Swedish Real Estate Market 2015 FEDESSA Swedish Self Storage Association Conference September 3, 2015

Investment themes Transaction market characteristics More money than ever targeting European and Nordic CRE Investors are still more risk-averse than previous cyclical peak Need for new products and markets to satisfy investment targets

Total transaction volume peaked in 2014? Sweden was ahead of rest of Europe in 2014 activity EUR 9.4 billion of transactions YTD +2% vs 9M 2014 (Rest of Europe +35%) 4Q 2015 expected to be slightly weaker than 4Q 2014 Total transaction volume per quarter, EURm

Transaction mix Retail and Industrial fastest growing segments y/y Total transaction volume per segment, 2015 YTD

High activity in industrial segment Big portfolio deals in 2014 and 2015 EUR 1.6 billion rolling 12 months +30% from end of 2014 Logistics segment most active Industrial real estate transaction volume, EURm

European comparison Sweden and Stockholm top 5 most liquid market in last ten years Real estate transaction volume in Europe totaled EUR 135 billion in the first half of 2015 Sweden accounted for 5.2 percent of the European total Stockholm dropped from 5th busiest transaction market in 2014 to 10th in 2015

Investable assets and liquidity Supply constraints in current market environment Limit to transaction activity Size of investable stock ~ EUR 125 billion Quality of investable stock Total real estate transaction volume, EURm

Cross-border investments Weaker krona strengthens foreign investor interest Foreign capital targets most Swedish commercial real estate segments But domestic investors are still the most aggressive on pricing Pre-crisis share of 40%–50% vs 20%+ today Foreign investor share of total transaction volume, %

Money on the sidelines Europe is seeing higher inflow of foreign funds than US and Asia EUR 12 billion raised for Europe focused funds in 2Q 2015 alone Dry powder available in real estate PE funds, USD billion

Pricing How low can yields go? Pricing in prime locations have continued to harden Prime asset yields are down 25–50 bps in six months Office prime yields, %

Cost of real estate debt Gap between real estate income and interest widens despite lower yields All in cost of debt below 2% on core or value-add investments Expected returns (IRR) remain intact despite sharper pricing All in cost of debt, CRE loan @65% LTV, %

Pricing in industrial segment High quality logistics assets have pushed yields lower Yields have contracted but upside to all time lows reflect remaining liquidity risk Warehouse/Industrial/Logistics yield, %

Pricing across segments Headroom in secondary segments reflect lingering risk-aversion While prime yields in office and retail have contracted close to all-time lows attractive yield spreads remain in industrial segment and other secondary and tertiary markets Dry powder available in real estate PE funds, USD billion

The search for investable assets Pension money leading hunt for returns in real estate Pension funds and PE funds looking for new segments of real estate investments New segments explored since 2010 Public tenant real estate (municipal tenants or publicly funded operators) Residential apartments Food retail Prime logistics Student housing Infrastructure In the pipeline Commercial development Land plays in biggest cities Joint ventures local and global Need for new products and markets to satisfy investment targets

Land plays Cost of residential building rights Location SEK per sqm Secondary suburbs 3,000–5,000 Best suburbs 6,000–10,000 Outside tolls 10,000–20,000 Inner city 20,000–40,000 Central Stockholm 40,000–60,000

Investment themes Summing up The market liquidity will last another 12 months Investors will remain more cautious than in the last cycle Yield will be the primary driver of shifts to new real estate segments

Daniel Anderbring Partner Capital Markets Mobile: +46 (0) 708 464 786 daniel.anderbring@cushwake.com

SELF STORAGE SECTOR REAL ESTATE OVERVIEW OLIVER CLOSE SEPTEMBER 2015

Agenda MARKET STATUS – MAJOR SELF STORAGE REITS TRANSACTIONS PROPERTY VALUATIONS DRIVERS OF VALUE SUMMARY & CONCLUSIONS

Market Status US REITS

US Performance US REIT Operating Statistics - Occupancy Source: Based on Same store data in K10 filings

US Performance US REIT Operating Statistics – Rental Rate Source: Based on Same store data in K10 filings

US Performance US REIT Operating Statistics - RevPAF Source: Based on Same store data in K10 filings

US Performance Movement Comparison FFO FOR THE QTR PER SHARE SHARE PRICE AS AT 30 JUNE ANNUALISED MULTIPLE $2.15 $184.37 4.66% 21.4 $0.31 $23.16 5.35% 18.7 $0.75 $65.22 4.60% 21.7 $1.24 $86.19 5.75% 17.4 Source: Yahoo Finance

Market Status EUROPE

Europe Performance Operating Statistics – Occupancy (%) Source: C&W Analysis extracted from published statements

Europe Performance Operating Statistics – Rental Rate (Mixed Currency) Source: C&W Analysis extracted from published statements

Europe Performance Operating Statistics – RevPAF (Mixed Currency) Source: C&W Analysis extracted from published statements

UK Performance Movement Comparison (Vs All UK REITs) Source: REITA – bpf.org.uk

Supply

Supply Comparison UK NUMBER OF FACILITIES - 975 TOTAL SQ M - 3,200,000 Bubble graph 2: EU - selected countries UK NUMBER OF FACILITIES - 975 TOTAL SQ M - 3,200,000 SQ M PER PERSON – 0.05

Transactions DEAL OR NO DEAL?

Major Transactions December 2014 October 2014 June 2015 December 2014 April 2014

Transactions – a problem?

Valuation Approach DCF Valuations Analysis of the trading data Model set up and process Freehold -v- Leasehold Capitalisation rate Portfolio analysis

Principal Drivers of Value Cashflow REVENUE – THE BIG 5 DRIVERS MLA Stable occupancy assumption Fill rate Rental rate Additional income OPERATING COSTS RENT, MANAGEMENT FEES & CAPITAL RESERVES

Principal Drivers of Value Capitalisation LOCATION BUILDING & PROMINENCE TENURE GEARING TRACK RECORD ABSORBTION RISK GROWTH AND DISCOUNT RATE RESULTING RETURNS ANALYSIS

Principal Drivers of Value Other PROPERTY SELECTION & STRATEGY PORTFOLIO PREMIUM ALTERNATIVE USE POTENTIAL LEASE RE-GEARS ETC MARKET CYCLE HOLD PERIOD

Q & A

OLIVER CLOSE PARTNER, VALUATION & ADVISORY 43/45 Portman Square London W1A 3BG +44 (0)20 7152 5156 oliver.close@eur.cushwake.com