M&G Real Estate.

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1 One of the world s largest property investors focused on generating income through the active management of real estate

2 Delivering strong, long-term income Delivering strong, long-term income is the property investment unit of M&G Investments, the asset management arm of Prudential plc. Our roots go back to 1864 when Prudential, the largest assurance company in the UK, set up an Estates Account to manage its property portfolio. Holborn Bars was one of the first investments, purpose built as the insurer s headquarters. Delivering strong, long-term income 25.9bn ( 31.2bn / $34.7bn) of assets under management 8bn of transactions carried out in 2014/15 71% of acquisitions sourced off-market in assets in 26 countries 110m sq ft of global real estate 245 staff across eight global offices Income is a precious commodity in a world of low interest rates and volatile markets. At we can help investors achieve income goals and meet liabilities by accessing the best investment opportunities and actively managing each and every building to maximise returns. We are one of the top 25 real estate fund managers in the world with 25.9 billion of assets under management. Through our range of funds, segregated mandates, investment partnerships and joint ventures, offers unrivalled access to global real estate. Across the property cycles, we draw on over 150 years of investment experience to identify and exploit market anomalies in order to deliver strong returns. Client needs are at the heart of what we do. As those requirements change and develop, we innovate to offer new strategies, and new deal structures to ensure that we continue to best serve our investors. All data in the brochure is as at 30 June 2016, unless stated otherwise. Assets under management data includes cash

3 A partner with presence and experience A partner with presence and experience 150 year history of investing in UK real estate 22bn of investments across the UK and continental Europe $2.2bn of assets owned in North America 1.5bn invested into UK regional offices in to capitalise on strong rental growth prospects and historically attractive yields $95m of investment in Japanese residential a new sector added in m sq ft area of our largest North American asset Garden State Plaza, New Jersey 367m directly invested in France across 10 assets 51 tenancies in Germany with annual rent roll of 19m 10 years of investing in Asia Pacific, making the longest-running institutional, diversified open-end core real estate strategy in the region A partner with presence and experience 175m investment in prime Madrid office in 2015 marked our debut on the Spanish real estate market 5countries invested in across Asia Pacific (Australia, Hong Kong, Japan, Singapore, South Korea) $2.3bn of assets owned in Asia Pacific Our global offices $793m of direct investments in Australia Source:, 30 June 2016 London Frankfurt Paris Luxembourg Singapore Seoul Tokyo Stockholm 03 04

4 Everything begins with listening Everything begins with listening In our business, everything begins with listening Alex Jeffrey, Chief Executive Our Chief Executive, Alex Jeffrey, explains the M&G Real Estate approach to the market and working with clients. In our business, everything begins with listening. You need to listen to what the market is telling you, listen to what the experience of your team is advising and, first and foremost, listen to what your partners and clients need from real estate investment. They tell us that they are looking to real estate for diversification, strong returns, and, above all, a sustainable long-term income stream. This fits in with our own firm belief that income is the primary driver of long-term asset performance. Sometimes that truth can get lost amid market cycles. If you are not attuned to that central belief then you may miss opportunities. Successful real estate investment is not about following the herd; it s about having the knowledge, experience and ability to execute effectively. Although in recent times our name has changed, that continuity of data and evaluation that began 150 years ago is still in place today and gives us a substantial competitive edge in the market. Allied to that is the unrivalled breadth and depth of our team. They add value through superior stock selection across sectors and geographies, which, combined with pro-active asset management, enables us to maximise returns for our clients. We work with a wide variety of investors and partners, and are always keen to sit down around a table and listen to what they want to achieve. That s where it all starts. We evaluate real estate markets and assets with the belief that periods of mispricing occur and that this is where we can identify and exploit opportunities. However, you can only capitalise on those opportunities by employing disciplined, research-driven, top-down and bottom-up analysis. M&G Real Estate s market knowledge and the ability to analyse performance stretches back many decades and has its origins in our parent group. Alex has been Chief Executive of M&G Real Estate since July 2012 and is also a Director of M&G Investments. He has more than 25 years of experience in international real estate, investment management and finance. Before joining, Alex was a founding shareholder and global Chief Investment Officer of MGPA, the independent private equity real estate investment advisory business

5 Solutions for success Solutions for success Solutions for success Client needs are at the heart of our approach to innovation: we listen to our investors to understand what is important, and use this insight to develop new strategies and deal structures to best meet their evolving needs. Our range of strategies and funds offers access to diversified portfolios of high-quality real estate across the UK, continental Europe and Asia Pacific. For investors who require a more bespoke approach, we can provide greater customisation and control through separate accounts, partnerships and joint ventures. Our capital solutions specialists work closely with client relationship and investment teams globally to provide: Separate accounts: Discretionary and non-discretionary mandates with bespoke investment strategies, tailored to the needs of each individual client (including target returns and risk tolerances). Investment partnerships: Partnerships and club investment programmes, focused on specific locations or sectors. Joint ventures: Select opportunities to invest in specific real estate assets alongside our funds. Spinningfields, Manchester, UK This scheme is an example of how we can match together different parties to facilitate an attractive, large scale investment. The Build-to-Core development features two prime centrally-located office buildings spanning 500,000 sq ft. It was acquired in a 320m joint venture between an existing client and a separate account investor, and has since delivered strong growth in market value. Our client service team has in-depth knowledge of our funds and is committed to providing timely, accurate information. Regular contact with fund managers, through investor days and asset tours, is among the reasons our investors tell us our client service is best-in-class. Phil Nixon, Director, Client Services and Reporting 07 08

6 Integrated and insightful approach Integrated and insightful approach Integrated and insightful approach People are key to our success. Everyone at works together to deliver high performance and serve the long-term needs of our clients. Responsible property investment experts future proof the buildings to meet new regulations and the growing occupier requirements for quality, sustainable space. Asset managers manage each property, drawing on deep sector and local market knowledge to maximise returns through the investment period. Global research team analyses each market to identify the sectors and locales which offer the best value and long-term return prospects. Fund managers apply the research to their portfolios, identifying investment and active management opportunities in-line with their risk and return objectives. Sector specialist investment managers source the assets, leveraging their extensive contacts network to find opportunities on and off the market. In-house transaction team enables us to transact quickly and efficiently, investing clients money in a timely manner. Our investment philosophy is built on exploiting the inefficiencies in the property market to create a strong long-term income stream. Tony Brown, Chief Investment Officer Tony Brown leads s fund managers and investment teams across the global fund range. He has over 25 years real estate investment experience across the UK, Continental Europe and Asia

7 Retail Retail Retail Retail markets across the world are being transformed by the rise of online shopping and the growing buying power of consumers in emerging economies. Our retail investments focus on assets which are best placed to thrive in this changing environment. These include locations offering a high level of convenience and an enhanced shopping experience. 10.5bn invested across shops, retail warehouses and shopping centres Our on-the-ground presence allows us to leverage local networks and knowledge to identify off-market opportunities and perform detailed analysis on each asset. Olivier Vellay, Head of Investments Continental Europe Via Torino, Milan, Italy This off-market forward purchase of a 40,300 sq ft prime retail property on Via Torino in central Milan marks M&G Real Estate s first acquisition in Italy in a decade. As the economic recovery spreads and gains momentum across the Eurozone, Italy is increasingly offering selective opportunities to investors who are interested in core properties and is no longer just the domain of risk-seeking opportunistic buyers

8 Residential Residential Photography is courtesy of Crest Nicholson Residential The residential sector offers investors strong diversification benefits together with defensive characteristics. With the advantages of scale, commercial edge and experience in other property types, institutional investors can meet the demand for high-quality private rented sector homes from a growing population while securing a strong, sustainable income stream. 1.3bn invested in residential Frederick House, Bath Riverside, Bath, UK forward funded this built-for-rent scheme through a pioneering investor-housebuilder partnership with Crest Nicholson. Frederick House, completed in 2016, offers 97 flats flats within walking distance of Bath city centre and train station. The scheme benefits from an on-site manager and community facilities such as a cinema

9 Office Office Office The office sector is performing well due to the global economic recovery. As unemployment falls, companies look to attract the most talented workforce through well-located, prime premises with strong sustainability credentials. Capital values in most of our markets are supported by the lack of supply of top-of-the-range assets. 8.5bn invested in the office sector 400 George Street, Sydney, Australia A centrally-located and wellmaintained office building, which has been part of our Asia Pacific portfolio since 2006 and has enjoyed strong capital value growth

10 Industrial Alternatives Industrial Alternatives The industrial sector offers a strong income stream from a wide diversity of occupier groups. It is also a major beneficiary of the growing demand for logistics facilities which is being driven by online retail and home delivery. Our investments focus on modern properties with good transport links in the UK, northern Europe and Asia Pacific. We also see attractive development opportunities in the sector, and are currently funding 1.7m sq ft of industrial warehouse schemes. 3.2bn invested in industrial The scope of real estate investment is being broadened by the emergence of new alternative sectors. These include leisure, student accommodation, private healthcare, hotels and strategic land. Our research shows that these alternative real estate sectors can offer investors strong returns and important portfolio diversification benefits. By working together with our credit colleagues at M&G Investments we are able to maximise the opportunities on offer through innovative sale-andleaseback structures. Alternatives offer value away from the prime, core commercial market; they also deliver important portfolio diversification benefits. Dermot Kiernan, Fund Manager Heudebouville, France A modern warehouse to the west of Paris, delivering a long-term inflation-linked income stream. This asset benefits from excellent road links and high environmental credentials (rated Very Good under the BREEAM In-Use accreditation). 1.9bn invested in leisure, health, education, hotels and other alternatives 17 18

11 Asset management and occupier engagement Asset management and occupier engagement Compass One, Singapore Asset management and occupier engagement Successful real estate investment is not just about buying and selling the right assets at the right time. has conducted a major refurbishment of the shopping centre, improving the trade and retail mix on offer to better serve Singapore s consumers. We have reformatted the layout to offer smaller, more productive units in order to increase the rental income for our investors. Occupiers are now moving in and the centre is set to re-open in September 2016 (The image represents an artist s view post refurbishment.) To maximise returns, each property must be actively managed to enhance income and minimise voids. We are committed to active management of all our investments through initiatives including: Refurbishing buildings to meet the changing needs of occupiers and higher sustainability requirements Converting the use of existing buildings or land to boost capital values Negotiating lease re-gears, surrenders and extensions with existing tenants We develop individual strategic plans for all our assets and regularly review them to maximise performance throughout the market cycle. By building long-term relationships of trust and respect with our occupier customers, we can better understand their business needs and property requirements, helping to maximise occupancy rates and to generate better performance for our clients. 1,868 new lettings negotiated in ,000 tenants globally 1bn annual rent roll 76% of our occupier customers rate their satisfaction as Good or Excellent By listening to the needs of our occupiers and their customers we can ensure that our assets continue to deliver the best possible returns and also serve the local communities where we invest. Chiang Ling Ng, Asia CEO 19 20

12 Delivering development opportunities Delivering development opportunities Fruit & Wool, London, UK The 320,000 sq ft mixed use speculative development is set to play a key role in helping stimulate the regeneration of the Spitalfields area on the fringes of City of London. The office space has already been leased to a major law firm for 20 years, and practical completion is expected in (Photo is an artist s impression.) Delivering development opportunities Conditions across many markets now offer compelling reasons for funding new, strategic and carefully managed property developments. These include: Relative lack of Grade A stock in many prime markets (a legacy of the financial crisis) Squeezed pricing for prime assets caused by a weight of money targeting a relatively limited selection of properties Opportunity to access secure, property-backed income strips through funding development in emerging sectors such as student housing has a longstanding pedigree as a developer with a focus on Build-to-Core the creation of new, prime assets in strong locations. We minimise risk through hands-on management of developments and by focusing on best-in-class schemes in economically strong locations. Greater occupier demand for new sustainable, top specification space as businesses seek to upgrade workspace to attract and retain the best staff 21 22

13 Responsibility and engagement Responsibility and engagement Responsibility and engagement is committed to sustainable property management through a dedicated Responsible Property Investment (RPI) team which plays an integral role in the investment and asset management process. Well-designed, sustainable buildings have lower running and management costs and are also more appealing to occupiers. By focusing on achieving the top environmental credentials across our new and existing assets we can therefore reduce voids and improve returns. Four of our funds were awarded Green Stars in the 2015 Global Real Estate Sustainability Benchmark (GRESB) Survey, meaning they are amongst the most highly-ranked for sustainability globally. Our energy management work on UK shopping centres has been recognised in the Chartered Institute of Building Services Engineers (CIBSE) Awards, where we were named Carbon Champion takes a leading approach to shaping the RPI agenda across the property industry and is a signatory to the UN Principles for Responsible Investment. Nina Reid is responsible for managing the on-going development and implementation of s RPI strategy and environmental reporting programmes by further embedding sustainability into the investment decision-making process. She oversees a wide range of sustainability projects including energy management, environmental risk management and sustainable investment. Our commitment to sustainability helps to protect property values and enhance returns for our clients Nina Reid, Director: Responsible Property Investment 23 24

14 contacts contacts For more information, please contact: Institutional Business Development: Christopher Andrews Head of Client Relationships and Marketing Lucy Williams Director, Institutional Business UK and Europe +44 (0) Stefan Cornelissen Director, Institutional Business Benelux, Nordics and Switzerland +31 (0) Institutional Client Service: Philip Nixon Director, Client Service and Reporting +44 (0) Tenant relations: Sian Richards Customer Relationship Manager +44 (0) Property Introductions: (If not a Propex member) IMPORTANT INFORMATION: This document is for investment professionals only and should not be passed to anyone else as further distribution might be restricted or illegal in certain jurisdictions. The distribution of this document does not constitute an offer or solicitation. Past performance is not a guide to future performance. The value of investments can fall as well as rise. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and you should ensure you understand the risk profile of the products or services you plan to purchase. This document is issued by M&G Investment Management Limited (except if noted otherwise below). The services and products provided by M&G Investment Management Limited are available only to investors who come within the category of the Professional Client as defined in the Financial Conduct Authority s Handbook. They are not available to individual investors, who should not rely on this communication. Information given in this document has been obtained from, or based upon, sources believed by us to be reliable and accurate although M&G does not accept liability for the accuracy of the contents. M&G does not offer investment advice or make recommendations regarding investments. Opinions are subject to change without notice. In Australia, M&G Investment Management Limited does not hold an Australian financial services licence and is exempt from the requirement to hold one for the financial services it provides. M&G Investment Management Limited is regulated by the Financial Conduct Authority under the laws of the UK which differ from Australian laws. In Singapore, this document is issued by Asia Pte Ltd. This document may not be circulated or distributed, whether directly or indirectly, to persons in Singapore other than (i) an institutional investor pursuant to Section 304 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ) or (ii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. M&G Investments and are business names of M&G Investment Management Limited and are used by other companies within the Prudential Group. M&G Investment Management Limited is registered in England and Wales under numbers with its registered office at Laurence Pountney Hill, London EC4R 0HH. M&G Investment Management Limited is authorised and regulated by the Financial Conduct Authority. Limited is registered in England and Wales under number with its registered office at Laurence Pountney Hill, London EC4R 0HH. Limited forms part of the M&G Group of companies. M&G Investment Management Limited and Limited are indirect subsidiaries of Prudential plc of the United Kingdom. Prudential plc and its affiliated companies constitute one of the world s leading financial services groups and is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America

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