BROOKFIELD PROPERTY PARTNERS L.P. May 19-20
2015 LONDON INVESTOR PRESENTATION & TOUR
Diversified, global owner and operator of high-quality real estate
Total Assets
$0.265/unit
Quarterly Distribution
72% ownership $28.791
Brookfield Asset Management
INVESTMENT PORTFOLIO CHARACTERISTICS
One of the world’s largest owners, developers and operators of premier office properties around the globe
Significant investment in class A regional malls and premier street retail in the U.S. through 33%4 stake in General Growth Properties (GGP)
Growing investments in modern logistics facilities, multifamily properties and hotels through Brookfield-managed private funds
Equity per Unit
Overview of Brookfield Property Partners
2
(1) As of March 31, 2015 and on a proportionate basis. (2) As of March 31, 2015. (3) 61% on a fully diluted basis. (4) On a fully diluted basis. .
$61.4 billion1
Public Float
~$6 billion2
68% ownership3
(1) All information is in total assets and based upon BPY’s proportionate ownership portfolio as of March 31, 2015.
$47.2B $7.8B
$4.7B $1.7B
NORTH AMERICA UK AUSTRALIA TOTAL2
$61.4B
OTHER
Global Portfolio of Premier Properties1
3
BRAZIL Retail: $0.5B
UNITED STATES Office: $22.1B Retail: $15.9B
CANADA Office: $4.9B UNITED KINGDOM &
WESTERN EUROPE Office: $7.8B
Industrial: $0.3B
AUSTRALIA, INDIA & CHINA
Office: $4.7B Retail: $0.2B
Geography
Diversified by Geography and Property Sector
U.S., 69% Australia, 7%
U.K., 14%
Canada, 7%
Other, 3%
Office, 61%
Retail, 31%
Opportunistic, 8%
Total Invested Capital of $29B1
Sector
4 (1) As of March 31, 2015 and excludes corporate.
Real Estate Investment Profile
Core Office
► Premier CBD assets in New York, Toronto, London, Los Angeles, Washington D.C., Calgary, Sydney and other gateway global cities
► Portfolio includes Brookfield Places in New York and Toronto; Bank of America Plaza in Los Angeles; Canary Wharf in London; Darling Park in Sydney
PROFILE
Brookfield Place New York
A leading global owner and operator of premier office properties
. (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.
► Interests in 137 core office properties totaling 98 MSF
► 31 MSF of developments
► $40B in assets
► $18B in equity
HIGHLIGHTS
6
Targeting returns on equity of 10-12% through current yield plus growth1
Core Retail
► Highly productive, best-in-market malls primarily in the United States
► Portfolio includes Ala Moana1 in Honolulu, Fashion Show1 in Las Vegas
Fashion Show Las Vegas
PROFILE
One of the highest-quality, fastest-growing retail platforms in North America
(1) Owned by GGP. (2) Represents BPY’s proportionate share. (3) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.
HIGHLIGHTS
► Interests in 171 regional malls and urban retail properties with 155 MSF
► $540M of developments2
► $17B in assets
► $9B in equity
7
Targeting returns on equity of 10-12% through current yield plus growth3
Opportunistic
PROFILE
Includes multifamily, industrial, hotel, suburban office and triple net lease assets
► Office, retail, multifamily, industrial, hotel and triple net lease properties in North America, Europe, Australia, India and China
► Assets held predominantly in Brookfield-managed real estate opportunity funds
HIGHLIGHTS ► Interests in 28,000 multifamily units, 167 industrial assets
totaling 44 MSF, 12 hotels with 8,860 rooms, 125 office park properties, predominantly in India, and a 16 MSF portfolio of ~300 properties leased to automotive dealerships on a triple net lease basis
► 22% interest in China Xintiandi retail and office portfolio in Shanghai
► $5B in assets
► $2B in equity
Targeting returns on equity of 20%+ primarily through capital appreciation1
Triple Net Lease - US
Multifamily - US Industrial - Europe
Hotel - The Bahamas
(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.
8
BPY’s Operating Strategy
Our Value Creation Model
Recycle capital by monetizing interests in
stabilized assets
Acquire high-quality assets on
a value basis
Leverage operating
platforms to enhance value
10
BPY’s Investment Strategy
► Concentrate on most dynamic global markets
► Acquire high-quality assets at discount to replacement cost
Acquire High-Quality
Assets
Invest On a Value
Basis
► Focus on multi-faceted transactions that capitalize on structuring capability, including recapitalizations
► Allocation of capital to buy for value
11
Brookfield Place Perth
Our Operating Strategy
► Maximize revenues by:
Increasing occupancy
Marking-to-market rents
Optimizing tenants
Capitalizing on synergies
► Execute re-developments within existing assets
Core Office: Repositioning assets
Core Retail: Converting big-boxes to in-line
space
Opportunistic: Refurbishing multifamily assets
and redeveloping logistics facilities
12
Redevelopment Pipeline
BPY currently has $1.4B of redevelopment projects underway which will generate an average yield on cost of 12%1
(US$ millions) Sector Total Cost2 Yield on Cost
5 Manhattan West Office $ 312 18%
Brookfield Place New York Retail Retail 315 11%
2001 M. Street Office 98 11%
7 Westferry Circus Office 124 7%
Ala Moana Retail Center3 Retail 119 9-10%
Other Retail 422 10%
Total $ 1,390 12%
13
(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Represents BPY’s share of investment. (3) Owned by GGP.
Redevelopment: 5 Manhattan West
► With 100,000+ SF floor plates and 16-foot ceilings, property is ideally suited for tech and media tenants
► Investing $312M to upgrade building, incorporating it into Manhattan West project
New glass façade
New lobby
Replacing elevators/HVAC
Anticipated connection to High Line
► Recently executed leases with tech- and media-sector tenants totaling more than 400,000 SF
► Currently negotiating leases with asking rates starting at $80 PSF
► Expect to generate incremental NOI of $56M
Before & After: 450 W. 33rd St./5 Manhattan West – New York
14
Redevelopment: Brookfield Place New York Retail
► 25-year-old WFC built for different era
► $315M redevelopment of common and retail areas
► Transformational program including:
New entry pavilion, lobbies and entry façades
‘Hudson Eats’ dining terrace
‘Le District’ French marketplace
40+ luxury retailers
5 new high-end restaurants
Rebranding ‘Brookfield Place’
► Retail occupancy fully committed
► Expect to generate $35M of NOI, versus $2M under previous retail offering
15
Our Development Program
Bay Adelaide Centre, Toronto
► BPY has assembled a portfolio of developable land in high-value, supply constrained markets
► Opportunistically pursuing developments to:
Earn premium risk-adjusted returns compared to acquisitions
Upgrade portfolio in key strategic markets
► Development strategy is low risk
Typically seek to execute anchor leases for 40% to 50% of space before launching office development
Active developments account for less than 10% of invested capital
16
Active Development Projects
(US$ Millions) SF 000’s % Leased Cost1 Own % Yield on
Cost Date of
Stabilization
Office Projects
Brookfield Place Calgary East Tower 1,400 71% 630 100% 7% Q3 2018
Principal Place – Office, London 621 69% 550 100% 8% Q4 2019
Bay Adelaide East, Toronto 980 69% 365 100% 7% Q2 2017
London Wall Place 505 61% 289 50% 8% Q3 2019
Brookfield Place Perth Tower 2 362 52% 259 100% 8% Q1 2016
Giroflex, Sao Paulo 681 — 196 100% 9% Q1 2018
Subtotal 4,549 % $ 2,289 8%
Three Manhattan West – Residential 879 units — $ 739 100% 5% Q3 2018
Principal Place – Residential2 344 units — 214 50% — —
Multifamily 2,781 units — 245 30% 6% Various
Industrial 11,103 — 161 25% 8% Various
Total — — $ 3,749 7%
(1) Represents BPY’s share of investment. (2) Condo units therefore not included in Total Cost /Stabilized NOI/Yield on Cost calculation.
17
Next Phase of Growth – Development
18
Over 5 million sq. ft. of new development to come online between 2019-2022 will generate stabilized NOI of $270 million and yields on cost averaging 7%
(1) Represents BPY’s share of investment. (2) Condo units therefore not included in Total Cost /Stabilized NOI/Yield on Cost calculation.
(US$ Millions) SF 000’s % Leased Cost1 Own % Yield on
Cost Date of
Stabilization
Underway
One Manhattan West, New York City 2,117 25% $ 1,901 100% 6% Q1 2020
100 Bishopsgate, London 962 — 1,200 100% 7% Q3 2019
1 Bank Street, London 713 40% 344 50% 8% Q2 2019
Canary Wharf Retail, London 160 91% 68 50% 9% Q3 2015
Subtotal 3,952 25% $ 3,522 7%
Planned Projects – Wood Wharf, London
Wood Wharf Phase 1 – Office 319 — 163 50% 7% Q2 2022
Wood Wharf Phase 1 – Multifamily Rental 349 — 232 50% 6% Q3 2020
Wood Wharf Phase 1 – Multifamily Condo2 675 — 480 50% — —
Total 5,278 — 4,397 7%
Development – Manhattan West: Office, Residential, Hotel
19
► Brookfield is creating a new, premium mixed-use neighborhood at Manhattan West in the Hudson Yards District
► Manhattan West includes:
Two 2 million-square-foot class A office towers
A 844-unit high-rise luxury residential tower
A mixed-use hotel/retail property
The repositioned 5 Manhattan West office building
A 2-acre public park transecting the site
► Recently executed anchor lease with Skadden for 550,000 square feet
► Expect to generate NOI of $124M from first office tower
$397
$1,325
$657
$871
$2,019
$405
$40
$357
$190 $141
$511
$104
$(17) $(1)
$55 $16 $36 $4
2010 2011 2012 2013 2014 2015
Sales Price Realized Gains IFRS Gains
Accretive Execution of Asset Sales
Over the past five+ years, have sold $5.7B of office assets1, generating ~$1.3B of realized gains and ~$93M of IFRS gains2,3
(1) Represents dispositions of office assets by Brookfield Office Properties since 2010 at 100%. (2) IFRS carrying values at quarter prior to disposition. (3) Prior performance is not indicative of future results and there can be no assurance that an investment in BPY will achieve comparable results or avoid losses.
(US$ Millions)
Office Sales
20
Update on Asset Sales
21
Asset Status Net Proceeds Timing
75 State Street, Boston Closed $250M Q2
Washington DC portfolio Finalizing $350M Q2
99 Bishopsgate, London In process $300M Q3
Other Office Assets Ongoing $600M Q4
$1,500M
BPY’s Value Proposition
Q1 2015 NOI Annualized
Signed Leases not Currently
Producing NOI
Mark-to-Market of Expiring Leases
Occupancy Gains
Development/ Redevelopment
Planned Asset Sales
Future NOI
$350 $90
$160
$2,452
~$3,600 $670
With a ~4.5% yield and targeted annual distribution growth of 5%-8%, BPY offers investors an attractive total return
BPY Value Proposition – Current Yield Plus Growth1
(US$ millions)
23 (1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns.
Leases not Currently Producing NOI Mark-to-Market of Expiring Leases Occupancy Gains Development/ Redevelopment Planned Asset Sales
($140)
BPY’s net asset value has significant upside driven by visible growth initiatives within its existing asset base
IFRS value per unit Q1 20153
Mark-to-Market of Expiring Leases
Increased Occupancy
Development/ Redevelopment
Opportunistic Investments
Future IFRS value per unit3
BPY’s Value Proposition – Capital Appreciation1,2
24
(1) There can be no guarantee that BPY will be able to successfully execute on its strategy and achieve such returns. (2) Capital appreciation from opportunistic assets roughly offsets divestitures of core assets. (3) Presented as book value per unit, diluted for impact of $1,800M of preferred shares issued in Q4 2014 that are convertible into 70.0M units
$2.50
$2.00 $7.50
$28.00
$6.00
$46.00
Mark-to-Market of Expiring Leases Occupancy Gains Development/ Redevelopment
City of London Office Market
London Executive Summary
• The Central London office market comprises of 224.4 m sq. ft. (all classes) and Q1 2015 vacancy is 4.8%. The City of
London office market, including Southbank, consists of 111.6 m sq. ft. (all classes) and Q1 2015 vacancy is 5.7%.
• Q1 2015 take-up for Central London was 2.6 m sq. ft., which is a decrease of 9.9%, from Q4 2014 volume of 2.8 m sq.
ft. The City take up for Q1 2015 was 1.7 m sq. ft. over 78 transactions, marking the highest first quarter result since
2010, despite a 10.3% decrease from Q4 2014 volume of 1.9 m sq. ft. Take-up in Canary Wharf/Docklands was 92,000
sq. ft. compared to 326,000 sq. ft. let in Q4 2014.
• Availability in the City decreased to 6.3 m sq .ft. (5.7% vacancy) due to strong demand and no new supply completions.
Grade A supply is 4.6 m sq. ft. and Grade A overall vacancy rate is 4.1%. Availability in Canary Wharf/Docklands
remains at 1.2 m sq. ft. and a vacancy rate of 7.2%, due to subdued take-up and newly marketed second hand space.
• In the City, the most active sectors remain business services (36%), banking and finance (24%), professional services
(15%) and TMT (15%).
• Current prime office headline rents for the City remained unchanged this quarter at £62.50 psf. Assuming a 10 year
term, the rent free incentive also remained at 21 months. The rental growth outlook remains positive as the
supply/demand imbalance intensifies. Prime rents are forecasted to increase with incentives further reducing in the
second half of the year. Canary Wharf/Docklands prime rents also remained at £40.00 psf.
• Prime City net initial yields are trading at approximately +/- 4.25% for sub-£40m lot sizes and +/- 4.50% for lot sizes of
£40-£125m but there is still general downward pressure on yields.
26
Availability: Central London: 4.8%; City: 5.7%; Docklands: 7.2% Strong occupier demand levels evidencing consistent take-up volumes even with new supply entering the market. The strength of leasing activity had led to a decrease in total occupier demand which fell 17% quarter on quarter to 9.2 m sq. ft. and is now marginally lower than the 10 year average of 9.6 m sq. ft. Availability generally decreased due to lack of new supply delivered (exception in Canary Wharf/Docklands where availability increased due to new second hand stock coming to market). Assuming current levels of demand persist, availability is anticipated to decrease throughout 2015.
Q1 15 Leasing Activity: Central London: 2.6 m sq. ft.; City: 1.7 m sq. ft.; Canary Wharf/Docklands: 0.9 m sq. ft. Q1 2015 take-up for the City was 1.7 m sq. ft. over 78 transactions marking the highest first quarter result since 2010. Business services, banking/finance, professional services and TMT sectors remain the most active in the City and Canary Wharf/Docklands market.
Supply/Under Construction:
Central London: 4.0 m sq. ft. (excluding the City); City: 2.4 m sq. ft. (under construction but excluding pre-lets) No new development completions in Q1 2015. Strong pre-leasing in 2013/2014 has absorbed much of the 2015 development. There is only 361,000 sq. ft. of speculative supply remaining from a total of 1.8 m sq. ft under construction, with anticipated completions later this year, in the City pipeline.
Rent:
Prime City rents remained stable at £62.50 per sq. ft. compared to Q4 2014. Assuming a 10 year term, the rent free incentive also remained at 21 months. The rental growth outlook remains positive as the supply/demand imbalance intensifies. Prime rents are forecasted to increase with incentives further reducing in the second half of the year. Prime Canary Wharf/Docklands rents also remained stable at £40.00 per sq. ft.
12-Month Forward Outlook:
Economy Rent Vacancy
London City – Demand remains strong. Limited new supply post-2017.
27
27
City Vacancy, Take-up & New Supply
City Prime Rents vs. Rent Free Periods
Central London Average Investment Yields
Source: JLL
Central London Vacancy Rates
28
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Q1
2005
Q3
2005
Q2
2006
Q3
2006
Q1
2007
Q3
2007
Q1
2008
Q3
2008
Q1
2009
Q3
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2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
Central London CityWest End Midtown (City)
20.00
30.00
40.00
50.00
60.00
70.00
0
5
10
15
20
25
30
35
Q1
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Q3
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Q1
2008
Q3
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Q1
2009
Q3
2009
Q1
2010
Q3
2010
Q1
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Q3
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Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
£ PSF Months Rent Free Periods (LHS) Rent (RHS) Net Rent (RHS)
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
Q1
2005
Q3
2005
Q1
2006
Q3
2006
Q1
2007
Q3
2007
Q1
2008
Q3
2008
Q1
2009
Q3
2009
Q1
2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
City West End City Average
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0
1
2
3
4
5
6
7
8
9
10
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Take-up(mn sf) Completions Vacancy
28
Total Occupational Costs
City (psf) West End (psf) Docklands (psf)
Headline Rent £62.50 £115.00 £40.00
Rates £20.00 £47.50 £15.50
Service Charge £10.00 £10.50 £15.501
Total Occupation Costs £92.50 £173.00 £71.00
Discount for net effective
rent2
17.5% 15% 20%
Net effective rent £51.56 £97.75 £32.00
(1) Includes the Canary Wharf Estate Charge
(2) Net effective discount % age reflects the quantum of rent free available on a 10 year lease
29
29
City Office Pipeline: Under Construction >50k sq ft
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Committed Speculative Spec: 1.6 m Committed: 0.9 m 2016 Total: 2.5 m
Spec: 0.5 m Committed: 1.4 m 2017 Total: 1.5 m
Spec: 0.3 m Committed: 1.4 m 2015 Total: 1.7 m
30
City Office Pipeline: Proposed >100k sq ft
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Completion 2016 Total: 0.7 m sq ft 2017 Total: 1.1 m sq ft 2018 Total: 3.2 m sq ft 2019 Total: 3.3 m sq ft
31
City Office Pipeline: Proposed Office Developments >100k sq ft
Address Earliest
Delivery Date Proposed sq ft Ownership
150 Holborn 2016 142,100 Ocubis
148 Old Street 2016 145,300 Great Portland Estates
33 Central 2016 230,800 HB Reavis
The Bower - The Tower 2017 165,400 Helical Bar plc / Crosstree Real Estate Partners
Roman Wall House 2017 177,300 London & Regional
20 Old Bailey 2017 183,000 Blackstone
The Scapel 2017 388,000 WR Berkley
120 Fenchurch Street 2017 420,000 Generali Group
Blossom Street 2018 262,000 City of London Corporation/ British Land
One Crown Place 2018 270,000 AlloyMtd Group
70 St. Mary Axe 2018 300,000 Henderson
80 Fenchurch Street 2018 300,000 Shieldpoint
Plumtree Court / Fleet Buildings 2018 422,000 Goldman Sachs
100 Bishopsgate 2018 962,000 Brookfield Property Partners
1 Swan Lake 2019 140,000 Sellar Property Group
Barts Square 2019 230,000 Baupost Group/ Helical Bar
The Goodsyard 2019 466,400 Hammerson / Ballymore Group
100 Liverpool Street 2019 529,400 British Land / GIC
40 Leadenhall 2019 890,000 Henderson
22 Bishopsgate (formerly Pinnacle) 2019 1,000,000 AXA Real Estate led consortium
32
City: Major Investment Deals Building Sq. Ft. Price £m Price £psf Cap Rate Buyer Seller
63 St Mary Axe 72,000 £70.0m £972 5.25% AXA Real Estate Rockspring / National Pension Service
Monument Place 75,000 £100.0m £1,333 4.00% CERN Rockspring
Milton Gate 201,666 £198.0m £982 5.00% Taikang Life Insurance / Gaw Capital
AGC Equity Partners
55 Moorgate 64,583 £50.0m £774 5.60% Kajima Corporation
Metropolis
1 Carter Lane 132,654 £138.8m £1,046 4.30% Fubon Financial LondonMetric Property
100 Cheapside 100,000 £95.5m £955 N/A Standard Life Investments
CarVal / Orion Capital Managers
Plantation Place South 162,213 £142.2m £877 5.42% London Wall Group
CS Euroreal
111 Old Broad Street 122,226 £113.0m £925 5.06% China Construction Bank
KBC Bank
131 Finsbury Pavement 78,653 £57.5m £731 5.00% RLAM Orion Capital Managers
33
City: Major Leasing deals
Address Market Occupier Size sq ft Rent psf Term (yrs) Rent free Date
New Street Square (pre-let) EC4 Deloitte 258,000 £64.00 20 Confidential Mar-15
Moor Place EC2 WeWork 167,900 £57.77 20 4 months Feb-15
30 Gresham Street EC2 Investec Asset Management
61,100 £60.00 13 26 + 6 months Feb-15
51 Lime Street (The Willis Building)
EC3 Deutsche Bank 52,300 £52.50 6 Confidential Feb-15
Aldgate Tower E1 Tag Worldwide 39,200 £49.00 10 21 months Feb-15
1 Aldermanbury Square EC2 Hewlett Packard 65,000 £51.73 15 28 + 4 months Jan-15
34
Brookfield’s City of London Business
London Portfolio
Operating Properties 4
Total Leasable Sq. Ft. 686,165
Portfolio Vacancy 2.4%
Market Vacancy (City of London) 5.7%
Development Properties 4
Total Sq. Ft 2,088,000
6.4%
0.3%
8.1% 7.7%
14.2%
63.3%
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Vacant 2015 2016 2017 2018 2019+
Sq. f
t.
Vacancy / Rollover Exposure - as at March 31, 2015
36
37
Mar 2010
Oct 2014
Pre
-let
dea
l wit
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no
un
ced
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lio
Bu
y re
mai
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sta
ke in
12
5 O
ld B
road
St
Oct
2013
Bro
okf
ield
acq
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ed 5
0%
sta
ke in
1
00
Bis
ho
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ate
Jul 2012
Bro
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ith
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12
5 O
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Sept 2014
Dec 2013
Pre
-let
dea
l wit
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Apr 2013
Jun 2013
Jul 2013
Jun 2012
Co
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Acq
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ed M
oo
r P
lace
Acq
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ed C
ity
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e H
ou
se
Dec 2014
May 2015
38
Principal Place
Leadenhall Court
London Wall
Place
125 Old Broad St
99 Bishopsgate
100 Bishopsgate
Principal Place
Leadenhall Court
London Wall Place
125 Old Broad St
100 Bishopsgate
Moor Place
99 Bishopsgate
Darling Park,
Sydney
99 Bishopsgate
Key Attributes 26-storey Grade A office building (336,000 sf) centrally located within the City
of London’s cluster of tall towers
On acquisition 2012, 62% leased
In 2013, Brookfield completed major refurbishment works to the façade, lobby, terrace and common areas
2015 occupancy 100%
Unexpired WALE, as at end of Q1 2015, is 6.4 years
Unexpired WALE, as at end of Q1 2015, is 5.6 years adjusted for lease breaks
Debt secured on a 5 year loan facility for £133.6m with an all in cost of 4.27%
Major Tenants: Latham & Watkins 138,063 sf
Deutsche Bank 82,365 sf
I2 Offices 42,364 sf
Brookfield 27,557 sf
39
99 Bishopsgate
Leadenhall Court
Leadenhall Court
Key Attributes 7-storey 109,000 sf office building (including 7,000 sf ground floor
retail space). Acquired as part of the Hammerson portfolio in June 2013
Held leasehold from City of London until 2139
Constructed in 1988 and occupies a prime City of London location, especially appealing for insurance tenants given its close proximity to Lloyds of London
Agreement for Lease executed with Amazon for 93,851 sf through to 1 January 2018. Tenant break option from 1 April 2017
Amazon took occupation on 13 March 2015, following a successful refurbishment managed by Brookfield
Loan facility with Wells Fargo for £30.0m, at 3M Libor + 225 bps in place
Potential for substantial refurbishment or redevelopment
40
Moor Place
Moor Place
Key Attributes Moor Place is a 236,000 sf Grade A office building located adjacent to
Brookfield’s 500,000 sf London Wall Place office development project (75% pre-let) and the future Moorgate Crossrail entrance.
Brookfield acquired Moor Place on 18 December 2014, with 7% occupation (single floor leased).
Practical Completion delivered in April 2014
Now 100% let or contracted, with a significant 168,000 sq ft let to We Work
Under offer on the last remaining floor (level 9)
Finance placed with Wells Fargo for £138m debt at Libor +200bps, capped at +300bps
41
Darling Park,
Sydney
100 Bishopsgate
100 Bishopsgate
Key Attributes 40-storey Grade A office development (930,000 RSF) centrally located within
the City of London’s cluster of tall towers.
100% ownership from 4 December 2015.
Cleared 2 acre site held under four 225-year leases from The Leathersellers Livery Company .
Obligation to redevelop 5/7 St Helen’s Place to provide the Leathersellers with new accommodation and 40,000 sf of office space currently ongoing with completion due July 2015.
Construction completion H2 2018
42
Principal Place Commercial
Principal Place Commercial
43
Key Attributes
15-storey Grade A office development (620,000 sf) located on the City of
London/Shoreditch border, immediately north of Broadgate in the London Borough of Hackney
100% owned by Brookfield. On completion, this will be held leasehold under a 987 year lease from London Borough of Hackney
Majority pre-let to Amazon (431,000 sf) on a 15-year term, with options on the remaining office space. Obligation to deliver by December 2016
Construction contract signed with BMCE in Q3 2014 for £171m
Construction finance facility secured for £280m
Darling Park,
Sydney
Principal Place Residential
Principal Place Residential
44
Key Attributes Principal Place Residential is located on the City of London / Shoreditch border
adjacent to Broadgate in the London Borough of Hackney (LBH)
The site has planning consent for a Foster + Partners designed 50-storey residential tower and affordable housing blocks (56 affordable units)
Planning consent granted on 1 April 2015 for 30 additional units to take Tower unit total from 243 to 273. No gain in saleable area but sales risk reduction on more efficient unit sizes
Stage E detailed design concluded January 2015
125 sales (125 exchanged) for a total of £142m (Average price of £1,515 psf)
3 Reservations totaling £6.5m (Average price £1,895 psf)
The development is held in a 50/50 joint venture with Concord Pacific
Estimated completion H2 2019
31 Principal Place Residential
Darling Park,
Sydney
London Wall Place
London Wall Place
Key Attributes 1.8 acre site with planning consent for two office buildings totaling 500,000 sf of
offices
Prominent City of London location (c.500m west of 100 Bishopsgate); strategically positioned by a major new Crossrail station (London transport system due 2018)
1LWP - 310,000 sf over 12 storeys. Lower floors of 40,000 sf, nine outdoor terraces
1LWP pre-leased to Schroders plc
2LWP - 190,000 sf of regular, highly efficient 12,000 sf floors over 16 storeys – 60,000 sf pre-leased to Cleary Gottlieb Steen & Hamilton LLP
The development will include significant new public realm including City
The development is held in a 50/50 JV with Oxford Properties and will be owned under a new 250 year lease from City of London on completion
Construction contract for £216.5m signed with BMCE in Q4 2014
Completion scheduled for Q1 2017
70% debt financed with Wells Fargo, Santander and HSBC completed in Q4 2014 45
City Gate House
46
Key Attributes Seven-story, 161,711 sq ft building which currently serves as
Bloomberg’s European headquarters
Located on Finsbury Square, which is in close proximity to public transportation links at Moorgate Station and the future CrossRail stop at Moorgate/Liverpool Street
Bloomberg to enter a six-year fully repairing and insuring lease at an annual rental of £6.5m (£40.20 per sq. ft.) that will expire in December 2020. Bloomberg will have the option to renew for up to a two-year term at an annual rent of £9.0m (£55.65 per sq. ft.)
The Bloomberg lease expiration is well timed to coincide with CrossRail coming online in 2018 allowing City Gate House to offer attractive office space at a compelling price point when compared to new construction deliveries that will require average rents well in excess of £75/ sq. ft.
47
Property Tenants Size sq ft Timing of deal
Moor Place WeWork 167,000 sq ft April 2015
CHP Consulting 19,250 sq ft April 2015
Pure Gym 8,700 sq ft April 2015
Sub Total 194,950 sq ft
125 Old Broad Street* Landmark Plc 11,100 sq ft Feb 2014
Eaton Vance 7,000 sq ft Feb 2014
King & Spalding 5,800 sq ft July 2014
FQS Capital Partners 3,850 sq ft June 2014
Pioneer Trader 3,500 sq ft July 2014
Sub Total 31,250 sq ft
99 Bishopsgate Deutsche Bank 49,000 sq ft Aug 2014
I2 Business Centres 43,000 sq ft Oct 2013 & Aug 2014
Brookfield 28,000 sq ft Dec 2013
Latham, & Watkins 10,750 sq ft Jan 2014
IDI Gazeley 4,500 sq ft July 2014
MBIA Insurance UK 4,500 sq ft Oct 2014
Sub Total 139,750 sq ft
One London Wall Place Schroders 310,000 sq ft Dec 2013
Leadenhall Court Amazon 94,000 sq ft Aug 2014
Principal Place Amazon 431,000 sq ft Aug 2014
Total 1,200,950 sq ft
*125 Old Broad Street was sold by Brookfield in July 2014
Canary Wharf Group Por/olio May 2015
BROOKFIELD PROPERTY PARTNERS
2
Canary Wharf Backgrounder • The Canary Wharf estate is a 97-‐acre business and shopping district in East London,
consisPng of 37 buildings and five retail malls that total 16 million square feet with over 105,000 workers in major Financial Services, Law, Professional Services and TMT businesses.
• Canary Wharf Group is a fully integrated property developer, owner and operator that has been responsible for the office and retail developments on the estate over the past two decades.
• Canary Wharf Group’s exisPng investment por/olio comprises 6.9 million square feet across 11 office buildings and five retail malls. The office por/olio is 97% leased with an average remaining lease term of 14.6 years. The retail por/olio is 100% leased. In addiPon, Canary Wharf Group owns joint venture interests in 20 Fenchurch in the City of London (682,000 square feet) as well as the future Shell Centre redevelopment in London’s Southbank (530,000 square feet of office, 820,000 square feet of residenPal)
• With over 11 million square feet of future residenPal and office developments, Canary Wharf has one of the largest mixed development pipelines in London and is regarded as one of the city’s pre-‐eminent developers in terms of execuPon and project quality.
• Fair value of operaPng and development por/olio: ~$5.5 billion1
(1) At Brookfield’s 50% share
3
Canary Wharf Estate -‐ Opera8ng Assets
(1) Represents BPY’s ownership interest net of JV partnership interest of QIA (2) 20 Canada Square located on Canary Wharf estate but is wholly owned by BPY (3) Canary Wharf owns 10% of 10 Upper Bank Street
# Property BPY Stake1 Occupancy Square feet
1 20 Canada Square2 100% 100% 610,000
2 One Churchill Place 50% 100% 1,038,500
3 10 Cabot Square 50% 100% 634,100
4 20 Cabot Square 50% 100% 558,100
5 One Canada Square 50% 97% 1,220,500
6 33 Canada Square 50% 100% 562,700
7 20 Bank Street 50% 100% 546,500
8 40 Bank Street 50% 94% 606,000
9 10 Upper Bank Street3 5% 100% 1,027,300
10 7 Wes/erry Circus 50% 8% 177,700
11 15 Wes/erry Circus 50% 100% 171,000
12 25 Churchill Place 50% 90% 545,000
7,697,400
13 Retail and Parking 50% 100% 732,000
Total 95.3% 8,429,400
4
Canary Wharf Estate -‐ Opera8ng Assets
One Canada Square 1,220,500 square feet
97% Leased
Key Tenants: Moody’s, Bank of New York, Mirror Group
One Churchill Place 1,038,500 square feet
100% Leased
Key Tenants: Barclays, BCG International
10 Cabot Square
634,100 square feet 100% Leased
Key Tenants:
Barclays, WPP Group
20 Cabot Square
558,100 square feet 100% Leased
Key Tenant: Barclays
5
25 Churchill Place 545,000 square feet
90% Leased
Key Tenants: EMA, EY
7 Westferry Circus 177,700 square feet
8% Leased Key Tenant: Under Refurbishment
15 Westferry Circus 171,000 square feet
100% Leased
Key Tenant: Morgan Stanley
20 Canada Square 610,000 square feet
100% Leased
Key Tenants: BP, McGraw-Hill
Canary Wharf Estate -‐ Opera8ng Assets
6
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
33 Canada Square 562,700 square feet
100% Leased
Key Tenant: Citi
40 Bank Street
606,000 square feet 94% Leased
Key Tenants: Skadden, Shell
Canary Wharf Estate -‐ Opera8ng Assets
20 Bank Street
546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
7
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Canada Place Mall 71,300 square feet
100% Leased
Key Tenants: Ted Baker, Boots, GAP, Mango
Jubilee Place Mall 134,560 square feet
100% Leased
Key Tenants: Michael Kors, The White Company, Molton Brown
Canary Wharf Estate -‐ Opera8ng Assets
Cabot Place Mall
141,600 square feet 100% Leased
Key Tenants: Tiffany & Co.,
Zara, Boss
8
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Canada Place Link Mall
7,960 square feet 100% Leased
Key Tenants: Sk:n, Chopp’d,
Costa
Canary Wharf Estate -‐ Opera8ng Assets
Canada Place Building
208,242 square feet 100% Leased
Key Tenants: Waitrose, Reebok
Reuters Plaza
8,900 square feet 100% Leased
Key Tenant: Carluccio’s
9
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Canary Wharf Estate -‐ Opera8ng Assets
Churchill Place
34,900 square feet 100% Leased
Key Tenants: Barclays, Jamie’s Italian, Rocket
Park Pavilion
22,900 square feet 100% Leased
Key Tenants: Roka, Lloyds
West Wintergarden
2,940 square feet 100% Leased
Key Tenant: Obica
10
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
East Wintergarden
Canary Wharf’s Premier Venue 7,341 square feet
Canary Wharf Estate -‐ Opera8ng Assets
Crossrail Place (Phase 1)
95,000 square feet Retail: 94% Leased
Key Tenants: Big Easy, Everyman Cinema, Sports Bar & Grill,
Sticks ‘n’ Sushi, Chai Ki, Bespoke Cycling, Bupa, NatWest
11
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Car Park
2,894 Spaces
Perimeter Retail / Restaurants1
57,000 square feet
Key Tenants: Iberica,
Cat & Canary, Bang & Olufsen
Canary Wharf Estate -‐ Opera8ng Assets
(1) Included within total building NIAs on page 3
• Canary Wharf Group has a current development pipeline of 11 million square feet.
• Over the last 21 months the Group has secured over 8 million square feet of new planning permissions including a new permission for a 4.9 million square foot mixed use development on Wood Wharf.
• Over the next 6 years we plan to deliver 5 million square feet across four significant development sites:
• Shell Centre
• Newfoundland
• Heron Quays West -‐ 1 Bank Street / 10 Bank Street and a Private Members Club
• Phase I of Wood Wharf
• In total 22 buildings delivering 5 million square feet of NIA
• Significant infrastructure and enabling works
12
Canary Wharf Group -‐ Development Programme
Phase 1 of the Development Programme will be delivered through a combina8on of:
• Office pre-‐lets
• Retail pre-‐lets
• Limited speculaPve office development to establish the Wood Wharf office district
• Forward sales
• Sales of residenPal apartments
• CreaPon of a private rental (PRS) residenPal pla/orm
• This first phase represents a Gross Development Value of circa £4.5billion.
Future Development Pipeline:
• We also have a future development pipeline of a further 6.5 million square feet that includes Park Place, North Quay, the later phases of Wood Wharf.
• Our Development & Planning group will be working on detailed planning permissions on future sites to create mixed use schemes and more residenPal opportuniPes
• Total Gross Development Value for the Future Development Pipeline is in the order of £6.7 billion.
13
Canary Wharf Group -‐ Development Programme
14
Shell Centre Summary Total: 1,415,000 square feet Office: 530,000 square feet Residential: 820,000 square feet Retail: 55,000 square feet Apartments: 863 units
15
Squire & Partners - B1
Office and Retail: 269,000 square feet
KPF - B2
Office and Retail: 291,000 square feet
16
Patel Taylor - B3
PRS: 151,000 square feet Units: 203
Affordable: 74,000 square feet Units: 98
Squire & Partners - B4a
Residential for sale: 175,000 square feet
Units: 199
Squire & Partners - B4b
Residential for sale: 140,000 square feet
Units: 158
17
Stanton Williams - B5
Residential for sale: 177,000 square feet Units: 108
Grid - B6/7
Residential for sale: 130,000 square feet Units: 97
18 One Bank Street Ten Bank Street Wood Wharf Newfoundland Private Members Club
Development Programme -‐ 5 Year Pipeline
19
Development Programme -‐ 5 Year Pipeline
One Bank Street 700,000 square feet of offices
40% leased Key Tenant: Societe Generale
Ten Bank Street Up to 700,000 square feet of
offices
Horden Cherry Lee - Newfoundland
PRS: 534,000 square feet Units: 611
20
Wood Wharf Phase 1
Wood Wharf Phase 1 Total: 1,670,000 square feet Office: 289,000 square feet Residential: 1,260,000 square feet Retail: 85,000 square feet Units for sale: 811 units PRS units: 461 units
21
Herzog & de Meuron - A1
Residential and Retail: 413,000 square feet Units: 468
Stanton Williams - A3
Residential and Retail: 262,000 square feet Units: 343
22
Stanton Williams - A2
PRS and Retail: 127,000 square feet Units: 174
Grid - E1/2
PRS and Retail: 226,000 square feet Units: 287
23
Allies & Morrison - G3
Intermediate Rent and Retail: 120,000 square feet Units: 176
Patel Taylor / Darling Associates - Affordable Housing
Affordable Rent and Retail: 179,000 square feet1 Units: 169
(1) Includes Community Space
24
Allies & Morrison - B3
Office and Retail: 101,000 square feet
Allies & Morrison - D1
Office and Retail: 223,000 square feet
25
Park Place 680,000 square feet
North Quay 2,400,000 square feet
Wood Wharf Future Phases 3,300,000 square feet
Development Programme -‐ Future Pipeline
26
Canary Wharf Group -‐ Development Portfolio
(1) Represents BPY’s ownership interest net of JV partnership interest of QIA (2) Development recently completed
Project BPY Stake1 Leased % Use NIA (square feet) Target Comple8on Year
Projects in development
Crossrail StaPon (Phase 2) 50% 0% Retail 18,000 2018 One Bank Street 50% 40% Office 700,000 2019
Ten Bank Street 50% Office 700,000 2020
Private Members Club 50% 100% Retail 60,000 2018
Wood Wharf (Phase 1 & Infrastructure)
50% Mixed-‐Use 1,670,000 2019-‐2020
Newfoundland 50% PRS 534,000 2018
Subtotal 3,682,000 Future Developments
Off-‐Estate Developments
Shell Centre 25% Mixed-‐Use 1,415,000 2017-‐2019
20 Fenchurch Street 7.5% 93% Office 682,0002 2015
Off-‐Estate Subtotal 2,097,000
Canary Wharf Future Developments
Wood Wharf Future Phases Mixed-‐Use 3,300,000 2020-‐2025
North Quay 50% Office 2,400,000 2024
One Park Place 50% Office 680,000 2024
Canary Wharf Subtotal 6,380,000
Future Development Subtotal 8,477,000
Total 12,159,000
27
29
Forecast Average Annual Housing Supply vs. Demand
30
Shia Of Tenure From Ownership To Rental In London
31
Growth In PRS Households 2001 -‐ 2011
32
Ten Year Residen8al Growth London & Prime London
33
The Grid Building
34
2 Bed Apartment Plan 87m2
The Grid Building
35
36
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Perimeter Retail / Restaurants
57,000 square feet
Key Tenant: Iberica, Cat & Canary, Bang & Olufsen
Canary Wharf Estate Leasing Overview
• 15.5 million square feet of offices
• 866,045 square feet available, of which 134,434 square feet is CWG space
• 5.58% vacancy rate
• Rental levels
• ConPnuing diversificaPon
37
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
One Canada Square
1,204,000 square feet of offices 97% leased
Canary Wharf -‐ Leasing Strategy -‐ Opera8ng Assets
25 Churchill Place
545,000 square feet of offices 90% leased
40 Bank Street
606,000 square feet of offices 94% leased
38
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Canary Wharf -‐ Leasing Strategy -‐ Developments
One Bank Street 700,000 square feet of offices
40% leased Key Tenant: Societe Generale
Ten Bank Street Up to 700,000 square feet of
offices
39
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Canary Wharf -‐ Leasing Strategy -‐ Developments
1 Park Place Up to 680,000 square feet of
offices
7 Westferry Circus 160,000 square feet of offices
Under refurbishment
40
Wood Wharf -‐ Leasing Strategy -‐ Developments Phase 1
Building 3 87,000 square feet of offices
Building D1 202,000 square feet of offices
41
Key Tenant:
20 Fenchurch Street
682,000 square feet of offices 93% Leased
City -‐ Leasing Strategy -‐ Opera8ng Assets
42
20 Bank Street 546,500 square feet 100% Leased
Key Tenant: Morgan Stanley
Perimeter Retail / Restaurants
57,000 square feet
Key Tenant: Iberica, Cat & Canary, Bang & Olufsen
Canary Wharf Group -‐ Retail Overview
• 812,000 square feet of exisPng retail
• Up to 878,000 square feet of future development
• 0% vacancy rate
43
Canary Wharf Group -‐ Retail Development
Crossrail Phase I - 2015 Total NIA of 95,000 square feet
Crossrail Phase II - 2018 18,000 square feet at level -3
C2 Building Wood Wharf
200,000 square feet
45
Canary Wharf Group -‐ Retail Development
UK & LONDON ECONOMIC & PROPERTY MARKET PROSPECTS
Dr Neil Blake
Head of EMEA Research,
CBRE
19th May 2015
THE UK ECONOMY IN CONTEXT
95
115
135
155
175
195
215
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275
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84
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85
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1984 =
100
USA UK
Euro Area
Source: Oxford Economics
2.7% p.a.
1.6% p.a.
2.5% p.a.
Growth picking up after a damaging
recession
Conservatives with slim or no majority
Europe top of the agenda
Big budget deficit to deal with
Is the 1992-1997 Major Government any guide to what’s next?
BACK TO THE 1990S?
Source: BBC
Growth picking up after a damaging
recession
Conservatives with slim or no majority
Europe top of the agenda
Big budget deficit to deal with
1992 2015
Generally…
Whether Cameron’s slim majority will be enough to keep a hold on power?
Could the Government be pulled off track by minor interests?
Whether there could be a second general election (unlikely?)
Specifically…
What will happen on an EU referendum?
Where is the devolution and independence debate going next?
How will the government hit its fiscal targets?
What new property-specific policies can we expect?
• Business rates
• Housing supply
We are mostly dealing with ‘known unknowns’
UNCERTAINTIES WE STILL HAVE
BREXIT: WHAT DO INVESTORS THINK? Q. The UK may decide to hold a Referendum on EU Membership: how would it affect the attractiveness
of property investment in the UK if they voted to leave the EU?
31% 38%
27%
4% 1% Makes the UK a muchless attractive location
Makes the UK a slightlyless attractive location
Makes no difference Makes the UK a slightlymore attractive location
Makes the UK a muchmore attractive location
Source: CBRE Investor Intentions Survey
Interest Rates have turned?
ZERO INFLATION IS TEMPORARY
0
1
2
3
4
5
6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CPI Inflation
10-year Gilt Yields
Source: Oxford Economics, CBRE
Office-Based Jobs in Central London
THE LONDON PHENOMENA
500
700
900
1100
1300
1500
1700
1900
2100
230019
84
19
85
19
86
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tho
usan
ds
Source: Oxford Economics, CBRE
17.7% growth 2009-14
Change in employees in 2009-14
CONSULTANCY & TMT LEAD THE WAY
-20000 -10000 0 10000 20000 30000 40000 50000 60000
Banking
Other professional & scientific
Publishing
Insurance
Scientific R&D
Rental & leasing
Public admin
Media
Information services
Membership organisations
Fund management
Real Estate
Architecture & engineering services
Programming & broadcasting
Telecommunications
Building services
Legal & Accounting
Employment agencies
Office admin & support
Advertising & MR
Computer Programming
Head offices; management consultancy
Source: ONS, CBRE. Covers Central London & adjacent boroughs
Office-based employment growth since the peak (2009-2014)
LONDON’S GROWTH AMONGST THE BEST
-5 0 5 10 15 20 25
Madrid
Paris
Milan
New York (metro)
Frankfurt
Berlin
Stockholm
San Francisco (metro)
Munich
Hong Kong
Shanghai
London (inner)
Warsaw
Source: Oxford Economics
Office completions in Central London
NO BOOM IN LONDON SUPPLY - YET
0
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8000
10000
12000
14000
16000
1800019
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000’s
sq
uare
feet;
4 q
uart
er
rollin
g t
ota
l
Source: CBRE
London Office Prime Rents
LONDON RENTS ON THE RISE
0
20
40
60
80
100
120
140
160
180
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
£ p
er
sq
uare
fo
ot
West End, 25.8% growth 3 years to 2019Q1
Source: CBRE (soft landing scenario)
City, 14.6% growth 3 years to 2019Q1
London Office Prime Rents
REAL RENTS* LOOK MORE STABLE
0
20
40
60
80
100
120
140
160
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
£ p
er
sq
uare
fo
ot,
at
2015Q
1 p
rices
Source: CBRE (soft landing scenario);
*deflated by the UK GDP deflator
0 50 100 150 200
Stratford
Docklands
Hammersmith
Shoreditch
Southbank
Farringdon
King's Cross
Paddington
Midtown (Holborn)
City core
Fitzrovia
Covent Garden
Victoria
Soho
Knightsbridge
Mayfair and St James's
£ per sq ft
Average Grade A Rent Average Grade A Business Rate Cost increase by 2018
Average grade A office costs
HOW LONG WILL CENTRAL AREAS REMAIN AFFORDABLE?
Source: CBRE
Note: Rates payable. Excludes service charge
London Office Yields vs Gilt Yields
YIELDS BUT RELATIVE PRICING STILL ATTRACTIVE
-2
-1
0
1
2
3
4
5
6
7
8
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
per
cen
t
*Weighted average of the City and Docklands
London Financial Area Prime
Office Yields*
Nominal 10 year Gilt yields
Real 10 year Gilt yields
Source: CBRE, Bank of England
Prime City Office Yields & 10-year Gilt yields
CURRENT SPREADS A CUSHION AGAINST FUTURE INTEREST RATE INCREASES
-2
-1
0
1
2
3
4
5
6
7
8
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Real Gilts
City Offices
Nominal Gilts
Spread between City Office and Real 10-year Gilt Yields
RENTAL GROWTH & ECONOMIC OPTIMISM TO NARROW YIELD SPREADS?
0
1
2
3
4
5
6
7
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
SUMMARY
Optimism following election
result to be balanced by
growing caution over the EU
referendum
New government still faces
policy challenges
Extra-ordinary growth of the
London economy over the
past 30 years
London is a global city;
No immediate reason for a
slowdown if the world
economy continues to recover
Threat to pricing from rising interest rates
Threat to occupier demand from cost escalation and BREXIT worries
Growing shortage of office space in Central London
Rental Growth is taking off
No immediate supply surge to rebalance the market
Supply surge towards the end of the decade possible
Re-rating and rental growth will have major implications for the relative affordability of London sub-markets
Brookfield Property Partners 2015