Press Release The Dr. ZitelmannPB Real Estate Stock Barometer Upbeat Sentiment among Analysts Berlin, March 5, 2012 The sentiment among analysts for real estate stock has noticeably rebounded. This is the upshot of the survey findings of the latest Dr. ZitelmannPB Real Estate Stock Barometer that involved the active participation of 13 renowned analysts. In the short-term outlook, the sentiment indicator reading went up to +0.5 points. As recently as mid-october of last year, the survey had returned a score of zero. The perspective for the medium term showed a rise from +0.2 up to +0.8 index points. Accordingly, analysts expected the prices of German real estate stock to gain between 5% and 15% in the coming twelve months. A year ago, the Barometer showed a score of +1.1 points. Fig. 1: Three-month perspective for the Dr. ZitelmannPB Real Estate Stock Barometer An index score of +2 would suggest that analysts expect to see price increases in excess of 15% during the next three months (short-term view) or twelve months (medium-term view). Inversely, a score of -2 would represent markdowns anticipated at a rate exceeding 15%. - 1 -
For the next three months, seven analysts projected an upside potential of 5% to 15%, one of them actually predicting gains above 15%. The other five analysts forecast stagnating prices. Concerning the next twelve months, ten analysts said that prices for real estate stock will rise. One respondent projected price gains of more than 15%. Three analysts said they did not expect to see any change. Fig. 2: Price trend of German real estate stock according to analyst estimates Positive Sentiment regarding Commercial Real Estate Stock Commercial real estate stock has rebounded from the downturn in sentiment. The Barometer score for the three-month perspective jumped from -0.1 up to +0.7 points. Six analysts expected quoted prices to rise at a rate between 5% and 15%. Two respondents actually foresaw price gains of more than 15%. Just four experts were bracing themselves for stagnant prices. Another analyst expected prices to go down slightly. The Barometer s one-year outlook rose from +0.2 to +0.7 points. Eight analysts expected prices to rise by as much as 5% to 15%. One expert actually suggested that - 2 -
prices will rise by more than 15%. Just three survey participants signalled concern about a stagnant development. Another analyst expected prices to go down slightly. Fig. 3: Price trend of German commercial real estate stock according to analyst estimates Buoyant Sentiment in regard to Residential Real Estate Stock, too As far as the three-month perspective goes, the Barometer for residential real estate stock rose from zero to +0.5 points. Seven analysts believe that quoted prices will rise at a rate of 5% to 15%. Six experts felt that the prices for residential real estate stock are likely to remain level. The twelve-month outlook shows an increased Barometer score of +0.8 points, up from +0.2 points. Nine of the analysts predicted that the stock of residential real estate companies will rise by 5% to 15%. One analyst actually projected price hikes by more than 15%. The remaining three experts anticipated a slight down-trend. - 3 -
Image 4: Price trend of German residential real estate stock according to analyst estimates Statements by 9 out of a Total of 13 Analysts Polled Helmut Kurz, analyst at Bankhaus Ellwanger & Geiger: Intense pressure to invest, on the one hand, and low valuations of German real estate stock in particular, on the other hand, are likely to generate moderate price gains despite the slow economic growth. Peter-Thilo Hasler, analyst at Sphene Capital: The financing environment remains problematic. As the Euro crisis is progressively easing up, both the investment environment and the real estate market will probably improve. We expect to see purchase prices perk up, even in the slower segments. Kai Malte Klose, analyst at Berenberg Bank: The focus is clearly on the business figures for 2011 that are to be published in the coming weeks. The preliminary results published by some of the companies were positive, so that principally speaking there are few if any negative surprises to be expected. Accordingly, it will be particularly interesting to see what sort of forecasts the companies will make. - 4 -
Stefan Scharff, Certified Real Estate Investment Analyst at SRC Research: Due to the banks intention to downscale their balance sheets, and to reinforce their equity positions, many real estate companies will place more weight on the build-up of the passive side and on the funding situation in their assessments. Companies with a high EC share and a low LTV ratio will be sure to be in a vantage position here. Residential and retail real estate stock might have a slightly easier time on the stock market in the months to come. With a view to the latest surveys, there is reason to believe that lease terms will get shorter and that the letting business will get more sophisticate in the office sector. Manuel Martin, analyst at Close Brothers Seydler: The progress to be expected for the efforts to cope with the sovereign debt crisis should be reflected, as far as real estate stock goes, in a positive improvement of the funding environment. Frank Neumann, analyst at Bankhaus Lampe: At the present level, most companies look enticing because of their high discounts on the NAV and a rather substantial FFO yield. Just when this is likely to be reflected in the quoted prices is hard to say, in our opinion, because of the market risks. The kind of stock we find most interesting are those that regularly pay interest irrespective of the performance of their quoted prices. Torsten Klingner, analyst at Warburg Research: In the coming months, the sector will benefit from decreasing interest costs. In addition, we are likely to see a moderate increase in transaction multipliers (and thus a yield compression) in the residential and commercial sectors (robust economic situation), given the low interest level. The dynamic rent hikes in the metropolises suggest potential for value adjustments of residential real estate. Matthias Schrade, analyst at GSC Research: My guess is that the stock market rally of recent weeks will continue for some time yet. Real estate stock will benefit from the situation as much as other stock. In the medium term, though, the deteriorating economic situation is likely to put the damper on the boom, at least for commercial real estate. - 5 -
Jochen Rothenbacher, analyst at Equinet Bank: The funds made available by the ECB are pushing down risk premiums. In the medium term, real estate stock, too, is likely to benefit from the fact. Survey Method: The Dr. ZitelmannPB Real Estate Stock Barometer is the sentiment indicator for the German real estate stock market. Each Quarter, Dr. ZitelmannPB. GmbH interviews leading analysts for German real estate stock as to their estimate of how the real estate stock market will develop over the next three and twelve months. At the same time, the survey polls the analysts opinion on the prospective performance of commercial and residential real estate stock. The analysts respond using a scale from +2 (rising fast) to -2 (falling fast). The Barometer maps the median of all estimates returned by the analysts. The current survey included analysts from the following institutes: Bankhaus Ellwanger & Geiger, Bankhaus Lampe, Berenberg Bank, Close Brothers Seydler, Equinet, GSC Research, HSBC Trinkaus, HSH Nordbank, Solventis Wertpapierhandelsbank, Sphene Capital, Warburg Research, and WestLB. Dr. ZitelmannPB. GmbH: Dr. Zitelmann PB GmbH is Germany s leading consulting company for the positioning and communications of real estate and fund companies. It advises national and international clients in the areas of strategic press and public relations work, capital market communication, and positioning. Other spheres of activity include the compilation of track records and statements of account, surveys and research documents, as well as the conceptualising of, and copywriting for, customer newspapers, newsletters, Internet presentations, and brochures. Dr. ZitelmannPB. GmbH supports the market entry of foreign companies in Germany, and brokers collaborations for real estate and fund companies. Contact for the Dr. ZitelmannPB Real Estate Stock Barometer: Dr. Alexander Knuppertz Rankestrasse 17 D-10789 Berlin T +49 (0)30 72 62 76 174 F +49 (0)30 72 62 76 163 knuppertz@zitelmann.com - 6 -