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Attracting Investors to REITs Fraser Hughes, EPRA

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Presentation on theme: "Attracting Investors to REITs Fraser Hughes, EPRA"— Presentation transcript:

1 Attracting Investors to REITs Fraser Hughes, EPRA
22 October 2014

2 Representing Gross Value > EUR 350 Billion
EPRA Strategy All three areas support & promote the sector Investor Outreach, Indices & Research Reporting & Regulation Events & Networking Member Category No. % Property Co/REITs 110 54 Investors 45 21 Universities 24 11 Consultants 5 Insurance Companies 10 Banks & Law Firms 7 3 Others 1 Total 210 100 Representing Gross Value > EUR 350 Billion Updated/data as of: 11/06/2014

3 Global Listed Real Estate Benefits
FTSE EPRA/NAREIT Global Index Diversification & liquidity Quality assets & management Strong Total Returns & Dividend Yield Governance & Transparency Research Promotion

4 FTSE EPRA/NAREIT Global Index

5 FTSE EPRA/NAREIT Global Index
Five major criteria for inclusion: Underpinned by 4 committees with total of > 300 years experience! Minimum size Minimum liquidity Minimum free-float Minimum level of relevant real estate income Detailed English annual reporting A focused, relevant and investible benchmark for global real estate To create:

6 FTSE EPRA/NAREIT Global Index
Weight = 1.3% Global Developed Global Emerging Global Developed EMEA Developed Asia North America Emerging Americas Emerging EMEA Emerging Asia Developed Europe Developed MEA Emerging Europe Emerging MEA 2 Countries 16 1 Country 6 5 Countries 9 8 9 Sectors Rental or Non-Rental REIT or Non-REIT Each index has multiple sub-indices:

7 FTSE EPRA/NAREIT Global Index
Gross Mkt Cap South Global Europe South Africa Co’s Yield (FF) EUR Africa % Emerging % Equal 86 co Rank Growthpoint 6.7% 3,624 26.8% 3.2% INTU 6 Redefine 7.6% 2,243 16.6% 2.0% Icade 20 Hyprop 5.4% 1,529 11.3% 1.3% Cofinimmo 24 Resilient 4.2% 1,369 10.1% 1.2% Wereldhave 26 Capital Property 6.6% 1,275 9.4% 1.1% Merlin 27 Attacq 0.0% 641 4.7% 0.6% Vastned 51 Vukile 7.4% 628 4.6% 0.5% Alstria 52 SA Corporate 8.0% 606 4.5% Norway Prop 55 Emira 486 3.6% 0.4% NSI 61 Acucap 7.1% 425 3.1% PHP 64 Fountainhead 6.8% 251 1.9% 0.2% Dios 77 Arrowhead (B) 7.8% 218 1.6% DIC 79 Arrowhead (A) 7.9% South Africa Total 6.3% 13,514 100% 11.82%

8 FTSE EPRA/NAREIT Global Index
South Africa weights in the index 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% South African companies gross yield +6%

9 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!

10 and if real estate is 10% of the total portfolio = €750bn!
Global diversification Direct investment Zones Zonal markets Property sectors No. of properties Ave. price (€m) Total invested (€bn) EMEA 10 4 25 Americas Asia Pacific Total Investment required: 75 and if real estate is 10% of the total portfolio = €750bn!

11 Significant Global Investors
Pension Fund Country 2012 AUM ($bn) 2013 GPJ Japan 1,181 1,227 APG NL 418 477 NPF Korea 359 402 CDC France 341 395 FR Thrift US 321 358 Others 27,134 29,121 Total (Source: Towers Watson 2014) 29,754 31,980 Sovereign Wealth Fund Country 2012 AUM ($bn) 2013 GPF Norway 716 838 ADIA UAE 627 773 SAMA Saudi 568 676 CIC China 533 575 SAFE 482 Others 2,396 2,892 Total (Source: SWF 2014) 5,322 6,322 (If) Government Pension Fund of Japan invests 5% in real estate = $60bn!

12 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 143 32,000 7,200

13 South Africa Asset Exposure
Johannesburg 12 South African companies own 1,500 Assets 18.5 sq.km. of Floor Space Cape Town Sandton

14 The Leadenhall Building – London
Company Examples – Major Cities One New Change - London Paris 500,000 sqm owned at La Defense Major player in the Greater Paris project EPRA Member: Icade The Leadenhall Building – London Located in La Defense Tenants include: PWC, LCL Bank & Heineken EPRA Member: Gecina Heart of City of London overlooking St Paul’s Cathedral Approx. 20,000 sqm Retail, 35,000 sq m Offices EPRA Member: Land Securities 224m tall building in centre of City of London Office largest in Europe including 7 stories open plan EPRA Member: British Land

15 Lowenbrau site - Zurich
Company Examples - Offices Lowenbrau site - Zurich Alte Post – Hamburg MainTor - Frankfurt Zürich West, former industrial area „Kries 5“ Disused brewery dated back to 1897 EPRA Member: PSP Swiss Property 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 Addition of a new 6-floors development 9,800 sqm (mix of retail and offices) EPRA Member: alstria

16 Carrousel du Louvre – Paris
Company Examples - Retail SOHO - London Gare St Lazare – Paris Carrousel du Louvre – Paris Mix of retail, office & living space Mix of flagship stores and specialist retailers EPRA Member: Shaftesbury 11,500 sqm retail and leisure 16.7mn visitors per annum EPRA Member: Unibail-Rodamco Les Terrasses du Port - Marseille Refurbishment of station attracting 500,000 commuters daily 80 retailers & 10 restaurants EPRA Member: Klépierre Located in Euromediterranee regeneration area 190 stores & 260m long restaurant terrace EPRA Member: Hammerson

17 Company Examples - Specialist
Student Accommodation – UK Co Working & Shared Offices - UK Healthcare – Belgium & France Industrial – UK & Europe Warehousing, logistic & datacenters 5.8million sqm worth over GBP4.5billion EPRA Member: SEGRO 43,000 Students in 130 sites in 23 UK cities New and refurbished modern & energy efficient units EPRA Member: Unite 30,000 people employed in offices Refurbished warehouses/derelict city spaces EPRA Member: Workspace In 2005 Cofinimmo identified nursing homes Now 40% of total portfolio EPRA Member: Cofinimmo

18 Regional Breakdowns 150 constituents Mkt Cap EUR 119 Bn.
Index 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% 306 constituents Mkt Cap EUR 927 Bn. Based on Market Cap Sources: FTSE, EPRA, NAREIT Data as of: September 1, 2014

19 Global Property Sectors
4% EPRA 2012 Based on Market Cap Sources: FTSE, EPRA, NAREIT Data as of: August 30, 2014

20 Strong Long Term Performance
15-year annualised total return in local currency Sources: Eurostat, JP Morgan, FTSE, IPD, MSCI, Bloomberg, EPRA, NAREIT Data as of: September 30, Note: Based on assumptions made by EPRA

21 Global Government Bonds Global General Equities
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% 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 Data as of May 28, 2014 (From MMR May 2014)

22 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?

23 Non-EPRA members are underlined
Transparency – BPR 2014 INTU Klepierre Land Secs Leasinvest Mobimo NSI PSP SEGRO Sponda Unibail Vastned WDP Wereldhave Alstria Befimmo British Land Citycon Cofinimmo Corio Derwent FDR Gecina Hamborner Hammerson Icade Aedifica Affine Capco Great Portland Intervest Office Mercialys Picton Shaftesbury SPS Atrium Development Secs DIC EuroCommerical Helical Bar LondonMetric STE Workspace Icade NSI Wereldhave Aedifica Intervest Office Non-EPRA members are underlined

24 Transparency....but 42 Co’s Below Bronze!
Big Yellow Daejan Hldgs F&C Commercial F&C UK Grainger Hansteen MedicX Primary Health Quintain St Modwen Safestore Schroder REIT Standard Life UK Commercial Unite Balder Castellum Dios Fabege Hemfosa Hufvudstaden Klovern Kungsleden Wallenstam Wihlborgs Deutsche Annington Deutsche Euroshop Deutsche Wohnen GAGFAH LEG Prime Office TAG Beni Stabili IGD CA Immo Convert Wereldhave Belgium Allreal Eurobank Technopolis Colonial Non-EPRA members are underlined ANF

25 Transparency - sBPR 2014 Results
British Land*** Beni Stabili Citycon*** Cofinimmo*** Derwent London*** EuroCommercial* FDR*** Gecina*** Grainger Great Portland** INTU*** Klepierre*** Land Secs*** SEGRO*** Unibail*** Workspace* Corio*** Hammerson*** STE* Wereldhave*** Alstria*** Befimmo*** DIC Asset* Sponda*** Technopolis Wereldhave Belgium 10 companies won gold BPR & sBPR 57% reported at least one sBPR (74% mc) 31% achieved an award (27% ) ***Gold BPR ** Silver BPR * Bronze BPR

26 >50 required in both categories to achieve “green star” status
Transparency - GRESB Ranking Table 2014 Points Australia Listed 68 Australia Non-Listed 63 Europe Listed 54 Asia Listed 51 Nth America Listed 49 Europe Non-listed 47 Asia Non-listed 44 Nth America Non-listed 42 “Green Stars” Management = 64 * 0.30 Implementation = 49 * 0.70 >50 required in both categories to achieve “green star” status Global Listed scored 52 v Global non-listed scored 45

27 EPRA Research Daily, weekly, monthly & ad-hoc tailored research and data output based on the Global Index constituents

28 UK Listed v Transactions & LTV
+81% Values (26), LTVs Level + 35% Values (22), LTVs -15% Crisis Sources: FTSE, EPRA, DTZ As of: June 30, 2014

29 Listed is Proxy for Direct
FTSE EPRA UK leads IPD by +/- 2 quarters FTSE EPRA UK par with spot NAV Degeared FTSE EPRA UK outperforms IPD Sources: FTSE, EPRA, IPD Data as of: Aug 31, 2014

30 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

31 Correlation declines with equities and increases with direct real estate
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

32 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

33 Research - Blended Allocations

34 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

35 Summary Quality assets & management Strong total performance
Attractive yields Diversification regional, countries & sectors Liquidity Governance & transparency


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