EMBRACING CHANGE. Adrian Harrington Head of Funds Management Folkestone February 2018

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1 EMBRACING CHANGE Adrian Harrington Head of Funds Management Folkestone February

2 FOLKESTONE OVERVIEW Folkestone is an ASX listed real estate funds manager, developer and investor providing real estate wealth solutions for private clients, select institutions and our shareholders FUNDS MANAGEMENT Offers listed and unlisted real estate funds to private clients and institutions with over $1.3 billion in funds under management 1 Income, Value-add & Development Funds Listed A-REIT Fund & A-REIT Securities Fund/Mandates Office Retail Enterprise Parks Residential Hotels Seniors Living Government Childcare DIRECT BALANCE SHEET On balance sheet activities focus on value-add, opportunistic (development) & strategic investments Underwriting & Co-investing in Funds Value-add & Development Investments Fees Acquisition, Leasing, Management & Performance Returns & Fees Development Profits, Pref Equity Interest, Mgt Fees 1 As at September

3 Return (%) FOLKESTONE MAXIM A-REIT SECURITIES FUND HIGH CONVICTION A-REIT SECURITIES FUND MANAGER only the best of breed securities listed real estate securities are considered for the Fund Folkestone Maxim A-REIT Securities Fund APN A-REIT Fund Vanguard Index Property A-REIT Securities Fund Ironbark Paladin Property Securities Fund SGH Property Income Fund Zurich Property Securities Fund Vanguard Aus Property Securities ETF Antares Professional Listed Property Fund Folkestone Maxim Risk Vs. Return: 3 Years to 31 December 2017* Vanguard ETF Risk (%) Source: Vanguard * After fees and before tax as at 31 December Please see the PDS dated 11 June 2014 and RG97 Website Notice dated 26 September Past performance is not an indicator of future performance. 3

4 REAL ESTATE INVESTING LANDSCAPE Market forces continue to re-shape the landscape Technology, demographic and social is redefining what we build where we build how be build how we buy, operate, manage and sell assets how we live, work and play within real estate assets & communities 4

5 SOCIAL / DEMOGRAPHICS Sydney and Melbourne growing above trend Population forecasting has consistently fallen short ABS forecast s 1999 vs 2016: Australia m vs 24.2m Sydney m vs 5.0m Melbourne m vs 4.7m Inner city & middle ring population growth stronger than expected Infrastructure has not kept pace Pressure on social services childcare/aged care/schools/medical especially inner & middle ring Greater Sydney Greater Melbourne Greater Brisbane Greater Adelaide Greater Perth Greater Hobart Greater Darwin ACT Total Cities NT -2,696 Demographic Shift Cities Population at 30 June ,005,358 4,641,636 2,349,699 1,326,354 2,066, , , ,294 16,152,336 Net Interstate Migration Change on Previous Year No. % 82, ,770 41,135 9,371 27,428 1,786 1,147 5, , QLD 11,581 Creates social infrastructure real estate investment opportunities WA -7,703 NSW -11,349 SA -6,398 Vic 16,699 5

6 Employment Growth ('000) SOCIAL INFRASTRUCTURE EMPLOYMENT GROWTH Healthcare & Social Assistance Public Administration & Safety Education & Training Employment Growth (%) Strong growth in social infrastructure employment across health, social services, education and government Source: Department of Employment 6

7 SOCIAL INFRASTRUCTURE REAL ESTATE Childcare Student Accommodation Medical/Health Seniors Living Government Data Centre 7

8 DIGITAL AUSTRALIA JAN 2017 A Snapshot Of Australia s Key Digital Statistical Indicators We Are Social Sources: UN, US Census Bureau; InternetWorldStats; Facebook, GSMA Intelligence 8

9 DEVICE USAGE JAN 2017 Percentage of the Adult Population that Currently Use Each Kind of Device We Are Social Sources: Google consumer barometer, January 2017, figures based on responses to a survey 9

10 E-COMMERCE ACTIVITIES JAN 2017 On-Line Purchases We Are Social Sources: Google consumer barometer, January 2017, figures based on responses to a survey 10

11 STAGES OF INDUSTRIAL REVOLUTION Source: CB Insights 11

12 TOP 5 GLOBAL BRANDS 12

13 CONVERGENCE OF TECHNOLOGY Technology Improving At Exponential Rates Processing Power Data Storage Digital Imaging Network Capacity Battery Life Smartphones Drive Connectivity 13

14 BIG DATA / OPEN DATA 14

15 LOCATION INTELLIGENCE IS BUSINESS INTELLIGENCE Where Business Intelligence may find one-dimensional relationships between customer demographics or store and warehouse locations, and perform rudimentary location comparisons, Location Intelligence enables much deeper dives into the relationships between geography and customer data. 80% of all business data contains a location component, it is critical to understand how location affects business. In the combination of geographic and dynamic data, visualised on a map, location intelligence reveals characteristics that may have been otherwise obscured in a spreadsheet environment. Source: Pitney Bowers 15

16 THE SMART CITY OF THE FUTURE Cities are complex ecosystems of activity set within a matrix of physical infrastructure, business and human interaction Smart cities are about linking human capital and business (networks of people, businesses and communities) with digital technology 16

17 SMART CITIES EMBRACING TECHNOLOGY San Francisco SF Park (parking app) Hong Kong Octopus Card (more than a travel card an ID and payment card) Melbourne Participate Melbourne (community engagement portal) Boston Boston Bump (pothole app) 17

18 SMART HOMES 18

19 TECHNOLOGY CHANGING FACE OF RETAIL Challenges the economics of established business models Forces businesses to change their business models, often to their detriment Operates a broad ecosystem of products and services and doesn t only make money selling its own products Amazon in Australia, it is not going to be as easy as the US Most of the retailers there rolled over but they won t here. Gerry Harvey: Harvey Norman News.com.au 26/04/17 "We have been expecting this for a long time. We have a healthy sense of paranoia. We are not complacent around the competitive risks." Rob Scott: Next CEO of Wesfamers, SMH 20/04/17 19

20 SHOPPING CENTRES BECOMING COMMUNITY CENTRES Shopping centres need not be just a place of selling, but a place where the retail space is complemented by entertainment, cultural and community services. They need to become a community gathering place where people can shop, play and even work and live. In other words a community centre. 20

21 RETAIL APPS TAKE SHOPPING Body Measurement Shopping Centre Offers While You Shop App Track Shoppers Moving Around a Centre Car Parking Reminder App 21

22 COWORKING Coworking The practice of working alongside people with whom one shares a workplace but not necessarily an organisational affiliation Coworking spaces Places shared by people from different organisations, often freelancers, who work alongside each other, share infrastructure and often engage in joint activities associated with learning, innovation and collaboration. Benefits Of Coworking 91% Gain business insights from others 74% Experience greater productivity 80% Achieve business growth 70% Become physically healthier Source: The University of Sydney / Sydney Business Insights 22

23 WeWork THE 6th MOST VALUABLE STARTUP IN THE WORLD WeWork Valuation History: First Funding to Present Source: CB Insights 23

24 OFFICE TECH LOCATING DOWNTOWN Martin Place Becomes Silicon Place Former Westpac Chambers Source: ARF / Folkestone 24

25 LOGISTICS REVOLUTIONING INDUSTRIAL PROPERTY Driving a Shift Towards Super-Sized Distribution Facilities in Key Locations 25

26 LOGISTICS - LAST MILE DELIVERY 26

27 SENIORS LIVING - TELEMEDICINE Telemedicine is the use of advanced telecommunication technologies to exchange health information and provide health care services across geographic, time, social and cultural barriers Facilities Ageing in Place and Consumer Directed Care Seniors Living Communities/ Retirement Villages 27

28 GEORGE STREET, SYDNEY 1900 vs Where is the Car? 1915 Where is the Horse? 28

29 TRANSPORT DRIVERLESS CARS Australian Driverless Vehicle Initiative (ADVI) Our vision is that the ADVI will accelerate the sage and successful introduction of driverless vehicles onto Australian roads ADVI is a collaboration between government, industry and academia Bosch developed Australia s first driverless car 29

30 EMBRACING CHANGE FOLKESTONE MAXIM PORTFOLIO WEIGHTING Portfolio Weighting: As at December 2017 Real Estate Developers & Managers Social Infrastructure A- REITs Portfolio (%) Index 1 (%) Relative Weighting Industrial A-REITs Other Underweight Retail but Overweight Industrial FUND THEMATICS Specialised A-REITs Office A-REITs Retail A-REITs Diversified A-REITs Cash TOTAL Underweight Office and Diversified but Overweight Social Infrastructure & Specialised A-REITs 1 S&P/ASX 300 A-REIT Index 30

31 FOLKESTONE REAL ESTATE IQ Real Estate IQ provides our latest thinking on real estate to assist you in navigating the world of real estate markets and issues, to make more informed investment decisions. Visit: 31

32 DIRECTORY FOLKESTONE MAXIM LIMITED INDEPENDENT BOARD OF DIRECTORS INVESTOR RELATIONS RESPONSIBLE ENTITY Website: ABN: AFSL: Level 10, 60 Carrington Street Sydney, NSW 2000 T: Greg Paramor Chairman Mark Baillie Non-Executive Director Winston Sammut Managing Director Lula Liossi Telephone: lliossi@folkestone.com.au REGISTRY Boardroom Pty Limited P.O. Box R67, Royal Exchange NSW 1223 One Managed Investment Funds Limited P.O Box R1471, Royal Exchange NSW 1223 Telephone: enquiries@oneinvestment.com.au COMPANY SECRETARY Scott Martin Telephone: Telephone: or enquiries@boardroomlimited.com.au Disclaimer: Investors should consider the product disclosure statement (PDS) issued by the Responsible Entity, One Managed Investment Funds Limited (ABN ) (AFSL ) (OMIFL) is the responsible entity of the Folkestone Maxim A-REIT Securities Fund ARSN (Fund). The information contained in this document was not prepared by OMIFL but was prepared by other parties. While OMIFL has no reason to believe that the information is inaccurate, the truth or accuracy of the information contained therein cannot be warranted or guaranteed. Anyone reading this report must obtain and rely upon their own independent advice and inquiries. Investors should consider the Product Disclosure Statement ( PDS ) dated 11 June 2014 and RG97 Website Notice dated 26 September 2017 issued by OMIFL before making any decision regarding the Fund. The PDS contains important information about investing in the Fund and it is important investors obtain and read a copy of the PDS before making a decision about whether to acquire, continue to hold or dispose of units in the Fund. You should also consult a licensed financial adviser before making an investment decision in relation to the Fund. A copy of the PDS may be obtained from or Folkestone Maxim Asset Management Limited (ABN ) (AFSL ) is the investment manager of the Fund (Folkestone Maxim). Neither OMIFL nor Folkestone Maxim guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. Past performance is not a reliable indicator of future performance. While every care has been taken in the preparation of this document, Folkestone Maxim makes no representation or warranty as to the accuracy or completeness of any statement in it including without limitation, any forecasts. This fact sheet has been prepared for the purpose of providing general information only, without taking account of any particular investor s objectives, financial situation or needs. Investors should, before making any investment decisions, consider the appropriateness of the information in this fact sheet, and seek professional advice, having to their objectives, financial situation and needs. Information in this fact sheet is current as at 31 October