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27 October 2006

Challenges of Investing in Real Estate Today… And the Advantages of Co-Investing with Specialist Operators. 27 October 2006. MCP OVERVIEW. Chicago 1 Banking/Placement. London Banking/Placement. Sydney 2 Placement. New York Placement.

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27 October 2006

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  1. Challenges of Investing in Real Estate Today…And the Advantages of Co-Investing with Specialist Operators 27 October 2006

  2. MCP OVERVIEW Chicago 1 Banking/Placement London Banking/Placement Sydney 2Placement New York Placement • Founded in 1991 as capital markets affiliate of Security Capital Group (“spun out” in 2001) • Boutique real estate investment bank – focus on private equity and M&A advisory • Global distribution • 60 employees • 200+ real estate operator relationships • 450+ real estate investor relationships • $40.9 billion in 171 transactions since 19913 1 MCP headquarters. 2 Placement capabilities in Asia / Australia through Macquarie Bank. 3 As of October 1, 2006.

  3. DEMOGRAPHIC SHIFT TO YIELD Retirement Age Population(65+ years of age) Savings / RE Investment (in millions) Actual Forecast Sources: U.S. Census Bureau International Data Base, Little Green Data Book 2004, OECD, MCP, Goldman Sachs: Report on Alternative Investing. 1 Represents household and non-profit institution saving rates as a percentage of disposable household income (5-year average from 1999-2003). 2 Represents the simple average of Norway, Sweden, Denmark and Finland.

  4. INCREASED TRANSACTION VOLUME (€ billions) 5-Year CAGR = 37% 5-Year CAGR = 19% Direct investment in U.S. real estate was 3.5x higher in 2005 versus 2001 Direct investment in European real estate was 2.0x higher in 2005 versus 2001 Note: US transaction volume converted into Euro with exchange rate as of August 13, 2006, $1 = €0.7977 Sources: Real Capital Analytics, Jones Lang LaSalle. Reflects total volume of direct property transactions in the four core sectors.

  5. CHALLENGES FOR REAL ESTATE INVESTORS Investor Issues Benefits of Partnering with Specialist Operators • Limited access to product • Gain access to extensive transaction pipelines • Inefficient staffing model • Efficient use of staff • Difficult to obtain local market expertise • Take advantage of local market expertise • Outperformance is increasingly difficult • Team up with specialists • Alignment of interest • Co-investment enhances alignment of interests

  6. INVESTOR CASE STUDY – INTERNATIONAL INVESTOR Investor has deployed approximately $800 M of equity in the U.S. and Europe through five operating partner relationships (U.S. $ in millions) 1 Investor has realized a capital event on this investment. 2 Includes 3 development assets.

  7. Conclusions Invest with specialist operators • Real estate is a good diversifier • Invest in partnership with specialist operators with a strong track record in a given sector • Invest in well established JV / fund structures advised by internationally recognised legal and tax advisors • Focus on best market practice in corporate governance, reporting / transparency and fees • Check what leading (and more experienced) institutional investors are doing

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