REITs in Europe Industry Overview Tobias Steinmann & Laurent Ternisien Lisbon, December 6th, 2016
EPRA: European Public Real Estate Association Member No. % Property Companies & REITs 122 55 Investors* 59 26 Academics 24 11 Consultants & others 18 8 Total 223 100 Representing Gross Value > 365 billion *Investment Companies, Insurance Companies/Funds, Banks & Stockbrokers All areas support & promote the sector Accessing deep industry research and data Advocating & developing a performing industry Shaping together the agenda & promoting best practices Attending exclusive events & creating opportunities to connect 2
Commercial Real Estate in Europe Significant role in Europe s economic, industrial and social structure Approx 50% of European companies rent their business premises Value of all commerical real estate is EUR 5.8 trillion >20% of Europe s economic activity Employs ca. 3,8 million workers EU Commercial real estate value Billion Euro, 2014 8000 7000 6000 5000 4000 3000 2000 1000 0 5.791 8.532 11.959 Real estate Stock Market Bonds 3
Example of France b Source IEIF, MSCI, ASPIM, FSIF, CNCC, INREV, CBRE, DTZ, BNP) Total asset value Offices Retail shopp ing center Industria l & logistics Others Average LTV Total debt REITs and listed real estates 82 32 35 30 3 7 38% 31 Insurances and other institutionals (Direct) 70 42 5 4 2 3 7% 5 Fund managers for institutionals 90 52 16 11 8 5 34% 31 Fund managers Retail (SCPI, OPCI) 40 27 8 4 1 1 20% 8 Autres (private, family office ) 60 34 7 3 4 5 40% 24 TOTAL 342 188 72 51 18 20 100 Weight of REITs and Listed RE 24% 17% 49% 58% 18% 32%.
Market Capitalisation Evolution Real estate: the 11 th sector in GICS Ireland UK Germany Italy Four-fold increase since 2008 NL Belgium France Spain Further potential compared with: - US REITs market free float market cap(x5.1) size - Overall size of European RE market (only 3.2%) - Size of overall listed market (only 4.9%) FTSE EPRA/NAREIT Developed Europe Index total market capitalisation The dates indicate when the REIT status was established in each country The split between REITs and Non REITS in the index started in 2007 5
Size matters US versus Europe x2 x3 Free float Equity Non free float Equity Debt The median US Equity REIT: 31% leverage Total market cap of 2.9b Free float of 2.8b The median Europe developed Listed Real Estate Company: 38% leverage Total market cap of 1.2b Free float of 1b 6
Real Assets across Europe 101 Companies with over 10,000 assets and portfolio s in 20 countries across 9 sectors Source: EPRA, SNL Financial Data as of: July 31, 2016 7
Europe listed real estate - strong investment case Diversification & liquidity Quality assets & management Strong total returns & dividend yield Governance & transparency
Strong Long Term Performance 9,0% 15-year annualised total return in local currency 8,0% 7,0% 6,0% 6,5% 8,3% 5,0% 5,2% 5,3% 4,0% 3,0% 2,0% 1,0% 1,7% 0,0% EPRA 2013 Sources: EPRA, FTSE, JP Morgan Data as of: October 31, 2016 Europe Inflation Europe equities Europe bonds Europe real estate Europe listed real estate.
Attractive Dividend Yield 4,5% 5-year Average Yield 4,0% 3,5% 3,7% 3,7% 4,3% 3,0% 2,5% 2,0% 2,5% 2,9% 1,5% 1,0% 0,5% 0,0% 0,4% ECB Refinancing rate FTSE Government Bonds >10 year Europe FTSE Corporate Bonds >10 year Europe FTSE All World Europe FTSE EPRA/NAREIT Developed Europe Index FTSE EPRA/NAREIT Developed Europe REITS Index Sources: ECB, FTSE, EPRA, NAREIT Data as of: October 31, 2016.
European REIT evolution Country Year Netherlands 1990 Belgium 1995 France 2003 UK 2007 Germany 2007 Italy 2007 Spain 2009 Ireland 2013 Introduction does not necessarily equal success! Regulation must ensure: Simple to use & transparent Competitive Flexible to meet market conditions.
REITs converge state of play Country Tax Exempt (Ownership) Distribution Requirements (Yield) Operational Restrictions (Develop?) Leverage Restrictions (Mkt forces) Shareholder Requirements (Liquidity) Withholding Tax (Govt) Germany ++ ++ ++ ++ ++ ++ France + ++ ++ 0 ++ ++ UK + ++ ++ 0 ++ ++ Italy (++) + (0) ++ ++ (++) + (0) + ++ Spain + (0) ++ ++ (++) 0 + ++ Ireland + ++ ++ 0 ++ ++ ++ indicates the requirement or restriction is strong + indicates the requirement is moderate 0 indicates that there are almost no requirements or restrictions Green indicates similar legislation or convergence 12
Capital raised since introduction of REIT regimes Countries REIT Regime Mln EUR Spain* 2009 (updated in 2013) 10,051 Ireland 2013 2,127 Total 12,178 *includes MAB listings Success factors: Stability & economic recovery Improved REIT regulation Increased allocations to real estate
GICS new sector - New sector status will reduce volatility closer to direct property - Enormous potential capital inflow of 75 bn. EUR
Global Pension Asset Study 2016
Real Estate Investments Investors with Real Estate allocation Average allocation to Real Estate (%) Investors with Listed Real Estate allocation Average Listed Real Estate allocation for investors In the US, among institutional investors 1,7 37% 80% 6,1 33% In Europe, among institutional investors 1.0 21% 80% 4,1 32% 80% have exposure to Real Estate 4.1% actual, 1.0% higher target 21% (by no.) have exposure to listed, (28% for >$5bn, 18% for smaller) 32% of Real Estate exposure is listed. 28% for the smaller investors. Source: Preqin, EPRA & NAREIT 16
Peer Real Estate Allocations Pension fund APG / Netherlands Target %RE %Listed RE 10% 30% Sovereign Wealth fund GPF / Norway Target %RE %Listed RE 7% 23% Top 20 investors in RE Investor Country RE AUM ( b) Total AUM ( b) Abu Dhabi Investment Authority UAE 49.1 701.9 Stiching Pensionfonds ABP NL 37.2 365.1 Caisse de depot et Placement du Quebec CA 37.2 167.8 Allianz GE 29.3 848.9 CalPERS US 27.6 268.1 Generali IT 27.0 200.5 CalSTRS US 23.6 165.7 Ontario Teachers' Pension Plan CA 23.2 179.1 Norway Governement Pension Fund Global NO 22.8 757.3 Canada Pension Plan Investment Board CA 22.1 221.5 Swiss Life SW 21.2 134.6 Pensioenfonds Zorg en Welzijn NL 20.9 166.4 AXA FR 20.4 887.1 GIC Private SI 20.0 285.7 Caisse des Depots et Consignations FR 15.5 447.2 Source: EPRA & IPE May/June 2016 17
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