FRENCH COMMERCIAL REAL ESTATE CURRENT MARKET AND OUTLOOK

22TH APRIL 2015

1. OFFICE MARKETS IN ILE DE FRANCE

STOCK: ZOOM ON PARIS ET INNER SUBURDS

Paris Centre West

8.6 M sq m

Rest of Paris

8.1 M sq m

Total Paris

16.7 M sq m

La Défense

3.3 M sq m

Western Crescent

8.7 M sq m

Inner Rim

6.4 M sq m

Total Paris + Inner Rim + Western Crescent + La Défense

35.2 M sq m

Total Ile-de-France

55.5 M sq m Source : ORIE / CBRE

3

OFFICE MARKET DYNAMICS IN PARIS REGION

4

TAKE UP Q1 2015 – PARIS REGION Q1 2014 : 508,900 sq m - 662 deals Q1 2015 : 372,500 sq m - 665 deals Q1

Q2

Q3

Q4

3,000,000 sq m

2,500,000 sq m

2,000,000 sq m

1,500,000 sq m

1,000,000 sq m

,500,000 sq m

00

01

02

03

04

05

06 5

07

08

09

10

11

12

13

14

15

Source : CBRE / Immostat / ORIE

IMMEDIATE SUPPLY IN GREATER PARIS April 1st 2015: 3,976,000 sq m 4,500,000 sq m New/redeveloped 4,000,000 sq m 3,500,000 sq m 3,000,000 sq m 2,500,000 sq m 2,000,000 sq m 1,500,000 sq m 1,000,000 sq m 21%

,500,000 sq m

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Q1 15 6

Source : CBRE et Immostat

VACANCY RATES BY BUSINESS DISTRICT APRIL 2015 Average Ile-de France 7.2 % 14.8 %

8.8 %

11.7 % 11.5 %

11.5 % 4.5 %

4.9 %

5.7 %

5.4 %

2.1 %

6.9 %

5.2 %

3.8 %

10.9 %

9.6 %

%

Below the 10-year average

% 7

Over the 10-year average

Source : CBRE et Immostat

TRENDS IN AVERAGE PRIME RENTS HEADLINE RENTAL VALUES IN CURRENT € NET/SQ. M PA, AT PERIOD END

900

Paris CBD

La Défense

Western Crescent

Average weighted Ile-de-France

800

750

762

698

700

734

771

716

707

691

695 664

600

610

549

625

503

455 486

500 457 497 400 300

305

432

502 478

462

456 401 422 298 301 316

430

360

351

687

297

300

239 200

441

442

498 459

430

438

297

296

495 456

297

248

100 0 93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14 Q1 15

Methodological note: before 2001, average prime rents correspond to the highest transaction value registered on top-of-the-range buildings, except atypical transaction. Since 2001, prime rents correspond to the weighted average of the 10 highest transactions in terms of rental values, registered during the 6 preceding months and concerning surfaces over or equal to 500 sq m 8

Source : CBRE

2. INVESTMENT MARKET

FRANCE - COMMERCIAL REAL ESTATE VOLUMES INVESTED 2014: €24.1 B Q1 2014: €4.0 B / Q1 2015: €4.3 B +10% YoY Marché de l’Investissement en France

€30 bn

€25 bn

Q1

Q2

€20 bn

€15 bn

€10 bn

€5 bn

€0 bn 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

10

Sources : CBRE et Immostat

DEAL SIZE Average deal size Q1 2014: €230.3 M / Nb of transactions: 131 Average deal size Q1 2015: €53.1 M / Nb of transactions : 82 +10% in volume/ - 37 % in nb of transactions YoY

Q1 2014

Q1 2015

46 deals 8.4%

96 deals 15.6% 2 deals 37.8%

21 deals 17.1%

6 deals 18.8%

< €25 M

14 deals 250 opérations 9.8% 8 deals 49.9% 21 opérations

6 deals 10.7%

€25–50 M

9 deals 38 opérations 16.2%

5 deals 18 opérations 15.7%

€50-100 M 11

€100 -200 M€

> €200 M Sources : CBRE et Immostat

GEOGRAPHICAL BREAKDOWN IN VOLUME

Q1 2015

2014

Paris 36.9 %

Regions 24.7%

Outer Rim 8.6%

Paris Centre West 23.7%

Outer Rim 4.1% Inner Rim 5.1%

Rest of Paris 13.3%

Regions 15.7%

Paris Centre West 14.5%

Paris 35.9 %

Rest of Paris 21.4% Western Crescent 39.2%

Inner Western Rim La 9.2% Défense Crescent 12.6% 8.0%

12

Source : CBRE et Immostat

TYPE OF PRODUCTS VOLUME (EXCLUDING MULTI-PURPOSE AND MULTI-ASSET PORTFOLIOS)

2014

Q1 2015

20.5% 26.8% 2.9%

7.6%

65.6%

Offices

76.6%

Industrial / logistics 13

Retail Source: CBRE et Immostat

TREND IN PRIME RENTS ON THE MAIN SHOPPING STREETS IN PARIS (ITZA IN € NET/SQ M PA) Av. des Champs Elysées

Avenue Montaigne

Rue St Honoré

Rue de Rennes/bd St Germain (Rive Gauche)

Rue des Francs Bourgeois (Le Marais)

22,000 sq m Change 2005-Q1 2015

20,000 sq m

+ 130% 18,000 sq m 16,000 sq m

+ 275%

14,000 sq m 12,000 sq m

+ 203%

10,000 sq m

+ 78%

8,000 sq m

+ 140%

6,000 sq m 4,000 sq m 2,000 sq m 05

06

07

08

09

10

11

14

12

13

14

Q1 2015

RETAIL INVESTMENT VOLUMES €7 bn

30%

French Investment Foreign investment

€6 bn

25% Share of retail in French direct RE investments

€5 bn

20% €4 bn 15% €3 bn 10% €2 bn 5%

€1 bn

€0 bn

0% 03

04

05

06

07

08

09

15

10

11

12

13

14

Q1 15

Sources : CBRE et Immostat

FRANCE LOGISTIC TAKE UP ET RENTAL VALUES Q1

Q2

Q3

Q4

3,000,000 sq m

Annual average: 2,526,900 sq m

1Q1 2015: 714,400 sq m

2,500,000 sq m

81% located on the North-South route* 2,000,000 sq m 1,500,000 sq m

+44%

1,000,000 sq m ,500,000 sq m

714,400 sq m 08

09

10

11

12

13

14

15

Headline rents A Class €30 / €60 net/sq m pa

* Nord-Pas de Calais, Ile-de-France, Rhône-Alpes, PACA regions

Sources: CBRE et Immostat

16

LOGISTICS/INDUSTRIAL INVESTMENT VOLUMES €4 bn

€3 bn

€2 bn

€1 bn

€0 bn 2004

2005

2006

2007

2008

2009

Industrial spaces

2010

2011

2012

Logistics

Sources : CBRE et Immostat 17

2013

2014

1T 2015

BREAKDOWN BY STRATEGY TRANSACTIONS > €50 M, IN VOLUME

2014

Q1 2015

7.2% 15.9%

26.2%

16.3% 67.8%

66.6%

« Core »

« Core + » 18

« Value added / opportunistic» Source : CBRE et Immostat

BREAKDOWN BY NATIONALITY IN VOLUME

70%

60%

50% French 44,3%

40%

30%

20%

North-American 18.4% Middle East 11.3%

10%

German 7.4% Asian 5.4% British 4.0 %

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

Source : CBRE 19

COMPARED CHANGE IN YIELDS 9% 8%

Prime office yields* Paris CBD OAT TEC 10 Euribor 3 months

7% Negative real risk premium Explosion of financing costs

6%

Real estate risk premium above Floor to financing costs

5% 4%

3,75 %

3% 2% 1%

0,46 % 0%

0,02% 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Q1 15

Sources : CBRE, Banque de France - Comité de normalisation obligataire

• Well located, leased in line with general market practice

As references do not systematically exist for each category, some 20 values are estimates provided by market specialists (Capital Markets, Valuation, Research)

PRIME* YIELDS Q1 2014

Q1 2015

Outlook

PARIS CBD Offices

4.15 % - 4.75 %

3.75 % - 4.25 %

La Defense Offices

5.90 % - 7.00 %

5.25 % - 6.50 %

Regions Offices

5.70 % - 8.00 %

5.40 % - 8.00 %

Logistics classe A

7.00 % - 8.00 %

6.75 % - 8.00 %

Light industrial

8.25 % - 12.00 %

8.00 % - 12.00 %

=

Industrial Parks

8.00 % - 10.00 %

7.50 % - 10.00 %

=

Regional Shopping Centres

4.50 % - 7.75 %

4.00 % - 6.25 %

=

City centre retail – top locations

3.90 % - 6.75 %

3.00 % - 6.00%

Retail Parks

5.50 % - 9.50 %

5.25 % - 9.25 %

=

* Well located, leased in line with general market practice As references do not systematically exist for each category, some values are estimates provided by market specialists (Capital Markets, Valuation, Research) 21

Source : CBRE

REGIONS – OFFICE INVESTMENT VOLUMES €1,400 M

Marché de l’Investissement en France

Marseille

Toulouse

Lille

Lyon

€1,200 M

€1,000 M

€,800 M

€,600 M

€,400 M

€,200 M

€,0 M 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

22

Sources : CBRE et Immostat

REGIONS – OFFICE TAKE UP 900,000 sq m

Marseille

Toulouse

Lille

Lyon

Marché de l’Investissement en France

800,000 sq m 700,000 sq m 600,000 sq m 500,000 sq m 400,000 sq m

300,000 sq m 200,000 sq m 100,000 sq m

2004

2005

2006

2007

2008

23

2009

2010

2011

2012

2013

2014

Sources : CBRE et Immostat

PRIME* OFFICE YIELDS IN REGIONS AT PERIOD END

10% Lyon

Lille

Marseille

Toulouse

9%

8%

7%

6.00% 5.75% 5.50% 5.40%

6%

5%

4% 2002

2003

2004

2005

2006

Sources: CBRE, Banque de France - Comité de normalisation obligataire

2007

2008

2009

2010

2011

2012

2013

2014

Q1 2015

* Well located, leased in line with general market practice As references do not systematically exist for each category, some values are estimates provided by market specialists (Capital Markets, Valuation, Research) 24

For more information regarding this presentation please contact: AURELIE LEMOINE

@CBREFrance

Head of Research T +33 (0)1 53 64 34 88 F +33 (0)1 53 64 40 00 [email protected]

www.cbre.fr