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Feri Wealth Management GmbH PowerPoint Presentation
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Feri Wealth Management GmbH

Feri Wealth Management GmbH

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Feri Wealth Management GmbH

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    2. - 2 - Feri Real Estate Services for both private and institutional clients Specific real estate services are offered with regard to the strategy development and consultancy as well as the selection, management and reporting The real estate services are offered on the basis of the market research together with the forecast and rating provided by Feri Rating and Research GmbH Specific real estate services are offered with regard to the strategy development and consultancy as well as the selection, management and reporting The real estate services are offered on the basis of the market research together with the forecast and rating provided by Feri Rating and Research GmbH

    3. - 3 - ... while covering a variety of property investments ... Basically one can differentiate between direct and indirect property investments. Whereas direct investments comprise property investments as well as project developments we will pay attention to indirect property investments. These can be differentiated into funds such as open-ended funds or REIT-funds, property equities and derivatives. Thus there exists a wide range of property investment possiblities and in this, lets say competitive environment one should ask whether a REIT can fulfill the requirements of private investors regarding an optimized indirect property investment. Basically one can differentiate between direct and indirect property investments. Whereas direct investments comprise property investments as well as project developments we will pay attention to indirect property investments. These can be differentiated into funds such as open-ended funds or REIT-funds, property equities and derivatives. Thus there exists a wide range of property investment possiblities and in this, lets say competitive environment one should ask whether a REIT can fulfill the requirements of private investors regarding an optimized indirect property investment.

    4. - 4 - What happens in German Real Estate markets? Demand: often results in a premium of the portfolio value as compared to the sum of the individual properties next to national and international funds, insurances and pension funds are mainly investing in office and retail during the past years a vast amount of residential real estate was sold through portfolio transactions summarizing these factors, an increase in purchase prices together with a yield compression are seen in several German cities Supply: Companies and the state that own properties that do not belong to the main business activity sell their real estate several funds now see a good opportunity to sell single properties at attractive prices Further: after international investors were able to obtain debt for investing with high leverage, German banks are willingly to finance those investments as well the interest rate levels remains at an attractive level which favors the financing of real estate Demand: often results in a premium of the portfolio value as compared to the sum of the individual properties next to national and international funds, insurances and pension funds are mainly investing in office and retail during the past years a vast amount of residential real estate was sold through portfolio transactions summarizing these factors, an increase in purchase prices together with a yield compression are seen in several German cities Supply: Companies and the state that own properties that do not belong to the main business activity sell their real estate several funds now see a good opportunity to sell single properties at attractive prices Further: after international investors were able to obtain debt for investing with high leverage, German banks are willingly to finance those investments as well the interest rate levels remains at an attractive level which favors the financing of real estate

    5. - 5 - Office property market Germany German office rents What: Graph shows the rental development of 67 locations in Germany in their respective class A regions (weighted) How: after a strong rise of property rents in 2000, a slump began in 2001 and strengthened between 2003 and 2005 since 2006 we see an upward trend in rents that is likely to continue over the next years Why: from 1996 onwards a great boom was characterised by high demand since 2002 augmented supply decreased absorption and weakened demand which put pressure on rents the excess supply wont burden the market for a long time with both rents and prices are projected to rise German total office stock What: graph shows the total office stock of 67 locations in Germany indexed at 2000 because no reliable data on the square metres can be obtained How: between 1996 and 2005, total office stock increased by approx. 12 % from 2004 onwards total office stock will only see a slight increase Why: after an increase in demand, supply came to the market over the past years and stopped when the demand was satisfied due to a relatively low volume of supply in the future the general vacancy rate is expected to fall Rents and purchase prices What: graph shows %-change in rents and purchase prices as compared to the previous year How: after negative growth from 1996 to 1998 in both rents and purchase prices, purchase prices began to increase even higher than rents between 1999 and 2001 between 2002 and 2004, both rents and purchase prices had negative growth between 2005 onwards rents and purchase prices are going to increase as well Why: between 2002 and 2005 rents and purchase prices declined especially in top cities due to a huge supply the relatively low volume of new supply leads to a moderate increase in purchase prices over the next years Total return What: graph shows total return of class A properties subsuming rental yield and price appreciation How: in 1996 class A office rents had negative total returns between 1997 and 2001 total returns increased up to 15% 2001 until 2005 total returns declined until they became negative from 2006 to 2015 stable total returns between 6 and 8 % are expected Why: the cyclical economic downswing that set in just after the turn of the century led to sharply declining office rents and prices due to recent increase in supply but only moderate activity in the future, yields wont be at the level they were in 2000German office rents What: Graph shows the rental development of 67 locations in Germany in their respective class A regions (weighted) How: after a strong rise of property rents in 2000, a slump began in 2001 and strengthened between 2003 and 2005 since 2006 we see an upward trend in rents that is likely to continue over the next years Why: from 1996 onwards a great boom was characterised by high demand since 2002 augmented supply decreased absorption and weakened demand which put pressure on rents the excess supply wont burden the market for a long time with both rents and prices are projected to rise German total office stock What: graph shows the total office stock of 67 locations in Germany indexed at 2000 because no reliable data on the square metres can be obtained How: between 1996 and 2005, total office stock increased by approx. 12 % from 2004 onwards total office stock will only see a slight increase Why: after an increase in demand, supply came to the market over the past years and stopped when the demand was satisfied due to a relatively low volume of supply in the future the general vacancy rate is expected to fall Rents and purchase prices What: graph shows %-change in rents and purchase prices as compared to the previous year How: after negative growth from 1996 to 1998 in both rents and purchase prices, purchase prices began to increase even higher than rents between 1999 and 2001 between 2002 and 2004, both rents and purchase prices had negative growth between 2005 onwards rents and purchase prices are going to increase as well Why: between 2002 and 2005 rents and purchase prices declined especially in top cities due to a huge supply the relatively low volume of new supply leads to a moderate increase in purchase prices over the next years Total return What: graph shows total return of class A properties subsuming rental yield and price appreciation How: in 1996 class A office rents had negative total returns between 1997 and 2001 total returns increased up to 15% 2001 until 2005 total returns declined until they became negative from 2006 to 2015 stable total returns between 6 and 8 % are expected Why: the cyclical economic downswing that set in just after the turn of the century led to sharply declining office rents and prices due to recent increase in supply but only moderate activity in the future, yields wont be at the level they were in 2000

    6. - 6 - Residential property market Germany

    7. - 7 - Retail property market Germany

    8. - 8 - Which urban areas carry a high potential at low risks? 1. Concerning th office market, we expect the highest risk-adjusted potential over the next 10 years in the following regions ... 2. However, there is additional potential in ..... Bargains can be escpecially made in Leipzig and Berlin in Berlin und Leipzig erhalten. If anybody is willingly to invest with a bit more risk these are the right places because returns are higher. If the risks are reduced due to a good tenant mix, I did most of it right. --------------------------------------------------------------------------------------------- In this graph you see the risk-adjusted potential. i.e. location A: Rental yield 5,5% Appreciation 2,4 % Risk discount 0,5 % = risk-adjusted yield 7,4 % i.e.. Standort B: Rental yield 6 % Appreciation 2 % Risk discount 1 % = risk-adjusted yield 7 % ------------------------------------------------------------------------------------------------- ? Let us now have a look at the German retail property market1. Concerning th office market, we expect the highest risk-adjusted potential over the next 10 years in the following regions ... 2. However, there is additional potential in ..... Bargains can be escpecially made in Leipzig and Berlin in Berlin und Leipzig erhalten. If anybody is willingly to invest with a bit more risk these are the right places because returns are higher. If the risks are reduced due to a good tenant mix, I did most of it right. --------------------------------------------------------------------------------------------- In this graph you see the risk-adjusted potential. i.e. location A: Rental yield 5,5% Appreciation 2,4 % Risk discount 0,5 % = risk-adjusted yield 7,4 % i.e.. Standort B: Rental yield 6 % Appreciation 2 % Risk discount 1 % = risk-adjusted yield 7 % ------------------------------------------------------------------------------------------------- ? Let us now have a look at the German retail property market

    9. - 9 - Which parts of Germany represent favourable residential investment opportunities? DemographyDemographie is not only concerned about birth and death rates. It furthermore considers the general developments of the population through internal migration. What we see here, is... for example - a particular high growth in the regions ... - main determinant are working places During the past years, we had an extensive internal migration - 1990 to 2000: + 7% in Bavaria and Baden-Wurttemberg, - 7% in Sachsen and Thringen and we will see that in the future as well - 2000 bis 2020: + 40 % County of Potsdam-Mittelmark - 30 % Jena However you have to be careful with those forecasts, - as the movement of one large company can even in one county lead to a huge change. as many parameters are hardly to forecast ex ante. These are for example the structural change or successfull regional economics or education politics. -------------------------------------------------------------------------------------------------------------------- generally the internal migration will be diversified; Northern Germany (except of Hamburg) the Ruhr area and the Eastern part of Germany will loose; the Rhineland and main parts of the South will win. Conclusion: in vast parts of Germany, some suburban areas remain as islands of growth. (Bundesamt fr Bauwesen und Raumplanung). DemographyDemographie is not only concerned about birth and death rates. It furthermore considers the general developments of the population through internal migration. What we see here, is... for example - a particular high growth in the regions ... - main determinant are working places During the past years, we had an extensive internal migration - 1990 to 2000: + 7% in Bavaria and Baden-Wurttemberg, - 7% in Sachsen and Thringen and we will see that in the future as well - 2000 bis 2020: + 40 % County of Potsdam-Mittelmark - 30 % Jena However you have to be careful with those forecasts, - as the movement of one large company can even in one county lead to a huge change. as many parameters are hardly to forecast ex ante. These are for example the structural change or successfull regional economics or education politics. -------------------------------------------------------------------------------------------------------------------- generally the internal migration will be diversified; Northern Germany (except of Hamburg) the Ruhr area and the Eastern part of Germany will loose; the Rhineland and main parts of the South will win. Conclusion: in vast parts of Germany, some suburban areas remain as islands of growth. (Bundesamt fr Bauwesen und Raumplanung).

    10. - 10 - What are the best places for retail property investments?

    11. - 11 - Conclusion property owners should check, whether a sale is profitable property investors should search for locations that are not in the focus of foreign, private and institutional investors property yields are still attractive in relation to many other countries intense competition between investors that target German property leads to a demand for expertise in investment selection - German and foreign investors are currently searching for German property and often pay attractive prices Property investors should search in areas other than the classic main investment cities such as Mnchen, Hamburg, Berlin, Frankfurt, Dsseldorf, Stuttgart, Kln, Leipzig rising property prices and only moderately rising rents are leading to a yield compression? however in an international context, Germany still has a potential for further yield compression however, the increasing competition for profitable properties demands for a sophisticated investment selection with the ability to identify attractive objects may be also through off-market deals - German and foreign investors are currently searching for German property and often pay attractive prices Property investors should search in areas other than the classic main investment cities such as Mnchen, Hamburg, Berlin, Frankfurt, Dsseldorf, Stuttgart, Kln, Leipzig rising property prices and only moderately rising rents are leading to a yield compression? however in an international context, Germany still has a potential for further yield compression however, the increasing competition for profitable properties demands for a sophisticated investment selection with the ability to identify attractive objects may be also through off-market deals

    12. Contact details Ladies and Gentlemen, thank you very much for your attention (and I would really appreciate to answer your questions now!) Ladies and Gentlemen, thank you very much for your attention (and I would really appreciate to answer your questions now!)