Presentation on theme: "Development of Real Estate Funds Management in Asia"— Presentation transcript:
1 Development of Real Estate Funds Management in Asia
2 Agenda Introduction of MGPA From MGPA to BlackRock Real Estate Funds What role does real estate perform in a balanced portfolioReal Estate Funds in AsiaReal Estate in Asia – How it has developed over timeCapital inflows for Asia FundsAsian real estate returns2013 – 2018 Crystal ballThailand-In an Asian RE Investment contextThe landscape ahead: Where will capital goQ & A
4 Historical AUM / EUM (US$ Millions) Capital Commitment by Region MGPA OverviewVertically integrated independently managed, private equity real estate advisory company operating throughout Asia Pacific and EuropeFocused on real estate funds management, co-investments and separate account mandates for institutional investorsOffering products across the risk/return spectrum including development14 year investment and development track record across Asia and Europe191 investors from Australia, Europe, Middle East and North AmericaAs of 31 March 2013 MGPA had (i) raised US$8.5 billion of equity commitments and (ii) gross assets under management of US$12billionHistorical AUM / EUM (US$ Millions)Capital Commitment by Region1 Including Lend Lease Global Properties Fund SICAF.
5 Global presenceExtensive local network with 220 staff in 13 offices throughout Asia Pacific and Europe.EuropeCopenhagenFrankfurtLondonLuxembourgParisWarsawAsia PacificBeijingHong KongKuala LumpurShanghaiSingaporeSydneyTokyo
6 Long term growth, stable platform 1995APIC CloseUS$250 million19951 Does not include the establishment and realisation of co-investment vehicles or separate accounts.
7 MGPA at a glance Activities Since inception – investors Eight funds currently under management in Asia and Europetotal cumulative equity commitments of approximately US$7.5 billionSeven co-investments and joint ventures totalling US$385 million in equity commitmentsThree advisory mandatesInvested in 421 properties with exposure to 21 countriesSince inception – investors91 investors from 16 countries across four regions; Australia, Europe, Middle East and North AmericaOver 85% of investors have reinvested with MGPASince inception - realised investments172 properties with total gross asset value at disposition of over US$6.3 billionRealized net investment level returns across value add and opportunistic strategies IRR 19%,1 As at 31 March 2013 includes all realised investments across LLGP, MGPA AFII, MGPA EFII, MGPA AFIII & MGPA EFIII.
8 Global industry recognition 2013 Best Asian PERE fund manager (REIW)2013 Asian deal of the year (Ginza 4-Chome Tower) (REIW)2012 Best Asian PERE fund manager (REIW)2010 Europe deal of the year (acquisition of Aldi Portfolio, Germany)2009 Asian firm of the year Asia deal of the year (181 Queen’s Road) CEE retail awards investor of the year award (MGPA Europe Fund III, L.P.)2008 Asian firm of the year Global fundraiser of the year (Global Fund III) Asian fundraiser of the year (MGPA Asia Fund III, L.P.) Asian industry figure of the year (Simon Treacy)2007 Asian & European firm of the year Asian industry figure of the year (Jim Quille) Asia deal of the year (8 Shenton Way)2006 Asian firm of the year
9 Capital raised over past five years MGPA has raised US$5.4 billion of capital commitments over the last five years, ranking them (globally) number 11 of real estate asset managersSource: PERE Magazine
10 Investor profileTotal capital raised (including all Funds and co-investments) US$8.5 billion91 investors across all industry sectors from Australia, Europe, Middle East and North AmericaCapital commitment by investor typeCapital commitment by region (number of investors)Average equity commitment by investor US$ MMCapital commitment by region
11 MGPA in Europe – Proven Performance Well established European presence with over 80 staff in six offices13 nationalities, 24 languages298 properties acquired since 1999 across 13 countriesGross asset value of US$6.2 billion20 development and re-development projects undertaken in ten countriesInvestments in 104 properties realised1Total gross asset value at disposition of US$3.4 billionRealised net investment level IRR 19%,1 As at 31 March 2013.2 Includes all realised investments across LLG, EFII and EFIII.
12 Assets in 13 European countries Belgiuml Banimmo Portfolio (corporate, office & retail)l Sony Portfolio (office)Denmark Illum (retail)Francel Banimmo Portfolio (corporate, office& retail)l Akeler Portfolio(corporate, office/logistics)l Capital Sud (office) Logiffine (light industrial/logistics)l Balthazar (office) Le Madeleine (office & retail) Viva (office)Germanyl Akeler Portfolio (corporate, office/logistics)l MCT (office) GLI Portfolio (logistics) Sony Portfolio (office) ‘Dial’ and ‘August’ Portfolios (retail & industrial) CNL GIT Portfolio (retail) Separate Account Portfolio (retail)Greece Academy Gardens (retail)Italyl Sony Portfolio (office/logistics) Light Building (office)Luxembourgl Banimmo Portfolio (corporate, office & retail)Polandl Roundabout (office) Angel Wings (residential) Rondo 1 (office & retail) Wilanow One (residential) Karolinka (retail) Pogoria (retail)Portugall Arrabida Shopping Centre (retail)l Akeler Portfolio (corporate, office/logistics)Spainl Amura (office)l Metrovacesa (equity)Switzerland Sony Portfolio (office)The Netherlandsl Haslemere (equity)UKl Meadow Portfolio (mixed use)l Hayes Office Park (office)l Storage King (self storage)l Chancery Exchange (office) LIH (corporate) Exchange Tower (office) Moorgate Exchange (office) 6 Bevis Marks (office)l Realised assets Currently owned assets
13 MGPA in Asia – Proven Performance Over 130 staff in China, Hong Kong, Japan, Singapore, Malaysia and Australia130 properties acquired since 1999 across seven countriesGross value of US$11 billion14 development and re-development projects undertaken in six countries74 properties realised1Total gross value at disposition of US$2.9 billionRealised net investment level returns across value add and opportunistic strategies, IRR 18%,1 As at 31 March 2013.2 Includes all realised investments in Asia and Japan across LLGP, AFII and AFIII.
14 Assets in eight countries across Asia Pacific Australia 6-10 O’Connell Street (retail & office) Optima Centre (office)Japanl Arasho (office)l MyAtria Ikebukuro (residential)l Sogo Portfolio (office)l Toranomon (office)l Ueno building (office)l Rosa Akasaka (residential)l KIR Otemachi (residential)l Osaka 2 Portfolio (office)l Noda (logistics)l Sanbacho (office) Whale Portfolio (residential) Ginza 4-Chome (office & retail) Strings Portfolio (office)l MyAtria Portfolio (mixed use) Malera Shopping Centre (retail) Fukuoka (office & retail) Meiwa 2 Portfolio (office & residential) Higashi Ogijima (industrial)l Shirokanedai (office & retail) Fuji Grand Imabari (retail)l Ark II (office & residential) Whale Meguro (office & residential)l Hybrid Portfolio (office & residential) Kameido (office)l Meguro Yamate Place (office)l Atria Meguro Tower (residential)Chinal Platinum (office) Galleria Chengdu (retail)l Panyu (residential & retail) j-Tower (office)Hong Kongl Lippo Towers (office)l Repulse Bay (residential)l 181 Queens Road (office & retail)l Vicwood (office & retail)l Great Eagle (equity)l HK Land (equity)Malaysia The Intermark (office, retail & hospitality)Singaporel Springleaf Tower (office) 8 Shenton Way (office & retail) Asia Square (office, retail & hospitality) Asia Square (office & retail)l Cascadia (residential)l 8 Napier (residential)South Koreal M Tower (office)l KEB (NPL portfolio)l Financial News (office)l Realised assets Currently owned assetsThailand Evolution Capital (hotel & leisure) Andaman (hospitality & residential) South Shin Otsuka Building (office) Shinjuku TX Building (office)
15 Asia Square – Singapore Current asset developmentKey figuresEquity invested to dateUS$1,724 millionOwnershipMGPA Asia Fund IIIAcquisition dateQ (Tower 1) and Q (Tower 2)Size2.1 million sq ft of office and retail (NLA) and a star hotelOpportunityBuy, develop, sellKey informationAmalgamate two adjacent sites to develop an integrated premier office complex with a 5-star hotel in new CBD of SingaporeAsia Square Tower 1 completed in June 2011; Tower 2 scheduled to be completed in Q3 2013Deliver efficient space for the financial services sectorTenants: Citi (anchor), Julius Baer, Sarasin Bank, Google, Lloyds of London, Marsh & McLennan and Westin hotelTower 1 is certified LEED Platinum (first in Singapore) and Tower 2 is pre- certified LEED Platinum.
16 The Intermark – Kuala Lumpur, Malaysia Current asset redevelopmentKey figuresEquity invested to dateUS$244 millionOwnershipMGPA Asia Fund IIAcquisition dateQ2 2007Size (NLA)1,315,659 sq ft (office)208,697 sq ft (retail)540 rooms (hotel)OpportunityBuy, fix, sellKey informationA mixed use development of 2,755,948 sq ft comprising a 63 storey existing office tower, a 40 storey new office tower, six storey shopping centre and a hotelRenovate existing office tower (Vista Tower) and hotel (Doubletree by Hilton)Demolish one of the poorly designed retail centres and re-develop into a new office tower (Integra Tower)Capture planning gain through increasing allowable plot ratio to ten timesIntegra Tower received Certificate of Completion and Compliance in November 2012Tenants: Vista Tower – UOB, SMBC, BNP Paribas and Petronas; Integra Tower – JP Morgan and Aker Solutions.
17 181 Queen’s Road Central – Hong Kong Realised asset managementKey figuresEquity investedUS$85.5 millionOwnershipMGPA Asia Fund II (65%), co-investors (35%)Acquisition dateQ2 2006Size (GFA)35,590 sqmRealised dateQ to Q1 2010Gross sales priceUS$434 millionOpportunityBuy, reposition, sellKey informationA 29 storey Grade B+ office building with retail podiumLocated in the fringe of Central Hong KongInvested in an under-rented building in a market with limited supply, strong demand and a positive rental growth outlookRealised reversionary value – passing rents over 50% below prevailing market rentsSold through strata title, to take advantage of opportunity in market cycleNet investment level return: IRR 20%, EM 1.8x.
18 Vicwood Plaza – Hong Kong Realised asset repositioningKey figuresEquity investedUS$67.4 millionOwnershipMGPA Asia Fund II (51%), co-investors (49%)Acquisition dateQ1 2006Size (GFA)377,214 sq ftRealised dateQ3 2010Gross sales priceUS$488 millionOpportunityBuy, fix, sellKey informationA 35 storey building over four levels of retail and 29 office floorsExcellent transport connections including a footbridge system linking it to CentralRealised reversionary value – passing rents 50% below market rentsImproved tenant covenants (e.g. HSBC and Mayer Brown JSM)Revitalised retail tenant mix and created direct access from retail podium to MTRUpgraded office floors and increased leasable area from 377,214 sq ft to 390,161 sq ftNet investment level return: IRR 23%, EM 2.2x.
19 56 Repulse Bay Road – Hong Kong Realised asset repositioningKey figuresEquity investedHK$622 millionOwnershipGlobal Fund I (70%), co-investors (30%)Acquisition dateQ3 2001Size188,294 sq ftRealised dateQ4 2006Gross sales priceHK$3,049 millionOpportunityBuy, refurbish, sellKey informationLocated in Repulse Bay, traditional luxury residential area of Hong Kong, all 53 houses enjoy full sea viewFixed the physical deficiencies, including water leakage, underperforming air conditioning and dated aesthetic designValue added opportunity to upgrade the asset via refurbishment, including replacement of the façade, upgrade of the car park and driveway and creation of new landscaped gardenRebranded the project including renaming it to ‘56 Repulse Bay Road’ and conducted high profile marketing campaignDisposed of the asset on a strata title basis, major buyers were local HNW and family officesNet investment level return: IRR 29%, EM 1.7x.
20 Toranomon – Tokyo, Japan Realised asset repositioningKey figuresEquity investedUS$13.4 millionOwnershipGlobal Fund IAcquisition dateQ4 2004Size4,692 sqmRealised dateQ3 2006Gross sales priceUS$71.3 millionOpportunityBuy, reposition, sellKey informationLocated on a major arterial route in central TokyoUndertook extensive refurbishment and repositioning, including new façade to provide modern office accommodationLet and sold into improving market cycleNet investment level return: IRR 61%, EM 3.2x.
21 Malera Shopping Centre – Gifu, Japan Current asset repositioningKey figuresEquity invested to dateUS$153 millionOwnershipMGPA Japan Core Plus FundAcquisition dateQ1 2008Size76,143 sqmOpportunityRepositioningKey informationAcquire a retail investment in suburban Japan in order to rebalance and reposition the centre in the trade area to capture increased salesOff market acquisitionProperty management efficiently restructured and redesignedCentre has secured new tenants including new anchor tenants (Round One, H&M, Zara and Bershka)Common areas have been improved and the centre re-zonedNLA has been increased by 277 tsubo following conversion of common area to let area.
22 Ginza 4-Chome – Tokyo, Japan Current asset managementKey figuresEquity invested to dateUS$25 millionOwnershipMGPA Asia Fund III (100%)Acquisition dateMarch 2012Size60,536 sq ftOpportunityBuy value with active managementKey informationA well-located office/retail property in the Ginza district of Chuo wardLender took control of the asset following original developer’s bankruptcy. Decision to dispose asset at significant discount to the original loan amount provided attractive pricing58% initial occupancy, to be leased-up and stabilized during the hold periodThe strategy is to lease-up and stabilize during the hold period and to achieve cost reduction by streamlining the building management and property management costsSell at stabilized cash flows in central Tokyo to institutions such as J-REITsIncreased occupancy to 100% within 6 months of acquisition
23 M Tower – Seoul, Korea Realised asset management Key information Key figuresEquity investedUS$16 millionOwnershipMGPA Asia Fund II (50%), co-investor (50%)Acquisition dateQ1 2007Size34,173 sqmRealised dateOctober 2007Gross sales priceUS$166 millionOpportunityForward purchaseKey informationA 19 storey Grade A office tower development located in a prime area of the CBD with a redevelopment planStrong demand with limited supply. Building fully let prior to completion.Sold to a Korean REIT after the building was fully letNet investment level return: IRR 91%, EM 1.6x.
24 Galleria – Chengdu, China Current asset managementKey figuresEquity invested to dateUS$67 millionOwnershipMGPA Asia Fund III (50%), JV partner (50%)Acquisition dateQ3 2011Size (GFA)385,125 sq ft (retail)OpportunityAcquire institutional Grade retail property with a strong rental growth outlookKey informationOccupancy remains unchanged at 100%Leasing performance is above underwritingOngoing discussions with Auchan about the connecting foot bridgeApproximately 7,800 sqm of let (23% of NLA/65 leases) space will expire in second half of 2013, providing good reversionary potential. Majority of these leases are on Levels 2 and 3.
26 Bigger platform with wider coverage Platform expansionA team of over 400 real estate professionals collectivelyCombined pro forma of approximately US$25 billion AUM as of 31 March 2013MGPA US$12 billionBlackRock real estate US$13 billionUS$25 billionThe combined platform will have substantial on the ground investment expertise in 18 offices across 13 countriesBlackRock Real Estate investment officesMGPA investment officesTokyoSydneyHong KongShanghaiBeijingSingaporeKuala LumpurCopenhagenLondonFrankfurtParisLuxembourgWarsawNew YorkBostonSan FranciscoNewport BeachPittsburghBlackRock and MGPA investment officesSource: BlackRock as at 5 June 2013
27 Future initiatives Launch follow on Funds Grow in all 4 quadrants Large core funds in each region & major countryValue add & opportunistic on a regional basisGrow AUM selectively
29 What role does real estate perform in a balanced portfolio Inflation Protection – hedge against inflationRental income highly correlated with inflationReturn enhancer – higher long-term return than and bonds and cashIncome generatorStable rental income from stabilised properties often secured against long term leases CPI indexedDiversification – weak correlation to equities and bondsReal assetsYou can feel and touchLow betaLower long term volatility than equities
30 Real Estate offers many investment styles ReturnOpportunistic:18%-20%PrivatePublicPrivate funds - Core, core plus, value-add, opportunisticREITsListed property fundsEquityValue-add:13%-15%Core plus:10%-12%MezzanineWhole loansCMBSMortgage REITsDebtCore:6%-8%Risk
32 Real Estate in Asia – How it has developed over time PrivatePublic1998201319932004Private funds - Core, core plus, value-add, opportunisticREITs,Listed property fundsEquityMezzanine,Whole loansCMBS,Mortgage REITsDebt
33 Capital inflows for Asia Funds 1995 -2013 Fund raising environment remains challengingDeclining capital raised/fund ratioReal Estate Funds Raised in AsiaSource: Preqin
34 What investors want Stability Certainty Transparency Rule of Law Stable political and economical environmentCertaintyContinuity of policies, regulationsTransparencyAvailability of information for investors making informed investment decisionsRule of LawLaw enforcementTitleLiquidityAn active transaction marketRobust Capital markets
35 What's changed in a post GFC world Initially less capital – This is changingLP’s want more sayDefinitionNew formatsLess feesGreater TransparencyGreater regulatory environmentOperators V AllocatorsFiduciary cultureIncreased communication
36 Where the capital is heading Capital is heading to markets thatwelcome capitalhave liquidityMost active markets in H1 2013Most active cities in H1 2013Source: JLL
37 Institutional grade real estate market size The U.S. still dominant by a very large marginEstimated Size of Real Estate (US$ bn)Estimated Size of Real Estate (US$ bn)Source: Prudential Real Estate Investors
38 Asia – the growth engine Asia Pacific is expected to become the largest real estate market in the world by 2021China will contribute the most to the global growth of CREForecasted Size of Real Estate (US$ tn)Contributions to global growth of CRESource: Prudential Real Estate Investors
39 2013 – 2018 Crystal ball Defined benefit to defined contribution More moneyGreater liquidityMore allocation to alternativesDB/DC Asset SplitPension asset allocationSource: Towers Watson
40 Pension asset development in Asia and CEE (€ bn) 2013 – Crystal ballReal assets – growth trendInfrastructureReal estateTimberAgricultural landEmerging marketRetirement plan (pension)Life insuranceMatching assets with liabilitiesPension asset development in Asia and CEE (€ bn)Source: Allianz Dresdner Economic Research
42 Thailand- in an Asian RE investment context Current GDP 5.3%13-yr forecast average: 4.7%3-yr historical average: 4.4%Population 66.4 billion, growth at 0.3% p.a. ( )22015 projection: 67.4 billionDiversified economySource: CIA World Factbook, 2012 est.1 Source: IHS2 Source: United Nations, Department of Economic and Social Affairs (as of 2010)
43 Thailand- in an Asian RE investment context Asian real estate ex. Japan delivers consistent positive returnsAsian markets 5-year total returnAsian markets 10-year total returnSource: MGPA, JLL REISNote: the returns were calculated based on JLL office total return indices (local currency)China – Beijing & Shanghai
44 Thailand- in an Asian RE investment context Much less inbound institutional investorsThailand is not getting its “fair share”Source: Real Capital Analytics
45 Thailand- plenty of room to grow Thailand has lagged in developing a REIT market, compared to its peers in ASEANIt has also lagged in the size of institutional-grade real estateSource: Asia Pacific Real Estate Association (APREA)Source: Prudential Real Estate InvestorsNote: For charting purpose, property funds are used as a proxy for REITs in Thailand
46 The landscape ahead: Where will capital go? Its all about changeThe rate of changeHow we adapt to changeCapital is agnosticAdapt and grow or atrophy and dieDetroit
47 Development of Real Estate Funds Management in Asia 22 July 2013Development of Real Estate Funds Management in Asia