ESTATE SECURITIES FUND INVESTOR PRESENTATION June 2020 Table of - - PowerPoint PPT Presentation
DRAFT FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND INVESTOR PRESENTATION June 2020 Table of Contents 1 Introduction to Foresight 4 2 Investment Philosophy: Sustainable Real Estate 11 3 Investment Strategy and Process 17 4
DRAFT June 2020 FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND
INVESTOR PRESENTATION
FP Foresight Sustainable Real Estate Securities Fund |
Table of Contents
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1 Introduction to Foresight 4 2 Investment Philosophy: Sustainable Real Estate 11 3 Investment Strategy and Process 17 4 The Portfolio 22
FP Foresight Sustainable Real Estate Securities Fund |
OEICs
This has been approved as a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Foresight Group LLP (“Foresight Group”). Foresight Group is authorised and regulated by the Financial Conduct Authority (FRN 198020). Its registered office is The Shard, London SE1 9SG. FundRock Partners Limited is the authorised corporate director of the Fund and Foresight Group is the investment manager. We recommend investors seek professional advice before deciding to invest. Investors must read the Fund Prospectus (“Prospectus”) and Key Investor Information Document (“KIID”), dated June 2020, before making an investment decision. The opportunity described in this document may not be suitable for all investors. Attention should be paid to the risk factors set out in the Prospectus. Words and expressions defined in the Prospectus shall have the same meaning in this Investor Factsheet. Foresight Group does not offer investment or tax advice. The value of an investment in the Fund, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future
and should not be seen as advice or a recommendation. There are a number of other risks connected to an investment in the Fund, including (but not limited to) counterparty risk, liquidity risk and volatility. These risks are explained in the Fund Prospectus. The Fund focuses on the global listed real estate sector only and will have a less diverse portfolio than the average OEIC. We respect your privacy and are committed to protecting your personal data. If you would like to find out more about the measures we take in processing your personal information, please refer to our privacy policy, which can be found at https://www.foresightgroup.eu/privacy-cookies/.
Capital is at risk.
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FP Foresight Sustainable Real Estate Securities Fund |
Introduction to Foresight
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SECTION 1
FP Foresight Sustainable Real Estate Securities Fund |
Foresight Group Overview
A leading sustainability-driven global infrastructure and private equity manager
As at 31 March 2020
£4.7bn
assets under management
£4.1bn
Infrastructure AUM
£571m
Foresight Capital Management AUM
12
continents
228
group staff globally
ESG
sustainability-led investments
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FP Foresight Sustainable Real Estate Securities Fund | 6 ▪ The Foresight Capital Management team have been managing OEICs that invest in real assets since 2017. ▪ The team have a specialist and wide ranging knowledge of the listed real asset market, with investments in infrastructure, renewable energy and property. Real Asset Investment Specialists ▪ Foresight Capital Management are significant investors in companies that provide a social or environmental benefit. This is a must for all investments. ▪ The Foresight Sustainable Real Estate Securities Fund has included its Sustainable Investment Criteria into the Fund’s investment policy. Investment Company Experience ▪ A real asset perspective to equity investing rather than an equity perspective to real asset investing. ▪ The team are focused on the quality of both the asset and its future cash flows. Sustainability Lead Investment Team ▪ The Fund’s portfolios are truly global, and the management team have visited companies in Europe, North America and Asia Pacific. ▪ The team are proactive in engaging with companies, both to assess their credentials and to encourage improvements to their levels of sustainability.
Active Mangers With Global Reach Listed Real Asset Investment Specialists Leaders in Sustainable Investing An Asset First Approach
Specialists in listed real assets
Foresight Capital Management
FP Foresight Sustainable Real Estate Securities Fund | 7
NAV £502m Total Return +25.8% Trailing Yield 5.30%
As at 8 June 2020, performance since inception
Proven track record managing portfolios of listed real assets
Foresight Capital Management
NAV £173m Total Return +20.4% Trailing Yield 4.1%
FP Foresight Sustainable Real Estate Securities Fund |
Foresight Capital Management
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The Fund is managed by a team of listed real asset investment specialists and material investment decisions are approved by the Fund’s Investment Committee.
Fund Managers Investment Committee Mark Brennan Lead Fund Manager Nick Scullion Co-Manager Eric Bright Investment Manager David Hughes Chief Investment Officer Bernard Fairman Chairman and Founding Partner Nigel Aitchison Head of Infrastructure Philip Stephens Independent Director
Mark is the Lead Fund Manager responsible for investment decisions. He is also the Lead Fund Manager for the FP Foresight UK Infrastructure Income Fund, where he has a successful track record of investing in
Foresight in 2017, Mark held a range of roles within the alternative investment space, including at Aberdeen Standard Investments and the UK Green Investment Bank. Nick is the Head of Foresight Capital Management and is responsible for fund management and growth of Foresight's open-ended fund
manager of the FP Foresight Global Real Infrastructure
Group in 2017 and has nine years of experience in fund management, capital markets and corporate finance. . Eric Bright joined Foresight Group in 2019 and currently works as an Investment
managing a fund and discretionary portfolios at Reyker Securities. He is responsible for fund management in Foresight’s
Eric is a CFA Charterholder. David joined Foresight in 2004 and is a member of the firm's Executive Committee and has
experience having started his career in 1974 at 3i where he was responsible for advising public and private companies
acquisitions, disposals, mergers and capital raising. Bernard formed Foresight Group in 1984. He has managed multiple portfolios through to IPO or trade sale. Responsible for strategic direction and management of Foresight through organic growth and acquisition to leading positions in the VCT and UK environmental infrastructure markets. Nigel Aitchison joined Foresight Group in 2009 and is a Partner and Head of Infrastructure based in the London office. A member of the firm's Executive Committee, he has over 30 years of experience covering specific areas such as waste management, project finance and fund management. Philip retired from the City after nearly 40 years working in UK Corporate Finance for various financial institutions including Lazard, Chase Manhattan and UBS where he was head of UK Corporate
served on the boards of many companies as a non-executive Director mostly as Chairman.
Investment Team
FP Foresight Sustainable Real Estate Securities Fund |
FP Foresight Sustainable Real Estate Securities Fund
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Fund Features FP Foresight Sustainable Real Estate Securities Fund Strategy Objective To provide an attractive income yield, that can be either distributed or reinvested, by investing in a global portfolio of sustainable listed real estate companies. Performance Objective The Fund aims to provide an income yield of 4% net of fees with a secondary objective to achieve capital growth over a rolling 5 year period. Fund Structure FCA authorised UCITS. Investment Universe Real estate companies, which will primarily be structured as a Real Estate Investment Trust “REIT”, who are listed on major global stock exchanges. Each company must be a viable long term investment and meet the Fund’s Sustainable Investment Criteria. Investment Style A real asset approach to equity investing rather than an equity approach to real asset investing. ESG Sustainability is fully integrated into the investment process and the Fund’s Investment Policy. All investments must meet the Sustainable Investment Criteria. Investment Basis Long-only. Number of Stocks 20-35 listed real estate companies. Currency Management GBP unhedged share class launching June 2020. Hedged share classes pending investor demand. Inception 15 June 2020.
Fund features
FP Foresight Sustainable Real Estate Securities Fund |
FP Foresight Sustainable Real Estate Securities Fund
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1 2 3 4 5 A resilient yield in a low rate environment
The Fund will target a 4% income yield, which will be generated by property sectors enjoying tailwinds. In a low and uncertain income environment, this can act a stable source of income for investors who are reliant on income.
A highly liquid route to real estate exposure
The Fund will invest solely into listed Real Estate Investment Trusts (and similar). This means that liquidity is subject to being able to trade the shares on a stock exchange, as with an equity fund, and not on buying or selling physical properties, which can take weeks or months.
Specialist and award winning fund management team
The Fund is managed by an award-winning fund management team, with a multi year track record of investing in listed real estate.
Contributing directly to a sustainable future
We will invest only in companies that deliver a net social or environmental benefit, meet the ten principles of the UN Global Compact and meet one of four pre-defined UN Sustainable Development Goals.
Diversified global exposure to growth sectors
The Fund will provide investors with a globally diversified exposure to real estate, investing in companies with assets in Europe, North America and developed Asia. The portfolio will focus on growth sectors such as logistics, medical properties, social housing and data centres.
Five reasons to invest
FP Foresight Sustainable Real Estate Securities Fund |
Investment Philosophy: Sustainable Real Estate
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SECTION 2
FP Foresight Sustainable Real Estate Securities Fund |
“Sustainability in the real estate sector is a prominent issue as the industry has a significant impact on the environment; buildings are responsible for 40% of energy consumption and 36% of CO2 emissions in the EU.”
European Public Real Estate Association |
Real Estate houses the economy, and so an approach to sustainability that fails to address the energy consumption, carbon emissions and wider implications of real estate is destined to fail. Modern day Real Estate is progressing, integrating new technology and increasing efficiency to improve standards across the board. Aside from environmental factors, Sustainable Real Estate can have a significant positive impact on society. Through the allocation of capital, ordinary investors can play a vital role in supporting those companies that are having the biggest impact on a more sustainable future for our communities and the planet.
Sustainable Real Estate
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FP Foresight Sustainable Real Estate Securities Fund |
Introduction to Listed Real Estate
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total capitalisation of the global listed REIT market
individual REITs Since its establishment in the 1960s, the listed real estate sector has become a mature and well established asset class within public markets
REITs
Source: Bloomberg & Nareit
FP Foresight Sustainable Real Estate Securities Fund |
Benefits of Listed Real Estate
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No liquidity mis-match Resilient sectors Diversification Shares in REITs are daily traded like any other public company, and can be bought and sold at any point throughout the trading day. This fully aligns the daily liquidity of the Fund’s structure with the liquidity of the assets it holds. Through investing in a portfolio of REITs that each hold large numbers of properties, the Fund is able to provide exposure to thousands of individual assets diversified across sectors and geographies . The Fund will invest into sectors of the property market that are well positioned to take advantage of modern tailwinds, such as the growth
The Fund is designed to provide investors with a liquid exposure to real estate. This is achieved by the Fund investing exclusively into the publicly traded shares of listed REITs, rather than directly into bricks and mortar. This approach provides several core advantages:
As a % traded of market capitalization, UK REITs are more liquid than UK equities, with Global REITs 4% more liquid than Global Equities*
Source: Bloomberg. Average 6 month daily traded volumes used. UK Equities = FTSE All Share Index & UK REITs = FTSE EPRA/NAREIT UK Index. Global Equities = FTSE All World Index & Global REITs = FTSE NAREIT Developed Index.
FP Foresight Sustainable Real Estate Securities Fund |
Model Portfolio Back-Testing
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Back-tested total returns of the Model Portfolio over the five years to June 2020 indicate the attractiveness of sustainable real estate investments. Since June 2015, the back-tested Model Portfolio has returned 14.91% p.a. vs 10.29% p.a. for global equities.
Source: Bloomberg. Returns to June 2020 in GBP. Total return index used.
Model Portfolio Performance % Total Return
20 40 60 80 100 120 140 05/06/2015 05/12/2015 05/06/2016 05/12/2016 05/06/2017 05/12/2017 05/06/2018 05/12/2018 05/06/2019 05/12/2019 FP Foresight Sustainable Real Estate Securities Fund FTSE All-World Index
FP Foresight Sustainable Real Estate Securities Fund |
Recovery Potential of Listed Real Estate
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REITs have historically performed strongly following period of market turmoil. Using the equity market low in 2009 following the Global Financial Crisis, the below charts display the outperformance of REITs vs equities in both the UK and the globally. REITs perform well in uncertain times.
REITs have historically outperformed equities after market falls
Source: Bloomberg. UK Equities = FTSE All Share TR Index & UK REITs = FTSE EPRA/NAREIT UK TR Index. Global Equities = FTSE All World TR Index & Global REITs = FTSE NAREIT Developed TR Index. All figures in GBP.
22% 30% UK REITs UK Equities Global Equities 24% Global REITs 34%
3 Year Annualised Return %
UK REITs UK Equities Global REITs Global Equities 19% UK REITs Global REITs UK Equities Global Equities 28% 23% 18%
5 Year Annualised Return %
FP Foresight Sustainable Real Estate Securities Fund |
Investment Strategy and Process
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SECTION 3
FP Foresight Sustainable Real Estate Securities Fund |
Portfolio Construction
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ESG Markers All listed companies that were tagged within Bloomberg as being classified as REITs on a global basis. This screening generated 806 companies with a combined market capitalisation of £1.3tn. All companies with a market capitalisation less than £300m and/or volatility of more than 35% were removed. This left 414 companies. All companies listed in non-OECD countries were removed. This left 706 companies. Finally, all remaining companies were screened using ESG markers, such as Sustainalytics, and the UN Sustainable Development Goals. This left an investable universe of 86 companies.
806 86 706 414
A total of 86 listed REITs were identified, with a combined market capitalisation of £637bn.
Target screening of the REIT universe identified an attractive opportunity set
Market Cap and Volatility Listing location REIT Universe
86 Launch Portfolio
FP Foresight Sustainable Real Estate Securities Fund |
Foresight Capital Management Investment Process
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An active approach to company engagement
A Focus on Engagement
We believe that engagement is a vital part of our active management investment process. Meeting with the management teams of potential and current companies allows for a deeper understand of how the business operates and their strategy.
Global Reach
The Fund will hold assets in multiple geographies in order to provide a diversified portfolio. The Fund management team are proactive in their approach to engagement and have visited companies throughout North America, Europe and Asia.
Strategy Assessment
The company’s strategy is assessed to ensure that the company has the ability to meet the portfolio’s investment objective. We are long term investors, and so the company must represent a viable long term strategy which can translate into returns for the Fund’s portfolio.
FP Foresight Sustainable Real Estate Securities Fund |
Foresight Capital Management Investment Process
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An asset up approach to investment due diligence Assessment of the underlying assets
The underlying assets that make up the Company’s portfolio are analysed in
future cash flows.
Review of the REIT portfolio’s composition
The Company’s wider portfolio is reviewed to assess the core drivers of the Company’s risk and return profile.
Evaluation of the Company’s stock market valuation
The prevailing valuation for the Company is evaluated to ensure an optimal entry point and that fair value is achieved.
FP Foresight Sustainable Real Estate Securities Fund |
Foresight Capital Management Investment Process
Assessment against the Sustainable Investment Criteria
Stage 2: UN Sustainable Development Goals Stage 1: UN Global Compact Stage 3: Qualitative Assessment
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1 3 2
In order to be included with the portfolio, all investments must provide a net social or environmental benefit and meet the Fund’s 3 part Sustainable Investment Criteria.
On the basis of detailed due diligence and discussion with management, does the fund management team believe that sustainability is a core and long-term focus of the company’s portfolio and strategy? The company must make a demonstrable impact against one of four Sustainable Development Goals. The company’s strategy, economic activity and fundamental purpose must be consistent with all of the 10 UN Global Compact Principles.
FP Foresight Sustainable Real Estate Securities Fund |
The Portfolio
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SECTION 4
FP Foresight Sustainable Real Estate Securities Fund |
Portfolio Sector Breakdown
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The Fund has exposures to a variety of different sectors, proving multiple sources of returns
30.00% 28.50% 8.25% 7.50% 6.50% 6.00% 5.00% 4.75% 3.00% Data Centres 8.25% Communications 3.00% Logistics 30.00% Healthcare & Social Housing 28.50% Forestry 6.50% Self Storage 7.50% Offices 6.00% Commercial 5.00% Government Property 4.75%
FP Foresight Sustainable Real Estate Securities Fund |
Geographic Asset Breakdown
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The Fund is globally diversified, providing access to leading real estate across the globe
US 45.50% Australia 3.00% Japan 6.00% UK 45.00%
Asset % of Portfolio (listing location)
Europe 4.15% US 43.67% Australia 1.61% Japan 6.34% Hong Kong 0.51% UK 43.19%
Asset % of Portfolio (asset location)
FP Foresight Sustainable Real Estate Securities Fund |
Top 10 Portfolio Holdings
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Company Listing Location Sector Target Allocation1
Civitas Social Housing UK Healthcare & Social Housing 9.75% Tritax Big Box UK Logistics 9.75% Medical Properties Trust US Healthcare & Social Housing 7.00% Physicians Realty Trust US Healthcare & Social Housing 7.00% Supermarket Income UK Commercial 5.00% LondonMetric Property UK Logistics 4.75% Office Properties Income Trust US Government Property 4.75% Primary Health Properties UK Healthcare & Social Housing 4.75% PotlatchDeltic US Forestry 4.50% CoreSite US Data Centres 4.25%
The top 10 portfolio holdings contains exposures to multiple key sectors
As at 15 June 2020.
FP Foresight Sustainable Real Estate Securities Fund |
Company name
Company Overview Investment Characteristics Sustainability Review
UK-listed REIT focused on specialist housing for the supported living sector Properties cater for individuals with long-term, non-acute physical and mental impairments and disabilities Listed in 2016, with current market capitalisation of £665m Portfolio of 599 properties and over 4,000 individual tenants Civitas receive rent from Housing Associations and Care Providers The funding they receive comes directly from Local Authorities, who themselves are funded by the UK Welfare Budget This 100% central government funding provides very robust income security for Civitas and provides a long term market for the high quality, specialist supported living properties that they develop and lease At the current share price, will deliver a 5% yield
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Very high impact on social outcomes for individuals and communities Clear alignment with SDG 3: Good Health and Wellbeing Explicit corporate objectives:
England and Wales, particularly for vulnerable people.
Civitas Social Housing
FP Foresight Sustainable Real Estate Securities Fund |
Company name
Company Overview Investment Characteristics Sustainability Review
£2bn UK listed REIT that invests solely into Big Box logistics assets High quality tenants, over 80% of which are listed on major stock exchanges Big Box warehouses are extremely large, strategically located and form a key part of a company’s supply chain Over 50% feature robotics and automation Modern and purpose built asset base High quality tenant base, with Amazon 13% of the rent roll Demand for quality assets remains strong Portfolio well positioned to enjoy e-commerce tailwind At the current price, the dividend yield is over 4% with potential for growth
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All assets are subject to a Green Property Review 87% of portfolio now have an EPC of A-C All new developments have a BREEAM rating of at least very good, with some rated excellent The modern portfolio means that assets are energy efficient and are able to facilitate modern automation Directly aligns with SDG 9: Industries, innovation & infrastructure
Tritax Big Box
FP Foresight Sustainable Real Estate Securities Fund |
FP Foresight Sustainable Real Estate Securities Fund
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Fund Name: FP Foresight Sustainable Real Estate Securities Fund Fund Structure: A sub-fund of FP Foresight OEIC, a UK open-ended investment company (“OEIC”) Regulatory Status: FCA Authorised UCITS IA Sector: Property Other Unit Type: Income & Accumulation Currency: GBP (unhedged) Minimum Investment: Lump Sum: £1,000 + subsequent increments of £500 Regular Savings: £100 per month Ongoing Charge: 0.85% Transaction Costs: Please refer to your platform or the latest fund EMT Fund Price At Launch: 100p Expected Return: An income yield of 4% with the potential for capital growth over a rolling 5 year period. Distributions: Income: Quarterly from 31 October 2020 (Jan, Apr, Jul, Oct) Accumulation: Reinvested Authorised Corporate Director (ACD): FundRock Partners Limited Investment Manager and Distributor: Foresight Group Launch Date: 15 June 2020 Final Accounting Date: 31st May Interim Accounting Dates: Last day of February; 31st August and 30th November
Key Features
FP Foresight Sustainable Real Estate Securities Fund |
Appendices
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FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND
FP Foresight Sustainable Real Estate Securities Fund |
Ten Principles of the UN Global Compact
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By incorporating Global Compact principles into strategies and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet, but also setting the stage for long-term success.
Human Rights 1. Businesses should support and respect the protection of internationally proclaimed human rights; and 2. Business should ensure they are not complicit in human rights abuses. Labour 3. Businesses should uphold freedom of association and the effective recognition of the right to collective bargaining; 4. The elimination of all forms of forced and compulsory labour; 5. The effective abolition of child labour; and 6. The elimination of discrimination in respect of employment and occupation. Environment 7. Businesses should support a precautionary approach to environmental challenges; 8. Undertake initiatives to promote greater environmental responsibility; and 9. Encourage the development and diffusion of environmentally friendly technologies Anti-Corruption
FP Foresight Sustainable Real Estate Securities Fund |
Listed Real Estate as a Recovery Strategy
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REITs have historically performed strongly following periods of market turmoil. Using the equity market low in 2002 following the Dot Com Bubble, the below charts display the outperformance of REITs vs equities in both the UK and the globally. REITs perform well in uncertain times.
REITs have historically outperformed equities after market falls
Source: Bloomberg. UK Equities = FTSE All Share TR Index & UK REITs = FTSE EPRA/NAREIT UK TR Index. Global Equities = FTSE All World TR Index & Global REITs = FTSE NAREIT Developed TR Index. All figures in GBP.
18% UK REITs 18% 28% UK Equities 26% Global Equities Global REITs
3 Year Annualised Return %
UK REITs UK Equities Global REITs Global Equities 21% UK Equities UK REITs Global REITs 17% 23% Global Equities 17%
5 Year Annualised Return %
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Logistics
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
investment
years
automation
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Data Centres & Communications
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
defensive industries
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Offices & Government Property
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
credentials
tenants
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Healthcare & Social Housing
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
linked
support
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Self Storage
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
businesses
utilise storage
US
well in a recessions
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Forestry
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
governments, and so has been able to continue
scale is not easy to achieve
FP Foresight Sustainable Real Estate Securities Fund |
Sector Overview: Commercial
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Real Estate Characteristics Typical Tenants COVID-19/recession resilience Investment rationale
industrial, manufacturing, trade stores and supermarkets
there have been strong levels of rent collection
rate
For further information, please contact: Foresight Group LLP The Shard 32 London Bridge Street London SE1 9SG United Kingdom t: +44 (0)20 3667 8100 e: info@foresightgroup.eu w: foresightgroup.eu