Office market report Luxembourg

Office market report Luxembourg On Point 4 th quarter 2015 The year of the mega deals Take-up in Q4 surged to 87,000 sqm., up vs. 58,000 sq.m. in Q3. Over the full year, take-up amounted to 231,000 sq.m, up 15% y- o-y and the second highest level ever recorded in Luxembourg. 2015 was clearly the year of mega deals, with 7 transactions above 10,000 sq.m. recorded. Vacancy rate stabilised at 4.15%, vs. 4.2% in Q3 and 50 bps lower than a year ago. As a few speculative completions are awaited in 2016, we expect higher vacancy in the near term. Prime rents increased in 2015 in most districts due to lack of vacancy. In the CBD, they reach 45 / sq. m. / month (+ vat), up vs. 42 / sq.m. / month (+vat) a year ago. Another increase is expected in 2016 in the best buildings under construction Boulevard Royal. The investment market jumped to a 8 year high of 979 Mln, 10% above 2014. Prime yields compressed further to 5%.

2 On Point Luxembourg Office market report Q4 2015 Foreword 2015 was the second best year ever in terms of the take-up in Luxembourg. It was also the year of mega deals with 7 transactions above 10,000 sq.m. being recorded. As a result, rents increased in many locations and prime rents may rise above 45 / sq.m. / month (+vat in 2016). This should not slow down take-up as we already see the beginning of 2016 booming. Angélique Sabron Head of Agency Luxembourg Key figures Letting Market 2012 2013 2014 2015 Take-up (cumulative) in 000 sq. m. 145 146 196 * 231 Stock in Mio. sq. m. 3.5 3.5 3.6 3.8 Completions (cumulative) in 000 sq. m. 73 71 104 116 Vacancy in 000 sq. m. 224 178 168 159 Vacancy Rate in % 6.5 5.1 4.7 4.2 Prime Rent in /sq. m. /month 40 42 42 45 Capital Market Investment volume total in Mio (**) 567 685 889 979 Prime Yield Band in % (typical 3/6/9) 5.75-6.50 5.75-6.50 5.50-6.50 5.00-6.25 2016e 2017e 2018e Future Supply, Speculative ( 000 sq. m. ) 66.5 22.9 22.9 Future Supply, Non Speculative ( 000 sq. m. ) 121.8 30.0 30.0 Total ( 000 sq. m. ) 188.3 52.9 52.9 (*) Restated (**) Incl. owner occupation, development, and land sales

3 On Point Luxembourg Office market report Q4 2015 Letting market The year of mega deals 2015 was the second best year ever in terms of take-up in Luxembourg: we recorded 231,000 sq.m. of transactions, 15% higher than in 2014 and 40% higher than the average of the last 10 years. In Q4, take-up amounted to 87,000 sqm., up vs. 58,000 sq.m. in Q3. This excellent performance is partly explained by a high number of transactions of more than 10,000 sq.m.: in 2015, we registered 7 of those, vs. 3 in 2014 and 1 in 2013. Among those, European institutions realised 4 transactions: the European Investment Bank signed for two major deals: the preletting of the IAK building (21,400 sq.m.) in Kirchberg, as well as the letting of 10,750 sq.m. in the Monnet 3 building, also in the Kirchberg. Over the last two years, the EIB therefore closed for c. 50,000 sq.m. of take-up. The contribution of European institutions to total take-up sharply rose to 27%, vs. 7% in 2014 and 11% on average over the last 5 years. Corporates also realised mid to large size transactions over the last 3 months, EY moved to its new HQ in the Kirchberg (15,262 sq.m.) and BGL BNP Paribas started to occupy its new building also in Kirchberg (5,200 sq.m. so far). In 2015, corporates represented 65% of total take-up, vs. 90% in 2014 and vs. 79% on average the last 5 years. Local administrations actively contributed to the year of mega deals: the CSSF joined its news building Route d Arlon (CBD) which totals 14,000 sq.m. Their relative proportion was 8%, vs. 3% a year ago and 11% on average the last 5 years. Take-up by sector 250,000 ago), and the CBD with 21% (vs. 16%). There were less transactions in the Periphery (9%, vs. 15%). Take-up by size category 250,000 200,000 150,000 100,000 50,000 0 2011 2012 2013 2014 2015 < 500 500-999 1,000-2,499 2,500-4,999 5,000-9,999 >=10,000 Risk of vacancy dry-up eased Early 2015, there was a real threat of a drying of the vacancy due to the European Commission s demand for 50,000 sq.m., representing c. 35% of total vacancy in Luxembourg, periphery included. Finally, after a decline to 3.8% in Q2, vacancy eased a bit to 4.2% in Q3 thanks to a few speculative completions and second hand properties being vacated. In Q4 vacancy stabilised at 4.15%, vs. 4.7% a year ago. From a European perspective, vacancy in Luxembourg remains one of the lowest, only London having lower vacancy rate. Representative recent speculative completions were the KPC (5,200 sq.m., part of EY s new building in Kirchberg), and the White Pearl (c. 8,400 sq.m. in the CBD, completed in Q3). Vacancy rate by district (%) 200,000 150,000 100,000 50,000-2011 2012 2013 2014 2015 16% 14% 12% 10% 8% 6% 4% 2% 0% Corporates Local Admin. EU Intl. Admin. Source : JLL Research CBD Kirchberg Station Dece Peri Esch Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 15 Over the full year 2015, the Kirchberg district represented 41%, vs. 22% a year ago, followed by the decentralised (primarily Cloche d Or, Bertrange and Strassen) with 23% (vs. 26% a year

'000 sq.m. 4 On Point Luxembourg Office market report Q4 2015 By district, the vacancy rate in Q4 2015 was 4.6% in the CBD (vs. 3.8% a year ago), 1.4% in Kirchberg (vs. 1%), 2.9% in the Station (vs. 1.2%), 5.9% in the Decentralised (vs. 8.7%) and 9.4% in the Periphery (vs. 11.6%). LARGEST SPECULATIVE PROJECTS 2016-2017 DISTRICT BUILDING AREA PLANNING KIRCHBERG LIGHTHOUSE ONE 14,500 Q4 2016 CBD CARREFOUR 13,000 Q4 2016 LEUDELANGE L2 11,000 Q4 2017 CLOCHE D OR DYAPASON 13,000 Q4 2017 Completions, Pipeline and Vacancy 250 200 150 100 50 0 8% 7% 6% 5% 4% 3% 2% 1% 0% LEUDELANGE TRIOLOGIE 5,000 Q3 2017 STATION FORT WALLIS 4,100 Q2 2016 CBD ONE on ONE 3,100 Q1 2016 CBD ROYAL20 2,600 Q2 2016 CBD ROYAL GRACE 1,600 Q2 2016 132,000 sq.m. will be delivered in 2016 A total of 132,000 sq.m. will be delivered in 2016, of which 62,000 sq.m. is speculative. A few projects will be delivered in central districts: the refurbished Carrefour (13,000 sq.m.), the Royal20 (2,600 sq.m. vacant), the One on One (3,100 sq.m.) and the Royal Grace (1,600 sq.m.) in the CBD, the Kons (2,500 sq.m. next to ING Luxembourg s new HQ) and the Fort Wallis (4,100 sq.m.) in the Station, and the Lighthouse One (14,500 sq.m., next to RTL Tower) in the Kirchberg. We therefore believe that vacancy will increase in 2016. Some of the properties vacated by their occupier moving to a new headquarters currently under construction (example: ING, EY) will be refurbished before being again available on the market, so the impact on vacancy will be delayed. Completions F C Spec. F C Non Spec. Vacancy Rate Source : JLL Research Hot market in Luxembourg: rental values go further up In view of the low vacancy and the slow flow of speculative completions, prime rents continued to increase in most districts in 2015. In the CBD, they increased from 42 / sq.m. / month (+vat) to 45 / sq.m. / month (+vat) as from Q2 2015. In the Kirchberg, prime rents are now at 34 / sq.m. / month (+vat) vs. 31 / sq.m. / month a year ago, while in the Station district prime rents increased by 3% to 35 / sq.m. / month. The drop of vacancy in La Cloche d Or pushed asking rents higher: the best products now trade at 29.5 / sq.m. / month (+vat) vs. 28 previously. Finally prime rents in the Periphery, and more specifically the Airport, are unchanged at 25 / sq.m. / year. In Leudelange, new projects trade at 23-24 / sq.m. / year, a 24% increase year-onyear. Prime rents evolution ( / sq.m. / month) 50 45 45 40 35 30 25 20 15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 35 34 29.5 25 22 CBD Station Kirchberg Decentralised Periphery Esch Source : JLL Research One on One by IKOGEST (CBD): 3,100 sq.m.

5 On Point Luxembourg Office market report Q4 2015 Investment market Nearly 1 bn investment volume The property investment market in Luxembourg jumped to an 8 year high volume of 979 Mln (land sales included), 10% above 2014 and the highest since 2007. 63% of the volume was offices, once again large volumes were traded such as the Vertigo in la Cloche d Or sold to Starwood and Rynda for 120 Mln and the HQ of Deutsche Bank in the Kirchberg acquired by Moor Park Capital for 72 Mln. The emblematic Royal20 project, developed by Leasinvest Real Estate which will be partly occupied by a Chinese bank, was also sold to a group of private investors for 62.5 Mln. The biggest deal of the year was the Royal Hamilius transaction with Abu Dhabi Investment Authority (ADIA). The land sales were particularly high at 56 Mln with as main players CLE and Immobel. The breakdown of investors origin was again very international, with the Middle East representing 28%, the USA 20% and France 6%. The traditional investors from Belgium contributed to 19%, and Germany which generally takes 15-20% or more of the volume represented only 5%. Investors from Luxembourg took 20% of the total volume. With the heavyweight of the Middle Eastern sovereign wealth fund, the share of institutions was 41% compared to 33% a year ago. Pooled funds followed with 19%, down from 47% in 2014, and private investors ranked third with 17%, vs. 15% a year ago. The high land sales volume and some development deals lifted the share of developers to 14%. There was no such deals in 2014. Yields compressed further Investment Volume by 2011 2015 ( Mio) 1000 800 600 400 200 0 2011 2012 2013 2014 2015 Investment Volume by origin of money (%) 100% 80% 60% 40% 20% 0% 2011 2012 2013 2014 2015 Middle East USA France UK Germany Belgium Luxembourg For prime office buildings in the CBD and with standard leases, yields went down by 50 bps vs. 2014 and now range between 5.0% and 6.0%. Prime High street shops yields are 4.0%, vs. 4.25% a year ago while prime shopping centers and retail warehousing yields are respectively 5.25% and 6.0%, though such transactions are very rare and effective yields of recent transactions are lower. Logistics and semi-industrial prime yields are at respectively 6.5% and 7.5%, though there is no recent representative transaction in these segments. Prime Yield evolution (6/9yr lease) 6.20% 6.00% 5.80% 5.60% 5.40% 5.20% 5.00% 4.80% 4.60% 4.40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

6 On Point Luxembourg Office market report Q4 2015 JLL Research Advisory Services JLL time series for quarterly and submarket data are available on request, as well as rental analysis (top quartile and weighted average rents). This is a fee-based service. Our Research & Advisory service also prepares micro-location studies for landlords and investors with a focus on rental analysis, existing and future competition analysis with GIS mapping, transaction analysis and SWOT. Contact: Pierre-Paul Verelst Head of Research BeLux + 32 2 550 25 04 pierre-paul.verelst@eu.jll.com Largest Letting Transactions in Luxembourg 2015 YEAR QTR SUBDISTRICT OPERATION BUILDING AGE AREA (sq.m) TENANT 2015 4 KIRCHBERG Letting IAK UC 21,400 EUROPEAN INVESTMENT BANK 2015 3 KIRCHBERG Owner occupier ARENDT HOUSE New 15,400 ARENDT & MEDERNACH 2015 4 KIRCHBERG Owner occupier KPC New 15,262 EY 2015 2 CLOCHE D OR Letting ARIANE Modern 13,624 EUROPEAN COMMISSION 2015 4 CBD Owner occupier ARLON-AUBEPINES New 14,000 CSSF 2015 2 CLOCHE D OR Letting LACCOLITH Modern 11,291 EUROPEAN COMMISSION 2015 3 KIRCHBERG Letting MONNET, 3 Modern 10,750 EUROPEAN INVESTMENT BANK 2015 4 KIRCHBERG Owner occupier KENNEDY, 50 New 5,200 BGL BNP PARIBAS 2015 1 CBD Letting AIRE New 4,906 BBH 2015 4 BERTRANGE Letting ABP VITRUM New 3,750 KNEIP COMMUNICATION Top 10 Office Investment Transactions in Luxembourg 2015 YEAR QTR DISTRICT BUILDING SURFACE PRICE ( Mio) SELLER BUYER Sovereign Wealth Fund Middle 2015 1 CBD Royal Hamilius 35,000 Conf. Codic East 2015 3 Cloche d Or Vertigo 24,000 Conf. Irish Life Starwood / Rynda 2015 2 Kirchberg Deutsche Bank 11,000 72 IVG Moor Park Capital 2015 2 CBD Royal20 4,700 62.5 Leasinvest Private 2015 4 Kirchberg LB LUX 10,300 70 LB Lux AG Real Estate 2015 3 CBD White Pearl 8,453 55 Sogimme French investor 2015 3 Periphery Airport Center 17,000 50 AIG Giorgetti 2015 3 Station M2 6,600 45 Mavin Project IVG 2015 2 CBD Royal 30 4,600 35 Landesbank Berlin Private 2015 4 Periphery E-Building Munsbach 10,500 22 Rynda Tristan Capital, based on publicly available data

7 On Point Luxembourg Office market report Q4 2015 Map of the Luxembourg Office Market

8 On Point Luxembourg Office market report Q4 2015 Definitions Take-up Take-Up New: Represents take-up of floorspace in new or substantially refurbished buildings of less than five years since completion. Take-Up Modern: Represents take-up of floorspace built or renovated between 5-15 years ago. Take-up Old: Represents take-up of floorspace built more than 15 years ago and not renovated. Rent Prime Office Rent represents the top open-market rent that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The rent quoted normally reflects prime units of over 500 sq. m. of lettable floorspace, which excludes rents that represent a premium level paid for a small quantity of space. Top Quartile Office Rent represents the average mean value of the top (25 %) quartile of all known face rents achieved on leasing transactions completed within a market during the survey period (normally calculated annually, or quarterly on a 12 monthly rolling basis). It excludes any unrepresentative deals. Weighted Average Rent represents the average mean value of all known face rents achieved on leasing transactions completed within a market during the survey period weighted with the floorspace (normally calculated annually, or quarterly on a 12 month rolling basis). It excludes any unrepresentative deals. Prime Yield Represents the best (i.e. lowest) rack-rented yield estimated to be achievable for a notional office property of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The property should be let at the prevailing market rent to a first class tenant with an occupational lease that is standard for the local market. The prime initial net yield is quoted, i.e., the initial net income at the date of purchase, expressed as a percentage of the total purchase price, which includes acquisition costs and transfer taxes. Vacancy Vacancy represents completed floorspace offered on the open market for leasing or sale, vacant for immediate occupation on the survey date (normally at the end of each quarter period), within a market. It includes all vacant accommodation irrespective of the quality of office space or the terms on which it is offered. Vacancy excludes obsolete or mothballed office property, i.e. floorspace held vacant and not being offered for letting, usually pending redevelopment or major refurbishment. Vacancy Rate The Vacancy Rate represents immediately vacant office floorspace in all completed buildings within a market as at the survey date (normally at the end of each quarter period), expressed as a percentage of the total stock. Stock Stock represents the total amount of completed office space in buildings mainly used for office purposes within a market that is capable of occupation regardless of the type of ownership or type of building quality, as at the survey (normally at the end of each quarter period). Completions Completions represent floor-space completed during the survey period (normally annually). Completions include new development and refurbished accommodation, speculative developments, pre-let floor space and space for owner-occupation..

JLL Office - Luxembourg Atrium Business Park 41 rue du Puits Romain L-8070 Bertrange LUXEMBOURG Tel : + 352-46.45.40 www.jll.lu Contact Romain Muller Angélique Sabron Jean-Philip Vroninks (*) Pierre-Paul Verelst Managing Director Luxembourg Head of Agency Luxembourg Head of Capital Markets BeLux Head of Research BeLux +352 46 45 40 22 +352 46 45 40 72 +32 (0) 2 550 26 64 +32 (0) 2 550 25 04 Romain.Muller@eu.jll.com Angelique.Sabron@eu.jll.com Jean-Philip.Vroninks@eu.jll.com Pierre-Paul.Verelst@eu.jll.com (*) Revron gcv COPYRIGHT JONES LANG LASALLE IP, INC. 2016. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them. Printing information: paper, inks, printing process, recycle directive.