Place North West AGMThursday 22nd May 2014

Presentation by Dan Crossley, Investment Partner, WHR Property Consultants LLP

TAKING ADVANTAGE OF OPPORTUNITIES IN THE ECONOMIC RECOVERY

Introduction• WHR is 10 years old.

• Main disciplines include Investment, Office and Industrial Agency, Rating and Professional and Building Surveying.

• WHR are currently the largest independent firm of surveyors in the North West

• WHR now have 18 fee earners in a single office.

Capital Markets – how does it feel?Feel good factor• Perceptions of economic uncertainty – 3.5 year low

• Risk appetite amongst the big corporates – 6 year high

• Manufacturing increasing

• Reduced unemployment

Transaction Volumes • Quarter 4, 2013 was the highest quarter trade value since the year 2000 - £21bn

• Higher than the Quarter 4 peak in 2006

• More than the whole of 2008

• In 2013 UK Institutions made up 33% of volumes in 2013 compared to 18% in 2012.

• Overseas – 48% of volumes in 2013 versus 23% in 2012

Why?• Increased demand • Old and new players• Low interest rate environment• The return of debt to the

market – 70% lending is back!• We didn’t double dip!

‘Its all about the Regions’• All the various research houses predict it’s all about the

regions.• Rippling out from London• Yield gap between prime and secondary closing• Secondary yields moving lower and faster than prime• Q1 2014 – 15,000 new regional office jobs• 11% growth forecast for professional and admin over

next 5 years

In excess of quoting ……Asset Quoting Price Sale Price % INXS

Sunlight HouseManchester £28.5m

(7.36%)£34,500,000

(6.35%)21.05%

Deeside Industrial ParkFlintshire £27.53m

(9.5%)

£34,000,000(7.69%)

23.5%

St James HouseManchester £19m

(7.58%)

u/o circa £21m(6.5%)

10.53%

Walker ParkBlackburn £9.85m

(9.50%)

u/o circa £11.25m(8.3%)

14.21%

Total Return Forecast

Total returns – sector forecast

Opportunities – current owners/controllers

• Sell into a good market• Take profits• Re-balance loan to values• Re-finance –’ it’s not all about transactions’

“But how do you replace the loss of income?”

Opportunities - Property Companies• Many laid dormant in survival mode• Currently priced out as institutions go up the ‘risk curve’• Recycle sales proceeds to new opportunities• Take benefit of rental growth• Make the most of local expertise - pockets of growth/demand• Capitalise on distressed properties returning home from

London• Give the Funds what they want

Opportunities - DevelopersOffices

1 Spinningfields

2 St Peter’s Square

First Street

• Predicted rental growth• New regional based jobs• 11% growth forecast in professional and admin• Regions becoming value for money v London (overall costs)• Supply has fallen 12% in the past 12 months

Opportunities - Developers

• Lack of stock

• Evidence of rental growth

• Impact of e-retailing

• D&B Market for specialist users

• Opportunities for speculative development

Industrial

Opportunities - Developers

• Limited rental growth – still recovering

• Larger food stores now shrinking – smaller is better

• Fewer opportunities

• Darling anchors of yesterday (e.g. M&S) now been replaced by the like of Primark and B&M Bargains

• It’s all about the footfall

• Smaller food stores – 12k sq ft – 20k sq ft (Aldi and Lidl) likely to see competition from larger operators

• Potential for ‘yields compression’

Retail

Conclusion• Opportunity is spread across the whole of the market like never

before• It is not just about the quick trading of assets as the market

recovers• It is more about the future of property

1. Development2. Recycling/refurbishment3. Change of use

• The regions will prosper• Up to date knowledge and advice is the key

Outlook AGM 2013Outlook AGM

2014