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COVERNEWS
ISSUE 41MARCH/APRIL 2012
FEATURES REFERENCE- Defined Contributions & REITs
- Debt availability- Asset exposure Europe- Bonded to real estate
- Member offers- Analyst tables- FTSE EPRA/NAREIT Global Real Estate Indices
GUEST EDITORIan Shepherdson
Asset quality, diversification and yield are irresistible for investors
2. _ EPRA NEWS / 29 / 20082. EPRA NEWS / 41 / 2012
AUSTRALIA•Univ. of Western Sydney, Property Research Centre
•Valad Property Group
AUSTRIA•CA Immobilien Anlagen•Conwert Immobilien Invest•Sparkassen Immobilien
BELGIUM•Antwerp Management School •Banque De Groof•Befimmo•Cofinimmo•Leasinvest Real Estate•Solvay Business School (Brussels Univ.)
BRITISH VIRGIN ISLANDS•Eastern Property Holdings
CANADA•Ivanhoe Cambridge •OPTrust•Presima
FINLAND •Citycon•CREF Center for Real Estate Investment & Finance
•KTI Finland•Sponda
FRANCE•Acanthe Developpement•Affine•Altarea•ANF Immobilier•Baker & McKenzie•BNP Paribas•Cegereal•EUROSIC•Foncière des Regions•Foncière Paris France•Gecina•ICADE•IEIF•Klépierre•Mazars•Mercialys•Predica•Silic•Société de la Tour Eiffel•Société Foncière Lyonnaise•Université de Paris-Dauphine•Unibail-Rodamco
GERMANY•Allianz Real Estate•Alstria Office REIT•Deutsche EuroShop•Deutsche Wohnen•DIC Asset•Fair Value REIT AG•GAGFAH•GSW
•Hamborner•Heitman•IREBS International RE Business School
•IVG Immobilien•MEAG Real Estate Management•PATRIZIA Immobilien•POLIS Immobilien•PricewaterhouseCoopers•Prime Office REIT•Real Estate Management Institute
•RREEF Investment•SEB Asset Management•TAG Tegernsee•VIB
GREECE•Eurobank Properties REIC•Lamda Development•National Bank of Greece Property Services
•Trastor REIC
HONG KONG•Univ. of Hong Kong, Dept. of RE & Construction
ISREAL•Azrieli Group•Gazit Globe
ITALY•Beni Stabili•Immobiliare Grande Distribuzione
•Prelios
LUXEMBOURG•Orco Property Group
NETHERLANDS•Amsterdam School of RE•APG Asset Management•ASR•Atrium European Real Estate•BPF Bouwinvest•CB Richard Ellis•Clifford Chance•Corio•Deloitte Real Estate•Ernst & Young European Real Estate Group
•Eurocommercial Properties•Houthoff Buruma•ING REIM Europe•Kempen & Co•KPMG Accountants•LaSalle Investment Management•Loyens & Loeff•MN Services•Nieuwe Steen Investments•PGGM•Prologis•Royal Bank of Scotland Group•Redevco Europe Services•Univ. of Maastricht
•VastNed•Wereldhave•Yardi Systems
NORWAY•Norwegian Property
RUSSIA•Renaissance Capital
SINGAPORE•Keppel Land Limited•National Univ. of Singapore
SOUTH-AFRICA•Growthpoint Properties
SPAIN•Fundación ESADE•Inmobiliaria Colonial•Neinver•REALIA Group•TESTA Inmuebles & Renta
SWEDEN•Aberdeen Asset Management•Balder•Castellum
SWITZERLAND•Center for Urban & RE Management
•Euro Institute of RE Management•Mobimo Holdings•PSP Swiss Property•Swiss Capital Alternative Investments
•Swiss Prime Site•Strategic Capital Management•University of Geneva•Züblin Immobilien Holding
TURKEY•Emlak Konut•Torunlar REIT
UAE•Abu Dhabi Investment Authority
UNITED KINGDOM•Aberdeen University Business School
•Alvarez & Marsal•AMP Capital Brookfield•Aviva Investors•Bank of America•Barclays Capital•Big Yellow Group•British Land•Cass Business School•Capital & Counties Properties•Capital Shopping Centres•CLS Holdings•Credit Suisse Securities•Derwent London plc•Deutsche Bank•GIC Real Estate
•Goldman Sachs International•Grainger•Green Street Advisors•Grosvenor Group•Great Portland Estates•Hammerson•Hansteen•Henderson Global Investors•Ignis Asset Management•Invesco•Invista Real Estate Investment Management
•Jefferies International•JPMorgan Cazenove•Land Securities•Linklaters•Macquarie Real Estate•M&G Investment Management•Morgan Stanley•Nabarro•Nottingham University•Principal Global Investors•Quintain Estates & Development•Redefine International PLC•Safestore•SEGRO•Shaftesbury•Standard Life Investments•Thames River Capital•Tristan Capital•UBS•Univ. of Cambridge, Dept. of Land Economy
•Univ. of Reading, Centre for RE Research
•Workspace Group
USA•AEW Capital Management•CBRE Clarion Securities•Cohen & Steers Capital Management
•Cornerstone Real Estate Advisers•Duff & Phelps•European Investors Incorporated•Fidelity Management & Research.
•Forum Partners Investment Management
•FPL Advisory Group•ING Clarion (US)•MIT Center for Real Estate•Real Capital Analytics•Real Foundations•Russell Investment Group•Simon Property Group•SNL Financial•The Tuckerman Group•Univ. of Cincinnati•Westfield Group•WP Carey•Zell-Lurie RE Center at Wharton
EPRA MEMBERSAS OF MARCH 2012
EPRA NEWS / 41 / 2012 3.
CONTENTS
CREDITS
Editor & Production ManagerDominic Turnbull
Guest EditorIan Shepherdson
Article Credits
Please send your comments and suggestions to:
Design & LayOutFuse Consulting Limited
18 Greek Street
London
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PrintersPCM Ltd
EPRASquare de Meeus 23,
B-1000 Brussels
+32 (0) 2739 1010
GUEST EDITORFixing Europe 4
NEWS 8
FEATURESDefined contributions potential for REITs 12
Inflated or justified? 16
Availability of debt for real estate 18
EPRA Insight into 2012 21
Why Europe must open access to equity markets 25
IASB/FASB consultation programme under way 29
A favourable climate – German IPOs 31
EPRA Europe - Asset exposure map 34
Bonded to listed real estate 38
First EPRA sustainability awards 42
Sustainability strategies of European property companies 43
Real estate or equities? 48
Members offers 52
Tapping a wealth of data 53
REFERENCE PAGES
Analyst round-up 55
FTSE EPRA/NAREIT Global Real Estate Indices 60
NEWSISSUE 41 | MARCH/APRIL 2012
Gregor Bamert
Peter Barkow
Laurens te Beek
Dr. Thomas Beyerle
Barney Coleman
Jesse Freitag-Akselrod
Fraser Hughes
Brendan Jarvis
Gareth Lewis
Joe Valente
Rogier Quirijns
Mohamed Abdel Rahim
Steffen Sebastian
Ali Zaidi
4. EPRA NEWS / 41 / 2012
FIXING - OR NOT FIXING -
EUROPE
GUEST EDITOR
Greece remains hugely over-
indebted, the economy is shrinking
rapidly and the targets set by the
troika look extraordinarily testing.
The chance of Greece reaching a
sustainable public debt position
over the timeframe envisaged by the
new deal is extremely slim.
The good news for everyone else,
however, is that the recent actions
of the European Central Bank mean
that Greece’s problems now pose a
much smaller threat to European fi-
nancial stability than seemed likely
just a few months ago. By flooding
the banking system with hundreds
of billions of euros of cheap three-
year loans, the European Central
Bank has effectively ensured that
no major European bank will be
allowed to go bust anytime soon.
This is a very welcome shift in
stance on the part of the ECB, which
seemed unwilling or unable to grasp
the severity of the banks’ situation
under its previous president, Jean-
Claude Trichet. His successor, Mario
Draghi, is a macroeconomist rather
than a bureaucrat, and it shows.
Unfortunately, while prevention
of major bank failures is absolutely
necessary if the European economy
is to return to sustained robust
growth, it is not enough. Banks need
to lend, not just merely exist. The
failure to appreciate the distinction
is the key reason why Japan has still
failed to recover properly after its
crash back in 1988.
Europe’s banks are short of capi-
tal. Private money is understandably
disinclined to flow to banks which
require ECB lifelines. Most govern-
ments are in no position to raise
money to recapitalise their banks,
and the new bailout fund, the EFSF,
has raised little money. That could
change if the EFSF taps some of
the money the ECB has lent to the
banks but, so far, it has shown little
inclination to do so.
The immediate risk of unmitigated disaster in
the European economy has been averted by
Greece’s recent deal with the troika — the
European Central Bank, the European Commission
and the IMF. The second Greek bailout should
keep the wolf from the door for a while but, make
no mistake, the country’s troubles are not over.
EPRA NEWS / 41 / 2012 5.
GUEST EDITORIan Shepherdson
In the medium-term this problem can only be fixed by a
sustained reflation of the German economy or sustained
deflation of the indebted economies.
What this means, therefore, is
that you should expect European
banks generally to be much more
of a hindrance than a help to the
economy for the foreseeable future.
Balance sheets have to shrink. Bank
finance for real estate development
will be hard to find in most mar-
kets. Among the large economies
the German banking system is in
the best shape, but even there the
European Banking Authority thinks
capital could fall short of their mid-
year minimum requirements, if the
economy fails to perform.
Banking bottleneckLack of development finance is not
the only problem. Banks are the key
source of working capital for small
and medium-sized businesses, which
typically account for about half of the
economy. When they are in trouble
and unable to raise finance it’s very
hard for the whole economy to grow
properly even if larger firms are doing
well. European bank lending to
businesses have slowed mark-
edly in recent months and is likely to
fall outright over the course of
this year.
Even if the banks were prop-
erly capitalised, however, the core
economic problem of the eurozone
would remain. The underlying dif-
ficulties run very deep. Compared to
Germany, the biggest economy of the
eurozone, all the major economies
have suffered a substantial loss of
labour cost competitiveness in recent
years. Wages adjusted for productiv-
ity growth have risen much faster
than in Germany, so non-German
companies have suffered large
market share losses both inside and
outside the eurozone.
In the days before the single cur-
rency, countries finding themselves
in this position would see their cur-
rencies sink, thereby improving their
competitive position, though at the
price of higher inflation. That can’t
happen anymore. Instead, trade
deficits are rising rapidly as coun-
tries lose market share to Germany.
The trade squeeze weakens growth,
which depresses tax revenues and
drives up unemployment. Sustained
high joblessness puts further strain
on the public finances.
Eventually, investors — the peo-
ple who buy the bonds to finance
the deficits — start to believe that
rising public debts are intractable,
and they flee. In the medium-term
this problem can only be fixed by
a sustained reflation of the German
economy or sustained deflation of
the indebted economies.
Alternatively a complete fiscal
union with automatic transfers from
the best-performing countries to the
weaker regions, as happens in the
US, would help sustain the single
currency. But that’s a very hard sell
to the German electorate and, when
politics and economics collide, bad
decisions are often taken in the
interest of short-term expediency.
The outlook for Europe, then,
is sustained weak growth at best
in most countries, with Germany
outperforming; but deep and long
recessions in the most heavily
indebted, like Portugal, Greece, Italy
and probably Spain. We might see
some growth in France but let’s be
clear: France has deep labour cost
problems too, and if those issues
are not addressed it will eventually
end up in the same position as the
current group of supplicants.
Meanwhile, the US, which took
quicker and more aggressive action
both to fix its banks and support the
economy via fiscal policy, is gather-
ing real momentum. It is probably
no accident that the recent pop-up
in some of the European business
surveys has followed a clear revival
in the US numbers. Strong growth
in America is helpful to Europe at
the margins, but it is not enough on
its own.
Europe’s economic mess is
mostly home-grown, and the solu-
tions are to be found at home too.
Unfortunately, all the solutions are
expensive; there are no quick fixes
or magic wands to be waved, just a
long, hard slog. And that, remember,
is the good scenario.
Dr. Ian Shepherdson is a foremost global economist who has been described by the London Times as one of “the best economists in the City”. His publication, Daily Notes in is widely read by investors, policymakers and dealers in 20 countries.
6. EPRA NEWS / 41 / 2012
Asset quality,
diversification and
yield are irresistible for
investors.
Outreach to the global investment
community highlighting the key
benefits of listed property remains a
top priority for EPRA – after all, we
represent an extremely attractive but
often misunderstood asset class. At
a fundamental level, we continue
to communicate the type of assets
EPRA’s members own and locations
in which they operate.
As an Industry, we should not
forget that the real estate our mem-
bers manage provides the environ-
ment in which organisations carry
out their day-to-day business and
communities live and function. In
addition, we need to properly com-
municate the specific benefits that
the listed property sector brings to
the economy – transparency, liquid-
ity, quality management, top quality
buildings, green/sustainable leaders
and robust business models. These
are clear attractions to achieving a
larger listed sector.
It is critical for real estate inves-
tors to understand which vehicle
provides exposure to the buildings
and locations that fits their invest-
ment profile. The over-riding theme
is quality and location of assets.
Looking at the asset mix of the listed
companies in Europe, they offer
investors exposure to some of the
best property on the market.
The analysis by EPRA’s Maikel
Speelman, later in this edition,
indicates the asset locations of the
properties owned by the listed com-
panies in the FTSE EPRA/NAREIT
Europe Index. The UK, France and
Germany are the three largest coun-
tries on an assets basis – they own
and manage approximately EUR 170
billion of direct real estate. In total,
the 83 constituents control approxi-
mately EUR 270 billion of property
– a clear example of the breadth and
depth of the listed sector. The map
also highlights the market capitalisa-
tion of each country. PIIGS exposure
is extremely limited.
While European listed real estate
as a whole tends to out-perform the
major investment asset classes over
the long term, REITs are the over-
achievers in the market, because the
prime quality property assets they
generally own are those most likely
to offer long-term reliable income,
which leads to healthy cash flows.
An uncertain economic environ-
ment and a back-drop of low interest
rates means investors will continue
to be attracted to ‘real’ assets offer-
ing attractive yields – “cash is king”.
High investor demand for dividend
yield, against a background of jit-
tery equity markets and ultra-low
interest rates, can be met by income
flows from European REITs or many
listed property companies.
REIT dividend yields have
strongly out-performed general equi-
ties and bonds – as well as inflation
– over the past five years, as recent
EPRA research has shown. Between
2007 and 2011, European REITs gen-
erated an average dividend of 5.1%,
compared with general equities at
4.1%, government bonds at 3.4%,
and average annual inflation in the
eurozone of 1.9%.
At a time when pension funds
are struggling to cover their li-
abilities due to low interest rates
and all investors are seeing weak
returns from investment markets,
the attractiveness of the dividend
yield on European property stocks
in general, and REITs in particular,
has rarely been higher. Current
discounts to NAV offer an attractive
entry point.
Even during the depths of the
Credit Crisis, the vast majority of
European listed property firms
were able to pay out dividends. The
year-on-year drop in the dividend
yield paid out by listed property
companies in the period 2009 to
2010 bottomed out at -20%, whereas
REITs hit a floor at -11.8% and general
UPDATE FROM PHILIP CHARLS Philip Charls, EPRA CEO
CEO UPDATE
EXPERTISE ASSETS AMBITIONPRIME OFFICE PROPERTY HIGH-QUALITY PORTFOLIO
SELECTIVE LEASING MANAGEMENT POLICYSTRICT GOVERNANCE
SOUND SHAREHOLDER BASE
ENSURING A SUSTAINABLE YIELD OVER THE LONG TERM
Cegereal is a REIT specialising in core office properties in the Paris region. Concentrating its investments on recently-built, large-scale assets in the inner Paris ring, Cegereal attracts first-class tenants with its high value-added offering that combines top quality with an impressive provision of services.
Cegereal : 21-25, rue de Balzac, 75008 Paris – [email protected], www.cegereal.com
EPRA NEWS / 41 / 2012 7.
REITs are the over-achievers in the market,
because the prime quality property assets they
generally own are those most likely to offer
long-term reliable income, which leads to
healthy cash flows.
equities showed a maximum decline
of -25%. Over the long-term, since
1999, the annual compound dividend
growth of European listed property
companies as a group has been 3.7%,
well above annual compound infla-
tion of 2.1%.
REITs tend to pay out higher
dividends than non-REITs because
of their legislative obligations in
national markets to distribute the
vast majority (up to 100%) of earn-
ings to shareholders. This is in line
with most REITs’ income-orientated
strategy of offering stable income
growth through active property asset
management and rotation of their
portfolios.
On a parting note, we understand
that we live in tough and uncertain
times. However, we believe opportu-
nities to expand the European listed
market may lie ahead. History tells
us that the introduction and effective
use of REITs in the US and Australia
for example, can offer governments
a way to galvanise stagnant property
markets.
Countries such as Spain, Italy,
Ireland and Greece may view REITs
as an effective route to breathe life
into their markets. Countries with
REIT structures currently in play
may see tweaks going forward – for
example, residential REITs are on
the agenda in the UK. In Germany,
approximately 30% of open-ended
funds remain closed – how will the
position unwind, and will the listed
market provide a potential exit route?
Get a front-row view later in the
year and mark off September 06 &
07 in your diaries. The EPRA Annual
Conference in Berlin is the place to
be – a must-attend for the real estate
sector.
EXPERTISE ASSETS AMBITIONPRIME OFFICE PROPERTY HIGH-QUALITY PORTFOLIO
SELECTIVE LEASING MANAGEMENT POLICYSTRICT GOVERNANCE
SOUND SHAREHOLDER BASE
ENSURING A SUSTAINABLE YIELD OVER THE LONG TERM
Cegereal is a REIT specialising in core office properties in the Paris region. Concentrating its investments on recently-built, large-scale assets in the inner Paris ring, Cegereal attracts first-class tenants with its high value-added offering that combines top quality with an impressive provision of services.
Cegereal : 21-25, rue de Balzac, 75008 Paris – [email protected], www.cegereal.com
8. EPRA NEWS / 41 / 20128. EPRA NEWS / 41 / 2012
IN THE NEWS
High investor demand for dividend
yield, against a background of
weak equity markets and ultra-low
interest rates, can be met by income
flows from European listed property
companies and particularly REITs,
new research from EPRA shows.
Dividend yields from the sector
have remained consistently above
equities and bond yields – as well as
inflation – over the past five years.
Between 2007 and 2011, European
REITs generated an average dividend
of 5.1%, compared with general eq-
uities at 4.1%, government bonds at
3.3%, and average annual inflation
in the eurozone of 2.0%.
Maikel Speelman, EPRA analyst
and author of the report said:
“While European listed real estate
as a whole tends to outperform
the major investment asset classes,
REITs are the over-achievers in the
market, because the prime quality
property assets they generally own
are those most likely to offer long-
term reliable income, which leads to
healthy cash flows and sustainable
dividends.”
BUILDING ON QUALITY AND PREDICTABLE PERFORMANCEA research update will shortly be released, which strongly supports our
fundamental performance understanding of listed real estate stock. The
Regensburg study generally found a stronger linkage to underlying real
estate assets compared against equity stock markets.
In the majority of cases, listed real estate markets are predominantly
driven by the performance of the underlying buildings, which can be
interpreted as the key driver of listed real estate in the medium to long
run. This suggests a deep flaw in the perception that allocating funds
into listed real estate stocks carries the same risk profile as wider equi-
ties. The building blocks of the listed investment are solid, transparent
and attract consistent yield.
ESMA LAUNCHES CONSULTATION ON DERIVATIVES LEGISLATIONThe European Securities and Markets
Authorities (ESMA) has launched
a consultation (accessible here) on
the draft technical standards for
the regulation of OTC Derivatives
(EMIR). This is a topic that has been
a concern for the property sector for
some time as the regulation imposes
an obligation on any business de-
fined as a ‘financial counterparty’
to post cash collateral with a central
counterparty (CCP) on any derivative
transaction (including interest rate
swaps on property loans).
Unfortunately, a ‘financial coun-
terparty’ includes any business that
falls within the AIFM Directive and it
therefore remains uncertain whether
this obligation will apply to listed
property companies because of the
uncertainty associated with the scope
of the AIFMD. Our investigations and
lobbying efforts are ongoing.
SECTOR BONDING TO NEW FINANCE SOURCE
Bonds are taking on a new significants as commercial property lenders
take fright and draw down their funding from the listed sector. European
listed real estate companies/REITs have successfully tapped the bonds and
convertibles market. In total, FTSE EPRA/NAREIT Europe Index constituents
raised EUR 7.4 billion in the past two years through bonds issuance.
“With the 155 tradable issues, we see the development of a long-term pat-
tern of finance which carries more favourable and liquid characteristics for
the listed sector,” explains EPRA’s Ali Zaidi. Valued at EUR 32 billion with an
average duration more than 20 years, deeper analysis of bond transactions
is ongoing. See page 38 for more information.
INDEX REVIEWAt the end of February 2012,
the FTSE EPRA/NAREIT
Developed Index counted a
total of 284 constituents, rep-
resenting a freefloat market
capitalisation of over EUR 638
billion. March’s quarterly in-
dex review takes into account
the nationality rule change.
See page 36 for more
information.
EUROPEAN REITS FILL INVESTORS’ THIRST FOR DIVIDEND YIELDS
NEWS
ADDRESSING THE ACADEMICS
First EPRA Sustainability awards. The first EPRA Sustainability Reporting BPR accreditations will be announced at the Annual Conference in September.
Assessment will be carried out by Jones Lang LaSalle based on the criteria laid out by the EPRA Sustainability Reporting committee. This is comprised of leading European listed property companies, investors and advisors.
In keeping with our green goals, links to the Sustainability Reports or Annual Reports should be submitted electronically to JLL’s Matthew Tippett on: [email protected]
Hammersonis proud to supportEPRA
www.hammerson.com
Hammerson EPRA Ad Feb 2012:Layout 1 28/2/12 16:30 Page 1
EPRA NEWS / 38 / 2011 1.
EPRA produces a mass of invaluable monthly data for members. It consists of over 1,000 pages of research,
graphs and statistics that can affect your market understanding and support your decisions. This sector round-up with its
rich indices data is used widely and globally - can you afford not to receive these?
Stay in touch: [email protected]
Patrick Sumner, Head of Property Equities,
Henderson Global Investors.
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T +32 (0)2739 1010 • F +32 (0)2739 1020
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EPRA NEWS / 41 / 2012 11. EPRA NEWS / 41 / 2012 11.
EC LAUNCHES FINANCIAL SUPPORT FOR ENERGY EFFICIENCY IN BUILDINGS CONSULTATION
The EC has launched a public con-
sultation on the ‘Financial Support
for Energy Efficiency in Buildings’
(consultation closes May 18).
To view the consultation, go
to http://ec.europa.eu/energy/ef-
ficiency/consultations.
The consultation aims to
identify market failures in the
uptake of energy-efficiency
measures as well as the actions
needed at national and European
level to improve the financial sup-
port for energy efficiency in
buildings.
Listed in German SDAX
ISIN DE0005098404
Good letting results. Strong Asset Management. Portfolio on growth path.
www.dic-asset.de
DAZ_Ad_quer_2011-eng._213_160_Layout 1 31.05.11 16:51 Seite 1
SECTOR PERFORMANCE
The FTSE EPRA/NAREIT Developed (Global)
Index gained 1.3% during February 2012. Glo-
bal equities increased 5.2% while the Global
Bonds market increased 0.1%. Real estate
markets in North America lost 2.6%. Europe
increased 0.6%, while Asia was up 7.7% over
the month.
Over a one-year period, global real estate
gained 4.0% compared to a drop of 0.5% for
global equities and a gain of 7.6% for global
bonds. Annualised ten-year rolling returns
for real estate investments stands at 6.1%.
Equities gained 4.4% while bonds markets
achieved a 4.4% return per annum as well.
NEWS
12. EPRA NEWS / 41 / 2012
DEFINED CONTRIBUTIONS
POTENTIAL FOR REITsAs the pensions landscape
is being transformed,
listed real estate/REITs
have an opportunity to
gain market share in
Defined Contribution
pension plans.
The percentage of pension funds
invested in real estate in 2009 was
approximately 75% at a global level
according to Eichholtz, Kok and An-
donov (2012). In Europe that figure
was much higher at 95%.
They concluded in their research
that larger pension funds are also
more likely to invest in REITs,
whereas smaller funds allocate more
assets to fund-of-funds in direct real
estate – which results in substantial
under-performance compared to
other investment approaches. They
stated that this is at least partly
due to multiple layers of fees, but
neither do the fund-of-funds seem
to have good skills in selecting
investment managers since their
gross benchmark-adjusted returns
are significantly negative.
It seems that smaller pension
funds do not seem to recognise
that REITs provide exposure to
property returns comparable to
external managers that invest in
direct real estate, and much better
than fund-of funds managers – but
with much lower investment costs.
Ciochetti, Craft and Shilling (2002)
found that a U-shaped relationship
exists between REIT holdings and
pension plan size. Smaller pension
funds invest in REITs, but as pension
plan size increases investors choose
direct real estate, at the expense of
REITs. At a certain point, this trend
reverses with the larger investors
choosing to invest in REITs.
Real estate’s relatively low
volatility and low correlation with
other asset classes make it an im-
portant source of diversification in
any portfolio, reducing overall risk
without sacrificing returns. Regula-
tory frameworks for retirement
provision and practices developed
in other major global economies –
particularly in the US and Australia,
have reflected this conclusion and
specifically included real estate as
an asset class within default invest-
ment options.
In addition, there is strong evi-
dence, reflected in the asset alloca-
tion decisions taken by the largest
global pension funds and through
regulation developed in other major
world economies, that REITs and
real estate equities offer a proxy for
FEATURES
EPRA NEWS / 41 / 2012 13.
Listed property companies including REITs could
be in a fantastic position to attract capital as a
result of these default investment allocations for
passive investors – provided that real estate is
rightly viewed as a separate asset class.
direct real estate investment that is
importantly accessible to all insti-
tutional investors, whether large or
small.
The futureThe growth of Defined Contribution
(DC) schemes and the disappearance
of Defined Benefits (DB) schemes
are widely viewed as a certainty. For
example, Italy, Portugal and Greece,
three of the countries at the heart
of the eurozone debt crisis, as well
as France, Austria and Poland, each
spent more than 11% of their gross
domestic product on state pensions
in 2010, according to Allianz Global
Investors. In contrast countries such
as Australia, the US, Switzerland,
the Netherlands and the UK spent
between 3.5% and 6.5% of GDP on
public pensions. But while the most
generous state schemes are seen
by many as unsustainable, there
are signs in some countries, such
as France, that employees are fun-
nelling money into work-based DC
schemes to cover a likely pullback
in state provision, according to
Cerulli Associates research.
This could represent an excel-
lent opportunity for the European
listed property sector to deliver
its potential – a defining moment
for the growth of the sector and
its emergence as a mature market
and a core asset class? Conversely,
it could also give rise to a huge
missed opportunity for the sector
and more importantly, the ability
for a European pension fund frame-
work to efficiently meet the needs of
Europe’s aging population.
The optimistic view first. We can
expect that DC pension schemes
with strategies including default
investment options for major asset
classes to be a major growth area
in Europe. Listed property compa-
nies including REITs could be in
a fantastic position to attract
capital as a result of these default
investment allocations for passive
investors – provided that real estate
is rightly viewed as a separate
asset class. The growth of compul-
sory automatic enrolment pension
schemes will only increase the
importance of default allocation
models.
A different perceptionA look at developments that have
occurred in the US show that real
estate is generally viewed as a
distinct asset class within these
plans and, importantly, REITs are
viewed as part of that real estate
allocation (see Fig 1 above). Because
the DC framework allocates more
control with regard to investment
decisions to the fund manager
and the individual pension plan
holders, liquidity is an important
factor when considering allocations
compared to DB schemes. This puts
REITs in a potentially strong position
as a preferred investment vehicle
compared to less liquid forms of
direct and indirect investment in
property.
Another way of looking at the
subject is much less positive, and
raises an important point related to
the European listed property sector
and its ability to contribute to a
successful European pension frame-
work. This concern stems from the
fragmented nature of the European
listed property sector. Given this
state of affairs, it is hard to see how
a coherent approach to pension fund
investment into real estate, which
aligns with the specific requirements
of the DC schemes (including target
date funds etc) can be achieved >
5.2 4.8 5.1 4.86.3
8.6
11.8 11.8
15.6
19.1
24.8
33.4
23.7
18.8
0
5
10
15
20
25
30
35
40Percent
Prop
ortion
of
pla
n y
ear
exper
ience
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Figure 1: 401(k) Plans Offering a Real Estate Option
Source: Profit Sharing/401(k) Council of America
14. EPRA NEWS / 41 / 201214. EPRA NEWS / 41 / 2012
in the same way that it has in coun-
tries like the US and Australia.
REITs in the US (after 50 years of
history) are a significant and widely
understood investment product and
it is clear that REITs, as a liquid
form of real estate, are well suited
to the requirements of DC schemes.
In contrast, the European listed
property sector is fragmented, hard
to understand and relatively under-
developed compared to the US and
Australia.
This is of course understandable
given that the EU is made up of 27
member states, each with their own
tax legislation – and is clearly one of
the reasons why the European listed
sector is under-represented com-
pared to other major regions. Many
European countries don’t even have
REIT legislation, and when they do
they tend to be structured differently
and called different names (REITs,
G-REITs, SICAFIS, FBIs, SIICs to name
a few!).
As this point in time, the exist-
ence of REIT legislation in Europe
has not been sufficient to achieve
the public policy objective of match-
ing the mainstream investing public
with the long-duration, contractually
protected and inflation-linked cash
flows derived from commercial
real estate. A number of regula-
tory obstacles have prevented this
from happening and are subject
to EPRA’s attention. It is preferable
that institutional investors, acting on
behalf of their beneficiaries and the
mainstream public, have an asset
allocation to REITs compared against
direct real estate holdings for all the
usual reasons:
• Attractive income/cash-flow
• Good quality assets/locations
• Superior diversification/exposure
opportunities
• Liquidity when needed
• Good transparency
• Cost/efficiency/scale
A focus on the ECAt a regulatory level, we believe
that the European Commission (EC)
urgently needs to provide leadership
by both prioritising the development
of a coherent European listed sector,
and at the same time by promoting
the ‘best practice’ examples from
the more developed DC markets
– like the US and Australia, when
developing the European pension
fund framework.
We believe that any European
code of good practice should pro-
vide pension fund holders with
the means to properly access the
diversification benefits of real
estate as a fundamental asset class
that should be included in any
properly diversified portfolio. Such
a framework should therefore follow
the best practices adopted in other
developed markets like Australia
and the US to recognise listed prop-
erty companies (including REITs) as
a liquid and accessible form of real
estate investment.
We believe that any European code of
good practice should provide pension fund
holders with the means to properly access
the diversification benefits of real estate as a
fundamental asset class that should be included
in any properly diversified portfolio.
EPRA NEWS / 41 / 2012 15. EPRA NEWS / 41 / 2012 15.
Gareth Lewis is EPRA’s Director of Finance, based in Brussels. He is responsible
for leading EPRA’s initiatives and policy positions with respect to REITs, taxation, finan-cial reporting and accounting issues. He worked closely with the industry and government to improve the REITs legislation, regulations and guidance. Lewis is a Chartered Accountant who, prior to joining the BPF, was a tax adviser within the real estate group of Ernst & Young both within their London and New York offices.
For the European REIT sector,
even a small improvement in this
regard could have a very positive
influence on capital flows into the
sector. It would represent a major
step in creating a genuinely relevant
European listed property sector,
prone to attract institutional and
other global investors, advancing
the stability and transparency of
the property investment markets,
and improving the efficiency of the
European built environment.
In this respect, we would high-
light the clear evidence apparent
from developments within the US
defined contribution plans towards
the inclusion of real estate options
within default pension plan options:
• In the US 401(k) plans offering a
real estate option have grown from
4.8% in 1997 to 33.4% in 2009.1
• A 2009 Survey by PIMCO in the US,
showed that 66% of firms believed
REITs would bring the most value
as an added asset class within
defined contribution plans.2
EPRA believes that the European
Commission could and should play
a very influential role in developing
a code of practice, particularly for
DC schemes and the area of default
investment options for employees in
workplace DC schemes that decide
PIMCO 15.0% Domestic
UBS 15.0% Global
JPMorgan 12.0% Global
Alliance Bernstein 10.0% Global
Dow Jones Indexes Real Return 10.0% Domestic
Source: NAREIT®
ORGANISATION MAXIMUM REAL ALLOCATION TYPE
ESTATE ALLOCATION
Fraser Hughes is Research Director at EPRA. He held a number of investment-
related positions in the City of London before relocating to the Netherlands. He holds an MSc in Investment Management and a BA in Finance. He is a regular speaker at real estate-related conferences and writes for a broad range of publications.
not to actively make investment
choices.
Such a European level code of
best practice should be relatively
simple and recognise the four dis-
tinct asset classes of Stocks, Bonds,
Cash and Real Estate and the need
to include a minimum, or a range of
allocations to these asset classes in
any properly diversified portfolio.
Fig 2 below shows the maximum
real estate allocations from a product
manufacturer perspective, used by
selected organisations for lifecycle
and target-risk funds.
One of the key reasons why REITs
and listed real estate equities are fa-
voured in existing lifecycle funds and
DC schemes in general, as a means to
manage real estate exposure in life-
cycle funds, is because the liquidity
they provide (to an otherwise illiquid
asset class) enables fund providers to
ensure that the change in asset mix
happens efficiently. EPRA strongly
believes that any default allocation
guidelines developed at an EU or
national level should include the
ability for a pension fund provider
to responsibly manage its real estate
exposure using allocations to REITs
and listed real estate equities.
1 Source: Profit Sharing/401(k) Council of America 2 Source: PIMCO’s 2009 Defined Contribution Consulting Support and Trends Survey of 32 investment consultants and managed-account-focused firms. Participating firms include seven of the top ten investments consulting firms in the US.
Figure 2
16. EPRA NEWS / 41 / 2012
FEATURES
INFLATED OR JUSTIFIED?
The inflation hedging
quality of real estate is
one of its most attractive
and enduring investment
characteristics. Indeed, it
is the reason often given
to invest in real estate,
particularly by those
investors who need to
match long-term assets to
liabilities.
A number of major institutional
investors have increased their al-
location to real estate recently as
a result of their respective house
views that assume a significantly
higher rate of inflation in the future.
It is not just institutions. The con-
tinuing attraction of the asset class
to an increasing number of high net-
worth individuals with a strategy
underpinned by wealth preservation
also implies a belief that property
can and does act as a suitable hedge
against rising inflation.
Many practitioners have long
asserted that property can be used
as a hedge. Most investors tend
to be of the view that property
is, or can be, an inflation hedge,
particularly over the long term. In
the same way, most will recognise
that, in the short term, local market
fluctuations will tend to prevail and
confuse the debate somewhat. It is
clear, however, that the debate over
the merits of real estate as a hedging
tool has long been raging but that
the evidence remains inconclusive.
This debate will undoubtedly
gather further momentum given the
growing concerns over a higher in-
flationary environment in the years
ahead across Europe. No doubt this
will trigger a wave of new research
papers on the subject which, if any-
thing like recent ones, will shed next
to no light on the issue, and succeed
only in adding to the general level of
confusion surrounding the subject,
or at least glossing over some of
the most important characteristics
of the asset class and its ability to
perform successfully as an inflation
hedge.
When is a hedge... to short?The definition of what exactly
constitutes a hedge is the first, and
possibly the most important, source
of confusion. An inflation hedge is
EPRA NEWS / 41 / 2012 17.
often taken to mean an investment
whose value is directly related to
the level of inflation. In other words
that there is a direct relationship
between property values and some
measure of inflation. So if over, say,
a five or ten-year period, property
values keep pace with inflation, or
even outperform a particular bench-
mark, this is not in itself viewed as
sufficient evidence that real estate
is capable of performing a hedging
function. For this to be the case, so
the argument goes, property values
have to move with, and react, to a
changing inflationary environment.
Far from semantics, the use of
such a definition will inevitably
lead to the conclusion that com-
modities, or even equities, offers a
much better hedging mechanism
than that provided by real estate.
After all, real estate is lumpy, there
is a lack of frequent real-time
pricing – quarterly data in a few
markets, annual indexes in most –
and that’s not to say anything of the
constraints imposed upon it by the
landlord/tenant relationship which
will vary not just between markets
but over the course of the real estate
cycle as well.
Issues that make real estate
different and which will inevitably
mean that values won’t be able
to ‘react’ sufficiently quickly to
changes in inflation. But this ignores
the fact that growth in property val-
ues may well exceed inflation over
a set period. In essence, the conclu-
sion that real estate is a poor hedge
against inflation is often solely the
result of applying a definition that
is ill-suited to the sector or doing so
with little understanding of how the
property market actually works in
the real world.
Tick the boxesThe key point is that real estate
provides a long-term hedge against
inflation but, in order for it to do so,
certain other criteria have to be met.
• While the real asset nature of
property underpins its inflation
hedging quality over the long
term, buying tangible assets as
a protection against inflation is
sensible only if done at the right
price. It’s an obvious point but one
that is overlooked a little too often.
• Properties with inflation-linked
leases are increasingly attractive to
a broad range of investors as they
are often seen as defensive in na-
ture. However, while such leases
can offer many attractive qualities
to the investor, rent indexation
does not equal inflation protection
– it is not a guarantee even if some
investors tend to regard them as
such. The reality is somewhat
different – rent indexation in the
absence of pro-active management
results only in over-rented assets.
Such leases should not be viewed
as a guarantee of an outcome but
rather as a starting point in the
quest for inflation protection.
• Income growth is the key to solv-
ing the inflationary puzzle. The
ability to retain a tenant in the
building, maintain and grow cash
flow lies at the very centre of an
inflation-hedging strategy. And that
applies across all markets and
points in the cycle.
• The importance of income growth
brings us to the missing link in
much of this debate, which is
simply the ability and expertise of
the asset management team. This
is the case for all asset managers,
whether they are listed property
companies or private equity funds.
Investors’ prime concern should
be whether their asset manager
has the ability and expertise to
deliver income growth all through
the real estate cycle.
The bottom line is very straight-
forward: a bad asset manager will
underperform inflation no matter
what the inflationary environment
might be, the point in the eco-
nomic cycle, the holding period or
the relationship between landlord
and tenant.
Part 2 of this analysis into inflation
& the listed real estate sector will
appear in the next EPRA newsletter.
The conclusion that real estate is a poor hedge against inflation
is often solely the result of applying a definition that is ill-suited to
the sector or doing so with little understanding of how the property
market actually works in the real world.
Joe Valente, managing director, is the head of research and strategy for the European Real Estate Group. Valente and his team forecast local economic and prop-erty market performance, identify
strategic investment opportunities for institutional and high net worth investors. Since 2007, he was responsible for the investment strategy at Allianz Real estate. Prior to this he was a director and head of research at DTZ. He was responsible for the house view on global markets as well as advising a large number of investment clients on global real estate investment markets.
18. EPRA NEWS / 41 / 201218. EPRA NEWS / 41 / 2012
FEATURES
AVAILABILITY OF DEBT FOR REAL ESTATE
Availability of debt for the
real estate sector has been
a key topic of concern
for management teams
in recent years and is
likely to continue to be so.
While the listed sector is
generally well capitalised
and retains a number of
financing options,
a proactive approach
is required.
In the very distant days of abundant
liquidity, owners of real estate were
able to access a plentiful supply
of low-cost debt for real estate.
Banks were increasing their lending
to the sector at a tremendous rate.
In the UK alone the value of gross
lending rose more than five-fold
between 1999 and 2007. Furthermore
the introduction of loans distribution
through securitisation and other capi-
tal market sources added liquidity.
Less than five years later the
landscape appears to have changed
fundamentally with little prospect
for a short-term improvement. As
the bank market in Europe remains
the predominant source of debt
capital for the real estate sector, here
we focus principally on changes in
this area while also touching on
alternative sources of real estate
finance.
Why do banks lend so much on real estate?In the current climate this seems an
unusual question, but real estate still
accounts for one of the largest sec-
tor exposures of many mainstream
banks. Generally, the explanation
for this has been that real estate
lending was anticipated to provide
a good return on equity for banks.
During the ‘good’ times this was
largely the case as outlined below.
With bank capital now more scarce
banks will be even more focused on
lending in sectors where they can
achieve an appropriate return on the
equity they are committing.
How it was when times were good?A bank provides a customer with a
typical commercial property invest-
ment loan and charges an upfront
fee and margin over the relevant
reference rate (e.g. Libor or Euribor).
The bank prices the loan based on
achieving an acceptable return for
the risk it is taking. (Figure 1)
Typically this would be meas-
ured by a return over Risk Weighted
Assets (RWAs). A reasonable as-
sumption in say 2002-2005 would
have been that a major bank would
fund itself at approximately the
reference rate so any margin earned
above this contributed to the returns.
The bank would allocate capital
to the loan based on the apparent
riskiness and take into account the
tenor of the loan.
EPRA NEWS / 41 / 2012 19. EPRA NEWS / 41 / 2012 19.
Simplified ROE Calculation
Adjusted Income
Average YTD RWAs x Capital Ratio
Numerator
Denominator
- Impairment - Costs - Tax
Calculating ROE Figure 1: Simplified ROE Calculation
During the life of the loan,
the underlying assets might be
re-valued - typically on an an-
nual basis - which in the good
times would have seen asset values
rise and the riskiness of the loan
decline further. Therefore the bank
might have been able to reduce the
capital allocated to the loan further
during the life of the loan. In many
instances the loans were repaying
(or being refinanced) well before
the loans’ maturity which helped
persuade banks that the amount of
capital being held was appropriate.
Impairments were at a low level and
on a seemingly declining trend.
The picture nowFast forward several years. At each
point of the above example things
have got worse for the bank and, by
extension, for the real estate owner
seeking to borrow funds.
To start off, banks’ cost of
funding has leapt dramatically.
The five years credit default swap
(CDS) spread for many large banks
is now over 150bps, meaning that
a good portion of the margin that
banks are charging no longer goes
to contribute to the return the bank
is making but simply helps it source
the relevant funding for the transac-
tion. Furthermore, due to a variety
of regulatory pressures, banks are
increasing the average tenor of their
funding profile, meaning that aver-
age funding costs are not just rising
because spreads as a whole are
higher but that additional duration
is also being paid for.
Secondly, the amount of capital in
the form of RWAs that a bank holds
against any one real estate loan has
been increasing due to regulatory
pressures, the increased loss experi-
ence of banks in the sector and a
broader credit deterioration across
loan books (with valuations under
pressure and the prospects of repay-
ment / refinancing dwindling, banks
are reassessing existing positions).
Thirdly, the relationship between
the amount of risk assets a bank
holds and the amount of equity
capital it has, demonstrates the lev-
erage of a bank. Broadly speaking,
the leverage for many banks has
reduced by as much as half in
recent years.
Finally, distribution of bilateral
loans remains severely limited (with
one or two CMBS whole loan deals
only, plus a few bank club deals).
In summary the return on equity
that banks have typically used as
a justification to lend to real estate
has been undermined by a sig-
nificant increase in the cost (to the
bank) of providing that lending, by
an increase in the number of RWAs
that this reduced return is allocated
to and an increase in the amount
of equity that this return on RWAs
is spread over. However this is just
the beginning, and a number of key
regulators believe that the change
has not yet gone far enough and that
the amount of capital that banks
hold against real estate should in-
crease much further than its current
level. Not surprisingly, banks are
being much more restrictive about
the amount and type of real estate
lending that they engage in.
It’s not all bad newsFortunately for the sector there are a
number of areas where new financ-
ing for real estate is being provided.
These areas are still dwarfed by
the banks but are growing rapidly,
and they seem likely to find a per-
manent place in the financing tools
available for real estate companies.
Largely these sources can be divided
into public and private instruments.
Public capital marketsFollowing a tumultuous end to
2011, the European corporate bond
market has opened with gusto in
2012 with EUR 64 billion of issuance
since the start of 2012. A growing
number of real estate companies
in Europe have the requisite invest-
ment grade rating able to access this
market, however, real estate in both
Europe and the US still accounts
for a relatively small share of the
overall corporate bond market. As
the sector reaches a critical mass,
improved investor understanding,
comparability of companies and
performance may encourage further
issuance.
The flexibility of convertible
bond issuance for real estate com-
panies has proven very attractive
in recent years, with some 14 com-
panies across Europe accessing the
market since 2010. The ability rap-
idly to access the market often >
20. EPRA NEWS / 41 / 2012
FEATURES
where the conversion price is above
current net asset value (NAV) and
coupons are low provide a strong
incentive to issue such instruments.
While the traditional CMBS
market remains relatively moribund
with only two issues in the last four
years, some investor interest in what
can be broadly termed structured
real estate finance is emerging.
Private capital marketsOne of the most significant areas
of support for real estate debt in
recent years has come both from the
traditional private placement market
and from bilateral institutional plac-
ings. In the former since 2010, we
have seen 11 real estate companies
across Europe access the US Private
Placement (USPP) market for tenors
ranging up to 30 years.
This product has established
itself as a firm favourite with bor-
rowers as no rating is required, long
tenors can be accessed and total
borrowing costs have been relatively
low compared to European capital
market pricing. Investors in USPPs
have a fondness for companies
which are governed by a REIT status
and subject to the restrictions this
tends to place on companies, how-
ever, they are looking beyond these
to alternative real estate assets such
as student accommodation as well.
Institutional debt investorsOf particular interest to real estate
companies at the moment is the
growing appetite for real estate
finance demonstrated by institu-
tional investors such as insurance
companies and pension funds.
Many of these institutions have
a long history of investing in real
estate both directly and indirectly
(through listed companies or real
estate funds) and therefore have an
appreciation of the sector. As these
investors are typically looking for
relatively long-term, stable and low
risk returns, the real estate debt
asset class has become attractive
particularly given the elevated pric-
ing level currently achievable and
certain regulatory treatments.
While a small number of players
such as AXA REIM and Aviva Com-
mercial Finance have been active in
this field for a while, the current field
of parties either actively lending or
establishing capabilities to do so is
in excess of 20. This investor base
provides a great opportunity for
real estate owners to partner with
long-term capital providers who
can act as a complementary source
of finance alongside banks and the
capital markets.
Quo vadisThe current challenging market
conditions around bank finance for
real estate will likely continue for
some time as legacy loan books,
regulatory uncertainty and challeng-
ing occupier markets all take their
toll. Against this backdrop however,
listed real estate companies have
demonstrated their resilience as an
asset class. A combination of proac-
tive early engagement, a willingness
to approach funding solutions in
a flexible way and a diversified
funding base will allow a number
of players the opportunity to further
differentiate themselves from the
broader market.
Gregor Bamert, head of real estate at Barclays Real Estate has responsibility for the national real estate coverage teams. Previously he was responsible for investment banking coverage of real estate
clients across western Europe with a particular focus on cross-border clients, strategic acquisitions, structured financings and capital markets. Gregor has worked on large portfolio acquisitions, equity and debt capital markets issues and structured risk management. Gregor joined Barclays in 2001 follow-ing several years in strategy consultancy for financial institutions in London and New York.
Brendan Jarvis is Managing Direc-tor and head of real estate, EMEA for Barclays Real Estate. Brendan has worked with the UK’s principal real estate clients for a number of years and has originated many
high profile deals, including UK and cross-border public to private acquisition and M&A transactions, together with numerous bank and capital market corporate financings. His depth of experience in banking across almost four decades has seen turbulent property cycles, as a credit officer, lending banker and industry sector head. Brendan joined Barclays in 1972.
While the traditional CMBS market remains relatively
moribund with only two issues in the last four years,
some investor interest in what can be broadly
termed structured real estate finance is emerging.
EPRA NEWS / 41 / 2012 21.
FEATURES
EPRA INSIGHT INTO 2012
EPRA’s annual Insight
events held in January
in London, Paris and
Amsterdam, are becoming
must-attend features of
the European listed real
estate calendar for those
wishing to get a New
Year feel for the major
industry issues in the 12
months ahead. This year’s
gatherings saw as strong
attendance as ever, with
the London Insight in
particular full-to-capacity
at the Lloyds Building
in the City.
UK Property firms urged to use share buy-backs and cut leverage In an opening presentation at the
London Insight hosted by legal firm
Nabarro, John Lutzius, Managing
Director at Green Street Advisors
said that in general gearing levels
at major UK listed property firms
remain far too high following exces-
sive development at the peak of
the market. He urged managements
to launch low risk share buyback
programmes, which are “leverage
neutral” and trump both acquisi-
tions and development in terms
of shareholder returns, while most
stocks are trading at steep discounts
to NAV.
BBC journalist Sarah Montague
moderated the panel of three UK
real estate CEOs and an equities
investor manager. David Atkins of
Hammerson; Chris Grigg of British
Land, Andrew Cunningham of
Grainger and Patrick Sumner, Head
of Property Equities at Henderson
Global Investors were generally
united in their oppositions to share
buy-backs in current market condi-
tions.
“We looked at share buybacks,
but determined that we could pro-
duce a better return by investing in
our own portfolio than buying back
our own shares,” David Atkins said,
while pointing out that his company
has leverage in the low 30s and
believes that finding a “sustainable
level of debt” is the most important
objective.
LONDON
>
22. EPRA NEWS / 41 / 2012
He was supported by Patrick
Sumner who said that in practice
share buy-backs don’t usually shift
NAV.
Chris Grigg added that when
markets don’t have liquidity,
companies have to think carefully
about shrinking their equity base
in a capital-consumptive sector. He
said he was comfortable with British
Land’s leverage of around 45% at this
stage in the cycle, but would move
towards lower gearing because of
the reduced availability of bank debt
that was looming.
The speakers generally concluded
that the UK housing market would
remain flat in 2012 along with
commercial property market yields,
although central London may outper-
form other markets.
Dutch Retail investors see opportunities in EuropeDespite the economic uncertainties
now facing Europe, leading Dutch
shopping centre investors Corio and
Wereldhave continue to see op-
portunities in their markets, although
they foresee stiff challenges over
the next five years from e-retailing
and demographic change from aging
populations.
Speaking at the Amsterdam EPRA
Insight event, hosted by lawyers
Loyens & Loeff, CEOs Hans Pars of
Wereldhave and Gerard Groener of
Corio emphasised that the sovereign
debt crises in a number of European
countries are having only limited
impact on their companies’ retail
markets. They remain optimistic
about the future performance of their
investments.
“Retail sales are under pressure,
but there are still opportunities de-
pending on the quality of the retailer.
Rent levels can still be increased,”
according to Pars.
For Corio, Italy in particular
remains strong. “Italians are fash-
ionable spenders. Household debt
is low in comparison with many
northern European countries, giving
the average Italian consumer a high
spendable income,” Corio’s Groener
said. He added that, unlike the more
conservative Germans, Italians make
it a priority to buy luxury goods,
which should translate into higher
rental income.
Both CEOs see traditional shop-
ping centres coming under threat
in the coming five years from a
combination of increasing online
shopping and aging populations.
AMSTERDAM
FEATURES
EPRA NEWS / 41 / 2012 23.
To counter these challenges, Corio is
emphasising its focus on centrally-
located shopping High Streets
rather than large out-of-town centres.
Wereldhave generally favours mar-
kets such as the UK, Belgium and the
Netherlands, where strict planning
laws restrict the supply of new retail
properties.
There was less optimism from
Pars on Wereldhave’s office invest-
ments: “Office markets everywhere
are under pressure. Rents are
declining, with the exception of a
few bright spots such as Paris where
rents are still rising,” he said.
Speaking on the same discussion
panel, Dutch pension fund PGGM’s
Head of Listed Real Estate, Hans
Op ’t Veld sounded a cautionary
note: “At the beginning of 2011 the
situation was clear. Things would go
badly, but we could prepare for that.
The situation in 2012 is murky. The
worst may not be over in Europe and
a hard landing in China could make
that country just as much a concern
as the EU.”
Op t’ Veld said PGGM will remain
invested in European listed real
estate, but would need to look very
carefully at the underlying asset
quality and structure of the compa-
nies it invests in.
24. EPRA NEWS / 41 / 201224. EPRA NEWS / 41 / 2012
Strength in French MarketFrench SIIC’s (listed real estate
investment companies) have dem-
onstrated their success on so many
levels to international investors. An
assessment made by John Lutzius,
managing director of Green Street
Advisors, at the EPRA Insight event
in Paris, organised by Business
Immo, with the collaboration of
Allen & Overy and the FSIF (Fédéra-
tion des Socíetés Immobillères et
Foncières).
Over the last decade, from 2001
to 2011, French SIIC’s have outper-
formed European bonds and the
CAC 40, working their way to the
top podium (+14%). They have also
managed to demonstrate a certain
resilience (-8%) in 2011, admittedly
not as good as European bonds
(+5%), but better than the CAC 40
(-13%). “They also offer a better
return on investment than listed UK
or US property companies, with a
return of 8.2%, against 7.5% for the
UK and 7.3% for the US,” Lutzius
pointed out.
A more ‘risky’ Europe For all that, the model is not without
its disadvantages, particularly in
times of crisis. The sovereign debt
crisis has turned international
investors into ‘euro-sceptics’, quite
happy to believe that the risks are
higher in continental Europe. “Listed
European property companies offer
higher IRR than in the UK or the
US, but the risks are also higher, par-
ticularly in terms of indebtedness
and developments”, emphasised
Lutzius. In Europe, the pipeline of
projects committed to by European
property companies (EUR 8.9 bil-
lion) thus represents 12% of the
value of their assets, whereas this
proportion falls to 7% in the UK
(EUR 3.6 billion) and to 3% in the
US (EUR 12.4 billion).
“But it’s important to consider
this risk in the light of the average
vacancy rate, which in Paris is
around 6%,” put in Serge Grzy-
bowski, CEO of Icade in reply. “We
have a large number of projects in
the pipeline, but these enterprises
have been fully pre-let, which was
true in the case of our group, with
the leases signed by Veolia or the
Ministry of Justice.”
Retail premises are the preferred investment of international investorsIf forced to choose, in France John
Lutzius prefers retail premises to
office space. An opinion shared by
Patrick Kanters, Head of Real Estate
at APG Asset Investment, “half”
of whose exposure in terms of its
allocation of real estate assets in
Europe and France is in shopping
centres, town centre shops and
commercial premises in the lower-
floors of building developments.
“The appetite of international
investors continues to hold up well,
with demand still riding high. But
there is still a big question mark
over the European crisis,” concluded
Lutzius.
PARIS
EPRA NEWS / 41 / 2012 25. EPRA NEWS / 41 / 2012 25.
FEATURES
WHY EUROPE MUST OPEN ACCESS TO EQUITY MARKETS: PHASE II
In March 2011, Cohen &
Steers published Why
Europe must open access
to equity markets.1 They
received a significant
amount of supportive
feedback from this paper.
To further explain their
views, Cohen & Steers
wrote this update to
show there are practical
solutions to increase the
flexibility of companies
to raise equity.
Reality sets inBased on the responses to our first
white paper and on further market
evidence, we are resolved to help
improve the methods by which
European companies raise equity.
We believe this the right moment in
time to demand for greater flexibility
to raise equity. Why?
• The recognition that capital mar-
kets and investor allocations are
becoming more global every day.
Without harmonisation of regula-
tory and capital market practices,
Europe seems destined to lose
ground in the global marketplace.
• The recognition that without re-
capitalisation with true equity, the
combination of high leverage, low
labour productivity and an aging
population represents a perilous
set of economic conditions in
Europe. The sovereign crisis has
continued to spread and threatens
the eurozone. We believe that de-
leveraging in Europe requires eq-
uity recapitalisation of the banks
as well as of other capital-
intensive sectors, such as
real estate. Debt markets
continue to narrow for
real estate, increasing
the reliance by REITs on
public equity – and debt
markets.
• The recognition that the
merit-based, open archi-
tecture of the US capital
market is powerful. That
companies can raise eq-
uity in real time through
ATMs (at-the-market
offerings), or through
one-day marketing of-
ferings, is a meaningful
competitive advantage by way of
efficient access to low-cost equity.
We believe that a more open ar-
chitecture would help reduce the
cost of raising equity in Europe.
One criticism of rights offerings
has been that underwriters earn
fees that are too high. To us, the
simple solution to this criticism is to
promote competition among banks
and institutional shareholders.
Discounts do matter, a point
borne out by the fact this is a mate-
rial negotiating point during the
rights offer process. The rights offer
process provides outside investors,
or the underwriter, a call option to
invest dilutively. We find that, when
considering the value of this option,
rights offerings are as at least as
expensive as other forms of equity
issuance.
• The recognition of the facts: Pre-
emptive rights is one of several
factors that have caused long-
1 http://www.cohenand-steers.com/downloads/Europe_Open_Access_Eq-uity_Markets.pdf
>
26. EPRA NEWS / 41 / 2012
term under-performance of UK
listed property companies relative
to private real estate and relative
to companies in markets without
pre-emptive rights. Performance
through the crisis is summarised
above.
• The recognition that real estate
companies are missing an op-
portunity to consolidate real estate
ownership in Europe and capital-
ise on the de-leveraging of private
real estate ownership.
• The recognition that real estate
companies deserve special
dispensation because their busi-
nesses are highly capital intensive
and the REIT rules require the
majority of earnings be distributed
as dividends.
A flexible approach to raising capital We respect corporate law and
pre-emptive rights, and we sup-
port strong corporate governance
and shareholder-friendly market
practices. As such, we endorse an
approach of flexibility whereby
companies can improve upon a
foundation of raising capital through
pre-emptive rights by:
• pursuing accelerated rights
offerings compressed to as little as
three days;
• pursuing rights issues priced at the
market and without sub-under-
writing (the backstop) along with
an open offer for unsubscribed
shares and
• allowing shareholders to vote
for waivers of pre-emptive rights
under certain conditions designed
to protect shareholders.
First, we endorse the improve-
ments made in Belgium and under
consideration in the UK, to execute
accelerated rights offerings in a
three-day timeframe. This will allow
better price execution, as less market
risk would result in a narrower dis-
count, and this would foster broader
access to non-shareholder investors.
These offerings would preserve the
important right of pre-emption and
facilitate more efficient access to
capital - certainly a ‘win-win’ for
both companies and shareholders.
Second, we advocate the use,
in non-distressed situations, of
at-the-market rights offerings
without a backstop in conjunction
with an open offer. An example of
companies becoming more aware of
the cost of discounted rights issues
and the related cost of capital is the
recent equity offering by Deutsche
Wohnen.
Deutsche Wohnen executed
a capital increase of 20% of its
existing share capital via an at-the-
market rights offering, which was
not backstopped and was executed
in two weeks. We believe this struc-
ture is an improvement as it:
• reduces the discount to market
pricing;
• mitigates downward pressure on
the share price;
• speeds time to market;
• provides the opportunity to bring
in new shareholders and
• reduces underwriting (backstop)
fees.
This form of offering has a more
open architecture and enables the
market to set the price. Importantly,
the company specified the short-
term and long-term uses of proceeds.
Finally, we offer a roadmap of
conditions under which Cohen &
Steers would waive its pre-emptive
rights. These conditions are meant
to address the primary concerns that
have given rise to the strong culture
of pre-emptive rights in Europe.
The real cost of rights issues The defence of the rights issue
process that “the discount doesn’t
matter” has always baffled us. We
and other investors know through
experience that the deeper the dis-
count, the larger the negative impact
on the share price. Said simply, if
the discount doesn’t matter, why
have one?
The discount exists to compen-
sate the underwriter for taking the
risk of backstopping the placement.
More risky issuers need to accept
a larger discount. The discount
has value because it gives the
underwriter the option to acquire a
significant stake in the company at
Bear market (2007-2008) -47.5% -74.8% +2,730bps
Recovery (2009-2011) +77.5% +22.0% +5,750bps
As of December 31, 2011. Past performance is no guarantee of future results. You cannot invest directly in an index.
Source: FTSE EPRA NAREIT Indexes.
US CUMULATIVE RETURN USD UK CUMULATIVE RETURN USD US vs. UK
Exhibit 1. Listed real estate returns: US and UK
The rights offer process provides outside investors, or
the underwriter, a call option to invest dilutively. When
considering the value of this option, rights offerings are as
at least as expensive as other forms of equity issuance.
EPRA NEWS / 41 / 2012 27.
Exhibit 2. Evaluating real cost of rights offering
a discounted price in case investors
do not take up their rights.
This option has value and,
as post announcement the shares
and rights are traded by investors
other than existing shareholders,
there is a value transfer between
existing and new shareholders. This
is part of the reason a company’s
share price tends to underperform
the market after the rights issue
process has been announced and
unfolds. In practice, this arbitrage is
normally borne out by hedge funds
taking advantage of this opportunity.
While taking up the rights
themselves is not value-destructive,
the real impact is on the value
of the investor’s initial investment
– due to the value transfer from the
option inherent in the rights issue
underwriting process and the fall in
company value that almost always
occurs in a rights issue process. As
such, we believe the discount does
matter; the higher the discount, the
more value will be lost.
For a company whose objective
is to raise 20% of its value through
a -30% discounted rights issue (with
an 85% take up probability), the net
option value is equivalent to 5% of
the amount of capital raised. On top
of the underwriter’s fee of 3%, this
equates to an all-in cost of 8%. The
example below serves to illustrate
this point.
If the discount is less, such as
the usual 2% to 4% discount in a
normal placement, the option value
is minimal. Hence there is no free
lunch - the cost of a rights issue at
8% is the same or more than the
all-in cost of a placement of 7% (-3%
price discount plus 4% underwriting
spread).
Unfortunately, there are other
Create a more flexible approach to raising capital that benefits companies
and investors:
- Reduce time for execution.
- Reduce the discount to market for pricing.
- Reduce sub-underwriting (backstop) fees and other cost/expenses.
Approve the waiver of pre-emptive rights for up to a reasonable percentage of capital
stock (20-60%) if:
- Upon request of the waiver, management provides a statement on the
general use of proceeds and why the company believes the waiver is
beneficial to shareholders.
- At the time of share issuance, management provides a specific
statement on the use of proceeds and benefit to shareholders.
- The discount to buyers of up to 5-10% is limited to the last price or
ten-day VWAP (exclusive of banker underwriting spread).
- Management has a history of disciplined and accretive capital
allocation.
- There are no insider shareholders with more than 25% ownership.
- The opportunity allows shareholders to remove the waiver at each AGM.
COHEN & STEERS PRE-EMPTIVE RIGHTS WAIVER VOTING ROADMAP
Option values are derived using the p option formula using a 40% volatility and 1.5% risk-free rate and assuming a time of three months.
Company initial market capitalisation USD 10,000
Shares 10,000
Share price USD 1.00
Capital raise price USD 2,000
Rights issue price USD 0.70
Discount -30%
TERP USD 0.93
Probability of take-up 85%
Exposure to underwriter USD 300
Underwriter’s call option value (USD 102.01)
Company’s put option value USD 2.31
Net option cost as a % of capital raised -5%
costs involved in rights issues, in-
cluding the time and energy for the
management and its shareholders. If
investors are unable to come up with
the capital required to exercise their
rights, the need to tail swallow (sell
your rights) means giving up the dis-
count to intrinsic value, another form
of dilution. Furthermore, the process
limits the ability to issue equity at
a premium to intrinsic value, and
hence create value. Instead, having
to protect against potential dilution
makes rights issues a coercive proc-
ess; the choice is taken away from
the shareholder, and that value is
transferred to the underwriter.
Next stepsAs for next steps, we are pursuing
the following and encourage share-
holders and companies to join us:
• Lobby real estate companies to
speak up and tell their sharehold-
ers and proxy voting firms why the
value of their company would be
enhanced by improved access to
the equity markets.
• Discuss capital-raising options
and the Cohen & Steers >
28. EPRA NEWS / 41 / 2012
Having to protect against potential
dilution makes rights issues a coercive
process; the choice is taken away from
the shareholder, and that value is
transferred to the underwriter.
Rogier Quirijns, senior vice president, is an associate portfolio manager and a senior analyst overseeing the European real estate securities research effort. He also covers listed real estate companies in the United Kingdom
and France. He has 12 years of investment experi-ence. Prior to joining the firm in 2008, Quirijns was a senior real estate equity analyst with ABN AMRO in Amsterdam, where his coverage included France, Scandinavia and the Benelux region. Previously, he was a direct real estate portfolio manager with Equity Estate and an analyst within the real estate corporate finance team at Arthur Andersen. Quirijns has a degree in business economics from the University of Amsterdam. He is based in London.
pre-emptive rights waiver voting
roadmap with market participants
in the Press, at industry confer-
ences, at shareholder meetings.
Shareholders, companies, EPRA,
proxy voting firms and pre-emptive
rights advocates should all get
involved.
• Work with companies that have
strong corporate governance prac-
tices in place, as well as a need
for capital, to place proposals to
waive pre-emptive rights under the
aforementioned conditions on the
agenda for shareholder meetings.
We call upon all market par-
ticipants to focus on this initiative
to help increase the value of your
real estate holdings in Europe, and
allow these companies to grow in
a rational, value-added fashion.
Only with this foundation can
the public market for real estate
companies grow and prosper in
the new- normal environment
of lower leverage and less credit
availability.
Property Investment &Project Development with added value
ORCO Property Group is an investor, developer and asset manager in the Central European real estate and hospitality market.
Main focus is on Germany: With GSG in Berlin, ORCO is offering 815,000 sqm of office & light-industrial space in attractive inner-city locations. In Düsseldorf, Sky Office is the new landmark of the skyline with first-class office space for renowned companies.
Find out more: www.orco-gsg.de | www.skyoffice.de | www.orcogroup.com
GSG-Berlin GSG-Berlin
Sky Office - Düsseldorf
EPRA NEWS / 41 / 2012 29.
FEATURES
INTENSIVE IASB/FASB CONSULTATION PROGRAMME UNDER WAY
The rapid pace of the
IASB/FASB‘s workplan
continues as the IASB/
FASB consult on agenda
consultation, Investment
Entities, and Revenue
Recognition
Agenda consultationStarting in December 2011, REESA
submitted its formal response to
the IASB’s agenda consultation. The
purpose of this was to gather views
on the ‘strategic direction’ and
overall work balance of the IASB’s
current and future workplan. In our
joint submission, REESA argued that
priority should be given to finalising
the revenue, leasing, and financial
statement projects. Thereafter, we
believe it is critical that the IASB
“slow the rate of change” to allow
a period of calm. This is consist-
ent with the general feedback as
the IASB confirmed “widespread
requests for a period of calm”.
As part of the response to the
consultation, REESA conducted a
survey of members on which of the
five ‘strategic areas’ identified by the
IASB should be given priority. The
overwhelming majority of respond-
ents (to both the REESA survey
and IASB consultation) identified
the need to “perform timely post
implementation reviews” as the
top priority. This reflects concerns
among property companies that
the rapid introduction of so many
accounting changes including
Financial Instruments, Fair Value
Measurement, Consolidation, Rev-
enue Recognition, Leases, etc. could
result in implementation issues.
Investment entitiesIn January 2012, EPRA submitted
on behalf of REESA, a response to
the IASB/FASB Investment Entities/
Companies Exposure Draft (ED).
This ED proposes criteria to iden-
tify ‘Investment Entities’ that would
no longer be permitted to consoli-
date the results of their controlled
entities.
While our strong view is that
European corporate property groups
will not be subject this standard,
we have some concerns about the
vague criteria being proposed. This
is of particular concern to US Equity
REITs since the criteria included in
the Investment Entities ED are
virtually identical to those proposed
in the FASB’s Investment Property
Entities ED, which raises the risk of
property companies being scoped
in (if they are not considered Invest-
ment Property Entities).
In response to the FASB’s
Investment Property Entities ED, in
February 2012 EPRA re-submitted a
letter to the IASB/FASB on FASB’s
Investment Property Entities Stand-
ard. In the joint REESA letter we
highlighted our concerns that the
FASB’s Investment Property Entities
standard is significantly different
to the well established asset-based
approach adopted in IAS 40 (FASB
are proposing an entity-based
classification whereas IAS 40 is
an asset-based approach) and >
30. EPRA NEWS / 41 / 2012
could result in some property which
would be classified as Investment
Property under IAS 40 being scoped
out of the equivalent US standard.
Revenue recognitionThe IASB currently has a re-exposure
draft out on Revenue from contracts
with customers - March 13 con-
sultation deadline. This is broadly
the same as the ED that REESA
responded to in October 2010 and is
most relevant to construction compa-
nies as it replaces IAS 11 Construction
Contracts and IAS 18 Revenue.
There is not much of relevance
to investment property companies
as lease income is outside of the
scope and a number of the relevant
issues raised in our previous letter
(e.g. aligning the guidance around
sale and lease back in the proposed
Lease standard, additional guidance
on accounting for sales involving
seller financing) seem to have been
addressed.
What else?Following a letter EPRA submitted
In addition to being represented in the
IVSC working group, EPRA plans to
setup up a separate working group to
assist the IVSC working group.
Mohamed Abdel Rahim is EPRA’s Financial Reporting Manager. He studied at the Manchester Business School before joining Deloitte where he worked in audit for three years. After earning his Chartered Accountant (ACA), Mohamed
worked at Orco Property Group, an EPRA member based in Luxembourg. Mohamed’s main responsi-bilities will be to develop the EPRA best practices and to assist in financial reporting lobbying to the IASB/FASB.
in November, the IVSC has now for-
mally launched a project to develop
a Valuation Standard for Investment
Property, including Project Brief,
and is in the process of setting up
a working group. The purpose the
proposed Standard would be to pro-
vide guidance on the valuation of
investment property line with new
IFRS 13 requirements which were
finalised in August 2011 (effective in
2013) and address issues where there
might be differences in practice. In
addition to being represented in the
IVSC working group, EPRA plans to
setup up a separate working group
to assist the IVSC working group.
What lies ahead?The IASB will be publishing the
results of its “feedback statement”
on the agenda consultation in Q2
2012. The re-exposure of the Leases
standard is expected in late Q2 2012.
A series of board meetings will take
place before then which will focus
primarily on lessee accounting but
also include consequential amend-
ments to IAS 40 (definition of Invest-
ment Property for the purposes of
the exclusion from the scope of the
proposed accounting).
The reporting and accounting
committee will meet in April to
discuss all relevant reporting and
regulatory issues including the IVSC
project.
For further informationOn any of the topics discussed or to
get involved please visit the EPRA
website (‘IASB/FASB representation’
page) and/or contact Gareth Lewis –
EPRA Finance Director or Mohamed
Abdel Rahim – EPRA Financial
Reporting Manager.
EPRA NEWS / 41 / 2012 31.
FEATURES
The IPO window for
German real estate
companies is about to
reopen. Market volatility
has declined significantly
since the beginning of
the year with the German
VDAX now close to levels
at which the last two
German real estate IPOs
were executed. The first
successful transactions
of 2012 underpin the
continued demand for
German equities.
London-based Akselrod Consulting
and Düsseldorf-based Barkow Con-
sulting have analysed a comprehen-
sive list of German real estate ECM
transactions comprising IPOs, rights
issues, capital increases and private
placements. This article contains the
main findings of the study.
Approx. EUR 3.7bn of German real estate equity placed since 2009Since 2009 – the beginning of the
end of the financial crisis – approx.
EUR 3.7 billion of German real
estate equity has been placed in
the market. The majority, or 56%
of the placed equity, came from
residential companies, whereas the
office sector only represented 29%.
Surprisingly, less than 10% of equity
originated from the retail sector, de-
spite strong investor demand for the
asset class.
Doubling of placements to EUR 2bn in 2011Difficult market conditions during
the second half of 2011 notwith-
standing, the volume of placed
equity more than doubled to EUR
2 billion in 2012. The first quarter
witnessed the highest ECM volumes
of 2011, with close to EUR 1 billion of
equity placed during March alone,
including the successful IPO of GSW.
Elevated market volatility during the
third quarter of 2011 – the highest
levels since the Lehman crisis –
effectively closed ECM win-
A FAVOURABLE CLIMATE
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
14/0
3/09
14/0
5/09
14/0
7/09
14/0
9/0
9
14/1
1/09
14/0
1/10
14/0
3/10
14/0
5/10
14/0
7/10
14/0
9/1
0
14/1
1/10
14/0
1/11
14/0
3/11
14/0
5/11
14/0
7/11
14/0
9/1
1
14/1
1/11
14/0
1/12
approx EUR3.6bn placed!Chart 1: Cumulated Volume of German RE ECM Transactions (placed capital, EURm, since 01/09)
Source: Bloomberg, Company Publications, Akselrod Consulting, Barkow Consulting
>
32. EPRA NEWS / 41 / 2012
dows with only one smaller transac-
tion being executed. Following the
extended second-half lull, the last
quarter of 2011 saw re-accelerated
ECM activity, as six deals with total
placement volume of approx. EUR
800 million came to market.
Residential real estate continued to be the most active asset classResidential real estate continued to
be the most active subsector, more
than doubling to EUR 1.1 billion
(55% of all real estate equity placed
in 2011). By contrast retail real estate
transactions were essentially absent
throughout the year.
1/3 of equity placed via IPOs in 2011, substantial increase in average transaction size2011 was also a good year for
German IPOs, with three new
companies joining the listed space.
Chart 2: Capital Placements by Sector 2009 to date
Source: Bloomberg, Reuters, Company Publications, Akselrod Consulting, Barkow Consulting
Retail Office Residential Mixed
5.5% 9.1%
29.9%
55.5%
Retail Office Residential Mixed
5.5% 9.1%
29.9%
55.5%
Retail Office Residential Mixed
5.5% 9.1%
29.9%
55.5%
IPO Rights Issue
Capital Increase Placement
EURm 364; 19%
EURm 712; 36%
EURm 363; 18%
EURm 529; 27%
Chart 3: Capital Placements 2011 by instrument
0
20
40
60
80
100
120
140
160
180
200
Retail Office Residential Mixed Total
Ave Sixe 2009 Ave Size 2010 Ave Size 2011 Ave Size 2012
Source: Bloomberg, Reuters, Company Publications, Akselrod Consulting, Barkow Consulting
Chart 4: Av size per transaction by sector (in EURm)
In addition to GSW and Prime Of-
fice, Youniq is included in the IPO
category, although initially only a
minimal free float was placed before
the company’s subsequent ‘relisting.’
In total, almost 50% of placed equity
came to market via these three IPOs.
27% of equity came from capital-
increases-without-rights and 18% via
rights issues.
Notably, average transaction size
increased to more than EUR 100
million in 2011 - up 68% from 2010
levels.
Reduced volatility and strong German macro pave the way for successful IPOs in 2012Against a backdrop of improving
forward indicators and firming
private consumption, the German
IPO window appears poised to
reopen. Ongoing uncertainty in the
troubled Eurozone and continued
tensions in the Middle-East seem
Peter BarkowIn 2009 Peter founded Barkow Consulting, an independent advisory firm
with core focus on capital mar-kets strategy and communication services for the listed real estate sector. Peter brings more than two decades of global financial
institutions and real estate experience to the table. He has amassed project experience with leading global strategy consulting firms and financial institutions. In his most recent roles in equity research, Peter has headed the Continental European real estate team at Lehman Brothers and the German Financial Institutions & Real Estate team at HSBC.
EPRA NEWS / 41 / 2012 33.
VDAX
IPO Hurdle
03/0
1/10
03/0
2/10
03/0
3/10
03/0
4/10
03/0
5/10
03/0
6/10
03/0
7/10
03/0
8/10
03/0
9/10
03/1
0/1
0
03/1
1/10
03/1
2/10
03/0
1/11
03/0
2/11
03/0
3/11
03/0
4/11
03/0
5/11
03/0
6/11
03/0
7/11
03/0
8/11
03/0
9/11
03/1
0/1
1
03/1
1/11
03/1
2/11
03/0
1/12
03/0
2/12
50
45
40
35
30
25
20
15
10
5
0
May 2010: GSW'sIPO postponeddue to sovereigndebt concerns
April 2011: GSW's2nd IPO approachsuccessfullyexecuted
June 2011: Prime Office IPO
Source: Bloomberg, Company Publications,, Deutsche Börse, Akselrod Consulting, Barkow Consulting
Chart 5: Av size per transaction by sector (in EURm)
Jesse Freitag-AkselrodBorn in 1976, Jesse has over ten years of diverse financial
and investment experience, having worked in mergers & acquisitions, equity research, and asset management. Since
2005, Jesse has been active in the European listed real estate space, most recently working as a buyside investor for Cohen & Steers Europe. In 2010, Jesse founded Akselrod Consulting, a stand-alone consultancy firm specialised in IPO-advisory and corporate strategy.
only to be reinforcing appetite for
German safe-haven investments.
Recent outperformance of defensive
German property stocks over the
EPRA-Europe benchmark and
first signs of successful 2012 ECM
transactions – particularly by GSW
and Alstria – underscore investor
demand for German exposure.
Importantly, volatility has
dropped significantly in the year-to-
date period with the German VDAX
currently trading around 21 - very
close to levels concurrent with suc-
cessful 2011 real estate IPOs. In-line,
a near-term upturn in IPO activity
doesn’t appear unlikely. Investor de-
mand for new residential and retail
companies will likely remain high-
est. Nevertheless, conservatively
financed, high quality office plays
may also pique investor demand
during 2012.
Improving market conditions
notwithstanding, the myriad
geo-political issues and macro
challenges ahead suggest that the
process of eurozone and global
recovery will not be straightforward.
Periodic resurgence of market
volatility and choppy open-and-shut
cycles for IPO windows therefore
likely remain a medium-term reality.
Whatever shape the economy and
equity markets take, 2012 promises
yet another exciting year for German
listed real estate.
Against a backdrop of improving forward
indicators and firming private consumption, the
German IPO window appears poised to reopen.
34. EPRA NEWS / 41 / 201234. EPRA NEWS / 41 / 2012
FEATURES0.
3
9.8
0.5
63.6
30.9
15.9
8.9
8.8
3.5
67.4
32.7
.003
.003
.08
.08
7.2
6.4
1.7
36.0
6.4
4.0
1.4
1.8
0.3
1.0
0.1
0.6
0.2
13.1
0.9
0.5
0.2
0.7
0.1
0.1
2.8
3.5
0.5
22.2
7.4
7.2
1.7
EPRA EUROPE - ASSET EXPOSURE MAP
Real estate assets
Full market Capitalisation
At the end of 2011,
the EPRA Europe
Index consisted of
83 European listed
property companies,
had a combined full
market capitalisation
of EUR 101.5 billion
and were trading
at an average 24.7%
discount to NAV.
FTSE EPRA/NAREIT Developed Europe IndexEUR billions as at December 31, 2011
EPRA NEWS / 41 / 2012 35. EPRA NEWS / 38 / 2011 35.
How things have changedBased on data collected from the
latest available individual company
reports, the combined underlying
real estate portfolio (bricks and
mortar) was valued at over EUR
271.7 billion, comprising of real
estate assets spread out across 31
European countries and the US. As
such, the EPRA Europe Index tracks
and measures one of the largest
pools of high quality, professionally
managed, transparent real estate
assets available in Europe.
The map on the left displays the
geographical allocation of the EPRA
Europe Index per country. As can
be observed, the major economies
make up the largest part, with the
UK, France and Germany represent-
ing 61.4% of total real estate assets
included in the index.
Due to the relatively small size of
individual European countries, the
need for cross-border investments
to achieve economies of scale is
evident, with 77.8% of the total
assets owned domestically. A full
geographical portfolio breakdown
of all 83 constituents can be down-
loaded in Excel format from www.
epra.com.
• 83 listed companies
• 32 countries
• EUR 271.7 billion real estate
portfolio valuation
*** CALL FOR ACTION *** CALL FOR ACTION *** CALL FOR ACTION ***
EPRA NAV ESTIMATES, WHAT’S THE CONSENSUS?Although income-related metrics are
gaining popularity, NAVs are still
the leading metric used by inves-
tors to valuate European listed
real estate company. As a result of
this, Consensus NAV Estimates are
widely used by the market as an
indicator of future performance as
well as current sentiment. EPRA has
often received feedback from inves-
tors and analysts, as well as from
property companies, regarding the
lack of consistent and accurate NAV
Consensus data.
With this in mind, EPRA is
aiming to launch a new initiative
by providing Consensus EPRA-NAV
Estimates for as wide a possible
selection of EPRA Europe Index
Constituents, based on as many as
possible analysts’ NAV Estimates.
Over 80% of the EPRA Europe
Index is reporting EPRA NAVs
at the moment and analysts are
increasingly using EPRA NAVs in
their models and communicate
this industry-standard when com-
paring the KPIs of the companies
they cover.
Based on the ‘Annual EPRA
Analyst Coverage Table’ (featured
at the back of this newsletter)
the well-known analysts, most of
whom are EPRA members, have
been contacted and responded very
positively to this initiative.
Ultimately, high-quality Consen-
sus Data can increase transparency
in the market and help to decrease
the volatility and uncertainty with
regards to the direction of the
market caused by incomplete NAV
Estimates Data.
Please contact Maikel Speelman if you have not yet been contacted and want to contribute your NAV Estimates to this project or have any questions regarding this initiative.
36. EPRA NEWS / 41 / 201236. EPRA NEWS / 41 / 2012
On a near daily basis, EPRA distributes index-related corporate ac-
tions to its members globally covering hundreds of indices. These
include index constituent inclusions/exclusions, free float changes,
share offerings, index ground rule changes... and much more.
To ensure you or your team are on this essential mail-out, please
contact: [email protected].
FTSE EPRA/NAREIT Global Real Estate Index Series -Ground rule changesFurther to the notice released on October 03, 2011, the FTSE EPRA/NAREIT Global Index Series Supervisory Committee (the Global
Group) re-affirms that the rules concerning eligibility for the FTSE EPRA/NAREIT Global Real Estate Index Developed and Emerging
Series and the nationality assignments of companies will be revised. The new rules will come into effect in March 2012. An updated
version of the FTSE EPRA/NAREIT Global Real Estate Index Series Ground Rules is now available and the relevant excerpt from the
revised rules is included below:
4.8 The FTSE EPRA/NAREIT Global Real Estate Index Series is divided into Developed and Emerging sub-series. Assignment of
companies to the sub-series is made according to the following criteria:
a) New constituents will be classified as Developed if greater than 75 percent of their total annual EBITDA is derived from
Developed Markets as classified by the FTSE Country Classification Committee. Otherwise the constituent will be classified
as Emerging.
b) 1. Existing Developed series constituents will move to the Emerging series if their total annual EBITDA from Developed
markets has decreased to less than 50 percent for two consecutive years as evidenced by the company’s annual reports.
2. Existing Emerging series constituents will move to the Developed series if their total annual EBITDA from Developed
markets has increased to greater than 75 percent for two consecutive years as evidenced by the company’s annual
reports.
4.9 For the purposes of creating local and regional indices the following criteria are used to determine the nationality and regional
allocation of a company:
a) The Nationality of a company will generally be the same as that allocated by FTSE in the construction of the FTSE Global
Equity Index Series except where this would be inconsistent with the allocation of the company to the Developed and
Emerging sub-series as provided for in the above rule.
b) In this eventuality, the Nationality of a company in the Developed sub-series will be determined by the Developed country,
and in the case of an Emerging sub-series constituent the Emerging country, that contributed most to the company EBITDA
as evidenced by the company’s most recent financial report. In the event of a company moving between the Developed
and Emerging sub-series, its Nationality will be re-evaluated according to this rule.
c) The Nationality of a company so assigned may also be re-assessed if for a constituent of the Developed sub-series a
different Developed country, and for a constituent of the Emerging sub-series a different Emerging country, has contributed
most to the company’s total annual EBITDA over two consecutive years as evidenced by the company’s annual reports.
Company Nationality assignments are subject to the approval of the EPRA/NAREIT regional committees. The regional allocation of a
company will be determined by its Nationality. Please note:
1. Existing constituents: EBITDA will be tested prospectively over a two-year period for developed/emerging status, starting in March
2012. Therefore, companies could be re-classified from March 2014 at the earliest.
2. Non-constituents, which may become eligible from March 2012, upon introduction of the revised rules, will be included in the
Global Index Series in March 2012. The past two years EBITDA for these companies has already been tested.
3. Red Chips: As per the notice released on March 17, 2011, the ‘Red Chips’ in the FTSE EPRA/NAREIT Global Real Estate Index Series,
which have remained in Hong Kong (Developed) since September 2009, will move to China (Emerging) in March 2012.
The three ‘Red Chip’ stocks which are expected to be reclassified as China as part of the March 2012 Annual review, are:
China Overseas Land & Inv (6192150)
China Resources Land (6193766)
Shenzhen Investment (6535261)
EPRA NEWS / 41 / 2012 37. EPRA NEWS / 41 / 2012 37.
The EPRA Annual Conference The road to Berlin.
September 06-07, 2012.Save the date.
· Real estate analysis
· Current affairs &
sustainability
· Forecasts & networking
· Investment insight
· Economic commentary
The event of the year for European listed real estate. EPRA’s Annual Conference brings together the world’s
largest property companies, analysts, consultants and
global financiers. It’s the primary networking opportunity.
Main
sponsors
Standard sponsors
Lanyard sponsor
38. EPRA NEWS / 41 / 201238. EPRA NEWS / 41 / 2012
FEATURES
BONDED TO LISTED REAL ESTATE
The retreat of commercial
property lenders is a
concern for the real
estate sector as a whole,
under the cloud of global
economic uncertainty. A
number of reports over
the past few months have
stated that lenders will
step back from the ‘extend
and pretend’ strategy of
the last three years and
start calling in loans.
Arguably the listed real
estate sector in Europe is
in relatively good shape
– certainly compared
against many other real
estate vehicles.
As at end January 2012 the listed
sector displays a loan-to-value of
44%, many of the companies/REITs
own and manage prime assets in top
locations. Nevertheless, operating
and delivering returns in the current
climate continues to be challenging.
Property stocks started the year on a
positive note but remain at attractive
(for the investors) discounts to NAV.
Banks already indicated back in
2009 that high level of exposure to
commercial property was a burden,
however at peak of the financial
turmoil loans were extended and
covenant breaches ignored to avoid
write-downs. Subsequently, prop-
erty lenders disposed of property
loans worth EUR 20 billion in 2011,
and this is expected to continue
for the foreseeable future - ahead
of regulatory changes. They have
chosen to off-load large portfolios
as opposed to negotiating against
individual assets to clear prop-
erty exposure from balance sheets.
For example, in the last three
months Eurohypo, Societe Generale
and Clydesdale stated that they have
halted property lending completely.
Despite the pool of bank debt
becoming more shallow, European
listed real estate companies/REITs
have successfully tapped the bonds
and convertibles market. A great
example, is Unibail-Rodamco’s
December 2012 EUR 500 million
3.875% bond issue maturing in 2017
which was thrice oversubscribed.
The bond was issued only three
months after the REIT raised EUR
500 million in September through a
3.5%, five-year bond that was four
times oversubscribed as the order
book hit EUR 2 billion. Foncière des
Régions made headlines earlier in
2011 when its EUR 480 million con-
vertible was increased to EUR 550
million following increased investor
appetite. Derwent London followed
by raising GBP 175 million through a
convertible in the week after.
In total, FTSE EPRA/NAREIT
Europe Index constituents raised
EUR 7.4 billion in the past two years
through bonds issuance. Currently
there are 155 tradable issues valued
at EUR 32 billion1 with an average
duration >20 years. This compares to
EUR 127 billion of outstanding debt
that sits on the balance sheets of the
FTSE EPRA/NAREIT Europe Index
constituents – perhaps this indicates
that there is room for the continued
growth of the bond market. France
and UK listed companies/REITs ac-
count for 75% of the market. (Fig 1)
Rather frustratingly for the
sector, listed real estate company 1 As of February 15, 2012
EPRA NEWS / 41 / 2012 39. EPRA NEWS / 41 / 2012 39.
shares currently trade on average at
20% discounts to NAV. The weighted
average LTV of the FTSE EPRA/
NAREIT Europe Index constituents
is just over 40% with 13% (EUR 11
billion) of total debt set to mature in
the coming 12 months.
The real estate four-quadrants
offer exposure to the asset class
through a variety of investment
vehicles - depending on the specific
requirements, appetite, and man-
date of the investor. (Fig 2) As an
increasing number of long-term real
estate investors incorporate all four
sections under one umbrella, they
are identifying real estate clearly as
a separate investment asset class.
A growing number of institutional
investors have taken up stakes or
formed joint ventures with listed real
estate companies/REITs in recent
years. The ability to ‘look through’
the wrapper and understand the
type of investment exposure at
the asset/building/location level is
becoming more widespread – the
Dutch pension funds having been
doing this for years!
As direct real estate lending will
continue to challenge the market, it
is extremely important that listed
real estate companies/REITs equip
themselves with a range of options
to balance the capital structure of
their firms. Issuing non-dilutive
equity or tapping the corporate
bond market depending on market
conditions, seem obvious choices.
However, it is no surprise that
equity issuance was identified as
the lesser preferred option2 by real
estate companies/REIT given the
resulting dilution especially when
the sector is trading at a discount
to NAV.
Corporate bonds may offer an
attractive alternative source of asset
financing under these conditions.
FTSE EPRA/NAREIT Europe Index
constituents have raised over EUR
60 billion in equal shares of cor-
porate bonds and equities over the
past 11 year (Fig 3). The disposal of
non-core assets is a strategy that a
number of real estate companies/
REITs have adopted.
Regulatory wisdomFinancial regulation is a matter of
concern for the sector where prop-
erty lending and equity investments
are expected to affect in an adverse
manner. Basel III, which regulates
banks lending and capital reserve
requirements is one of the reasons
why new lenders have already
started reducing exposure in the
property sector. The Solvency II
SwissBelgiumSpainItalyNetherlandsGermanySwedenNorwayFinlandAustriaFranceUK
€ 959m € 786m € 2m € 728m € 1,546m € 795m € 181m € 164m € 438m € 820m € 7,322m € 15,936m
Fig 1: France and UK listed companies/REITs account for 75% of the market.
PRIVATE PUBLIC
DEB
TEQ
UIT
Y
Direct Real Estate OwnershipGreater controlLabour intensiveCapital intensiveOwnership of maintenance operationsHigh incomeLiquid
Indirect Real Estate (Private Funds)Direct property characteristicsDiversificationExternal managementLiquidLess direct controlHigher costs
Listed Property CompaniesTransparencyLiquidityDiversification at low costLower management costsHigh income - particularly REITsMed/long proxy for directEasy to benchmarkLack of controlShort term volatility correlation to equities
Listed Debt SecuritiesDiversified exposure easy to achieveLiquidityReasonable transparency (credit agencies)Strong correlation to movements in interest rates
Corporate BondsWide range of credit quality, based on issuers, sector, region, etcUnsecured obligation
CMBSAbility to tailor credit exposure by class/trancheDetailed understanding of securitisation documents req.Market remains closed
Direct & Indirect LendingSecured loansFavourable market conditions (attractive spreads)Ability to tailor credit profile through mix of senior and mezzanine
Direct Lending (Senior & Mezzanine)Greater control than indirectDifficult to achieve diversificationLending platform expensive
Debt Fund InvestingMore cost effective at smaller scaleDiversification easier to achieveLess ability to target and control investments
Fig 2: The real estate Four Quadrants
Source: EPRA, Morgan Stanley
>
2 The EPRA/Cambridge Capital Structure Survey 2010
40. EPRA NEWS / 41 / 201240. EPRA NEWS / 41 / 2012
Directive scheduled to become effec-
tive in 2014, will require insurance
companies to meet more stringent
capital adequacy requirements. On
the one hand it could stimulate di-
rect property lending at the expense
of direct property ownership, which
is positive.
A glimpse of this effect was
observed when insurers competed
with each other to finance a GBP
120 million loan to Unite Group. On
the other hand, Solvency II Capital
Requirements (SCR) on property
stocks under the ‘standard model’
could have an adverse effect – but
this will depend on how the wide
range of indirect property vehicles
are eventually classified under SII
when implemented at a national
level.
Under the SII standard model,
real estate shares require the same
levels of capital reserves as gen-
eral equities, and this may cause
insurance companies to reduce their
investments. Bond investments in
the same companies would require
a lower reserve ratio. Opportunistic
debt funds have naturally been
formed which are looking to acquire
loans.
For example Allianz RE is plan-
ning to lend up to EUR 1 billion to
eurozone property. Olivier Piani,
chief executive officer at Allianz Real
Estate, was quoted: “There are now
more opportunities to lend against
real estate than buy, but we are
not coming to replace the banks.”3
The amount of debt secured against
commercial property in UK alone
is approximately GBP 280 billion4,
with only a small proportion linked
to prime assets.
Long-term bondThe continued development of the
real estate bonds market in Europe
is not only a favourable develop-
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Billion
s
Equity & Rights Issue
Debt Issue
Fig 3: Capital raised by Europe companies
The ability to ‘look through’
the wrapper and understand
the type of investment
exposure at the asset/
building/location level is
becoming more widespread.
0
2.00
4.00
6.00
8.00
10.00
12.00
01-
Jan-0
2
01-
Apr-
02
01-
Jul-02
01-
Oct
-02
01-
Jan-0
3
01-
Apr-
03
01-
Jul-03
01-
Oct
-03
01-
Jan-0
4
01-
Apr-
04
01-
Jul-04
01-
Oct
-04
01-
Jan-0
5
01-
Apr-
05
01-
Jul-05
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Oct
-05
01-
Jan-0
6
01-
Apr-
06
01-
Jul-06
01-
Oct
-06
01-
Jan-0
7
01-
Apr-
07
01-
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01-
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-07
01-
Jan-0
8
01-
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08
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01-
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-08
01-
Jan-0
9
01-
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09
01-
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-09
01-
Jan-1
0
01-
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10
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-10
01-
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1
01-
Apr-
11
01-
Jul-11
01-
Oct
-11
01-
Jan-1
2
WTD AVG BONDs YTM FTSE EPRA NAREIT Dividend Yield
Fig 4: FTSE EPRA/NAREIT
Developed Europe
Dividend and Bond Yield
3 Property Investor Europe – October 06, 2011
4 CBRE Property service Research
EPRA NEWS / 41 / 2012 41. EPRA NEWS / 41 / 2012 41.
475794 Land Securities 2004 5.391%(F/R)03/27 A5 03/11/2004 613,918 4.8598 5.391 0
5608U7 Klepierre 2010 4% 13/04/17 Reg.S 13/04/2010 750,000 4.0112 4 0
6113D6 Unibail-Rodamco 2010 3 7/8%05/11/20 Reg.S 05/11/2010 700,000 3.8611 3.875 0
85109C Land Securities 2007 5.125%(F/R)02/36 S-5 07/02/2007 500,000 4.8338 5.125 0
475792 Land Securities 2004 5.391%(F/R)03/27 S-1 03/11/2004 608,876 4.7136 5.391 0
63901H Klepierre 2006 4 1/4% 16/03/16 Reg.S 16/03/2006 689,100 4.2234 4.25 0
72620U Hammerson 2006 4 7/8% 19/06/15 Reg.S 19/06/2006 700,000 4.6916 4.875 0
3932XL Unibail-Rodamco 2009 4 5/8% 23/09/16 Reg.S 23/09/2009 600,000 4.2884 4.625 0
5575W9 Unibail-Rodamco 2010 3 3/8% 11/03/15 Reg.S 11/03/2010 635,000 3.277 3.375 0
6450JT Fonciere Des Region Cv 3.34% 01/01/17 S 24/05/2011 550,000 3.6722 3.34 0
3812KU Unibail-Rodamco Cv 3 1/2% 01/01/15 29/04/2009 574,996 2.7001 3.5 0
TYPE NAME ISSUE DATE AMOUNT OUTSTANDING INTEREST COUPON S&P CURRENT RATING &
(LOCAL CURRENCY) YIELD OVERLOOK (BOND)
Top ten European corporate bond issues
ment in the short term - going some
way to addressing the banks’ credit
challenge, but also offers long-term
benefits. Comparative analysis
between dividend yields and bond
yields of the FTSE EPRA/NAREIT
Europe index constituents shows a
convergence over the past 12 months
– in the 4-5% range. (Fig 4)
As the bond market develops
further, investors may choose to
add bonds to existing portfolios
to enhance risk/return profiles. In
a recently published5 outlook by
rating agency Fitch, the corporate
bonds market is expected to be the
preferred option for European REITs
in particular.
According to Fitch, European
REITs are well suited to raise capital
in the bonds market on favorable
terms due to the limited leverage
and healthy cash ratios. In addition,
the trend towards a ‘US-Style’ bond
funding is expected to continue as
diversifying debt channels becomes
beneficial.
Ali Zaidi, joined EPRA’s research team in October 2007 as an analyst. His initial projects
were working on the emerging market indices for the FTSE EPRA/ NAREIT Global Real Estate Index and the European corporate governance report. Ali holds a BA in Economics and Business and completed his MSc in International Finance at the University of Amsterdam.
5 2012 Outlook: European REIT- Riders of the Storm
42. EPRA NEWS / 41 / 201242. EPRA NEWS / 41 / 2012
FEATURES
FIRST EPRA SUSTAINABILITY AWARDS
– DON’T MISS THE BOAT!
As with the EPRA Financial BPR
awards, companies will be awarded
Gold, Silver, and Bronze accredita-
tions based on their compliance
with the EPRA sBPR, and the results
will be announced at this year’s
EPRA Annual Conference in Berlin
(September 06-07). The review of
company disclosures will be under-
taken by Jones Lang LaSalle over the
June-August period.
What are the EPRA sBPR?The EPRA sBPR are consistent with
the GRI Construction and Real
Estate Supplement (GRI CRESS)
recommendations and focus on the
key reporting measures on Energy,
Greenhouse Gas Emissions, Water,
and Waste that are relevant to
investment property. They consist
of eight ‘absolute’ performance
measures which measure the total
footprint and three ‘intensity’ meas-
ures which divide the total footprint
by relevant surface area or persons.
Recognition of EPRA’s efforts, and
a further boost for the prospects of
improving the transparency of sus-
tainability reporting for the European
property sector, was given when
INREV (the organisation representing
the European non-listed property
sector) recently published their Sus-
tainability Reporting Recommenda-
tions, based on the EPRA sBPR.
How many companies do we expect to adopt in 2012?Some 25 companies were involved
in the consultation including mem-
bers of the sustainability committee.
Since the launch we have held a
number of individual meetings with
EPRA member companies who have
indicated that they will be adopting.
Based on our consultations and
meetings with companies we expect
anywhere between 35% and 50% of
the EPRA Europe Index companies
to be adopting in 2012. This would
compare favorably with the level of
adoption of the EPRA Financial BPR
in 2008 (41%).
CALL TO ACTION!To facilitate our review please
submit links to your 2011/2012
Sustainability reports and/or
Annual reports to Jones Lang
LaSalle. Please note that only
companies in the EPRA index
Europe (on March 31, 2012) are
eligible for an award.
Email: [email protected]
Following the launch of the EPRA
Sustainability BPR (sBPR) in September
2011, EPRA will be launching the first
EPRA Sustainability reporting awards
in 2012. Based on EPRA’s extensive
consultation with companies both during
the development of the sBPR and after
publication, we are confident that a high
number of companies will be
adopting the EPRA sBPR.
35% Confirmed 13% Expected28% Not known13% Non-EPRA Members
% of EPRA Europe Index
companies expected to adopt sBPR
in 2012
Sponsored by
EPRA NEWS / 41 / 2012 43. EPRA NEWS / 41 / 2012 43.
FEATURES
SUSTAINABILITY STRATEGIES OF EUROPEAN PROPERTY COMPANIES
Let’s be honest, who
doesn’t like investing in
a convincing investment
story? Especially when
it does not provide only
strong economic, but
also strong ecological
and moral arguments.
‘Green’ is now quite
clearly a major trend for
this decade – but with this
style comes substance.
Scarcely a day goes by without the
managers of real estate companies
being confronted with this new phe-
nomenon. And this is something to
be welcomed – especially as there is
a growing awareness that, whatever
happens, we just cannot continue
using raw materials as we have in
the past. But awareness and hope
alone won’t turn you a profit.
The simple question is what
comes after the hope phase has
passed: profit and cash earnings?
Who, if not investors and their
funds managers, can give us mean-
ingful information on this? A lot of
reasonable academic papers have
appeared – and surprise surprise:
green pays. But how much of this
stands up to scrutiny?1 What we
need is a strong dose of realism – in
the context of the overall market
and listed real estate it is solid black
and red numbers that count.
To shed light on this issue, last
autumn IVG Research began a
pan-European survey of 85 listed
property companies that are mem-
bers of EPRA.
European listed property
companies are giving ever greater
consideration to aspects of sustain-
ability. The number of corpora-
tions that employ sustainability
strategies has risen steadily over
recent years. Between 2006 and the
middle of 2011 alone, the number of
property companies that claimed
to have added a sustainability
strategy within their corporate poli-
cies quadrupled. This growth will
continue in future, as will the
significance of sustainability within
that strategy. Afterall, sustainability
means long-term, economic stability
and responsibility – and companies
without a sustainability concept
will increasingly find themselves at
a competitive disadvantage moving
forwards.
Some result of the survey: • This gap between Scandinavian
property companies and Polish
and Southern European coun-
terparts will probably shrink in
coming years as the benefits of
sustainability become evident
across the regions. Furthermore,
market and public require- >
1 IVG Research (2011) The Sustainability Strategies of European Property Companies – An Analysis.Cajias M./Bienert, S. (2011): Does Sustainability Pay Off for European Listed Real Estate Companies? In: Journal of Sustainable Real Estate JoSRE, Vol. 3, Page 45-49.
44. EPRA NEWS / 41 / 201244. EPRA NEWS / 41 / 2012
ments will increase, heightening
the pressure on these companies.
• Companies mainly cited reduc-
tion of economic risk as the goal
of their sustainability efforts.
Improving their image and rais-
ing productivity were mentioned
relatively frequently.
• All companies asked stated that
they had noticed an increased
interest in sustainability by their
stakeholders. Some 90% of
companies investors are interested
in a sustainability concept. Almost
65% of companies surveyed
noticed demand on the part of
tenants.
• In order to better react to this
upsurge in awareness, more com-
panies are creating sustainability
departments. In around 22% of
companies asked, a separate
corporate sustainability (CS) de-
partment has already been set up.
However, there are also substantial
regional differences in this respect.
• The number of certified proper-
ties is also continuing to rise. In
particular, the companies asked
regularly use the UK BREEAM
certificate. We anticipate better
comparability of the various green
accreditations.
• More than half of the companies
asked either publish a separate
CS report to communicate their
sustainability activities or cover
the subject in their Annual Report.
Western European and Scandina-
vian property companies are most
likely to publish such information.
• In addition to their print materi-
als, 60% of European property
companies publish sustainability
data on their website. Here, Cen-
tral European and Scandinavian
companies lead the field.
• To date, around a third of the
companies asked have set up a
CS fund. Most that have not yet
established such a fund do not
intend to as this is not part of their
business model.
• 53% of companies asked indicated
that they aim for green leases in
the next 24 months.
Sharp increase in green property investmentBased on the survey and website
assessment, there have been four
phases to date in the development
of the introduction of sustainable
business activities in the property
industry.
The analysis begins with the
initial phase, which saw a more
pronounced increase around
2001/2002. Among other things, this
was based on the great political
and social interest in the subject of
sustainability. The repercussions of
global warming and climate change
were well known to the public at
large. Political reactions included the
Kyoto Protocol to reduce greenhouse
gas emissions and an EU Green Pa-
per2. Certification became possible
in the property sector for the first
time, but generally, sustainability
remained relatively unpopular in
the property industry.
There then followed a coordina-
tion phase between 2003 and 2006.
Only a handful of companies intro-
duced new CS strategies during this
period. These years were dominated
by different regional economic trends
in Europe. The property boom in the
south of Europe side-stepped sus-
tainability, meanwhile the German
economy was in crisis. Companies
focused on survival economics and
therefore most did not implement a
green thinking.
There has been steady growth in
interest in CS activities since 2007.
The Lisbon Treaty of 2007 brought
climate change and energy solidar-
ity under the purview of the EU. The
considerable emissions attributed
2 http://europa.eu/documentation/official-
docs/green-papers/
“Green buildings affect the performance of the
property company that owns them.
They perform better, they have lower risk and
a higher net cash flow.” (www.fsinsight.org)
Piet Eichholtz, Professor of Real Estate Finance, Maastricht University.
EPRA NEWS / 41 / 2012 45. EPRA NEWS / 41 / 2012 45.
to buildings drew tighter regulation
and requirements from the property
industry. These regulations formed
the basis for building construction
and renovation. The ordinances
were therefore one reason for the
re-emergence of the sustainabil-
ity concept in 2007. In addition, the
2008 economic crisis triggered a
rethink within the property sector as
companies sought to overhaul their
processes and structures.
Sustainability was seen as a
possible solution that could bring
long-term gain, and of course add
a shine to the corporate image. So
ironically, the economic crisis was
therefore a key push factor for the
uptake in corporate sustainability
activities within the industry. The
momentum of recent years should
see CS measures becoming common
practice for most companies.
Almost 70% of property companies have a sustainability strategyThe trend towards sustainability has
taken root in the property industry.
70% of the companies asked already
reported CS activities. However,
there are significant regional differ-
ences that have been highlighted by
our research. Scandinavia is a clear
front-runner in sustainability mat-
ters. There, some 90% of companies
have already integrated a sustain-
ability strategy into their processes.
Western European companies are
also well above the European aver-
age at 79%. Central Europe and the
UK are slightly below average. Last
comes Southern Europe, where only
40% of companies have integrated
sustainability into their company
processes. From the two companies
covered in Poland, one has imple-
mented a sustainability strategy.
Notable investor interest in sustainable ROIIn our survey, all companies indi-
cated that they had seen increased
demand for sustainability from their
stakeholders – particularly investors
and tenants. More than 90% of
companies noted strong demand
from their investors. They expect
that investments in buildings will
generate profits for their interest in
sustainable business.
Energy-efficient buildings and/
or certified properties also tend to
command higher prices on the mar-
ket in our experience (based on a
two years analysis of transactions in
Germany.) Redevelopment and retro-
fitting costs are factors weighing on
valuations as emission regulations
evolve. According to the survey
last autumn showed that most
investors expect that the value of
conventional buildings will decline
in future. Investors’ reinvigorated
interest in sustainable buildings is
therefore understandable.
CO2 reduction and certification in particular planned for next 24 monthsMost companies surveyed are
anticipating more standardisation
e.g. in the appraisal systems or
certification process for refurbished
buildings over the next two years.
Many companies currently operat-
ing without a sustainability plan
claim they would adapt sustainable
development to keep market share.
Here we notice a key trend. Some
70% of those asked stated that they
would attempt to obtain certification
for their properties. In future, green
buildings could become the market
standard for internationally investi-
ble properties over the next 24
months. There is the possibility that
the value of conventional, uncerti-
fied properties will diminish. This
development is prompting many
companies to have their properties
certified in order to stabilise their
value.
Energy saving, portfolio-screening or wait-and-see60% of the companies are planning
to carry out portfolio-screening over
the next five years; ie, assessing
their properties for sustainability
aspects. Building on this, they can
derive specific measures to enhance
the sustainability of their property
portfolios. Such screenings allow
for targeted sustainability planning
on the one hand while increasing
a portfolio’s transparency on the
other. At the same time, the rise in
portfolio-screening reinforces the
trend towards sustainable build-
ings. This important measurement
is the base to identify the leverage
to decrease of CO2 emission in
the portfolio – in other words: to
identify the “good” (no investment
needed) from the “bad” properties
(more or less heavy costs expected
in the case to transfer it into
Sustainability means long-term, economic
stability and responsibility – and companies
without a sustainability concept will increasingly
find themselves at a competitive disadvantage
moving forwards.
>
46. EPRA NEWS / 41 / 201246. EPRA NEWS / 41 / 2012
a green property). Indeed many of
the property companies questioned
indicated an objective to specifically
acquire buildings that are already
certified over the next five years.
Again, this would reinforce the
value differential of sustainable
properties.
Perhaps unsurprisingly, one
green strategy was no strategy. There
was a ‘wait and see’ approach taken
by 35% of those surveyed. Some
objected to the opaqueness of sus-
tainability reporting and preferred to
wait for more reliable trends. These
companies are concerned that the
sustainability measures to date are
not yet fully mature.
So watch out for the rise of
the ‘Green officer’ or the ‘Head of
sustainability’ among international
companies. Green is now very much
in vogue and I strongly believe that
the idea of sustainability will be
one of the mega-trends for the listed
sector globally. Soon an indispensa-
ble component to any investment
decision.
Enhancing propErty assEts through partnErship, innovation and ExpErtisE Key player in the office real estate market, Foncière des Régions now owns and manages an €8.6 billion portfolio. Foncière des Régions works alongside leading companies and stakeholders to design innovative, sustainable real-estate solutions with a dual objective: to enhance the quality of its portfolio and conceive tomorrow’s real estate. Through its established expertise and human resources, Foncière des Régions has succeeded in cultivating partnerships with major companies from France and around the world, including France Télécom, Thalès, EDF, Accor, Dassault Systèmes, Suez Environnement, IBM and Eiffage.
www.foncieredesregions.fr
Eiffage Construction head office
Siège Cisco
vision partnErship
ExpErtisE
Rouget de l’Isle
Cisco head office
Fonciere PArTenAire
Fonciere des regions
des
ign
– pr
oduc
tion
. 1
0649
– P
hoto
cre
dits
: o
. oua
dah,
c. d
ubre
uil.
10649_FDR_AP_A5.indd 2 19/07/11 17:48
“The rise in portfolio-
screening reinforces
the trend towards
sustainable buildings.”
Dr. Thomas BeyerleBeyerle is managing director and head of CS &
Research at IVG Immobilien AG, Bonn. From 2002 he was director and head of the Allianz Global Investors Division Research & Consulting and Press Management at the DEGI Deutsche Gesellschaft für Immobilienfonds mbH, Frankfurt, and from 2008 he was working as head of global research at Aberdeen Property Investors.
€8.6billion portfolio
Each REIT regime is unique. The latest survey updates all the regulatory changes which have occurred this year - across 34 countries.
This, the eleventh REIT Survey, covers 34 countries. It is a hugely collaborative effort - with major contributions from Deloitte, PWC, Ernst & Young, KPMG, Baker & McKenzie, Loyens & Loeff, together with data from Macquarie Global Property Security Analytics. Global REITs are still developing despite recent market turmoil. We’ve seen the major REIT regimes withstand these recent traumas and remain popular with investors and governments around the globe. This is evident from the ability of many REIT regimes to raise capital and the attention paid by the authorities to the continued development of existing regimes.
Contact
REPORTING
Global REIT Survey 2011
About EPRA
EPRA’s mission is to promote, develop and represent the European public real estate
sector. We achieve this through the provision of better information to investors and
stakeholders, active involvement in the public and political debate, improvement of
the general operating environment, encouragement of best practices and cohesion,
and strengthening of the industry.
Visit: www.epra.com/reitsurvey
350 pages &online!
Square de Meeus 23 • B-1000 Brussels • BelgiumT +32 (0)2 739 1010 • F +32 (0)2 739 1020 • E [email protected] • www.epra.com
Now available
The EPRA Global REIT
Survey is the window
on the REIT world.
48. EPRA NEWS / 41 / 201248. EPRA NEWS / 41 / 2012
FEATURES
REAL ESTATE OR EQUITIES - AN INTERNATIONAL ANALYSIS
We commissioned the
University of Regensburg
to update its study on the
behaviour of listed real
estate companies versus
the underlying property
market back in 2009.
The original research
was well received and
added to the growing
library of research and
analysis to bolster the
case that a medium to
long-term listed real estate
investment provides direct
real estate returns. This
updated study strengthens
the case further.
The updated study builds on the
previous analysis and examines
whether listed real estate indices in
a broader sample of 13 economies
are predominantly driven by the
underlying property markets or
by performance of general stock
markets. The economies covered
by the research were: Australia,
Belgium, Denmark, Finland, France,
Hong Kong, Norway, Spain, Sweden,
Switzerland, The Netherlands, UK
and US.
Using advanced statistical tech-
niques, Regensburg generally found
a stronger linkage to underlying real
estate assets compared against eq-
uity stock markets. In the majority
of cases, the listed real estate mar-
kets are predominantly driven by
the performance of the underlying
buildings, which can be interpreted
as the key driver of listed real estate
in the medium to long run.
Investors are faced with a wide
range of products and vehicles to
gain real estate exposure. In addi-
tion to conventional investment in
direct commercial and residential
real estate, investors have options
to invest in a number of alternative
real estate vehicles such as closed
and open-end funds, listed real
estate companies and REITs, or
real estate private equity. Given the
fundamental relationship between
listed real estate and the underlying
real estate market coupled with
the vehicles trading ‘wrapper’ on
the stock market, in this project,
Regensburg examined the true per-
formance nature of listed real estate.
A consequence of a stock
exchange listing is the fact that
additional drivers – over and above
the performance of the underlying
property markets – can affect the
performance and the risk/return
structure of listed real estate to a
significant extent. Subsequently,
listed real estate performance is also
influenced by current economic and
market news, analyst expectations
and valuations which results in
short-term share prices being influ-
enced by general stock market risk.
With this in mind, as share prices
are a function of market supply and
demand, they may suffer from ir-
rational trading behaviour on stock
markets; for example, over and
under-shooting in phases of boom
and bust; or “herding behaviour”
from investors. As a result, listed
real estate companies face the risk
that market values are driven by
developments on general stock mar-
kets in the short-term, despite the
EPRA NEWS / 41 / 2012 49. EPRA NEWS / 41 / 2012 49.
fact that the fundamental business
of listed real estate companies is the
trading and management of income
producing real estate.
For this reason, it is valuable to
analyse whether listed real estate
securities can be characterised as
underlying real estate investments
and whether their distinctive
features, as an alternative invest-
ment, remain intact despite stock
market ‘noise’. For the purposes
of this research, Regensburg used
a co-integration framework and
the Johansen (1988) procedure. In
order to achieve convincing results
Regensburg conducted further
analyses.
The regulation affectWith respect to regulation, disclo-
sure and accounting standards,
we still find significant differences
across international real estate
markets. As these country-specific
distinctions can impact results,
reduce comparability and ultimately
affect our conclusions, the use of
a reliable and consistent data set
is of primary importance for the
purposes of the examination.
Our dataset includes 13 of the
most important developed econo-
mies listed earlier. On average,
real estate markets in those regions
and countries are relatively more
transparent compared against others
in the world. Furthermore, they are
also more actively traded, are more
mature, and offer higher levels of
liquidity. For the purpose of this
research, those real estate markets
offer reliable data and indices that
are representative of both direct
and indirect real estate investment
markets. This is a pre-requisite
when using our approach to analyse
the characteristics of real estate
securities.
Data & General Process • FTSE EPRA/NAREIT Global Real
Estate Index
• Bank of International settlement
property price index
• Individual country equity blue
chip indices
For the purposes of this examina-
tion, Regensburg analysed the real
estate markets in the 13 developed
economies from the beginning of
1990. At the end of 2011, the market
capitalisation for listed real estate in
the 13 economies covered approxi-
mately 90% of global real estate
investment.
Regensburg first tested the
unknown structural break in each
market using the unknown break-
point test based on a dynamic
multi-variate model. The majority
structural breaks appear between
the end of 2007 and the beginning
of 2008.
It combines time series ana-
lytical procedures with the concept
of economic equilibrium, and
facilitates the analysis of long-term
equilibrium relationships between
non-stationary variables. The
co-integration analysis is based
on the observation that economic
variables often display common
trend behaviour. This implies that
linear combinations of these vari-
ables converge towards a common
equilibrium in the long term, even
though individual time series fluctu-
ate over time.
The ResultsPrior to analysing the features
of listed real estate, Regensburg
evaluated the implemented model
framework with respect to econo-
metric requirements and economic
plausibility. Despite some of the
drawbacks of vector error correc-
tion models, namely sensitivity,
both implemented models meet the
econometric requirements which
were defined prior to the estimation.
As a result, the VECM framework,
including the implemented model
specifications, were adopted for ex-
amining and evaluating the features
of listed real estate.
Based on the co-integration test
results, Regensburg found that seven
markets have one co-integration
relationship: Australia, Belgium,
Denmark, France, the Netherlands,
Switzerland and UK. The
Regensburg explored the question whether listed
real estate can be classified as an underlying
real estate investment, or whether international
general stock market trends serve as the
predominant driver of performance.
>
50. EPRA NEWS / 41 / 201250. EPRA NEWS / 41 / 2012
The long-term synchronicity between real estate
securities and direct real estate implies that the primary
characteristics of real estate investment persist despite the
influences of the general stock market movements.
Steffen Sebastian, Chair of Real Estate Finance, IREBS Interna-tional Real Estate Business School - University of [email protected]
Steffen Sebastian is Professor of Real Estate Finance at the IRE|BS International Real Estate Business School and director at the Center for Finance University of Regensburg, Germany. He is also a research associate of the Centre for European Economic Research (ZEW), Mannheim. His research focuses are, among indirect real estate investments, real estate indices, real estate derivatives and asset allocation. He has contributed to a number of academic journals and is a member of the editorial board of European Journal of Real Estate Research and the German Journal of Property Research
cointegation matrix in the other six
markets has a rank of two, indicating
two cointegeration relationships.
In each model with co-integration
matrix, the first vector is normalised
to the listed real estate performance,
and the second is normalised to
general stock market performance.
Using a vector error correc-
tion framework and variance
decompositions, Regensburg found
a significantly stronger relationship
among real estate assets (underlying
and listed real estate) compared
against the relationship with general
equities. In 11 out of the 13 econo-
mies, the listed real estate markets
are predominantly driven by the
performance of the underlying prop-
erties in terms of medium to long-
term equilibrium. In the other two
markets (Australia and Norway), the
corresponding general stock market
and underlying property market
play relatively equal roles.
Additionally, we also identify six
significant long-run relationships
between housing price performance
and general stock market perform-
ance. The results using variance
decomposition substantiate our
conclusions. In nine out of the 13
countries, a larger proportion of the
performance of the listed real estate
securities indices is explained by
underlying property performance.
In order to analyse the dynamic
relationships amongst the selected
macroeconomic variables, the
underlying property, and listed real
estate indices, the study applies
the co-integration concept to vector
autoregressive (VAR) models using
the vector error correction (VEC)
framework according to Johansen
(1988).
The long-term synchronicity be-
tween listed real estate and underly-
ing direct real estate implies that
the primary characteristics of real
estate investment persist despite
the influences of the general stock
market movements in the short
term. Ultimately, the development
of the underlying real estate markets
remained the key driver of the per-
formance of listed real estate for the
examined sample. As a result, com-
bined with the benefits of liquidity,
dividends payout/yield, quality of
assets, transparency and manage-
ment teams, a medium to long-term
investment in listed real estate offer
investors the opportunity to com-
bine the attractions of both direct
and listed real estate. The ability
to blend both direct and listed real
estate provides remarkable potential
for diversify ing the investor´s
portfolio whether national, regional
or global.
Answering this question is of
particular importance with respect
to issues of asset allocation in a
multi-asset portfolio – for a broad
range of institutional investors. If
listed real estate were found to be
predominantly driven by perform-
ance of general stock markets,
the benefits of listed real estate
investment - in terms of portfolio
diversification - would be limited. By
implication, the intended risk/return
structure of an investor´s portfolio
would be significantly distorted
because the inclusion of listed real
estate would involuntarily increase
the proportion of investments that
are subject to general stock market
risk. Consequently, this case would
finally result in a portfolio allocation
which is more risky than desired.
However, these research findings
counteract this scenario.
To sum up, our study provides
strong evidence that medium to
long-term investments in listed real
estate fulfil their function as an
‘alternative investment’. For that
reason, we assume lower correla-
EPRA NEWS / 41 / 2012 51. EPRA NEWS / 41 / 2012 51.
Main
sponsors
Standard sponsors
Lanyard sponsor
tions to conventional assets and a
more defensive risk/return structure
compared to investments in general
stock markets. Subsequently, we
conclude that medium to long-term
investments in listed real estate
not only provide opportunities for
portfolio diversification, but in addi-
tion provide the ability to combine
the attractions of both real estate
assets – direct and indirect, includ-
ing benefits in terms of liquidity,
transparency, dividend income and
management.
The event of the year for European listed real estate. EPRA’s Annual Conference brings together the world’s
largest property companies, analysts, consultants and
global financiers.
The listed property sector - at the forefront of a quality and sustainable built environment.EPRA Annual Conference, September 06-07, 2012.
13 economies =>90% assets coverage
Real Estate or Equities?
Statistical modelling (VECM procedures etc.)
Listed real esate predominantly driven by underlying real estate markets.
52. EPRA NEWS / 41 / 2012
REFERENCES
MEMBERS OFFERSEPRA association membership not only offers anyone in the member organisation full access to the EPRA website/archive, regular research, economic, regulatory and index statistics updates; but much more.
IPE MagazineDiscount of 20% on subscription. The full an-
nual rate is EUR 355. For more details, contact:
IPE Real Estate is positioned at the inter-
face of institutional investment and the real
estate industry. Drawing on its international
network of correspondents and supply-side
research, the magazine and website’s mission
is to bring to light the views and activities of
European pension funds and other capital
owners (insurance companies and other plan
sponsors) investing in real estate and keep
them up-to-date with the rapid evolution
of real estate as a sophisticated, global
asset class.
Tel: + 44 20 7261 0666
Fax: +44 20 7928 3332
Email: [email protected]
PropertyEU is the pan-European information
source for real estate professionals. A full
subscription package to PropertyEU
includes the PropertyEU Daily Newslet-
ter, PropertyEU newsflashes, PropertyEU
magazine and special annual publica-
tions Who’s Who and City Leaders as
well as access to the subscriber-only
content on PropertyEU website. An an-
nual package normally costs EUR 495.
EPRA members can enjoy a 20% discount,
paying only EUR 395 per year. Mail your
contact details to: subscribe@propertyeu.
info indicating your EPRA membership number.
The Property Investor Europe mission is to
bring transparency to Mainland Europe real
estate for US & global investment professionals.
Via a magazine, Online Weekly, HTML Letter,
daily intelligence, podcast and events, its hard
news-analysis-commentary fosters investment
capital flows in and around the continent. A
subscription-based service founded in 2005, PIE
is uniquely published in English from Frankfurt,
Germany, with editors around Europe. Weekly,
PIE reaches over 50,000 institutional profes-
sionals via the PIE Letter, and goes monthly to
4,000-5,000 top-level targeted subscribers in
print (7,000-9,000 during MIPIM and Expo Real).
PIE is written for investing institutions, capital
allocators and managers, banks, global REITs
and other listed vehicles,
funds, corporate treasur-
ers, academics and private
investors – to help understand
reward, opportunity and risk
in Europe’s diverse markets.
12-month subscription
rates are EUR 749, GBP 639
or USD 995, depending
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gain free entry to PIE events.
EPRA and RICS mem-
bers receive a 10% discount on individual
subscriptions. Register for a free 60-day
trial now!
Go to: www.pfeurope.eu to register,
or email: [email protected].
EuroProperty is the leading commercial prop-
erty publication in Europe with an influential
following of investors. In addition to
a fortnightly magazine, subscribers
receive access to EuroProperty.com
where they can stay up-to-date with
breaking news stories. A daily email
alert informs them of the top news
stories of the day. The website also
has an online archive going back
to 1996, making it an indispensable
research tool. Every issue gives you
authoritative information from unri-
valled sources. It’ll prepare you with
reliable analysis and data which can be used
to support and confirm your business decisions.
EPRA discount of 20% on subscription. The full
annual rate is GBP 795. For more details, contact:
Tel: +44 (0)20 7911 1864
Email: [email protected]
EPRA NEWS / 41 / 2012 53. EPRA NEWS / 41 / 2012 53.
TAPPING A WEALTH OF DATA
Following the launch of
the new EPRA website
in the autumn of 2011,
EPRA has embarked upon
an ambitious project in
2012 to restructure the
underlying database
and datasets to provide
members with a more
flexible and customisable
experience.
Over the years, EPRA has amassed
and developed a vast range of
statistics covering every aspect of
the listed universe. This cavernous
amount of statistics of companies
and performance - much dating
back 20 years - will soon be acces-
sible, blendable and downloadable!
We are calling the project ‘My EPRA’
because the project will deliver an
end user with an experience that
is unique to them, based upon on
their individual data requirements.
The work will involve considerable
background rebuilding of the data
tables and how they interact with
each other and the website; how-
ever, the real benefits will be seen
in the way users can interact and
receive data from the website.
The aim of the project is multi
faceted, though the key benefits for
users will be:
• personalised settings so each user
can create their own custom and
tailored reports
• clearer and simplified user inter-
faces for accessing key information
such as index values or reports
• more varied data sets, company-
asset information and diary events
• broader datasets to include global
reporting
The improvements will be rolled
out in phases during 2012.
Personalised reportsThe central theme of the project is
to give members more control and
flexibility over what, how and when
they receive EPRA reports. So users
will be able to select which reports
they receive, how often they receive
them and in what format. In addi-
tion, users will be able to customise
the reports; so for example if a user
wants a NAV report every week for
a specific sector they will be able to
set their preferences accordingly and
then receive the pdf or excel report
every week.
Users will also be able to update
their own contact details.
We will start the roll-out of the
customisable reports based on the
most popularly downloaded reports
and build future reports based on
user demand.
Clearer user InterfacesWe recognise that the current user
interfaces to obtain stock and index
data can be cumbersome and lacks
a usable search facility. We intend
to alter the interface by displaying
the top 20 indices and stocks by
most frequent downloads (based on
the previous month’s downloads)
with 20 year to YTD total returns
displayed as a default.
There will be one-button clicks
to alter the currency, price type,
data type and one click to compare
these values to other indices
or stocks; comparisons will be
automatically added to the graph
and download data by default. In
addition, we are creating a search
function so that users can search for
an index or stock by name, re- >
54. EPRA NEWS / 41 / 201254. EPRA NEWS / 41 / 2012
gion, and country and then compare
to others and download the charts
and raw data.
Most excitingly, we are creating
the ability for users to save their pre-
ferred indices or stocks so that when
a user returns to the site and logs in,
their favourite indices and stocks
will be displayed to them rather than
the default top 20.
Barney Coleman started his career as a General practice Surveyor training and practising in the Central London commercial property market in the 1990’s. More recently his career has been
property data-related, working on projects including the roll-out of energy performance certificates in the UK and as Chief Operating Officer in a Joint Venture Company with HomeTrack.
The interface will be colour-coded
and intuitive, making it easier to nav-
igate and select the correct feature.
Company and asset information We are rebuilding the members and
company section of the website so
that each company will have its
own page displaying headline data.
These pages will include such in-
formation as company description,
Board membership, headline index
and stock data, headline NAV and
discount data with graphs, analyst
coverage, Annual Reports and
agenda, and corporate actions.
Importantly, some of this data
will be updatable and customisable
by the member companies, and
where possible will link to external
sources for users who want greater
detail, such as the company’s own
website or videos.
The analyst coverage data will
provide, for the first time, an online
and up-to-date list of which analysts
cover what companies. It will be
searchable, and for the first time
clearly demonstrate transparency in
action as listed companies are con-
nected to those who scrutinise their
performance.
We also intend to provide details
of headline assets owned by a com-
pany with links to maps and key
transactional data, again with links
to external sources for more detailed
information.
Finally, this section will link to a
new diary system presenting events
drawn from across the entire web-
site; so dates for company events,
EPRA events and user-generated
events will appear throughout the
diary system. Also company-specific
events will be filtered to appear in
the company’s new page.
Global ReportingMany EPRA reports are provided on
a European or regional level; part of
the ‘My EPRA’ project will enable
us to increase the footprint of these
reports to a global scale where ap-
propriate. Again the reports will be
customisable for individual users so
that one user may wish to download
a full global NAV report whereas
another user may prefer just a
European or even country-specific
NAV report.
Of course some users may not
wish to customise and simply
receive the default reports as they
do now.
In conclusion, we believe the
changes to the website and database
will enhance the members experi-
ence in retrieving the data that is
most apposite to their needs, as well
making simple data requests and
downloads more intuitive. It will
enable users to receive the data they
want, in the format they want and
at the time they want. So bookmark
the site, as you will likely have
plenty more reasons to return in the
near future.
We are rebuilding the members and company
section of the website so that each company will
have its own page displaying headline data.
EPRA NEWS / 32 / 2010 _ 55. EPRA NEWS / 41 / 2012 55.
The following pages
show the analyst
coverage list of the FTSE
EPRA/NAREIT Europe
Index constituents as it
currently stands. Please
note that stocks can
be added or deleted
to coverage lists and
subsequently this table,
in its current form,
has a limited shelf-life.
However, we encourage
banks to update us
directly with their
coverage list, enabling
EPRA publish an
accurate list on:
www.epra.com
OverviewThroughout the year, we obtain
coverage lists from the major
banks and research firms
active in the sector directly and
search on various data vendors
and company websites for
analyst coverage of individual
companies. In addition, we
also contact company investor
relations departments directly –
response tends to be very good
and supportive. The following
pages aim to provide an update
of this survey.
Since last year’s edition, Dutch
bank Kempen & Co retains the
lead among the major investment
banks, in terms of number of
companies covered: 53. Goldman
Sachs, JPMorgan and Bank of
America Merrill Lynch come in
at second place with around 35
property companies under cover-
age. However, it is the independ-
ent research firm EVA Dimensions
that ranks first, with a coverage of
69 companies.
Currently, of the 83 European
real estate companies that are in-
cluded in the FTSE EPRA/NAREIT
Developed Europe Index, three
companies are not being tracked
by an analyst: UK Commercial
Property Trust, Invista Foundation
Property Trust and IRP Property
Investments. All three companies
are UK-based. This is a slight
deterioration over last year, when
only one out of 83 constituents
was not covered. In terms of
market capitalisation, this means
that currently 99.36% of the index
is covered, as compared to 99.82%
last year.
ConclusionWe have seen steady demand
for the analyst coverage data
since the analyst coverage matrix
was published 12 months ago.
Subsequently, we have updated
the list and plan to maintain a
‘live’ service on the new version
of www.epra.com to be rolled
out over the coming months
(see the preceding page for more
information).
We encourage banks and the
companies themselves to update
us on a regular basis to ensure our
overview is accurate – whether or
not they are index constituents or
EPRA members.
Laurens te Beek holds a BA in Business Economics and
a MSc in Economics from University of Amsterdam.
He started his career at Euronext Indices BV where
he gained extensive knowledge of the FTSE EPRA/
NAREIT Global Real Estate Index. He then worked as
an International Analyst at European Investors Inc.
In May 2006 Laurens joined EPRA.
+32 (0)2739 1011
ANALYST ROUND-UPARE YOU COVERED?
Call-to-action: • Companies: who covers you?
• Banks: who do you cover?
Please update us regularly on:
56. _ EPRA NEWS / 32 / 201056. EPRA NEWS / 41 / 2012
REFERENCES
ANALYST COVERAGE TABLE
Company CountryFull Mkt Cap
(EURm) % F
ree
Floa
t W
eigh
t
EVA
Dim
ensi
ons
Kem
pen
Ban
k of
Am
eric
a M
erri
ll L
ynch
Gol
dm
an S
ach
s
JPM
orga
n
UBS
Deu
tsch
e B
ank
AB
N A
MRO
Mor
gan
Sta
nley
Exan
e B
NP
Pari
bas
Roya
l B
ank
of S
cotl
and
Soci
été
Gén
éral
e
Peel
Hu
nt
Gre
en S
tree
t A
dvis
ors
Bar
clay
s C
apit
al
Edge
Cap
ital
Mar
kets
ING
Ori
el S
ecu
riti
es
Cré
dit
Suis
se
HSB
C
Pete
rcam
Ber
enber
g Ban
k
CA
Che
uvre
ux
Alp
haV
alue
Espi
ritu
San
to
Rab
o Se
curi
ties
Silv
ia Q
uan
dt
Baa
der
Ban
k
Jeff
erie
s
Pan
mu
re G
ordo
n
Nor
dea
Equ
ity
Han
dels
ban
ken
Swed
ban
k
Nat
ixis
AB
G S
und
al C
olli
er
Dn
BN
OR
Mar
kets
SEB
En
skil
da
Inve
stec
Lib
eru
m C
apit
al
DZ
Ban
k
Ban
khau
s La
mp
e
Dan
ske
Mar
kets
Car
negi
e
Pare
to S
ecu
riti
es
Trad
itio
n S
ecu
riti
es
Evli
Ban
k
Kepl
er C
apit
al
M.M
. War
bu
rg
Com
mer
zban
k
Clos
e B
roth
ers
Wes
tLB
Eq
uit
y
Day
by
Day
Keij
ser
Secu
riti
es
Ban
k D
egro
of
Seym
our
Pier
ce
Y Y Y Y Y Y Y Y Y YUnibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YLand Securities Group UK 6,342.38 7.15% Y Y Y Y Y Y Y Y Y Y Y Y Y YBritish Land Co UK 5,036.38 5.68% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHammerson UK 3,340.87 3.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCorio Netherlands 3,284.67 3.70% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YPSP Swiss Property Switzerland 2,953.41 3.33% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCapital Shopping Centres Group UK 2,611.74 2.95% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSwiss Prime Site Switzerland 2,393.26 2.70% Y Y Y Y Y Y Y Y Y Y Y YKlepierre France 2,232.16 2.52% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDerwent London UK 2,060.72 2.32% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSegro UK 2,049.45 2.31% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCastellum Sweden 1,700.12 1.92% Y Y Y Y Y Y Y Y Y Y Y Y YCapital & Counties Properties UK 1,568.53 1.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFonciere Des Regions France 1,512.91 1.71% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YShaftesbury UK 1,483.12 1.67% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGecina France 1,399.83 1.58% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIcade France 1,363.33 1.54% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche EuroShop Germany 1,334.16 1.50% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGreat Portland Estates UK 1,299.55 1.47% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHufvudstaden A Sweden 1,292.19 1.46% Y Y Y Y Y Y Y YCofinimmo Belgium 1,263.43 1.42% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YMercialys France 1,234.00 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWereldhave Netherlands 1,232.70 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFabege Sweden 1,151.17 1.30% Y Y Y Y Y Y Y Y YMobimo Switzerland 1,111.19 1.25% Y Y Y Y Y Y YEurocommercial Properties Netherlands 1,098.32 1.24% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche Wohnen AG Germany 1,046.02 1.18% Y Y Y Y Y Y Y Y Y Y Y Y Y YSilic France 1,022.32 1.15% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGSW Immobilien AG Germany 961.66 1.08% Y Y Y Y Y Y Y Y Y YWallenstam AB Sweden 925.76 1.04% Y Y Y Y Y Y Y Y Y YSponda Finland 908.67 1.02% Y Y Y Y Y Y YBefimmo Belgium 853.95 0.96% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWihlborgs Fastigheter Sweden 807.22 0.91% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKungsleden Sweden 802.09 0.90% Y Y Y Y Y YAllreal Hld N Switzerland 797.78 0.90% Y Y Y Y YLondon & Stamford Property UK 737.50 0.83% Y Y Y Y Y Y Y YCa Immobilien Austria 700.12 0.79% Y Y Y Y Y Y Y Y YConwert Immobilien Invest Austria 671.76 0.76% Y Y Y Y Y Y Y Y Y YVastned Retail Netherlands 648.81 0.73% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YAlstria Office Germany 638.53 0.72% Y Y Y Y Y Y Y Y Y Y Y YF&C Commercial Property Trust UK 626.37 0.71% Y Y Y Y Y Y Y Y YNorwegian Property ASA Norway 584.75 0.66% Y Y Y Y Y Y YHansteen Holdings UK 561.89 0.63% Y Y Y Y Y Y YNieuwe Steen Inv Netherlands 559.24 0.63% Y Y Y Y Y Y Y Y Y Y Y Y YCitycon Finland 535.48 0.60% Y Y Y Y Y Y Y Y Y Y Y Y YTAG Immobilien AG Germany 467.78 0.53% Y Y Y YBig Yellow Group UK 451.70 0.51% Y Y Y Y Y Y Y Y Y YBeni Stabili Italy 407.19 0.46% Y Y Y Y Y Y Y Y Y Y Y Y Y YWorkspace Group UK 390.06 0.44% Y Y Y Y Y YGrainger UK 387.87 0.44% Y Y Y Y Y YWarehouses De Pauw Belgium 380.80 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGagfah Germany 377.37 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKlovern AB Sweden 373.00 0.42% Y Y YUnite Group UK 362.02 0.41% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIvg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y YUK Commercial Property Trust UK 316.58 0.36%St.Modwen Properties UK 293.91 0.33% Y Y Y YHelical Bar UK 271.92 0.31% Y Y Y Y Y Y YSafestore Holdings UK 269.42 0.30% Y Y Y Y Y YPrimary Health Prop. UK 266.69 0.30% Y YQuintain Estates and Development UK 265.39 0.30% Y Y Y Y Y Y Y
Technopolis Finland 254.17 0.29% Y YDevelopment Securities UK 240.77 0.27% Y Y Y Y Y Y Y Y Y Y Y YDIC Asset AG Germany 233.89 0.26% Y Y Y Y Y Y YSociete de la Tour Eiffel France 229.45 0.26% Y Y Y YPicton Property Income UK 177.63 0.20% YCLS Holdings UK 169.56 0.19% Y YDaejan Hdg UK 168.31 0.19% Y Y Y YPrime Office REIT-AG Germany 166.73 0.19% YInvista Foundation Property Trust UK 149.63 0.17%Wereldhave Belgium Belgium 147.14 0.17% Y Y Y Y YIntervest Offices & Warehouses Belgium 138.83 0.16% Y Y Y Y Y Y Y YPatrizia Immobilien Germany 109.34 0.12% Y Y Y YLeasinvest Belgium 104.65 0.12% Y YIRP Property Investments UK 101.14 0.11%Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y Y Y Y
Standard Life Inv Prop Inc Trust UK 100.21 0.11%Mucklow (A.& J.)Group UK 99.88 0.11% Y Y YZueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y Y YColonia Real Estate Germany 77.22 0.09%Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y
Inmobiliaria Colonial S.A. Spain 64.36 0.07% YAffine France 61.98 0.07% Y Y Y Y Y Y
Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 16 15 15 15 14 12 12 12 11 10 10 10 10 9 9 9 9 8 8 8 8 8 8 7 7 7 7 6 6 6 5 5 5 5
EPRA NEWS / 32 / 2010 _ 57. EPRA NEWS / 41 / 2012 57.
ANALYST COVERAGE TABLE
Company CountryFull Mkt Cap
(EURm) % F
ree
Floa
t W
eigh
t
EVA
Dim
ensi
ons
Kem
pen
Ban
k of
Am
eric
a M
erri
ll L
ynch
Gol
dm
an S
ach
s
JPM
orga
n
UBS
Deu
tsch
e B
ank
AB
N A
MRO
Mor
gan
Sta
nley
Exan
e B
NP
Pari
bas
Roya
l B
ank
of S
cotl
and
Soci
été
Gén
éral
e
Peel
Hu
nt
Gre
en S
tree
t A
dvis
ors
Bar
clay
s C
apit
al
Edge
Cap
ital
Mar
kets
ING
Ori
el S
ecu
riti
es
Cré
dit
Suis
se
HSB
C
Pete
rcam
Ber
enber
g Ban
k
CA
Che
uvre
ux
Alp
haV
alue
Espi
ritu
San
to
Rab
o Se
curi
ties
Silv
ia Q
uan
dt
Baa
der
Ban
k
Jeff
erie
s
Pan
mu
re G
ordo
n
Nor
dea
Equ
ity
Han
dels
ban
ken
Swed
ban
k
Nat
ixis
AB
G S
und
al C
olli
er
Dn
BN
OR
Mar
kets
SEB
En
skil
da
Inve
stec
Lib
eru
m C
apit
al
DZ
Ban
k
Ban
khau
s La
mp
e
Dan
ske
Mar
kets
Car
negi
e
Pare
to S
ecu
riti
es
Trad
itio
n S
ecu
riti
es
Evli
Ban
k
Kepl
er C
apit
al
M.M
. War
bu
rg
Com
mer
zban
k
Clos
e B
roth
ers
Wes
tLB
Eq
uit
y
Day
by
Day
Keij
ser
Secu
riti
es
Ban
k D
egro
of
Seym
our
Pier
ce
Y Y Y Y Y Y Y Y Y YUnibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YLand Securities Group UK 6,342.38 7.15% Y Y Y Y Y Y Y Y Y Y Y Y Y YBritish Land Co UK 5,036.38 5.68% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHammerson UK 3,340.87 3.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCorio Netherlands 3,284.67 3.70% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YPSP Swiss Property Switzerland 2,953.41 3.33% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCapital Shopping Centres Group UK 2,611.74 2.95% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSwiss Prime Site Switzerland 2,393.26 2.70% Y Y Y Y Y Y Y Y Y Y Y YKlepierre France 2,232.16 2.52% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDerwent London UK 2,060.72 2.32% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSegro UK 2,049.45 2.31% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCastellum Sweden 1,700.12 1.92% Y Y Y Y Y Y Y Y Y Y Y Y YCapital & Counties Properties UK 1,568.53 1.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFonciere Des Regions France 1,512.91 1.71% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YShaftesbury UK 1,483.12 1.67% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGecina France 1,399.83 1.58% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIcade France 1,363.33 1.54% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche EuroShop Germany 1,334.16 1.50% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGreat Portland Estates UK 1,299.55 1.47% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHufvudstaden A Sweden 1,292.19 1.46% Y Y Y Y Y Y Y YCofinimmo Belgium 1,263.43 1.42% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YMercialys France 1,234.00 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWereldhave Netherlands 1,232.70 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFabege Sweden 1,151.17 1.30% Y Y Y Y Y Y Y Y YMobimo Switzerland 1,111.19 1.25% Y Y Y Y Y Y YEurocommercial Properties Netherlands 1,098.32 1.24% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche Wohnen AG Germany 1,046.02 1.18% Y Y Y Y Y Y Y Y Y Y Y Y Y YSilic France 1,022.32 1.15% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGSW Immobilien AG Germany 961.66 1.08% Y Y Y Y Y Y Y Y Y YWallenstam AB Sweden 925.76 1.04% Y Y Y Y Y Y Y Y Y YSponda Finland 908.67 1.02% Y Y Y Y Y Y YBefimmo Belgium 853.95 0.96% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWihlborgs Fastigheter Sweden 807.22 0.91% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKungsleden Sweden 802.09 0.90% Y Y Y Y Y YAllreal Hld N Switzerland 797.78 0.90% Y Y Y Y YLondon & Stamford Property UK 737.50 0.83% Y Y Y Y Y Y Y YCa Immobilien Austria 700.12 0.79% Y Y Y Y Y Y Y Y YConwert Immobilien Invest Austria 671.76 0.76% Y Y Y Y Y Y Y Y Y YVastned Retail Netherlands 648.81 0.73% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YAlstria Office Germany 638.53 0.72% Y Y Y Y Y Y Y Y Y Y Y YF&C Commercial Property Trust UK 626.37 0.71% Y Y Y Y Y Y Y Y YNorwegian Property ASA Norway 584.75 0.66% Y Y Y Y Y Y YHansteen Holdings UK 561.89 0.63% Y Y Y Y Y Y YNieuwe Steen Inv Netherlands 559.24 0.63% Y Y Y Y Y Y Y Y Y Y Y Y YCitycon Finland 535.48 0.60% Y Y Y Y Y Y Y Y Y Y Y Y YTAG Immobilien AG Germany 467.78 0.53% Y Y Y YBig Yellow Group UK 451.70 0.51% Y Y Y Y Y Y Y Y Y YBeni Stabili Italy 407.19 0.46% Y Y Y Y Y Y Y Y Y Y Y Y Y YWorkspace Group UK 390.06 0.44% Y Y Y Y Y YGrainger UK 387.87 0.44% Y Y Y Y Y YWarehouses De Pauw Belgium 380.80 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGagfah Germany 377.37 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKlovern AB Sweden 373.00 0.42% Y Y YUnite Group UK 362.02 0.41% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIvg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y YUK Commercial Property Trust UK 316.58 0.36%St.Modwen Properties UK 293.91 0.33% Y Y Y YHelical Bar UK 271.92 0.31% Y Y Y Y Y Y YSafestore Holdings UK 269.42 0.30% Y Y Y Y Y YPrimary Health Prop. UK 266.69 0.30% Y YQuintain Estates and Development UK 265.39 0.30% Y Y Y Y Y Y Y
Technopolis Finland 254.17 0.29% Y YDevelopment Securities UK 240.77 0.27% Y Y Y Y Y Y Y Y Y Y Y YDIC Asset AG Germany 233.89 0.26% Y Y Y Y Y Y YSociete de la Tour Eiffel France 229.45 0.26% Y Y Y YPicton Property Income UK 177.63 0.20% YCLS Holdings UK 169.56 0.19% Y YDaejan Hdg UK 168.31 0.19% Y Y Y YPrime Office REIT-AG Germany 166.73 0.19% YInvista Foundation Property Trust UK 149.63 0.17%Wereldhave Belgium Belgium 147.14 0.17% Y Y Y Y YIntervest Offices & Warehouses Belgium 138.83 0.16% Y Y Y Y Y Y Y YPatrizia Immobilien Germany 109.34 0.12% Y Y Y YLeasinvest Belgium 104.65 0.12% Y YIRP Property Investments UK 101.14 0.11%Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y Y Y Y
Standard Life Inv Prop Inc Trust UK 100.21 0.11%Mucklow (A.& J.)Group UK 99.88 0.11% Y Y YZueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y Y YColonia Real Estate Germany 77.22 0.09%Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y
Inmobiliaria Colonial S.A. Spain 64.36 0.07% YAffine France 61.98 0.07% Y Y Y Y Y Y
Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 16 15 15 15 14 12 12 12 11 10 10 10 10 9 9 9 9 8 8 8 8 8 8 7 7 7 7 6 6 6 5 5 5 5
58. _ EPRA NEWS / 32 / 201058. EPRA NEWS / 41 / 2012
REFERENCES
ANALYST COVERAGE TABLE
Company CountryFull Mkt Cap
(EURm) % F
ree
Floa
t W
eigh
t
Ban
khau
s M
etzl
er
Vont
obel
Sec
uri
ties
Zuer
cher
Kan
ton
alb
ank
Cen
kos
Secu
riti
es
Citi
Nu
mis
Sec
uri
ties
FIM
Pohj
ola
Ban
k
Solv
enti
s
GSC
Res
earc
h
Stan
dar
d &
Poo
r's
Evol
utio
n S
ecu
riti
es
Fair
fax
Ban
ca A
kros
Ban
co S
abad
ell
Erst
e B
ank
Gil
ber
t D
up
ont
Med
iob
anca
SRC
Res
earc
h
Bre
win
Dol
phin
Equ
inet
In
stit
utio
nal
Se
rvic
es
Rai
ffei
senban
k
Land
esb
ank
Bad
en-
Wue
rtte
mb
erg
Nor
d/L
B
Cent
rob
anca
Mat
rix
Mac
qu
arie
KB
C S
ecu
riti
es
Oeh
man
Fo
ndko
mm
issi
on
Arb
uth
not
Secu
riti
es
Equ
ita
SIM
AEK
Aho
rro
Corp
orat
ion
Alp
ha
Fin
ance
Arc
tic
Secu
riti
es
Ard
en P
artn
ers
Avi
or R
esea
rch
Ban
ca L
eon
ardo
BBV
A
CS
Cap
ital
Inde
pen
dent
Res
earc
h
Woo
d &
Com
pan
y
Odd
o &
Cie
Nat
ion
al B
ank
Terr
a M
arke
ts
Shor
e C
apit
al
Stoc
kbro
kers
Tota
l
Unibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y 35Land Securities Group UK 6,342.38 7.15% 11British Land Co UK 5,036.38 5.68% Y Y 23Hammerson UK 3,340.87 3.77% Y 23Corio Netherlands 3,284.67 3.70% 24PSP Swiss Property Switzerland 2,953.41 3.33% Y Y 12Capital Shopping Centres Group UK 2,611.74 2.95% Y Y 23Swiss Prime Site Switzerland 2,393.26 2.70% Y Y 6Klepierre France 2,232.16 2.52% 27Derwent London UK 2,060.72 2.32% 21Segro UK 2,049.45 2.31% 21Castellum Sweden 1,700.12 1.92% 20Capital & Counties Properties UK 1,568.53 1.77% 17Fonciere Des Regions France 1,512.91 1.71% 19Shaftesbury UK 1,483.12 1.67% 16Gecina France 1,399.83 1.58% 20Icade France 1,363.33 1.54% 20Deutsche EuroShop Germany 1,334.16 1.50% Y Y Y 28Great Portland Estates UK 1,299.55 1.47% Y 21Hufvudstaden A Sweden 1,292.19 1.46% 18Cofinimmo Belgium 1,263.43 1.42% 14Mercialys France 1,234.00 1.39% Y 20Wereldhave Netherlands 1,232.70 1.39% Y 17Fabege Sweden 1,151.17 1.30% 19Mobimo Switzerland 1,111.19 1.25% Y Y 6Eurocommercial Properties Netherlands 1,098.32 1.24% Y 18Deutsche Wohnen AG Germany 1,046.02 1.18% Y 20Silic France 1,022.32 1.15% 17GSW Immobilien AG Germany 961.66 1.08% 12Wallenstam AB Sweden 925.76 1.04% 6Sponda Finland 908.67 1.02% Y Y 16Befimmo Belgium 853.95 0.96% Y 11Wihlborgs Fastigheter Sweden 807.22 0.91% 14Kungsleden Sweden 802.09 0.90% 17Allreal Hld N Switzerland 797.78 0.90% Y Y 4London & Stamford Property UK 737.50 0.83% Y 10Ca Immobilien Austria 700.12 0.79% Y Y Y Y 11Conwert Immobilien Invest Austria 671.76 0.76% Y Y Y 15Vastned Retail Netherlands 648.81 0.73% Y 13Alstria Office Germany 638.53 0.72% Y 21F&C Commercial Property Trust UK 626.37 0.71% 1Norwegian Property ASA Norway 584.75 0.66% Y Y 14Hansteen Holdings UK 561.89 0.63% 9Nieuwe Steen Inv Netherlands 559.24 0.63% 7Citycon Finland 535.48 0.60% Y Y 15TAG Immobilien AG Germany 467.78 0.53% 10Big Yellow Group UK 451.70 0.51% Y Y 11Beni Stabili Italy 407.19 0.46% Y Y Y Y 15Workspace Group UK 390.06 0.44% 10Grainger UK 387.87 0.44% Y Y 8Warehouses De Pauw Belgium 380.80 0.43% 8Gagfah Germany 377.37 0.43% Y 17Klovern AB Sweden 373.00 0.42% 12Unite Group UK 362.02 0.41% Y Y 10Ivg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y Y 25UK Commercial Property Trust UK 316.58 0.36% 0St.Modwen Properties UK 293.91 0.33% Y 5Helical Bar UK 271.92 0.31% Y 7Safestore Holdings UK 269.42 0.30% Y Y 9Primary Health Prop. UK 266.69 0.30% Y 3Quintain Estates and Development UK 265.39 0.30% 5
Technopolis Finland 254.17 0.29% Y Y 6Development Securities UK 240.77 0.27% Y 6DIC Asset AG Germany 233.89 0.26% Y Y Y 16Societe de la Tour Eiffel France 229.45 0.26% 5Picton Property Income UK 177.63 0.20% 1CLS Holdings UK 169.56 0.19% Y Y 4Daejan Hdg UK 168.31 0.19% 1Prime Office REIT-AG Germany 166.73 0.19% 4Invista Foundation Property Trust UK 149.63 0.17% 0Wereldhave Belgium Belgium 147.14 0.17% 4Intervest Offices & Warehouses Belgium 138.83 0.16% 2Patrizia Immobilien Germany 109.34 0.12% 10Leasinvest Belgium 104.65 0.12% 3IRP Property Investments UK 101.14 0.11% 0Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y 7
Standard Life Inv Prop Inc Trust UK 100.21 0.11% Y 1Mucklow (A.& J.)Group UK 99.88 0.11% Y 4Zueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y 3Colonia Real Estate Germany 77.22 0.09% 3Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y 3
Inmobiliaria Colonial S.A. Spain 64.36 0.07% Y Y Y Y 6Affine France 61.98 0.07% Y 3
Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
EPRA NEWS / 32 / 2010 _ 59. EPRA NEWS / 41 / 2012 59.
ANALYST COVERAGE TABLE
Company CountryFull Mkt Cap
(EURm) % F
ree
Floa
t W
eigh
t
Ban
khau
s M
etzl
er
Vont
obel
Sec
uri
ties
Zuer
cher
Kan
ton
alb
ank
Cen
kos
Secu
riti
es
Citi
Nu
mis
Sec
uri
ties
FIM
Pohj
ola
Ban
k
Solv
enti
s
GSC
Res
earc
h
Stan
dar
d &
Poo
r's
Evol
utio
n S
ecu
riti
es
Fair
fax
Ban
ca A
kros
Ban
co S
abad
ell
Erst
e B
ank
Gil
ber
t D
up
ont
Med
iob
anca
SRC
Res
earc
h
Bre
win
Dol
phin
Equ
inet
In
stit
utio
nal
Se
rvic
es
Rai
ffei
senban
k
Land
esb
ank
Bad
en-
Wue
rtte
mb
erg
Nor
d/L
B
Cent
rob
anca
Mat
rix
Mac
qu
arie
KB
C S
ecu
riti
es
Oeh
man
Fo
ndko
mm
issi
on
Arb
uth
not
Secu
riti
es
Equ
ita
SIM
AEK
Aho
rro
Corp
orat
ion
Alp
ha
Fin
ance
Arc
tic
Secu
riti
es
Ard
en P
artn
ers
Avi
or R
esea
rch
Ban
ca L
eon
ardo
BBV
A
CS
Cap
ital
Inde
pen
dent
Res
earc
h
Woo
d &
Com
pan
y
Odd
o &
Cie
Nat
ion
al B
ank
Terr
a M
arke
ts
Shor
e C
apit
al
Stoc
kbro
kers
Tota
l
Unibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y 35Land Securities Group UK 6,342.38 7.15% 11British Land Co UK 5,036.38 5.68% Y Y 23Hammerson UK 3,340.87 3.77% Y 23Corio Netherlands 3,284.67 3.70% 24PSP Swiss Property Switzerland 2,953.41 3.33% Y Y 12Capital Shopping Centres Group UK 2,611.74 2.95% Y Y 23Swiss Prime Site Switzerland 2,393.26 2.70% Y Y 6Klepierre France 2,232.16 2.52% 27Derwent London UK 2,060.72 2.32% 21Segro UK 2,049.45 2.31% 21Castellum Sweden 1,700.12 1.92% 20Capital & Counties Properties UK 1,568.53 1.77% 17Fonciere Des Regions France 1,512.91 1.71% 19Shaftesbury UK 1,483.12 1.67% 16Gecina France 1,399.83 1.58% 20Icade France 1,363.33 1.54% 20Deutsche EuroShop Germany 1,334.16 1.50% Y Y Y 28Great Portland Estates UK 1,299.55 1.47% Y 21Hufvudstaden A Sweden 1,292.19 1.46% 18Cofinimmo Belgium 1,263.43 1.42% 14Mercialys France 1,234.00 1.39% Y 20Wereldhave Netherlands 1,232.70 1.39% Y 17Fabege Sweden 1,151.17 1.30% 19Mobimo Switzerland 1,111.19 1.25% Y Y 6Eurocommercial Properties Netherlands 1,098.32 1.24% Y 18Deutsche Wohnen AG Germany 1,046.02 1.18% Y 20Silic France 1,022.32 1.15% 17GSW Immobilien AG Germany 961.66 1.08% 12Wallenstam AB Sweden 925.76 1.04% 6Sponda Finland 908.67 1.02% Y Y 16Befimmo Belgium 853.95 0.96% Y 11Wihlborgs Fastigheter Sweden 807.22 0.91% 14Kungsleden Sweden 802.09 0.90% 17Allreal Hld N Switzerland 797.78 0.90% Y Y 4London & Stamford Property UK 737.50 0.83% Y 10Ca Immobilien Austria 700.12 0.79% Y Y Y Y 11Conwert Immobilien Invest Austria 671.76 0.76% Y Y Y 15Vastned Retail Netherlands 648.81 0.73% Y 13Alstria Office Germany 638.53 0.72% Y 21F&C Commercial Property Trust UK 626.37 0.71% 1Norwegian Property ASA Norway 584.75 0.66% Y Y 14Hansteen Holdings UK 561.89 0.63% 9Nieuwe Steen Inv Netherlands 559.24 0.63% 7Citycon Finland 535.48 0.60% Y Y 15TAG Immobilien AG Germany 467.78 0.53% 10Big Yellow Group UK 451.70 0.51% Y Y 11Beni Stabili Italy 407.19 0.46% Y Y Y Y 15Workspace Group UK 390.06 0.44% 10Grainger UK 387.87 0.44% Y Y 8Warehouses De Pauw Belgium 380.80 0.43% 8Gagfah Germany 377.37 0.43% Y 17Klovern AB Sweden 373.00 0.42% 12Unite Group UK 362.02 0.41% Y Y 10Ivg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y Y 25UK Commercial Property Trust UK 316.58 0.36% 0St.Modwen Properties UK 293.91 0.33% Y 5Helical Bar UK 271.92 0.31% Y 7Safestore Holdings UK 269.42 0.30% Y Y 9Primary Health Prop. UK 266.69 0.30% Y 3Quintain Estates and Development UK 265.39 0.30% 5
Technopolis Finland 254.17 0.29% Y Y 6Development Securities UK 240.77 0.27% Y 6DIC Asset AG Germany 233.89 0.26% Y Y Y 16Societe de la Tour Eiffel France 229.45 0.26% 5Picton Property Income UK 177.63 0.20% 1CLS Holdings UK 169.56 0.19% Y Y 4Daejan Hdg UK 168.31 0.19% 1Prime Office REIT-AG Germany 166.73 0.19% 4Invista Foundation Property Trust UK 149.63 0.17% 0Wereldhave Belgium Belgium 147.14 0.17% 4Intervest Offices & Warehouses Belgium 138.83 0.16% 2Patrizia Immobilien Germany 109.34 0.12% 10Leasinvest Belgium 104.65 0.12% 3IRP Property Investments UK 101.14 0.11% 0Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y 7
Standard Life Inv Prop Inc Trust UK 100.21 0.11% Y 1Mucklow (A.& J.)Group UK 99.88 0.11% Y 4Zueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y 3Colonia Real Estate Germany 77.22 0.09% 3Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y 3
Inmobiliaria Colonial S.A. Spain 64.36 0.07% Y Y Y Y 6Affine France 61.98 0.07% Y 3
Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
60. _ EPRA NEWS / 38 / 201160. EPRA NEWS / 41 / 2012
GLOBAL
REFERENCES
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
GLOBAL
50
100
150
200
250
300
350
400
Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03
EPRA/NAREIT Global TR (USD) 123.8%
Inde
x Va
lue
(reb
ased
to 1
00)
EPRA/NAREIT North America TR (USD) 108.5%
EPRA/NAREIT Asia TR (USD) 172.8%
EPRA/NAREIT Europe TR (EUR) 61.4%
Investment Focus Market Cap Breakdown
Asia 35.6%
Europe 13.8%
North America 50.5%
Middle East 0.1%
Regional Breakdown by Market Cap Investment Focus Market Cap Breakdown
Global Non-Rental 21%
Global Rental 79%
Global Industrial 4.5%
Global Residential 11.3%
Global Speciality 0.0%
Self Storage 2.7%
Global Retail 23.2%
Global Office 13.7%
Global Lodging/Resorts 3.2%
Global Industrial/Office 1.0%
Global Healthcare 6.6%
Global Diversified 33.9%
Sector Breakdown
Q Hopson Development Hong Kong Non-Rental Residential 31.59 -0.67 -14.34 -26.09 -12.40 0.025
Q St Modwen Properties UK Rental Diversified 31.33 31.33 44.69 0.69 26.13 0.02
Q Sumitomo Realty & Dev Japan Non-Rental Diversified 30.94 3.59 -6.19 18.47 -7.92 0.01
Q Shimao Property Hong Kong Non-Rental Residential 26.66 -7.34 -12.86 -18.43 -NA- 0.04
Q New World Development Hong Kong Non-Rental Diversified 25.65 -11.31 -16.16 -5.01 1.04 0.03
q Medical Properties Trust * USA Rental Health Care -9.33 -9.33 -1.52 -10.32 48.03 0.08
q First Potomac Realty Trust * USA Rental Industrial -11.09 -9.74 2.92 -13.02 28.95 0.06
q DuPont Fabros Technology * USA Rental Specialty -10.20 -10.20 -5.45 -4.26 64.36 0.021
q Associated Estates Realty * USA Rental Residential -10.71 -10.71 -5.39 -4.00 45.38 0.05
q FKP Property Group Australia Non-Rental Diversified -13.39 -1.24 -13.45 7.35 -17.08 0.04
1 Simon Property Group * USA Rental Retail 29,663.73 9.19 5.81 26.65 63.78 0.028
2 Sun Hung Kai Props Hong Kong Non-Rental Diversified 22,133.97 9.17 -5.76 8.10 9.69 0.0247
3 Westfield Group * Australia Rental Retail 16,384.25 7.00 -7.28 -1.43 1.04 0.0912
4 Mitsubishi Estate Japan Non-Rental Diversified 14,157.76 5.95 0.35 13.71 -9.60 0.0085
5 Unibail-Rodamco * France Rental Diversified 13,239.51 15.02 4.39 -1.95 22.14 0.0552
6 Public Storage * USA Rental Self Storage 12,791.67 3.96 -0.29 22.69 36.99 0.0283
7 Mitsui Fudosan Japan Non-Rental Diversified 12,552.97 4.93 1.17 11.91 -10.08 0.016
8 Equity Residential Props * USA Rental Residential 12,502.46 3.87 -0.25 6.10 52.29 0.0399
9 HCP * USA Rental Health Care 11,989.26 3.71 -3.45 9.05 34.74 0.0506
10 Sumitomo Realty & Dev Japan Non-Rental Diversified 8,336.83 3.45 8.11 18.47 -7.92 0.0112
Top 5 and Bottom 5 Performers
Company Country investment Focus Sector
Price Return Total Return (%) (Feb-29)
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Indices
Index DescriptionMarket Cap
(EUR m) Close Value
Feb-29Total Rtn (%)
YTD Total Rtn (%)
-1Y Total Rtn (%)
-3Y Div Yld (%)
Feb-29
EPRA/NAREIT Europe TR (EUR) 89,413.34 2,120.06 15.45 17.70 -11.24 4.18
EPRA/NAREIT Asia TR (USD) 306,179.92 2,352.20 13.95 14.66 -11.67 3.41
EPRA/NAREIT North America TR (USD) 337,107.80 3,476.50 25.49 43.36 -5.34 3.69
EPRA/NAREIT Global TR (USD) 768,453.88 2,851.93 18.18 24.74 -9.25 3.65
Top 10 on Market Cap
Company Country investment Focus Sector
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Market Cap (EUR m) (%) Weight
EPRA NEWS / 38 / 2011 _ 61. EPRA NEWS / 41 / 2012 61.
GLOBAL
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
ASIA
0
100
200
300
400
500
Jan 12Oct 11Jul11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03
EPRA/NAREIT Hong Kong TR (HKD) 298.0%
Inde
x Va
lue
(reb
ased
to 1
00)
EPRA/NAREIT Japan TR (JPY) 86.5%
EPRA/NAREIT Singapore TR (SGD) 159.5%
EPRA/NAREIT Australia TR (AUD) -2.9%
Investment Focus Market Cap Breakdown
New Zealand 0.3%
Australia 23.6%
Japan 26.1%
Hong Kong 37.8%
Singapore 12.2%
Country Breakdown by Market Cap Investment Focus Market Cap Breakdown
Asia Non-Rental 58%
Asia Rental 42%
Retail 18%
Residential 5%
Office 12%
Industrial 5%
Diversified 60%
Sector Breakdown
Q Hopson Development Hong Kong Non-Rental Residential 31.59 -0.67 -14.34 -26.09 -12.40 2.45%
Q Sumitomo Realty & Dev Japan Non-Rental Diversified 30.94 3.59 -6.19 18.47 -7.92 1.12%
Q Shimao Property Hong Kong Non-Rental Residential 26.66 -7.34 -12.86 -18.43 -NA- 4.17%
Q New World Development Hong Kong Non-Rental Diversified 25.65 -11.31 -16.16 -5.01 1.04 3.23%
Q Kenedix Realty Investment * Japan Rental Diversified 25.00 -7.19 -10.69 33.17 -5.86 6.70%
q Kiwi Income Property Trust * New Zealand Rental Diversified -2.87 0.00 16.21 24.31 2.30 6.73%
q CDL Hospitality Trusts Singapore Rental Lodging/Resorts -3.38 -0.96 -0.96 17.71 -NA- 4.95%
q Charter Hall Retail REIT * Australia Rental Retail -3.38 -4.19 8.84 16.36 -17.46 7.75%
q Stockland Trust Group * Australia Non-Rental Diversified -5.65 -0.03 4.25 -2.02 -6.49 6.95%
q FKP Property Group Australia Non-Rental Diversified -13.39 -1.24 -13.45 7.35 -17.08 4.29%
1 Sun Hung Kai Props Hong Kong Non-Rental Diversified 22,133.97 9.17 -5.76 8.10 9.69 2.47%
2 Westfield Group * Australia Rental Retail 16,384.25 7.01 -7.28 -1.43 1.04 9.12%
3 Mitsubishi Estate Japan Non-Rental Diversified 14,157.76 5.95 0.36 13.71 -9.60 0.85%
4 Mitsui Fudosan Japan Non-Rental Diversified 12,552.97 4.93 1.17 11.91 -10.08 1.60%
5 Sumitomo Realty & Dev Japan Non-Rental Diversified 8,336.83 3.45 8.11 18.47 -7.92 1.12%
6 Hongkong Land Hldgs Hong Kong Rental Office 7,201.62 4.06 3.14 46.18 16.34 2.25%
7 Wharf Holdings Hong Kong Non-Rental Diversified 7,083.13 3.44 0.75 46.11 -NA- 1.83%
8 China Overseas Land Hong Kong Non-Rental Residential 6,398.11 2.87 6.51 15.46 29.94 1.62%
9 Hang Lung Properties Hong Kong Non-Rental Diversified 6,314.79 3.00 -4.23 -NA- 20.21 2.23%
10 Link REIT * Hong Kong Rental Retail 6,309.66 2.48 13.57 42.55 14.87 4.16%
Top 5 and Bottom 5 Performers
Company Country investment Focus Sector
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Indices
Index DescriptionMarket Cap
(EUR m) Close Value
Feb-29 Total Rtn (%)
YTD Total Rtn (%)
-1Y Total Rtn (%)
-3Y Div Yld (%) Feb-29
EPRA/NAREIT Australia TR (AUD) 66,348.89 1,314.37 2.87 5.86 -11.80 6.26
EPRA/NAREIT Hong Kong TR (HKD) 892,087.08 2,615.79 -4.41 17.75 8.29 2.54
EPRA/NAREIT Japan TR (JPY) 6,436,158.75 1,903.61 -9.61 14.84 -11.72 2.55
EPRA/NAREIT Singapore TR (SGD) 46,176.31 1,475.43 -10.47 -0.84 -3.97 3.22
Top 10 on Market Cap
Company Country investment Focus Sector
Market Cap (EUR m) (%) Weight
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Price Return Total Return (%) (Feb-29)
62. _ EPRA NEWS / 38 / 201162. EPRA NEWS / 41 / 2012
REFERENCES
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
EUROPE
Investment Focus Market Cap Breakdown
United Kingdom 36%
Nederlands 8%
France 25%
Austria 2%
Sweden 8%
Other countries 21%
Country Breakdown by Market Cap Investment Focus Market Cap Breakdown
Europe Non-Rental 4%
Europe Rental 96%
Speciality 0.0%
Self Storage 0.8%
Retail 20.6%
Residential 4.1%
Office 19.3%
Lodgings/Resorts 0%
Industrial 3.4%
Healthcare 0.3%
Diversified 51.4%
Sector Breakdown
0
100
200
300
400
500
Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03
EPRA/NAREIT Sweden TR (SEK) 272.4%
Inde
x Va
lue
(reb
ased
to 1
00)
EPRA/NAREIT France TR (EUR) 224.2%
EPRA/NAREIT Netherlands TR (EUR) 78.0%
EPRA/NAREIT UK TR (GBP) 23.3%
Q St Modwen Properties UK Rental Diversified 31.33 31.33 44.69 0.69 26.13 1.90%
Q Ivg Immobilien Germany Non-Rental Office 21.11 21.11 3.81 -NA- -NA- 0.00%
Q Patrizia Immobilien Germany Rental Residential 18.47 18.47 31.37 -23.44 42.07 0.00%
Q Development Securities UK Non-Rental Retail 14.46 14.46 12.17 -15.74 -8.18 2.85%
Q DIC Asset Germany Rental Diversified 13.51 13.51 24.46 -32.16 35.70 5.25%
q Klovern AB Sweden Rental Diversified -4.58 -4.58 9.32 -9.05 24.19 6.00%
q Nieuwe Steen Inv * Netherlands Rental Diversified -5.63 -5.63 -6.13 -31.94 2.46 13.53%
q Befimmo * Belgium Rental Office -6.81 -6.81 -4.24 -20.45 -5.33 8.18%
q Colonia Real Estate Germany Rental Residential -7.43 -7.43 8.04 -42.99 1.05 0.00%
q Alstria Office * Germany Rental Office -7.81 -7.81 -8.44 -20.18 28.56 5.23%
1 Unibail-Rodamco * France Rental Diversified 13,239.51 15.02 4.39 -1.95 22.14 5.52%
2 Land Securities * UK Rental Diversified 6,276.24 7.12 6.22 -13.50 15.47 4.24%
3 British Land * UK Rental Diversified 4,968.97 5.64 3.09 -12.84 12.87 5.53%
4 Corio * Netherlands Rental Retail 3,328.97 3.78 7.34 -5.92 12.07 7.46%
5 Hammerson * UK Rental Retail 3,310.57 3.76 8.83 -13.56 21.08 4.11%
6 PSP Swiss Property Switzerland Rental Office 3,014.35 3.42 -0.13 5.08 21.38 3.57%
7 Capital Shopping Centres Group * UK Rental Retail 2,559.74 2.90 6.53 -10.55 15.75 4.51%
8 Swiss Prime Site Switzerland Rental Office 2,390.62 2.71 0.14 5.97 25.91 4.95%
9 Klepierre * France Rental Retail 2,260.61 2.56 8.17 -7.83 19.56 5.66%
10 SEGRO * UK Rental Industrial 2,081.35 2.36 12.71 -24.78 14.36 6.17%
EPRA/NAREIT UK TR (GBP) 26,784.11 1,615.25 6.82 -8.28 18.96 3.97
EPRA/NAREIT Netherlands TR (EUR) 6,801.53 2,631.72 5.88 -20.42 11.38 8.34
EPRA/NAREIT France TR (EUR) 22,201.02 4,443.3 5.36 -5.06 20.66 5.8
EPRA/NAREIT Sweden TR (SEK) 60,966.99 5,785.83 5.14 -3.86 22.53 3.83
Top 5 and Bottom 5 Performers
Company Country investment Focus Sector
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Index DescriptionMarket Cap
(EUR m) Close Value
Feb-29
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Company Country investment Focus Sector
Market Cap (EUR m) (%) Weight
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Indices
Top 10 on Market Cap
Price Return Total Return (%) (Feb-29)
EPRA NEWS / 38 / 2011 _ 63. EPRA NEWS / 41 / 2012 63.
GLOBAL GLOBAL
50
100
150
200
250
300
Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03
Inde
x Va
lue
(reb
ased
to 1
00)
EPRA/NAREIT United States TR (USD) 121.3%
EPRA/NAREIT Canada TR (CAD) 176.9%
Investment Focus Market Cap Breakdown
United States 89%
Canada 11%
Country Breakdown by Market Cap Investment Focus Market Cap Breakdown
North America Non-Rental 100%
North America Rental 0%
Speciality 0%
Self Storage 5.2%
Retail 27.4%
Residential 17.5%
Office 13.3%
Lodgings/Resorts 6.1%
Industrial 4.6%
Industrial/Office 2.0%
Healthcare 12.9%
Diversified 11.1%
Sector Breakdown
Q Forest City Enterprises USA Rental Diversified 11.35 11.35 23.69 -22.65 42.90 0.00%
Q Innvest REIT * Canada Rental Lodging/Resorts 10.30 10.98 33.82 -14.97 32.82 7.32%
Q Pennsylvania Real Estate * USA Rental Retail 9.28 10.50 29.98 -2.91 70.32 4.47%
Q TransGlobe Apartment REIT * Canada Rental Residential 6.81 7.35 7.06 16.18 -NA- 6.05%
Q Northern Property REIT* Canada Rental Residential 6.14 6.55 12.57 24.04 33.65 4.61%
q Hersha Hospitality Trust USA Rental Lodging/Resorts -7.37 -7.37 3.07 -19.94 47.62 4.77%
q Medical Properties Trust * USA Rental Health Care -9.33 -9.33 -1.52 -10.32 48.03 8.23%
q First Potomac Realty Trust * USA Rental Industrial -11.09 -9.74 2.91 -13.02 28.95 6.05%
q DuPont Fabros Technology * USA Rental Specialty -10.20 -10.20 -5.45 -4.26 64.36 2.10%
q Associated Estates Realty USA Rental Residential -10.71 -10.71 -5.39 -4.00 45.38 4.56%
1 Simon Property Group * USA Rental Retail 29,663.73 9.19 5.81 26.65 63.78 2.80%
2 Vornado Realty Trust * USA Rental Diversified 11,256.54 3.49 7.23 -9.47 39.97 3.38%
3 Equity Residential Props * USA Rental Residential 12,502.46 3.87 -0.25 6.10 52.29 3.99%
4 Public Storage * USA Rental Self Storage 12,791.67 3.96 -0.29 22.69 36.99 2.83%
5 Boston Properties * USA Rental Office 11,207.09 3.47 1.96 8.01 42.86 2.17%
6 Host Hotels & Resorts * USA Rental Lodging/Resorts 8,329.90 2.58 6.84 -13.48 63.90 1.27%
7 HCP * USA Rental Health Care 11,989.26 3.71 -3.45 9.05 34.74 5.06%
8 Avalonbay Communities * USA Rental Residential 9,216.74 2.86 -0.71 10.09 49.02 2.75%
9 Ventas * USA Rental Health Care 12,026.95 3.73 1.43 5.05 42.46 4.11%
10 Kimco Realty * USA Rental Retail 5,576.14 1.73 13.18 -1.39 33.27 4.13%
Company Country investment Focus Sector
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Company Country investment Focus Sector
Market Cap (EUR m) (%) Weight
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Top 5 and Bottom 5 Performers
Top 10 on Market Cap
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
NORTH AMERICA
EPRA/NAREIT Canada TR (CAD) 45,197.67 4,919.37 6.49 15.39 38.75 4.98
EPRA/NAREIT United States TR (USD) 385,888.80 3,901.28 5.43 5.23 42.48 3.65
Index DescriptionMarket Cap
(EUR m) Close Value
Feb-29Total Rtn (%)
YTD Total Rtn (%)
-1Y Total Rtn (%)
-3Y Div Yld (%)
Feb-29
Indices
Price Return Total Return (%) (Feb-29)
64. _ EPRA NEWS / 38 / 201164. EPRA NEWS / 41 / 2012
REFERENCES
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
EMERGING MARKETS
0
50
100
150
200
250
Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06Jan 06Oct 05Jul 05
Inde
x Va
lue
(reb
ased
to 1
00)
EPRA/NAREIT AIM TR (USD) -66.5%
EPRA/NAREIT Emerging Market TR (USD) 92.3%
Asia Pacific 40%
Europe 3%
Middle East/Africa 17%
Americas 40%
Country Breakdown by Market Cap Global Breakdown by CountryBrazil 36%
Chile 1.2%
China 7.7%
Egypt 0.3%
India 5.5%
Indonesia 7.0%
Malaysia 6.8%
Mexico 2.7%
Philippines 6.7%
Poland 0.6%
South Africa 13.6%
Thailand 5.9%
Turkey 2.3%
Taiwan 0.2%
UAE 3.5%
Q Six Of October Develoment & Inv. Egypt Non-rental Diversified 56.48 56.48 111.25 -38.52 28.37 9.47%
Q Prestige Estates Projects Ltd India Non-rental Diversified 38.58 38.58 46.84 -10.14 -NA- 1.15%
Q Guangzhou R&F Properties (H) China Non-rental Diversified 34.74 34.74 66.78 3.83 25.20 7.22%
Q Poly (Hong Kong) Inv. (Red Chip) China Non-rental Diversified 28.24 28.24 46.88 -20.29 45.24 3.13%
Q Aldar Properties PJSC UAE Non-rental Diversified 28.13 28.13 33.70 -10.87 -19.52 0.00%q Geo B Mexico Non-rental Residential -10.40 -10.40 7.02 -45.91 9.75 0.00%
q Desarrolladora Homex SA de CV Mexico Non-rental Residential -12.07 -12.07 -1.18 -29.67 6.39 0.00%
q Camargo Correa Desenvolvimento Brazil Non-rental Residential -15.29 -15.29 -16.13 -48.80 15.94 8.31% Imobiliario S/A Ord
q Globe Trade Centre Poland Non-rental Diversified -17.20 -17.20 -5.81 -58.56 -12.95 0.00%
q Urbi Desarrollos Urbanos Mexico Non-rental Residential -19.58 -19.58 -5.86 -44.01 5.73 0.00%
Top 5 and Bottom 5 Performers
Company Country investment Focus Sector
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
1 BR Malls Participacoes S/A Ord Brazil Rental Retail 4,307.69 16.87 21.47 39.91 55.18 0.75%
2 PDG Realty S/A Empreendimentos Brazil Non-rental Diversified 3,589.51 14.06 24.41 -17.39 41.96 2.30% e Participacoes Ord
3 Growthpoint Prop Ltd South Africa Rental Diversified 3,488.81 31.49 10.78 28.82 20.66 6.37%
4 Cyrela Brazil Realty S/A Brazil Non-rental Diversified 2,388.87 9.36 16.71 6.69 37.53 1.95% Empreendimentose e Participacoes Or
5 MRV Engenharia e Participacoes SA Brazil Non-rental Residential 2,177.27 8.53 29.44 6.21 61.31 2.43%
6 Redefine Income Find South Africa Rental Diversified 2,118.96 19.13 6.08 18.67 13.51 8.66%
7 Emaar Properties UAE Non-rental Diversified 1,921.19 17.34 22.96 19.72 15.77 3.16%
8 Ayala Land Philippines Non-rental Diversified 1,854.29 7.26 35.22 44.38 54.87 0.95%
9 DLF India Non-rental Diversified 1,766.96 6.92 23.70 8.24 15.58 0.88%
Company Country investment Focus Sector
Market Cap (EUR m) (%) Weight
Total Rtn (%) YTD
Total Rtn (%) -1Y
Total Rtn (%) -3Y
Div Yld (%) Feb-29
Index DescriptionMarket Cap
(EUR m) Close Value
Jun-30Total Rtn (%)
YTD Total Rtn (%)
-1Y Total Rtn (%)
-3Y Div Yld (%)
Feb-29
EPRA/NAREIT Emerging Market TR (USD) 63,925.15 2,025.94 20.96 6.16 29.10 2.72
EPRA/NAREIT AIM TR (USD) 25,546.33 2,046.92 20.66 19.43 25.47 1.98
Indices
Top 10 on Market Cap
Price Return Total Return (%) (Feb-29)
10 BR Properties S/A Ord Brazil Rental Retail 1,728.17 6.77 19.19 25.19 -NA- 0.49%
EPRA NEWS / 38 / 2011 _ 65. EPRA NEWS / 41 / 2012 65.
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
TOTAL MARKET
Countries2010 GDP
($ Bn) 2010 GDP
per capita ($) 2010 Real Estate
($ Bn) 29 Feb 12
Total Listed ($ Bn)29 Feb 12
No. of Companies29 Feb 12
Index Mkt Cap ($ Bn) 29 Feb 12
Total RE v Listed RE (%)
Australia 1,142 53,713 514 101 162 71.7 19.73%
Hong Kong 2,164 306,692 974 283 198 115.0 29.12%
Japan 5,107 40,200 2,298 160 272 79.5 6.95%
New Zealand 75 17,899 34 5 18 0.8 15.16%
Singapore 192 41,341 866 116 115 37.0 13.45%
South Korea 947 19,527 426 0 27 - 0.06%
Total Asia-Pacific 9,628 5,112 666.4 792 304 13.04%
Austria 386 47,078 174 9 13 1.8 4.97%
Belgium 477 45,802 215 8 30 3.8 3.81%
Denmark 316 57,460 142 1 40 - 0.87%
Finland 247 46,994 111 3 8 2.2 2.32%
France 2,636 40,923 1,186 78 122 29.7 6.56%
Germany 3,359 41,040 1,512 57 169 7.6 3.80%Greece 316 29,405 142 2 24 0.1 1.48%
Ireland 230 50,284 103 1 3 - 1.19%
Italy 2,125 35,168 956 2 20 0.7 0.22%
Luxembourg 54 108,947 24 - 7 - 0.00%
Netherlands 802 47,995 361 11 15 9.1 3.16%
Norway 404 86,730 182 3 17 0.7 1.77%
Portugal 235 21,984 106 0 9 - 0.03%
Spain 1,465 31,718 659 6 33 0.1 0.88%
Sweden 448 49,487 202 18 41 9.3 8.89%
Switzerland 503 66,151 226 15 32 9.9 6.60%
United Kingdom 2,364 38,135 1,064 67 138 42.8 6.28%
Total Europe 16,367 7,365 281.6 721 118 3.82%
Israel 405 56,545 182 14 153 0.8 0.75%
Total EMEA 16,773 7,548 295.3 874 119 3.91%
Canada 1,475 44,049 664 78 129 45.9 11.82%
United States 14,308 46,571 6,439 857 858 385.9 13.32%
Total North America 15,783 7,102 936.0 987 432 13.18%
Total Developed Markets 42,183 19,762 1,898 2,653 855 9.60%
China 5,122 3,870 1,232 122 192 6.6 0.99%
India 1,471 1,272 244 27 188 4.7 1.10%
Indonesia 590 2,455 122 16 64 6.0 1.35%
Malaysia 216 7,773 66 46 131 5.8 7.04%
Pakistan 166 969 25 - 6 - 0.00%
Philippines 180 1,837 34 24 59 5.8 7.07%
Taiwan 340 14,820 128 17 87 0.2 1.31%
Thailand 286 4,333 71 29 113 5.0 4.00%
Total Asia-Pacific 8,372 1,923 280.5 840 34 14.59%
Czech Republic 195 19,048 80 - 3 - 0.00%
Egypt 190 2,287 38 6 48 0.3 1.69%
Hungary 134 13,382 49 - 7 - 0.00%
Morocco 89 2,778 19 - 5 - 0.00%
Poland 465 12,093 164 3 50 0.4 0.21%
Russia 1,421 10,144 471 - 37 - 0.00%
South Africa 314 6,269 89 29 51 11.6 3.26%
Turkey 689 8,970 219 8 39 2.0 0.38%
United Arab Emirates 276 5,787 76 9 12 3.0 1.23%
Total EMEA 3,772 1,205 56.6 252 17 4.69%
Brazil 1,781 9,548 579 61 52 30.8 1.05%
Chile 184 11,615 64 5 42 1.0 0.72%
Colombia 256 6,248 72 - 1 - 0.00%
Mexico 1,000 9,531 325 7 17 2.3 0.22%
Peru 137 5,049 36 - 13 - 0.00%
Total Americas 3,358 1,076 72.3 125 34 6.72%
Total Emerging Markets 15,502 4,204 409 1,217 86 9.74%
World 57,685 23,966 2,307 3,870 940 9.63%
Source: World Bank, IMF, Prudential Real Estate Investors, EPRA * Base on Prudential Real Estate Investors Formula
66. _ EPRA NEWS / 38 / 201166. EPRA NEWS / 41 / 2012
REFERENCES
FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES
TOTAL MARKET
Global real estate vs equities & bonds
Underlying Real Estate
Asia Pacific 24%
Europe 35%
Middle East/Africa 1%
Latin America 5%
North America 34%
Listed Real Estate
Asia Pacific 37%
Europe 24%
Middle East/Africa 3%
Latin America 0%
North America 36%
5% 10% 15% 20% 25% 30% 35% 40%
-15%
-10%
-5%
0%
5%
10%
15%
Global Bonds
Belgium
Canada
US
Netherlands
Sweden
Finland
France
Nth Am RE
UK
Europe RE Global RE
Switzerland
Italy
Asia RE
Australia
Risk (St Deviation)
Global Equities
Japan
Germany
Hong Kong
Singapore
45% 50%
Norway
Feb-
09
Apr
-09
Jun-
09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
Apr
-10
Jun-
10
Aug
-10
Oct
-10
Dec
-10
Feb-
11
Apr
-11
Jun-
11
Aug
-11
Oct
-11
Dec
-11
Feb-
12
FTSE EPRA/NAREIT Developed RE 1.28%
FTSE World 0.83%
40
60
80
100
120
140
160
180
200
220
240
JP Morgan Global Bonds 0.15%
Rolling 10-years risk/return local currencies - countries
EPRA NEWS / 38 / 2011 _ 67. EPRA NEWS / 41 / 2012 67.
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Send to: Clare Faulkner, Deloitte, Hill House, 1 Little New Street, London EC4A 3TR, UK
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