Appeal to investors

The European property sector enjoys particularly favourable conditions today. The services sector, which is a large consumer of office space, is becoming an increasingly important part of the economy. Firms are outsourcing the management of their property assets to focus on their core activities and this is contributing to the securitisation of the sector and to the consolidation of firms operating in it. Consumption trends favour modern distribution methods and especially large shopping centres, the management of which is becoming a specialised activity in its own right. Taxation is becoming accommodating for property companies that distribute all or part of their capital gains and income.

 

Hence the consistent outperformance of the European property sector compared with other asset classes during the last five years.

We believe that this fundamental trend has not yet come to an end and that the European property sector will continue to outperform in the coming two to three years, regardless of the economic conditions.

Moreover, the European property sector has been weakly correlated with other equity classes: for the five years to 31 March 2007 , the correlation coefficient versus the DJ Euro Stoxx 50 index was 0.49.

 

The management team, based in Paris , is headed by Camille de Marliave, a property portfolio manager with recognised experience in this field. She is assisted by an analyst and a product specialist.

 

Assets under management were euro 705 million at 31 April 2007.

Our approach:

 

• Risk control through strict investment constraints. A risk control department, reporting directly to the Managing Director of BNPP AM, ensures these constraints are observed.

•  A top-down approach making it possible, with the support of our strategists, to identify the country-sector pairings providing the best performance prospects and hence to benefit from the arbitrage opportunities which are inherent in the diverse European property sector. The segments we analyse are: office space, shopping centres and residential property. The principal countries are: France , the United Kingdom , the Netherlands and the Nordic countries. The analytical criteria include: growth in rents, the outlook for household consumption, outlook for job creation, property vacancy rates and the impact of initial rent-free periods.

•  A bottom-up approach making it possible to identify for each of these country-sector pairings the companies offering the greatest growth potential. This approach is based on a rigorous and systematic rating process (analysis of the various financial ratios, quality of assets, visibility of future projects, management's experience), corroborated by frequent visits.

• The collaboration of all BNPP AM's specialised resources, including strategists, other analysts and equity managers