1. The Attraction of Investing in Real Estate A journey from the Palm to Park Avenue via London Presented by: Richard Johnson Managing Director Istithmar 22 nd November 2006

2. “A journey of a thousand miles begins with a single step” - Traditional Chinese proverb

3. 230 Park Avenue

4. What makes Real Estate investment attractive ?

5. For international investors - a mix of science and art ?  Source of diversification - a risk adjusted return generator  Real estate as an inflation or deflation hedge  Real estate as a component of the investment universe  Real estate can be a strong cash flow generator  Natural affinity for real estate ?  Ego and “snob” Values  Different perceptions of value – “Because we can”

6. Grand Buildings

7. What makes it attractive – practical aspects

8. Market selection

9. World real estate at night

10. World Real Estate Value by Region Total Stock US 7.1 Trillion Invested Stock USD 2.4 Trillion Investible Stock USD 4.7 Trillion Invested Stock USD 4 Trillion Investible stock USD 5.2 trillion Total stock USD 7.5 Trillion Invested Stock USD 1.4 Trillion Investible Stock 2.5 Trillion Total Stock of USD 4.6 Trillion Source: RREEF Research

11. Any time you take a chance you better be sure the rewards are worth the risk because they can put you away just as fast for a $10 heist as they can for a $1,000,000 job. - Stanley Kubrick

12. 280 Park Avenue

13. Our changing world…

14. What lies ahead?  Consolidation  Innovative Capital Markets  Further Globalisation  Emergence of newer markets  Continued growth of CMBS and Globalisation of REITs  Wider range of acceptable markets ?

15. Market Risks Source: RREEF Research

16. Looking for growth

17. Picking deals and what you get from them

18. W Hotel

19. Managing investor expectations Short term sentiment and expectation management…  Create a diversified portfolio  Structure deals using a spread of financial instruments.  Active asset management to unlock value enhancement opportunities.  Monitor portfolio performance through regular reporting and appraisals.  Explore exit strategies to maximise IRR returns.

20. Hotel Washington

21. Global trends spurring greater real estate investment  Globalisation of capital flows  More efficient markets  Tighter tax regimes  Emerging Markets  “Weight” of capital

22. Global Flow of Capital into real estate 2005 Source: PwC

23. Success is a consequence and must not be a goal. - Gustave Flaubert

24. Adelphi

25. “Follow the yellow brick road. We’re off to see the Wizard” - EH Harburg – The Wizard of Oz

26. Emirates Towers, Level 4, Sheikh Zayed Road, PO Box 17000. Dubai, United Arab Emirates www.Istithmar.ae