REAL CAPITAL ANALYTICS

REAL CAPITAL ANALYTICS Evaluating The Impact Of Capital Property Funds Association, Cairns, 4 th May 2015 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed and subject to future revision.

RECORD YEAR, RECORD QUARTER IN 2014 Global Themes Australia In A Global Context Summary & Questions 2 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 2

RANKING THE MARKETS 2014 Most Active Markets Globally* Rankings 2008 2009 2010 2011 2012 2013 2014 Market 2014 Sales Volume ($M) YOY Change *Includes property types: Office, Industrial, Retail, Apartment, Hotel, $10mil+ 7 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 7 2 6 3 1 1 1 1 NYC Metro 3 1 2 2 2 2 2 London Metro 1 2 1 3 3 3 3 Tokyo 5 9 8 5 4 4 4 LA Metro 12 13 10 7 5 5 5 SF Metro 4 3 4 4 6 7 6 Paris 9 8 7 6 8 6 7 DC Metro 13 28 16 10 9 11 8 Chicago 48 21 18 20 17 13 9 Sydney 15 35 22 16 12 12 10 Dallas 8 4 5 8 7 8 11 Hong Kong 27 34 21 15 18 17 12 Boston 16 32 29 21 22 14 13 Atlanta 22 26 19 26 20 22 14 So Fla 21 39 20 18 13 10 15 Houston 63 29 24 33 31 28 16 Melbourne 28 15 17 22 28 23 17 Rhine-Ruhr 43 33 26 25 26 24 18 Frankfurt/Rhine-Main 29 7 11 11 19 21 19 Shanghai 6 22 12 23 21 25 20 Stockholm 35 46 30 31 11 19 21 Seattle 37 47 48 28 25 29 22 Denver 24 18 23 19 14 9 23 Berlin-Brandenburg 34 40 33 32 23 30 24 Phoenix 7 17 25 37 36 31 25 Amsterdam/Randstad 20 31 13 14 10 16 26 Toronto 46 63 42 35 42 38 27 Philly Metro 14 5 15 12 15 20 28 Seoul 39 20 38 29 32 26 29 Munich 45 79 39 48 27 34 30 Austin $14,275 $13,565 $13,051 $12,990 $12,964 $12,676 $11,976 $10,714 $9,159 $8,971 $8,367 $7,724 $7,612 $7,507 $7,365 $7,181 $7,006 $6,226 $6,109 $6,094 $5,923 $5,886 $5,838 $5,652 $28,800 $26,666 $24,526 $42,889 $38,894 $57,012-19% -28% -46% -34% -25% -2% -5% -8% -9% 19% 15% 5% 51% 45% 9% 16% 5% 37% 22% 46% 50% 20% 14% 4% 16% 21% 14% 20% 49% 17%

CROSS-BORDER DRIVING EUROPEAN VOLUMES $600 $500 USD Bn EMEA Asia-Pacific Chinese Land Global Continental Domestic Cross-Border % of Total Americas % Total 60% 50% $400 40% $300 30% $200 20% $100 10% $0 '08 '09 '10 '11 '12 '13 '14 '15 Rolling 12 Month, USD Billions '09 '10 '11 '12 '13 '14 '15 '09 '10 '11 '12 '13 '14 0% 8 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 8

KEY CROSS-BORDER CAPITAL SOURCES Capital Source YOY % EMEA YOY % APAC YOY % AMERICAS United States Western Europe Asia Other Canada China United Kingdom Middle East EMEA Australia AsiaPac Other Americas Americas Japan CEE India Africa Capital Destination 0B 20B 40B 60B 80B -200% 0% 200% -200% 0% 200% -200% 0% 200% 9 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 9 YOY 12 Months to Q1 2015 compared to same period Q1 2014

CHINESE FLOWS RE-FOCUSING ON USA 18B Chinese Cross-Border Flows 16B 14B 12B 10B AsiaPac Americas EMEA 8B 6B 4B $4B 2B 0B 2007 2008 2009 2010 2011 2012 2013 2014 2015 10 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 10

WHILE SOVEREIGN FUNDS TARGET LONDON SWF European Targets SWF Global Targets London 71% London 38% Paris NYC Metro Bristol Tokyo Rome LA Metro Brussels Boston Moscow DC Metro Munich Paris Milan SF Metro Barcelona Bristol Madrid Seoul 0B 4B 8B Billion Transaction Volume 0B 4B 8B Billion Transaction Volume 11 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 11

$ Billions AND PRIVATE EQUITY FUNDS ARE NET SELLERS? Investment Activity of The 50 Largest Private Equity Funds Acquisition Disposition Net $100 $80 $60 $40 $20 $0 -$20 -$40 -$60 -$80 -$100 -$120 2009 2010 2011 2012 2013 2014 12 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 12

PRIVATE EQUITY FUNDS LOOKING FOR MISPRICING Peripherals Benelux India France Nordics Latin America Central Europe Africa Australia United Kingdom SE Asia Japan Germany United States 12 Months to Q1 2015 -$10.0B -$5.0B $0.0B $5.0B Net Investment 13 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 13

TOP 25 GLOBAL BUYERS, LAST 12 MONTHS* Blackstone Deutsche Annington GIC Hyundai / KIA GLP QIA Klepierre JP Morgan NBIM Lone Star TIAA-CREF CPPIB Starwood AXA Group LaSalle Clarion Partners Essex Property Colony Capital NorthStar Credit Agricole Hines Caisse de Depot WP Glimcher Brookfield DEXUS By Sector, b Office Retail Industrial Apartment Hotel Dev Sites By Geography, % Americas Asia-Pacific EMEA * Excluding Chinese Land Sales; to end Q1 2015 14 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 14 $0bn $5bn $10bn $15bn $20bn 0% 50% 100%

Initial Yield Initial Yield BIGGEST QUESTION - PRIMARY OR SECONDARY? 9.0% US Office 9.0% UK Office 8.0% 8.0% 7.0% US Average 7.0% UK Average 6.0% 6.0% 5.0% US 6 Major Metros 5.0% Central London 4.0% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 4.0% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 15 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 15

PREQUIN DATA HIGHLIGHTS SLOWER RAISING* $35 Pan-Asia Other Asia Japan India China $30 $25 $20 $15 $10 $5 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 17 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 17 Source: 2005 Prequin Real Estate Report * US Dollars, Billions Raised

CURRENTLY FAVOURED BY GLOBAL ALLOCATORS Asia-Pacific Realised Transaction Volumes 2007, $37B 2014, $22B 35% Australia 28% 24% Australia 57% Australia China Hong Kong India Singapore South Korea Other Asia 18 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 18 Australia China Hong Kong India Singapore South Korea Other Asia

AUSTRALIAN CAPITAL FLOWS $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 600% 400% 200% 0% -200% -400% -600% Cross-Border Institutional Listed/REITs Private User/Other Equity Fund '08 '09 '10 '11 '12 '13 '14 '15 * Rolling 12 Month $AUD Billions 19 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 19

CROSS-BORDER INVESTORS (INTO AUSTRALIA) 60% Cross-Border, % Total 9% 9% International Comparisons Average Secondary 50% 8% 40% 8% 7% 6% Prime 30% 7% 20% Cross-Border Commercial Yield 6% 5% 4% 10% 3% 0% '08 '09 '10 '11 '12 '13 '14 '15 5% 2% HKG TOK LON NYC PAR SYD 20 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 20

WHY AUSTRALIA? Compared to other Advanced Economies: Stronger GDP growth outlook 1 Stronger CPI outlook 1 Transparent 2 Market access Strong international tenant base Safe haven & Asia-Pacific allocation Notes: 1 IMF April 2015 report; 2 RCA data collection & JLL Transparency Index 21 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 21

BENCHMARK PRICING 6% 5% Prime Office Yields 07 Peak Today 300 250 200 Spread to Bonds (bps) 07 Peak Today 4% 150 3% 100 50 2% 0 1% -50-100 0% Manhatten London Sydney -150 Manhatten London Sydney 22 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 22

AUSTRALIAN TRANSACTION YIELDS BY INVESTOR 10% 9% Realised Yields Compared* Investments in Australia Australian European Asia-Pacific North American 0% Spread to Australian Yields* Home nation investment yields Canada Germany United Kingdom United States -1% 8% -2% 7% 6% -3% '10 '11 '12 '13 '14 '15 * Office Yields Only, Rolling 4Q Average 23 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. '10 '11 '12 '13 '14 '15

$18 $16 $14 $12 $10 AUSTRALIAN CAPITAL FLOWS - SUMMARY $8 $6 $4 $2 $0 200% 100% 0% -100% Australian Capital Flows* *$AUD Billions Portfolio Individual YoY Change '07 '08 '09 '10 '11 '12 '13 '14 15 24 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 24 Vol ($M) Q4'14 YOY Chg Last 12 Months Vol ($M) YOY Chg Office $2,321.1-3% $21,049.5 39% Industrial $573.5 5% $5,730.1 63% Retail $717.8-43% $6,675.0-17% All Commercial $3,612.5-14% $33,454.6 25% Apartment $20.0-94% $66.8-85% Hotel $504.4 212% $3,202.1 46% Dev Site $970.0-11% $6,469.2 73% Grand Total* $5,106.9-12% $43,192.6 31% * Totals may not sum due to rounding Market Vol ($M) Q4'14 YOY Chg Last 12 Months Vol ($M) YOY Chg Sydney $2,513.0 21% $19,297.2 45% Melbourne $975.8-49% $11,673.5 57% Brisbane $660.1-6% $5,280.4 4% Perth $264.7-1% $1,388.1-52% Adelaide $79.1-44% $1,260.8 96% Canberra $46.0-28% $628.6 13% Gold Coast $362.1 483% $843.5 252% Others $206.2-62% $2,820.6-4% Grand Total* $5,106.9-12% $43,192.6 31% * Totals may not sum due to rounding

CROSS-BORDER INVESTOR ACQUISITIONS $20 $18 $16 By Capital Source* Other Europe Malaysia Greater China Singapore North America $20 $18 $16 By Property Type* Apartment Dev Site Hotel Industrial Retail Office $14 $14 $12 $12 $10 $10 $8 $8 $6 $6 $4 $4 $2 $2 $0 '08 '09 '10 '11 '12 '13 '14 '15 $0 '08 '09 '10 '11 '12 '13 '14 '15 *$AUD Billions, Rolling 12 Month 25 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 25

TRANSACTION ACTIVITY BY CITY, SECTOR & SOURCE Q1 2015 Sydney - Office Sydney - Retail Sydney - Industrial Sydney - Apartment Sydney - Hotel Sydney - Dev Site Melbourne - Office Melbourne - Retail Melbourne - Industrial Melbourne - Apartment Melbourne - Hotel Melbourne - Dev Site Brisbane - Office Brisbane - Retail Brisbane - Industrial Brisbane - Apartment Brisbane - Hotel Brisbane - Dev Site Domestic Cross-Border $0B $4B $8B 26 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 26

IMPACT ON DOMESTIC YIELDS Yield Bands - Australia Yield Bands Sydney Office 10% 10% 9% 9% 8% 8% 7% 7% 6% 5% Office Prime Retail Prime Office Secondary Retail Secondary '08 '09 '10 '11 '12 '13 '14 '15 6% 5% Uber-Prime Prime Secondary '08 '09 '10 '11 '12 '13 '14 '15 27 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 27

Investment Volume $B, Rolling 12 Month OUTWARD TREND - AUSTRALIAN GLOBE TROTTING $45 $40 Americas AsiaPac EMEA % of Australian Investment 80% 70% $35 $30 $25 $20 $15 $10 60% 50% 40% 30% 20% % Of Overall Australian Investments $5 10% $0 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 0% 28 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 28

% Investment Volume CHANGING AUSTRALIAN GLOBAL INVESTORS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2007 versus 2015 52% 2007 17% 59% Q1 2015* Equity Fund Institutional Listed Other Top Overseas Investors Last 3 Years AustralianSuper Westfield Goodman QIC Macquarie Campus Living Crown Resorts QSuper AMP Lend Lease $0 $2 $3 29 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 29

WHEN THE MUSIC STOPS? Cross-Border Investment Volumes $USD $50B $45B $40B Australia Canada Germany Japan Malaysia $100B $90B $80B United States $35B South Korea UK $70B $30B China $60B $25B $50B $20B $40B $15B $30B $10B $20B $5B $10B $0B $0B '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 30 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 30

CURSE THE GLOBAL CAPITAL? Unlikely the global capital will leave suddenly; Global capital likely to increase an opportunity to take profit, but what about re-investment? Possible medium-term changing mix of investors as yield levels less attractive to Western investors; Developers continuing to see opportunity in Australia, and a learning ground for experience ; 31 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 31

THANK YOU SIMON MALLINSON Executive Managing Director EMEA & APAC smallinson@rcanalytics.com REAL CAPITAL ANALYTICS + 44 207 297 6860 www.rcanalytics.com 32 2015 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed. 32