie 33, Jyväskylä Exits 22 properties Lettable area 154,309 m 2 Vacancy rate 3.2 % Average lease contract length 4.5 years 262 lease contracts (figures 31.1.2007) 8
Exit from CapMan Real Estate I Ky Portfolio of CapMan Real Estate I sold in January 2007 to a consortium formed by Samson Properties Ltd, The Royal Bank of Scotland and Ajanta Oy Object of purchase included the whole portfolio of CapMan Real Estate I Ky at that time i.e. 22 properties Acquisition price of 304 million, sales price of 377.5 million Gross return on equity 2.7x Gross IRR on equity 120% Combined gross IRR on equity and bond loans approx. 30% The sale accrued carried interest totalling 21.0 million, of which the share belonging to the owners of the parent company was 13.4 million 9
Agenda CapMan s real estate strategy Case examples 10
Case Skanssi Transaction overview Bought from Hartela Group in July 2007 Value creation agenda Entering the development project in an early phase, where CapMan s construction project management, commercial consulting and letting capabilities can be fully utilised to achieve an efficient cost/quality balance for the shopping center combined with maximum rental returns Active shopping center management during the holding period Optimising the timing for the exit within 5 years from the completion by selling as a whole, or as a part of a larger retail portfolio SHOPPING CENTER SKANSSI IN BRIEF Location Size Site Levels Visitors Sales Parking Opening Located in Turku, approximately 4 kilometres east from Turku city center by the main high way (road E18) to Helsinki c. 35,000 sqm of lettable space Leasehold with an option to buy the land by the end of 2010 Total size 43,000-9,000 sqm Land price 7,787,500 + tax 2 + 1 (parking in the basement) c. M 4.5 p.a. c. M 120 p.a. c. 2000 parking spaces April 2009 11
Case Erottajankatu 15 17: challenging starting point CapMan Real Estate I Ky bought the property in 2006 and exited in 2007 Rent levels clearly below the market levels in the area Part of the space vacant 12
Case Erottajankatu 15 17: value creation done Vacant space was rented out and the rent levels were increased After six months gross operating income increased by 20% and net yield by 62% Fashion store space was converted into a restaurant and a long term lease agreement was signed with the entrepreneur Rent increase of 312% 1.2 million investment in renovation (managed by Realprojekti Oy) Tenant of a former movie theater was replaced resulting in 117% increase in the rents Lease agreements and invoicing of the maintenance were updated 13
Case Porkkalankatu 3: challenging starting point CapMan Real Estate I Ky bought the property in 2005 and exited in 2007 Building was designed as a single tenant building, Kemira Plc headquarters Large proportion of the area was in unprofitable use Inefficient and impractical layout The office space did not support the change of the organizational culture of Kemira Plc and it considered moving away 40% of the area was about to become vacant Building a service concept for the needs of several companies was needed 14
Case Porkkalankatu 3: value creation done In connection with the investment a new long term lease agreement was signed with Kemira Plc (9,866 sqm.) The office space was upgraded and modernized according to the needs of Kemira Kemira was able to operate in the offices during the renovation 5,526 sqm. of lettable area that became vacant were rented out in six months New lettable meeting rooms were built in the hallways and new office and warehouse spaces were built A new maintenance concept was developed to cover security, diner and catering services as well as reservation and invoicing systems 15
Thank you! CapMan IR contacts: Heikki Westerlund CEO, Senior Partner tel. +358 9 6155 8304 heikki.westerlund@capman.com Kaisa Arovaara CFO tel. +358 9 6155 8383 kaisa.arovaara@capman.com Jerome Bouix Senior Partner, Head of Investor Services tel. +358 9 6155 8358 jerome.bouix@capman.com Mari Maunula Analyst tel. +358 9 6155 8323 mari.maunula@capman.com 16