ITALIAN INVESTMENT MARKET Setting the scene Italy Investment - - PowerPoint PPT Presentation

ITALIAN INVESTMENT MARKET “Setting the scene”

Italy Investment Briefing – London, 20 June 2012

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

GENERAL OVERVIEW

House View BRAVE NEW WORLD UNCERTAINTY AND CAUTION FINANCIAL STRESS EURO ZONE REMAINS EURO SURVIVES POLITICAL CHANGES SOCIAL UNREST

AN UNPLEASANT COCKTAIL TO DO BUSINESS

“ ”

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

GLOBAL ECONOMIC SITUATION

Source: Moody’s Current Status – April 2012

RECESSION RECOVERY EXPANSION AT RISK

MOVEMENT OF EQUITY

“ ”

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

GENERAL OVERVIEW

House View

On an European stage, Sweden, UK, Germany and France were again most in demand as perceived “safe havens” as investors look to minimize risk.

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€ 0 € 2,000 € 4,000 € 6,000 € 8,000 € 10,000 € 12,000 UK Germany Sweden France Netherlands Poland Spain Italy Q1 2012 Q1 2011 ** € / Million * € / Billion

ANNUAL VOLUMES QUARTERLY VOLUMES

€ 0 € 10 € 20 € 30 € 40 € 50 UK Germany France Sweden Netherlands Italy Spain Poland

Volumes 2011 - € Billion Volumes 2010 - € Billion

2011 2010 * **

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT VOLUME COMPARISON

Q1 2011 – Q1 2012

No Spring time for European Property. Nordics and Germany will remain in focus for 2012.

“ ”

• 61%

+39% +32%

• 7%
• 51%

+56% +2%

• 28%
• 42%
• 5%
• 83%
• 97%
• 42%

+192%

• 67%
• 88%

+73%

• 26%
• 50%
• 23%

+156%

• 74%
• 96%
• 37%

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

ITALIAN GENERAL INVESTMENT OVERVIEW

The Italian real estate investment market is in a state of transition. The biggest challenge for investors is securing debt financing for transactions. The Euro zone sovereign debt crisis, banking crisis and lack of political unity

• n a wider European stage has and will continue to affect the Italian

economy. We believe Italy will “weather the storm” due to its fundamentals. Domestic Institutional and Private investors will remain active, but risk adverse. Traditional International Cross border investors have retreated.

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT MARKET IN ITALY

2003 – Q1 2012

Annual Comparison (€ million) 2007 2008 2009 2010 2011 Q12011 Q1 2012 Office € 4,950 € 2,270 €1,700 €1,690 €1,900 € 464 € 244 Retail € 2,470 € 1,320 €1,372 € 1,420 € 2,130 € 701 € 61 Industrial € 745 € 430 €315 € 123 € 235 € 24

• Hospitality

€1,050 € 927 € 215 € 325 € 57

• € 177

Other € 1,550 € 499 €121 € 545 € 66 € 60

• Total

€ 10,700 € 5,500 € 3,700 € 4,100 € 4,400 € 1,250 € 482

Volume Invested in Italy (all sectors) and N°of transactions 2003 - Q1 2012

4,720 4,168 5,092 9,169 10,807 5,449 3,727 4,157 4,427 482 80 87 85 148 197 150 104 103 122 20 50 100 150 200 2,000 4,000 6,000 8,000 10,000 12,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 2012 Volume

• N. of transactions

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT MARKET IN ITALY

Sector analysis Q1 2011 vs Q1 2012

Q1 investment volumes down by over 60%. Q2 to date sees little recovery. On a like for like basis 2011 investment volumes were in the region of € 2.2 Billion. Retail and office sectors most affected. Hospitality has seen significant activity mostly due to roll over of transactions from the previous year. Industrial activity fragmented, very few prime opportunities available with limited investor interest.

Q1 2011 Q1 2012 Q2 to date Retail

€ 701,344,000 € 60,800,000 € 39,000,000

Office

€ 464,450,000 € 243,700,000 € 9,000,000

Hospitality

• € 177,000,000

€ 148,000,000

Industrial

€ 24,400,000

• Other

€ 60,000,000

• € 157,500,000

Total

€ 1,250,194,000 € 481,500,000 € 353,500,000

€ 0 € 100,000,000 € 200,000,000 € 300,000,000 € 400,000,000 € 500,000,000 € 600,000,000 € 700,000,000 € 800,000,000

Retail Office Hospitality Industrial Other

Q1 2011 Q1 2012 Q2 to date

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

TRANSACTIONS SUMMARY Q1 2012 & TO DATE

Name City Buyer Total GLA (m²) Price € /Mln Gross Yields Gallery Gallarate and Gallery San Giuliano Milan Carrefour Property Italia 5,000 13 c.a. 9% Bari – Via Sparano High Street Bari Private 4,434 37 c.a. 5.2% Alessandria – Mediaworld Alessandria LFPI 4,850 4

• Corsico – Ex Emmelunga

Milan Private 4,855 11

• Firenze High Street

Firenze Private

• 35

Total 100

RETAIL

Name City Buyer Total GLA (m2) Price € /Mln Gross Yields Via Brera 18 Milan Fabrica Immobiliare Sgr 2,020 17.1 Vacant Via Innocenzo Golfarelli 86 Forlì Private 2,454 2.8 7.7% Via A. Vespucci Milan Beni Stabili Gestioni SGR 13,000 42 6.39% Carabinieri Via Torino Rome Cassa dei Commercialisti

• 23
• Palazzo ex Cirio

Rome SS Lazio 2,500 3

• Via Hope 1

Sanremo Private Italian 3,700 6

• Viale Regina Giovanna 27-29

Milan Fabrica immobiliare Sgr 20,100 45.5 7.80% Via Ghisalba Rome Fund

• 8.3

6% Milanofiori 2000 - Building U15 Milan Generali 10,000 33 6.40% Nuovo Palazzo della Prefettura L'Aquila L'Aquila INAIL

• 20

Vacant Palazzo di Giustizia Potenza Private Italian

• 32
• Via Brodolini 4-7

Rome BNP Paribas 5,000 11 6.65% Via Caravaggio 44 Pescara Private Italian 6,800 3.5

• Palazzo Nettuno

Brescia Nettuno Srl

• 5.5
• Total

252.7

OFFICE

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT MARKET OVERVIEW 2011

INVESTORS ANALYSIS - 2011 VS. 2007 (all sectors)

65%

NATIONAL

35%

INTERNATIONAL

2007: € 10,7 billion

“ 72%

NATIONAL

28%

INTERNATIONAL

24%

PRIVATES

76%

INSTITUTIONAL

2011: € 4,4 billion

Domestic institutional and private investors are the driving force.

”

12%

PRIVATES

88%

INSTITUTIONAL

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT MARKET IN ITALY

House View

€ 130 mln €115 mln € 82 mln € 140 mln

Retail (HS) 52,600 sqm

Milano La Rinascente First Atlantic

€ 472 mln

Significant transactions 2011

Chieti Megalò

Retail (SC) 48,500 sqm

ECE Roma Via dei Normanni

Office 36,000 sqm

Mittel Re Sgr

Retail 170,000 sqm

Joint Venture

Milano Segrate

Westfield / Gruppo Stilo

Retail (SC) 20,500 mq

Cremona Cremona Po Eurocommercial Properties

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

CHALLENGES FOR ITALY

WHY REAL ESTATE

• Core

income producing real estate is defensive – investors moving out of equities

• “Flight to quality buildings” in order to reduce

risks

• Quality well leased buildings will continue to

generate cashflow

• Risk management requires diversification

CONCERNS

• Austerity

package / recession – slow growth in the short term

• Finance from banks remains limited
• Changing “goal post” – IMU, tax changes…
• European debt crisis – confidence
• Fractured political system

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTMENT OPPORTUNITIES FOR THE FUTURE

House View Investors with experience in Italy can use the environment to expand Re-pricing will occur, especially with International vendors Value add office opportunities exist, but will require finance package Prime core retail remains resilient Disposals by financial houses, but pace will be slow

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

INVESTOR SNAPSHOT

CROSS BORDER INVESTORS RETREATING, DOMESTIC FUNDS TERM EXPIRING , GERMAN FUNDS LIQUIDATING, STATE PROPERTIES TO BECOME AVAILABLE

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RE-PRICING WILL OCCUR

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€ 0 € 200 € 400 € 600 € 800 € 1,000 € 1,200 € 1,400 5.00% 4.00% 4.50% 4.95% 5.25% 5.50% 6.00% 6.00% 6.05%

RENTS YIELDS PRIME OFFICES

SUBTITLE

CUSHMAN & WAKEFIELD CAPTAL MARKETS GROUP

CHANGES TO OUR BUSINESS

• INVESTORS AND OCCUPIERS WILL BE SLOW MAKING DECISIONS -

“DEVIL IN THE DETAIL”

• OCCUPIERS WILL VALUE PROFESSIONAL, PROACTIVE OWNERS

WHO ADAPT TO THE NEW ENVIRONMENT

• OPPORTUNITIES WILL ARISE FOR NEW PLAYERS TO ENTER THE MARKET -

“RE-PRICING / PARTNERSHIPS / CLUB DEALS COMMON”

• SOME OF THE BIGGEST CHALLENGES FOR 2012

MAY NOT EVEN BE KNOWN YET!!

www.cushmanwakefield.com

MARIACRISTINA LARIA

MRICS Partner, Valuation & Advisory Cushman & Wakefield LLP Via Filippo Turati 16/18, 20121 Milano Tel: +39 02 63799 283 mariacristina.laria@eur.cushwake.com