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1<br />
<strong>STANLIB</strong> <strong>Global</strong><br />
<strong>Property</strong> <strong>Feeder</strong> <strong>Fund</strong>
<strong>STANLIB</strong>’s <strong>Global</strong> Investment Solutions<br />
Building Block <strong>Fund</strong>s<br />
Cash Bonds <strong>Property</strong> Equity<br />
<strong>STANLIB</strong> Euro Cash <strong>Fund</strong> <strong>STANLIB</strong> <strong>Global</strong> Bond <strong>Fund</strong><br />
<strong>STANLIB</strong> Sterling Cash <strong>Fund</strong><br />
<strong>STANLIB</strong> US Dollar Cash<br />
<strong>Fund</strong><br />
* Currently only available in the Rand denominated range.<br />
<strong>STANLIB</strong> <strong>Global</strong><br />
<strong>Property</strong> <strong>Feeder</strong><br />
<strong>Fund</strong>*<br />
Managed <strong>Fund</strong> Solutions<br />
<strong>STANLIB</strong> <strong>Global</strong><br />
Equity <strong>Fund</strong><br />
<strong>STANLIB</strong> European Equity<br />
<strong>Fund</strong><br />
<strong>STANLIB</strong> <strong>Global</strong> Conservative <strong>Fund</strong> <strong>STANLIB</strong> <strong>Global</strong> Balanced <strong>Fund</strong> <strong>STANLIB</strong> <strong>Global</strong> Aggressive <strong>Fund</strong><br />
2
<strong>STANLIB</strong> <strong>Global</strong> <strong>Property</strong> <strong>Fund</strong>
<strong>STANLIB</strong> <strong>Global</strong> <strong>Property</strong> <strong>Fund</strong><br />
• Objective<br />
• Invests principally in global property market comprising of both developed and emerging territories.<br />
• Provide clients with superior long term investment performance based on sound fundamental research.<br />
• Portfolio Characteristics<br />
• The <strong>Fund</strong> aims to outperform the UBS <strong>Global</strong> Real Estate Investors Index.<br />
• Stock selection from the bottom up rather than attempting to take too bigger regional bets.<br />
• The <strong>Fund</strong> has a very strong bias toward investors rather than developers.<br />
• Investment Style<br />
• Select companies that generate above average rental growth, and trading at reasonable values relative<br />
to their growth prospects.<br />
• Focus on defensive attributes such as balance sheet strength, tenant stability and core rental earnings.<br />
• Target Market<br />
4<br />
• Ideal for investors that seek a diversified portfolio of global property stocks<br />
• Diversity to currency exposure.<br />
• Diversity to offshore cash, equities and/or bond exposure.
The <strong>STANLIB</strong> <strong>Property</strong> Team<br />
Ndabezinhle Mkhize: <strong>Property</strong> Analyst<br />
BSc Actuarial Science, CFA, CAIA<br />
7 Years Industry Experience<br />
5<br />
Keillen Ndlovu: Head of <strong>Property</strong> <strong>Fund</strong>s<br />
B.Com (Hons) Finance, CAIB(SA)<br />
<strong>Property</strong> Development Programme<br />
7 Years Industry Experience<br />
Riaan Gerber: <strong>Property</strong> Analyst<br />
B.Compt (Hons), CA(SA)<br />
3 Years Industry Experience
We outsource most of the research<br />
UBS MacQuarie<br />
Credit Suisse Morgan Stanley<br />
JP Morgan Merill Lynch<br />
Morningstar Deutsche Bank<br />
6<br />
Monthly or quarterly conference calls<br />
Ad hoc conference calls<br />
Email conversations<br />
Analysts visit to our offices<br />
Bloomberg chats<br />
Weekly reports<br />
Daily property flashnotes<br />
Monthly reports
Why run an Offshore <strong>Fund</strong>?<br />
Most local property companies have offshore exposure<br />
SA Listed <strong>Property</strong><br />
Company/<strong>Fund</strong><br />
Offshore Exposure % of total<br />
assets<br />
Resilient NEPI (Romania) 5.5%<br />
Redefine Redefine International (UK, Germany & Australia) 8.6%<br />
Growthpoint Growthpoint (Australia) 5.1%<br />
Emira Growthpoint (Australia) 3.0%<br />
Sycom Nova Eventis Shopping Centre (Germany) 4.6%<br />
Hyprop Germany exposure through Sycom holding 0.8%<br />
Acucap Germany exposure through Sycom holding 0.6%<br />
Capital NEPI (Romania) 0.6%<br />
Fortress NEPI (Romania) 2.9%<br />
7<br />
Source: Avior Research May<br />
2011
Romania, Eastern Europe – May 2011 site visits-<br />
First impressions?<br />
8
The new Romania – upmarket shopping centres<br />
9<br />
Promenada Mall , Braila<br />
New Europe <strong>Property</strong> Investments (NEPI)<br />
7 May 2011
The new Romanian –<br />
modern office buildings with multinational tenants<br />
City Business Centre, Timisoara<br />
10<br />
Floreasca 169, Bucharest
The new Romania –<br />
International Retailers, great shop fronts & nice cars<br />
11<br />
Baneasa Shopping City, Bucharest<br />
JW Marriott Bucharest Grand Hotel<br />
H&M, Mega <strong>Fund</strong> Shopping Centre, Bucharest<br />
Baneasa Shopping City, Bucharest
The new Romania – world class designs<br />
Mega <strong>Fund</strong> Shopping Centre ice rank, Bucharest Promenada Mall cinema entrance, Braila<br />
12
<strong>STANLIB</strong> <strong>Global</strong> <strong>Property</strong> <strong>Fund</strong> performance to<br />
30 April 2011 (ZAR)<br />
13<br />
1<br />
Month<br />
3<br />
Months<br />
6<br />
Months<br />
1<br />
Year<br />
<strong>STANLIB</strong> <strong>Global</strong> <strong>Property</strong> <strong>Fund</strong> 3.06% 1.05% 8.73% 13.26%<br />
UBS <strong>Global</strong> Investors Index 3.14% 0.46% 8.29% 12.68%<br />
Out/Underperformance -0.08% 0.58% 0.44% 0.58%
<strong>STANLIB</strong> <strong>Global</strong> <strong>Property</strong> <strong>Fund</strong> rankings versus peers* -<br />
5 May 2011<br />
1<br />
Month<br />
3<br />
Months<br />
6<br />
Months<br />
9<br />
Months<br />
1<br />
Year<br />
3<br />
Years<br />
5<br />
Years<br />
<strong>STANLIB</strong> <strong>Global</strong><br />
<strong>Property</strong> <strong>Fund</strong> 2/9 3/9 1/9 3/9 6/9 2/7 2/5<br />
Source: Morningstar<br />
* Foreign Equity Varied Specialist sector - funds focusing on offshore real estate<br />
14
<strong>Global</strong> Listed <strong>Property</strong> Regions<br />
• North America<br />
• Continental Europe<br />
• UK<br />
• Oceania<br />
(Australia and New Zealand)<br />
• Japan<br />
• Hong Kong<br />
• Singapore<br />
Japan<br />
5%<br />
Hong<br />
Kong<br />
5%<br />
Oceania<br />
10%<br />
UK<br />
6%<br />
Europe<br />
15%<br />
Singapore<br />
5%<br />
North<br />
America<br />
54%<br />
Source: UBS, Bloomberg April 2011
<strong>Global</strong> Listed <strong>Property</strong> Sectors<br />
• Retail<br />
• Office<br />
• Diversified<br />
• Residential<br />
• Industrial<br />
• Hotels<br />
16<br />
industrials<br />
6%<br />
hotels<br />
3%<br />
diversified<br />
22%<br />
residential<br />
10%<br />
Source: UBS, Bloomberg April 2011<br />
retail<br />
32%<br />
office<br />
27%<br />
Singapore retail, May 2009 site visit
<strong>Global</strong> <strong>Property</strong> <strong>Fund</strong> – we prefer Investors to Developers<br />
Investors may be REIT or Non REIT<br />
17<br />
Non REIT<br />
10%<br />
REIT<br />
62%<br />
Developers<br />
28%<br />
Source: UBS, Bloomberg April 2011
Investors have outperformed Developers over the long-term<br />
900.0<br />
800.0<br />
700.0<br />
600.0<br />
500.0<br />
400.0<br />
300.0<br />
200.0<br />
100.0<br />
-<br />
18<br />
UBS Investors UBS Developers<br />
Source: UBS, Bloomberg April 2011
UBS <strong>Global</strong> Investors Index provides better risk-adjusted<br />
returns…..<br />
Source: UBS and S&P estimates – Jan 1990 to Apr 2011<br />
19
….more so in the Retail Sector<br />
Source: UBS – May 2002 to Apr 2011<br />
20
Top 10 Holdings<br />
Boston Properties Inc 2.5%<br />
Digital Realty Trust 2.4%<br />
Equity Residential 2.7%<br />
HCP Inc 2.2%<br />
Public Storage 2.5%<br />
Simon <strong>Property</strong> Group 6.7%<br />
SL Green Realty Corp 2.4%<br />
Unibail - Rodamco 4.7%<br />
Vornado Realty Trust 2.7%<br />
Westfield Group 3.8%<br />
Total 32.6%<br />
21<br />
As at April 2011<br />
Top 10 Overweights<br />
Alstria Office REIT-AG 1.0%<br />
Digital Realty Trust 1.6%<br />
Eurocommercial 1.1%<br />
GPT Group 1.1%<br />
Kenedix Realty Investment Corp 1.1%<br />
Kilroy Realty Corp 1.1%<br />
Mapletree Logistics REIT 0.9%<br />
Simon <strong>Property</strong> Group 1.6%<br />
SL Green Realty Corp 1.4%<br />
Unibail - Rodamco 1.5%<br />
Total 12.5%
Example: Unibail-Rodamco<br />
• Market cap of €14bn (+/- R135bn)<br />
• Focuses on prime, well-located assets offering high growth<br />
potential in European capital cities.<br />
• Owns 88 shopping centres; out of which 54 receive more than<br />
6 million visits per year each<br />
• Loan-to-value (debt) 37%<br />
• Average debt maturity 4.3 years<br />
• Average cost of debt 3.9%<br />
• Income growth of 3.25%<br />
• Forward yield 5.3%<br />
• French 10-year government bond 3.4%<br />
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Why <strong>Global</strong> <strong>Property</strong> is an<br />
attractive asset class
All Regions are trading in line or better than 10-year bond yields<br />
24<br />
Source: MacQuarie, Bloomberg May 2011
<strong>Global</strong> <strong>Property</strong> prices to NAV – not cheap, but not peak<br />
25<br />
Source: UBS
Earnings growth tracks GDP growth – improved GDP outlook<br />
Forecasts, GDP growth, %y/y 2011 2012 2013<br />
World 4.4 4.5 4.5<br />
Advanced economies 2.4 2.6 2.5<br />
Emerging and developing economies 6.5 6.5 6.5<br />
Source: IMF<br />
Source: UBS, DataStream
Limited supply of global office space – new completions declining<br />
Manhattan offices,<br />
New York, USA<br />
27<br />
Source: CB Richard Ellis Q1 2011
<strong>Global</strong> office vacancies falling<br />
Hong Kong Central<br />
April 2009 site visit<br />
28<br />
Source: CB Richard Ellis Q1 2011
<strong>Global</strong> office rentals are on an upward trend<br />
Marina Bay, Singapore<br />
September 2010 site visit<br />
29<br />
Source: CB Richard Ellis Q1 2011
The global office rental cycle – rental growth accelerating in most<br />
cities<br />
Shinjuku office node,<br />
Tokyo<br />
December 2010 site visits<br />
30<br />
Source: CB Richard Ellis Q1 2011
Five reasons why you should<br />
consider Offshore <strong>Property</strong> in a<br />
Balanced Portfolio
1) <strong>Global</strong> total returns – <strong>Property</strong> has provided superior returns<br />
(ZAR)….<br />
32<br />
Source: Bloomberg
2) <strong>Global</strong> <strong>Property</strong> has provided a higher yield<br />
<strong>Global</strong> Equity <strong>Global</strong> <strong>Property</strong> <strong>Global</strong> Bonds<br />
Average yield over 20 years 2.3% 6.0% 4.8%<br />
33<br />
Source: Bloomberg
3) <strong>Global</strong> <strong>Property</strong> provides a relatively stable income stream<br />
50%<br />
30%<br />
10%<br />
-10%<br />
-30%<br />
-50%<br />
Source: UBS & Bloomberg<br />
34<br />
Income Return Price Return Total Retun
…but there are exceptions<br />
8.8%<br />
7.8%<br />
6.8%<br />
5.8%<br />
4.8%<br />
3.8%<br />
2.8%<br />
Source: UBS, Bloomberg<br />
35<br />
Income Return Average
4) <strong>Global</strong> <strong>Property</strong> is a diversifier away from bonds and<br />
equities<br />
Source: UBS<br />
36
5) <strong>Global</strong> <strong>Property</strong> is a currency hedge<br />
600<br />
500<br />
400<br />
300<br />
200<br />
100<br />
0<br />
Source: UBS, Bloomberg April 2011<br />
37<br />
UBS Investors Index (ZAR) UBS Investors Index (USD) USDZAR<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0
No wonder why there is a huge appetite for <strong>Global</strong> <strong>Property</strong><br />
• DTZ’s “Great Wall of Money” report<br />
• $329bn of equity targeting property investment globally<br />
• $114bn targeting EMEA property<br />
• Jones Lang LaSalle (JLL) report<br />
• £52bn equity chasing UK property<br />
• More than 80% of that focused on London<br />
• Demand for London property to remain strong<br />
• Rising rents<br />
• Selective bank lending<br />
• Political unrest overseas<br />
• Weak sterling<br />
• Low interest rates<br />
Source: JP Morgan May 2011<br />
38
Conclusion<br />
• <strong>Global</strong> property is a great diversifier<br />
• Currency – best time to take advantage of the strong rand<br />
• Income, regions and sectors<br />
• Upside risk<br />
• Risks<br />
• Yield<br />
• Improved fundamentals across all regions and sectors<br />
• Earnings profile has bottomed<br />
• Physical property valuations reached the trough<br />
• Limited supply of new properties<br />
• Low funding costs<br />
• Higher inflation leading to interest rate hikes<br />
• Debt maturing in the next year to two, more so in Europe<br />
• We are looking at income (yield) of 3.6% in USD in the next year<br />
39
Legal Disclaimer<br />
Information and Content<br />
The information and content (collectively 'information') provided herein are provided by <strong>STANLIB</strong> Asset<br />
Management (“<strong>STANLIB</strong>AM”) as general information for information purposes only. <strong>STANLIB</strong> does not guarantee<br />
the suitability or potential value of any information or particular investment source. Any information herein is<br />
not intended nor does it constitute financial, tax, legal, investment, or other advice. Before making any<br />
decision or taking any action regarding your finances, you should consult a qualified Financial Adviser. Nothing<br />
contained herein constitutes a solicitation, recommendation, endorsement or offer by <strong>STANLIB</strong>AM.<br />
Copyright<br />
The information provided herein are the possession of <strong>STANLIB</strong>AM and are protected by copyright and<br />
intellectual property laws. The information may not be reproduced or distributed without the explicit consent<br />
of <strong>STANLIB</strong>AM.<br />
Disclaimer<br />
<strong>STANLIB</strong> has taken care to ensure that all information provided herein is true and accurate. <strong>STANLIB</strong> will<br />
therefore not be held responsible for any inaccuracies in the information herein. <strong>STANLIB</strong>AM shall not be<br />
responsible and disclaims all loss, liability or expense of any nature whatsoever which may be attributable<br />
(directly, indirectly or consequentially) to the use of the information provided.<br />
<strong>STANLIB</strong> Asset Management Limited<br />
Registration No: 1969/002753/06. A Financial Services Provider licensed under the Financial Advisory and<br />
Intermediary Services Act, 37 of 2002. FSP license No: 719.
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