EUROPEAN PROPERTY STRATEGY

FLASH REPORT
Q4 2014
based on estimated figures
EUROPEAN PROPERTY STRATEGY
INTRODUCTION
Founded by the recovery of property values, which started early 2014, European Property
Strategy NV (“the Fund”) yielded a 1.3% total return in the fourth quarter, bringing the total
return YTD to 6.5%. During the fourth quarter the Fund made dividend distributions to its
shareholders of 0.6% and received capital contributions amounting to EUR 10.5 million. The
Fund made an additional investment in one target fund.
RETURNS
In 2014 the Fund recorded a net result of EUR 16.6 million, which resulted in a total return
of 6.5%. This result consists of dividend distributions paid (2.4%) and capital growth of the
Fund (4.1%). Seven out of eleven target funds distributed income during 2014.
The Fund made dividend distributions during 2014 amounting to EUR 6.0 million
(EUR 13.86 per share). Over the fourth quarter the distributable result amounts to
EUR 2.3 million (EUR 4.68 per share), which will be distributed in February 2015.
PORTFOLIO
During fourth quarter the Fund increased its stake in CBRE European Industrial Fund with
EUR 10.1 million and committed itself to an additional investment in CBRE Dutch Residential
Fund of EUR 5.5 million which materialised in January 2015. The target funds yielded a
positive fair value change of EUR 1.1 million, bringing the value of these investments to
EUR 224.0 million. Currently, the Fund is preparing the acquisition of stakes in several target
funds. The table below gives an overview of the target funds invested in.
Fund
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
CBRE
Value as at
31 Dec '14
Retail Property Fund France Belgium
Nordic Property Fund
Dutch Retail Fund
UK Property Fund
European Industrial Fund
Dutch Residential Fund
European Shopping Centre Fund
Retail Property Fund Ibérica
Property Fund Central Europe
Property Fund Central and Eastern Europe
European Office Fund
€ million
23.9
13.7
23.0
24.0
39.6
26.7
29.6
16.4
11.1
12.4
3.6
Share in
Fund
portfolio
%
10.7
6.1
10.3
10.7
17.7
11.9
13.2
7.3
5.0
5.5
1.6
Stake in
target
fund
%
3.7
5.4
2.3
3.5
11.7
2.8
9.0
2.7
2.5
5.0
5.4
Sector
Region
Retail
Balanced
Retail
Balanced
Logistics
Residential
Retail
Retail
Retail
Retail
Office
Western Europe
Nordics
Western Europe
United Kingdom
Balanced
Western Europe
Balanced
Southern Europe
Central & Eastern Europe
Central & Eastern Europe
Balanced
CAPITAL
The Fund’s capital now stands at EUR 285.9 million. In the fourth quarter the Fund received
EUR 10.5 million capital inflow from existing investors. At the end of the quarter the Fund
attracted an EUR 8.0 million new capital commitment from an existing investor that will lead
to an issue of shares in the first quarter of 2015.
OUTLOOK
Currently European economies are characterised by deflationary tendencies and a low
interest environment. In this low interest environment European property forms an attractive
investment alternative. This leads to increasing capital flows to property, which is expected to
continue well into 2015, with positive effects on property yields and values. However, the
impact of the real economy for the letting market is less favorable. Uncertainty surrounds the
real economy, as confidence is tempered by disappointing growth figures. This uncertainty
will make a recovery on letting markets in general more distant and will most likely off-set
positive capital market developments. The current portfolio is well-positioned and the
Manager will uphold its investment policy when selecting new target funds for investment. The
main focus for the first half of 2015 will be diversification of EPS’ retail exposure.
FACTS & FIGURES
(As at 31 December 2014)
Objective of the Fund
 The objective of the Fund is to offer its
investors direct access to a well-diversified
pan-European property portfolio through
investments in a selection of target funds
(non-listed funds primarily managed by CBRE
Global Investors EMEA). The Fund’s
investment portfolio is composed of
specialised sector and regional funds which
invest in real estate. These target funds are
managed by dedicated local teams
leveraging the local knowledge and networks
to the target fund’s advantage.
Size
 NAV: EUR 285.9 million
NAV per share
 Share price: EUR 578.58
 IFRS-EU: EUR 579.00
 INREV NAV: EUR 579.40
Returns YTD
 Income return: 2.4%
 Capital growth: 4.1%
 Total return: 6.5%
 IRR since inception: 3.2%
Number of shares
 Shares issued year-to-date: 77,599
 Shares repurchased year-to-date: 0
 Total number of shares: 494,051
Investor capital
 Inflow year-to-date: EUR 43.8 million
 Outflow year-to-date: EUR 0.0 million
 New commitments: EUR 8.0 million
Investments
 Target funds: EUR 224.0 million
 Liquid assets: EUR 62.1 million
 Commitments: EUR 5.5 million
 Number of target funds: 11
Leverage:
 EPS level: 0.0%
 Including debt at target fund level: 34.2%
This flash report has been prepared by the
Manager based on the Accounting Principles EPS
as described in the latest published annual
report. This flash report is based upon the
estimated figures of the underlying target funds.
For the final figures we refer to the annual report
which will be published at the end of April 2015.
PUBLICATION DATE
22 January 2015
PORTFOLIO CHANGES
In the fourth quarter the Fund made one additional investment and committed itself for an
additional investment in another target fund. Most of the target funds invested in yielded
positive total returns during the fourth quarter. The highest return was achieved by CBRE
Retail Property Fund Ibérica with 10.6%, this was however partially off-set by strong
devaluation in CBRE Nordic Property Fund. Currently, the Fund is preparing several
investments to efficiently allocate the new capital inflow with the aim to be fully invested at the
end of the first quarter of 2015.
CBRE European Industrial Fund (“EIF”)
The Fund made a EUR 10.1 million additional investment in EIF through a subscription for
new participations. This is the fifth investment in this target fund, bringing the total investment
in this fund to EUR 39.6 million. Through its high dividend yields, the EIF investment further
enhances the Funds’ dividend return.
CBRE Dutch Residential Fund (“DRES”)
The Fund committed itself to a EUR 5.5 million additional investment in DRES through a
secondary transaction with a small liquidity discount. This is the fourth investment in DRES
and will bring the total investment in this fund to EUR 32.3 million. The investment contributes
to diversifying the Funds’ sector exposure.
These acquisitions are in line with the Investment Plan 2014-2015.
FUND MANAGEMENT
The Manager and issuing entity of the Fund is RFM
Regulated Fund Management BV (“RFM”). The
Manager is part of CBRE Global Investors EMEA,
which has EUR 26 billion in assets under
management. CBRE Global Investors EMEA offers a
broad range of property funds, Multi-Manager
solutions as well as separate-account management.
RFM acts as direct Manager of the Fund. RFM was
founded in 2004 and RFM has since then gained
significant experience and built a track record in
managing property investment.
REGULATORY LICENSE
The Fund is supervised via the CBRE Global Investors
EMEA AIFM BV, the “AIFM”, which obtained a
license within the meaning of Article 2:65 of the
Dutch Financial Supervision Act (Wet op het
financieel toezicht). The Fund is therefore subject to
supervision of the Dutch Authority for the Financial
Markets (AFM) and the Dutch Central Bank (DNB).
WEBSITE MANAGER
www.regulatedfundmanagement.nl/eps
PORTFOLIO MANAGER
Tjeerd Jansen
T: +31 20 202 2217
[email protected]
PORTFOLIO OVERVIEW
The sector and geographic allocation of the investments at the end of the fourth quarter:
Sector allocation
PERCENTAGE
31 December 2014
31 December 2013
Retail
58
57
Logistics
21
17
Residential
13
16
Office
7
9
Other
1
1
31 December 2014
31 December 2013
Western Europe
49
55
Southern Europe
12
11
Central and Eastern Europe
12
11
United Kingdom
11
9
Nordics
10
8
6
6
Country allocation
PERCENTAGE
Germany and Austria
FINANCIAL MANAGER
Michel Santpoort
T: +31 20 202 2278
[email protected]
Leverage
The look-through leverage including cash and debt at target fund level remained stable at
34.2% (as at 30 September 2014: 34.3%). Within the target funds the loan-to-value levels
remained stable. The Manager is focussed at maintaining the total leverage well below 50%.
Occupancy
The occupancy rate for the consolidated portfolio increased marginally to 93.4% (as at
30 September 2014: 93.2%). CBRE European Industrial Fund and CBRE Retail Property Fund
Ibérica show increased occupancy figures. All other target funds remained stable.
GOVERNANCE
On



the proposal of the Manager the Advisory Board approved in the fourth quarter:
The extension of the lifetime of CBRE Retail Property Fund Ibérica with 5 years;
The investment in CBRE European Industrial Fund;
Amendments to the Fund Management and Delegation Agreement.
IMPORTANT INFORMATION
This report has been produced by the Manager and has been prepared solely for information purposes and is intended for the use and the assistance
of existing investors in European Property Strategy only. Acceptance and/or use of any of the information contained in this report indicate the
recipient’s agreement not to disclose any of the information contained herein. This report does not constitute any form of representation or warranty on
the part of CBRE Global Investors, an investment advice, or a recommendation, or an offer or solicitation, and is not the basis for any contract to
purchase or sell any security, property or other instrument, or for CBRE Global Investors to enter or arrange any type of transaction. This report should
not be regarded as a substitute for the exercise by the recipient of its, his or her own judgement. The figures in this report have not been audited by an
external auditor. This report does not purport to be a complete description of the markets, developments or securities referred to in this report. The
value of an investment can go down as well as up. Past performance is not a guide or guarantee to future performance. CBRE Global Investors and its
affiliates accept no liability whatsoever for any direct, consequential or indirect loss of any kind arising out of the use of this report or any part of its
contents. For the full documentation of the Fund we refer to the Prospectus. The most recent Prospectus is available on the website of the Manager.