Highest investment volume in

a decade

Baltics Investment, 2015

2015 CBRE Research © 2016 CBRE Real Estate Consultancy| 1

KEY POINTS

• Since 1st of January 2015 a currency risk has

been removed as the euro was adopted across

the Baltic countries

• The total investment volume for Baltic states in

2015 was of EUR 1.1 billion, the figure has

more than doubled when compared to 2014.

2015’s total volume was the highest since 2007

• Investors have changed their focus from 2014

and in 2015 invested in retail assets, investing

almost EUR 640 million EUR in the sector,

comprising 59% of all investment

• The largest acquisition in the Baltics was made

by Blackstone Group LP where three shopping

centres in Riga were acquired as a part of the

Obligo portfolio

Figure 1: Investment Volume per Country 2005 - 2015

• US investors accounted for almost 20% of all

Baltics investment volume in 2015

• Asking prime office and retail yield across the

Baltics was showing slight compression in second

half of 2015, this trend will continue in 2016

• Due to very active office market and rapid

development in this segment, the beginning of

2016 shows that investors focus is on the office

segment in Lithuania

• According to CBRE’s 2016 EMEA Investor

Intentions Survey almost half (48%) of all

respondents expect their purchasing activity to be

higher than in 2015, compared with just 15% who

expect to be less active buyers. 43% also expect

their selling activity to increase, indicating a

buoyant and liquid real estate investment market

for EMEA region in 2016

Source: CBRE Research, March 2016

*Arrows indicate change from the previous year

12 mEUR 7% EUR 1.097 billion

-200%

-100%

0%

100%

200%

300%

400%

500%

0

200

400

600

800

1 000

1 200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gro

wth

, %

EU

R m

ln.

Latvia Estonia Lithuania Total Growth, %

7%

2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 2

BALTICS INVESTMENT

M ACR OECONOM IC INDICATOR S

INVESTM ENT ACTIV I TY IN 2015

ESTONIA

Figure 2: Real GDP Growth Forecasts per country (2015-2017), %

Source: Source: Oxford Economics, 2016 – 2017 (forecast), March 2016

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2015 2016 2017

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

Yearly I

nvestm

ent Volu

me (

in M

illion E

UR)

Czech Republic Hungary Poland The Baltic States

Romania Slovak Republic Russia BG, HR, UA, RS

Figure 3: Share of the Baltics in the Total CEE Investment Volume

(2005-2015)

Source: CBRE Research, March 2016

0

100

200

300

400

500

Latvia Estonia Lithuania

EU

R m

ln.

Office Retail Industrial Mixed-Use Hotel Residential Other

Figure 4: Investment Volume by Sector per Each Country, 2015

Source: CBRE Research, March 2016

79% 37% 72 %

-18%

2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 3

Table 1: Newcomers in Baltic Countries during 2015

BALTICS INVESTMENT

LATV IA

L I THUANIA

BALTIC R EGION INVESTOR S’ P R OFI LE

Source: CBRE Research, March 2016

Country Newcomers in 2015

Latvia

Estonia

Lithuania

Latvia

33%

Estonia

43%

Lithuania

24%

38%

24%

18%

10%

8% 3% Western Europe

Baltic countries

United States

Scandinavia

Other

Asia (China, Singapore)

Source: CBRE Research, March 2016

41%

38%

18%

2%

Baltic countries

Scandinavia

Other

Western Europe

Figure 5: Total Investment Volume distribution by Country, 2015

Figure 6: Investment Volume by Country of Origin, 2 013-2014

Source: CBRE Research, March 2016

Source: CBRE Research, 2015

Figure 7: Investment Volume by Country of Origin in 2015

2015 CBRE Research © 2016 CBRE Real Estate Consultancy | 4

INVESTM ENT BY SECTOR

YI ELDS

BALTICS INVESTMENT

0

200

400

600

800

1 000

1 200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU

R m

ln.

Office Retail Industrial Mixed-Use Hotel Residential Other

Figure 5: Investment Volume by Sector in the Baltics (2005-2015)

Source: CBRE Research, March 2016

16%

59%

7%

0%

5%

9% 4%

Office

Retail

Industrial

Mixed-Use

Hotel

Residential

Other

Figure 6: Total Investment Distribution by Sector in the Baltics , 2015

Source: CBRE Research, March 2016

Figure 7: Prime Office Yields compared with other CEE countries, 2010-2016f

5,0

7,0

9,0

11,0

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016f

Czech Republic Hungary Latvia Estonia

Lithuania Poland Romania Slovakia

Source: CBRE Research, March 2016

5,0

6,0

7,0

8,0

9,0

10,0

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q2 2015 Q3 2015 Q4 2015

Czech Republic Hungary Poland Romania

Latvia Estonia Lithuania Slovakia

Figure 8: Prime Retail Shopping Centres Yield, 2010-2015

Source: CBRE Research, March 2016

2015 CBRE Research © 2016 CBRE Real Estate Consultancy 5

0

10

20

30

40

All C

EE

Countr

ies

Germ

any

UK

Spain

Neth

erlands

Fra

nce

Italy

Nord

ics

Oth

er

% o

f r

espondents

2013 2014 2015 2016

Figure 9: Most Attractive Markets: In EMEA, which country/region do you believe to be the most attractive for making property investment

purchases in 2016?

Source: 2016 CBRE Investor Intentions Survey, March 2016

BALTICS INVESTMENT

OUTLOOK FOR 2016

Investor Property Sector Country

Blackstone Group LP Part of Obligo portfolio: Alfa, Mols, Dole Retail Latvia (Riga)

Partners Group BPT Optima Portfolio Office, Retail,

Industrial Latvia, Lithuania, Estonia

Partners Group Warehouse, Shopping centre Retail, Industrial Estonia (Tallinn)

LCN Capital Partners Raadiku municipal housing Residential Estonia (Tallinn)

EfTEN Capital Radisson Blu Sky Hotel Estonia (Tallinn)

NHC Baltic Opportunity Fund Europa SC Retail Lithuania (Vilnius)

Westerwijk Investments Molas Retail Lithuania (Kaunas)

Zenith Capital Nordika, 1st stage Retail Lithuania (Vilnius)

East Capital Mustamäe Keskus Retail Estonia (Tallinn)

PBG Invest Holding Police House Office Estonia (Tallinn)

Table 2: Top Ten Investment Transactions in the Baltic Countries , 2015

Source: CBRE Research, March 2016

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy,

we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and

completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be

reproduced without prior written permission of CBRE.

ABOUT CBR E IN BALTICS

• Headquartered in Riga, Latvia from 2011

• Headcount – 28 people

• Providing services in:

• Valuation,

• Consulting & Research,

• Property sales,

• Property & Asset Management,

• Tenant Representation,

• Agency Services – Retail, Offices, Industrial &

Logistics.

CONTACTS

BALTICS INVESTMENT

RESEARCH DEFINITIONS

Central and Eastern Europe (CEE) – includes the following

countries: Bulgaria, Croatia, Estonia, Latvia, Lithuania, the

Czech Republic, Hungary, Poland, Romania, Serbia,

Slovakia and Ukraine.

Prime Yield – represents the net yield that an investor

would receive when acquiring a class A building in a prime

location (for office in the CBD, for example), which is fully

let at current market vale rents. Prime Yield should reflect

the level at which relevant transactions are being

completed in the market at the time but need not to be

exactly identical to any of them, particularly if deal flow is

very limited or made up of unusual one-off deals. If there

are no relevant transactions during the survey period, a

hypothetical yield should be quoted, and is not a

calculation based on particular transactions, but it is an

expert opinion formed in the light of market conditions, but

the same criteria on building location and specification still

apply.

Alternative investment sectors – should be understood

as an alternative sectors to traditional sectors of

commercial assets (office, retail, hotels, industrial and

residential) where investors are willing to invest in search of

attractive yield. Alternative sectors could be identified as

self-storage, automotive/car parks, data centres,

infrastructure, leisure/entertainment, retirement living,

healthcare, real estate debt, student living etc. Real estate

debt is the segment that has the greatest existing market

penetration, however Student Housing is the segment

attracting most new interest.