SPAIN COMMERCIAL REAL ESTATE

CBRE Spain 26th June, 2014 CB Richard Ellis | Page 1

CLIENT LOGO

SPAIN REAL ESTATE MARKET OVERVIEW

26th June, 2014

The Leading Company Around the World The company works for 80% of the businesses in the prestigious Fortune 500 list.

CBRE has been awarded major business awards worldwide for its experience, leadership, innovation and project & professional team management.

449 OFFICES

IN 65 COUNTRIES

44,000 EMPLOYEES

EMEA

AMÉRICA

ASIA Turnover:

Offices: Countries: Employees: Total Value of Transactions: For Sale or Purchase (value of transaction): Rents (value of transaction): Property Management: Valuations and Advising: p. 3

$7,184 million

449 62 44,000 223,200 million $140,100 million $83,100 million 325.16 million m² 132,300 transactions (*) including data from partner companies

Some of our international clients

p. 4

The total tornover in 2013

p. 5

CBRE in SPAIN

7

OFFICES

BARCELONA

CBRE SPAIN

ZARAGOZA

450

MADRID

PALMA DE MALLORCA VALENCIA

EMPLOYEES Turnover: € 60 million

MARBELLA

Offices: 7 Employees: 450 Total Value of Transactions: € 686 millions For Sale or Purchase (value of transaction): € 412 millions

Rents (value of transaction): € 274 millions € Property Management: 3 millions m² Valuations and Advising: 831 transactions p. 6

CASABLANCA (MARRUECOS)

CBRE services in SPAIN

p. 7

Some of our national clients

p. 8

1 MACROECONOMIC CONTEXT – SPAIN AS A WHOLE

Visuel

p. 9

Macroeconomic Data Spain GDP

4% 2.4%

2%

1.6%

1.8%

2.0%

2.3%

1.1% 0.4%

0%

-1.3%

-2%

-1.6%

% annual change -4% 2010

2011

2012

2013

2014

Source: Oxford Economics & CBRE p. 10

2015

2016

2017

2018

2019

Macroeconomic Data Spain Employment 22,0 20,0 18,0 16,0 14,0 12,0 10,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Oxford Economics & CBRE p. 11

Macroeconomic Data Spain Current Balance

2% 0.4%

1.3%

1.1% 1.0% 0.9%

0.8% 0.7%

0% -1.4%

-2% -4%

-3.5%

-6% -8%

% GDP

-10% 2 0 0 7 2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 Source: Oxford Economics & CBRE p. 12

Macroeconomic Data Spain Government Budget

3% 0% -3%

-2.2%

-1.8%

-1.3%

-3.2% -4.5%

-6%

-5.6% -6.5%

-9% -10.6%

-12%

% GDP

2 0 0 7 2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 Source: Oxford Economics & CBRE p. 13

The Economist The worst may be over

p. 14

Financial Times Spain back on growth path after two years!

p. 15

The New York Times Optimism, and Caution, as Spain Attracts Investment

p. 16

Fitch Ratings Fitch Revises Spain's Outlook to Stable; Affirms at 'BBB'

p. 17

Standar & Poors Ratings Estándar & Poors Revises Spain's Outlook to Stable; Affirms at 'BBB'

p. 18

2 OFFICE MARKET

Visuel

p. 19

Madrid office market CBRE Spain

Madrid office zones

Source: CBRE p. 21

Madrid: KPI

Stock (sqm) New Supply (sqm) *¹ Vacancy rate Take-up (sqm) Rents (€/sqm/month)

2011

2012

2013

Q1 2014

12,190,400

12,304,276

12,419,341

12,449,341

128,800

113,593

115,065

30,000

13.7%

16.32%

17.19%

17.15%

322,230

248,588

371,262

98,388

26.00

25.25

24.50

24.50 *¹completions

Source: CBRE p. 22

Madrid: KPI 2 2014 Q1 Stock (sqm)

Take-up (sqm)

Availability (% stock)

New Supply* (sqm)

Max. Rent (€/ sqm/month)

Central Business District

3,515,543

44,111

13.46%

28,212

24.50

Secondary Centre

2,499,000

4,619

13.19%

11,000

18.00

A-1 Motorway

2,385,614

22,453

21.15%

0

14.75

A-2 Motorway

2,367,000

20,225

22.25%

42,024

14.25

A-6 Motorway

1,137,000

6,980

12.59%

0

13.75

545,184

0

28.98%

0

7.75

12,449,341

98,388

17.15%

81,236

24.50

Zone

Periphery Madrid Total

*New supply in development 2014-2015

Source: CBRE p. 23

Take – Up and Vacancy Rate Take-up, Thousand sqm

Vacancy rate, % stock

400

20% 18%

350

16% 300 14% 250

12%

200

10% 8%

150

6% 100

4% 50

2%

0

0% 2000

2001

2002

2003

2004

2005

2006

2007

Source: CBRE p. 24

2008

2009

2010

2011

2012

2013

2014

Take – up Take-up in Q1 50.000

Take-up (% stock in sub-market)

sqm

Take up % stock in sub-market

1,4%

45.000 1,2% 40.000 1,0%

35.000 30.000

0,8%

25.000 0,6%

20.000 15.000

0,4%

10.000 0,2% 5.000 0

0,0%

CBD

SC

A-1

A-2

Source: CBRE p. 25

A-6

Periphery

Availability Available space

Vacancy rate

Available space, sqm

Availability rate

600.000

60%

500.000

50%

400.000

40%

300.000

30% 21,2%

200.000

13,5%

22,3%

20% 13,2% 29,0%

100.000

12,6%

0

10% 0%

CBD

SC

A-1

Source: CBRE p. 26

A-2

A-6

Periphery

Deals Letting Deals

H1 2013

H2 2013

2.000

4.000

Q1 2014

35

Rent (€/sqm/month)

30 25 20

15 10 5 0

0

Sqm

Source: CBRE p. 27

6.000

8.000

Deals Letting Deals H1 2013

H2 2013

Q1 2014

35

Rent (€/sqm/month)

30 25

20 15 10 5 0

0

10.000

20.000

30.000 Sqm

Source: CBRE p. 28

40.000

50.000

60.000

70.000

Take – up Transactions by activity 2013

2012 Financial Sector

Financial Sector

Business Services

Business Services

Independent Professionals

Independent Professionals

Consumption & Leisure

Consumption & Leisure

Industrial and Energy

Industrial and Energy

Information & Technology

Information & Technology

Other

Other

Public Sector

Public Sector

Unknown

Unknown

Q1 2014 Financial Sector Business Services Independent Professionals Consumption & Leisure Industrial and Energy Information & Technology Other Public Sector Unknown

Source: CBRE p. 29

Prime Rent Rental evolution €/sqm/month

Yoy variation

45

60% 50%

40

40% 35 30% 30

20%

25

10%

20

0% -10%

15

-20% 10 -30% 5

-40%

0

-50%

Source: CBRE p. 30

Prime Rents in Madrid A1

45

A2

A6

CBD

SC

P

40 35 30 25

20 15 10 5 0 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Source: CBRE p. 31

Madrid – New Supply Main projects description for 2014 - 2015 A-1 A-6

New HQ of BBVA - Avenida de Burgos 130.000 sq m for self use. - To be delivered in 2 phases. First one in the 2013 year end, and the rest in 2014.

M-50 M-40 Torre Titania - Raim. Fern. Villaverde 65 - Ownership: El Corte Inglés. - 14.430 sq m to let. M-50 - Completion expected for 2013 year end

R-1

A-2

M-30 MADRID

M-40

R-3 M-45 A-5

M-50

A-42 R-5

Hernani - Hernani, 59 - Ownership: Consorcio - 8.731 sq m to let. - Whole refurbishing that could be completed in the H1 2014.

R-4

A-3

MBC Building - Avenida América, 81 - Ownership: Torre Rioja - 20.851 sq m to let. - Whole refurbishing that could be completed in the H2 2014.

A-4

Génova 17 - Génova 17 - Ownership: HNA - 3.481 sq m to let. - Whole refurbishing that could be completed in the H2 2014.

Source: CBRE Spain

p. 32

EMEA Prime Office Rent Cycle: Recovery Progress As of Q1 2014

Source: CBRE p. 33

3 INVESTMENT MARKET

Visuel

p. 34

0

Source: CBRE, & Property Data & KTI p. 35

Q4 2013

Q3 2013

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Q2 2012

Q1 2012

Q4 2011

Q3 2011

Q2 2011

Q1 2011

CEE

Q4 2010

Q3 2010

Q2 2010

Q1 2010

Q4 2009

Q3 2009

Q2 2009

Q1 2009

Million €

Q4 2008

Q3 2008

Q2 2008

Q1 2008

Q4 2007

Q3 2007

Q2 2007

Q1 2007

Q4 2006

Q3 2006

Q2 2006

Q1 2006

CRE Investment Volumes in CEE vs. Southern European Economies

In nominal figures PIIGs

12.000

10.000

8.000

6.000

4.000

2.000

0

Source: CBRE, & Property Data & KTI p. 36

Q1 2014

Q4 2013

Q3 2013

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Portugal

Q2 2012

Q1 2012

Q4 2011

Q3 2011

Q2 2011

Q1 2011

Q4 2010

Q3 2010

Spain

Q2 2010

Q1 2010

Q4 2009

Q3 2009

Q2 2009

Q1 2009

Italy

Q4 2008

Q3 2008

Q2 2008

Q1 2008

Q4 2007

Q3 2007

Million €

Q2 2007

Q1 2007

Q4 2006

Q3 2006

Q2 2006

7.000

Q1 2006

CRE Investment Volumes in Southern Europe

Spain 4Q average

6.000

5.000

4.000

3.000

2.000

1.000

Commercial Real Estate Finance Market Conditions in Europe Key Lending Terms*: Top Quality Real Estate and Tenant, Q4 2013

Market Germany UK Ireland Netherlands Russia Spain Market Trend

Max Loan**

Max LTV

Margin***

€ 200 m £150m €80m €120m €150m €50m

75% 70% 70% 70% 70% 60%

150 bps 170 bps 300 bps 200 bps 600 bps 400 bps

/





 

* New 5-year loan based on the maximum underwriting ability of a single lender. ** Max ticket size for a single lender. *** Margin over EURIBOR/LIBOR swap.

Source: CBRE, & Property Data & KTI

p. 37

Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014

Offices - Capital Values €/sqm Barcelona Madrid

Source: CBRE p. 38

Europe

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

Europe: France, Germany, Italy, Nederlands, Spain, UK (average)

Q1 1995 Q3 1995 Q1 1996 Q3 1996 Q1 1997 Q3 1997 Q1 1998 Q3 1998 Q1 1999 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014

Offices in Madrid – Capital Values €/sqm Current prices Prices of 1995

Source: CBRE p. 39

Constant prices - average

12.000

10.000

8.000

6.000

4.000

2.000

0

Spain: Historical CRE Turnover Investor demand is now reflected in investment volumes € Millions

Retail

Offices

10.000

Industrial & Logistics

Other

609

9.000 8.000 7.000

430 5.879

6.000

605

5.000

3.818 196

4.000

1688 288 4.289

3.000 2.000

2.537

214 117 1.199

1.757

1116

97 72

3.591 2.889

1.000 0

1.527

1.766

370 222 960

2.288

1.868

259

381 120

1074 508 82 803 1912

1670

1.261

924

930

2011

2012

332

2003

2004

2005

2006

2007

Source: CBRE Spain p. 40

2008

2009

2010

2013

3

Source: CBRE Spain p. 41

Q1 2014

Q3 2013

Q1 2013

Q3 2012

Q1 2012

Q3 2011

Q1 2011

Q3 2010

High Street

Q1 2010

Q3 2009

Q1 2009

Q3 2008

Q1 2008

Q3 2007

Q1 2007

Q3 2006

Offices

Q1 2006

Q3 2005

Q1 2005

Q3 2004

Q1 2004

Q3 2003

Q1 2003

Industrial

Q3 2002

Q1 2002

Q3 2001

Q1 2001

Q3 2000

Q1 2000

Q3 1999

Q1 1999

Q3 1998

Q1 1998

Q3 1997

Q1 1997

Madrid: Prime yields evolution Shopping Centres

11

10

9

8

7

6

5

4

Spain: CROSS-EUROPEAN CRE Investment € 3,764 out of 4,934 million came from over seas in 2013

Source: CBRE Spain & Bloomberg p. 42

Spain: CROSS-EUROPEAN CRE Investment Only 24% came from other European countries

Norway € 129 Russia €5 million

million

UK € 328 million

Germany € 205 France million € 496 Switzerland million € 43 million Italy € 31 million

Source: CBRE Spain & Bloomberg p. 43

Q1 2013 vs Q1 2014 Total Investment volume; Spain The share per sectors (% of total) € Millions

1.250

€ 988 MM 1.000

184 7 183

750

500

Offices

Retail

€ 424 MM Industrial 149

250

0

614

141 66 68

Others

Q1 2013

Q1 2014

Source: CBRE Spain p. 44

Total Investment volume; Spain The share per sectors (% of total) up to 30th May 2014 € Millions

3.000

€ 2,446 MM 2.500

Offices 591 2.000

47 1.500

844

Industrial

1.000

500

Retail

964

0 30th May 2014 Source: CBRE Spain p. 45

Others

DISCLAIMER Global Research and Consulting This presentation was prepared by the CBRE Spain Research Team which forms part of CBRE Global Research and Consulting – a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe.

Disclaimer CBRE Spain confirms that information contained herein, including projections, has been obtained from sources believed Visuelto be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. p. 46

THANK YOU FOR YOUR TIME 26th June, 2014 CBRE | Page 47

For any extra information, please contact with:

Patricio Palomar Murillo

National Director Research & Ivestment Strategy CBRE Real Estate SPAIN +34 619 137151 [email protected]

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