Mark Baillie Head of Real Estate (Europe and North America) Real - - PowerPoint PPT Presentation

14 September 2007 Presentation to investors and analysts

Mark Baillie

Head of Real Estate (Europe and North America)

Real Estate Group

European focus operational briefing and general update

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Real Estate Group

European snapshot

In Europe, Macquarie Real Estate Group consists of two key operating divisions and a major joint venture:

• Real Estate Capital (REC)

— Business started July 2006 with 4 staff — London based with 15 staff plus 2 consultants (UK, Italy) — Two pronged business strategy:

• Continue investment in Europe for existing products such as Macquarie Office Trust (MOF), Macquarie

CountryWide Trust (MCW) and Macquarie Leisure Trust Group (MLE) - in the near future

• Take advantage of the deregulation of real estate capital markets to create new products that supply long

term, secure, income streams and have potential to form seed assets for REITs

• Real Estate Structured Finance (RESF)

— Business started January 2005 with 2 staff — A successful, focused strategy — 14 staff across 2 offices (London and Manchester) — 18 transactions approved since inception — Approximately £150 million commitments — Profitable from second year of operation

• Joint Venture: Macquarie Global Property Advisors (MGPA)

— Formed a JV with Macquarie Global Property Advisors July 2004 — Bermuda headquartered with European offices in London, Luxembourg, Paris and Frankfurt and additional associates in Munich with 58 staff — MGPA currently has our mandate to undertake real estate private equity funds management in Europe — REC works with MGPA, thereby leveraging a large global network

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Real Estate Group

European locations and staff*

7 Macquarie Real Estate & associates European locations

Germany Frankfurt Munich France Paris Luxembourg Luxembourg UK London Manchester

89 Macquarie Real Estate & associates staff

Italy Rome

10 20 30 40 50 60 70 80 90 100 '04 '05 '06 '07 Aug-07

MGPA Real Estate Structured Finance Real Estate Capital

* At August 2007. MGPA joint venture staff are not included in MBL headcount

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Real Estate Group

€1.8b current European investments (including associates)

France (€322.5m assets) BalthazarCapitale – (Offices) Captial Sud (Office) Paris (MGPA) Logiffine – Logistics in Valance, Lille & Mer (MGPA) Germany (€430m assets) Light Industrial Portfolio – Industrial/Office, Stuttgart & Kiel (MGPA) Munich Tower – Office, Munich (MGPA) 2 shopping centres (MCW) Atrium Charlottenburg, Berlin-Charlottenburg (MOF) Darmstadter Landstrasse, Frankfurt (MOF) ¹ Poland (€747m assets) Rondo 1 (Office) & Wilanów One (Residential development), Warsaw (MGPA) Angel Wings, (Residential development) Wrocław (MGPA) 5 shopping centres (MCW) Italy (€152m assets) Macchi Building, Milan (MOF) ² Pan European (€127m assets) Sony Portfolio – Office/Warehouse (MGPA)

¹ Frankfurt exchanged Jul 07, expected to settle Jan 08, ² Milan exchanged Mar 07, expected to settle end Sep 07

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Real Estate Capital

Real estate market snapshot

European real estate market still split by geography and culture: REIT legislation proposed REIT legislation in place

• Second largest market by size but 27 different

countries

• In short term, requires country by country

approach and sector by sector approach

• Major markets only introduced REIT structures

within last 12 months

• REITs not yet acting as REITs
• Immature dedicated REIT investor base both

institutional and retail

• Valuation methodologies still evolving
• Growth of European REIT market not developing

as quickly as other regions (due to low yields and higher interest rates)

• Currently a hiatus in transactions as CMBS

markets recalibrate

• As a consequence, Macquarie is seeing more

deal flow as certain types of investors exit the market

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Real Estate Capital

Real estate market snapshot

Total Investment Grade ($b)

EU $4,659 US/CN $5,691 UK $963 AU/NZ $329

% of Institutional Holdings Listed

US/CN 17% EU 8% UK 17% AU/NZ 56% ce: UBS Research – “The Case for Global Real Es Sour tate” Source: Macquarie Real Estate Research, EPRA Indices via Bloomberg, UBS

• Public to private opportunities exist provided you can understand the

true underlying value, which may be changing in the current financial environment

• Europe is the second largest real estate market globally but has the

lowest level of real estate securitisation

• Combination of transition to securitised real estate and current market

volatility will lead to: — Public to private opportunities in short term — Re-listing opportunities in medium to long term

• 10%

0% 10% 20% 30% 40% 50% 60% Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 UK public (listed) real estate performance (% ch p.a)

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Real Estate Capital

Expertise and experience – platform for growth

• Our global REIT funds management expertise and experience provide a competitive advantage in deregulating

European real estate capital markets

• We are leveraging this by:

— Continuing to expand our Australian LPT’s (MOF, MCW, MLE) investments into Europe — Building on the ground resourcing to support this growth with country and sector expertise

• Identifying and funding development of real estate operating platforms in markets of interest with view to create value

from creation or on sale of a REIT

Storage King self-storage facility, Dudley

• Taking advantage of current market volatility to acquire assets, platforms

and human capital on a ‘value’ basis

• Focus on the real estate component of alternate asset classes such as

self-storage: — Long term management agreement with Storage King (largest self storage operator in Australia, and already 5th largest in the UK) — Substantial MBL equity committed to grow the platform

• Continue to work with MGPA to identify large scale co-investment
• pportunities across Europe

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Real Estate Structured Finance

UK residential market snapshot

Overall strong fundamental residential demand - recent Government statistics show that there remains a material undersupply of dwellings across the UK Reasonably stable economic outlook, with a scarcity of good product in many prime areas UK overall price growth circa 10%, London 15% and London prime 28% over the past 12 months General UK residential market expected to slow materially in line with the higher interest rates (five consecutive interest rate rises in the last year - base rate now 5.75% pa, which is the highest in 6 years) Recent stress in financial markets may have an impact on the high-end residential markets Scarcity of high-end stock, volume of established local wealth, plus further continued international wealth (Middle East, Russia etc) entering the UK, provides a broad base

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Real Estate Structured Finance

Deal snapshots

5-6 Queens Gate Place, South Kensington, London: refurbishment of 6 residential apartments with end value

• f £28m

Clapham Road, Stockwell, London: a redundant commercial office building, planning approval achieved for 240 residential apartments with end value £120m Atrium Apartments, Mainz, Germany: 604 apartment, university housing complex acquired for €12m with target sale price of €17m King Edward Hospital – Midhurst, West Sussex redundant hospital building, planning approval received for 260 residential dwellings with end value of £130m

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Real Estate Structured Finance

Actively pursuing opportunities

Continue to increase key products — eg include further planning approval funding, slice/syndication funding, take out funding, loan securitisation, selective acquisition of complimentary businesses Geographic expansion, second office opened in Manchester on 20 August 2007 New European office to be assessed in line with establishment of UK licenced banking entity in 2008 Leverage existing relationships to expand into continental Europe Participate in European CMBS market as recalibration and restructuring occurs Focus on good prime, urban and provincial based projects where other lenders may be pulling back Capitalise on relationships with existing customers to seek out ‘value’ opportunities

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Real Estate Group

Asset snapshots

Atrium Charlottenburg, Berlin-Charlottenburg: Macquarie Office Trust’s first acquisition in Germany Sourced by MGPA

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Macchi Building, Milan - Artist Impression: Macquarie Office Trust’s first acquisition in Italy Sourced by MGPA

Real Estate Group

Asset snapshots

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Dabrowka shopping centre, Katowice: One of Macquarie CountryWide’s 5 shopping centers in Poland Sourced by MGPA

Real Estate Group

Asset snapshots

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Darmstadter Landstrasse, 108, Sachsenhausen Frankfurt: Macquarie Office Trust’s latest acquisition in Germany

Real Estate Group

Asset snapshots

14 September 2007 Presentation to investors and analysts

Mark Baillie

Head of Real Estate (Europe and North America)

Q&A

European focus operational briefing and general update