Presentation of the AREF/IPD UK Quarterly Property Fund Index (UK PFI)

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1 Presentation of the AREF/IPD UK Quarterly Property Fund Index (UK PFI)

2 Welcome Anthony Judge Partner, Travers Smith

3 Chairman's Introduction John Cartwright AREF Chief Executive

5 Agenda AREF / IPD Pooled Fund Index Results - by Fund type and portfolio Performance Structure Pooled Fund direct performance comparison against IPD standard benchmarks Market performance history through the context of Pooled Funds 2013 and longer term Sector and segment Prime versus secondary moving up the risk curve 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 5

UK Property Fund Index results to Q4 2013 UK Property Fund Index and component indices Quarterly Total Return

6 UK Property Fund Index results to Q UK Property Fund Index and component indices Quarterly Total Return Annual Total Return Source: AREF, IPD % q/q % y/y 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 6

7 2013 UK Property Fund Index results Headline results in context of other assets Total Return (% year to year) Source: Equities MSCI Property Equities MSCI Bonds JP Morgan 7-10year 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 7

Distribution of fund returns Balanced Funds

8 Distribution of fund returns Balanced Funds Specialist Funds 95 th % 75 th % Median Benchmark 25 th % 5 th % Source: AREF, IPD - Represents direct property returns 5 th and 95 th percentile 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 8

9 Fund versus direct real estate relative performance Year ending December 2013 Fund Direct Real Estate Fund Direct Real Estate Fund Direct Real Estate Fund Direct Real Estate Source: AREF, IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 9

Longer term Fund level returns 2004-2013 2014

UK Property Fund Index characteristics Q4 2013 UK Property Fund Index and component indexes Gearing as % Gross Asset Value (GAV)

11 UK Property Fund Index characteristics Q UK Property Fund Index and component indexes Gearing as % Gross Asset Value (GAV) Cash Holdings as % Gross Asset Value (GAV) Source: AREF, IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 11

12 Leverage as % of gross asset value in UK, Europe, US Leverage levels across regions Historic leverage levels Leverage as % of gross asset value in UK funds Distribution of leverage levels in UK funds Source: AREF, IPD Investment Property Databank Ltd. All rights reserved. ipd.com 12

Sector allocation by fund type December 2013 By fund index gross asset value

14 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Asset allocation time series All Property Fund Index by % of gross asset value Retail % Office % Industrial% Other % 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 14

15 Property sector allocations balanced funds As % of gross asset value December 2004 vs. December 2013 Retail allocation dropped by 10% since 2004 mostly in retail warehouse and unit shops Other allocation has risen from 2.8% to 9% across the period 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 15

17 Other sector allocation by index December 2013 By % of gross asset value Non specified includes a mix of data centres, universities and other property investments Source: AREF, IPD 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 17

Quarterly Standard Benchmarks Relative Returns in 2013 Source: AREF,

22 AREF / IPD UK Quarterly Property Fund Index for 2013 Property Fund Index vs. IPD Quarterly Index UK Quarterly Property Fund Index Total return 9.8% Quarter end: 2,534 properties valued at billion IPD Quarterly Property Index Benchmark total return 10.9% Total return 10.5% Income return +6.0% Capital growth +3.6% Cross product * 0.2% Quarter end: 9,305 properties valued at billion Rental value growth +0.7% Yield impact +3.9% * Cross product: capital gain / loss in reinvested income Residual ** -1.0% ** Residual: impact of delays in income stream, mainly effect of over-renting Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 22 Income return +6.0% Rental value growth +0.9% Capital growth +4.3% Yield impact +4.3% Cross product * 0.2% Residual ** -0.9%

Long-term trends UK Property Fund Index direct returns to end of Q4 2013 Source: IPD UK

Change 29% Increase 62% Increase 60% Source: IPD UK Quarterly Property

24 Capital value trend UK all property capital value change by asset Decrease 10% Quarterly index comparison Decrease 11% No Change 28% No Change 29% Increase 62% Increase 60% Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 24

Latest trends by sector Components of total return Office Pick up in rental growth spreading from London into the South East Retail Disconnect between rents and yields for most of 2013 Industrial

25 Latest trends by sector Components of total return Office Pick up in rental growth spreading from London into the South East Retail Disconnect between rents and yields for most of 2013 Industrial Rental growth returning in last two quarters, bolstered by favourable investor sentiment Property Fund Index % yr Total Return Quarterly Index % yr Total Return Other Losing ground to the mainstream sectors Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 25

26 Segment total returns for 2013 Total returns for all segments Total return change - Quarter/Quarter Q1 Q2 Q3 Q4 = Greater = Less Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 26

27 Drivers of capital growth in detail Annual drivers of capital growth by segment 2013 All Property Fund Index Quarterly Index Y-on-Y% Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 27

% of Capital Value Net investment by funds All Property Fund Index Source: IPD UK

29 High Quality High Quality High Quality High Quality High Quality Risk versus return Comparing quarter-over-quarter total returns by asset quality and lease length Q Q Q Long Lease Long Lease Q Q Long Lease Long Lease Long Lease Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 29

High-yielding segments have turned a corner Each segment has been split by equivalent yield quartile Low Yield (Top Quartile): Total Returns High Yield

30 High-yielding segments have turned a corner Each segment has been split by equivalent yield quartile Low Yield (Top Quartile): Total Returns High Yield (Bottom Quartile): Total Returns % q/q % q/q Source: IPD UK Quarterly Property Index 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 30

UK Property Fund Index Risk Web Source: AREF, IPD 2014

32 Conclusion Performance levels strengthened in 2013 Direct 10.5% Pooled Fund Index 9.0% NAV, 9.8% direct Long income funds have lost ground in 2013 Balance fraction behind the wider market due to transaction costs Specialist targeting the more challenged retail sector Growth based on improving investor and occupier fundamentals Performance becoming more widespread, with evidence of strengthening among the secondary 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 32

35 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 35 Current IPD Property Fund Index Coverage National Property Fund Indexes Australia France Germany Italy Nordic Portugal UK USA Composite Property Fund Indexes Pan-European Property Fund Index (PEPFI) Global Property Fund index (GPFI) Developed Independently over time

36 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 36 IPD Global Property Fund Index Concept Open-end funds (or semi-open) Core strategy (diversified as well as specialized) Measured by IPD (fund and direct real estate) Gross Asset Value > $100 million 85% of Gross Asset Value in real estate All assets and liabilities revalued quarterly Leverage < 60% of Gross Asset Value

37 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 37 IPD Global Property Fund Index Composition Q Global Index North America EMEA Asia- Pacific Growth Asset Value ($Billion) $211 $115 $48 $49 Net Asset Value ($Billion) $169 $86 $42 $41 # Funds # Assets 5,199 2,383 2, Average Asset Size ($ Million) $38 $45 $17 $104 Average Fund Size (Growth Asset Value $ Million $2,642 $6,031 $1,096 $2,853 Average Fund Size (# Assets) Leverage % 20% 25% 12% 16% Cash % 4% 3% 6% 2% Average Fund Size (Net Asset Value $ Million $2,112 $4,506 $963 $2,408

38 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep Investment Property Databank Ltd. All rights reserved. ipd.com 38 Long-term performance trends Direct asset total returns (% quarter/quarter) for the three major regions Total Return (% quarter/quarter) (2) (4) (6) (8) (10) (12) Asset-level performance slipped in APAC. Lowest since Q Improvements in UK and rest of Europe combine for largest improvement North America still leads the way, and remains steady at 2.9% q/q APAC Europe Nth. America

39 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 39 Enhancement Project The aim is to streamline the Property Fund Indexes globally, including data collection data storage (single database from tenant to vehicle level) calculations output and distribution Benefits for users Easier data submission DCT simplified single data template across countries Valid comparison across Fund Indexes same measures, same definitions Tailored benchmarks and indexes unique database for vehicle and assets, more funds, refined fund classification Reporting continuity from asset level to fund level available fully when infrastructure is built Product simplification All market information released in Fund Intel, same look and feel across country indexes

40 Unique database Asset DB Fund DB Top down 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 40 New system Fund Debt Cash Other assets Costs Fund fees Portfolio Assets Assets Indirect assets Tenant Tenant Tenant Tenant Tenant Single database holding both asset level and fund level data Allows top down and bottom up analysis tenants assets fund Easier to connect asset and fund level performance

41 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 41 New Data Collection template All clients globally will use a standard Data Collection Template Online tool with option to download/upload in Excel to fill in numerical fields Simplified template focus on core fields only Online validations much faster process than previous DCT Historical changes are not allowed in the DCT. Clients will have to contact IPD analyst to change history (so that IPD can monitor changes more closely) Data frequency will be aligned to valuation frequency (like asset level) Clients will only provide their period-end values (Net Asset Value, Growth Asset Value) no hold down IPD will interpolate to transform into monthly (standard interpolation method across funds and services)

42 2014 Investment Property Databank Ltd. All rights reserved. ipd.com 42 New deliverables Fund Intel 3 rd module of the Global Intel package Market information package bundling the 14 Property Fund Indexes Output is Digest-type information for each of these indexes Global Intel Multinational Intel France OPCI Germany SFIX Germany OFIX Italy Portugal UK Australia Core Wholesale City and Sector Intel Fund Intel Australia Unlisted Retail US All open-end US Core open-end Canada (Sep14) Nordic Pan Europe Global

44 Panel Discussion & Q&A

45 bn Net Asset Value and Fund Count from Long Income NAV (only since 2009) Specialist NAV Managed NAV Balanced NAV Source: Investment Property Databank, Feb 2014 Notes: The Long Income Funds Index is since 2009 only

46 Thank you

Is there still value in Irish Real Estate?

Is there still value in Irish Real Estate? Colm Lauder Senior Associate, MSCI ERES Belfast, 17 th October 214 214 Investment Property Databank Ltd. All rights reserved. ipd.com 1 Today s focus Risk, Return