Sustainable Infrastructure Investing - The new fixed income?

Paolo Scordino

Chief Executive Officer

Zurich - November 15th, 2013

Strictly confidential

Sustainable infrastructure

Company Profile

Agenda

Prelios SGR & Renewable Energies Projects

Infrastructure Market & Sustainable Projects

The OECD forecast that global infrastructure

investment requirement by 2030 for transport,

electricity generation, transmission and

distribution, water and telecommunications will

be $70 trillion (€50 trillion)

Infrastructure Projects are the core of the

European plan to drag the “old continent” from

one of the most intensive periods of crisis.

During the last months we have assisted at a

strong impetus by the government of

different European Countries to attract private

investments in the infrastructure sector through

ad hoc legislation.

New Fixed Income products based on

infrastructure projects could attract large

institutional investors (i.e. Project Bond).

The concept of sustainability is a confluence of

solutions that support environmental as well

as social and economic needs and benefits —

the so-called "triple bottom line" goal.

The engineering profession has been delivering

technically superior solutions to meet Society'

needs and to protect the environment.

In recent years, there has been growing

recognition of:

finiteness of natural resource bases

increasing demands for services by a growing

population

need to support aging infrastructure

higher levels of regulatory requirements

limitations on funding sources for critical and

necessary infrastructure investments.

INFRASTRUTURE MARKET SUSTAINABLE INFRASTRUCTURE

Over the next 10 years Europe will need a huge injection of capital into the continent’s

infrastructure network

The European Commission estimates an investment requirement of €1.5 trillion and €2 trillion by

the year 2020

A Sizeble Market

EU INFRASTRUCTURE MARKET

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

An Attractive Market

34% of institutional investors in

infrastructure are pension funds.

Social and responsible Investments

One of the rare asset classes capable of offering high

quality long term predictable and stable cash flows

Long term nature of investments allows for a

matching of investors’ long term liabilities

New investment products to attract institutional

investors (i.e. Project Bond)

Superior risk-adjusted return based on low default

and high recovery rates

Low correlation to other corporate loans investment

strategies, offering valuable diversification

Favorable market conditions and timing for

institutional investors to enter the market

WHY TO INVEST WHO INVEST

Banks have dramatically decreased their available lending capacity due to the increased capital costs

Large market in need of significant debt supply which historical traditional lenders are no longer capable

of providing

Outside the bank financing there are new providers and instruments for infrastructure debt

During the last months we have assisted at a strong impetus by the government of different European

Countries to attract private investments in the infrastructure sector through ad hoc legislation

“Project Bonds” and Debt Products are a very interesting asset class for investors with a long term

horizon and keen on stable cash flows

Key investors for those instruments are: Insurance Companies, Pension Funds, Sovereign Wealth Fund:

Margins on infrastructure debt are at a historically high point and will remain elevated for the foreseeable

future due to regulatory pressures faced by the banking community

Power is in the hands of the debt providers: Opportunities to negotiate debt tranches with better

covenant and security packages, as well as interest rate and amortization profiles suited to the

institutional investors community

Asset class with strong attributes complementing institutional investors fixed-income investment

portfolios

Fixed Income and Infrastructure InvestmentsKey movements in the infrastructure debt market

Make a Project development Sustainable

Lead with creative, positive and SUSTAINABLE solutionsLead with creative, positive and SUSTAINABLE solutions

Developing a corporate sustainability cultureDeveloping a corporate sustainability culture

Engage investors, as asset manager, making themaware of the importance of the impact. Negativeimpact creates risk that far exceeds any possibletolerance (lawsuits, regulatory risk, reputational risk)

Engage investors, as asset manager, making themaware of the importance of the impact. Negativeimpact creates risk that far exceeds any possibletolerance (lawsuits, regulatory risk, reputational risk)

Building a teams that will develop tomorrow’sinfrastructure

Building a teams that will develop tomorrow’sinfrastructure

Sustainable infrastructure

Company Profile

Agenda

Prelios SGR & Renewable Energies Projects

Prelios SGR & Reneweable Energies Projects

Project Renewable Assets

Obton Fund

The project consists in the setting up of a new real estate fund specializing in

investments in the renewable energy sector and reserved to qualified investors.

First contribution of 19 plants, already implemented and financed, connected to the

electrical grid and benefiting from the government incentive tariffs.

The assets are currently owned by TerniEnergia and have a total value of approx. €

75 million with a debt level of approx. 76% (€ 58 million).

The investment pipeline, expected the contribution, during the first half of 2014,

additional plants for approx. € 120 million financed at 74% approx. (€ 89 million).

Following the transfer, Terni will be the conductor of the assets, and will place the

units to third parties.

Obton is an Italian closed ended real estate fund reserved to qualified investors(Ministerial Decree 228/1999).The Fund invests primarily in real estate assets and real property rights on real estate,

functional to the production of electricity from renewable energy sources.

The Fund investment strategy provides a leverage of 70%, in line with the

provisions of the Rules of the Fund (maximum level of debt permitted up to 90% of

the real estate), and a minimum target yield of the Fund in terms of IRR equal to

10%. The target size of the Fund's investments is set at approximately € 50 million

(approx. 15 MW) and the duration of the fund is equal to 21 years.

Sustainable infrastructure

Company Profile

Agenda

Prelios SGR & Renewable Energies Projects

Prelios SGR

Prelios SGR (90% Prelios, 10% Intesa Sanpaolo) is one of the leading real estate asset

management companies in Italy.

The company is active in promoting, setting up and managing real estate investment

funds, in real estate advisory and in third-party separate account management.

Prelios SGR currently manages 23 funds1, of which two are listed in the MIV segment

of the Milan Stock Exchange.

As of June 2013, it has total AUM2 of ~ €3.8 Bn and NAV of ~ €1.5 Bn.

It has a successful track record with best in class results.

o Average Dividend Yield3 for ordinary funds of about 7%

o Average Internal Rate of Return (IRR)3 for ordinary funds of approximately 9%

The company subscribes to high standards of transparency, governance and risk

management.

Prelios SGR has received the certification for Quality Management System, ISO 9001:

2008, from the independent certification body, IMQ, confirming the SGR’s continuing

commitment to international best practice.

AUM BREAK DOWN BY TYPE OF FUND

1 Prelios SGR also manages a third-party separate account

2 Total AUM includes a third-party SPV, managed by Prelios SGR

3 From initial date of operation to June 30th 2013

Prelios Group

As of 30/06/2013, the Prelios Group has Assets Under Management of approximately €9.5 Bn

(including NPL of approximately €1 Bn) with assets localized in Italy and Germany

Through independent operating companies, the Prelios Group is the first platform for real estate finance and

specialty services for the management and value enhancement of third-party portfolios.

*Includes a start-up Asset Management business unit**Includes Facility Management services

COMMERCIAL

Servicesfor commercialportfolios

ITALY* PRELIOS PL

CREDITSERVICING

Managementof performing&non-performingloans

SGR

Real estatefundmanagement

INTEGRA**

Integratedpropertymanagementservices

AGENCY

Real estatebrokerageand advisory

VALUATIONS

Valuationsand real estatetrading portal

PRELIOS DE

RESIDENTIAL

Servicesfor residentialportfolios

RE SERVICES

Integratedpropertymanage-mentservices

INTEGRATED SERVICES ITALY RE SERVICES GERMANY

Shareholder Base after Capital Increase (main shareholders)1

AssicurazioniGenerali

Camfin Mediobanca

Intesa SanPaolo2 Other3 Feidos 112

Market

Unicredit2

Industrial Shareholders

Financial Shareholders

Shareholders already in

Prelios Group Shareholder Structure

Below, a glance at the current shareholder structure of the Company after the capital increase:

Pirelli2

10.4% 2.2% 1.8%

19% 15.5% 7.4% 9.7% 8.5%

25.5%

(1) Based on the economic stake and without assuming the impact of potential further debt conversion in equity.

(2) Stake owned also through the vehicle, “Fenice,” which holds 19.8%, represented by non-voting share capital.

(3) Includes the Italian banks BPM (2.9%), BPS (1.1%), MPS (2.9%), UBI (0.6%), BPER (1.1%), CARIGE (1.1%).

Insurance companiesFinancial institutions,

foundations, sovereign wealthfunds and investment funds

Institutions, pension funds,public bodies

Main Institutional Investors

Quality Management Certification ISO 9001:2008

Prelios SGR recently received the ISO 9001:2008 certification for Quality

Management Systems from the independent accreditation body, the IMQ. It

confirms the company’s continuous commitment to international best

practice.

In compliance with the certification standards, SGR has adopted rules and

practices for ensuring:

• Best client satisfaction

• Best market competitiveness

• Improved, effective communication and product development processes

• The application of ISO quality management principles of continual

improvements in management systems and processes, and the use

of quality indicators

… And Recognition

• CLARICE FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2011

• Clarice Fund – Light Industrial, a real estate fund established by private contribution, was the 2011 winner

for Italy for the Specialist Fund Awards, for the highest yield recorded over the last three years to date.

• CLOE FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2010

• Cloe, a real estate fund established by private contribution, was the prize winner for Italy for the Specialist

Fund Awards, for achieving the highest yield recorded over the last three years to date.

• FIPRS FUND: PRIZE WINNER AT THE IPD EUROPEAN PROPERTY INVESTMENT AWARDS 2012

• FIPRS, Fondo Immobiliare Pubblico Regione Siciliana, a real estate fund established by contribution of

public properties, received the Specialist Fund Award for achieving the highest yield recorded over the last

three years to date.