Property as an asset class

1. Property as an asset class Harry de Ferry Foster Director of Fund Management .

2. A recent history of commercial property returns Source: Investment Property Databank Annual Digest 2007 Chart shows total returns with capital growth element as remainder from total return

3. Secure income underpins returns …. • Long leases (average of 9.8 years)* • Tenant responsible for repairs and insurance • Upward only rent reviews • Rent is paid ahead of dividends • Income can be improved through asset management * Source: Investment Property Databank – average for All Property (commercial) December 2006

4. …but recent performance comes from yield shift Source: IPD, 3 monthly annualised (IPD Monthly Index, January 2007)

5. …and investors have to accept lower yields Source: AREF, Cordea Savills, IPD Monthly Index December 2006 AREF average is for PUTs 2001-2003 and for balanced funds 2004-2006. Yields are calculated on a prospective basis as a percentage of offer price (2001-2003) and NAV (2004-2006)

6. There is now a negative financing gap Source: IPD Monthly Index, January 2007, Savills Private Finance, Cordea Savills

7. …and a new environment for returns Source: IPD, Cordea Savills, December 2006 Total returns, annualised

8. Income becomes key for returns again Source: IPD, Cordea Savills, December 2006 Chart shows total returns with capital growth element as remainder from total return

9. Sector and segment differences • Retail sector • Significant slowdown in returns • Discounting pervades the High Street with migration to “Out of Town” • Significant supply of new shopping centres • Office sector • Showing best performance with attractive rental growth • Driven by London, in particular West End • Industrial sector • Remains highest yielding sector • Risk from soft planning regime in many locations

10. Some market changes to watch • REITs (Real Estate Investment Trusts) • “Green” buildings • Property derivatives • Globalisation of capital flows • Corporate outsourcing • Residential

11. Residential is being looked at afresh • The stock of residential is at least 5 x commercial • Institutional investors have not seen it? • IPD commercial index £192bn* vs • Buy-to-let investment value c £150bn • Even the ‘specialist’ residential segments are large • Student Halls worth c £20bn • Social Housing is far larger • Investments can look like “commercial” but have long leases with RPI linked rents *Source: IPD All Property December 2006 **Source: Cordea Savills – estimate based on Council of Mortgage Lenders February 2007 data

12. Conclusions • Commercial property remains attractive • Institutional lease structure • Yield profile • Re-appearance of income growth in some segments • Demand still driving the market • Institutions attempt to increase exposure to property • Significant growth of new funds • REITs should generate additional demand for investments • Outlook positive but selection needs to be more careful • Finance is no longer relatively cheap • Active management is the key to unlocking performance • Residential and Europe may offer opportunities

13. Cordea Savills LLP Lansdowne House 57 Berkeley Square London W1J 6ER Tel: +44 (0)20 7877 4700 Fax: +44 (0)20 7877 4777 Harry de Ferry Foster Director of Fund Management Tel: +44 (0)20 74098715 Harry.deferryfoster@cordeasavills.com IMPORTANT NOTICE Cordea Savills is the brand name of Cordea Savills LLP and Cordea Savills Investment Management Limited. Cordea Savills Wealth Management is a trading style of Cordea Savills Investment Management Limited. This presentation is the property of Cordea Savills and may not be reproduced in any form without the express permission of Cordea Savills and to the extent that it is passed on care must be taken to ensure that this is in a form which accurately reflects the information presented here. Cordea Savills Investment Management Limited is authorised and regulated by the Financial Services Authority. Registration number 193863. Any funds, products and services described may not be available in all countries, and nothing contained herein constitutes an offer or solicitation to anyone in any jurisdiction where such an offer is not lawful or to anyone to whom it is unlawful to make such an offer or solicitation. Any reference made to specific investments is purely for the purposes of illustration and should not be construed as a recommendation. Investment in property can be difficult to realise – and it is unlikely that investors will be able to sell / cash in their investment when they want to. The value of property is generally a matter of a valuer’s opinion rather than fact. Please remember that past performance is not necessarily a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and investors may not get back the amount originally invested. Tax assumptions may change if the law changes, and independent advice should be sought. Whilst Cordea Savills believe that the information is correct at the date of this presentation, no warranty or representation is given to this effect and no responsibility can be accepted by Cordea Savills to any intermediaries or end users for any action taken on the basis of the information. Any forecasts made are subject to various factors which are uncertain or outside of the control of Cordea Savills. Actual results or events may differ materially from those forecast. This document has been authorised and approved for publication by Cordea Savills Investment Management Limited Contact information