Project Grønttårnet

First page 1 Next page Last page

PROJECT GRØNTTÅRNET ZãØ«ã¼ú ÊÃăÃã«¼ OCTOBER 2017

INVESTMENT MEMORANDUM

CONTENTS

Introduction 3 Investment highlights 4 The property 6

Unit types 9 Location 14 Micro location 18

Danish residential market 20 Danish investment market 24 Danish economy 26 Disclaimer 30 Contact 31

Project Grønttårnet

INTRODUCTION

The property is an 18-storey turnkey student housing building, dubbed “Grønttårnet” (the Green Tower), set in an attractive upcoming district of Copenhagen, Grønttorvet, Valby. On scheduled completion in July 2019, the property comprises 8,052 sqm floorspace distributed on 189 student housing units in addition to one ground-floor commercial unit. FB Gruppen A/S (the Seller) has instructed Sadolin & Albæk with the sale of the special purpose vehicle (the SPV), which sole purpose is the ownership and turnkey development of the property.

The proposed transaction will be structured as a share deal involving the transfer of all shares in the SPV. The property is assumed divested without any rental guarantees. This investment memorandum sets out the details of this highly attractive investment opportunity to assist interested parties in making their own assessment of the property. The Seller targets signing of a transfer agreement in Q4 2017/Q1 2018. On signing, the buyer of the SPV will be required to provide a satisfactory guarantee for the purchase sum as specified in the transfer agreement. Closing will take place on completion of the turnkey project.

Project Grønttårnet INVESTMENT HIGHLIGHTS

Property visualisation, Effekt Architects

Project Grønttårnet

High-volume student housing investment opportunity On completion comprising a total GLA of 8,052 sqm and 189 student housing units, the property represents an excellent opportunity to acquire a high-volume asset in an emerging segment characterised by limited investment opportunities in terms of prime assets.

Optimised project With highly space-efficient units, all with own kitchen and bathroom, the property is designed to match the preferences of students, also in terms of affordable rent levels, from an investor perspective providing a great potential in terms of rental income per sqm.

Strong and secure cash flows Against the backdrop of long-term supply and demand imbalances in the Copenhagen market for student housing, featuring virtually no vacancies, the strong and secure cash flows of the property will accommodate investors pursuing a passive buy-and-hold (rental strategy) as well as provide long-term capital appreciation by means of rental growth.

Easy resale in the ownership market The property can be divided into commonhold units, which facilitates successive sales of individual units in the ownership market, allowing for substantial capital gains in a buoyant market. Once the divestment of individual units becomes VAT- exempt (five years after completion), a break-up (divestment) strategy may well prove more lucrative than a buy-and-hold strategy. Excellent accessibility Today well-serviced by public transport in terms of train and bus links to the entire Greater Copenhagen area, the loca- tion of the property will gain access to top-tier infrastructure thanks to the ongoing expansion of the Copenhagen Metro commissioned for 2023.

Attractive location near educational institutions Located in an upcoming area in Copenhagen, Grønttorvet in the district of Valby, the property enjoys easy access to most of the large educational institutions in Copenhagen. At the same time, the prop- erty is set in green and highly attractive surroundings, overlooking a brand-new park.

Project Grønttårnet THE PROPERTY

Project Grønttårnet

Scheduled for completion in July 2019, Grønttårnet is a turnkey student housing tower block, comprising 8,052 sqm floorspace above ground distributed on 189 highly space-efficient residential units in addition to one commercial unit, communal space and storage facilities. The property benefits from an attractive location in an emerging residential district of Copenhagen, viz. Grønttorvet, Valby, with swift access both to central Copenhagen and environs.

In terms of building design, the property will consist of an 18-storey tall residential tower, constructed of brown bricks to blend in with its green and scenic surroundings. In addition, the tower will feature a ‘roofless’ top- storey, open to the sky, serving as a rooftop garden with a green oasis of pine trees to complement the overall look of Grønttorvet. Grønttårnet offers a wide range of student dwellings to suit the taste and pocket of both singles, friends sharing and couples. Accommodation therefore comes in ten different unit types. 90% of the units are single- bedroom flats (bedsits) whereas the remaining 10% are two-bedroom flats and handicap-friendly units. All residential units have bathroom and kitchen facilities. Internally, the units will in general be space-efficient and open with bright rooms due to large panel windows. In terms of student-friendly facilities, the property accommodates five communal units (151 sqm in total), which can be used for various purposes, e.g. study rooms, game rooms and computer labs. Comprising 243 sqm, the commercial unit on ground floor would be ideal for a café or similar. In addition, the property has 32.5 sqm storage space. The property has access to parking facilities both on ground and in neighbouring parking garages and basements. Nearby, a large-sized bicycle parking facilities, holding all of 322 bicycles, will be available to the students.

The footprint of the property has a hexagonal shape and to ensure optimum space utilisation, 10 types of student housing units have been designed. For further details, please refer to pp. 9-11. On the 16th and 17th floors, the students will have access to common roof terraces, including common kitchen facilities suitable for large get-togethers while enjoying a spectacular view of Valby and Copenhagen. On the split levels of the property, the plan is to grow plants, giving the building a green look.

Project Grønttårnet

Development plan, Grønttorvet, Valby, Copenhagen

Høffdingsvej

plot m

Border for local plan no. 462

Ramsingsvej

plot L

Border for local plan addendum no. 3

Ingrid Marievej

Building in 1-3 floors, max. 11 metres

Building in 4 floors, max. 16 metres

Løgæblevej

VIC

Coxorangevej

Building in 4-7 floors, max. 24 metres

Ib Sch

Grønttårnet

Ingrid Marievej

Elstarvej

Building in 5-9 floors, max. 30-31 metres

Degneæblevej

Belle de Boskoopvej

Kongshaven

Taffelæblevej

Paradisæblevej

Kongeæblevej

Possible location of towers in XX floors

Rubinolavej

Jernæblevej

Marks edge of building plot for construction

Grønttorvsparken

Summerredvej

Preservation-worthy construction

James Grievevej

Max. 25 m

Paradisæblevej

Del af IIA

Retortvej

Title register The property is located on plot no. 13C of title no. 2062a Valby, Copenhagen. The site will be parcelled out prior to the takeover date of the turnkey property

Torvekanten

Nøddehaven

Torveporten

Glostervej

Burgundyvej

Fø

Lindehaven

Værkstedvej

Rønhaven

Source: “Grønttorvsområdet” - Proposed local plan addendum no. 3 to local plan no. 462, City of Copenhagen

Værkstedvej

mmel Køge Landevej

Project Grønttårnet

UNIT TYPES

The most common unit types of student housing are types A, B, C and D, which make up 161 of the 189 units.

In terms of size, the units range from 34 sqm to 62 sqm. They are designed with large window panels providing excellent daylight inflow. All units have their own kitchen and bathroom, which is an important value driver in today’s market for student housing.

Breakdown of GLA by type/size

Unit type

GLA per unit (sqm)*

Total no. of units GLA per type (sqm)

A B C D E F G

38 34 36 47 56 45 49 56 60 62

57 38 40 26

2,186 1,279 1,446 1,231

8 8

449 360

HC**

505

1 1 1

60 62

38 SQM

Commercial Communal

243

34 SQM

5 5

151 33

36 SQM

Storage

47 SQM

In total

200

8,052

Source: FB Gruppen A/S NOTES: *Rounded figures. **HC = Handicap-friendly unit.

Project Grønttårnet

Type A

Type B

Project Grønttårnet

Type C

Type D

GRØNTTÅRNET - DANISH FOR “THE GREEN TOWER” [, Ǳȏ Ö ȃ T’T ǣ RN ǧ T ]

Property visualisation, Effekt Architects

Project Grønttårnet LOCATION

Copenhagen city centre

Valby city district

Project Grønttårnet

ABOUT COPENHAGEN

Copenhagen, the capital of Denmark, is located on the island of Zealand in the very heart of the Øresund region, one of the most densely populated, affluent and dynamic regions in northern Europe. In addition to this, in 2016 Copenhagen was named the most liveable city in the world by magazines Metropolis and Wallpaper.

Population forecast for 2017-2045 (index 100 = 2017)

According to Statistics Denmark, Copenhagen will see continued population growth, accelerating to all of 25% in 2017 – 2045 and thus greatly outperforming the overall forecast for Denmark. A key driver of growth in the housing and labour markets, the population boom continues to exacerbate the current undersupply of residential units. Despite brisk construction activity in the development areas of Copenhagen, we expect residential demand to outstrip supply in both the short and the long term. The city benefits from excellent air- and seaports facilitating long-distance commutes. In addition, Copenhagen has an extensive rail and motorway network with the European motorway E20 ensuring swift transport to national and international destinations. Furthermore, Copenhagen benefits from its Metro line, adding even more stations in 2019 and 2023. Copenhagen is considered the main driver of Denmark’s economic growth. In fact, in terms of technological know-how, political stability, favourable business operating environments and a transparent and liquid property market, Copenhagen is among the European elite cities.

130

125

120

115

110

105

100

17 19 21

23 25 27 29 31

33 35 37 39 41

43 45

Copenhagen

Denmark

Source: Statistics Denmark

Project Grønttårnet

In 2015, JLL ranked Copenhagen as the top city ahead of other ‘New World Cities’ that front the provision of energy-efficient and smart buildings while addressing current issues such as liveability, sustainability and technological prowess. In addition, for the sixth year running, in 2016 Denmark topped the European ‘Ease of Doing Business’ index published by the World Bank. Copenhagen – Number One student city Copenhagen is a well-known university and college city with a wide range of educational programmes attracting many students. Copenhagen Business School (CBS) was recently ranked the 13th best business school in the world by leading global higher and business education analysts Quacquarelli Symonds. Indeed, the share of Copenhagen residents that have completed long-cycle higher education significantly exceeds the national average. The largest educational institutions in Copenhagen include the University of Copenhagen, Copenhagen Business School (CBS) and UCC (University College). Combined, these institutions had a student count of some 63,600 students in October 2016.

Project Grønttårnet

Highest completed education

Universities in Copenhagen

35%

30%

25%

University of Copenhagen

20%

Copenhagen Business School

15%

10%

UCC

Aalborg University, Cph branch

Long-cycle higher education

Other

Basic school (9th - 10th grade)

Upper secondary school

Vocational school

Short-cycle higher education

Bachelor/ medium- cycle higher education

Grønttårnet

Copenhagen Denmark

1 km

Source: Statistics Denmark

No. of students, higher education, Copenhagen/Frederiksberg

92,000

90,000

108,000

97,000

103,000

107,000

104,000

87,000 88,000

2007

2009

2008

2010

2011

2016

2012

2013

2015

2014

Source: Statistics Denmark. NOTE: Student count exclusive of the students enrolled at the Copenhagen branch of Aalborg University

Project Grønttårnet

MICRO LOCATION

Valby is located about three kilometres west of the Copenhagen city centre. To the east, the area borders on the vibrant district of Vesterbro and to the north on the affluent district of Frederiksberg. Grønttorvet is one of the largest urban development areas of Copenhagen, expected to be fully developed by 2021. The Danish name of “Grønttorvet” refers to the vegetable market on the site that has been the centre of trade with vegetables and fruits for the last decades. The old vegetable market has moved to an out-of-town location at Høje- Taastrup, paving the way for redevelopment of the site with 234,000 sqm of primarily residential space, which translates into some 2,000 dwellings.

together all residents of the area. Various historical elements of the area will be preserved as some of the existing building stock originally forming the old market hall will be recycled as part of the new park. The area of Grønttorvet is located next to Gammel Køge Landevej, a central arterial road into Copenhagen and Frederiksberg. Ring Road 02 and Holbæk Motorway are located 200 metres and 1.7 kilometres from the property, respectively, linking to the E20 and E47. Access by public transport is fairly good with Ny Ellebjerg and Vigerslev Allé stations within walking distance, giving access to the entire S-train grid, and with busses stopping at Gammel Køge Landevej. As part of the ongoing Metro expansion scheme, a new Metro station is scheduled to open at Ny Ellebjerg in 2023, greatly enhancing connectivity vis-à-vis the rest of Copenhagen.

As a tribute to its green history, the new city district will feature a central green hotspot ‘Grønttorvsparken’, a 23,000 sqm park intended to bring

Distances and travel times

CITY HALL SQUARE, CITY CENTRE

UNIVERSITY COLLEGE, UCC (CAMPUS CARLSBERG) 3.1 KM

NY ELLEBJERG STATION (S-TRAINS/FUTURE METRO) 1.2 KM

COPENHAGEN CENTRAL STATION

VIGERSLEV STATION (S-TRAINS)

AALBORG UNIVERSITY (SYDHAVN)

UNIVERSITY OF COPENHAGEN (SOCIAL SCIENCE)

MOTORWAY E20/E47

CPH BUSINESS SCHOOL

6.8 KM

4.2 KM

3.8 KM

15.1 KM

0.7 KM

4 KM

6 KM

12-minute bike ride

9-minute bike ride

9-minute drive

9-minute walk

15-minute bike ride

16-minute walk

22-minute bike ride

20-minute drive

9-minute drive

METRO

COPENHAGEN CITY CENTRE

METRO

COPENHAGEN CENTRAL STATION

METRO

Grønttårnet

SYDHAVN STATION

METRO

COPENHAGEN AIRPORT

METRO

MOTORWAY E20

EXISTING METRO LINE

CITY RING METRO LINE 2019

SYDHAVNSLINIEN 2023

METRO

)ÊÜãØèÕÜ )ó Project Grønttårnet DANISH RESIDENTIAL MARKET

Population growth rates in and around Copenhagen are the highest in the country, with a surge in the ranks of Copenhagen residents causing a marked housing shortage. To meet the extra demand, the level and scale of residential newbuilding must increase significantly in the years to come.

In Copenhagen, the projected population boom is causing a surge in residential demand. To meet this demand, the level and scale of residential newbuilding must increase significantly in the coming years. According to Statistics Denmark, in 2016 residential completions extended to 353,000 sqm space in Copenhagen due to a high volume of development projects. Although this figure is projected to increase, the massive demand for housing cannot be met in the foreseeable future given the current population forecast. The strong demand combined with historically low financing costs and strong demographics have contributed to hiking Copenhagen housing prices. Similarly, rents have increased significantly in recent years. Student housing Increasing market rent levels in the residential market make it difficult to find suitable and affordable flats even for student co-habitation. Moreover, the price of ownership housing has surged, making parents’ less inclined to acquire flats for their children despite record-low interest rates. This has limited students’ housing options and increased demand in the already strained student housing market. In fact, the Copenhagen student

housing market is facing an even greater imbalance between demand and supply than the residential market in general. Since 2006, Copenhagen has seen the completion of some 41,300 sqm student housing, according to Statistics Denmark. In the same period, the number of students aged 19-27 residing in Copenhagen has increased from 51,100 to 70,800. Assuming that an average student requires 30 sqm gross floorspace, these student housing completions provide accommodation for around 1,370 of the 19,700 students. In fact, the gap between the number of enrolled and resident students is fairly stable in the City of Copenhagen and the City of Frederiksberg, as it has exceeded 25,000 students for the past decade. In 2016, the figure was 26,045, which would require student housing completions of some 780,000 sqm to meet the extra demand, given the students’ preference for living in Copenhagen and Frederiksberg. Not surprisingly, the central student accommodation agencies in Copenhagen, i.e. Kollegiernes Kontor I København (KKIK) and Centralindstillingsudvalget (CIU), have around 12,000 and 14,500 students on their respective wailing lists.

There is a substantial lag in the current level of new student housing construction that it will take many years to eliminate.

Project Grønttårnet

No. of enrolled students vs. resident students, Copenhagen/Frederiksberg

120,000

100,000

80,000

60,000

40,000

20,000

07 08 09 10 11

14 15

Number of students residing in Copenhagen and Frederiksberg, aged 19-27 Student count, further education institutions, Copenhagen and Frederiksberg

Sources: Statistics Denmark and Sadolin & Albæk

Residential completions vs. demand (sqm)

700,000

600,000

500,000

400,000

370,000 375,000

300,000

200,000

100,000

E17

Completions (sqm)

Change in demand (sqm)

Sources: Statistics Denmark and Sadolin & Albæk

Project Grønttårnet MARKET COMPARABLES

The supply of newly constructed student housing is rather limited in Copenhagen. However, there is a newbuilding/redevelopment pipeline of +170,000* sqm floorspace student housing scheduled for completion in the years up to and including 2020.

Market rent, student housing For market rent comparables, please refer to the table on p. 23. The rent levels are quoted for selected student housing properties in similar Copenhagen locations. Teglholmsgade 36, DK-2450 Copenhagen SV Better known as ‘Teglhuset’ and built in 2016, this student housing property contains 91 units ranging between 35 sqm and 43 sqm. Teglholmen is an upcoming, vibrant residential area on the waterfront of the south-western part of Copenhagen. Like Grønttorvet, the area is undergoing comprehensive development and benefits from easy access by public transport, in particular with the new Metro line opening in the area in 2023. Søndre Fasanvej 90, DK-2500 Valby Converted in 2015 from senior housing to student housing, this property comprises 83 student housing units. The individual units vary in size from 44 to 75 sqm, with the majority in the smaller size bracket. The property is located on the border between Valby and the upmarket district of Frederiksberg, about 2 kilometres from Copenhagen Business School (CBS) and a mere 5-minute walk from Valby station.

Bispebjerg Kollegiet, DK-2400 Copenhagen NV Designed by C.F. Møller Architects, this student housing property was completed in 2016. It consists of 252 units, all with own bathroom and kitchen facilities. Unit sizes range between 24 and 27 sqm. The property is located on the border between Copenhagen NV (Nordvest) and Nørrebro, less than 100 metres from Bispebjerg S-train station. Mønten, Amager Boulevard 115, DK-2300 Copenhagen S Located in central Copenhagen, ‘Mønten’ offers 173 student housing units of various sizes, ranging from 35 to 130 sqm.

The property is the former home of national coin production, converted into student housing in 2013.

*NOTE: Estimate based on construction database searches

Project Grønttårnet

The most prominent construction schemes are Uptown Nørrebro (36,000 sqm) developed by domestic pension fund Danica, the development of Kaktustårnene (16,000 sqm) at Kalvebod Brygge and the new student housing complex at Nimbusparken in Frederiksberg (13,000 sqm), see visualisations to the right. Sales references As the subject property, Grønttårnet, will be divided into commonhold units, the individual units can be divested in the ownership market. Five years after completion, the divestment of the units in the property becomes VAT-exempt, and a divestment strategy may prove profitable. Please find below sales references for residential units of comparable sizes. The references stem from a development project in the Grønttorvet area. In terms of quality and location, the references are deemed comparable to Grønttårnet. The average size of the units in Grønttårnet is however significantly lower. As a result, Grønttorvet will no doubt command higher achievable sqm prices, also when taking into account the unique features and views of this 18-storey tower construction.

Left to right: Nimbusparken 1, Kaktustårnene, Uptown Nørrebro.

Rent levels, student housing

Student housing name

Location

GLA (sqm) Annual rent

(DKK per sqm) 1,900 - 2,250 1,950 - 2,300 2,000 - 2,050 1,750 - 2,050

Teglholmsgade 36* Søndre Fasanvej 90*

Copenhagen SV

35 - 43 44 - 52 24 - 27 35 - 58

Valby

Bispebjerg Kollegiet*** Copenhagen SV

Ved Mønten**

Copenhagen SV

Sources: www.kollegierne.dk and Sadolin & Albæk NOTES: * Most recent lets dating from 2017. ** Re-lets in 2016. *** Quoted on website www.kollegierne.dk

Market comparables, ownership housing (small units) Address Floor Price (DKK)

GLA (sqm)

Price (DKK per sqm)

Construction year

Status

Paradisæblevej 82 Paradisæblevej 82 Paradisæblevej 82 Paradisæblevej 82

Ground

2,395,000 2,425,000 2,475,000 2,525,000

65 64 64 64

36,846

2018 2018 2018 2018

For sale For sale For sale For sale

1st

37,891

2nd

38,672 39,453

3rd

Source: Boliga.dk

Project Grønttårnet DANISH INVESTMENT MARKET

Broadly speaking, the Danish market for investment properties is considered a highly transparent and liquid market, with Copenhagen as the premier growth locomotive. In 2016, Greater Copenhagen accounted for all of DKK 50bn of total transaction volume in Denmark, viz. a record-breaking DKK 64bn.

In recent years, international investors have become more active players in the Danish investment property market, today accounting for approximately 45% of the total transaction volume. They have a strong appetite for the residential segment, but are increasingly active in other segments as well. Due to the low bond yield level and a general lack of investment opportunities that provide the same risk-adjusted returns as property investments, the property investment market has experienced historically high capital inflows. In addition, because of stock market and geopolitical volatility both domestic and international investor are expected to continue to allocate substantial investment resources to alternative investments, including real estate. In general, investors are moving further out the risk curve. As a result, transaction activity is picking up in the so-called value-add segment, typically involving relatively high-risk property assets with less cash-flow security and returns that hinge on proactive management skills. Danish residential investment market Also the Danish residential investment market is characterised by high liquidity. In Copenhagen, recent years have seen substantial hikes in prices as strong population growth and favourable demographic shifts have served to whet investor appetite. Strong investor demand has driven down yields to the 3.75% mark for prime residential properties. In general, investor demand for Danish residential property investments has been

mounting since 2011. Despite the surge in transaction volumes, the short supply of high-quality investment opportunities appears to put a ceiling on transaction activity, spurring yield compression in this segment. Although yields on residential property investments have been downtrending, they still exceed the return on bonds by a great margin. This allows for a historically high risk premium in a segment associated with low risk due to strong demand and a weak supply. Student housing investment market The investment market for student housing properties has been experiencing increasing interest from investors, likely owing to the yield compression in the prime residential market, where supply has been unable to meet investors’ demand throughout the past year or so. Historically, some investors have been hesitant to enter the market for student housing. This may be because investors do not consider student housing to represent standard residential rental property, and as a result it is perceived to be associated with higher operational risk. This trend has somewhat served to curb investment market demand and, by extension, development activity. This may help explain why student housing property typically trades at yields that exceed those of ordinary residential rental property.

Project Grønttårnet

Sadolin & Albæk estimates that in today’s market, prime student housing in Copenhagen would normally trade at a yield approximately 25-50 bps above the yields for comparable properties serving as ordinary residential rental properties. The yield span naturally depends on the characteristics of the individual properties, but we would typically expect prime student housing to trade at yields in the 4.25% to 4.50% range.

Prime residential yield vs. 10-year gov. bond

Prime student housing

+350 bps

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Residential properties

10-year Danish government bond yield

Sources: NASDAQ OMX and Sadolin & Albæk

Project Grønttårnet DANISH ECONOMY

Project Grønttårnet

GDP and consumer spending Denmark’s economic recovery is now in its fifth year. So far, the recovery has manifested itself in employment growth in particular, whereas Danish GDP growth has been modest. In 2016, GDP growth was driven mainly by sustained domestic consumer spending combined with surprisingly high public expenditure. However, consumption and exports have picked up and as such, 2017 seems set to produce the highest GDP growth in seven years. Danske Bank predicts GDP growth of 2.4% and 2.0% in 2017 and 2018, respectively. However, a slight slowdown in GDP growth is forecast for 2018 as a lack of qualified labour is believed to cause bottlenecks. In addition, real incomes are believed to erode at a slightly faster pace because of rising inflation. Over the past almost two years, consumer confidence has been substantially restored. Consumer spending is driven mainly by improved household budgets following a decline in unemployment rates and an increase in real wages. If domestic credit-financed consumption really picks up and a labour shortage drives up real wages to a higher level than expected, it could potentially serve to boost the Danish upturn even further. Danske Bank expects consumer spending growth of 1.9% and 2.3% in 2017 and 2018, respectively. Unemployment and wages Standing at 4.1% (DST definition) as at end-Q2 2017, the Danish unemployment rate is expected to remain stable in 2018. By European standards, the Danish unemployment rate remains very low as the European unemployment rate was 10.0% in 2016. In Denmark, the low unemployment rate has made qualified labour a sought-after resource, exacerbating the wage pressure in several sectors.

Inflation IIn 2017, the Danish inflation rate is predicted to rise from the remarkable low recorded in 2016 to 1.1%. According to Danske Bank, the prices of services and wage growth continue to increase at a rate close to 2% p.a., indicating that the low inflation is driven largely by low energy prices as well as lower prices in the ICT and clothing industries. Interest rates The DKK-EUR peg ties the interest rates determined by the Danish central bank, Danmarks Nationalbank, to those of the ECB. In view of Denmark’s large current account surplus and the strong demand for Danish government bonds, it is plausible that Danish interest rate levels will remain lower than those of the ECB for a significant length of time. In Q1-Q3 2017, the Danish benchmark yield, defined as the yield on a 10- year government bond, dropped from 0.32% to 0.28%. By comparison, the short-term interest rate dropped from -0.24% to -0.27% in the same period. The medium-term outlook remains for sustained low short-term interest rates as the economies of Europe are still in a recovery phase, as reflected in macroeconomic forecasts of low inflation rates and moderate GDP growth. Eurozone inflation is currently below the 2% target stipulated by the ECB. Danish mortgage system The market for Danish investment properties benefits from a strong and transparent mortgage system, allowing for loan-to-value (LTV) ratios of up to 80% on residential real estate. The mortgage system works by allowing

Project Grønttårnet

for such LTV ratios through the issue of covered bonds, which are among the most liquid and secure asset classes in Europe, typically boasting AAA-ratings. It is possible to obtain financing at flexible or fixed rates, and compared to most other countries, Denmark has exceptionally low financing costs and a highly transparent cost structure. Interest rates remain very low, with flexible interest rates currently around the 0.00% mark and fixed interest rates of some 2.50%, both with bonds selling at market prices close to face value. Interest rate margins are typically somewhere between 40 and 100 bps for residential properties, depending on LTV and the interest-only period. Core properties generating stable long-term cash flows, such as well- located residential properties, usually qualify for easy access to attractive mortgage financing in Denmark.

Project Grønttårnet

Macroeconomic outlook 2016-2018

Year

GDP*

Unemployment** Consumer spending* Exports*

Inflation*

Public debt***

Denmark 2016

1.7

4.2 4.4 4.3

2.1 1.9 2.3

2.5 5.0 2.8 3.3 4.5 3.3

0.3

37.7 35.6 34.4 89.2 88.8 88.5

2017 2018

2.4 2.0

1.1 1.1

Eurozone 2016

1.8 2.1 1.5

10.0

2.0

0.2

2017 2018

9.1

1.7 1.3

1.5

8.5

1.1

*) Growth (% y/y) **) % of workforce

***) % of GDP Sources: Danske Bank, Eurostat and Statistics Denmark

Consumer spending growth (y/y), Denmark vs. eurozone

GDP growth (y/y), Denmark vs. eurozone

-2%

-4%

-1%

-6%

08 09 10 11

12 13 14 15 16 E17 E18

16 17YTD

Eurozone (3M)

Eurozone (10-year gov. bond)

Denmark (3M)

Denmark (10-year g

Denmark

Eurozone

Sources: Statistics Denmark and Eurostat

Sources: Statistics Denmark, Eurostat and Danske Bank

Project Grønttårnet

DISCLAIMER

Sadolin & Albæk A/S (the Adviser) has been retained to act as sell-side adviser to FB Gruppen A/S (the Seller), on the proposed sale (the Transaction) of the SPV, which sole purpose is the ownership and development of a residential turnkey project, Grønttårnet student housing, at Grønttorvet, DK-2500 Valby, Copenhagen (the Property). The Adviser has been authorised by the Seller, in the capacity as agent for the Seller only, to issue, on behalf of the Seller, this confidential investment memorandum (the Memorandum). The Memorandum is provided solely for information purposes to a limited number of parties who have expressed interest in submitting investment proposals in relation to the acquisition of the SPV. All recipients of the Memorandum (the Recipients) are kindly asked to treat the contents of the Memorandum as confidential. The Memorandum is provided to professional investors only who are deemed able to assess the risks associated with a transaction such as the Transaction and who will obtain expert advice where and when needed. Individuals or entities who are not the intended Recipients of this Memorandum should be aware that their use of the Memorandum is unauthorised and may cause substantial damage to the Seller, the Adviser or third parties, including parties who have expressed an interest in the Transaction. Such individuals or entities are expressly requested to immediately return the Memorandum to the Adviser or delete any electronic versions hereof when so called upon by the Adviser The information contained in the Memorandum has been compiled to assist interested parties in making their own evaluation of the Property and the SPV, but the Memorandum does not purport to contain all the information that a prospective buyer may require. In any event, interested parties are encouraged to conduct their own investigations and an analysis of the data set forth in this Memorandum. The contents of this Memorandum have been verified neither by the Seller, the Adviser, nor any third party.No representation, warranty or undertaking (expressed or implied) whatsoever is made or given by or on behalf of the Seller or the Adviser, nor any third party in relation to the accuracy, completeness or fairness of the information contained in this Memorandum, in part or as a whole, nor information made available in connection with any further investigation of the Property and the SPV, including without limitation any estimates or projections. Neither the Seller nor the Adviser may be held liable for any misrepresentations (expressed or implied) contained in, or for any omissions from this Memorandum or any other

written or oral communication transmitted to the Recipients of the Memorandum in the course of their evaluation of the Property and SPV. The contents of this Memorandum will not be updated. Neither the Seller nor the Adviser are under any obligation to correct possible inaccuracies contained therein, should they be revealed. Similarly, they are under no obligation to grant the Recipients access to any additional information. It is noted that there could be minor inconsistencies in data tables due to rounding. The Adviser is not accountable to any other party than the Seller in terms of providing client confidentiality to the Adviser’s clients or for providing advice in relation to the Transaction or in relation to the contents of this Memorandum or any other transaction or arrangement referred to or contemplated herein. The issue of this Memorandum to any Recipients does not constitute the submission of investment advice by the Adviser, nor does such Recipients become clients of the Adviser. Nor does such issue constitute the offer or acceptance of any agreement. Distribution of this Memorandum in and from certain jurisdictions may be restricted. Recipients are required to familiarise themselves and comply with any such restrictions or prohibitions. By accepting this Memorandum, the Recipients represent that their receipt of this Memorandum does not and will nor contravene any registration requirement or other legal restriction in the jurisdiction in which they reside or conduct business. Neither the Seller nor the Adviser accept any liability in relation to the distribution or possession of this Memorandum in and from any jurisdiction and neither the Seller, nor the Adviser may be held liable for any violation by the Recipients of any such registration requirements or other legal restrictions. This Memorandum does not constitute a prospectus and by providing this Memorandum, neither the Seller nor the Adviser make any offer or recommendations of any kind in any jurisdiction for the sale or purchase of the SPV or any of their businesses or assets. A proposal regarding the SPV will only involve a contractual obligation if set forth in a definitive transfer agreement, subject to such limitations and restrictions as may be specified therein. By retaining this Memorandum, the Recipients acknowledge that the terms and conditions under which this Memorandum is provided are governed by Danish law. All communications, inquiries and requests for information relating to this Memorandum or to a possible transaction regarding the SPV should be addressed to the Adviser.

Project Grønttårnet

CONTACT

The Transaction

Christian Fladeland Partner and Director (MRICS)

T:+45 60 60 68 68 E: cfp@sadolin-albaek.dk

For underlying data, please contact

Muhamed Jamil Eid Consultant

T: +45 22 36 64 03 E: mje@sadolin-albaek.dk

Palægade 2-4, DK-1261 Copenhagen K Skovvejen 11, DK-8000 Aarhus C T: +45 70 11 66 55, E: sa@sadolin-albaek.dk, W: sadolin-albaek.dk, CVR no. 10 52 56 75 SADOLIN & ALBÆK A/S

Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32

Made with FlippingBook - Online catalogs