REAL ESTATE INVESTMENT TRUSTS Isabel Ucha Board member Euronext December 6, 2016
REITS Listed companies whose main activity is direct and indirect investment in urban real estate for lease, distributing most of the income generated, with a specific tax regime. Asset/activity Distribution requirements Tax regime Listing regime Acquisition and development of real estate for lease Holding shares of other REITs or similar High % of qualifying assets (around 80%) High % of revenues deriving from qualifying assets (80%) Minimum holding period of assets Maximum leverage Pay dividends of high % of income (80% to 90%) Pay dividends on high % of capital gains Pay dividends on high % of other REITs income Transparency tax regime: no corporate tax Dividends and capital gains on shares are taxed at the investor level (individual or corporate) Withholding tax rules may apply In some jurisdictions listing is compulsory Listing may occur in regulated markets or multilateral trading facilities 2
REITS AS AN INVESTMENT Dividends Provide a stable income stream to investors Liquidity Diversification Stock exchange listed REIT shares can be easily bought and sold Allows both individual and institutional investors to diversify their portfolios without engaging directly into real estate activities Transparency As listed companies, REITs operate under the same rules as other public companies, namely the same financial reporting Tax Transparency tax regime
EURONEXT: CRITICAL OVERALL MASS IN REITS Euronext markets have a substantial community of REIT companies: 58 listed issuers combining a total market capitalization of more than 89bn High diversification in terms of sectors and companies sizes 1 IPO of an REIT issuer in Belgium: Xior Student Housing, ( 88m raised) for an initial market cap of 116 mln 6% Number of issuers by market cap Split by sector / market cap 18 17 11 Hotel & Lodging REITs 2% Residential REITs % Diversified REITs 1% Specialty REITs 0% 8 1 Industrial & Office REITs 41% Retail REITs 52% 0-100m 100-500m 500m- 1bn 1-5bn 5-10bn > 10bn 4
EURONEXT EUROPEAN REITS CENTER Outperformance of REITs equities on Euronext (LTM) Remarkable peer group 140 10 120 110 100 90 80 Supported by positive investor sentiment, REITs equities listed on Euronext have raised in total 628 million euros on Euronext since September 2015. 70 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Residential Diversified Industrial Retail SXXP INDEX REITE INDEX 00 200 220 250 100 0 49 5 47 8 1 1 6 0.4 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Follow-on in m Source:Euronext, Bloomberg, September 2016 Indices are market cap weighted * Average / Median 5
AS WELL AS ON EURONEXT PARIS Euronext Paris has a substantial community of REIT companies: 4 listed issuers combining a total market capitalization of approx. 5.2bn Number of issuers by market cap Split by sector / market cap 12 Residential REITs 2.4% Hotel & Lodging REITs 2.6% Diversified REITs 0.4% Specialty REITs 0.1% 9 6 Industrial & Office REITs 41.5% Retail REITs 52.9% 1 0-100m 100-500m 500m- 1bn 1-5bn 5-10bn > 10bn 6
AS WELL AS ON EURONEXT AMSTERDAM Euronext Amsterdam has a substantial community of REIT companies: 6 listed issuers combining a total market capitalization of approx. 26bn Number of issuers by market cap Split by sector / market 6% cap Industrial & Office REITs 5.2% Diversified REITs 2.5% 2 1 0-100m 100-500m 500m- 1bn 1-5bn 5-10bn > 10bn Retail REITs 92.% 7
EURONEXT REITS INVESTOR OVERVIEW Institution name Top 20 Institutional investors holding Count Of Securities Aggregate Value ( m) Aggregate Value Change ( m) Dominant style Country APG Asset Management N.V. 11,592 +0.65 Yield Netherlands Externally Predica 8,02 +60.5 Managed France Caisse de dépôt et placement du Québec 6 1,805 - Value Canada The Vanguard Group, Inc. 22 1,412-4.04 Index United States Belgium % Investors by country Norway 4% Canada 6% Germany 2% Other 8% France 27% Norges Bank Investment Management (Norway) 17 1,64 +2.29 Value Norway BlackRock Advisors (U.K.), LTD 19 1,198-4.27 Index United Kingdom Garantie Mutuelle des Fonctionnaires 965 - Externally Managed Northern Cross, LLC 1 94-96.84 Value United States Assurances du Crédit Mutuel Vie S.A. 4 897-4.21 Externally Managed State Street Global Advisors (SSgA) 18 816-10.4 Index United States AXA Investment Managers (Paris) 24 729 +18.896 Growth France CBRE Clarion Securities, LLC 10 711-7.48 Specialty United States BlackRock Fund Advisors 25 656-4.49 Index United States Dimensional Fund Advisors, L.P. (U.S.) 28 579 +11.96 Value United States SAFE (Hong Kong) 1 56 - Growth Hong Kong Natixis Asset Management 2 542-55.8 Value France France France Netherlands 12% United Kingdom 1% Investors by dominant style Yield 10% Specialty 5% Other % United States 25% Value 27% LaSalle Investment Management Securities, LLC 9 452-0.01 Specialty United States Degroof Petercam Asset Management S.A. 1 446 +1.59 Growth Belgium BlackRock Investment Management (U.K.), LTD 19 425 +1.02 Growth United Kingdom Morgan Stanley Investment Management Inc. 10 414 +2.9 Growth United States TOTAL TOP 20 Institutional Investors (54%) 21,5 TOTAL 9,704 Externally Managed 14% Index 17% Growth 24% Source: Ipreo, September 2016 8
REITS IN PORTUGAL 2015 Government Budget Current Status The introduction of a regime for Portuguese Real Estate Investment Trusts was included in 2015 Budget the SIPIs (Sociedades de Investimento em Património Imobiliário) The previous government targeted to create a regime similar to that of the Spanish SOCIMIs. * Non-regulated real estate company * Minimum share capital 5mln * Distribution 75% to 90% * Listed on a stock market * Transparent tax regime * Special transitory tax regime for year 1 The current government has publicly stated interest in introducing a REITs regime in Portugal Some issues have to be tackled: * the legal framework * the tax regime * some constraints to initially listed companies 9