Transcript Document

Attracting Investors to REITs
Fraser Hughes, EPRA
22 October 2014
Author:
EPRA Strategy
•Investor Outreach, Indices & Research
•Reporting & Regulation
•Events & Networking
Member Category
No.
%
Property Co/REITs
110
54
Investors
45
21
Universities
24
11
Consultants
11
5
Insurance Companies
10
5
Banks & Law Firms
7
3
Others
3
1
210
100
Author:
Total
All three areas
support &
promote the
sector
Representing
Gross Value >
EUR 350 Billion
2
Global Listed Real Estate Benefits
•FTSE EPRA/NAREIT Global Index
•Diversification & liquidity
•Quality assets & management
•Strong Total Returns & Dividend Yield
•Governance & Transparency
•Research
•Promotion
Author:
3
FTSE EPRA/NAREIT Global Index
Author:
4
FTSE EPRA/NAREIT Global Index
Five major criteria for inclusion:
Minimum
size
Minimum
liquidity
Minimum level of
relevant real
estate income
To create:
Minimum
free-float
Detailed English
annual reporting
Underpinned by 4
committees with
total of > 300
years experience!
A focused, relevant and investible benchmark
for global real estate
Author:
5
FTSE EPRA/NAREIT Global Index
Weight = 1.3%
Global
Emerging
Global
Developed
Global
North
America
2
Countries
Developed
EMEA
Developed
Asia
Developed
Europe
Developed
MEA
16
Countries
1
Country
Each
index has
Author:
multiple sub-indices:
9 Sectors
6
Countries
Rental or
Non-Rental
Emerging
Americas
5
Countries
Emerging
Asia
Emerging
EMEA
Emerging
Europe
Emerging
MEA
5
Countries
9
8
Countries
Countries
REIT or
Non-REIT
6
FTSE EPRA/NAREIT Global Index
South Africa Co’s
Growthpoint
Redefine
Hyprop
Resilient
Capital Property
Attacq
Vukile
SA Corporate
Emira
Acucap
Fountainhead
Arrowhead (B)
Arrowhead (A)
SouthAuthor:
Africa Total
Gross
Yield
6.7%
7.6%
5.4%
4.2%
6.6%
0.0%
7.4%
8.0%
8.0%
7.1%
6.8%
7.8%
7.9%
6.3%
Mkt Cap
South
(FF) EUR Africa %
3,624
26.8%
2,243
16.6%
1,529
11.3%
1,369
10.1%
1,275
9.4%
641
4.7%
628
4.6%
606
4.5%
486
3.6%
425
3.1%
251
1.9%
218
1.6%
218
1.6%
13,514
100%
Global
Emerging %
3.2%
2.0%
1.3%
1.2%
1.1%
0.6%
0.5%
0.5%
0.4%
0.4%
0.2%
0.2%
0.2%
11.82%
Europe
Equal 86 co
INTU
Icade
Cofinimmo
Wereldhave
Merlin
Vastned
Alstria
Norway Prop
NSI
PHP
Dios
DIC
DIC
Rank
6
20
24
26
27
51
52
55
61
64
77
79
79
7
FTSE EPRA/NAREIT Global Index
South Africa weights in the index
Wgt %
Gross
Yield
Global Dev & EM
1.3%
3.7%
EMEA Dev
9.0%
3.6%
EMEA EM
45.0%
3.8%
Global EM
11.8%
3.9%
Index
South African companies gross yield +6%
Author:
8
FTSE EPRA/NAREIT Global Index
Index Use:
•Specialist Managers
•Pension Funds
•Global ETFs market
•US$ 10.5bn AUM
•Futures contracts – Europe
•OTC products
Underpinned by 4
committees with
total of > 200
years experience!
You need to
be on
investors
radar!
Author:
9
Global diversification
Direct investment
Zones
Zonal
markets
Property
sectors
No. of
properties
Ave.
price
(€m)
Total
invested
(€bn)
EMEA
Americas
10
10
4
4
25
25
25
25
25
25
Asia Pacific
10
4
25
25
Total Investment required:
25
75
and if real estate is 10% of the total portfolio = €750bn!
Author:
10
Significant Global Investors
Pension
Fund
Country
GPJ
Japan
APG
2012
AUM
($bn)
2013
AUM
($bn)
Sovereign
Wealth Fund
Country
2012
AUM
($bn)
2013
AUM
($bn)
1,181
1,227
GPF
Norway
716
838
NL
418
477
ADIA
UAE
627
773
NPF
Korea
359
402
SAMA
Saudi
568
676
CDC
France
341
395
CIC
China
533
575
FR Thrift
US
321
358
SAFE
China
482
568
Others
27,134
29,121
Others
2,396
2,892
Total
29,754
31,980
Total
5,322
6,322
(Source: Towers Watson 2014)
Author:
(Source: SWF 2014)
(If) Government Pension Fund of Japan
invests 5% in real estate = $60bn!
11
Global Asset Exposure – €1.5 Trn
Region
Companies
Assets
Top 10 own
Asia
78
5,100
900
Europe
86
14,300
1,500
Nth America
Author:
143
32,000
7,200
South Africa Asset Exposure
12 South African companies own 1,500 Assets
18.5 sq.km. of Floor Space
Johannesburg
Cape Town
Author:
Sandton
13
Company Examples – Major Cities
One New Change - London
 Heart of City of London overlooking St Paul’s Cathedral
 Approx. 20,000 sqm Retail, 35,000 sq m Offices
 EPRA Member: Land Securities
The Leadenhall Building – London
 224m tall building in centre of City of London
 Office largest in Europe including 7 stories open plan
 EPRA Member: British Land
Paris
 500,000 sqm owned at La Defense
 Major player in the Greater Paris project
 EPRA Member: Icade
Paris
 Located in La Defense
 Tenants include: PWC, LCL Bank & Heineken
 EPRA Member: Gecina
Author:
14
Company Examples - Offices
Lowenbrau site - Zurich
 Zürich West, former industrial area „Kries 5“
 Disused brewery dated back to 1897
 EPRA Member: PSP Swiss Property
Alte Post – Hamburg
 Addition of a new 6-floors development
 9,800 sqm (mix of retail and offices)
 EPRA Member: alstria
MainTor - Frankfurt
 Six impressive buildings in financial district
 Over 100,000 sqm (mix of retail and offices)
 EPRA Member: DIC
Oslo - Norway
 Refurbishment docklands area
 Mixed use, office, retail and urban space
 EPRA Member: Norwegian Property
Author:
15
Company Examples - Retail
SOHO - London
 Mix of retail, office & living space
 Mix of flagship stores and specialist retailers
 EPRA Member: Shaftesbury
Les Terrasses du Port - Marseille
 Located in Euromediterranee regeneration area
 190 stores & 260m long restaurant terrace
 EPRA Member: Hammerson
Carrousel du Louvre – Paris
 11,500 sqm retail and leisure
 16.7mn visitors per annum
 EPRA Member: Unibail-Rodamco
Gare St Lazare – Paris
 Refurbishment of station attracting 500,000 commuters daily
 80 retailers & 10 restaurants
 EPRA Member: Klépierre
Author:
16
Company Examples - Specialist
Student Accommodation – UK
 43,000 Students in 130 sites in 23 UK cities
 New and refurbished modern & energy efficient units
 EPRA Member: Unite
Healthcare – Belgium & France
 In 2005 Cofinimmo identified nursing homes
 Now 40% of total portfolio
 EPRA Member: Cofinimmo
Co Working & Shared Offices - UK



30,000 people employed in offices
Refurbished warehouses/derelict city spaces
EPRA Member: Workspace
Industrial – UK & Europe
Warehousing, logistic & datacenters
 5.8million sqm worth over GBP4.5billion
 EPRA Member: SEGRO

Author:
17
1
8
Regional Breakdowns
150 constituents
Mkt Cap EUR 119 Bn.
Emerging
Developed
18%
Asia Pacific
16%
EMEA
Americas
26%
North America
Asia
56%
52.6%
EMEA
32%
Sth Africa
Wgt %
Gross
Yield
Global Dev & EM
1.3%
3.7%
EMEA Dev
9.0%
3.6%
EMEA EM
45.0%
3.8%
Global EM
11.8%
3.9%
Index
Author:
Sources: FTSE, EPRA, NAREIT
Data as of: September 1, 2014
306 constituents
Mkt Cap EUR 927 Bn.
1
9
Global Property Sectors
Self Storage Industrial/
Lodging &
Offices
3%
Resorts
2%
4%
Industrial
6%
Health Care
7%
Diversified
30%
4%
Residential
10%
Offices
13%
Author:
EPRA
2012
Retail
25%
Sources: FTSE, EPRA, NAREIT
Data as of: August 30, 2014
Strong Long Term Performance
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
LISTED & REITs
15-year annualised total
return in local currency
DIRECT
4.5%
4.9%
1.3%
3.9%
3.4%
4.5%
2.6%
0.5%
Global Bonds
Global Equities
Capital Growth
Global Real Estate
Global Listed Real
Estate
Yield
Author:
Sources: Eurostat, JP Morgan, FTSE, IPD, MSCI, Bloomberg, EPRA, NAREIT
Data as of: September 30, 2014 Note: Based on assumptions made by EPRA
20
2
1
Annualised Local Total Returns
Global
Listed Real Estate
Global
Government
Bonds
Global
General
Equities
3 years
18.0%
3.3%
19.1%
5 years
14.6%
3.9%
11.4%
10 years
7.6%
3.9%
7.8%
15 years
9.0%
4.4%
4.7%
20 years
8.7%
5.5%
7.7%
Source: EPRA
Data as of: September 30, 2014
Author:
Transparency - EPRA BPR 2014
Total of 84 European companies surveyed
• 50% gained a ‘medal’ or award:
• 25 gold medals
• 9 silver medals
• 8 bronze medals
• 81% disclose at least 1 EPRA measure (91% mkt cap)
• 33% disclose all 6 EPRA measures (58% mkt cap)
• South African BPRs & EPRA BPRs under EMEA umbrella?
Author:
22
Transparency – BPR 2014
INTU
Alstria
Befimmo
British Land
Land Secs
Leasinvest
Citycon
Cofinimmo
Mobimo
NSI
Corio
PSP
Derwent
SEGRO
FDR
Sponda
Gecina
Hamborner
Hammerson
Icade
Klepierre
Unibail
Vastned
WDP
Author:
Wereldhave
Aedifica
Atrium
Icade
Affine
Development Secs
NSI
Capco
DIC
Wereldhave
Great Portland
EuroCommerical
Aedifica
Intervest Office
Helical Bar
Intervest Office
Mercialys
LondonMetric
Picton
STE
Shaftesbury
Workspace
SPS
Transparency....but 42 Co’s Below Bronze!
Big Yellow
Balder
Deutsche Annington
Beni Stabili
CA Immo
Daejan Hldgs
Castellum
Deutsche Euroshop
IGD
Convert
F&C Commercial
Dios
Deutsche Wohnen
Fabege
GAGFAH
Hemfosa
LEG
MedicX
Hufvudstaden
Prime Office
Primary Health
Klovern
Quintain
Kungsleden
St Modwen
Wallenstam
Safestore
Wihlborgs
F&C UK
Grainger
Hansteen
Wereldhave
Belgium
Allreal
Eurobank
Technopolis
TAG
Schroder REIT
Colonial
Standard Life
UK Commercial
Author:
Unite
ANF
Non-EPRA members
are underlined
24
Transparency - sBPR 2014 Results
British Land***
Grainger
Corio***
Alstria***
Beni Stabili
Great Portland**
Hammerson***
Befimmo***
Citycon***
INTU***
STE*
DIC Asset*
Cofinimmo***
Klepierre***
Wereldhave***
Sponda***
Derwent London***
Land Secs***
Technopolis
EuroCommercial*
SEGRO***
Wereldhave Belgium
FDR***
Unibail***
Gecina***
Workspace*
***Gold BPR
Author:
** Silver
BPR
* Bronze BPR
•
10 companies won gold BPR & sBPR
•
57% reported at least one sBPR (74% mc)
•
31% achieved an award (27% - 2013)
Transparency - GRESB
Ranking Table
2014 Points
Australia Listed
Australia Non-Listed
Europe Listed
Asia Listed
68
63
54
51
Nth America Listed
Europe Non-listed
Asia Non-listed
49
47
44
Nth America Non-listed
42
“Green Stars”
Management
Implementation
= 64 * 0.30
= 49 * 0.70
>50 required in both categories to
achieve “green star” status
Global Listed scored 52 v Global non-listed scored 45
Author:
EPRA Research
Daily, weekly, monthly & ad-hoc tailored research and data output
based on the Global Index constituents
Author:
27
UK Listed v Transactions & LTV
350
60%
FTSE EPRA UK
300
DTZ Transactions UK
50%
FTSE EPRA UK LTV
250
40%
200
30%
150
20%
100
50
0
+81% Values (26), LTVs Level
Author:
Crisis
+ 35% Values (22), LTVs -15%
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
Q1
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
10%
Sources: FTSE,
EPRA, DTZ
0%
As of: June 30,
2014
28
250
Listed is Proxy for Direct
FTSE EPRA UK
leads IPD by +/- 2
quarters
200
FTSE EPRA UK
par with spot NAV
150
100
50
0
Degeared FTSE EPRA UK NAV
FTSE EPRA UK NAV
FTSE EPRA UK
IPD UK Capital Growth
Degeared FTSE
EPRA UK
outperforms IPD
Sources: FTSE, EPRA, IPD
Data as of: Aug 31, 2014
Author:
29
Academic Research
•Leading universities in committee
•Cambridge University is current chair
•Research to bolster the investment case
•Average of 5 projects per annum focusing on:
•Performance
•Allocations
•Correlations
•Full academic reports and executive summaries
published – hits a broad audience
•EPRA research compendium is home for all reports
Author:
30
Correlation declines with equities and
increases with direct real estate
Correlation declines with equities and increases with
direct real estate
FTSE 100 / Developed Europe
80%
100%
60%
80%
40%
60%
20%
40%
0%
20%
1
3
6
12
24
36
48
0%
60
6 months
•
80%
60%
•
40%
20%
0%Author:
3
6
12
24
36
48
60
2 years
General Equities v Listed
Developed Europe / IPD property index
100%
1 year
3 years
5 years
10 years
Direct v Listed
Correlation with stocks declines as
investment horizon increases
Potential for strategic investors:
Good diversification with allocation
to listed real estate in the long run
Sources: IPD, Bloomberg, EPRA
Data as of: 31/12/2013
31
Research – Equities or Property?
• “Are REITs real estate?
• Examined whether listed real estate returns
reflect direct property or general equities in:
• US, UK and Australia
• Short term linked to stock market
• Mid/long term linked to direct real estate
• Opportunities to ‘blend’ real estate exposure
Author:
32
Research - Blended Allocations
Author:
33
Events & Networking
• EPRA Annual Conference
• 8 Property Tours
• 21 Company pitches (South Africa in 2015?)
• EPRA Insight
• London
• Continental Europe
• EPRA Private Client Broker Events
• London (GBP 500bn market)
• Quarterly – company & investor pitches
• EPRA Asia (x2) & USA (x2) trips per year
Author:
34
Summary
•Quality assets & management
•Strong total performance
•Attractive yields
•Diversification
•regional, countries & sectors
•Liquidity
•Governance & transparency
Author:
35