Investing in Norway from an international Real Estate Market Perspective

Chris Staveley9th February 2012

International

22

Akershus Eiendom: international cooperation

Jones Lang LaSalle: Our Global Capital Markets Platform Combining the in-depth local knowledge of over 1,300 investment and corporate finance professionals based in 209 offices around the world

Completed over $300 billion of sales, acquisitions and finance transactions since 2006, of which over 40% have been cross border

Unique relationships with active sellers and buyers across the globe through the International Capital Group

Akershus Eiendom has had a formal cooperation agreement for 10 years with Jones Lang LaSalle as its sole partner in Norway since the agreement was signed in 2001

The cooperation agreement includes transactions, corporate solution services for key clients, research and valuation

3

European Commercial Real Estate Demand is Global

Global Sources of Funds

9.1

2.83.4

13.9

GlobalAsia Pacific

AmericasEurope

Middle East

NB: Other geographies or unknown capital accounted to EUR 5.8 billion

83.5

Equity rich investors (e.g. Canadian and US pension funds) from the Americas have become increasingly active across Europe in 2011

Sharp increase in capital flows from outside Europe

-50-25

0255075

100

Americas Asia Pacific MENA

%

YoY growth in capital inflows

Capital Sources 2011 (€bn) % Change YoY

European 87.1 +4%International 31.6 +57%

Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, January 2012

2011: €bn

44

European Transaction Activity 2011

EUR bn

TOTAL EUR 118.7 bnOffice 44%

Retail 33%

Industrial 8%

Other 14%

36.8

3.7

3.8

16.1

2.4

1.8

3.2

22.8

2.2

8.4 5.81.9

1.8

1.6

0.5

1.6

1%

29%

32%

17% 108%

-45% -2%

0.6

6% 35%

European Investment Volumes (all commercial sectors, EUR bn)

Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, January 2012

Circles: € billions traded in full year 2011% change 2010 vs. 2011

2011 Volume by sector

5

Regent St Estate* (25%)London, UKNBIM (Norway)€550m

Aviva Tower*London, UKPrivate (Indonesian)

€326

11-12 St James*London, UKMEPF (Malaysia)

€168m

O’Parinor (51%)*Paris, FranceNPS (South Korea)

€223m

20 Columbus Courtyard*London, UKM1 (Lebanon)

€180m

1 Kingdom Street*London, UKCityhold Property AB Group (Sweden)

€268m

Polish Telecoms*Warsaw, PolandQatar Holding (Qatar)

€135m

PEP* Munich, GermanyTIAA-CREF(USA)

€400m

New Capital Sources in the European Market

Hotel de Crillon* Paris, FranceRoyal Family(Saudi Arabia)

€250m

* Jones Lang LaSalle advised

Olympia*Brno, Czech RepublicECE and NPS(Germany and South Korea)

€262.5m

6

Investment in the Nordics has been strengthening

5

11

4

10

5

8

5

8

6

4 43

1 2 2 3 2 2

6

2

53

5

3

0

2

4

6

8

10

12

Q1 06

Q2 06

Q3 06Q4 0

6Q1 0

7Q2 0

7Q3 0

7Q4 0

7Q1 0

8Q2 0

8Q3 0

8Q4 0

8Q1 0

9Q2 0

9Q3 0

9Q4 0

9Q1 1

0Q2 1

0Q3 1

0Q4 1

0Q1 1

1Q2 1

1Q3 1

1Q4 1

1

€ bn Quarterly volumes

Quarterly Average

Nordic Market Share

Nordics13%

France14%

CEE & Russia11%

Germany19%

Benelux4%

Other Europe2%S. Europe

5%UK

31%

Nordics increasing their market share – the market was a similar size to France in 2011

Source: Jones Lang LaSalle; Akershus Eiendom (Norway) Sadolin & Albaek (Denmark), January 2012

7

0

25

50

75

100

Norway Sweden Finland France Germany Denmark Europe -Average

UK

Mar

ket S

hare

(%)

Domestic

As highly liquid markets, the dominance of domestic investors in Sweden and Norway illustrates the level of wealth within the countries

Domestic Purchasers Drive the Nordic Markets in 2011

Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, IHS Global Insight Jan 2012

8

Where Real Estate capital wants to invest 2012

UK – remains attractive as a highly liquid market and a perceived “safe haven” sitting outside the €zone

CEE – continued growth will attract investors with some appetite for risk; activity will be driven by availability of product

NORDICS – investors like the Nordics because their better than average economic outlook

RUSSIA – positive long term growth trend will attract more international capital into the market

FRANCE –Strong recovery since 2009 but volumes could fall after deals were brought forward to take advantage of the tax incentive

GERMANY – investors attracted to the stability offered by the economy

SOUTHERN EUROPE – High levels of investor caution; some interest from opportunity funds but pricing will have to adjust further

DECREASE IN INVESTMENT

FLAT

INCREASE IN INVESTMENT

Source: Jones Lang LaSalle

9

6.2

3.9

5.1

2.9

0.4 -1.9

-3

-2

-1

0

1

2

3

4

5

6

7

CEE & Russia Germany France Nordics UK Southern Europe

Change in Vol. (€bn)

0

0.5

1

1.5

2

2.5

3

3.5

4GDP Growth p.a (%)

Change in Volumes (2010 vs. 2011)

GDP Annual Growth (2012-15)

Countries with Stronger Outlook will attract CapitalNet Growth in Investment in 2011 (€bn)

Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, Oxford Economics, Global Insight Jan 2012

1010

Note

This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle as at end of December 2011

Markets can move around the clock at different speeds and directions

The diagram is a convenient method of comparing the relative position of markets in their rental cycle

Their position is not necessarily representative of investment or development market prospects.

Their position refers to Prime Face Rental Values

European Office Property Clock Q4 2011

Rental GrowthSlowing

RentsFalling

Rental GrowthAccelerating

RentsBottoming Out

Barcelona, BrusselsAmsterdam, Budapest,Dublin, MadridEdinburgh, RomeSt. Petersburg

Milan

Cologne

Lyon, Stuttgart

The Jones Lang LaSalle Property ClocksSM

Copenhagen

AthensLisbon

Bucharest, Frankfurt, Istanbul, Kiev, Luxembourg, Prague

Berlin, Hamburg, Munich

Düsseldorf, Geneva, Stockholm

Warsaw

Helsinki

Moscow

Oslo

London City, London West End, Paris, Zurich

Source: Jones Lang LaSalle IP, January 2012

1111

-15 -10 -5 0 5 10 15 20 25 30 35 40 45

Dublin

Madrid

Prague

Frankfurt

Amsterdam

London City

Milan

Munich

Hamburg

Stockholm

Copenhagen

Helsinki

London WE

Paris

Warsaw

Oslo

Moscow

% change

Office Rental Trend is Strong in Nordic Markets…

Source: Jones Lang LaSalle; Akershus Eiendom (Norway), January 2012

Prime Office Rental Change Q4 2010 – Q4 2011

12

Q4 2011 Office Capital Value/m2 vs.10-year Average

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

(local currency in 2011 prices)

13

Domestic Dominance but Very Liquid Markets

0 100 200 300 400 500 600 700 800 900 1000

Portugal

Ireland

Spain

Russia

Italy

Poland

Netherlands

France

Germany

Finland

UK

Norway

Sweden

Investment per Capita (EUR)Source: Jones Lang LaSalle; Property Data (UK); Akershus Eiendom (Norway), Athens Economics (Greece), Sadolin & Albaek (Denmark), RCA Analytics, IHS Global Insight Jan 2012

Direct RE Investment per capita: 2011

* Central London investment volumes includes offices only

14

The Norwegian Market has High Levels of Transparency

1.0United Kingdom, Sweden, Ireland, France, Netherlands Germany, Belgium,

Denmark1.5

Finland, Spain, Austria, Portugal, Switzerland, Italy, Poland

2.0South Africa, Czech Republic Hungary, Israel

2.5Greece, Slovakia, Russia (Tier 1-2 Cities)

Romania, Turkey3.0

Bulgaria, Russia (Tier 3 Cities), Ukraine, Slovenia

3.5Croatia, Kazakhstan

4.0Belarus

4.5

5.0

Source: Jones Lang LaSalle, LaSalle Investment Management

Highest

High

Semi

Low

Opaque

NORWAY

15

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Oslo Europe

Oslo Prime Yields becoming more Aligned with Europe

Oslo Europe*

Current Prime Yield 5.25% 5.27

10 Year Average 5.71% 5.42

20 Year Average 6.75% 5.62

15

20 Year Average

20 Year Average

Prime yields in Oslo are in line with a weighted European average but are sitting well below the long-term average

Source: Jones Lang LaSalle; Akershus Eiendom (Norway), January 2012

Prime Yield %

* Yield is weighted

16

2012-2013 % p.a. % p.a.

Over-performers Under-performers

London – City 7.0 Utrecht 0.4

Warsaw 5.6 Luxembourg 0.4

Edinburgh 5.4 The Hague 0.0

Moscow 5.1 Dusseldorf 0.0

Oslo 5.0 Brussels 0.0

Rental Forecasts Strongly suggest Outperformance in Oslo

Source: Jones Lang LaSalle, December 2011

17

Forecast

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006 2007 2009 2009 2010 2011 2012 2013 2014

Forecast

0

12

3

4

56

7

89

10

2010 2011 2012 2013 2014 2015 2016

Norwegian Economic Outlook is PositiveCo

nsum

er P

rice

Inde

x An

nual

Gro

wth

(%)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Norway Finland UK Sweden Denmark Germany France

Annu

al A

vera

ge G

rowt

h 20

12-1

6 Over 2012-2016 Norway’s average annual growth outperforms other major European economies

Norway

GermanySwedenUKFinland

Source: Oxford Economics

Norwegian inflation forecast to remain below target Unemployment expected to remain low

Norway GDP growth looks set to outperform

ILO

Um

empl

oym

ent R

ate

(%)

• Higher GDP growth than Europe in 2012: we forecast + 2.3% vs. + 0.2% in the EU-27

• Better labour market in Norway: unemployment is one of the lowest in Europe

• While inflation is under control: inflation is anticipated to remain below target

18

Norwegian Bonds relatively stable against German bunds

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12

UK Spain France Norway

JFirst bail-out in

Source: Datastream; February 2012

% p

oint

spr

ead

over

Ger

man

10

year

bun

ds

Source: Datastream; February 2012

19

China

SwedenSwitzerland

Turkey

Denmark

Luxembourg

Czech Rep

Iceland

Finland

Norway

HungaryAustria

Germany

NetherlandsSpain

Belgium

France

Portugal

Italy

UK

Ireland

USA

Greece

0

20

40

60

80

100

120

140

160

180

-15 -10 -5 0 5 10 15

Sovereign Debt, not an issue for NorwayG

over

nmen

t Tot

al D

ebt a

s %

of G

DP 2

011

Source: Global Insight, November 2011 Government Fiscal Balance % GDP 2011

Developed Countries – Total Government debt and fiscal balance as a % of GDP

20

Nordic Regions’ Banks’ Tier 1 capital ratios healthy

-2

0

2

4

6

8

10

12

14

Pira

eus

EFG

Eur

oban

kNB

GKB

C Ba

nkCr

edit S

uiss

eAl

pha

Bank

Cred

it Agr

icole

BCP

Com

mer

zban

kDe

utsc

he B

ank

Banc

oUB

SBM

PSLl

oyds

SocG

enUB

I Ban

caHS

BCBa

nco

Saba

dell

BBVA

BNP

Parib

asBa

rcla

ysBa

nkin

ter

Banc

o Po

pula

rRB

SSa

ntan

der

Dans

ke B

ank

Inte

saDn

B NO

RNo

rdea

Ban

kSw

edba

nkS

E B

Hand

elsb

anke

n

%

Nordic banks are the most well capitalised in Europe and will have more scope for lending activity

Source: Bank of America Merrill Lynch Equity Research

21

0 100 200 300 400 500 600 700

ADIA - UAE

SAFE - China

Govn PF - Norway

SAMA - Saudi Arabia

CIC - China

KIA - Kuwait

HK Monetary Authority - China

Govn of Singapore Inv. Corp

Temasek Holdings - Singapore

Nat. Social Security Fund - China

Source: www.swfinstitute.org

Strong Capital Base will support Norwegian Market…

Top 10 Global Sovereign Wealth Funds

Total Assets (US$bn)

22

Forecast

… and Population Growth in Norway and Oslo Region is Strong

95

100

105

110

115

120

125

130

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Norway

Oslo

Stockholm

London

Paris

EuropeanUnion

Population Growth Forecasts

Annu

al P

opul

atio

n G

rowt

h In

dex

(200

5=10

0)

+7%

+27%

+3%

+18%

+13%

Source: Oxford Economics; December 2011

23

Investing in Norway – International Perspective

• European real estate demand is global

• Nordic investment is relatively strong – but highly domestic

• Norwegian market has strong prospects and will attract new capital sources

• Norwegian economic backdrop is very robust – should increase the relative attractiveness of the market

• Perception of a lack of liquidity – not necessarily real

• Domestic competition and transaction speed are barriers

• A market too far for regional funds? – Should not be the case

24

This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent ofJones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

Chris StaveleyInternational DirectorEuropean Capital MarketsLondon+44 (0) 20 7399 5340chris.staveley@eu.jll.com

Takk!