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Crisis? What crisis?

Supertramp, 1975Peter de HaasSeptember 2008

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The ultimate truth…..

We are just entering a cyclical downturn in the economy, accelerated by the Credit Crisis, (Sweder van Wijnbergen, Dutch Economist, 08-09-2008)

We have to manage fear & greed (Roderick Munsters, CIO APG Group (ABP), 15-09-2008)

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Obvious European structural trends

Ageing society

Declining population

A changing economic base

A balanced market for traditional property sectors

4

Impact

A substitute market

A focus on existing stock

Redevelopment

Refurbishment

Smart, niche product development

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Investments environment - institutional investors; back to basics

Traditional return expectations

8-10% IRR requirement

3-5 SD

Cash return 60% of IRR

LTV of investments < 65%

Property as investment sector

A preferred one (INREV survey)

Short term investment restrictions

6

A few more observations

Restructuring of Investment Bank sector

Tighter risk management & DD process

Higher volatility of property returns

7

Impact back to the basics

Mean variance?

Higher yields

Traditional real interest rate levels

Structural lower LTV’s

More risk management instruments & derivatives products

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Offices & financial markets

Retail & the residential market as a key indicator

Country % home

ownership

LTV Interest rate fixation

Germany 43 80 80% 10y+

France 57 (2005) 65* 90% 25y+

Holland 56 70 80% 5y+

Ireland 75 ? 45% L.T.

* 0f disposable income Source: European Housing review 2008, RICS 2008

Property market fundamentals; fragmentised impact of the credit crisis

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Business strategies

I. Fight fear

II. Accept fear

III. Neglect Fear; “Crisis?, What crisis?”

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How to position?

No ultimate truth

A Poll

I

II

III

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A discussion model

“ A combination of fight & accept”

Accept & anticipate a mean variance yields correction

Sell the property investment case with

Cash is king products

A selection of strong fundamental markets

Variety of new investment products

&…

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Last but not least

Trust!!!

Convincing strong management skills

Transparency

Integrity

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DisclaimerImportant information

This document is issued by Protego Real Estate Investors. Protego Real Estate Investors is the trading name of Protego Real Estate Investors LLP & Protego Real Estate Investors Finance LLP, which is authorised & regulated by the UK Financial Services Authority (FSA) & Dutch Autoriteit Financiele Markten (AFM).

This document neither constitutes an offer by Protego Real Estate Investors of shares or any other investment products or investment service, nor an invitation to the recipient to respond to the document by making an offer to purchase shares or to purchase any other investment product or investment service.

Risk warning

Past performance is not necessarily a guide to future performance & the value of shares or any other investment products & income from them may fall as well as rise.