CCIM Real Estate Investment Forum

Transcription

1 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 1/16 CCIM Real Estate Investment Forum The Road Ahead 22-January-2009

2 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 2/16 Overview of Credit Crisis Events A Fluid Landscape 130% 07-Sep-08 Conservatorship 21-Sep-08 Granted bank holding company status 03-Oct-08 Revised Emergency Economic Stabilization Act ımplemented by the US Government 16-Jan-09 Bank of America announces a $15.3bn loss at Merrill Lynch unit 120% 110% 100% 90% 80% 18-Sep Sep-08 ECB, Fed and others inject billions into global markets Files for bankruptcy 25-Sep-08 Sold to JPMorgan 03-Oct-08 Wells Fargo and Citigroup compete to acquire Wachovia 14-Oct Oct-08 Buys equity in some of the major UK banks TARP purchases 1st nine investments FDIC announces Term Loan Guarantee Program 13-Oct-08 Mitsubishi closes $9bn investment in Morgan Stanley Acquired by PNC 11-Dec Nov-08 Becomes a bank holding company Federal agents arrest Bernard Madoff after Madoff confesses ponzi scheme to sons 12-Jan-09 U.S. Treasury to provide $20bn in fresh aid and guarantee $118bn of assets Rumors of a JV of brokerage units British government takes 43% stake in "Super Bank" Acquired by Bank of America 70% Bailed out by the U.S. Federal Reserve (33.5%) 60% Merges with Lloyds TSB in an emergency rescue 50% 40% 30% 29-Sep-08 Nationalized. Santander buys branches and deposits Bailed out by German Government Bailed out by the governments of the Netherlands, Belgium and Luxembourg Iceland's third largest bank nationalized Bailed out by France, Belgium and Luxembourg 27-Oct Oct-08 Receives 3.5bn of equity from the Belgian government $60bn fund to hold toxic assets. Common / convert capital injections Raıses 10bn non-dilutive Core Tier 1 through Dutch government Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 S&P 500 Index REIT Index 19-Dec-08 $17.4bn is approved to bail out U.S. automakers 24-Dec-08 Federal Reserve grants GMAC bank holding status (46.2%) 2

3 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 3/16 How Did We Get Here? The Great Leverage Unwind The Positive Feedback Loop : What Got the Markets in Trouble The Negative Feedback Loop : What the Market is Contending with Today 340% 320% 300% 280% 260% 240% Indexed Price 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% Jan-2002 Jan-2003 Jan-2004 Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 S&P 500 Index REIT Index 3

4 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 4/16 Historical CMBS Issuance 2008 Issuance Declined 95% ($ in billions) 250 US CMBS Issuance, $ $202.7 $168.7 Issuance (billions) $93.3 $67.1 $ $46.9 $52.1 $ Source: Commercial Mortgage Alert 4

5 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 5/16 CMBX Pricing January 2007 January , , , ,000 AAA Spread (bps) ,500 2,000 BBB- Spread (bps) 300 1, , Jan-07 Feb-07 Mar-07 May-07 Jun-07 Aug-07 Sep-07 Nov-07 Dec-07 Jan-08 Mar-08 Apr-08 Jun-08 Jul-08 Sep-08 Oct-08 Dec-08 CMBX AAA CMBX BBB- 0 Source: GS Research; market data 5

6 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 6/16 CMBS Delinquency Rates Delinquencies jumped to 0.88% on December 31, 2008, up 30% from a month earlier 8% 7% 6% Delinquency Rate (%) 5% 4% 3% 2% 1% 0% Sep-1998 Sep-1999 Sep-2000 Sep-2001 Sep-2002 Sep-2003 Sep-2004 Sep-2005 Sep-2006 Sep-2007 Sep-2008 Industrial Lodging Multifamily Office Retail All Source: Trepp 6

7 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 7/16 Overall CMBS Debt Maturities $86bn of Maturities over the Next Two Years ($ in billions) Overall US CMBS Maturities by Year $160 Maturities from "Peak" '05-'07 Variable Rate 5-year REIT Privatization Financing Maturities from "Peak" '05- '07 Fixed Rate 10-year REIT Privatization Financing $131 $137 $120 CMBS Maturity Amount ($bn) $80 $40 $41 $45 $52 $65 $46 $54 $100 $74 $ Year Vintage 10 Year Vintage Other Source: Trepp 7

8 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 8/16 Real Estate Public Company Debt Maturity Overview Summary of All REIT Debt Maturities (Includes Secured Debt Maturities) ($ in billions) While there is approximately $40 billion of total debt coming due by the end of 2009, there is another $82 billion maturing in 2010 and 2011 Overall REIT Debt Maturities by Year 2009 REIT Debt Maturities by Sector $200 $16 $ of Maturity per Year $180 $160 $140 $120 $180 $80 $60 $40 $20 $0 $182 $50 $40 $ $ Amount of Maturing Debt $ of Total $14 $12 $10 $8 $6 $4 $2 $0 $7 $1 Office Net Lease Lodging $1 $6 $3 $14 Multifamily Shopping Centers Regional Malls $ of Total $2 $1 Industrial Storage C-Corps $2 Healthcare $3 Source: REIT filings 8

9 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 9/16 REIT Bond Trading Levels Performance of 5 Year REIT CDS REIT CDS versus Indices Spread Change by Sector 3200 BXP EQR PLD SPG VNO BBB+ BBB- BB 2400% Industrial Apartment Office Min: Max: Retail Healthcare Lodging 2800 Avg: % Cur: % % Spread to Libor (bps) % 900% % % 100% 0 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 0% Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Source: Plottool, Internal GS 9

10 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 10/16 REIT 2008 Performance Total Returns REIT Index Falls 38.0% in 2008 and an Additional 10.8% in (27.0)% (34.9)% (37.5)% (38.0)% (47.1)% (55.2)% (67.4)% 20 0 Jan-2008 Feb-2008 Mar-2008 Apr-2008 May-2008 Jun-2008 Jul-2008 Aug-2008 Sep-2008 Oct-2008 Nov-2008 Dec-2008 All REITs Office REIT Multifamily Industrial Regional Mall Shopping Center Hotel Source: FactSet Note: The Industrial REIT Index includes: AMB, DCT, DRE, EGP, FR, LRY, and PLD. The Hotel REIT Index includes: AHT, BEE, DRH, FCH, HPT, HST, HT, LHO, and SHO. The Office REIT Index includes: ARE, BDN, BMR, BPO, BXP, CLI, CSA, CUZ, DEI, HIW, HRP, KRC, LRY, MPG, MPW, MSW, OFC, PKY, PSB, SLG, VNO, and WRE. The Regional Mall Index includes: SKT, TCO, SPG, MAC, GGP, CBL, PEI, GRT, and WDC. The Multifamily Index includes: ACC, AEC, AIV, ANL, AVB, BRE, CLP, CPT, EDR, ELS, EQR, ESS, HME, MAA, PPS, SUI, UDR, and UMH. The Shopping Center REIT Index includes: AKR, KIM, REG, FRT, DDR, EQY, BFS, WRI, KRG, CDR, IRC, AMY, UBA, ADC, and RPT. 10

11 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 11/16 REIT Market Implied Nominal Cap Rates by Sector 5-Year Historical 2004 through Today Lack of asset level trades results in few asset-level cap rate comps; however, REIT equity prices imply significantly higher cap rates from the market peak 12% 10% 8% 9.2% 9.2% 8.4% 8.4% 8.4% 8.1% 6% 4% 2% 0% Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 Multifamily Industrial Mall Office Strip Center Health Care Source: Green Street Advisors 11

12 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 12/16 FFO Multiples Decline below Historical Average 5-Year FFO Average Multiple of 13.4x vs. Today s FFO Average Multiple of 7.0x 25x 20x 15x 10x 9.9x 7.9x 7.6x 7.6x 5x 3.1x 2.4x 0x Jan-2004 Jul-2004 Jan-2005 Aug-2005 Feb-2006 Aug-2006 Mar-2007 Sep-2007 Apr-2008 Oct-2008 Office Multifamily Industrial Regional Mall Shopping Center Hotel Source: Factset as of January 14, 2009 market close Note: The Industrial REIT Index includes: AMB, DCT, DRE, EGP, FR, LRY, and PLD. The Hotel REIT Index includes: AHT, BEE, DRH, FCH, HPT, HST, HT, LHO, and SHO. The Office REIT Index includes: ARE, BDN, BMR, BPO, BXP, CLI, CSA, CUZ, DEI, HIW, HRP, KRC, LRY, MPG, MPW, MSW, OFC, PKY, PSB, SLG, VNO, and WRE. The Regional Mall Index includes: SKT, TCO, SPG, MAC, GGP, CBL, PEI, GRT, and WDC. The Multifamily Index includes: ACC, AEC, AIV, ANL, AVB, BRE, CLP, CPT, EDR, ELS, EQR, ESS, HME, MAA, PPS, SUI, UDR, and UMH. The Shopping Center REIT Index includes: AKR, KIM, REG, FRT, DDR, EQY, BFS, WRI, KRG, CDR, IRC, AMY, UBA, ADC, and RPT. 12

13 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 13/16 Dividend Yields Spike in October Year Historical View of REIT Yields 38% 33% 28% 23% 21.1% 21.0% 18% 13% 12.8% 10.1% 8% 8.7% 8.5% 3% Jan-2004 Jul-2004 Jan-2005 Aug-2005 Feb-2006 Aug-2006 Mar-2007 Sep-2007 Apr-2008 Oct-2008 Office Multifamily Industrial Regional Mall Shopping Center Hotel Source: FactSet as of January 14, 2009 market close Note: The Industrial REIT Index includes: AMB, DCT, DRE, EGP, FR, LRY, and PLD. The Hotel REIT Index includes: AHT, BEE, DRH, FCH, HPT, HST, HT, LHO, and SHO. The Office REIT Index includes: ARE, BDN, BMR, BPO, BXP, CLI, CSA, CUZ, DEI, HIW, HRP, KRC, LRY, MPG, MPW, MSW, OFC, PKY, PSB, SLG, VNO, and WRE. The Regional Mall Index includes: SKT, TCO, SPG, MAC, GGP, CBL, PEI, GRT, and WDC. The Multifamily Index includes: ACC, AEC, AIV, ANL, AVB, BRE, CLP, CPT, EDR, ELS, EQR, ESS, HME, MAA, PPS, SUI, UDR, and UMH. The Shopping Center REIT Index includes: AKR, KIM, REG, FRT, DDR, EQY, BFS, WRI, KRG, CDR, IRC, AMY, UBA, ADC, and RPT. 13

14 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 14/16 Trends in Dividend Policy Dividend Decreases and Suspensions by REITs 2008 saw a tremendous increase in dividend cuts and suspensions given economic uncertainty, capital markets conditions and focus on health of balance sheets / deleveraging Year Total Decreases and Suspensions YTD Source: Standard and Poor s Quantitative Services, YTD as of January 14,

15 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 15/ Transaction Volume Falls by 67% Transaction Volume in West, East, South, and Midwest Regions ($ in billions) West East $75 $60 $58.1 $75 $60 $70.4 Total Invested $45 $30 $15 $17.0 Total Invested $45 $30 $15 $19.5 $0 $75 $ South Midwest $75 $60 $60 Total Invested $45 $30 $15 $26.2 $10.7 Total Invested $45 $30 $15 $17.2 $5.8 $ $ Q 2Q 3Q 4Q Source: IREN Note: NCREIF regions are defined as follows: Mountain: AZ, CO, ID, MT, NV, NM, UT, WY; Pacific: AK, CA, HI, OR, WA; East North Central: IL, IN, MI, OH, WI; West North Central: IA, KS, MN, MO, NE, ND, SD; Northeast: CT, ME, MA, NH, NJ, NY, PA, VT; Mideast: DE, DC, KY, MD, NC, SC, VA, WV; Southeast: AL, FL, GA, MS, TN; Southwest: AR, LA, OK, TX. 15

16 WCREGEN\_Real Estate General\San Diego Conference \Presentation\Slides v16.doc wongjy 20 Jan :25 16/16 Sector Cap Rates to Rise Late 2008 Witnessed Cap Rates Rising Above Lows 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 7.4% 6.8% 6.4% 6.0% 5.9% 5.4% 5.0% Multifamily Hotel Industrial Office Retail All Source: Real Capital Analytics 16