Presentation on theme: "Attracting Investors to REITs Fraser Hughes, EPRA"— Presentation transcript:
1Attracting Investors to REITs Fraser Hughes, EPRA 22 October 2014
2Representing 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
3Global Listed Real Estate Benefits FTSE EPRA/NAREIT Global IndexDiversification & liquidityQuality assets & managementStrong Total Returns & Dividend YieldGovernance & TransparencyResearchPromotion
5FTSE 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:
6FTSE 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:
7FTSE 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%
8FTSE 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%
9FTSE 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!
10and 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!
11Significant 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!
13South Africa Asset Exposure Johannesburg12 South African companies own 1,500 Assets18.5 sq.km. of Floor SpaceCape TownSandton
14The 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
15Lowenbrau 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
16Carrousel 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
17Company 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
18Regional 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
19Global Property Sectors 4%EPRA2012Based on Market CapSources: FTSE, EPRA, NAREITData as of: August 30, 2014
20Strong 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
21Global 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)
22Transparency - 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?
23Non-EPRA members are underlined Transparency – BPR 2014INTUKlepierreLand SecsLeasinvestMobimoNSIPSPSEGROSpondaUnibailVastnedWDPWereldhaveAlstriaBefimmoBritish LandCityconCofinimmoCorioDerwentFDRGecinaHambornerHammersonIcadeAedificaAffineCapcoGreat PortlandIntervest OfficeMercialysPictonShaftesburySPSAtriumDevelopment SecsDICEuroCommericalHelical BarLondonMetricSTEWorkspaceIcadeNSIWereldhaveAedificaIntervest OfficeNon-EPRA members are underlined
25Transparency - 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
27EPRA ResearchDaily, weekly, monthly & ad-hoc tailored research and data output based on the Global Index constituents
29Listed 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
30Academic 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
31Correlation 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
32Research – 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
34Events & 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
35Summary Quality assets & management Strong total performance Attractive yieldsDiversificationregional, countries & sectorsLiquidityGovernance & transparency