The Listed Property Sector: An Overview

Transcription

1 The Listed Property Sector: An Overview REALTY Conference 22 May Brussels Steffen Milner EU Affairs and Regulation Manager EPRA Agenda A reminder: Without real estate nothing works! Who is EPRA? The European listed property sector Growing the sector Conclusion Grand Opening 30 March 2012 by EPRA Member Klépierre 2 1

2 Real Estate is crucial to all walks of life From birth to death! Nursing home Maternity Office building Real Estate «Circle of Life» Home Le Forum des Halles Paris EPRA Member: Unibail-Rodamco Factory School La Goélette Equeurdreville EPRA Member: Cofinimmo Mall Globus Zürich EPRA Member: PSP Swiss Property Maternities, apartments, schools, universities, supermarkets, grocery store, factory, offices, hotels, ministries, 3 hospitals, nursing homes, undeveloped land, and cemetery! Agenda Without real estate nothing works! Who is EPRA? The European listed property sector Growing the sector Conclusion 4 2

3 EPRA Agenda Membership EPRA Representing 250 billion of commercial property EPRA Today (covering 27 countries) Type Number and percentages Property Companies 96 46% Investors 40 20% Banks 23 12% Universities 19 10% Consultants 19 10% Others 4 2% 10% 11% 9% 2% 20% EPRA % Property Companies Investors Banks Universities Consultants Others Total % 5 EPRA Mission Statement EPRA s mission is to promote, develop and represent the European public real estate sector. EPRA Activities Reporting & Regulation Research, Indices & Investor Outreach Events/Networking Place Polert ( m 2 ) Brussels Befimmo EPRA Member EPRA Coordinated Voice EU legislation Monitoring and participation to EU policy and legislation development, listed RE representation to the EU. Best Practice Recommendation Development of guidelines to help property companies produce best-in-class annual reports. Taxation Revision Active development of REIT regimes and listed property in Europe. Financial Reporting Lease accounting, European valuation methodologies, revenue recognition, etc. 6 3

4 EPRA Countries Belgium: 8 EPRA Members United Kingdom The Netherlands France Germany USA Belgium Switzerland Spain Others 7 Agenda Without real estate nothing works! Who is EPRA? The European listed property sector Growing the sector Conclusion 8 4

5 Commercial Property Sector Broad range of activities Physical bricks and mortar property development / redevelopment. Rental income generation and growth over the medium to long term. Mainstream: residential, office, retail and industrial property. Other: hospitality, leisure, education, healthcare and infrastructure. 9 Grenelle (Paris, 15 ème ) The listed RE sector is Best in Class Provides access to impressive range of properties to retail and institutional investors. As with other listed companies, transparency requirements are higher. Offers a liquid investment in an illiquid market (easy to get in or out). Helpful to investors to make decisions, reward effective and responsible management Improve quality and dynamism of the underlying built environment. Often, the only feasible way to get a piece of top quality property assets. Broad diversification countries & sectors. Attractive cash-flow /yield, with strong long term performance. Interesting for risk pooling (often hundreds of objects in portfolio). Useful provider of long-term financial returns in pension schemes. A proxy for direct property investment. Leaders in sustainability issues, thanks to high transparency. Offers regular and reliable tax revenues for governments (regular dividends). Improves low cost housing availability (better than buy-to-let scheme ). Capital of corporate owners occupiers (partly) freed from RE ownership. 10 5

6 Key attributes of listed property sector (1) Liquidity Company Market Cap Velocity Unibail 13.9 B 106% Land Securities 6.3 B 86% British Land 5.5 B 91% Corio 4.5 B 88% Hammerson 3.6 B 80% Cap Shop 2.8 B 82% Swiss Prop 2.8 B 68% SEGRO 2.7 B 65% Klépierre 2.7 B 85% PSP 2.7 B 54% 2011 figures 11 Key attributes of listed property sector (2) Transparency IFRS, REIT legislation, EU Corporate Law, Stock Exchange. EPRA Best Practices Recommendations (BPR) since Industry KPIs and guidance developed in consultation with investors. Raising standards, transparency and comparability within the sector Adoption rate of EPRA BPR EPRA BPR Adoption Company Flag Market Cap 1 Icade FR Silic FR Société de la Tour Eiffel FR Deutsche EuroShop DE Deutsche Wohnen AG DE Prime Office REIT-AG DE Shaftesbury UK Eurocommercial NL Mobimo CH Warehouses De Pauw BE Wereldhave Belgium BE 369 Total (M ) % of EPRA index (115B ) 11% 12 6

7 Energy efficiency in buildings Transparency & Liquidity attributes are helping EU currently consulting on financial support for energy efficiency in buildings. Why? Easy, EU is noton track to realisethe goals set for % of final energy consumption is in houses, offices, shops and others. 35% of greenhouse gas emission is coming from property sector. 2 nd untapped cost-effective potential for energy savings (after energy sector). Issue is important to EPRA Members. EPRA replied to EU consultation last week. Listed property sector has a role to play. 13 REITs A performing subset of listed RE Eight EU countries have REITs (market brand). SIICs, SICAFIs, G-REITs, FBIs, etc. Different legal structures, regulatory systems and business models. EPRA/FTSE listed property index = 111bn. (April 2012) 14 7

8 Listed RE companies are real businesses A few other examples Major developers Land Securities completed more development projects in (over m²) more than Skanska or Bouygues. Development pipeline: Klépierre(2010): 1,255,750m 2 ( 4,2bn) and Unibail-Rodamco(2011): m 2 ( 6.9bn). Customers focused (retail context) British Land (2010): 250 million visitors, 4.7bn annually spent in department stores. Unibail-Rodamco(2011): 353 million visitors in 33 shopping centres(france only), new wave of attractive brands (Apple, Uniqlo, ) Active operating businesses Hammerson: individual lease contracts with tenants, SEGRO more than customers (tenant businesses). Klépierre (2011): operates > 350 shopping centresand > commercial lease contracts. Here for the long run British Land (1856), Land Securities (1864) SEGRO (1921), Hammerson(1943),Unibail- Rodamco(1968), Klépierre (1990), Icade (1954), Gecina(1959). 15 Listed Real Estate: A Success Story in East London Agenda Westfield Stratford City: Gateway to the 2012 Olympics In Summary New large urban development in East London m 2 (retail), m 2 (offices) Construction started 2007, will end 2020 (offices part) 300 shops, 70 restaurants, 3 hotels, 17 screens cinema 4 million people within 45 minutes from centre visitors a day Sustainability 75% of electric power through on-site CCHP Carbon reduction targets of 50% by 2020 Recycling 50% of retail waste Ecological brown roofs for wildlife 10% more energy efficient than required Pavegen floor tiles to harness kinetic energy Employment construction jobs jobs in retail sector permanent job Benefits to Economy Peak of workers each day permanent jobs (upon completion) Construction training onsite Tax revenue of up to 160 mio/year by 2020 Apprentices and trainees on site Deprivation in Newham sets to fall sharply Improved quality of life in neighborhood Westfield Group (WDC): Part of the EPRA/NAREIT Global Index 16 8

9 Agenda Without real estate nothing works! Who is EPRA? The European listed property sector Growing the sector Conclusion 17 Global Real Estate Market Region All Listed Companies (USD billion) Listed Real Estate (%of all listedcos) Developed Europe % North America % Developed Asia-Pacific % South America % Emerging EMEA % Global % Region Underlying Real Estate (USD billion) Listed Real Estate (% of underlying RE) Developed Europe % North America % Developed Asia-Pacific % South America % Emerging EMEA % EPRA Index Market Cap (USD billion) Global % Estimates: 31 April

10 Regional relative index weights 19 Why is the European listed sector small? Persistent discounts to NAV. Free float restrictions in some cases. Investor culture many prefer direct control (lower volatility, etc.). Regulatory hurdles. Europe is combination of 27 medium to small states Fragmentation! Russia 8 th, Germany 15 th, Turkey 18 th, France 21 st, UK 22 nd, Italy 23 rd, Spain 28 th. USA 3 rd, Canada 35 th, Brazil 5 th, Mexico 11 th. China 1 st, India 2 nd, Indonesia 4 th, Japan 10 th, Philippines 12 th. EU Single Market is currently not performing well for our industry

11 Increased RE listed sector footprint in Europe Good for economic growth European listed RE sector is very small compared to other regions of the world. In some EU countries listed sector is almost non-existent (Germany). Increased listed footprint would directly contribute to economic growth and jobs. EPRA recommendations for larger listed sector Encourage emergence of Best in Class REIT legislation. Introduce mutual recognition principle for cross border REIT investments. Encourage adoption of OECD Model Treaty Recommendation for REITs. Utilise REITs for addressing issues of affordable housing alternative to owner occupation (social housing, subsidised and full market rental sector). Establish a global acceptance of corporate operating REITs as real economy business, not passive funds. 21 A few current regulatory issues Topic Timeline Comments AIFMD (defines funds) Transposition by July 2013 Scope is still under discussion! Majorityof EPRA members are not funds. Pension funds EIOPA output published in Q EC/EIOPA review of EU pension fund framework. EU -REITs Ongoing New EU REIT regimes. Improvements. Mutual recognition. Shadow Banking Green Paper 2012 Indirect impact (capital). Possible direct impact(scope). Energy efficiency in buildings EU Consultationongoing Growingthe listed RE sector would help achieving the EU 2020 goals. VS

12 Agenda Without real estate nothing works! Who is EPRA? The European listed property sector Growing the sector Conclusion 23 Government and investors wishes Governments want: Capital flows into the built environment (access to capital) Economic stability (lower debt/less market defaults) Regular tax receipts Investors want: Cashflow/Diversification (long term correlation to RE) Liquidity Quality management and transparency Performance Wiertz( m 2 ) Brussels Befimmo EPRA Member 24 12

13 EPRA Contacts Gareth Lewis Director of Finance T +32(0) M +32(0) gareth.lewis@epra.com Steffen Milner EU Affairs and Regulation Manager T +32(0) steffen.milner@epra.com EPRA Square de Meeus Brussels Belgium T +32(0) F+32(0)