GRAEME NEWELL University of Western Sydney and ANDREW BAUM University of Reading JUNE 2010 THE PERFORMANCE OF PROPERTY COMPANIES ON THE AIM STOCKMARKET.

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Presentation transcript:

GRAEME NEWELL University of Western Sydney and ANDREW BAUM University of Reading JUNE 2010 THE PERFORMANCE OF PROPERTY COMPANIES ON THE AIM STOCKMARKET

PURPOSE OF PAPER Assess significance of AIM stockmarket Assess significance of property companies on AIM stockmarket Assess performance of property companies on AIM stockmarket Assess impact of GFC on AIM property companies

SIGNIFICANCE OF AIM AIM = Alternative Investment Market Purpose: small, growth companies: Benefits Regulatory structure Role of NOMADs IPO ongoing support Other “growth” stockmarkets Europe Asia Americas

SIGNIFICANCE OF AIM June 1995: # = £80 million Dec 2007: # = £98 billion Feb 2010: # = £58 billion Sectors (10): eg: financial, oil & gas, mining Sub-sectors (42): eg: property Distribution < 41% £10M - 38% £50M - 9% £100M - 11% > 1% UK versus international

# AIM:

AIM:

UK (#) and international (#) over

% UK (# companies)

SIGNIFICANCE OF AIM Capital raised IPO further issues £66 billion International exposure (# = 19%) US Canada Australia Cayman Island BRIC mining, property, oil and gas AIM: FTSE AIM All Share AIM 100 sub-sectors (18) property

PREVIOUS AIM Regulatory issues Sub-sector: apparel Finance industry reports NOMADs AIM commissioned (eg: LSE) Property AIM

SIGNIFICANCE OF AIM 1998: # = £0.35 billion Dec 2007: # = £12.9 billion Feb 2010: # = £6.1 billion Distribution < 39% £10M - 33% £50M - 8% £100M - 19% > 2%

# PROPERTY AIM:

£B PROPERTY AIM:

% PROPERTY ( AIM:

% PROPERTY (# AIM:

SIZE OF PROPERTY SECTOR (£) Size of property sector : Feb 2010 £6.1 billion 10.5% (#3 sector) Average property company size: Feb 2010 £68M (versus AIM) £ raised 2007: 23% AIM (#1) 2008: 0.2% AIM 2009: 25% AIM (#1)

TOP AIM 2004: # = : # = 3 (4 th largest sector) 2006: # = 10 (1 st ) 2007: # = 11 (1 st ) 2008: # = 5 (3 rd ) 2009: # = 5 (3 rd )

LEADING PROPERTY AIM Songbird Estates: £1,103M (#2) London & Stamford: £596M (#12) Dolphin Capital: £355M (#22) Vinaland: £266M (#43) Max Property: £261M (#45) Raven Russia: £248M (#49) + 9 > £110M

REGIONAL PROFILE (#) 31% Central/Eastern 22% Western 20% 20% 5% 2%

PROPERTY SECTOR PROFILE Residential Office Retail Industrial/logistics Hotel Diversified Tourism/resort Healthcare Ski resorts Self storage Entertainment Windfarms

METHODOLOGY Aug 2005 – Feb 2010: monthly AIM All Share AIM Property Companies Other UK markets stocks property companies bonds Risk-adjusted returns Portfolio diversification Impact of GFC: sub-periods (2) pre GFC during GFC

AIM PROPERTY SERIES Established: Dec 2008 Start: Aug 2005 FTSE EPRA/NAREIT index # constituents: 13 Total market cap: £1.812 billion Major constituents London & Stamford Dolphin Capital Raven Russia Mirland Conygar China RE Opportunities

AIM SERIES

IMPACT OF GFC Aug 2005 – Aug 2007 Sept 2007 – Feb 2010 Investment dynamics re: GFC

IMPACT OF GFC Returns: 16.96% → % Risk: 17.44% → 39.39% Risk-adjusted returns: #2 → #5 Diversification: 0.74 → 0.89 Comparison to other asset classes

FUTURE OUTLOOK Impact of GFC Capital raising 2009 – 2010 Future prospects Risk factors Operational issues