Credit Suisse Global Real Estate Outlook 2012

Zurich, 7 December 2011 Investment horizon: 6–12+ months

Global Real Estate Research

Important disclosures are found in the Disclosure appendix

In 2012, economic headwinds are likely to become more chal-lenging, and the performance of global commercial property markets is likely to slow down markedly. Nevertheless, real estate should continue to appeal to investors in a world marked by high cash levels and demand for real assets with yield. The asset class is therefore part of Credit Suisse Global Research’s top ten investment ideas for 2012. We believe that selected stocks of property holding companies and mutual funds with direct market exposure offer value. For specialist investors, we are recommending outright exposure to com-mercial real estate in Australia, Singapore, China, Germany, France, Canada and selected US and Latin American markets. Direct commercial real estate offers opportunities

Many listed risk-related assets – among those, real estate equities – came under significant selling pressure in the sec-ond half of 2011. On the other hand, direct real estate in-vestments held up rather well. Global commercial real estate transaction volumes (including land sales) remained fairly sta-ble in the third quarter of 2011 at about USD 200 billion – according to real estate research firm RCA – and are up by 27% in a year-on-year comparison (see Figure 1). The USA in particular came increasingly into the focus of real estate inves-tors in 2011 due to less demanding valuations.

Valuations of prime commercial properties now appear rich in most markets worldwide as indicated by relatively low rental yields (see Figure 2). But compared with government bonds, prime commercial real estate still offers an attractive rental carry. Moreover, since the interest rate environment will likely remain accommodative for some time to come, we do not expect large movements in global prime commercial property yields in the first half of 2012. Real estate as a higher-yielding asset should therefore continue to attract investors.

However, investment volumes are unlikely to increase much from current levels. First, there is little room for further capital value appreciation in most global markets, in our view. Properties in many Asian markets especially are already ex-pensively priced. Second, the global rental market recovery will likely slow down considerably due to the weaker economic outlook (see Figure 3). However, we do not expect a return to broad-based declines in commercial property rents. Construc-tion activity has generally been low in this cycle, especially in many Western markets. And while our base scenario calls for a further slowdown in global economic expansion in 2012, we do not expect renewed recession in Asia and the USA, and

)

Research Monthly

Global Real Estate Outlook 2012: Attractive yield from income versus weaker growth in rents Private Banking

Highlights

Outlook: Higher-yielding assets, such as commercial real estate, remain attractive in the current low interest rate environment, but heightened economic uncertainty poses downside risk.

Regional Overview: We are currently favoring direct commercial property in Aus-tralia, Singapore, China, Germany, France, Canada and some US and LatAm markets.

Real Estate Equities: While further near-term corrections are probable, we see appealing medium-term buying opportuni-ties in Australia, the USA and Japan.

Figure 1 Commercial real estate investments held up well in Q3 2011

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Americas EMEA Asia-Pacific

Commercial real estate (incl. land) transaction volume, USD bn

Source: CBRE, RCA, Credit Suisse

Zurich, 7 December 2011

Research Monthly 2

only a mild one in the Eurozone. Overall, we therefore believe that direct commercial real estate will likely continue to offer attractive investment opportunities in 2012 (see the valuation matrix on page 4 for a regional overview). Elevated downside risks require defensive stance

However, we are recommending a very defensive stance re-garding sectors and markets since major downside risks exist. In the event that the debt crisis in Europe intensifies further and drags the global economy back into recession, commercial real estate – as a pro-cyclical asset class – should perform poorly as well. However, this fate is shared by many other asset classes, such as commodities and equities, and good diversification of the total investment portfolio is therefore im-portant. Potential spillover effects of balance sheet contrac-tions by financial institutions, especially in Europe, pose an-other risk. Banks will have to de-leverage in order to meet higher capital requirements. This will likely diminish credit availability for real estate deals – an asset class that is very dependent on debt financing. Funding already is scarce in many Western markets for non-prime properties, and credit flows in this segment are likely to dry up further. On the other hand, prime property deals should continue to find financing. Regionally, countries with high current-account deficits and a banking system owned primarily by foreign institutions will likely be affected more negatively, such as parts of Eastern and peripheral Europe.

Mixed outlook for indirect real estate investments

In the global real estate equity markets, we believe that buying opportunities have opened up after the sell-off in equity mar-kets from a strategic viewpoint. But in the near term, we could see further phases of corrections (see page 3 for detailed discussion). Swiss real estate funds are currently trading at historically high premiums. This raises the risks of premium reductions and negative total returns once interest rates start increasing again. However, this will unlikely occur any time soon. We are therefore taking a Neutral stance toward Swiss

real estate funds – despite the rich valuations – because they have proven to be a good diversifier in times of market uncer-tainty too. Finally, regarding German open-end real estate funds, we recommend staying on the sidelines until some of the currently closed funds have successfully reopened, which most of them have to do in 2012 in order to avoid liquidation.

Martin Bernhard, [email protected], +41 44 334 83 22

Figure 2 Figure 3 Property rental yields are richer, but still attractive “Cycle clock” for office rental markets (December 2011)

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London City Paris FrankfurtSydney Hong Kong SingaporeTokyo New York LA

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Prime office yields, %

Source: PMA, Credit Suisse

Source: JLL, Credit Suisse


Research Monthly 3

Real Estate Equities

In H1 2012, we would focus on Australian, US and Japanese property stocks and un-derweight European markets. We remain cautious on Asia ex-Australia / Japan.

Global real estate equities have slightly underperformed world stock markets year-to-date (see Figure 5). Asian and emerg-ing-market property stocks have corrected the most relative to local equity markets. On the other hand, Swiss and Australian real estate companies have outperformed by 15.6% and 10.2%, respectively. Swiss property stocks have benefited from their safe-haven status, but are now expensively priced. Further downside risks for many Asian developers Asian ex-Japan/Australia real estate companies appear attrac-tively valued from a net asset value (NAV) perspective (see Figure 7), but also exhibit significant downside risk due to a high share of developers. Developers are more dependent on the economic cycle and the outlook for local housing markets, which has deteriorated considerably in the region in recent months. Hence, while we recognize significant upside potential in the long term, we generally remain cautious toward China, Hong Kong and Singapore property stocks in the next months. We favor Australian REITs due to their attractive dividend yield (above 6% 2012E) and their discounts to NAV. Property stocks in the USA could benefit from better economic data, while Japan offers attractive defensive attributes such as rela-tively stable property yields.

Dominik Garcia, [email protected], +41 44 334 25 38

Figure 5 Underperformance of Asian property stocks vs. local markets

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-1.47-1.46

0.040.80

2.024.37

10.2415.64

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EMHK

Sing.Germany

JapanAsia

WorldUK

EU ex-UKUSA

FranceAustralia

CH

Relative performance of real estate equities to local stock marketyear-to-date (%)

Source: Datastream, Credit Suisse

Figure 6 Listed real estate valuations appear undemanding

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M SCI World Real Estate Average +/- 1 STD

12-month forward P/E


Figure 4 Figure 7 Volatile and slightly downward trending markets recently Australian REITs are trading at discounts

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Asia Europe ex UK JapanSwitzerland UK USAustralia

Real estate equity return index (01.07.2011 = 100)

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Premium / discount to 2011E NAV

Yield spread between prime office and govt bond yields (r.h.s.)

% %


Source: Datastream, PMA, Credit Suisse


Research Monthly 4

Valuation matrix: Outlook over next 6-12+ months

Region Rating Submarket1 Office market Retail market

North America Positive USA Positive Negative

Europe

(excluding UK, Switzerland) Neutral Germany Neutral Positive

France Neutral Positive

Spain Negative Negative

Italy Neutral Neutral

UK Neutral Neutral Negative

Switzerland Neutral Neutral Neutral

Asia-Pacific Positive Japan Positive Neutral

Singapore Positive Neutral

Hong Kong Neutral Positive

Australia Positive Positive

Emerging markets Positive China Positive Positive

India Negative Neutral

Brazil Positive Positive

Russia Neutral Neutral

Poland Positive Neutral

Turkey Neutral Neutral

1 For requests on specific markets, please contact [email protected]

Source: Credit Suisse

Special topic: Real estate equity and mutual funds Figure 8 Characteristics of most common real estate investment

vehicles

Real estate equity instruments include single property company stocks and equity real estate investment trusts (REITs). Real estate equity instruments have the advantage of being liquid and easily accessible to many investors. In return, they are more volatile than direct investments and have a rela-tively high correlation to overall equity markets in the short to medium term, reducing diversification gains in a portfolio. Real estate equity mutual funds include actively managed physi-cal funds, actively managed equity funds and exchange-traded funds (ETFs) on real estate equity indices. Physical real estate funds are funds that own and manage property portfolios di-rectly, while real estate equity funds invest in listed real estate instruments such as property stocks. Physical real estate funds have a higher correlation to the underlying real estate market, while real estate equity funds and ETFs have charac-teristics similar to real estate equity instruments. Liquidity is-sues may arise, depending on the specific legal form of a fund.

Source: Credit Suisse


Research Monthly 5

Regional overview for individual markets

Europe (excluding Switzerland): Neutral

We maintain our Neutral rating for overall European direct commercial real estate, despite significantly increased downside risks due to the lingering sovereign debt crisis.

Current large regional differences in performance will likely

persist in 2012. Within the major Western European coun-tries, we favor the core retail real estate markets in France and Germany due to their relative defensiveness.

In Germany, we believe that especially high-street retail

properties in West German cities as well as office proper-ties in Berlin, Munich and Stuttgart should outperform.

We remain negative on the commercial real estate sector

in Spain and other peripheral European countries due to continued deleveraging of local consumers and possibledeflationary macroeconomic adjustments.

UK commercial real estate returns are likely to soften

markedly due to fading growth in rents (see Figure 9), but should remain positive in H1 2012.

Switzerland: Neutral

We maintain our optimistic view toward commercial proper-ties in major Swiss cities. But in some peripheral markets,commercial rents could come under pressure in the nextquarters due to oversupply.

Intervention by the Swiss National Bank (SNB) should

keep the monetary environment accommodative for prop-erty markets for the time being.

The office rental property market has benefited from ro-

bust growth in employment in recent years, which kept va-cancies low (see Figure 10). In 2012, the economic envi-ronment is likely to become more challenging.

Elevated construction activity should limit the upside for

rents both in the office and retail property sector in themedium term.

Figure 9: Europe Figure 10: Switzerland Growth in rents for office properties likely to fade in the UK and France

Office vacancies are low so far due to robust economy

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Prime office rents Rental growth (r.h.s.)

EUR/sqm p.a. YoY, %

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98 99 00 01 02 03 04 05 06 07 08 09 10 11

Known vacant office space in Switzerland

in '000 square meters


Source: Various local statistical offices, Credit Suisse Economic Research


Research Monthly 6

North America: Positive

While the performance is likely to cool down somewhat,we are maintaining our cautiously positive view toward UScommercial real estate.

The prolonged low interest rate environment is supportive,

rental incomes have shown signs of bottoming in manymarkets and commercial real estate delinquency rates havereceded substantially in the past months.

However, the near-term upside potential for rents is limited

given the anemic labor market recovery. But economic data have started to surprise to the upside again recently.

Our favorite sectors are offices and apartments. Region-

ally, we prefer San Francisco, the Northeast and Texasdue to better rental market prospects and would still avoidMiami and the Southwest.

The outlook for overall retail real estate remains somewhat

dampened since consumer spending will likely remain sub-dued due to continued deleveraging by households.

Asia-Pacific: Positive

Direct commercial real estate in Asia should continue tobenefit from low interest rates, but the weaker economicoutlook and rich valuations – as indicated by low propertyyields – requires a more defensive stance.

Initial yields have fallen to historically low levels, especially

in Hong Kong, China and Singapore. Within developed Asia, we currently favor the Australian

commercial real estate markets. Major Chinese office property markets – especially in Bei-

jing – are likely to perform robustly as well next year sincevacancies have fallen markedly except in Shenzhen (seeFigure 12), and current construction pipelines are lowcompared with those in recent years.

Tokyo’s office rental property market could finally bottom

out in H1 2012 after three years of deterioration.

Figure 11: North America Figure 12: Asia-Pacific Robust performance of US commercial real estate in 2011 Strong decrease in Beijing’s prime office vacancy rate

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Office Retail Industrial Apartments

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Quarterly total return on direct investments in the USA (%, QoQ)

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Beijing Shanghai Guangzhou Shenzhen

Prime office vacancy rate, % (2 quarters m.a.)

Source: NCREIF, Credit Suisse / IDC



Research Monthly 7

Emerging markets: Positive

Commercial real estate investments in emerging markets offer attractive return prospects for long-term-oriented in-vestors thanks to favorable structural drivers such as supe-rior growth in private consumption.

In the near term, selectivity is required due to oversupply in

some markets (e.g. in Dubai, India). Latin America is currently our favorite region within the

emerging markets due to generally very low vacancy ratesin the prime commercial real estate sector. Brazil will likely remain the primary Latin American investment destinationin 2012.

In Eastern Europe, we expect commercial properties in

Poland and the Czech Republic to continue to outperform. A major risk for many Eastern European property markets

is some countries’ dependence on availability of foreign credit (see Figure 13), which will likely be negatively af-fected by de-leveraging of Western European banks.

Figure 13: Emerging markets Large net foreign debt in Hungary, Bulgaria and Romania poses risk in case of bank de-leveraging

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Reserve Assets Loans Net FDI

Net Portfolio Debt Net Portfolio Equity Net Foreign Assets

Net foreign asset position in % of GDP



Research Monthly 8

Regional overview of individual markets: Tables

European office property data (including Switzerland)

Office yield1 (%) Yield spread2 Prime office rent3 Rent growth YoY (%) Vacancy rate (%)

Vienna 5.3 305 264 2 6

Brussels 5.4 319 225 2 11

Copenhagen 5.0 278 221 3 9

Paris 4.9 273 734 3 7

Berlin 5.0 275 258 8 10

Frankfurt 4.9 265 396 2 16

Hamburg 4.9 265 276 5 10

Munich 4.8 255 342 4 9

Athens 7.4 521 260 -10 13

Dublin 7.5 530 323 -14 23

Rome 5.3 312 350 0 9

Milan 5.0 284 500 0 13

Amsterdam 5.3 306 312 4 19

Lisbon 6.6 435 208 -1 13

Madrid 5.2 301 300 -4 11

Barcelona 5.4 324 225 -3 14

Stockholm 4.5 270 452 11 12

Zurich 4.3 344 656 0 5

London City 5.3 290 730 5 11

London West End 4.0 165 1093 23 5

1 Prime net initial yield 2 Spread between yields on office property and 10-year government bonds (in basis points) 3 EUR/sq.m./year

Source: PMA, Bloomberg, Credit Suisse

European retail property data (including Switzerland)

Retail yield1 (%) Yield spread2 Prime retail rent3 Rent growth YoY (%) Retail sales growth YoY (%)

Vienna 4.3 205 2160 0 -1.4

Brussels 4.9 265 1650 4 -6.2

Copenhagen 5.0 280 1879 8 0.1

Paris 4.4 219 6186 0 0.2

Berlin 4.6 236 2700 5 3.5

Frankfurt 4.4 217 3060 4 3.5

Hamburg 4.4 217 2820 4 3.5

Munich 4.0 178 3540 4 3.5

Athens 6.3 413 1580 -13 -3.7

Dublin 6.8 455 2580 -4 -3.7

Rome 4.8 260 2750 0 -1.6

Milan 4.8 260 2850 0 -1.6

Amsterdam 4.3 214 2250 14 -0.9

Lisbon 7.0 480 900 0 -8.2

Madrid 4.6 236 2580 0 -4.2

Barcelona 4.6 236 2408 0 -4.2

Stockholm 5.0 319 1435 4 -1.2

London 4.0 165 5416 2 5.4

1 Prime net initial yield 2 Spread between yields on retail property and 10-year government bonds (in basis points) 3 EUR/sq.m./year

Source: PMA, Bloomberg, Credit Suisse


Research Monthly 9

North America property data

Yield1 (%) Yield spread2 Prime rent3 Rent growth YoY (%) Vacancy rate (%)

Office markets

Atlanta 7.1 506 20 -1 22

Boston 5.5 339 47 2 18

Chicago 5.7 363 34 -1 20

Dallas-Fort Worth 6.4 429 22 -3 22

Houston 5.7 363 36 1 16

Los Angeles 6.0 386 36 1 18

Miami 6.9 482 40 -1 20

New York 4.8 267 70 9 11

San Francisco 5.7 363 40 14 14

Washington, D.C. 5.2 315 56 6 14

Vancouver 5.8 363 54 16 2

Toronto 6.4 423 56 9 6

Retail markets

US average 7.8 570 16 -4 11

1 Prime net initial yield 2 Spread between yields on property and 10-year government bonds (in basis points) 3 USD/sq.ft./year; CD/sq.ft./year

Source: PMA, Colliers, Credit Suisse

Asia-Pacific property data

Yield1 (%) Yield spread2 Prime rent3 Rent growth YoY (%) Vacancy rate (%)

Office markets

Tokyo 3.8 275 12 -6 9

Singapore 3.4 163 7 25 12

Hong Kong 3.1 172 17 22 5

Seoul 5.7 191 4 1 4

Sydney 6.8 284 5 2 9

Melbourne 7.0 304 3 3 7

Retail markets

Singapore 5.5 378 30 36 n.a.

Hong Kong 3.7 232 104 72 n.a.

Sydney 6.4 241 25 -3 3

1 Prime net initial yield 2 Spread between yields on property and 10-year government bonds (in basis points) 3 USD/sq.ft./month

n.a. = not available

Source: PMA, CBRE, Credit Suisse


Research Monthly 10

Emerging markets – Latin America, Asia & EMEA property data

Office markets Yield1(%) Prime rent2 Rent growth YoY (%) Vacancy rate (%)

Abu Dhabi 10 42 -24 7

Bangalore 10 15 -4 16

Beijing 6 44 29 5

Bogotá 10 38 -9 5

Bratislava 8 19 -25 9

Bucharest 8 24 -17 18

Budapest 8 20 -35 25

Buenos Aires 10 33 -17 7

Cape Town 11 12 -22 9

Chennai 9 15 4 22

Delhi 9 58 -13 17

Doha 11 55 -24 7

Dubai 11 42 -41 50

Guangzhou 6 25 -1 18

Istanbul 7 30 -46 11

Jakarta 8 15 -44 8

Johannesburg 11 7 -54 9

Kiev 11 37 -13 13

Kuala Lumpur n.a. 16 4 11

Lima 12 19 -6 3

Manila 10 21 7 4

Mexico City 10 30 0 11

Moscow 10 65 17 12

Mumbai 11 59 7 14

Prague 7 28 -10 12

Riga 8 19 -11 13

Rio de Janeiro 11 89 33 1

Santiago 9 29 -5 3

Sao Paulo 11 69 12 3

Shanghai 6 41 0 11

Sofia 9 15 -47 26

St Petersburg 11 38 -3 13

Taipei 3 29 32 10

Tallinn 8 21 2 11

Tel Aviv 8 34 20 6

Vilnius 9 21 7 10

Warsaw 7 36 -4 6

Zagreb 9 20 -10 9

1 Prime net initial yields 2 USD/sq.ft./year

Source: Colliers, Credit Suisse


Research Monthly 11

Overview of real estate equities

Company name Bloomberg ticker

Regional exposure Sector Rating Analyst Market cap. (USD m)

Price to book 2011E

Dividend yield 2011E

Allreal ALLN SW Switzerland Office HOLD Dominik Garcia 1990 1.17 4.08%

Ascendas REIT AREIT SP Singapore Industrial BUY Shirley Wong 3130 1.23 6.82%

Ascott Residence Trust ART SP Pan-Asia Diversified HOLD Shirley Wong 830 0.77 8.69%

Asian Property Dev. AP TB Thailand Developer BUY Shirley Wong 430 1.38 5.04%

Ayala Land ALI PM Philippines Diversified HOLD Junhao Tan 4700 3.66 0.97%

British Land BLND LN Great Britain Office / retail BUY Dominik Garcia 6450 0.82 5.75%

Capitaland CAPL SP Developing and emerging Asia Diversified BUY Shirley Wong 8210 0.73 2.26%

Capitamall Trust CT SP Singapore Office HOLD Shirley Wong 4290 1.13 5.47%

Cheung Kong 1 HK Hong Kong Diversified BUY Irene Chow 25770 0.74 3.6%

China Resources Land 1109 HK China Residential HOLD Wen Chi Yu 7710 1.21 3.02%

City Developments CIT SP Global, focus on Singapore Developer BUY Shirley Wong 6680 1.37 1.45%

Dexus Property Group DXS AU Global Diversified HOLD Simon Clark 3940 2.06 6.5%

Emaar Properties EMAAR UH Middle East, India Developer BUY Kamran Butt 4310 0.49 2.4%

Frasers Centrepoint FCT SP Singapore Retail BUY Shirley Wong 850 1.12 6.48%

Goodman Group GMG AU Asia-Pacific, Europe Industrial BUY Simon Clark 4130 0.97 6.38%

GPT Group GPT AU Mainly Australia, Europe Retail / office HOLD Simon Clark 5530 0.82 5.75%

Hang Lung Properties 101 HK Hong Kong, China Diversified HOLD Irene Chow 13370 0.91 3.18%

Henderson Land 12 HK Hong Kong Diversified BUY Irene Chow 10650 0.5 2.89%

Keppel Land KPLD SP Singapore, China, Vietnam Developer BUY Shirley Wong 2740 0.81 4.56%

Land Securities LAND LN Great Britain Office / retail BUY Dominik Garcia 7850 0.72 4.58%

Lend Lease Group LLC AU Australia, UK, USA Developer BUY Simon Clark 4000 1.12 5.64%

Mirvac Group MGR AU Australia, New Zealand Diversified BUY Simon Clark 4040 0.76 6.69%

Mitsui Fudosan 8801 JP Japan Office / residential BUY Satoshi Kobayashi 13560 1.02 1.85%

Nippon Building Fund 8951 JP Japan Office BUY Satoshi Kobayashi 4970 0.93 4.44%

PSP Swiss Property PSPN SW Switzerland Office HOLD Dominik Garcia 3480 1.07 3.94%

Sino Land Co. Limited 83 HK Hong Kong Developer BUY Irene Chow 7180 0.67 4.34%

Stockland SGP AU Australia, New Zealand Diversified BUY Simon Clark 7510 0.92 7.22%

Sun Hung Kai 16 HK Hong Kong Diversified BUY Irene Chow 31280 0.76 3.67%

Suntec REIT SUN SP Singapore Retail HOLD Shirley Wong 1910 0.63 8.58%

Swire Pacific 19 HK Hong Kong Office / retail BUY Irene Chow 17850 0.67 3.81%

Swiss Prime Site SPSN SW Switzerland Office / retail HOLD Dominik Garcia 3970 1.15 5.26%

The Link REIT 823 HK Hong Kong Retail / car parks HOLD Irene Chow 7900 1.12 4.43%

Unibail-Rodamco UL FP Europe Retail / office HOLD Dominik Garcia 16140 1.05 6.44%

Westfield Group WDC AU Global Retail BUY Simon Clark 17360 1.09 6.19%

Wharf Holdings 4 HK Hong Kong Diversified HOLD Irene Chow 13640 0.64 2.79%

Source: Bloomberg, IBES/Thomson Reuters, Credit Suisse

Equity Research Analysts: Telephone number: Regional responsibility: Equity Research Analysts: Telephone number: Regional responsibility:

Dominik Garcia +41 44 334 56 33 Switzerland, Europe, USA Irene Chow +852 28 41 40 36 Hong Kong Simon Clark +61 2 8205 4314 Australia Shirley Wong +65 6212 6072 South East Asia Kamran Butt +971 4 362 0124 Middle East Satoshi Kobayashi +81 3 4550 51 18 Japan


Research Monthly 12

Imprint

Authors Martin Bernhard, CFA Assistant Vice President Global Real Estate Analysis [email protected] +41 44 334 83 22 Dominik Garcia Equity Research [email protected] +41 44 334 56 33


Research Monthly 13

Disclosure appendix

Analyst certification The analysts identified in this report hereby certify that views about the companies and their securities discussed in this report accurately reflect their personal views about all of the subject companies and securities. The analysts also certify that no part of their compensation was, is, or will be directly or indirectly related to the spe-cific recommendation(s) or view(s) in this report. Knowledge Process Outsourcing (KPO) Analysts mentioned in this report are em-ployed by Credit Suisse Business Analytics (India) Private Limited.

Important disclosures Credit Suisse policy is to publish research reports, as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. The Credit Suisse Code of Conduct to which all employees are obliged to adhere, is accessible via the website at: https://www.credit-suisse.com/governance/doc/code_of_conduct_en.pdf For more detail, please refer to the information on independence of financial re-search, which can be found at: https://www.credit-suisse.com/legal/pb_research/independence_en.pdf The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse’s total revenues, a portion of which is generated by Credit Suisse Investment Banking business.

Equity rating history as of 07/12/2011 Company Rating Date

HOLD since 29/08/2011



ALLREAL (ALLN SW)

BUY since 17/09/2010




ASCENDAS REIT (AREIT SP)





ASCOTT RESIDENCE TRUST (ART SP)




ASIAN PROPERTY DEVELOPMENT (AP TB)


HOLD since 06/10/2011 AYALA LAND (ALI PM)









BRITISH LAND COMPANY PLC (BLND LN)

BUY since 17/11/2010 CAPITALAND (CAPL SP) BUY since 09/11/2011








CAPITAMALL TRUST (CT SP)




CHEUNG KONG HOLDINGS (1 HK)


HOLD since 29/03/2011 CHINA RESOURCES LAND (CRL) (1109 HK) HOLD since 21/09/2010





CITY DEVELOPMENTS (CIT SP)




DEXUS PROPERTY GROUP (DXS AU)


BUY since 24/03/2011 EMAAR PROPERTIES (EMAAR UH)





FRASERS CENTREPOINT TRUST (FCT SP)




GOODMAN GROUP (GMG AU)




GPT GROUP (GPT AU)




HANG LUNG PROPERTIES (101 HK)





HENDERSON LAND DEVELOPMENT (12 HK)






KEPPEL LAND (KPLD SP)









LAND SECURITIES GROUP PLC (LAND LN)


Abbreviations frequently used in reports

Abb. Description Abb. Description Abb. Description

CAGR Compound annual growth rate EPS Earnings per share P/B Price-to-book value

CFO Cash from operations EV Enterprise value P/E Price-earnings ratio

CFROI Cash flow return on investment FCF Free cash flow PEG P/E ratio divided by growth in EPS

DCF Discounted cash flow FFO Funds from operations ROE Return on equity

EBITDA Earnings before interest, taxes, depreciation and amortization IBD Interest-bearing debt ROIC Return on invested capital


Research Monthly 14




LEND LEASE CORPORATION LIMITED (LLC AU)




MIRVAC GROUP (MGR AU)




MITSUI FUDOSAN (8801 JP)

BUY since 30/09/2010 NIPPON BUILDING FUND (8951 JP) BUY since 04/10/2010











PSP SWISS PROPERTY (PSPN SW)

HOLD since 09/09/2010 SINO LAND (83 HK) BUY since 10/10/2011




STOCKLAND (SGP AU)




SUN HUNG KAI PROPERTIES (16 HK)





SUNTEC REIT (SUN SP)





SWIRE PACIFIC ’A’ (19 HK)





RESTRICTED since 08/06/2011




SWISS PRIME SITE (SPSN SW)





THE LINK REIT (823 HK)






UNIBAIL-RODAMCO (UL FP)






WESTFIELD GROUP (WDC AU)

RESTRICTED since 04/11/2010

HOLD since 02/09/2011 WHARF (4 HK)


BUY since 02/09/2010 Fundamental and/or long-term research reports are not regularly produced for (LAND SECURITIES GROUP PLC). The Global Research department reserves the right to terminate coverage at short notice. Please contact your Relationship Manager for the specific risks of investing in securities of these companies. As at the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (CHEUNG KONG HOLDINGS, SUN HUNG KAI PROPERTIES, SWISS PRIME SITE). For the following disclosures, references to Credit Suisse include all of the subsidiar-ies and affiliates of Credit Suisse AG, the Swiss bank, operating under its Investment Banking division. The subject issuer (ASCENDAS REIT, ASCOTT RESIDENCE TRUST, ASIAN PROPERTY DEVELOPMENT , AYALA LAND, BRITISH LAND COMPANY PLC, CAPITALAND, CAPITAMALL TRUST, CHEUNG KONG HOLDINGS, CHINA RE-SOURCES LAND (CRL), CITY DEVELOPMENTS, EMAAR PROPERTIES, FRASERS CENTREPOINT TRUST, GPT GROUP, HANG LUNG PROPERTIES, HENDERSON LAND DEVELOPMENT, KEPPEL LAND, MITSUI FUDOSAN, NIPPON BUILDING FUND, SINO LAND, SUN HUNG KAI PROPERTIES, SUNTEC REIT, SWISS PRIME SITE, THE LINK REIT, UNIBAIL-RODAMCO, WESTFIELD GROUP, WHARF) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (AS-CENDAS REIT, ASCOTT RESIDENCE TRUST, AYALA LAND, BRITISH LAND COMPANY PLC, CAPITALAND, CAPITAMALL TRUST, CHEUNG KONG HOLD-INGS, CHINA RESOURCES LAND (CRL), CITY DEVELOPMENTS, EMAAR PROPERTIES, FRASERS CENTREPOINT TRUST, HANG LUNG PROPERTIES, HENDERSON LAND DEVELOPMENT, KEPPEL LAND, MITSUI FUDOSAN, NIPPON BUILDING FUND, SINO LAND, SUN HUNG KAI PROPERTIES, SUNTEC REIT, SWISS PRIME SITE, THE LINK REIT, UNIBAIL-RODAMCO, WESTFIELD GROUP, WHARF) within the past 12 months. Credit Suisse provided non-investment banking services, which may include Sales and Trading services, to the subject issuer (ASCENDAS REIT, ASIAN PROPERTY DEVELOPMENT , CHEUNG KONG HOLDINGS, GPT GROUP, HENDERSON LAND DEVELOPMENT, SUN HUNG KAI PROPERTIES) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (ASCOTT RESIDENCE TRUST, CAPITALAND, CAPITAMALL TRUST, CHINA RESOURCES LAND (CRL), DEXUS PROPERTY GROUP, SWISS PRIME SITE, WESTFIELD GROUP) within the past three years. Credit Suisse has managed or co-managed a public offering of securities for the subject issuer (CAPITAMALL TRUST, SWISS PRIME SITE) within the past 12 months. Credit Suisse has received investment banking related compensation from the sub-ject issuer (ASCOTT RESIDENCE TRUST, CAPITALAND, CAPITAMALL TRUST, CHEUNG KONG HOLDINGS, FRASERS CENTREPOINT TRUST, SWISS PRIME SITE, THE LINK REIT, UNIBAIL-RODAMCO, WESTFIELD GROUP) within the past 12 months. Credit Suisse has received compensation for products and services other than in-vestment banking services from the subject issuer (ASCENDAS REIT, ASIAN PROPERTY DEVELOPMENT , CHEUNG KONG HOLDINGS, GPT GROUP, HENDERSON LAND DEVELOPMENT, SUN HUNG KAI PROPERTIES) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related com-pensation from the subject issuer (ASCENDAS REIT, ASCOTT RESIDENCE TRUST, ASIAN PROPERTY DEVELOPMENT , AYALA LAND, BRITISH LAND COMPANY PLC, CAPITALAND, CAPITAMALL TRUST, CHEUNG KONG HOLD-INGS, CHINA RESOURCES LAND (CRL), CITY DEVELOPMENTS, EMAAR PROPERTIES, FRASERS CENTREPOINT TRUST, GPT GROUP, HANG LUNG PROPERTIES, HENDERSON LAND DEVELOPMENT, KEPPEL LAND, LAND SECURITIES GROUP PLC, LEND LEASE CORPORATION LIMITED, MIRVAC GROUP, MITSUI FUDOSAN, NIPPON BUILDING FUND, SINO LAND, SUN HUNG KAI PROPERTIES, SUNTEC REIT, SWIRE PACIFIC ’A’, SWISS PRIME SITE, THE LINK REIT, UNIBAIL-RODAMCO, WESTFIELD GROUP, WHARF) within the next three months. As at the date of this report, Credit Suisse acts as a market maker or liquidity pro-vider in the securities of the subject issuer (MITSUI FUDOSAN). Credit Suisse holds a trading position in the subject issuer (ALLREAL , ASCENDAS REIT, ASCOTT RESIDENCE TRUST, ASIAN PROPERTY DEVELOPMENT , AYALA LAND, BRITISH LAND COMPANY PLC, CAPITALAND, CAPITAMALL TRUST, CHEUNG KONG HOLDINGS, CHINA RESOURCES LAND (CRL), CITY DEVELOPMENTS, DEXUS PROPERTY GROUP, EMAAR PROPERTIES, FRASERS CENTREPOINT TRUST, GOODMAN GROUP, GPT GROUP, HANG LUNG PROPERTIES, HENDERSON LAND DEVELOPMENT, KEPPEL LAND, LAND SECURITIES GROUP PLC, LEND LEASE CORPORATION LIMITED, MIR-VAC GROUP, MITSUI FUDOSAN, NIPPON BUILDING FUND, PSP SWISS PROPERTY, SINO LAND, STOCKLAND, SUN HUNG KAI PROPERTIES, SUNTEC REIT, SWIRE PACIFIC ’A’, SWISS PRIME SITE, THE LINK REIT, UNI-BAIL-RODAMCO, WESTFIELD GROUP, WHARF).


Research Monthly 15

Masayuki Matsushima, an employee of Credit Suisse, is an advisor to the Board ofDirector of MITSUI FUDOSAN. Mario Seris, an employee of Credit Suisse AG, is a Member of the Board of Direc-tors of SWISS PRIME SITE. Markus Graf, an employee of Credit Suisse AG, is ChiefExecutive Officer of SWISS PRIME SITE. Peter Wullschleger, an employee of CreditSuisse AG, is Chief Financial Officer of SWISS PRIME SITE and Secretary of theBoard of Directors. Peter Lehmann, an employee of Credit Suisse AG, is ChiefInvestment Officer of SWISS PRIME SITE.

Additional disclosures for the following jurisdictions Hong Kong: Other than any interests held by the analyst and/or associates as disclosed in this report, Credit Suisse Hong Kong Branch does not hold any disclos-able interests. United Kingdom: For fixed income disclosure information for clients of Credit Suisse (UK) Limited and Credit Suisse Securities (Europe) Limited, please call +41 44 333 33 99. For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: http://www.credit-suisse.com/research/disclaimer

Guide to analysis

Equity rating allocation as of 07/12/2011 Overall Investment banking interests only

BUY 47.47% 48.39%HOLD 46.18% 44.84%SELL 5.48% 5.81%RESTRICTED 0.87% 0.97% Relative stock performance At the stock level, the selection takes into account the relative attractiveness of individual shares versus the sector, market position, growth prospects, balance-sheet structure and valuation. The sector and country recommendations are “overweight,” “neutral”, and “underweight” and are assigned according to relative performance against the respective regional and global benchmark indices. Absolute stock performance The stock recommendations are BUY, HOLD and SELL and are dependent on the expected absolute performance of the individual stocks, generally on a 6-12 months horizon based on the following criteria: BUY: 10% or greater increase in absolute share price HOLD: variation between -10% and +10% in absolute share price SELL: 10% or more decrease in absolute share price RESTRICTED: In certain circumstances, internal and external regulations ex-

clude certain types of communications, including e.g. an invest-ment recommendation during the course of Credit Suisse en-gagement in an investment banking transaction.

TERMINATED: Research coverage has been concluded. Absolute bond recommendations The bond recommendations are based fundamentally on forecasts for total returns versus the respective benchmark on a 3–6 month horizon and are defined as follows: BUY: Expectation that the bond issue will outperform its specified

benchmark HOLD: Expectation that the bond issue will perform in line with the

specified benchmark SELL: Expectation that the bond issue will underperform its specified

benchmark RESTRICTED: In certain circumstances, internal and external regulations ex-

clude certain types of communications, including e.g. an invest-ment recommendation during the course of Credit Suisse en-gagement in an investment banking transaction.

Credit Suisse HOLT With respect to the analysis in this report based on the HOLT(tm) methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report. The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default

variables and incorporated into the algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. These adjust-ments provide consistency when analyzing a single company across time, or analyz-ing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur. The Credit Suisse HOLT methodol-ogy does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a secu-rity, and as the third-party data are updated, the warranted price may also change. The default variables may also be adjusted to produce alternative warranted prices, any of which could occur. Additional information about the Credit Suisse HOLT methodology is available on request. CFROI(r), CFROE, HOLT, HOLTfolio, HOLTSelect, HS60, HS40, ValueSearch, AggreGator, Signal Flag and “Powered by HOLT” are trademarks or registered trademarks of Credit Suisse or its affiliates in the United States and other countries. HOLT is a corporate performance and valuation advisory service of Credit Suisse. For technical research Where recommendation tables are mentioned in the report, “Close” is the latest closing price quoted on the exchange. “MT” denotes the rating for the medium-term trend (3–6 months outlook). “ST” denotes the short-term trend (3–6 weeks outlook). The ratings are “+” for a positive outlook (price likely to rise), “0” for neutral (no big price changes expected) and “–” for a negative outlook (price likely to fall). Outper-form in the column “Rel perf” denotes the expected performance of the stocks rela-tive to the benchmark. The “Comment” column includes the latest advice from the analyst. In the column “Recom” the date is listed when the stock was recommended for purchase (opening purchase). “P&L” gives the profit or loss that has accrued since the purchase recommendation was given. For a short introduction to technical analysis, please refer to Technical Analysis Explained at: https://www.credit-suisse.com/legal/pb_research/technical_tutorial_en.pdf

Global disclaimer / important information

References in this report to Credit Suisse include subsidiaries and affiliates. For more information on our structure, please use the following link: http://www.credit-suisse.com/who_we_are/en/ The information and opinions expressed in this report were produced by the Global Research department of the Private Banking division at Credit Suisse as of the date of writing and are subject to change without notice. Views expressed in respect of a particular stock in this report may be different from, or inconsistent with, the observa-tions and views of the Credit Suisse Research department of Division Investment Banking due to the differences in evaluation criteria. The report is published solely for information purposes and does not constitute an offer or an invitation by, or on behalf of, Credit Suisse to buy or sell any securities or related financial instruments or to participate in any particular trading strategy in any jurisdiction. It has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Although the information has been obtained from and is based upon sources that Credit Suisse believes to be reliable, no representation is made that the information is accurate or complete. Credit Suisse does not accept liability for any loss arising from the use of this report. The price and value of investments mentioned and any income that might accrue may fluctuate and may rise or fall. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to individual circumstances, or otherwise constitutes a personal recommendation to any specific investor. Any refer-ence to past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any products mentioned in this document. Alternative investments, derivative or struc-tured products are complex instruments, typically involve a high degree of risk and are intended for sale only to investors who are capable of understanding and assum-ing all the risks involved. Investments in emerging markets are speculative and con-siderably more volatile than investments in established markets. Risks include but are not necessarily limited to: political risks; economic risks; credit risks; currency risks; and market risks. In jurisdictions where Credit Suisse is not already registered or licensed to trade in securities, transactions will only be effected in accordance with applicable securities legislation, which will vary from jurisdiction to jurisdiction and may require that the trade be made in accordance with applicable exemptions from registration or licensing requirements. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Credit Suisse recommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as legal, regulatory,


Research Monthly 16

credit, tax and accounting consequences. A Credit Suisse company may, to the extent permitted by law, participate or invest in other financing transactions with the issuer of the securities referred to herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof.

Distribution of research reports Except as otherwise specified herein, this report is distributed by Credit Suisse AG, a Swiss bank, authorized and regulated by the Swiss Financial Market Supervisory Authority. Australia: This report is distributed in Australia by Credit Suisse AG, Sydney Branch (CSSB) (ABN 17 061 700 712 AFSL 226896) only to "Wholesale" clients as defined by s761G of the Corporations Act 2001. CSSB does not guaran-tee the performance of, nor makes any assurances with respect to the performance of any financial product referred herein. Bahamas: This report was prepared by Credit Suisse AG, the Swiss bank, and is distributed on behalf of Credit Suisse AG, Nassau Branch, a branch of the Swiss bank, registered as a broker-dealer by the Securities Commission of the Bahamas. Bahrain: This report is distributed by Credit Suisse AG, Bahrain Branch, authorized and regulated by the Central Bank of Bahrain (CBB) as an Investment Firm Category 2. Dubai: This information is distributed by Credit Suisse AG Dubai Branch, duly licensed and regulated by the Dubai Financial Services Authority (DFSA). Related financial products or services are only available to wholesale customers with liquid assets of over USD 1 million who have sufficient financial experience and understanding to participate in financial markets in a whole-sale jurisdiction and satisfy the regulatory criteria to be a client. France: This report is distributed by Credit Suisse (France), authorized by the Comité des Etablissements de Crédit et des Entreprises d’Investissements (CECEI) as an investment service provider. Credit Suisse (France) is supervised and regulated by the Autorité de Con-trôle Prudentiel and the Autorité des Marchés Financiers. Germany: Credit Suisse (Deutschland) AG, authorized and regulated by the Bundesanstalt fuer Finanzdienst-leistungsaufsicht (BaFin), disseminates research to its clients that has been prepared by one of its affiliates. 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Luxembourg: This report is distributed by Credit Suisse (Luxembourg) S.A., a Luxembourg bank, authorized and regulated by the Commission de Surveillance du Secteur Financier (CSSF). Mexico: The information contained herein does not constitute a public offer of securities as defined in the Mexican Securities Law. This report will not be advertised in any mass media in Mexico. This report does not con-tain any advertisement regarding intermediation or providing of banking or investment advisory services in Mexico or to Mexican citizens. Qatar: This information has been distributed by Credit Suisse Financial Services (Qatar) L.L.C, which has been author-ized and is regulated by the Qatar Financial Centre Regulatory Authority (QFCRA) under QFC No. 00005. All related financial products or services will only be available to Business Customers or Market Counterparties (as defined by the Qatar Financial Centre Regulatory Authority (QFCRA)), including individuals, who have opted to be classified as a Business Customer, with liquid assets in excess of USD 1 million, and who have sufficient financial knowledge, experience and understanding to participate in such products and/or services. Russia: The research contained in this report does not constitute any sort of advertisement or promotion for specific securities, or re-lated financial instruments. This research report does not represent a valuation in the meaning of the Federal Law On Valuation Activities in the Russian Federation and is produced using Credit Suisse valuation models and methodology. Singapore: Dis-tributed by Credit Suisse AG Singapore Branch, regulated by the Monetary Authority of Singapore. 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This report may not be reproduced either in whole or in part, without the written permission of Credit Suisse. Copyright © 2011 Credit Suisse Group AG and/or its affiliates. All rights reserved. 11C019A

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