DON T TELL ME THIS ISN T REAL ESTATE

Transcription

1 DON T TELL ME THIS ISN T REAL ESTATE MAY 2016 INSIGHTS.IDEAS.RESULTS. AMP CAPITAL GLOBAL LISTED REAL ESTATE 1

2 THIS IS REAL ESTATE, BUT ONLY IF YOU INVEST FOR THE LONG TERM The returns of both listed and unlisted real estate are driven by the same economics of the buildings they own, be it the rent, cap rate, capital expenditure schedule or the covenant of your tenant. Put simply, the returns you receive and the diversification benefits listed real estate bring to your portfolio are the same as physically owning the actual buildings over time. This paper aims to evaluate why this is correct and provide guidance on how investors should be thinking about real estate at this point in the cycle. It is appropriate to use the US for the majority of this analysis as it is the deepest, most liquid and diversified representation of both listed and direct market. The US accounts for 53%-66% (EPRA NAREIT March 2016) of the listed global benchmark depending on what EPRA NAREIT benchmark you choose. It also has the highest quality and longest data series of both listed and unlisted markets. 2 AMP CAPITAL GLOBAL LISTED REAL ESTATE

3 SAME SAME BUT (NOT) DIFFERENT There have been many academic studies 1 analysing whether listed real estate has similar performance characteristics to direct. The most contemporary analysis 2 proves that the correlation of returns between listed and direct increases significantly as the investment horizon lengthens, given the two real estate indices are inter-related with one another and not with the stock market. As a result, listed real estate is likely to bring similar long-term diversification benefits to a diversified portfolio as direct real estate. In fact, if you remove leveraging differences from both asset classes and control them for the industry practice of appraisal smoothing, the correlation between the two is in the region of 0.8 for many countries. 3 Indonesia has the highest correlation at over 0.95 and around 15 countries are close to 0.8 correlation, with only two at 0.6 and below (Figure 1). Figure 1 Public-private correlation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Australia Austria Belgium Canada China Czech Republic Denmark France Germany Hong Kong Hungary Indonesia Ireland Italy Japan Korea Malaysia Netherlands New Zealand Norway Poland Portugal Singapore South Africa Spain Sweden Switzerland Taiwan Thailand United Kingdom Correlation United States Source: Shepard, P., Y. Liu, and Y. Dai, 2014, The Barra private real estate model (PRE2), Research notes, MSCI The two asset classes move in concert, albeit with a lag. We see the five-year annualised returns of US-listed real estate with direct US real estate show a correlation of 0.84 (Figure 2). Figure 2 US REITs vs. US Private real estate funds Trailing five-year 1998 to 2015 annualised return Percentage Return 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Source: Green Street Advisors (Dec 2015) US Real Estate Funds US REITs Correlation for the period = Listed real estate is likely to bring similar long-term diversification benefits to a diversified portfolio as direct real estate AMP CAPITAL GLOBAL LISTED REAL ESTATE 3

4 SHORT TERM VS. LONG TERM Given listed real estate has daily liquidity, it behaves more like equities than real estate in the short term. If you invest in listed real estate for one month, you won t be getting real estate returns (Figure 3). Figure 3 Short-term correlations for US listed real estate US REITs vs. stocks (one-month appreciation) US REITs vs. real estate (one-month appreciation) 40% 40% REIT Price Appreciation 20% R 2 = % -20% -40% -20% -10% 0% 10% 20% S&P 500 appreciation 20% R 2 = % -20% -40% -20% -10% 0% 10% 20% Real estate appreciation (GSA CPPI) REIT Price Appreciation Source: Green Street Advisors (Feb 2016) But should we measure the short term or long term? When was the last time you allocated capital to a physical real estate investment on anything shorter than a five-year valuation? After all, it is a long-term investment by the very nature of the leases that are contractually committed to and the longevity of the physical asset. Over the longer term, direct real estate and listed real estate prices are highly correlated to each other but lowly correlated to equities over a five-year period (Figure 4). The correlation moves from around 0.05 after one month, but settles at around 0.85 after five years, proving they are interchangeable over the long term. Figure 4 Long-term correlations for US listed real estate 30% US REITs vs. stocks (five-year appreciation) US REITs vs. Real estate (five-year appreciation) 30% REIT Price Appreciation 20% R 2 = % 0% -10% -20% -10% -5% 0% 5% 10% 15% 20% 25% S&P 500 appreciation 20% 10% R 2 = % -10% -20% -10% -5% 0% 5% 10% 15% Real estate appreciation (GSA CPPI) REIT Price Appreciation Source: Green Street Advisors (Feb 2016) 4 AMP CAPITAL GLOBAL LISTED REAL ESTATE

5 WHAT ABOUT RETURNS? Direct real estate investments trailed REITs by 3.7% per year due to their significantly lower gross returns as well as direct s relatively high investment costs Total returns on US-listed real estate have been substantially higher over the period (Figure 5 2 ). As Nieuwerburgh et al found in their recent paper, One dollar in 1978 would have grown to US$27.03 by 2015 if invested in direct US property (NCREIF), compared with US$95.76 in listed real estate, a value over 3.5 times as high. 4 This obviously fully captures numerous real estate cycles, economic recessions and equity cycles, especially the global financial crisis, that many point to as reason not to consider listed real estate as a viable investment. These findings provide a contrary conclusion for those cynics. Figure 5 Stunning outperformance: Cumulative returns on US REITs vs. NCREIF Property Index (Direct US real estate) 10 2 Index level Year NCREIF (Direct) REIT Source: A review of real estate and infrastructure investments by the Norwegian Government Pension Fund Global, Nieuwerburgh, Stanton and Bever (2015) Again utilising the US as an example, (Figure 5) listed real estate consistently outperforms direct real estate but is not limited to this one study. Ling and Naranjo (2015) 5 report that unlevered core real estate investment trusts (REITs) outperformed their direct market benchmark by 0.49% (annualised) over the sample period. If you add back leverage, the outperformance discrepancy is even greater. To further prove this out, a well-known CEM Benchmarking study 6 of defined benefit pension funds in the US tracked the performance of all asset classes from and had similar findings to (Figure 5 and 6). After accounting for the costs of investing, US listed real estate recorded an average annual net return of 11.31%, the highest average annual net return of any asset class over the sample period. Direct real estate investments trailed REITs by 3.7% per year due to their significantly lower gross returns as well as direct s relatively high investment costs, but still outperformed US large cap equities by 1.55% per annum after fees. AMP CAPITAL GLOBAL LISTED REAL ESTATE 5

6 Reviewing the performance of all asset classes over 14 years, listed real estate was the best performer with TAA/hedge funds the worst, a whole 6.54% per annum lower (Figure 6). Figure 6 Standardised aggregate asset class net total returns for US public and corporate DB pension funds Stock Fixed Income Real Assets Other Year US Large Cap. US Small Cap. Non US US Broad US Long US Other Non US Private Real Estate Listed Equity REITs Other TAA/ Hedge Funds Private Equity % -3.08% % 8.51% 21.80% 3.89% 4.56% 9.23% 2.74% -1.47% 37.00% -4.38% % 26.35% 12.42% 8.73% 11.07% 5.56% 13.33% 15.75% 23.53% 10.80% 9.19% 29.47% % 33.64% 39.38% 11.86% 4.37% 13.42% 19.96% 23.50% 29.74% 5.44% 14.50% 38.77% % % % 0.02% 13.96% -5.55% -8.80% % % -9.26% % % % 2.19% 14.29% 6.50% 7.68% 4.83% 7.81% % % 13.93% 7.73% 7.94% % 14.66% 25.56% 4.80% 2.71% 5.69% 7.75% 13.68% 34.86% 14.86% 10.75% 29.43% % 7.17% 16.72% 3.15% 5.99% 3.32% 1.88% 18.17% 14.15% 19.19% 6.87% 3.18% % 16.78% 19.64% 5.29% 9.09% 4.86% 10.08% 26.32% 32.52% 18.16% 6.84% 19.49% % 43.11% 37.55% 6.10% 6.87% 8.55% 17.74% 14.85% 33.15% 9.39% 13.91% 28.11% % % % 9.38% 15.23% 2.29% 14.01% 11.52% 5.29% 9.32% % % % -1.29% % 8.14% 6.60% 4.56% 2.00% 4.84% 10.94% 4.56% -4.69% -1.17% % 0.43% % 11.45% 16.16% 6.31% 4.73% 3.50% 25.89% 18.95% 1.78% 3.34% % 29.10% 38.24% -0.68% -7.86% 5.52% 1.21% 13.90% 1.07% 22.30% 9.59% 34.78% % 3.10% 12.09% 8.54% 11.90% 6.11% 10.73% 8.10% -6.12% 1.78% 21.10% 27.79% Gross Ret. 6.29% 8.81% 8.67% 6.73% 9.14% 5.29% 8.06% 8.73% 11.82% 10.88% 6.02% 13.31% Inv. Cost (bps) Net Return 6.06% 8.25% 8.23% 6.56% 8.97% 4.95% 7.64% 7.61% 11.31% 9.85% 4.77% 11.10% Source: CEM Benchmarking: asset allocation and fund performance of DB pension funds in the US (2014) US listed real estate recorded an average annual net return of 11.31%, the highest average annual net return of any asset class over the sample period 6 AMP CAPITAL GLOBAL LISTED REAL ESTATE

7 SO IT BEHAVES LIKE REAL ESTATE BUT WITH BETTER PERFORMANCE..THERE MUST BE A CATCH, SO WHAT ABOUT RISK? Without doing the work it is easy to conclude that on the surface listed real estate appears substantially more volatile; the annualised volatility of quarterly US REIT returns is 17.7%, compared with only 4.3% for direct US real estate (NCREIF) returns. The volatility range suggests there is short-term noise (Figure 7). Figure 7 Short-term noise, long-term gain: Quarterly US REIT returns (NAREIT) and appraisal-based NCREIF Property Index (direct US real estate) from 1978 to 2015 Quarterly return Source: A review of US real estate and infrastructure investments by the Norwegian Government Pension Fund Global, Nieuwerburgh, Stanton and Bever (2015) However, after adjusting for smoothing in direct valuations, leverage and portfolio composition, the total volatility of public and direct real estate is actually very close. If you are investing for the long term, as you should as an investor in real estate, the volatility of the two asset classes begins to converge to 19.2% for NCREIF (direct US real estate) vs. 25.1% for US REITs over 40 quarters (Figure 8). Figure 8 Volatility of returns on US REITs vs. NCREIF Property Index (NPI) Vol Year NCREIF REIT Number of quarters NCREIF REIT Source: A review of US real estate and infrastructure investments by the Norwegian Government Pension Fund Global, Nieuwerburgh, Stanton and Bever (2015) In fact the biggest myth debunked in this analysis is that direct real estate is not volatile. Pedersen et al (2012) 7 report that, after correcting for smoothing, the volatility of direct real estate is actually about 2.5 times higher than implied by unadjusted volatility estimates. This shows unresponsive estimates of risk as during the financial crisis, using October 2008 as an example, direct real estate might have looked like a low-risk safe haven for many months, until liquidity and clearing price levels were found, providing data points that demonstrated real estate is closely linked to other risky assets in the market, but with a lag. The liabilities of pension funds are long dated and income dependent by their very nature, which real estate clearly delivers through its contractual leases. The challenge listed real estate has always had is many asset allocation models rely on the maximum data points possible to assess risks. This obviously incorporates short-term price volatility (Figure 7). As a consequence, the listed real estate returns that are fed in are daily prices, not the longer dated economic returns they deliver over the life of the investment. We feel this over-reliance on short-term data by pension funds is the source of lower allocations (Figure 9) than is warranted by the long-term risk adjusted returns on offer. But what is most important for this analysis? It is surely what gets delivered to the end pensioner. If listed real estate is included in this asset allocation model, does it or does it not offer the long-term benefits of real estate, which we know provides diversification and solid risk-adjusted returns? We believe they do. GREAT SCOTT.IS THAT A TIME MACHINE? As a direct real estate investor, even if the above hasn t sparked your interest about listed real estate as a liquid proxy for your portfolio, answer this: if we offered you the DeLorean time machine from Back to the Future to help with your day job, would you take it? You would think that s a no-brainer, but many real estate investors choose to ignore the lead signals of 12 months or more listed real estate market provides the direct market, allowing investors in both sectors to benefit from arbitrage opportunities that the two present. But the very fact listed real estate still makes up only a small fraction (12-13%) of total real estate investment allocation by pension funds globally suggests many are missing this opportunity. Figure 9 Real estate as a fraction of total pension fund assets 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% All real estate Direct real estate REITs Source: A review of real estate and infrastructure investments by the Norwegian Government Pension Fund Global, Nieuwerburgh, Stanton and Bever (2015) AMP CAPITAL GLOBAL LISTED REAL ESTATE 7

8 The reason this omission continues in the investment community is because many don t believe listed real estate is in fact the same as direct real estate, even though the evidence continues to show striking similarities. Listed real estate on a company-by-company basis can trade at a discount or premium to net asset value (NAV) because of many factors, including but not limited to capital structure, management ability or growth opportunities. But when looking holistically at the sector, the analysis of NAV provides pretty good access to the flux capacitor of the DeLorean time machine and its predictive abilities. In short, the NAV (premium/discount) ascribed to listed real estate as a function of stock price inform the future direction of the real estate market. Therefore, very simply, if a REIT trades at a premium to its NAV, the market believes its assets will appreciate above levels indicated by market pricing of the underlying direct real estate. In fact, if we look at listed real estate in the US since 1988, whenever prices have been at a premium to NAV, direct real estate appreciated 96% of the time in the following 12 months 8 (Figure 10). Figure 10 US REIT premiums to asset value and subsequent change in property values 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% 1/98 1/00 1/02 1/04 1/06 1/08 1/10 1/12 1/14 1/16 Source: Green Street Advisors (Feb 2016) Yet in times of discount, listed real estate has nearly always delivered greater five-year returns than direct (Figure 11 and 12). When you start the clock at a time when listed real estate trades at a NAV premium, direct vehicles have often delivered the better results especially when the premiums have been large. As a real estate investor, you may well benefit from allocating funds to listed and direct real estate, and arbitraging between the two (Figure 11). Listed real estate is now trading at a discount to NAV. Figure 11 US REIT premiums and subsequent returns of real estate funds vs. REITs 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% CRE appreciation next 12 months 20.0% 15.0% 10.0% 10.0% 0.0% -5.0% -10.0% -15.0% -40.0% -20.0% 12/93 12/96 12/99 12/02 12/05 12/05 12/08 12/11 12/14 REIT NAV premium (left axis) Returns of RE funds vs. REITs over subsequent 5 years (right axis) Source: Green Street Advisors (Nov 2015) REIT premium to asset value Figure 12 Performance of US private real estate when US REITs trade at a big or small premium 1.3% NAV Premium > 10% Source: Green Street Advisors (Nov 2014) Direct vehicles managed to outperform when REITs traded at big NAV premiums but underperform by a wide margin when large discounts are found (Figure 12). Listed real estate is essentially a predictor of how the direct market will move in the coming months, especially around inflexion points at the turning of cycles. We now need to look under the hood of the DeLorean to figure out where we are in the current real estate cycle. WHAT IS THE LISTED REAL ESTATE MARKET TELLING US ABOUT THE DIRECT PROPERTY TODAY? Firstly, what are the managers of listed real estate doing with their portfolios? In the markets where they are trading at discounts to NAV, the best management teams are taking advantage of strong pricing in direct real estate markets, selling non-core assets and utilising the proceeds to either de-lever balance sheets or shrink their equity base by returning capital to investors. This is driven in part by the fact listed real estate managers see less value in certain direct markets given the underwriting of their deals are done upon an unlevered basis compared to certain levered buyers (such as private equity), who run aggressive leverage metrics on underwriting. Of late, we have seen a significant shift in activity in the transaction market. In the US, equity funds (dominated by private equity) have made net acquisitions to the tune of US$30bn during the past six months, which is a momentous increase from the US$3bn annual pace over the past five years 9. Listed real estate has moved in the opposite direction and has been selling into this demand (Figure 13). We are seeing both privatisations and asset sales drive this outcome. Figure 13 US net CRE acquisitions by PE shops and listed REITs (quarterly data; US$ billions) Equity funds Source: Green Street Advisors (Dec 2015) REITs -9.5% NAV Discount > 10% Listed real estate is trading at a discount to NAV in a number of key markets, implying the market believes some parts of the direct market have become overheated for the time being. Utilising the above analysis and assuming it holds going forward, listed real estate should deliver superior performance in the next five years over direct and would enhance a portfolio that only has direct AMP CAPITAL GLOBAL LISTED REAL ESTATE

9 Some of the current key valuation metrics show the global universe is trading at a discount of -14% to NAV (Figure 14). As you can see, the biggest discounts on offer are in the Asian markets. Figure 14 Global valuation and growth metrics PRICED AT CLOSE: MKT CAP Source: UBS (26 Feb 2016) NET DEBT/ EV 26-FEB-16 US$ BN FY FY FY16 Sector Office % 5.7% 6.6% 2.2% 3.3% 0.1% 4.7% 31.5% Retail % 5.6% 6.8% 7.4% 4.0% 6.6% 4.6% 30.8% Industrial % 5.6% 9.0% 5.4% 4.2% 4.4% 4.2% 31.4% Residential % 9.5% 14.0% 12.5% 3.7% 14.9% 10.7% 22.0% Diversified % 7.1% 14.7% 8.6% 3.5% 10.0% 7.1% 30.9% Hotel % 4.6% 10.7% 7.4% 4.6% 10.1% 7.4% 28.0% Country Australia Prop. Co % 9.2% 10.4% 11.0% 4.6% 11.0% 8.5% 18.6% Australia REIT % 6.0% 2.8% 5.5% 4.9% 3.2% 5.3% 26.4% New Zealand REIT % 5.3% -1.8% 6.1% 5.9% 1.4% 2.7% 29.5% Hong Kong Prop. Co % 9.4% 13.3% -5.5% 4.2% -0.2% 1.1% 16.7% Hong Kong REITs % 4.9% 14.6% 5.0% 4.9% 2.4% 1.9% 19.9% Japan Prop. Co % 3.5% 9.7% 7.7% 0.8% 8.4% 7.3% 44.3% JREIT % 3.0% 5.4% 7.8% 3.2% 4.5% 2.7% 33.6% Singapore Prop. Co % 6.3% 5.4% -3.9% 2.7% 0.5% 0.5% 33.5% SREIT % 6.0% 1.8% 1.6% 6.4% 1.9% 0.9% 31.9% Continental Europe % 5.3% 8.6% 3.8% 4.4% 3.4% 4.6% 38.4% United Kingdom % 3.9% 4.2% 4.8% 3.2% 4.0% 4.1% 31.7% United States % 5.9% 5.5% 6.7% 4.0% 3.6% 10.9% 28.3% China-H Prop. Co % 14% 27.3% 19.1% 4.4% 19.7% 14.5% 32.5% China-A Prop. Co % 10.7% 17.2% 14.1% 2.9% 14.1% 7.5% 21.8% India Prop. Co % 6.2% 41.4% 68.2% 1.6% 6.7% 2.3% 30.6% Indonesia Prop. Co % 8.3% 24.6% 14.8% 0.8% 45.8% 14.3% 11.6% Malaysia Prop. Co % 7.7% -18% 39.5% 3.5% 38.2% 1.6% 15.7% Middle East Prop. Co % 6.8% 30.2% 26.1% 2.6% 49.7% 20.3% 23.7% Philippines Prop. Co % 6.0% 17.1% 15.5% 1.6% 15.7% 11.9% 20.8% Global PREM/(DISC) TO NAV EPS YLD EPS GROWTH Global including EM 1, % 6.9% 9.9% 7.2% 3.8% 6.6% 7.9% 28.4% DIV YLD DPS GROWTH The best management teams are taking advantage of strong pricing in direct real estate markets, selling non-core assets and utilising the proceeds to either de-lever balance sheets or shrink their equity base by returning capital to investors AMP CAPITAL GLOBAL LISTED REAL ESTATE 9

10 Another consideration to support the argument that direct real estate pricing in more commoditised products such as office is looking expensive relative to listed is to look at where direct deals have been penned for core assets (squares on figure 15) relative to replacement cost (diamonds ) and implied pricing of listed real estate (circles ). Then look at how they all interact. Very simply, if market transactions are above replacement cost, that encourages developers to underwrite new supply as it s cheaper to develop than buy. We are seeing this in a number of key global markets. Moderate supply is healthy for any market but if the margins are excessive, that drives disproportionate risk-taking by the developer and supply snuffs out future rental tension. This interplays with the implied pricing of listed real estate, which looks forward. It also prices this increased supply risk and subsequent valuation impact. There is better risk/reward balance in listed over direct at this point in the cycle (Figure 15). So, as a rule of thumb, the time to buy direct real estate is when the squares are below the diamonds (new supply is not economical) and the circles are at the top as listed is projecting asset appreciation. If asset allocators stuck to this simple model, returns in the real estate space should be maximised. Figure 15 Premium grade office Replacement cost vs. market transactions and implied pricing of listed real estate Capital Value - Per Sq Ft (USD) LA Downtown Boston CBD NY Midtown San Francisco London West End London City Paris CBD Replacement cost ($/ft) Milan CBD Frankfurt Madrid CBD Zurich Sydney Market transaction Melbourne Brisbane Singapore Implied pricing REITs Source: AMP Capital, Green Street Advisors, Evercore ISI, Bank of America ML, UBS (Mar 2016) If past relationships hold, this puts listed in a favourable position relative to direct in the next leg of this cycle, especially in highly competitive global gateway markets 10 AMP CAPITAL GLOBAL LISTED REAL ESTATE

11 CONCLUSIONS Direct real estate assets have several disadvantages such as relatively low liquidity, high transaction costs and lumpiness. The listed real estate market was developed in the 1960s to circumvent these complications so that all investors, big or small, could reap the benefits of a well-diversified real estate allocation. We recognise that listed real estate was the poster child of leverage, particularly in Australia during the financial crisis, and lots of destructive equity was issued. Many lessons have been learnt and now, more so than ever before, listed real estate is back to where it should have always been: a proxy for direct real estate. If past relationships hold, this puts listed in a favourable position relative to direct in the next leg of this cycle, especially in highly competitive global gateway markets. As this paper proves the two asset classes are essentially the same over the longer term as the returns are driven by the underlying real estate cash flows they have in common. For those investors wanting to maximise risk adjusted returns, an asset allocation between both listed and direct should be utilised at different points in the cycle. Many lessons have been learnt and now, more so than ever before, listed real estate is back to where it should have always been, a proxy for direct real estate AMP CAPITAL GLOBAL LISTED REAL ESTATE 11

12 1 Ang, Nabar, and Wald (2013), Kutlu (2010); Bond and Chang (2013); Boudry, Coulson, Kallberg, and Liu (2012); Hoesli and Oikarinen (2012); Stefek and Suryanarayanan (2012); Yunus, Hansz, and Kennedy (2012). 2 A review of real estate and infrastructure investments by the Norwegian Government Pension Fund Global, Nieuwerburgh, Stanton and Bever (2015). 3 Shepard, P., Y. Liu, and Y. Dai, 2014, The Barra private real estate model (PRE2), Research notes, MSCI. 4 Green Street Advisors. US Private Real Estate Funds returns represented by the net total return of the NCREIF Open End Diversified Core Equity (ODCE) Index US REITs returns are represented by a combination of the FTSE NAREIT Indices (40% office, 20% apartments, 20% industrial, 10% malls, 10% strip) that roughly matches the holdings of ODCE, with 20 basis points per annum deducted for a management fee. 5 Ling, D., and A. Naranjo, 2015, Returns and information transmission dynamics in public and private real estate markets, Real Estate Economics 43, CEM Benchmarking, Asset allocation and fund performance of DB pension funds in the US (2014). 7 Pedersen, N., F. He, A. Tiwari, and A. Hoffmann, 2012, Modeling the risk characteristics of real estate investments, Technical report, PIMCO. 8 Green Street Advisors. 9 Green Street Advisors, Heard on the Beach: A Familiar Bus Driver (December 2015). CONTACT DETAILS For more information on how AMP Capital can help grow your portfolio, visit our website, Important note: This document is provided for Australian residents and residents of countries where it would not be prohibited or against local laws to provide the information in this document ( Permitted Jurisdictions ). This document is not provided to any person who is a resident of any other country. The information in this document is only available to persons accessing the document from within Australia or another Permitted Jurisdiction. While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN , AFSL ) makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital. Copyright 2016 AMP Capital Investors Limited. All rights reserved.