DTZ Net Debt Funding Gap Nov 12

DTZ Insight Net Debt Funding Gap

European gap to be bridged by 2015, with UK ahead

DTZ Research

14 November 2012

Contents

Introduction 2

Net Debt Funding Gap declines 3

Non-bank lending steps-up 7

DTZ Contacts 12

Author

Nigel Almond

Head of Strategy Research

+44 (0)20 3296 2328

[email protected]

Contact

Hans Vrensen

Global Head of Research

+44 (0)20 3296 2159

[email protected]

The UK posted a 55% reduction in its net debt funding gap over the last six months. This is well ahead of Europe as a whole which posted a 20% decline and the global gap down 17% over the same period. Europe continues to have the highest gap at USD86bn, with the remaining USD31bn in Asia Pacific. As before, we estimate there to be no funding gap in the Americas (Figure 1).

In our four step analysis, the net decline occurred despite the negative impact of new banking regulations. These regulations are estimated to more than double Europe’s refinancing gap of USD82bn to a gross debt funding gap of USD190bn. France, Germany and the Netherlands are most significantly impacted by these pending regulatory pressures.

A dramatic 45% increase in new non-bank lending reverses this regulatory

impact. Over the last six months, we note an increase as well as greater diversity in new non-bank funding. We are now aware of over ten insurance companies and over 30 funds providing debt financing. As before, we expect these groups to provide USD75bn of additional lending capacity over 2012-13. In addition, we estimate that continued growth in corporate bond issuance could provide an additional USD29bn of net new funding.

In the near term, we expect two thirds of the non-bank activity to come from

insurance companies. But, the growth in fund raising by fund managers should see a more even balance in lending capacity by 2015. In aggregate we forecast USD225bn of new lending capacity from insurers and funds over 2013-15.

With the European net funding gap having shrunk by more than half by the end of 2013, we project that by the end of 2015 a majority of the work-out will have been completed. In the UK this could be earlier. We expect the tail end of the work out to take longer to complete representing 10-15% of the funding gap. This is on the assumption of available non-bank lending, continued low base rates and no further regulatory changes.

Figure 1

Global net debt funding gap, 2012-13, USD bn

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UK Europe GlobalUK (LHS) Europe Global

Europe Europe

Asia Pacific

Asia Pacific-55% -20%

-17%

Source: DTZ Research

mailto:[email protected]

Net Debt Funding Gap

www.dtz.com DTZ Insight 2

Introduction This is the fifth issue of our Global Debt Funding Gap report and provides an update on our previous analysis released in May 2012. Compared to our previous report, the amount of debt outstanding in each market remains unchanged, based upon data from our Money into Property database at the end of 2011. Since our last report we have made adjustments to some of the inputs based on discussions with our research and deal teams locally and also updated information provided in the year-end 2011 De Montfort University survey on UK commercial property lending

1.

Our methodology for estimating the debt funding gap remains unchanged. As before, it involves a detailed analysis which takes into account:

Vintage of outstanding loans

Duration of loans by vintage

Loan to value ratios by vintage

Historic and future changes in collateral values, and

Impact of loan extensions In addition across Europe, we have updated our analysis to take account of the regulatory impacts as well as new non-bank lending. We use a four step process in calculating the net debt funding gap (see Box1). Where data permits, inputs vary for each individual country. A detailed step-by-step methodology is available in the appendix of our May 2011 report

2, and our process of

dealing with the regulatory impacts is outlined in our May 2012 report

3.

1 The UK Commercial Property Lending Market Research Findings 2011 Year End, De Montfort University 2 Global Debt Funding Gap, Smaller But Pressures Remain, 5 May 2011 3 Global Debt Funding Gap, new non-bank lending offsets EBA impact, 11 May 2012

Box 1: Our four-step approach to estimating the net debt funding gap Since we first released the debt funding gap in March 2010, we have adapted our approach to the changing market conditions and to reflect new and better information. Currently, our analysis involves the following four steps:

1. Estimate the refinancing gap based on refinancing of maturing debt vintages

2. Add the impact of bank regulations to provide the gross debt funding gap

3. Estimate the positive impact of non-bank lending sources

4. Subtract the non-bank debt from the gross gap to estimate the net debt funding gap

Although 2012 is now nearly past us, we continue to analyse over the period 2012-13 to enable a like for like comparison of the regulatory impacts. The latest available estimates provided by the International Monetary Fund (IMF) only cover the period to end 2013

4. This limits our ability to move

forward with an updated 2013-14 estimate at this time. 4 Global Financial Stability Report, Restoring Confidence and Progressing on Reforms, October 2012, IMF



Net Debt Funding Gap declines

UKs 55% reduction leads 20% European decline The UK’s 55% reduction leads a 20% decline in Europe’s total net debt funding gap over the last six months. The global net debt funding gap shrank a more modest 17% to USD117bn over the same period. Europe continues to have the highest gap at USD86bn, with the remaining USD31bn is in Asia Pacific. As before, we estimate there to be no funding gap in the Americas (Figure 2).

Four-step approach considers all relevant perspectives In estimating the net debt funding gap, we run our analysis through the following four step process. First we estimate the refinancing gap. This estimate uses a detailed vintage-based refinancing analysis considering maturing debt and new debt available to replace it. Second we add the impact of pending bank regulation to estimate the gross debt funding gap. Third, we estimate the amount of non-bank finance available. Finally in the fourth step, we subtract the new non-bank lending to obtain the net debt funding gap. Please refer to Figure 3

Step 1: Deteriorating capital value outlook pushes refinancing gap higher Globally the refinancing gap has increased by 9% to USD118bn over the period 2012-13. The majority of this increase was in Europe as the refinancing gap grew 7% from USD74bn to USD82bn. The refinancing gap in Asia Pacific grew 2% to USD34bn. There remains no gap in North America. Globally, Japan has the largest refinancing gap at USD35bn. This is followed by the UK and Spain, both at USD25bn. Ireland has the next largest refinancing gap at USD9bn with Italy at USD8bn. France and Germany have gaps of just USD3bn each (Figure 4). Both the UK and Spain saw increases in their refinancing gap. This partly relates to a reduction in the LTV at refinance, compared to our previous assumption. But, this is also driven by a deterioration in the outlook for capital values. This is particularly the case in Spain, whose refinancing gap grew by over USD6bn. Italy also saw its gap grow by over USD2bn, again reflecting a deterioration in the outlook for capital values.

Figure 2

Global net debt funding gap, 2012-13 USD bn

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Figure 3

Four-step approach to estimating net debt funding gap

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Non-bank finance

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Figure 4

Step 1:Refinancing gap by country 2012-13 USD bn

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May 12 Nov 12




Step 2: Pending banking regulations more than doubles Europe’s gap to USD190bn Allowing for the regulatory impact (see Box 2), Europe’s USD82bn refinancing requirement more than doubles to a USD190bn gross debt funding gap (Figure 5). The UK remains the most exposed, with a gross funding gap of USD36bn, followed by Germany and Spain at USD27bn and France at USD26bn. As we highlighted previously some markets with relatively low refinancing gaps are impacted more by regulation. Of the major markets, the Netherlands is most exposed with its refinancing gap rising from USD0.2bn to a gross debt funding gap of USD9.9bn. Sweden is also exposed with its gap rising from USD0.8bn to a gross USD5.2bn. Ireland remains the only market which is not impacted by the regulation based on our analysis. Of the major markets, Spain only has a 10% hit due to regulation. Of course there are other pressures building on the Spanish banking system (see Box 3 for an update on Spain). Increase of 4% in gross debt funding gap based on regulatory impact The gross debt funding gap has increased in all major markets. Overall, across Europe the gross funding gap has risen 4% from USD182bn in our May-12 estimate to USD190bn now (Figure 6).

Figure 5

Step 2:European Gross Debt Funding Gap, 2012-13, USD bn

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Refinancing gap Regulatory impact


Figure 6

European Gross Debt Funding Gap, 2012-13, USD bn

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Box 2: Assessing the regulatory impact

We have updated our analysis to take into account the growing impact of the regulatory burden on banks’ deleveraging requirements. This particularly impacts European banks where the European Banking Authority (EBA) is requiring banks under its watch to maintain a Core Tier 1 ratio of 9%. In our May-12 update we assessed the impact of regulation based on analysis undertaken by the IMF. Since their report was published, the EBA provided some updated analysis highlighting those banks had met the capital ratio requirements, with much of this achieved through capital raisings. Going forward banks will still need to maintain their capital ratios. In the most recent update to their analysis the IMF

5 has revised its estimates on bank deleveraging required to maintain capital ratios. Given the deteriorating

economic outlook the amount of deleveraging required has increased from 7% to 7.3%. In line with our previous report we assume commercial real estate takes a similar hit. Whilst the refinancing gap is ultimately the additional equity a borrower needs to find, the regulatory impact is the reduction in equity that hits the bank directly and could come through additional repayment of loans, equity raising or writedowns. 5 Global Financial Stability Report, Restoring Confidence and Progressing on Reforms, October 2012, IMF



Box 3: Creating Spain’s bad bank With over EUR270bn in outstanding debt to commercial real estate Spain has the third highest level of outstanding debt in Europe. It represents a significant 25% of GDP, the second highest ratio in Europe after Ireland. Official figures from the Bank of Spain show that 27% of loans to real estate are doubtful

6. Whereas

Ireland was quick to establish its bad bank – the National Asset Management Agency (NAMA) to work out the problem loans, Spain has been slow to respond, preferring to provide support to the banking system through its Fund for Orderly Bank Restructuring (FROB). Legacy loans to commercial real estate continue to weigh on the banking sector, with the Spanish central bank earlier this year requiring banks to make EUR50bn of provisions to help clear up their balance sheets and the financial system. As part of the process to provide financial support to the banking sector through funds provided by the ECB and IMF a number of banks have been subjected to detailed stress tests. Tests were conducted on fourteen bank groups, representing 90% of total domestic credit in the Spanish financial system. These tests showed there was EUR227bn of loans outstanding to real estate developers with a further EUR88bn of foreclosed loans (mostly in the real estate sector). Following the recent stress test the Spanish Government is also pressing ahead with plans for a Spanish bad bank. The asset management company (SAREB) is currently being established through law and based on the current draft legislation is likely to have a life span of 15 years, with average discounts on loan transfers of circa 50%, ranging from 32% on performing loans to 80% foreclosed land. Although this average reduction appears lower compared to the 58% cut applied to transfers into NAMA, it should be noted that these transfers took place three years ago, and therefore there have already been writedowns and provisions on some of these loans. The move is welcome, and the longer lifespan of the company should prevent fire sales and provide sufficient time to run down the assets. This is critical given the Spanish economy is currently projected to show positive growth in 2014 at the earliest, and growth will only average just above 1% pa from 2012-2021. Table 1

Bad bank quick facts

Spain Ireland

Name SAREB NAMA

Established December 2012 December 2009

Life span 15 years 10 years

Average haircut on transfer (Range)

Average 50% (32% - 80%)

Average 58% (35% - 72%)

Public ownership <50% 100%

Source: Bank of Spain, NAMA, Morgan Stanley

6 Doubtful loans are loans in relation to which there is reasonable doubt regarding full repayment (of principal and interest) in accordance

with the contractual terms. See www.bde.es.



Government-sponsored bad banks address relatively most exposed markets – but, who’s next? Comparing the gross debt funding gap relative to the size of the individual countries invested stock provides a more realistic measure of their exposure as you might expect to see a high debt funding gap in a relatively larger market. Ireland and Spain remain the most exposed markets with their gross debt funding gaps around 6% of its invested stock (Figure7). As noted above, both countries now have structural solutions in place with government-sponsored bad banks. Hungary and Romania, at around 5% have the next largest relative exposures. A number of major European markets including the UK, Germany, France, Italy and the Netherlands have high relative exposures. This does bear the question, whether any of these countries might be next by putting in place a state-sponsored structural solution, similar to those adopted in Ireland and Spain. These exposures in Europe ignore the impact of swap breakage costs. In some individual cases they can add significant costs, often preventing banks from taking action. We outline the potential costs in Box 4.

Figure 7

Global Gross Debt Funding 2012-13 USD bn, and as % invested stock

UK

Japan

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FranceItalyNetherlands

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Australia0%

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NAMA

SAREB

Source: DTZ Research, Oxford Economics

Box 4: Assessing the impact of swap breakage costs

At the peak of the market it was not uncommon for swap maturities to be longer than the loan maturity. At the time of origination longer dated swaps were often cheaper than shorter swaps. For example, at the middle of 2007 five year swaps were at 6.2%, compared to 5.9% for 10 years. As no one thought interest rates would decline further, there was a sustained period when few foresaw the potential problems of breaking a swap early. To assess the impact we have assumed that 25% of loans originated in 2006 and 2007 vintages had a swap-loan term maturity mismatch. As we know the average duration of loans for these vintages and we also know the proportion of loans that were extended there is a good basis for this estimate. Therefore, assuming all loans in these vintages follow this trend, we can estimate the value of loans due to mature with a swap issue. We estimate these maturities to be EUR33bn in 2012 and EUR27bn in 2013. If the cost of breaking is around 15% of the maturing value, there is an additional EUR9bn (USD12bn) mark-to-market swap charge in Europe. We assume this charge is added to the collateral encumbrance. Overall, this could add a further 6% increase in Europe’s gross debt funding gap. However, given that most loans with longer swaps are likely to be extended further any way, any systematic market-wide additional indebtedness due to the swap mark-to-market charge will reduce over time. Therefore, we disregard it in our final estimate of the debt funding gap. However, we recognise its relevance in limiting the defaults during the loan term and potential for moving the market more towards fixed rate lending.



Non-bank lending steps-up

Step 3: New non-bank lending up by 45% In Nov-11, we estimated there to be USD75bn of lending capacity from non-bank lenders in Europe over the period 2012-13, with a further USD75bn in 2014. In updating our estimate we have reviewed the number of non-bank lenders in both the UK and wider market based on public and private sources. At this point, we are now aware of over ten insurance companies lending in the UK and Europe, including Aviva, AXA, Legal & General, Met Life and Mass Mutual. In addition there are some thirty funds that have raised or are planning to raise funds to provide senior debt in the market. These include both dedicated debt funds as well as global opportunity funds, such as Blackstone, Colony Capital, Fortress Investment, M&G, and Starwood Capital. We are also aware that some institutional investors have established segregated accounts. That could increase this figure further. Many of these have already undertaken some lending (Table 2). Based on discussions with some of these funds and known target raisings we have estimated the amount of new equity available for lending purposes. For the period 2012-13 we estimate this still to be USD75bn, although a reduction of equity in 2012 is offset by a higher amount in 2013 (Figure 8). This reflects a relatively longer than anticipated period for many funds to get up and running. Looking to 2014 we see close to USD80bn of equity being available taking the full 2012-14 availability to USD154bn.

Diversity grows to bond markets In addition we have seen a growing number of property companies who have also been tapping into the bond markets to take advantage of the falling borrowing costs in the public market. Already in the first three quarters of this year issuance across Europe has totalled USD15bn (EUR11.5bn), 31% above the full year 2011 total of USD11bn (Figure 9). It is also above levels seen in 2006/07. In particular we have seen more issuances over EUR 50m, but also over EUr100m. Assuming this trend continues, we expect the full year volumes to reach EUR15bn (USD20bn). We estimate a similar level of activity in 2013. After allowing for maturities this year and next we estimate there to be a net USD29bn of funding from bond issuance in Europe over 2012-13.

Figure 8

Lending capacity from non-bank lenders in Europe, USD bn

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Table 2

Notable lending by non bank lenders

Lender Location Amount Borrower

Aviva Tower 42, UK £145m Nathan Kirsh

Metlife Distb’n warehouse, UK

£133m London & Stamford

Natixis/ Blackrock

Portfolio, Germany

€388m Edinburgh House

LIM Grosvenor Square, UK

£100m Richard Caring

M&G Nido Student housing, UK

£266m Round Hill

L&G Student housing, UK

£121m Unite Group


Figure 9

Bond issuance by European property companies, EUR bn

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< €50m €50-€99m €100-€249m > €250m Forecast

4Q 12




Combined with the USD75bn of finance from insurance companies and other senior debt funds, this provides additional funding of USD104bn in Europe over 2012-13. Thus shrinking Europe’s USD190bn gross debt funding gap by 55% to a net USD86bn (Figure 10). The increase in bond issuance is not something we were aware of earlier in the year and therefore has a significant impact on lending capacity, albeit it is unsecured. We also estimate there to be net bond issuance of USD5bn in Japan over 2012-13, which would lower Japan’s funding gap to a net USD30bn.

UK leads the way The main focus of lending activity to date has been predominantly focussed on the UK, although there has been growing activity in Europe. Based on our analysis there is USD9bn of lending capacity focussed on the UK in 2012, with a further USD12bn with a wider European focus. In 2013 we see far more capacity in Europe, with close to USD38bn available and just under USD17bn purely focussed on the UK (Figure 11). As we highlighted earlier, much of the lending activity by non-banks has been in the UK (Table 2). With GBP13bn of debt available from insurers and funds and a net GBP4.5bn in corporate bond issuance to real estate, the UK’s net debt funding gap shrinks by 75% to GBP6bn (Figure 12). The UK is therefore leading the way relative to the rest of Europe in shrinking its net debt funding gap. It is therefore of little surprise to see a greater focus of activity towards pan-European funds beyond 2013 (Figure 11) as this is where we see the main challenge going forward. Overall we see further growth in lending capacity, with over USD90bn available by 2015, and a significant USD225bn available over the period 2013-15 (of which 70% is aimed at pan-European funds). This would represent more than 20% of European loans due for refinance in this period.

Figure 10

European net debt funding gap 2012-13, USD bn

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Figure 11

Finance from insurers and funds, USD bn

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Figure 12

UK net debt funding gap 2012-13, GBP bn

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Insurers to dominate in the near term In the near term we see much of the non-bank activity coming from insurance companies. Many of these companies already have established teams and the capacity to lend in the current market. We estimate insurers to have a two third market share this year (Figure 13). With a growing number of funds now coming to the market, including global equity funds, we can easily see a rapid growth in the number of funds with lending capacity rising nearly seven fold to USD48bn by 2015. This would marginally outweigh the USD43bn we estimate to be available from insurance companies in the same period. In the previous section we highlighted how Europe’s refinancing gap more than doubled to a gross USD190bn debt funding gap. This pushed the global gross debt funding gap to USD226bn. However funds continue to raise equity to target commercial real estate, whilst we have also see growing interest from non-bank lenders. How does this stack against the gross debt funding gap?

Sufficient equity to bridge global funding gap Globally we see sufficient equity to bridge the debt funding gap. In total there is close to USD280bn of equity available which compares with a net debt funding gap of USD117bn (Figure 14). In Asia Pacific the amount of equity (USD70bn) is double the debt funding gap (USD31bn). In Europe there is also sufficient equity (USD116bn) to bridge the net debt funding gap of USD86bn.

Diversity in lending sources welcome The current shift towards a more diverse lending base across Europe is a welcome shift in the market. The dominance of banks as a source of finance in Europe is a stark contrast with the US where non-bank lending represents around 40% of the market. With no debt funding gap, this highlights how markets can operate more efficiently when there is less reliance on one source of finance.

Rising discounts as loan sales shift to secondary assets Loan sales have continued across Europe, with the focus now shifting from Ireland and the UK to the wider continental European market. Whilst the initial focus of loan sales was predominantly towards performing loans, more recent sales have been of non-performing and more secondary assets. This has led to a rise in the level of discounts which are now ranging from 50%-70%, compared around 25%-30% a year ago (Figure 15).

Figure 13

Available finance by source of lender

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Insurers Funds


Figure 14

Net debt funding gap and available equity 2012-13, USD bn

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Available equity Net debt Funding Gap Non bank debt


Figure 15

Discounts and volume of European loan sales, % and EUR bn

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Discount ̶ Trend Cumulative value (RHS)




As sales have shifted from better performing loans to those loans secured against secondary or poorer performing assets we have continued to see growth in activity, albeit at higher discounts. In recent months we have see a levelling in the rate of discounts applied, which has typically been around 60%. Inevitably there will be instances where pricing becomes an issue as evidence by the failed sale of Project Pivot, a UK non performing loan (NPL) portfolio. Loan sizes too have also been shrinking. Initial sales were often in excess of EUR1bn. More recent sales have been in the region of EUR500m to EUR700m. We see this trend continuing as investors become more selective and the capacity of funds to acquire multi-billion portfolios wanes.

Funds not just focussed on core Although many investors are focussed on core opportunities our analysis of newly raised capital across Europe highlights a broad mix of investors active targeting a range of investment styles

7.

The majority of equity raised is through third party managed funds, combined with publicly listed property companies and institutions they form the bulk of raised equity. In contrast to the perception that most funds are seeking prime opportunities, our analysis of funds shows that just 20% are focussed on core, with a majority more interested in opportunistic or value-add (Figure 16). This diversity of styles means funds will be well placed to target the more secondary opportunities coming to the market, although we expect deals to be more protracted as investors focus more on pricing. 7 See DTZ Insight Great Wall of Money New Capital returns to Growth, 9 October 2012 Figure 16

Available equity by type and style of fund, 2012-13

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Regulators to force deleveraging As the crisis across Europe continues we see regulators increasing their focus on the banking sector as well as non-banks to maintain stability in the financial system. This will force legacy lenders to further deleverage their balance sheets, particularly in more exposed markets, and where significant writedowns are expected. Although in our analysis, the Netherlands has a relatively small funding gap, the exposure towards secondary assets cannot be underestimated. There are plans under consideration that could force banks to revalue the property of standard mortgages to market value if there is an expected impairment on the loan. Such a requirement could be followed by other Central Banks. In the UK uncertainty still remains over the impact of slotting. The lack of transparency over the introduction of slotting means we are unable to assess its impact in our analysis. The introduction could lead to a further reduction in lending capacity and the writedown of legacy loans and would likely lead to an increase in overseas lenders and other non-bank sources of finance.

European lending market returns to normal by end-2015 It is now five years since the onset of the financial crisis in 2008. Whilst the deleveraging process was slow to start we have seen the momentum building since 2011. If we see continued strong growth in new non-bank lending, continued low base rates and no further regulatory changes, we expect the European net debt funding gap to have shrunk by more than half (55%) by the end of 2013. In the UK, this will be even stronger falling to 25% of the gross gap. If these trends continue, we project that over the next three years, by year-end 2015 the European debt funding gap will be largely resolved. The majority of the UK’s gap will most likely be gone earlier than that. The tail end of the work out, comprising around 10-15% of the funding gap will take a longer period to run-off, and as evidenced in previous cycles.



Other DTZ Research Reports Other research reports can be downloaded from www.dtz.com/research. These include:

Occupier Perspective Updates on occupational markets from an occupier perspective, with commentary, analysis, charts and data. Global Occupancy Costs Offices 2012 Obligations of Occupation Americas 2012 Obligations of Occupation Asia Pacific 2012 Obligations of Occupation EMEA 2012

Property Times Regular updates on occupational markets from a landlord perspective, with commentary, charts, data and forecasts. Coverage includes Asia Pacific, Bangkok, Beijing, Berlin, Brisbane, Bristol, Brussels, Budapest, Central London, Chengdu, Chongqing, Dalian, Edinburgh, Europe, Frankfurt, Glasgow, Guangzhou, Hangzhou, Ho Chi Minh City, Hong Kong, India, Jakarta, Japan, Kuala Lumpur, Luxembourg, Madrid, Manchester, Melbourne, Milan, Nanjing, Newcastle, Paris, Poland, Prague, Qingdao, Rome, Seoul, Shanghai, Shenyang, Shenzhen, Singapore, Stockholm, Sydney, Taipei, Tianjin, Ukraine, Warsaw, Wuhan, Xian.

Investment Market Update Regular updates on investment market activity, with commentary, significant deals, charts, data and forecasts. Coverage includes Asia Pacific, Australia, Belgium, Czech Republic, Europe, France, Germany, Italy, Japan, Mainland China, South East Asia, Spain, Sweden, UK.

Money into Property For more than 35 years, this has been DTZ's flagship research report, analysing invested stock and capital flows into real estate markets across the world. It measures the development and structure of the global investment market. Available for Global, Asia Pacific, Europe and UK.

Foresight Quarterly commentary, analysis and insight into our in-house data forecasts, including the DTZ Fair Value Index™. Available for Global, Asia Pacific, Europe and UK. In addition we publish an annual outlook report.

Insight Thematic, ad hoc, topical and thought leading reports on areas and issues of specific interest and relevance to real estate markets. Great Wall of Money – October 2012 Property Market Correlations – October 2012 J-Reit – October 2012 Rise of City Clusters– September 2012 Singapore luxury condominiums – September 2012 China Hongqiao Transportation Exchange – June 2012 Global Debt Funding Gap – May 2012

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DTZ Research DTZ Research Contacts

Global Head of Research Hans Vrensen Phone: +44 (0)20 3296 2159 Email: [email protected] Global Head of Forecasting Matthew Hall Phone: +44 (0)20 3296 3011 Email: [email protected] Head of Strategy Research Nigel Almond Phone: +44 (0)20 3296 2328 Email: [email protected] Head of UK Research Ben Burston Phone: +44 (0)20 3296 2296 Email: [email protected]

Head of CEMEA Research Magali Marton Phone: + 33 1 49 64 49 54 Email: [email protected] Head of Greater China Research David Ji Phone: +852 2507 0507 Email: [email protected] Head of APAC Research Chor-Hoon Chua Phone: +65 6293 3228 Email: [email protected] Head of Americas Research John Wickes Phone: +1 312 424 8087 Email: [email protected]

DTZ Business Contacts

Head of Valuation EMEA Bryn Williams Phone: +44 (0)20 3296 4474 Email: [email protected] Head of Valuation UK Charles Smith Phone: +44 (0)20 3296 4411 Email: [email protected] Head of Valuation Netherlands Jacques Boeve Phone: +31 (0)20 8 407 262 Email: [email protected] Head of Valuation Germany Klaus Dallafina Phone: +49 (0) 69 92 100 400 Email: [email protected] Head of Valuation France Jean-Philippe Carmarans Phone: + 33 1 47 48 77 24 Email: [email protected]

Debt Solutions Coordinator George Minns Phone: +44 (0)20 3296 3647 Email: [email protected] Debt Solutions Ireland Maurice O’Neill Phone: +353 1 6399657 Email: [email protected] Debt Solutions London Fergus Jack Phone: +44 (0) 20 3296 4494 Email: [email protected] Debt Solutions UK Regions Richard Murphy Phone: +44 (0)29 2026 2235 Email: [email protected] Debt Solutions Netherlands Patrick Steenstra Toussaint Phone: +31 20 571 1427 Email: [email protected]

DISCLAIMER

This report should not be relied upon as a basis for entering into transactions without seeking specific, qualified, professional advice. Whilst facts have been rigorously checked, DTZ can take no responsibility for any damage or loss suffered as a result of any inadvertent inaccuracy within this report. Information contained herein should not, in whole or part, be published, reproduced or referred to without prior approval. Any such reproduction should be credited to DTZ.

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DTZ Net Debt Funding Gap Nov 12