Stanlib Offshore property presentation
- 1. Offshore Developed Markets Property Overview and Outlook Keillen Ndlovu Head: Listed Property Funds November 2016
- 3. 2 Management meetings, conferences and site visits STANLIB Foreign Property 2012 2013 2014 2015 2016 Hong Kong UK China China Japan UK Romania France Philippines Philippines USA Turkey Thailand Indonesia Zambia Romania Philippines Hong Kong Nigeria Kenya & Mauritius Brazil Indonesia Taiwan Mexico Romania & Serbia Nigeria Hong Kong UK UK Spain Ghana USA USA USA UK Tanzania Germany Australia Romania USA Singapore Romania Egypt China Mexico Slovakia UAE Australia Hungary Singapore Germany Netherlands Slovakia Kenya Netherlands Germany & Austria Germany Botswana Poland Switzerland Brazil Mozambique Kenya Poland & Croatia Zambia Namibia Croatia Mozambique & Namibia Mauritius Morocco Namibia Slovakia Swaziland UAE Developed Markets Emerging Markets Africa
- 4. 3 Mixed relative performance versus Equities Year-to-date Global Listed Property Total Returns (USD) Source: UBS, EPRA/NAREIT Index Total Returns to 04 November 2016 Brexit US elections Rate hike?
- 5. Brexit Impact – UK vs. Continental Europe Share Prices 4 Source: UBS Nov 2016 Based to 100 UK Property Europe Property Brexit Referendum
- 6. Intu’s retail properties in the UK and Spain 5 Source: STANLIB Research June 2016
- 7. Capital & Counties: Covent Garden & Earls Court, London, UK 6 Source: STANLIB Research June 2016
- 8. 7 STANLIB Global Property Fund Exposure Portfolio Benchmark Difference Europe 11.1% 6.2% 4.9% Oceania 7.0% 8.0% -0.9% Hong Kong 2.1% 1.8% 0.4% Singapore 2.1% 2.8% -0.7% Middle East 0.0% 0.0% 0.0% UK 8.0% 4.9% 3.1% Japan 8.1% 9.0% -0.9% Cash 2.8% 0.0% 2.8% North America 58.7% 67.3% -8.6% Total 100.00% 100.00% 0.00% Source: STANLIB, Bloomberg October 2016
- 9. 8 STANLIB Global Property Fund Top Holdings % Portfolio Benchmark Difference Region Sector Prologis 4.16 2.29 1.87 USA Industrial Simon Property Group 7.12 5.29 1.83 USA Retail Deutsche Wohnen 1.62 - 1.62 Germany Residential Public Storage 4.30 2.70 1.59 USA Self Storage SL Green Realty Corp 2.30 0.88 1.42 USA Offices Extra Space Storage 2.12 0.81 1.30 USA Self Storage Life Storage Inc 1.17 - 1.17 USA Self Storage Boston Properties Inc 2.81 1.70 1.11 USA Offices Japan Retail Fund 1.60 0.51 1.08 Japan Retail Vonovia Se 1.08 - 1.08 Germany Residential Source: STANLIB, Bloomberg Sept 2016
- 10. 9 at almost record lows Central London (UK) office vacancies Source: Derwent London plc 2016
- 11. 10 Size of London office job market Remember the size of London vs European Cities Source: Citi October 2016 - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000
- 12. La Defense Offices, Paris, France (Unibail-Rodamco) Source: STANLIB Research April 2016
- 13. 12 Driven by immigration, including refugees German residential continues to be a strong performer Source: JP Morgan Estimates, Bloomberg July 2016 Rental Growth Projections € 3.0% 4.1% 2.7% 2.9% 3.8% 3.0% 0% 1% 1% 2% 2% 3% 3% 4% 4% 5% Vonovia Deutsche Wohnen LEG 2016 Rental Growth 5-year CAGR Rental Growth Forecast German residential property companies
- 14. 13 Current rents and values less than half equilibrium levels German residential replacement costs very high Source: Citi Research November 2016 0 2 4 6 8 10 12 0 500 1,000 1,500 2,000 2,500 3,000 ANN's average capital value € psm (LHS) Average replacement cost per sqm € (RHS)
- 15. 14 Sydney - Rents are growing above trend Australian Office Property Market Source: JLL October 2016
- 16. 15 Sydney - Take-up of space continues to be strong Australian Industrial Property Market Source: JLL October 2016
- 17. USA Property Market – Vacancies are falling 16 Source: REIS Analytics and JP Morgan September 2016
- 18. USA Property Market – Rents are going up 17 Source: REIS Analytics and JP Morgan April 2016
- 19. USA Property Market – Supply is picking up, marginally 18 Source: REIS Analytics and JP Morgan April 2016
- 20. US Property Market – But new space is being absorbed 19 Source: REIS Analytics and JP Morgan September 2016
- 21. 20 Sales Forecast – 2015 to 2018 based to 100 E-Commerce showing strong growth across the world Source: CBRE 2016
- 22. Food, beverage & entertainment now new anchor tenants 21 Source: CBRE and STANLIB Research September 2016 “Experience-driven retail, which includes fine dining, education and family entertainment – all customised to the needs and wants of the local catchment area – will be the key to success”
- 23. Mall of Scandinavia, Stockholm, Sweden (Unibail-Rodamco) Source: STANLIB Research April 2016
- 24. “Experiential” shopping, technology and bigger stores 23 Source: Unibail-Rodamco Results Presentation, February 2016
- 25. Times Square, New York City, USA – Vornado Realty Trust 24 Source: STANLIB Research September2016
- 26. Westfield World Trade Centre, New York City, USA – Westfield Corp 25 Source: STANLIB September 2016
- 27. 26 Despite some weakness in Asia Rents up across all sectors and regions globally Source: CBRE 2016
- 28. Global Property Earnings track Global GDP Growth 27 Global Earnings Per Share Growth Global GDP Growth Source: UBS, MSCI, Thomson Financial Datastream, 31 August 2016
- 29. 28 Listed Property still cheaper than Physical Property generally Global Listed Property Price to Net Asset Value (NAV) Source: UBS , Worldscope, Datastream 31 October 2016 CHEAP EXPENSIVE
- 30. 29 Global Property still cheap relative to Bonds Yield Spread between Listed Property and Bonds Source: BNP Paribus Cadiz , STANLIB Research 30 September 2016 Spread = Global Developed Property Yields less Developed Bond Yields Current 3.08% Average 1.55% CHEAP EXPENSIVE -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Spread(%) FTSE EPRA NAREIT Developed Index and JP Morgan Global Bond Index Spread Spread
- 31. 30 Property now cheaper than sub-prime period Global Property-Bond Yield Ratio Source: BNP Paribus Cadiz , STANLIB Research 30 September 2016 Ratio = Property Yield (EPRA/NAREIT Index) divided by Bond Yields (JP Morgan Index) Average 1.80 Current 4.46 CHEAP EXPENSIVE 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 1-Mar-05 1-Aug-05 1-Jan-06 1-Jun-06 1-Nov-06 1-Apr-07 1-Sep-07 1-Feb-08 1-Jul-08 1-Dec-08 1-May-09 1-Oct-09 1-Mar-10 1-Aug-10 1-Jan-11 1-Jun-11 1-Nov-11 1-Apr-12 1-Sep-12 1-Feb-13 1-Jul-13 1-Dec-13 1-May-14 1-Oct-14 1-Mar-15 1-Aug-15 1-Jan-16 1-Jun-16
- 32. 31 Lower correlation to bonds, above average yield gap/ratios give some comfort* Global Listed Property Outlook (USD) 1 Year Bull Case Base Case Bear Case Total Return (Income and Capital) 14.13% 8.31% 3.09% Assumption 1: US 10 Year Bond Yield (Current 1.80%) 1.50% 2.00% 2.50% Assumption 2: Exit Yield (Current 4.60%) 4.45% 4.70% 4.95% Assumption 3: Earnings Growth 5.70% 5.70% 5.70% 4 Years (Lower for Longer Interest Rates) Bull Case Base Case Bear Case Total Return (Income and Capital) 9.62% 9.00%% 8.40% Assumption 1: US 10 year Bond Yield (Current 1.80%) 2.25% 2.50% 2.75% Assumption 2: Exit Yield (Current 4.60%) 4.83% 4.95% 5.08% Assumption 3: Average Earnings Growth 5.90% 5.90% 5.90% Source: STANLIB Research, UBS, S&P, Bloomberg October 2016 * NB: Hence we apply only a 50% rating change to bond yield movements in our exit yields
- 33. 32 STANLIB Global Property Fund Dividend Yield Source: STANLIB, Bloomberg Nov 2016 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Dividend yield % Portfolio Benchmark
- 34. 33 Property prices have gone up driven by good earnings growth Global Listed Property in a rising interest rate cycle Source: DataStream and UBS August 2016 Grey shading is Fed rate hikes period Equities Property
- 35. Adding Global Listed Property Helps to Improve Returns in Global Balanced Portfolios 34 Source: Cadiz BNP Paribus, Bloomberg and various indices to 30 September 2016 USD 6.3 4.9 7.7 4.8 10.1 6.5 4.9 8.0 5.0 10.4 6.8 4.9 8.3 5.2 10.7 7.1 5.0 8.6 5.4 10.9 0 2 4 6 8 10 12 15 yrs 10 yrs 5 yrs 3 yrs 1 yr AnnualisedReturn(%) Investment Horizon Annualised Returns of Portfolios with Different Weightings in Property 0% Property 5% Property 10% Property 15% Property
- 36. Global Property Provides Stable & Fairly Predictable Income 35Source: UBS Investors Index , S&P Developed REIT Index, Bloomberg January 2016 USD
- 37. 36 Rather than being part of Financials in S&P and MSCI Indices Listed Property now a stand-alone sector Source: Data Stream, UBS August 2016 S&P Developed BMI MSCI World All Cap
- 38. 37 ➜ Better than expected economic growth ➜ Lower for longer interest rates ➜ Wall of money still chasing property ➜ Big gap between property yields and bond yields ➜ Limited supply of properties in most sectors ➜ Property now a standalone sector ➜ Rising global bond yields and interest rates ➜ Lower than expected economic growth ➜ Brexit uncertainty ➜ US political uncertainty UpsideRisk DownsideRisk Global Listed Property Conclusion Developed Markets
- 39. THANK YOU
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