“Investment in offshore property portfolios” – Stanlib

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  • 1.Global Listed Property OverviewKeillen NdlovuHead of Listed Property Funds Senate Conference March 2013

2. The STANLIB Listed Property TeamKeillen Ndlovu Riaan GerberNdabezinhle Mkhize Craig SmithHead: Listed Property FundsProperty AnalystProperty AnalystProperty AnalystPortfolio Manager Offshore Focus Local Focus Local FocusBCom (Hons) FinanceBCom(Hons) FinanceB Compt (Hons)BSc (Actuarial Science) BSc (Hons) Property StudiesProperty Development Programme Property Development ProgrammeCAIACFACAIB(SA)CA(SA) CFAPassed CAIA Level 1 exams8 years5 years8 years 4 yearsasset management experienceasset management experienceasset management experiencephysical property experience (8 years listed property)(5 years listed property)(6 years listed property)(1.5 years listed property)(8 years with STANLIB) (5 years with STANLIB) (2 years with STANLIB) (1.5 years with STANLIB)3 3. Stanlib Global Property Fund Objective The Fund invests in the global property market comprising of both developed and emerging territories. To provide superior long term investment performance based on sound fundamental research. Portfolio Characteristics The Fund aims to outperform the UBS Global Real Estate Investors Index Manager selects stocks from the bottom up rather than attempting to take big regional bets. The Fund has a very strong bias toward investors rather than developers. Investment Style Involves selecting companies that generate above average growth in their rental streams We invest in companies that are trading at reasonable values relative to their growth prospects. We focus on defensive attributes such as balance sheet strength, tenant stability and core rental earnings. Target Market Investors that seek a diversified portfolio of global property stocks that aims to diversify exposure away from the South African listed property market Investors that need to add diversity to their offshore cash, equities and/or bond exposure. Investors that need to add diversity to currency exposure 3 4. We do stock picking in-house but we outsource most of the researchUBSMacQuarieCredit SuisseMorgan StanleyJP MorganMerill LynchMorningstarDeutsche BankCB Richard Ellis Jones Lang La Salle Monthly or quarterly conference callsAd hoc conference calls ConversationsEmailBloomberg chats Analysts visiting us at our officesOne-on-one meetings Property markets reportsDaily reportsWeekly reportsMonthly reports4 5. Increased appetite for STANLIBs offshore listed property offering The STANLIB Global Property Feeder Fund has grown to R790m making it the biggest offshore property fund in South AfricaSource: I-Net & STANLIB5 6. STANLIB Global Property offering managed in-house - a top performer STANLIB Global Property Fund (underlying fund US Dollar denominated) Ranked 2nd in the world over 2 years as at 31 December 2012 (in USD) STANLIB Global Property Feeder Fund (Rand denominated) Winner of the Morningstar Award Best Risk-Adjusted Return Over 1 and 3 years to Dec 2011 South African ranking(in ZAR) Jan 2013 1st over 1 year out of 6 funds 1st over 3 years out of 5 funds 1st over 5 years out of 3 fundsSource: Morningstar & FundsDataNB: We do not aim for this. Its an outcome of our investment philosophy and process.6 7. STANLIB Global Property Fund gross total returns to 31 December 2012 - USD 1 3 613 Since Month Month Month YearYearInception(%) (%) (%)(%)(%) Sept 2009* (%)STANLIB Global Property Fund 3.254.679.9726.79 16.1316.60 Benchmark : 2.854.588.8624.93 15.5515.84UBS Global InvestorsOutperformance 0.400.081.111.860.59 0.76 *annualisedOfficial STANLIB takeover July 2009Fully invested Sept 2009Source: STANLIB Performance 8. STANLIB Global Property Fund gross total returns to 31 December 2012 ZAR 1 3 613Since Month Month Month YearYear Inception(%) (%) (%)(%)(%)Sept2009*(%)STANLIB Global Property Fund -1.55 7.0313.85 32.85 21.68 21.05 Benchmark : -1.93 6.941.7030.90 21.06 20.26UBS Global InvestorsOutperformance 0.380.081.151.950.61 0.79*annualised Official STANLIB takeover July 2009 Fully invested Sept 2009 Source: STANLIB Performance 9. Our benchmark has achieved the highest return with the lowest risk STANLIB Global Property Fund Benchmark 9% 8% UBS Global Investors FTSE EPRA/ NAREITTotal Return Per Annum 7% Global 6% 5%GPR 250 4% MSCI World RE* 3%UBS Global 2%Developers 1% 0%16% 18%20% 22% 24% 26% 28%Risk Per Annum Source: UBS Data from 1990 to 20129 10. STANLIB Global Property Fund exposure by regionPortfolio by Region4.0% 5.6% North America5.6% 3.7%Europe UK Oceania 10.3% Japan54.7% Hong Kong5.7% Singapore 10.3% cashSingapore retail, Suntec City Mall May 2009 site visitSource: STANLIB Research Dec 2012 11. STANLIB Global Property Fund exposure by sector Portfolio by Sector 1.6%5.6%17.3%officeretail 20.2%industrialsHOSPITALSresidentialdiversified 11.1%hotels 37.1%cash 7.2%PRISONSSource: UBS, Bloomberg Dec 201211 12. The retail sector has provided the best returns with the lowest risk10%9% Global Investors8%Retail Return Per Annum7%6%Diversified Residential5% Industrial4%3%Office2% Global Developers1%0%13%15% 17% 19% 21%23%25% 27%29%31%33%Risk Per AnnumSource: UBS May 2002 to Jan 201212 13. STANLIB Global Property Fund Current HoldingsTop 10 Holdings Portfolio % Top 10 Overweight PositionsRelativeWestfield Group 2.0%American Campus Communities 0.72%Wharf Holdings Ltd2.0%Westfield Retail Trust0.73%Ventas Inc2.0%Brookfield Office Properties0.75%Equity Residential2.1%Can Real Estate Invest Trust0.78%Boston Properties Inc 2.2%Can Apartment Prop Real Estate0.82%Prologis Inc2.5%Primaris Retail Real Estate 0.89%Unibail-Rodamco Se2.6%Simon Property Group Inc1.02%Public Storage3.0%Tanger Factory Outlet Center1.06%New Europe Property Invest3.4% Growthpoint Properties Austr 1.60%Simon Property Group Inc7.1%New Europe Property Invest3.37% 28.8% 11.72% Source: STANLIB Research as at Dec 2012 13 14. Imagination is a poor substitute for experience Havelock EllisSome of our many site visitsNB: All photos taken by the STANLIB Listed Property team 15. Shopping JK Iguatemi, Sao Paulo Brazils most beautiful shopping centre July 2012 Owned by Iguatemi Empresa de Shopping Centers one of our holdings15 16. Norte Shopping, Rio de Janeiro, Brazil Low income centre BR Malls Source: STANLIB Research July 2012 16 17. USA New York site visits June 2012Source: STANLIB Research June 201217 18. USA New York Site VisitsSource: STANLIB Research June 201218 19. London Jan 2012 site visits - Westfield Stratford City Westfield Group Opened in September 2011 and cost 1.45bn (R17.5bn) to build 190,000m- the largest shopping centre in Europe (Canal Walk in Cape Town is 150,000m) Average lease length is 10 years Anchored by John Lewis (24,000m), Marks & Spencer (20,000m), Waitrose (3,200m) & 6,500m casino (UKs largest) 17 cinemas all with 3D screens Vacancy of 6% - looks to be fully let before Olympic Games 70% of the visitors to the Olympics will pass through Westfield Stratford 58 trains per hour connect Stratford and Central LondonSource: STANLIB Research January 2012 19 20. Westfield White City London Westfield Group - January 2013 Opened in October 2008 and cost circa 1.6bn (R22bn) to build 150,000m in size placing it at a similar size to Canal Walk in Cape Town 255 stores Anchored by Debenhams, M&S, Waitrose (3,200m) The project took five years to build Shop front floor to ceiling height on upper level is double volumeSource: STANLIB Research Jan 2013Source: Westfield, Stanlib Research20 21. Canary Wharf, London - January 2012 & 2013 Owned by Canary Wharf plc Canary Wharf precinct commenced in the mid to late 1980sPhoto by Craig Smith Photo by Craig Smith precinct now comprises approx 1.5m m of office and retail space Working population in excess of 105 000 people Occupiers include Thomson reuters, Ogilvy, McGraw-Hill, BP Shell, Chevron, Total, Clifford Chance, Allen and ,Overy, HSBC, Barclays, Citi, Morgan Stanley, Credit Suisse, BNY Mellon, BOA Merrill Lynch, KPMG, Fitch, Moodys,Standard & Poors, Mastercard, FSA, JP Morgan) The Cross rail line will link in to Canary Wharf and is expected to open in 2018Source: STANLIB Research Jan 2013Source: Songbird Estates, Stanlib Research 21 22. Hong Kong One of the most densely populated cities Source: STANLIB Research January 201222 23. No wonder why theres queues at shopping centres in Hong Kong Harbour City Hong Kongs largest mall 177,000m Normal trading day. No specials.Source: STANLIB Research January 201223 24. Hong Kong site visit - Langham Place Mall Champion REIT Dividend yield 6.2% Gearing 26% Cost of debt 1.1% 100% occupied Footcount up 5.2% to 8.5m visitors per month management looking to improve it! Turnover up 24% year on year Rental growth up 20% over expiring rentsNo weakness or slowdown expected in occupancies or rentsSource: STANLIB Research January 201224 25. Romanian towns and cities visited by STANLIB in 2011 Areas where NEPI is exposed to25 26. The new Romania upmarket shopping centres - NEPI Source: STANLIB Research May 2011Promenada Mall , Braila - New Europe Property Investments (NEPI) 26 27. The new Romania NEPI - modern office buildings with multinational tenantsCity Business Centre, Timisoara Floreasca 169, Bucharest Source: STANLIB Research 27 28. Singapore site visits August 2011 Strong fundamentals across all sectorsMarina Bay SandsNew CBD letting very well. Taken up by banks No material impact on existing retail and hotelsNew shopping centre on Orchard Road fully letOld CBD holding up despite increase in supply28 29. Singapore site visits August 2011- Strong fundamentals across all sectors Hotel RetailRetail Retail first H&M store in Singapore29 30. Westfield Retail Trust, Australia - October 2011- Management breakfast A$9.3bn market capitalisation (R85bn) Owns malls in Australia and New Zealand Less than 2% of rent linked to sales turnover 99.5% of portfolio leased i.e. 0.5% vacancy Low gearing of 20%Westfield