Stanlib Offshore property presentation

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Offshore Developed Markets Property Overview and Outlook

Keillen NdlovuHead: Listed Property FundsNovember 2016



2Management meetings, conferences and site visitsSTANLIB Foreign Property20122013201420152016Hong KongUKChinaChinaJapanUKRomaniaFrancePhilippinesPhilippinesUSATurkeyThailandIndonesiaZambiaRomaniaPhilippinesHong KongNigeriaKenya & MauritiusBrazilIndonesiaTaiwanMexicoRomania & SerbiaNigeriaHong KongUKUKSpainGhanaUSAUSAUSAUKTanzaniaGermanyAustraliaRomaniaUSASingaporeRomaniaEgyptChinaMexicoSlovakiaUAEAustraliaHungarySingaporeGermanyNetherlandsSlovakiaKenyaNetherlandsGermany & AustriaGermanyBotswanaPolandSwitzerlandBrazilMozambiqueKenyaPoland & CroatiaZambiaNamibiaCroatiaMozambique & NamibiaMauritiusMoroccoNamibiaSlovakia SwazilandUAE

Developed MarketsEmerging MarketsAfrica

3 Mixed relative performance versus EquitiesYear-to-date Global Listed Property Total Returns (USD)Source: UBS, EPRA/NAREIT Index Total Returns to 04 November 2016Brexit

US electionsRate hike?

Brexit Impact UK vs. Continental Europe Share Prices4Source: UBS Nov 2016Based to 100UK PropertyEurope PropertyBrexit Referendum

Intus retail properties in the UK and Spain5

Source: STANLIB Research June 2016

Capital & Counties: Covent Garden & Earls Court, London, UK6

Source: STANLIB Research June 2016

7STANLIB Global Property Fund ExposurePortfolioBenchmarkDifferenceEurope11.1%6.2%4.9%Oceania7.0%8.0%-0.9%Hong Kong2.1%1.8%0.4%Singapore2.1%2.8%-0.7%Middle East0.0%0.0%0.0%UK8.0%4.9%3.1%Japan8.1%9.0%-0.9%Cash2.8%0.0%2.8%North America58.7%67.3%-8.6%Total 100.00%100.00%0.00%

Source: STANLIB, Bloomberg October 2016

8STANLIB Global Property Fund Top Holdings%PortfolioBenchmarkDifferenceRegionSectorPrologis4.162.291.87USAIndustrialSimon Property Group7.125.291.83USARetailDeutsche Wohnen1.62-1.62GermanyResidentialPublic Storage4.302.701.59USASelf StorageSL Green Realty Corp2.300.881.42USAOfficesExtra Space Storage 2.120.811.30USASelf StorageLife Storage Inc1.17-1.17USASelf StorageBoston Properties Inc2.811.701.11USAOfficesJapan Retail Fund1.600.511.08JapanRetailVonovia Se1.08-1.08GermanyResidential

Source: STANLIB, Bloomberg Sept 2016

9at almost record lowsCentral London (UK) office vacancies

Source: Derwent London plc 2016

10Size of London office job marketRemember the size of London vs European CitiesSource: Citi October 2016

La Defense Offices, Paris, France (Unibail-Rodamco)

Source: STANLIB Research April 2016

12Driven by immigration, including refugeesGerman residential continues to be a strong performerSource: JP Morgan Estimates, Bloomberg July 2016

Rental Growth Projections German residential property companies

13Current rents and values less than half equilibrium levelsGerman residential replacement costs very highSource: Citi Research November 2016

14Sydney - Rents are growing above trendAustralian Office Property MarketSource: JLL October 2016

15Sydney - Take-up of space continues to be strongAustralian Industrial Property MarketSource: JLL October 2016

USA Property Market Vacancies are falling16Source: REIS Analytics and JP Morgan September 2016

USA Property Market Rents are going up17Source: REIS Analytics and JP Morgan April 2016

USA Property Market Supply is picking up, marginally18

Source: REIS Analytics and JP Morgan April 2016

US Property Market But new space is being absorbed19Source: REIS Analytics and JP Morgan September 2016

20Sales Forecast 2015 to 2018 based to 100E-Commerce showing strong growth across the worldSource: CBRE 2016

Food, beverage & entertainment now new anchor tenants21Source: CBRE and STANLIB Research September 2016

Experience-driven retail, which includes fine dining, education and family entertainment all customised to the needs and wants of the local catchment area will be the key to success

Mall of Scandinavia, Stockholm, Sweden (Unibail-Rodamco)

Source: STANLIB Research April 2016

Experiential shopping, technology and bigger stores23Source: Unibail-Rodamco Results Presentation, February 2016


Times Square, New York City, USA Vornado Realty Trust24Source: STANLIB Research September2016

Westfield World Trade Centre, New York City, USA Westfield Corp25Source: STANLIB September 2016

26Despite some weakness in AsiaRents up across all sectors and regions globallySource: CBRE 2016

Global Property Earnings track Global GDP Growth27Global EarningsPer ShareGrowthGlobalGDP GrowthSource: UBS, MSCI, Thomson Financial Datastream, 31 August 2016

28Listed Property still cheaper than Physical Property generallyGlobal Listed Property Price to Net Asset Value (NAV)Source: UBS , Worldscope, Datastream 31 October 2016


29Global Property still cheap relative to BondsYield Spread between Listed Property and BondsSource: BNP Paribus Cadiz , STANLIB Research 30 September 2016

Spread = Global Developed Property Yields less Developed Bond YieldsCurrent 3.08%Average 1.55%CHEAPEXPENSIVE

30Property now cheaper than sub-prime periodGlobal Property-Bond Yield RatioSource: BNP Paribus Cadiz , STANLIB Research 30 September 2016

Ratio = Property Yield (EPRA/NAREIT Index) divided by Bond Yields (JP Morgan Index) Average 1.80Current 4.46CHEAPEXPENSIVE

31Lower correlation to bonds, above average yield gap/ratios give some comfort*Global Listed Property Outlook (USD)1 YearBull CaseBase CaseBear CaseTotal Return (Income and Capital)14.13%8.31%3.09%Assumption 1: US 10 Year Bond Yield (Current 1.80%)1.50%2.00%2.50%Assumption 2: Exit Yield (Current 4.60%)4.45%4.70%4.95%Assumption 3: Earnings Growth5.70%5.70%5.70%

4 Years (Lower for Longer Interest Rates)Bull CaseBase CaseBear CaseTotal Return (Income and Capital)9.62%9.00%%8.40%Assumption 1: US 10 year Bond Yield (Current 1.80%)2.25%2.50%2.75%Assumption 2: Exit Yield (Current 4.60%)4.83%4.95%5.08%Assumption 3: Average Earnings Growth5.90%5.90%5.90%

Source: STANLIB Research, UBS, S&P, Bloomberg October 2016* NB: Hence we apply only a 50% rating change to bond yield movements in our exit yields

32STANLIB Global Property Fund Dividend YieldSource: STANLIB, Bloomberg Nov 2016

33Property prices have gone up driven by good earnings growthGlobal Listed Property in a rising interest rate cycleSource: DataStream and UBS August 2016

Grey shading is Fed rate hikes period


Adding Global Listed Property Helps to Improve Returnsin Global Balanced Portfolios34Source: Cadiz BNP Paribus, Bloomberg and various indices to 30 September 2016USD

Global Property Provides Stable & Fairly Predictable Income35Source: UBS Investors Index , S&P Developed REIT Index, Bloomberg January 2016


36Rather than being part of Financials in S&P and MSCI IndicesListed Property now a stand-alone sectorSource: Data Stream, UBS August 2016

S&P Developed BMIMSCI World All Cap

37Better than expected economic growthLower for longer interest ratesWall of money still chasing property Big gap between property yields and bond yieldsLimited supply of properties in most sectorsProperty now a standalone sectorRising global bond yields and interest ratesLower than expected economic growthBrexit uncertaintyUS political uncertainty

Upside RiskDownside RiskGlobal Listed Property Conclusion Developed Markets



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