AREITs vs GREITs What is the best way to play the recovery in real - - PowerPoint PPT Presentation

▶
a reits vs g reits
SMART_READER_LITE
LIVE PREVIEW

AREITs vs GREITs What is the best way to play the recovery in real - - PowerPoint PPT Presentation

Aug 14, 2023 343 likes •601 views

AREITs vs GREITs What is the best way to play the recovery in real estate? What is the best way to play the recovery in real estate? E... L... 1 m... tag AREITs A Real Opportunity The Australian economy is strong

slide-1
SLIDE 1

1

A‐REITs vs G‐REITs

What is the best way to play the recovery in real estate? What is the best way to play the recovery in real estate?

E... L... m... tag

slide-2
SLIDE 2

2

A­REITs – A Real Opportunity

  • The Australian economy is strong
  • A­REITs are again investment

grade

  • Substantially de­risked
  • Lower beta, lower volatility
  • Strong reporting season
  • Australian property markets ­

stable and improving

  • Sector is trading below Net Asset

Value

  • The sector NAV has upside
slide-3
SLIDE 3

3

A­REITs – Substantially De­ Risked

  • Improved debt structures
  • Improving credit markets
  • Valuations have been written

down significantly

  • Valuations are likely to increase
  • Gearing down to 30% (Debt /

Assets)

  • More focus on recurring income
  • Increased transparency
  • Dividend payout ratios moved to

FFO concept (sustainability)

slide-4
SLIDE 4

4

A­REITs ­ good value, structurally improved

Gea ring Estim ated Intere st Cove r Val uer Ca p Rat e Impl ied Cap Rate Impl ied Valu e Decl ine

S&P/ASX 300 A­REIT Index

30% 3.3x 7.0 % 7.6% 8%

PE 2011 Div Yield 2011 Payout ratio Price to NAV S&P/ASX 300 A­REIT Index

12.9 5.9% 76% 5% discou nt

Source: SG Hiscock & Company, 28 March 2011

slide-5
SLIDE 5

5

A­REITs – substantially de­ risked

Result: Substantial improvement in Beta

Source: UBS

slide-6
SLIDE 6

6

Volatility – now back to long term levels

Source: IRESS

slide-7
SLIDE 7

7

Office vacancies ­ nothing like the 90s

(A positive effect of the GFC)

Source: PCA 5 10 15 20 25 30 35 Jun­90 Jun­91 Jun­92 Jun­93 Jun­94 Jun­95 Jun­96 Jun­97 Jun­98 Jun­99 Jun­00 Jun­01 Jun­02 Jun­03 Jun­04 Jun­05 Jun­06 Jun­07 Jun­08 Jun­09 Jun­10 % Vacancy Brisbane Perth Sydney Melbourne

slide-8
SLIDE 8

8

Office ­ positive

  • We remain positive on the office

sector as previously mentioned

– Low vacancy rates – Expected rental growth – Cap rates are higher (better value) than historic – Limited supply coming in the next few years

  • Rent growth 2009­2014 forecast to be

strong in Melbourne and Sydney, with

slide-9
SLIDE 9

9

Westfield update

  • Split into two vehicles

Westfield Group (WDC) (30% of Index):

  • carved off 50% of Aust. & NZ assets into

WRT

  • retained overseas assets but owns no

WRT

  • retained development and management
  • higher growth, lower dividend yield
slide-10
SLIDE 10

“EQT SGH Property Income Fund” – more diversified

Retail Office Indust rial Other Cash

EQT SGH PIF 27%

48% 14% 6% 4%

ASX 300 AREITs

56% 21% 12% 11%

Source: SG Hiscock, 31 Dec 2010

INDEX EQT SGH PIF

Source: SG Hiscock, 3 March 2011

slide-11
SLIDE 11

11

A­REITS summary

Strong reporting season Upgraded earnings Sector trading at discount to

fair valuation

Valuations and earnings will

rise

Appropriate gearing, and

payout ratios

slide-12
SLIDE 12

A‐REITs vs G‐REITs

What is the best way to play the recovery in real estate? What is the best way to play the recovery in real estate?

E... L... m... tag

slide-13
SLIDE 13

13

The Largest Market Cap Real Estate Company

US$44 Billion

slide-14
SLIDE 14

14

Largest Real Estate Companies by Market Capitalization Seven of the Top 25 are US­ Based; Seven are HK­Based

Sources: LaSalle Investment Management, Bloomberg. As of 5/2/11. Only EPRA/NAREIT Global Index qualifying companies included.

Company (HQ) Market Capitalisation ($ Billions) Countries Invested

  • 1. Sun Hung Kai Properties (HK)

43.8 2

  • 2. Simon Property Group (US)

30.7 7

  • 3. Westfield (Australia)

28.2 4

  • 4. Mitsubishi Estate (Japan)

27.0 3

  • 5. Warf Holdings (HK)

21.1 2

  • 6. Henderson Land (HK)

19.8 2

  • 7. Hang Lung Properties (HK)

19.8 2

  • 8. Public Storage (US)

19.6 8

  • 9. Mitsui Fudosan (Japan)

18.4 5

  • 10. Unibail­Rodamco (France)

17.5 13

slide-15
SLIDE 15

15

500 1000 1500 2000 2500 3000 3500 Dec­02 Dec­03 Dec­04 Dec­05 Dec­06 Dec­07 Dec­08 Dec­09 Dec­10

Source: LaSalle Investment Management (Securities), UBS Global Investors Index; Total Return, local currency index values; as of 02/10/2011 2133 (02/10/2011) 3036 (Feb 7

th

) 856 (Mar 9

th

)

Index High – Feb 2007 Index Low－March 2009

Global REIT Index (Long­term Performance History)

Recover to Long­term cycle

slide-16
SLIDE 16

16

Global Real Estate Securities – Market Summary

  • Public real estate securities have

staged a dramatic recovery

–Credit market recovery –Improving economic outlook –Improving outlook for real estate fundamentals

  • Public real estate companies are well

positioned to compete and grow

–Well capitalised –Access to capital on favorable terms

* Returns based on the UBS Global Investors Index (in local currencies) as of January 31, 2011. Past performance does not guarantee future results

slide-17
SLIDE 17

Note

  • This diagram illustrates where Jones Lang LaSalle estimate each

prime office market is within its individual rental cycle as at end of December 2010

  • Markets can move around the clock at different speeds and directions
  • The diagram is a convenient method of comparing the relative position
  • f markets in their rental cycle
  • Their position is not necessarily representative of investment or

development market prospects.

  • Their position refers to Prime Face Rental Values

Global Office Property Clock Q4 2010

Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Americas Asia­Pacific Europe MENA

Abu Dhabi, Mexico City Detroit Dubai Seoul, Chicago, Los Angeles Atlanta, Dallas Madrid Brussels Amsterdam, Rome, New York Frankfurt, Toronto Cairo São Paulo London City, London West End Hong Kong Beijing Washington DC, Singapore Shanghai Sydney Moscow, Stockholm San Francisco, Mumbai, Berlin Delhi, Tokyo, Paris Milan

Source: Jones Lang LaSalle IP, January 2011

Washington DC Milan Hong Kong. Brussels Berlin Mumbai Moscow, Stockholm, Beijing, Shanghai, Boston, Chicago, Los Angeles, New York, San Francisco, Sao Paulo Singapore, Madrid Tokyo Seoul, Mexico City Rental growth slowing Rents falling Rental growth accelerating Rents bottoming
  • ut
Toronto Amsterdam, Hamburg, Munich, Paris, Sydney, London Delhi

Q4 2008

Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Rental Growth Slowing Rents Falling Rental Growth Accelerating Rents Bottoming Out Cairo Mexico City Toronto Toronto Chicago, Los Angeles Chicago, Los Angeles Milan, San Francisco Milan, San Francisco Abu Dhabi Abu Dhabi Amsterdam, Brussels, Frankfurt, Madrid, Seoul Amsterdam, Brussels, Frankfurt, Madrid, Seoul Singapore Singapore Berlin, Paris, Washington DC Berlin, Paris, Washington DC Dubai Dubai Moscow, Delhi Tokyo Mumbai London, São Paulo, Hong Kong, Sydney London, São Paulo, Hong Kong, Sydney Shanghai Shanghai

Q4 2009

slide-18
SLIDE 18

18

Diversification benefits:

G­REITs vs A­REITs

Australian vs Global Listed Property Jan 1990 to Dec 2010

100% G­REITs 100% A­REITs 90/10 80/20 70/30 60/40 50/50 40/60 30/70 20/80 10/90

7.6% 7.8% 8.0% 8.2% 8.4% 8.6% 8.8% 13.0% 13.5% 14.0% 14.5% 15.0% 15.5% 16.0% Standard Deviation of Return (% pa) Return (% pa)

Correlation = 0.63

Data Source: LaSalle, SG Hiscock & Co

slide-19
SLIDE 19

19

Risk­adjusted return comparison

Blend of risks and returns suggests benefits of adding GRES to portfolio

Risk Return Risk­Adj. Returns Global Bonds 3.3% 6.3% 1.92 Global Real Estate Securities 15.8% 8.2% 0.52 Global Equities 14.7% 5.5% 0.37

Note: Risk is measured using standard deviation, returns are annualized. Returns are in local currencies. Past performance does not guarantee future results. Source: UBS Global Investors Index, UBS Global Developers Indices; January 1990 – January 2011.

slide-20
SLIDE 20

20

Source: Investment Property Databank, LaSalle Investment Management As of 3Q 2010

All Commercial Real Estate US$ 34.4 trillion Institutional Public & Private US$ 6.0 trillion Public Real Estate US$ 2.0 trillion

Approximately 6% of total commercial real estate globally is owned by listed companies

Vast potential for securitisation of real estate

slide-21
SLIDE 21

21

Diverse regional exposure in preferred index

Source: UBS Global Investors Index; as of January 31, 2011. Weights may not add due to rounding.

Count ry Market Cap (USD, millions ) Wei ght % # of Co’ s

Australi a 66,890 11.2% 16 Japan 34,714 5.8% 23 Hong Kong 21,519 3.6% 9 Singapo re 20,784 3.5% 17 New Zealand 1,768 0.3% 3 Asia Pacific 145,675 24.4% 68 Contine nt 78,666 13.1% 39 Britain 38,710 6.5% 19 Europe 117,376 19.6% 58 United States 319,909 53.4% 94 Canada 16,571 2.8% 15 North Americ a 336,480 56.1% 109 GLOBE 599,531 100. 0% 235

UBS Global Investors Index

United States Continent Australia Britain Japan Hong Kong Singapore Canada New Zealand

slide-22
SLIDE 22

22

Diverse sector exposure in preferred index

Source: UBS Global Investors Index; as of January 31, 2011. Weights may not add due to rounding. Retail 25% Office 23% Diversified 26% Apartment 18% Industrial 5% Hotel 3%

slide-23
SLIDE 23

23

Why invest in Global Real Estate Securities?

Long term competitive performance Diversification benefits ­ low correlation with other asset classes Second layer of diversification within real estate Risk­adjusted returns complement typical mixed­asset portfolios Large and growing investable universe Diverse regional and sector exposure

slide-24
SLIDE 24

24

Contact Details

Equity Trustees Limited

Brod MacPhail Craig Mills Key Account Manager (NSW, ACT) Key Account Manager (NSW/WA) T: 02 9458 5509 T: 02 9458 5534 M: 0439 207 869 M: 0419 616 216 E: bmacphail@eqt.com.au E:

E... L... m... tag

slide-25
SLIDE 25

25

This presentation has been prepared by Equity Trustees Limited (ABN 46 031 298, AFSL 240975), SG Hiscock & Company (ABN 51 097 263 628, AFSL 240679) and LaSalle Investment Management Securities together ‘the parties’. LaSalle Investment Management Securities ("LIMS") is regulated by the U.S. Securities and Exchange Commission. In providing this presentation, no party has taken into account the investment objectives, financial situation or particular needs of any particular person. This presentation is only provided for information purposes and does not contain investment recommendations nor provide investment advice. Before making an investment decision, you need

E... L... m... tag