The BEVAK in an international environment Director Equity

The BEVAK in an international environment Director, Equity Property Databank Ltd Brussels, 22 November 2005 0 © Copyright IPD 2004 Hans Op ‘t Veld

Topics • Listed property companies are growing worldwide • Bevak structure is relatively attractive to investors • Availability of product is an issue particularly going forward 1

The listed property share markets are young 1991 Start of REIT ‘Boom’ 1960 Introduction US Real Estate Investment Trust 1995 Introduction BEVAK 1992/4 European Real Estate Crisis 1997 Asian Financial Crisis 2001 Introduction of Euro/Asian structures 2003 Introduction SIIC (France) 2

The European market has grown substantially in the last few years… Size of European listed property share market 2003 -2005 capitalisation in € millions Bron: FTSE/EPRA 3

…with tax transparent structures becoming the standard in the market Country Since Name New Zealand United States Netherlands Australia South-Africa Brasil Malaysia Canada Italy Belgium Turkey Singapore Japan South Korea* Austria France Hong Kong Taiwan Puerto Rico United Kingdom** Germany** 1956 1960 1971 1981 1993 1994 1995 1998 1999 2000 2001 2003 1972/2000 2006 Property Trust Real Estate Investment Trust Fiscale Beleggingsinstelling Listed Property Trust Property Unit Trust Fundos de Investimento Imobiliario Real Estate Investment Trust Fondi di Investimento Immobiliare Societe d'Investissement a capital fixe Gayrimenkul Yat Singapore Real Estate Investment Trust Japanese Real Estate Investment Trust Korean Real Estate Investment Trust Immobilien-Investmentfonds[gesetz] (Immo. Inv. FG) Societe d'Investissements immobiliers cotees Hong Kong Real Estate Investment Trust UK Real Estate Investment Trust German Real Estate Investment Trust * Various structures exist ** Introduction expected within one year 4

Tax transparent structures have become more important through time Percentage of tax transparent listed property companies through time % of total market capitalization, June 1994 – September 2005 5

Property shares are not equally distributed throughout Europe Breakdown by market capitalisation 100% = € 97, 4 miljard Other Europe Sweden 5% Spain 5% UK 44% Netherlands 13% France 17% * Source: FTSE/EPRA/NAREIT Breakdown by companies % of total, 100% = 86 Germany Other Europe 7% UK Belgium 34% 8% Switzerland 6% Sweden 10% France Spain 4% Netherlands 12% 9% 6

REITs do outperform tax paying property companies Total return index in local currencies 06/30/1994 = 100 7

Tax transparency is seen to be a driver of market growth Transparant structure not present Transparent structure for publicly listed property companies Transparant structure for non-listed and/or institutional investments Transparent structure to be introduced in near future 8

Topics • Listed property companies are growing worldwide • Bevak structure is relatively attractive to investors • Availability of product is an issue particularly going forward 9

Bevak is relatively well positioned to compete with other structures Performance drivers Remarks Fit 1. Borrowing level Ceiling to borrowing level should not hamper growth 2. Activities Ability to employ operating activities (development) is crucial to returns 3. Shareholder requirements should enable liquidity and free float 4. Distributions need to be at high levels to mimic income characteristics of real estate 10

Ceiling to borrowing of Bevak is well within acceptable levels Country Australia Austria Belgium Canada Finland France Germany Hong Kong Italy Japan Malaysia Netherlands New Zealand Philippines Singapore South-Africa Spain Sweden Switzerland Thailand UK USA Average borrowing levels Transparant Taxed 27. 63% 46. 12% 25. 53% 57. 43% 42. 74% 30. 31% 34. 92% 40. 39% 74. 25% 49. 07% 37. 40% 62. 07% 21. 56% 42. 54% 51. 41% 30. 92% 38. 39% 31. 54% 28. 66% 37. 00% 19. 80% 29. 24% 49. 60% 61. 95% Remarks • Borrowing levels of tax paying companies are close to those of tax transparent companies • Average levels of borrowing are typically in the range of 30 -45% loan-to-value • Current average borrowing levels does not suggest structure to limit opportunities 47. 54% 57. 34% 79. 85% 51. 93% 59. 81% 11

Activities are of key importance to performance Permission of development activities in % of structures around the world Not permitted 39% Stapled company 17% Portfolio only limited 22% Permitted 22% Is it good or bad to be limited in activities? ? 12

Shareholder requirements do not support free float and liquidity in Belgian market Remarks • Minimum stock market quotation of only 30% of shares outstanding Free float companies included in EPRA index Europe Befimmo 100% Cofinimmo 75% • Current free float is restricted, especially for the smaller companies Intervest Offices 50% Leasinvest Real Estate 75% • Trading volumes are subdued (if not prohibitive for institutional investors) Warehouses de Pauw 75% 13

Distribution requirements provide room for growth Distribution level should be high Distribution level should be low • Tax transparency will require passing on dividends quickly • Company will be able to use earnings for reinvestment • Investors will judge companies on level of dividend payments • • Payment pattern with regular dividends improves correlation with underlying real estate Passing through distributions might not be required by investors, who are at risk of lowering allocation to real estate • Growth will come through in NAV • Distribution requirements prevent company from making wrong allocation decisions 14

Topics • Listed property companies are growing worldwide • Bevak structure is relatively attractive to investors • Availability of product is an issue particularly going forward 15

Future will see ‘Euro-REIT’ replace structures, creating a level playing field Investor Domestic / holding Abroad / portfolio Source tax Country 1 Withholding Tax Investor Home country Source tax Country 2 Compensation for source tax Source tax Country 3 16

Product in Belgium is relatively limited in scope Office Industrial Breakdown of market capitalisation in % of free float* Residential Retail Source: FTSE/EPRA/NAREIT 17

Euro-REIT will further limit product due to subsidiaries and limited size Subsidiaries are poised to leave market… …whilst drive to grow is given another boost Higher index weight Better chance of immproved valuation Improved liquidity More interest of analysts, investors and media 18

New sectors would offer wider choice Self-storage Car dealerships Shurgard Hotels Prisons Healthcare Movie theaters Golf courses Specialties 19

Conclusions Bevak is a relatively attractive regime Liquidity and product availability are biggest challenges to market Other markets show ability to broaden scope of (listed) property investments 20

Equity Property Databank Hans Op ‘t Veld, Director hans. optveld@epdatabank. com +44 (0)20 7643 9323 Equity Property Databank Ltd 7/8 Greenland Place London NW 1 0 AP United Kingdom Switch: +44 (0)20 7482 5149 Fax: +44 (0)20 7267 0208 http: //www. epdatabank. com © Copyright IPD 2004 21