New York Is AFIRE! · Williamsburg, Astoria, the South Bronx, DUMBO and Chelsea — are becoming...

The Official Voice of the Foreign Real Estate Industry

Spring 2016

INSIDE 2

Welcome New Members 3

AFIRE New Member Incentives

6

In Memory of Erwin Stouthamer

7

What Kind of AFIRE Member Are You?

11

Winter Conference 2016 Photos

13

MIPIM 2016 Photos

15First Quarter in Review

16

Top Transactions of Q1’16

17

Calendar Events

18AFIRE European Conference 2016

20

AFIRE European Conference 2016

Registration Form

I t was too much of a pun to resist, and several speakers at AFIRE’s NY meeting took advantage of the opportunity: New York is afire, they intoned. From marketplace panelists to the keynote

speaker, the messages surrounding NYC were hot. Midtown rents are up 7 percent. Midtown south, with a 4 percent vacancy rate, is the tightest market in the country. Downtown is asking an unprecedented $56.50 per square foot. Land south of 96th Street has gone up by 90 percent. As space tightens, employment is migrating to where the workforce is living. New, mixed-use developments are springing up in Brooklyn and Long Island City. In Greenwich Village, the Rudin Management Company’s 90 Greenwich Lane, a mixed-use development on the site of the old Saint Vincent’s Hospital, is 90 percent sold. A new development in partnership with Boston Property, Dock 72 in Brooklyn, will create the city’s newest example of live/work urbanism.

In his keynote speech, William C. Rudin identified the three characteristics underpinning New York’s appeal: first among them, the city’s strength and resiliency. “At 8.5 million, New York’s population is the largest in history; the private sector is providing 4.2 million jobs; 58 million visitors came through in 2015; $70 trillion worth of property was sold commercially, outpacing the peak of 2007.” Even the hotel industry is gaining ground. A demand for 33-million-room-nights is now fueling the largest hotel creation since the 1930s. “Old neighborhoods — lower Manhattan, Williamsburg, Astoria, the South Bronx, DUMBO and Chelsea — are becoming iconic examples of live/work phenomenon,” he added. “By 2025, the number of expected jobs could result in requirements for 60 million square feet, creating pressure for new real estate development.”

Next he cited the support of the city, state and federal governments. “2015 was the safest year in NYC history. Governor Cuomo’s new infrastructure plan covers every major transportation mode into the city, and Senator Schumer is leading the charge for the Terrorism Risk Insurance Act in support of foreign investment.”

Finally, Rudin praised the city’s competitive stance vis-a-vis other global cities: lower rents, positive, long-term yield and capital appreciation, and lower cap rates. “Most importantly,” he said, “is the city’s ability to change, adapt and reimagine itself.”

New York Is AFIRE!

Continued on page 4

David Walker, PricewaterhouseCoopers, and Frank Lively, Wafra Investment Advisory Group

By Kathryn Hamilton, Hamilton Ink

2016 EUROPEAN CONFERENCE HOTEL ATLANTIC KEMPINSKI

HAMBURG, GERMANY • JUNE 15–16, 2016

See pages 18–20 for program information and the registration form.

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Volume 31 Number 2

Association of Foreign Investors in Real EstateRonald Reagan Building1300 Pennsylvania Avenue, NWWashington, DC 20004-3020

Telephone202.312.1400

Fax202.312.1401

E-mailafireinfo@afire.org

Internetwww.afire.org

©2016 AFIRE

OFFICERS

ChairmanFrancis P. Lively Executive Vice President Wafra Investment Advisory Group

Deputy Chairman Catherine L. Pfeiffenberger Senior Vice President Skanska USA Commercial Development Inc.

Chief ExecutiveJames A. FetgatterAFIRE

Treasurer Edward M. CasalChief Investment OfficerAviva Investors

Corporate Secretary Donald M. WisePresident and Chief Executive OfficerMetzler North America

Purpose AFIRE News provides its membership with information and news on legislation, issues and events impacting institutional real estate investment.

AFIRE News is published three to four times a year by the Association of Foreign Investors in Real Estate.

EditorLexie Miller

Editorial SubmissionsArticles and materials for inclusion in AFIRE News may be submitted to the AFIRE office via e-mail.

WelcomeNewMembersGemini RosemontGemini Rosemont is a fully-integrated real estate platform that invests in and manages high-quality commercial office properties located in Gateway and Primary/Select Secondary markets. Headquartered in Santa Fe, NM, Gemini Rosemont employs over 200 professionals and has regional offices in Albuquerque, Atlanta, Dallas, Denver, Houston, New York, Peoria, San Antonio and Tulsa. Over the past 23 years, Gemini Rosemont has generated an impressive investment performance track record and established deep relationships with buyers, sellers, lenders and brokers. The company’s real estate portfolio consists of 135 buildings spanning 15.9 million square feet in 22 states across the US.

Gemini Rosemont is the product of a joint venture between Gemini Investments (Holdings) Limited and Rosemont Realty. The company has access to significant financial resources and investment capital from its Asian sponsors. Gemini Investments is a subsidiary of Sino-Ocean Land, which in turn has a 29 percent interest held by China Life. H

DelegatesDonald R. Henry; Santa Fe, NM; 505.992.5100; dhenry@geminirosemont.com

John Caley; Santa Fe, NM; 505.992.5100; jcaley@geminirosemont.com

Macquarie Infrastructure and Real Assets IncMacquarie Infrastructure and Real Assets (MIRA) is the world’s largest infrastructure asset manager with growing portfolios in real estate, agriculture and energy. It has been investing in and managing infrastructure for more than 20 years.

Today, with dedicated regional teams of operational and financial experts, its focus remains on the enduring success of its portfolio companies and the communities they serve. It’s MIRA’s long-term approach to building sustainable value throughout the investment cycle.

MIRA manages A$148 billion (US$104 billion) of assets via more than 50 public and private funds, co-investments, partnerships and separately managed accounts. It is organized into European/Middle East/Africa (EMEA), Americas, South Asia/Australia and North Asian teams who manage regionally-focused funds. H

DelegatesAndrew Calderwood; New York, NY; 212.231.1744; andrew.calderwood@macquarie.com

Andreas Calianos; New York, NY; 212.231.0783; andreas.calianos@macquarie.com

Rhys Kidd; New York, NY; 212.231.6196; rhys.kidd@macquarie.com

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Members must contact the AFIRE office with the non-US investor contacts they would like to invite to join AFIRE. The AFIRE office will make sure they meet the basic membership qualifications and then provide the Member with a package of information to share with the prospect, including an application for membership. Once the AFIRE office receives their application, the prospect will have to be approved by the Executive Committee.

New Member IncentivesAssociate and Supporting Members of AFIRE are asked to consider helping the Association continue to grow by inviting non-US institutional investors, qualified for membership, to join AFIRE.

OR

raise by one the number of attendees

sent to the three conferences held by

AFIRE in the following year (Winter

Conference, European Conference

and Annual Meeting);

bring one delegate complimentary

to the three conferences held by

AFIRE in the following year (Winter

Conference, European Conference

and Annual Meeting).

In appreciation for each prospect who becomes an AFIRE Member, the company may:

AFIRE

AFIRE News Articles Being Accepted

Do you have information to share with other AFIRE members? Want to see

your name and that of your organization in print? AFIRE relies on members for

articles that appear in the newsletter. If you are interested in writing an article,

please contact Lexie Miller at 202.312.1403, or by e-mail at lmiller@afire.org.

Articles usually run between 1,000 and 2,000 words and may include a brief

description of your company and the services you offer.

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New York Is AFIRE!

Efficiency Driving EvolutionAcross the city, workplace efficiency continues to drive its evolution. A shortage of large floorplates in midtown is forcing a migration to the garment center and reinvented midtown buildings. Using Brookfield Place and 280 Park as examples, Mike Geoghegan of CBRE said, “The greatest change in development is that people are looking at the workplace strategically. If new product has good slab-to-slab height, and a healthy infrastructure, tenants will trade location for better productivity. Those landlords who invest in improvements when they have a significant vacancy will be handsomely rewarded.”

Tenants seeking less-expensive space are being attracted to side-street buildings in the 30s where a loft-like ambiance can be had without major renovation. Ron Lo Russo of Cushman & Wakefield said Third Avenue is currently one of the tightest markets because it is so inexpensive. “That’s how midtown south grew. All the buildings were cheap.” While “coming-of-age” startups are beginning to seek more traditional space, David Falk of Newmark Grubb Knight Frank called $85 per-square-foot a “shallow market.” Mr. Geoghegan said that in 2015 only two leases of more than 20,000 square feet were signed at $100/square foot.

Panelists agreed that densification, propelled by the collaborative work style, is all but done, but could change again if the way people work changes. And “green” is a moving target. It is expected in new buildings, but in older buildings it is trumped by efficiency. “The push for green is not necessarily coming from the top,” added Mr. Falk. “Employees are driving it from a health care perspective.”

And Elsewhere…The unprecedented levels of foreign investment in US real estate may not be the new norm but the trend is likely to continue in 2016 and for as long as allocations to real estate grows. While many investors use funds to gain entry to a market, panelists expressed a decided preference for joint ventures because of the local market knowledge, the increased investment potential, and the better terms, conditions and management control they offer.

The four main food groups — commercial, multi-family, industrial and retail — continue to rule. “Core holdings that generate sustainable return over time” dominate with core-plus strategies and “opportunistic plays targeting alpha returns” along the edges. Transit-oriented, 24-hour cities remain in vogue.

Continued from page 1

William C. Rudin, Chief Executive Officer and Vice Chairman, Rudin Management Company, Inc., and Chairman, Association for a Better New York (ABNY)

Who, What, When, Where and Why? Catherine Marcus, Prudential Real Estate Investors; Christoph Donner, Allianz Real Estate of America; Michel Schram, PGGM; and Stephen Taylor, Healthcare of Ontario Pension Plan (HOOPP)

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Gaining strength and described as a recession-resilient, trillion-dollar market are senior living, medical office, self-storage and public university student housing. “These asset classes performed well against the four food groups in a tough market, said Chris Merrill of Harrison Street Real Estate Capital. At the same time, enthusiasm for these investments can be tempered by its size and fragmentation of the markets and the additional challenge of dealing with operational issues beyond real estate.

Further on the spectrum: natural resources and real estate infrastructure as “an omnibus asset class that will compete with and complement real estate, balance investments in volatile stocks and low-yielding bonds, offer a blend of income and capital growth and, in a recession, take away a little of a punch. They are at the early state of maturity, offer a blend of income and capital growth, often benefiting from a regulatory component, long-term service contracts and long-term obsolescence,” said Brendan Woods of StepStone Group. On the liability side are liquidity and, for sovereign investors, the risks of regulation and expropriation.”

“You don’t have to own it to make money in real estate,” said Mark Walsh of Silverpeak Real Estate Partners. “With cap rates inching down from the eights and nines into the fours and fives, investing in debt is a way to invest in a flattening market and have an equity cushion that ensures you have equity-like returns.” He cited a $2 trillion pool of debt maturing over the next

five years. “Lenders have been slowed by regulation, leaving some choppiness in the market. This will provide more pricing power than there might be for equity. For foreign investors it can be a more efficient strategy,” he concluded.

Citing a current debt-to-GDP ratio of 71.8 percent, when the historical average has been 34–40 percent, luncheon speaker David Walker of PricewaterhouseCoopers said, “the federal government has grown too big, promised too much and needs to restructure.” He illustrated the possibility for change under strong presidential leadership by describing a 27-state study he undertook. “My hypothesis was that American people are smarter than politicians think they are; they can handle the truth and are willing to make tough choices if they are part of a comprehensive plan for achieving a goal based on a set of principles and values that bring people together.” The plan included six principles for reform: pro-growth, social equitability, cultural acceptability, mathematical integrity, political feasibility and meaningful bi-partisan support. “My theory was validated,” he said. “There was 92 percent agreement on the principles and values; 97 percent agreement that we had to make tough choices sooner rather than later, and 90 percent agreement that the debt should not exceed 60 percent of the budget. In summary, there was 78 percent plus agreement from a cross-section of America.”

Mix Your Bricks: Joseph A. Azelby, JP Morgan Asset Management; Brenden Woods, StepStone Group; Chris Merrill, Harrison Street Real Estate Capital; and Mark Walsh, Silverpeak Real Estate Partners

Message from the Marketplace: Steve Kohn, Cushman & Wakefield Equity, Debt & Structured Finance; David A. Falk, President, New York Tri-State Region, Newmark Grubb Knight Frank; Mike Geoghegan, CBRE; and Ron Lo Russo, Cushman & Wakefield

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“America needs a president who will lead, who will state the truth, talk about the tough choices, use the bully pulpit, set a goal, and lay out principles and values designed to bring people together. We need a president who will engage the people in a way that no politician has been willing to do: to understand they are adults, can accept the truth, and can handle and accept tough choices as long as they are part of a comprehensive plan they deem to be fair. We need a president who will help them understand that doing nothing is not an option, that what we are doing now is irresponsible, unethical and immoral.” H

Kathryn B. Hamilton is a writer and marketing communications specialist living in Raleigh, NC. She specializes in real estate and the built environment.

In Memory of Erwin Stouthamer

We at AFIRE are saddened to hear the news of Erwin Stouthamer’s passing. Erwin was Chairman of AFIRE in 2004/2005 and active on the board for many years. He was the first Chairman of AFIRE to reside outside of the US, and when elected, promised that the distance from the AFIRE office in Washington, DC, wouldn’t be a problem and it was not. He was in constant

communication and cared deeply about AFIRE and his responsibilities. Erwin also cared deeply about friends’ lives and well-being and never failed to ask how they and their families were doing. He continued to be active in AFIRE after he formed Composition Capital. Erwin Stouthamer will be greatly missed.

Deal Structures and Current Products: Lee Kuntz, Shearman & Sterling LLP; Peter H. Blessing, KPMG LLP–Washington National Tax; Michael Bond, Weil, Gotshal & Manges LLP; and David R. Hodes, Hodes Weill & Associates

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What Kind of AFIRE Member Are You?

Aareal Bank Group*Abu Dhabi Investment Council

ADIA*AFIAA Anlagestiftung

Alberta Investment Management CorporationAlberta Teachers’ Retirement Fund Board

Alecta Real Estate Investment, LLC* Allianz Real Estate of America, LLC*

AP2 Second Swedish National Pension FundAPG Asset Management US Inc.*

ATP Real Estate*Aviva Investors*

AXA Real Estate Investment Managers

Bayerische Landesbank*Bentall KennedyBlue Sky Group*

BNP Paribas REIMBouwinvest REIM*

Brookfield Asset Management* BVT Equity Holdings, Inc.Canada Post Pension Plan

Capital & Counties Properties PLC*Capital Guidance Corporation*

CIBC World Markets Corp.* Commerz Real AG*

Credit Suisse*

We frequently receive questions from our members asking which category of membership they belong to and what are the guidelines for and benefits of their membership. We hope that the outline below answers these questions. After reviewing, if you still have any questions, please contact Nancy Knight, Director of Meetings & Membership, at nknight@afire.org. Membership in AFIRE is by invitation only.

The Primary Delegate from each member firm:• Serves as the main point of contact with the AFIRE staff.• Contacts AFIRE staff with any and all changes to:

p Organization Information (e.g., company name or address change), andp Delegate Information.

• Receives invoices unless he/she designates another Billing Delegate.• Receives and answers Annual Foreign Investor Survey.• Acts as decision-maker if there is a question about who will attend a conference or pay the registration fee.• May be invited to serve on the Board of Directors.

The top three (3) delegates from each member firm are listed in the printed AFIRE Membership Directory, though additional “contacts” may be listed in the database to receive AFIRE mailings and materials.

Guidelines for Each Membership Category:

• Foreign institution or its US-controlled subsidiaries engaged in international real estate investing (examples: pension funds, insurance companies, banks, large public and private companies).

• May send 2 delegates to a conference on a complimentary basis. A third delegate may attend for the member meeting registration fee.

(Cost: $9,500 annually)

Institutional

*Indicates Keystone Members

MEMBERS

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DEKA Immobilien GmbH*DekaBank Deutsche Girozentrale*

DreamEuramex Management Group, LLC

Gaw Capital PartnersGazit-Group USA*Gemini Rosemont

Generali Real EstateGIC Real Estate, Inc.*

GLL Real Estate Partners*Global Logistic Properties Limited

Greystone Managed Investments Inc.Grosvenor*

Hannover Leasing GmbHHANSAINVEST

Healthcare of Ontario Pension Plan (HOOPP)Hermes Real Estate Investment Manager Ltd.

Hongkong Land Ltd.*HQ Capital Real EstateHSBC Bank USA, NAThe IBUS Company*

ING Real Estate Finance* Ivanhoé Cambridge*

JAMESTOWN US-Immobilien GmbH*Kan Am International*

KFH Capital Investment Company.*Landesbank Baden-Württemberg (LBBW)*Landesbank Hessen Thüringen (Helaba)*

LGT Capital PartnersM&G Real Estate Limited*(formerly PRUPIM)

Macquarie Capital (USA) Inc.*Macquarie Infrastructure and Real Assets Inc.

Manulife Metzler Real Estate GmbH*

Mitsubishi Corporation (Americas)Mitsui Fudosan America, Inc.*

National Bank of KuwaitNational Pension Service of Republic of KoreaNippon Life Global Investors Americas, Inc.

Norddeutsche Landesbank*Norges Bank Investment Management

Ontario Pension BoardOqyana Real Estate Company

OUE LimitedOxford Properties GroupParamount Group, Inc.*

PGGM*Pramerica Real Estate Investors*

Profimex Ltd.PSP Investments

QInvestRFR Holding LLC*

Rockefeller Group Investment Management*RREEF Investment GmbH*

Savills Fund Management GmbH*Skanska USA Commercial Development Inc.

Standard Life Investments*Stawski Partners*

StoneBridge Investments BV*Sumitomo Mitsui Banking Corporation

Syntrus Achmea Real Estate*TIAA*

TRIUVA (formerly IVG Institutional Funds)UBS AG*

Union Investment Real Estate GmbH*Wafra Investment Advisory Group, Inc.*

WealthCap Management, Inc.*Westfield Corporation, Inc.*

Institutional

*Indicates Keystone Members

MEMBERS (continued)

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AEW*Ares Management*

Atlantic Partners, Ltd.*AvalonBay Communities, Inc.*

Avison YoungBeacon Capital Partners, LLC*

Benenson Capital Partners, LLC*Berkshire Group

BlackRockThe Blackstone Group LP

CBRECBRE Global Investors*

CIM Group*Clarion Partners*

Cornerstone Real Estate Advisers LLCCushman & Wakefield, Inc.*

Douglas Emmett, Inc.Eastdil Secured, LLC*

Genesis Capital Advisors, LLC*GI Partners

Glenborough, LLC*Greenhill & Co., Inc.

Greystar Real Estate PartnersGTIS Partners

H/2 Capital PartnersHarrison Street Real Estate Capital

Heitman LLC*HFF*

Hines*Hodes Weill & Associates LP

Inland Institutional Capital Partners CorporationInvesco Real Estate

Iron Tree Capital LLCJ.P. Morgan Asset Management*

JLL*

Kimco Realty Corporation*Lacy, Ltd.*

LaSalle Investment Management*Lennar International, LLC

Lionstone InvestmentsLone Star US Acquisitions, LLC*

M3 Capital Partners LLC*MacFarlane Partners*

MetLife Real Estate InvestorsMorguard Investments Limited*

National Real Estate AdvisorsPark Hill Real Estate Group, LLC*

PCG Exchange, Inc.*Pembroke Real Estate*Primera Companies*

Principal Real Estate Investors*Prologis Private Capital*

Property Group Partners*REIT Funding, LLC*

Rockpoint Group, L.L.C. Savills Studley, LLC

Sentinel Real Estate Corporation*Square Mile Capital Management

Starwood Capital Group Global, L.L.C.*Sweco Nederland B.V.

Taurus Investment Holdings LLC*Tishman Speyer*

Torchlight InvestorsTPG Real Estate

Transwestern Investment GroupTruAmerica MultiFamily LLCUSAA Real Estate Company*Vornado/Charles E. Smith*

Walton Street Capital

• Foreign or US institution must be actively engaged in managing and advising investment accounts for foreign institutions that are Institutional members or would qualify as such (examples: investment banks, investment advisors, asset/portfolio managers and REITs).

• Applicant must be sponsored by an AFIRE Institutional member and the Executive Committee must consider applicant to be beneficial in the furtherance of the Association’s goals.

• Is limited to a percentage of the Institutional membership. • May send up to 2 delegates to a conference who each pay the member meeting registration fee. (Cost: $9,500 annually)

Associate

*Indicates Keystone Members

MEMBERS

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Columbia University Cornell University

Georgetown UniversityHarvard University

Johns Hopkins UniversityMIT Center for Real Estate

New York University Peking University

UC Berkley – Fisher Center University of Wisconsin School of Business

Villanova UniversityZell/Lurie Real Estate Center at Wharton

• Must be leading real estate schools. • Members in this category agree to make contributions of research, speakers and published articles. • May send up to 1 delegate to a conference on a complimentary basis.

• Foreign or US accounting and law firms must be actively engaged in representing foreign institutions that would qualify as Institutional members.

• Is limited to 25 firms. • May send up to 2 delegates to a conference who each pay the member meeting registration fee. (Cost: $9,500 annually)

Blake, Cassels & Graydon LLP*Bradley Arant Boult Cummings LLP*

Dechert LLPDentons*

DLA Piper LLP (US)*EY*

Goulston & Storrs, P.C.*K & L Gates LLP

Katten Muchin Rosenman LLP*Kaye Scholer LLP*

King & Spalding LLP*Kirkland & Ellis LLP*

KPMG LLPMayer Brown LLP*

Pillsbury Winthrop Shaw Pittman LLPPricewaterhouseCoopers LLP

Ropes & Gray LLP Shearman & Sterling LLP*

Squire Patton Boggs (US) LLPStroock & Stroock & Lavan LLPWillkie Farr & Gallagher, LLP*

WithersworldwideWorld Tax Partners, LLP*

Supporting

Academic Circle

*Indicates Keystone Members

MEMBERS

MEMBERS

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AFIRE Winter Conference 2016

Ed Casal, Aviva Investors; Barbara Knoflach, BNP Paribas Real Estate; and Russ Bates, Aviva Investors

Matt Hershey, Hodes Weill; Steve Tomlinson, Kirkland & Ellis LLP; David Park, NPS; and Lewis Ingall, Heitman LLP

Len O’Donnell, USAA Real Estate Company; Steve Hason, APG Asset Management US Inc.; Gabi Stein, Tishman Speyer; Craig Solomon, Square Mile Capital Management LLC; and Steve Wechsler, Tishman Speyer

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AFIRE Winter Conference 2016

Julie Solomon, Ares Management; Lanhee Yung, Starwood Capital Group Global, LLC; Steve Hason, APG Asset Management US Inc.

Steve Kohn, Cushman & Wakefield Equity, Debt & Structured Finance; Gitta Becker, Commerz Real AG; and Martin Hoppe, Commerce Real AG

Catherine Marcus, Prudential Real Estate Investors; Catherine Pfeiffenberger, Skanska USA Commercial Development Inc.; and Lucy Fletcher, JLL

Dietrich Heidtmann, GTIS Partners; Chris Ludeman, CBRE; and Luigi Luppi, Morguard Investments Limited

John Wilson, King & Spalding; Ali Alghannam, Oqyana Real Estate Company; and Scott Arnold, Iron Tree Capital LLC

Frank Lively, Wafra Investment Advisory Group, and John Streicker, Sentinel Real Estate Corporation

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MIPIM 2016

Thank You MIPIM Brunch Sponsor

Claus Thomas, LaSalle, and Christoph Donner, Allianz Real Estate of America

Bruce Traversy, Dream; Volker Noack, Union Investment Real Estate GmbH; and Willis Kim, Union Investment Real Estate GmbH

Howard Roth, EY; Andy Levy, DLA Piper LLP (US); and El Rosenheim, Profimex

Volker Noack, Union Investment Real Estate GmbH; Johannes Haug, Pembroke Real Estate; Frank Billand, Union Investment Real Estate GmbH

Ed Casal, Aviva Investors, and Dietrich Heidtmann, GTIS Partners

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MIPIM 2016

Steve Kohn, Cushman & Wakefield Equity, Debt & Structured Finance; Sylvain Fortier, Ivanhoé Cambridge Inc.; and Rupert Wingfield, Abu Dhabi Investment Council

Nils Huebener, BNP Paribas Real Estate; Brad Olsen, Atlantic Partners; Barbara Knoflach, BNP Paribas Real Estate; and Michael Fitzgerald, Alberta Investment Management Corporation

Audrey Klein, Peter de Haas, Cornerstone Real Estate Advisers LLC; and Ben Sanderson, Hermes Real Estate Investment Manager Ltd.

Markus Zoppa, DEKA Immobilien GmbH; Mario Leissner, King & Spalding LLP; Siegfried Cofalka, Savills Fund Management GmbH; and Wilfried Witthuhn, King & Spalding LLP

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First Quarter in Review —Real Capital Analytics’ US Capital Trends, April 2016

Based on independent reports of properties and portfolios $2.5 million and greater. Data believed to be accurate but not guaranteed. All data and statistics are the sole intellectual property of Real Capital Analytics, Inc. and no sale, transfer, sub-license, distribution or commercial exploitation of the data is permitted without the express permission of RCA.

© Real Capital Analytics, Inc. 2016. For more current deals, cap rates and property details visit http://rcanalytics.com

• US commercial property transaction volume fell 20 percent YOY in Q1’16 on sales of $111b. On a monthly basis, deal volume fell 25 percent YOY in March on sales of $32b, which is a sort of an improvement from February, where deal volume was off 39 percent YOY. While a decline is a decline and double-digit drops in transaction activity are troubling, the level of activity in the market in Q1’16 is still elevated. Over the last 11 years there were only two other Q1 periods where deal volume was above $100b.

• Normally one might expect that with volume falling off at such sharp rates that pricing would begin to adjust as well. For most property sectors however cap rates are largely unchanged from a year earlier. The combination of largely flat cap rates and falling volume suggests a bit of a hung market.

• Overall volume is down across all property types save apartment. Apartment deal volume was up 12 percent YOY thanks to portfolio and entity-level transactions. The most significant declines were associated with changing patterns of investor appetite for risk. For commercial property overall, the six Major Metros saw the strongest pullbacks as investors fretted over the risks of buying at record low cap rates. Transactions with value-add characteristics were off more than activity for stabilized deals as fewer investors were willing to take on the market risk embedded in such investments.

• The pullback in volume was in part due to an unusual period of activity in Q1’15 that would be difficult to replicate. Portfolio and entity-level transactions totaled only $34.6b in Q1’16, down 34 percent YOY. The weakness in the quarter was not limited to these megadeals however. Single assets sales are the bedrock of the market and transaction activity here was down 11 percent YOY on sales of $76b.

• While commercial real estate still offers an attractive yield relative to other asset classes, it would be unreasonable to expect that pace of sales for the megadeals and other high sticker price transactions to continue to grow at the pace set in 2015 in the current financial environment.

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Top Transactions of Q1’16 —Real Capital Analytics’ US Capital Trends, 2016

*When prices are not known, estimated prices are used in the ranking but are not shown. In the case of partial interest deals, the pro-rated share of the property was used for the transaction price and the PPU/PPSF was based on the full 100% price.Partial Interest

©2016 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; based on properties & portfolio $2.5M and greater.

Property Transaction Location Price ($M) SF PPSF Buyer1 OFF 787 Seventh Avenue New York, NY $1,941.5 1,706,007 $1,138 CalPERS JV CommonWealth Partners2 OFF Five Times Square New York, NY $800.0 1,132,865 $1,412 RXR Realty 3 OFF 850 Third Avenue New York, NY $463.0 613,664 $754 MHP RE Services JV HNA Group4 APT Rivertower at Sutton Place New York, NY $390.0 323 $1,207,430 GreenOak JV Slate Property Group5 DEV 80 South Street New York, NY $390.0 14,718 $26,498 China Oceanwide Holdings 6 OFF West 8th Seattle, WA $370.0 499,000 $741 Deutsche AWM - US 7 OFF Cira Square Philadelphia, PA $354.0 862,692 $410 Coretrust Capital OBO Korea Investment Holdings8 APT The Buchanan New York, NY $270.0 289 $934,256 Madison Realty Capital JV USAA Real Estate9 OFF Santa Fe Summit Phase II San Diego, CA $262.3 465,812 $563 Intuit 10 OFF Pasadena Towers I & II Pasadena, CA $256.0 439,650 $582 CBRE Global Investors 11 APT North Water Residences Chicago, IL $240.3 398 $603,799 Invesco RE 12 OFF 1615 L Street Washington, DC $229.0 417,273 $549 JP Morgan JV Alony Hetz13 RET Eastridge Mall San Jose, CA $225.0 785,804 $286 Pacific RET Capital Partners JV Silverpeak RE Partners14 OFF Two Rector Street New York, NY $221.0 440,000 $502 Sun Life Financial JV Cove Property Group15 OFF 580 California Street San Francisco, CA $220.0 313,000 $703 JP Morgan 16 OFF Bank of America Plaza Atlanta, GA $220.0 1,287,997 $171 Shorenstein Properties 17 OFF Bayhill OFF Center San Bruno, CA $215.0 515,000 $417 Google 18 OFF One Wells Fargo Center Charlotte, NC $213.0 985,315 $288 Vision Properties JV Quarry Capital LLC19 APT The Chelsea New York, NY $211.3 204 $1,035,539 Greystar RE Partners 20 OFF Facebook HQ Menlo Park, CA $202.4 1,024,090 $198 Facebook 21 RET One Colorado Shopping Center Pasadena, CA $201.0 260,619 $771 Blackstone 22 APT Riverton Houses New York, NY $200.9 1,228 $163,620 A&E Real Estate JV Harvard Management Co23 OFF Metropark OFF Center Iselin, NJ n/a 918,656 n/a AIG 24 RET The Shops at Canal Place New Orleans, LA $199.1 217,092 $917 O'Connor Capital Partners 25 OFF 180 North Lasalle Street Chicago, IL $198.3 767,605 $258 Caisse de Depot JV Callahan Capital Partners

Location Price ($M) SF PPSF Buyer1 World Wide $6,995.4 n/a n/a Blackstone 2 Multiple, United States $5,793.4 23,262 $230,634 Starwood Capital Group 3 Multiple, United States $1,965.8 n/a n/a DRA Advisors JV Prudential RE Investors4 Multiple, United States $1,802.1 14,758 $128,744 Harrison Street RE Capital 5 Multiple, United States $1,366.7 19,614 $71,276 Starwood Capital Group 6 Los Angeles, CA $1,349.0 1,651,065 $813 Douglas Emmett Realty JV Qatar Investment Authority7 Kansas City, MO $660.0 n/a n/a Taubman JV Macerich8 Multiple, United States $522.0 1,930,448 $813 Heitman 9 Multiple, United States $502.0 4,172 $120,326 Milestone APTS REIT 10 New York, NY $485.1 1,547,377 $743 Jamestown George and Loeb NY OFF Portfolio 2016

Campus Crest BuyoutLATA Buyout 2016Blackstone OFF Portfolio 2016Country Club PlazaMacerich RET Portfolio 2016Landmark Apt Portfolio 2016

IRC Buyout 2016

Top 25 Property Sales

Top 10 Portfolio SalesTransaction

BioMed Buyout 2016EQR Apt Portfolio 2016

Property Transaction Location Price ($M) SF PPSF Buyer1 OFF 787 Seventh Avenue New York, NY $1,941.5 1,706,007 $1,138 CalPERS JV CommonWealth Partners2 OFF Five Times Square New York, NY $800.0 1,132,865 $1,412 RXR Realty 3 OFF 850 Third Avenue New York, NY $463.0 613,664 $754 MHP RE Services JV HNA Group4 APT Rivertower at Sutton Place New York, NY $390.0 323 $1,207,430 GreenOak JV Slate Property Group5 DEV 80 South Street New York, NY $390.0 14,718 $26,498 China Oceanwide Holdings 6 OFF West 8th Seattle, WA $370.0 499,000 $741 Deutsche AWM - US 7 OFF Cira Square Philadelphia, PA $354.0 862,692 $410 Coretrust Capital OBO Korea Investment Holdings8 APT The Buchanan New York, NY $270.0 289 $934,256 Madison Realty Capital JV USAA Real Estate9 OFF Santa Fe Summit Phase II San Diego, CA $262.3 465,812 $563 Intuit 10 OFF Pasadena Towers I & II Pasadena, CA $256.0 439,650 $582 CBRE Global Investors 11 APT North Water Residences Chicago, IL $240.3 398 $603,799 Invesco RE 12 OFF 1615 L Street Washington, DC $229.0 417,273 $549 JP Morgan JV Alony Hetz13 RET Eastridge Mall San Jose, CA $225.0 785,804 $286 Pacific RET Capital Partners JV Silverpeak RE Partners14 OFF Two Rector Street New York, NY $221.0 440,000 $502 Sun Life Financial JV Cove Property Group15 OFF 580 California Street San Francisco, CA $220.0 313,000 $703 JP Morgan 16 OFF Bank of America Plaza Atlanta, GA $220.0 1,287,997 $171 Shorenstein Properties 17 OFF Bayhill OFF Center San Bruno, CA $215.0 515,000 $417 Google 18 OFF One Wells Fargo Center Charlotte, NC $213.0 985,315 $288 Vision Properties JV Quarry Capital LLC19 APT The Chelsea New York, NY $211.3 204 $1,035,539 Greystar RE Partners 20 OFF Facebook HQ Menlo Park, CA $202.4 1,024,090 $198 Facebook 21 RET One Colorado Shopping Center Pasadena, CA $201.0 260,619 $771 Blackstone 22 APT Riverton Houses New York, NY $200.9 1,228 $163,620 A&E Real Estate JV Harvard Management Co23 OFF Metropark OFF Center Iselin, NJ n/a 918,656 n/a AIG 24 RET The Shops at Canal Place New Orleans, LA $199.1 217,092 $917 O'Connor Capital Partners 25 OFF 180 North Lasalle Street Chicago, IL $198.3 767,605 $258 Caisse de Depot JV Callahan Capital Partners

Location Price ($M) SF PPSF Buyer1 World Wide $6,995.4 n/a n/a Blackstone 2 Multiple, United States $5,793.4 23,262 $230,634 Starwood Capital Group 3 Multiple, United States $1,965.8 n/a n/a DRA Advisors JV Prudential RE Investors4 Multiple, United States $1,802.1 14,758 $128,744 Harrison Street RE Capital 5 Multiple, United States $1,366.7 19,614 $71,276 Starwood Capital Group 6 Los Angeles, CA $1,349.0 1,651,065 $813 Douglas Emmett Realty JV Qatar Investment Authority7 Kansas City, MO $660.0 n/a n/a Taubman JV Macerich8 Multiple, United States $522.0 1,930,448 $813 Heitman 9 Multiple, United States $502.0 4,172 $120,326 Milestone APTS REIT 10 New York, NY $485.1 1,547,377 $743 Jamestown George and Loeb NY OFF Portfolio 2016

Campus Crest BuyoutLATA Buyout 2016Blackstone OFF Portfolio 2016Country Club PlazaMacerich RET Portfolio 2016Landmark Apt Portfolio 2016

IRC Buyout 2016

Top 25 Property Sales

Top 10 Portfolio SalesTransaction

BioMed Buyout 2016EQR Apt Portfolio 2016

Spring 2016

17

2016EUROPEAN CONFERENCE

Hamburg, Germany Hotel Atlantic Kempinski

June 15–16, 2016

ANNUAL MEMBERSHIP MEETING Washington, DC

Mandarin Oriental September 12–14, 2016

AFIRE BOOTH AT EXPO REAL Munich, Germany October 4–6, 2016

AFIRE BRUNCH AT EXPO REAL Munich, Germany

Käfer Am See October 5, 2016

2017WINTER CONFERENCE

New York, NY Mandarin Oriental, NY

February 8–9, 2017

AFIRE BRUNCH AT MIPIM Cannes, France Hotel Majestic

March 16, 2017

EUROPEAN CONFERENCE London, England

Claridge’s June 7–8, 2017

ANNUAL MEMBERSHIP MEETING San Francisco, CA

The Ritz-Carlton, San Francisco September 11–13, 2017

AFIRE BOOTH AT EXPO REAL Munich, Germany

October 2017

AFIRE BRUNCH AT EXPO REAL Munich, Germany

Käfer Am See October 2017

AFIRE Calendar of Events

Spring 2016

18

ASSOCIATION OF FOREIGN INVESTORS IN REAL ESTATEEUROPEAN CONFERENCE PROGRAM

HOTEL ATLANTIC KEMPINSKI • HAMBURG, GERMANY • JUNE 15–16, 2016

EXTERNAL FORCES ON THE EUROZONE:THE IMPACT ON OUTBOUND CAPITAL

Several external pressures seem to be simultaneously assailing the Eurozone, including terrorism, immigration, Brexit and negative interest rates. Could these forces potentially

have a destabilizing effect on the future of the Eurozone? Or, are they overblown and containable? Could these external forces influence capital coming out of Europe?

Spring 2016

19

WEDNESDAY, JUNE 156:00pm – 9:00pm ....................................... Dinner Reception

9:00pm – 11:00pm ..................................... Young AFIRE (Venue TBD)

THURSDAY, JUNE 168:30am – 9:30am ....................................... Registration and Continental Breakfast

8:30am – 9:30am ....................................... Executive Committee Breakfast for Guestsand New Members

9:30am – 9:45am ...................................... Welcome and Opening RemarksFrancis P. Lively, Executive Vice President, Wafra Investment Advisory Group, and AFIRE Chairman

9:45am – 10:30am ..................................... Keynote Speaker Joschka M. Fischer, Former German Vice Chancellor and Minister of Foreign Affairs

10:30am –11:45am .................................... Europe Under Siege?The Eurozone has met many challenges in the past. Will the current issues create any permanent changes to the structure of Europe and the EU? What will the Eurozone look like in the future for Europeans?

Moderated by: Nils Kok, PhD, Professor of Finance and Real Estate, Maastricht University, and Co-Founder, GRESB

12:00pm – 1:30pm ..................................... Lunch

1:30pm – 2:45pm ....................................... Outbound Capital: Will It Change?A panel of prominent European investors contemplate the impact, if any, on European capital coming out of the Eurozone. What do these external political and economic forces mean to these investors?

Moderated by: Bernard Penaud, Senior Managing Director, Co-Head of Europe, Tishman Speyer

2:45pm – 3:15pm ....................................... Break

3:15pm – 4:30pm ....................................... Googling the US MarketBetter than Google, a panel of experts on the US market gives updates and predictions for the US real estate markets. Is there really a pause and what does that mean anyway?

Moderated by: Francis P. Lively, Executive Vice President, Wafra Investment Advisory Group, and AFIRE Chairman

4:30pm – 6:00pm ....................................... Cocktail Reception

ASSOCIATION OF FOREIGN INVESTORS IN REAL ESTATEEUROPEAN CONFERENCE PROGRAM

HOTEL ATLANTIC KEMPINSKI • HAMBURG, GERMANY • JUNE 15–16, 2016

20

June 15–16, 2016 • Hotel Atlantic Kempinski • Hamburg, Germany

AFIRE 2016 European Conference

If you are an AFIRE Delegate, please go to www.afire.org to register. If you are not an AFIRE Delegate and you are taking the place of a Delegate, print clearly the information below and e-mail this form to AFIRE at nknight@afire.org.

Mr./Ms./Mrs. Name:

Badge Name:

Title:

Company:

Mailing Address:

City, State, ZIP, Country:

Phone: Fax:

E-mail:

Special Meals or Needs:

REGISTRATION FEE & REGULATIONS

o First & Second Institutional Member Delegates ....... Complimentary

o Third Institutional Member Delegate ..................................$1,000

o Associate & Supporting Member Delegates .....................$1,000

o Institutional Young AFIRE Delegate .....................................$500

o Non-Member Registration ....................................................$1,500

Institutional Members may send two delegates on a complimentary basis. A third delegate may attend for the member meeting registration fee. Institutional Young AFIRE delegates may attend for half the member meeting registration fee. Associate and Supporting Members may send up to two delegates who will each pay the member meeting registration fee. Academic Circle Members may send up to two attendees complimentary. Speakers attend complimentary and are not counted in the maximum number of delegates allowed to attend. Attendance at a meeting may not be split between delegates.

PAYMENT INFORMATION (All fees and payments are in US dollars.) Please print clearly.

o Check (payable to AFIRE) o Visa o MasterCard o American Express

Name on Credit Card:

Account Number: Expiration Date:

Credit Card Billing Address:

Signature:

Hotel Information Hotel Atlantic Kempinski Hamburg An der Alster 72-79 20099 Hamburg, Germany

To make hotel reservations, please call +49.40.2888.817 or e-mail reservations.atlantic@kempinski.com. The sleeping room rates start at m219.00. To Register If you are an AFIRE Delegate, please go to www.afire.org to register. If you are a member of AFIRE, but not a designated Delegate, please have your Primary Delegate register you online. To be included on the participant list, you must register online by May 27, 2016. Cancellation Policy Refunds will be given for cancellations received in writing to nknight@afire.org by May 27, 2016. Substitutions may be made anytime. Please note that if you do not cancel and you do not attend, you are still responsible for payment. Questions Please contact the AFIRE office at 202.312.1400 if you have any questions.

BRIEF AGENDA Wednesday, June 15 Welcome Dinner Reception 6:00pm – 9:00pm

Thursday, June 16 AFIRE Conference 8:30am – 4:30pm

Thursday, June 16 Cocktail Reception 4:30pm – 6:00pm