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 StrategyAll three areas support & promote the sectorInvestor Outreach, Indices & ResearchReporting & RegulationEvents & NetworkingMember CategoryNo.%Property Co/REITs11054Investors4521Universities2411Consultants5Insurance Companies10Banks & Law Firms73Others1Total210100Representing Gross Value > EUR 350 BillionUpdated/data as of: 11/06/2014
3 Global Listed Real Estate Benefits FTSE EPRA/NAREIT Global IndexDiversification & liquidityQuality assets & managementStrong Total Returns & Dividend YieldGovernance & TransparencyResearchPromotion
5 FTSE EPRA/NAREIT Global Index Five major criteria for inclusion:Underpinned by 4 committees with total of > 300 years experience!Minimum sizeMinimum liquidityMinimumfree-floatMinimum level of relevant real estate incomeDetailed English annual reportingA focused, relevant and investible benchmark for global real estateTo create:
6 FTSE EPRA/NAREIT Global Index Weight = 1.3%GlobalDeveloped GlobalEmerging GlobalDeveloped EMEADeveloped AsiaNorth AmericaEmerging AmericasEmerging EMEAEmerging AsiaDeveloped EuropeDeveloped MEAEmerging EuropeEmerging MEA2Countries161Country65Countries989 SectorsRental or Non-RentalREIT or Non-REITEach index hasmultiple sub-indices:
7 FTSE EPRA/NAREIT Global Index GrossMkt CapSouthGlobalEuropeSouth Africa Co’sYield(FF) EURAfrica %Emerging %Equal 86 coRankGrowthpoint6.7%3,62426.8%3.2%INTU6Redefine7.6%2,24316.6%2.0%Icade20Hyprop5.4%1,52911.3%1.3%Cofinimmo24Resilient4.2%1,36910.1%1.2%Wereldhave26Capital Property6.6%1,2759.4%1.1%Merlin27Attacq0.0%6414.7%0.6%Vastned51Vukile7.4%6284.6%0.5%Alstria52SA Corporate8.0%6064.5%Norway Prop55Emira4863.6%0.4%NSI61Acucap7.1%4253.1%PHP64Fountainhead6.8%2511.9%0.2%Dios77Arrowhead (B)7.8%2181.6%DIC79Arrowhead (A)7.9%South Africa Total6.3%13,514100%11.82%
8 FTSE EPRA/NAREIT Global Index South Africa weights in the indexIndexWgt %GrossYieldGlobal Dev & EM1.3%3.7%EMEA Dev9.0%3.6%EMEA EM45.0%3.8%Global EM11.8%3.9%South African companies gross yield +6%
9 FTSE EPRA/NAREIT Global Index Index Use:Specialist ManagersPension FundsGlobal ETFs marketUS$ 10.5bn AUMFutures contracts – EuropeOTC productsUnderpinned 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 diversificationDirect investmentZonesZonal marketsProperty sectorsNo. of propertiesAve. price(€m)Totalinvested(€bn)EMEA10425AmericasAsia PacificTotal Investment required:75and if real estate is 10% of the total portfolio = €750bn!
11 Significant Global Investors PensionFundCountry2012AUM ($bn)2013GPJJapan1,1811,227APGNL418477NPFKorea359402CDCFrance341395FR ThriftUS321358Others27,13429,121Total (Source: Towers Watson 2014)29,75431,980SovereignWealth FundCountry2012AUM ($bn)2013GPFNorway716838ADIAUAE627773SAMASaudi568676CICChina533575SAFE482Others2,3962,892Total (Source: SWF 2014)5,3226,322(If) Government Pension Fund of Japan invests 5% in real estate = $60bn!
13 South Africa Asset Exposure Johannesburg12 South African companies own 1,500 Assets18.5 sq.km. of Floor SpaceCape TownSandton
14 The Leadenhall Building – London Company Examples – Major CitiesOne New Change - LondonParis500,000 sqm owned at La DefenseMajor player in the Greater Paris projectEPRA Member: IcadeThe Leadenhall Building – LondonLocated in La DefenseTenants include: PWC, LCL Bank & HeinekenEPRA Member: GecinaHeart of City of London overlooking St Paul’s CathedralApprox. 20,000 sqm Retail, 35,000 sq m OfficesEPRA Member: Land Securities224m tall building in centre of City of LondonOffice largest in Europe including 7 stories open planEPRA Member: British Land
15 Lowenbrau site - Zurich Company Examples - OfficesLowenbrau site - ZurichAlte Post – HamburgMainTor - FrankfurtZürich West, former industrial area „Kries 5“Disused brewery dated back to 1897EPRA Member: PSP Swiss PropertySix impressive buildings in financial districtOver 100,000 sqm (mix of retail and offices)EPRA Member: DICOslo - NorwayRefurbishment docklands areaMixed use, office, retail and urban spaceEPRA Member: Norwegian PropertyAddition of a new 6-floors development9,800 sqm (mix of retail and offices)EPRA Member: alstria
16 Carrousel du Louvre – Paris Company Examples - RetailSOHO - LondonGare St Lazare – ParisCarrousel du Louvre – ParisMix of retail, office & living spaceMix of flagship stores and specialist retailersEPRA Member: Shaftesbury11,500 sqm retail and leisure16.7mn visitors per annumEPRA Member: Unibail-RodamcoLes Terrasses du Port - MarseilleRefurbishment of station attracting 500,000 commuters daily80 retailers & 10 restaurantsEPRA Member: KlépierreLocated in Euromediterranee regeneration area190 stores & 260m long restaurant terraceEPRA Member: Hammerson
17 Company Examples - Specialist Student Accommodation – UKCo Working & Shared Offices - UKHealthcare – Belgium & FranceIndustrial – UK & EuropeWarehousing, logistic & datacenters5.8million sqm worth over GBP4.5billionEPRA Member: SEGRO43,000 Students in 130 sites in 23 UK citiesNew and refurbished modern & energy efficient unitsEPRA Member: Unite30,000 people employed in officesRefurbished warehouses/derelict city spacesEPRA Member: WorkspaceIn 2005 Cofinimmo identified nursing homesNow 40% of total portfolioEPRA Member: Cofinimmo
18 Regional Breakdowns 150 constituents Mkt Cap EUR 119 Bn. IndexSth AfricaWgt %GrossYieldGlobal Dev & EM1.3%3.7%EMEA Dev9.0%3.6%EMEA EM45.0%3.8%Global EM11.8%3.9%306 constituentsMkt Cap EUR 927 Bn.Based on Market CapSources: FTSE, EPRA, NAREITData as of: September 1, 2014
19 Global Property Sectors 4%EPRA2012Based on Market CapSources: FTSE, EPRA, NAREITData as of: August 30, 2014
20 Strong Long Term Performance 15-year annualised total return in local currencySources: Eurostat, JP Morgan, FTSE, IPD, MSCI, Bloomberg, EPRA, NAREITData as of: September 30, Note: Based on assumptions made by EPRA
21 Global Government Bonds Global General Equities Annualised Local Total ReturnsGlobalListed Real EstateGlobal Government BondsGlobal General Equities3 years18.0%3.3%19.1%5 years14.6%3.9%11.4%10 years7.6%7.8%15 years9.0%4.4%4.7%20 years8.7%5.5%7.7%Source: EPRAData as of: September 30, 2014Data as of May 28, 2014 (From MMR May 2014)
22 Transparency - EPRA BPR 2014 Total of 84 European companies surveyed50% gained a ‘medal’ or award:25 gold medals9 silver medals8 bronze medals81% 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 2014INTUKlepierreLand SecsLeasinvestMobimoNSIPSPSEGROSpondaUnibailVastnedWDPWereldhaveAlstriaBefimmoBritish LandCityconCofinimmoCorioDerwentFDRGecinaHambornerHammersonIcadeAedificaAffineCapcoGreat PortlandIntervest OfficeMercialysPictonShaftesburySPSAtriumDevelopment SecsDICEuroCommericalHelical BarLondonMetricSTEWorkspaceIcadeNSIWereldhaveAedificaIntervest OfficeNon-EPRA members are underlined
25 Transparency - sBPR 2014 Results British Land***Beni StabiliCitycon***Cofinimmo***Derwent London***EuroCommercial*FDR***Gecina***GraingerGreat Portland**INTU***Klepierre***Land Secs***SEGRO***Unibail***Workspace*Corio***Hammerson***STE*Wereldhave***Alstria***Befimmo***DIC Asset*Sponda***TechnopolisWereldhave Belgium10 companies won gold BPR & sBPR57% 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 - GRESBRanking Table2014 PointsAustralia Listed68Australia Non-Listed63Europe Listed54Asia Listed51Nth America Listed49Europe Non-listed47Asia Non-listed44Nth America Non-listed42“Green Stars”Management = 64 * 0.30Implementation = 49 * 0.70>50 required in both categories to achieve “green star” statusGlobal Listed scored 52 v Global non-listed scored 45
27 EPRA ResearchDaily, 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%CrisisSources: FTSE, EPRA, DTZAs of: June 30, 2014
29 Listed is Proxy for Direct FTSE EPRA UK leads IPD by +/- 2 quartersFTSE EPRA UK par with spot NAVDegeared FTSE EPRA UK outperforms IPDSources: FTSE, EPRA, IPDData as of: Aug 31, 2014
30 Academic Research Leading universities in committee Cambridge University is current chairResearch to bolster the investment caseAverage of 5 projects per annum focusing on:PerformanceAllocationsCorrelationsFull academic reports and executive summaries published – hits a broad audienceEPRA 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 increasesPotential for strategic investors:Good diversification with allocation to listed real estate in the long runSources: IPD, Bloomberg, EPRAData 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 AustraliaShort term linked to stock marketMid/long term linked to direct real estateOpportunities to ‘blend’ real estate exposure
34 Events & Networking EPRA Annual Conference 8 Property Tours 21 Company pitches (South Africa in 2015?)EPRA InsightLondonContinental EuropeEPRA Private Client Broker EventsLondon (GBP 500bn market)Quarterly – company & investor pitchesEPRA Asia (x2) & USA (x2) trips per year
35 Summary Quality assets & management Strong total performance Attractive yieldsDiversificationregional, countries & sectorsLiquidityGovernance & transparency