the multiple challenges of listed real estate · the multiple challenges of listed real estate...

The multiple challenges of listed real estate

► Matthijs Storm, Kempen Capital Management

► CFA/CAIA Seminar 9th of April 2013

Kempen Capital Management

Declining consumer spending

Over supply Ageing population

E-commerce

1

Four threats for the (Dutch) retail property market

Kempen Capital Management 2

Dutch retail turnover per SQM index (2000 – 2020e)*

* Source: Q&A Research (2012)

50

60

70

80

90

100

110

120

130

140

2000 2005 2010 2015 2020

NL:(2000=100) Bron: Q&A

Retail Total

Food Retail

Non Food Retail

Non Food Retail corrected foronline share

But which force is the strongest?


Lack of National zoning and planning laws caused over supply*

3

* This is a hypothetical example, red shaded areas do not reflect true catchment areas of existing shopping centres

Catchment area of

a single shopping

center


Declining consumer spending

Over supply Ageing population

E-commerce

4

Four threats for the (Dutch) retail property market

Too late!

Time to

act! Just wait

???


Success rate of e-commerce varies by segment

5

“Commodity” business = online success Need to see more evidence first!

Don’t underestimate the variable cost base of an online retailer:

• Logistics / Delivery (including returns)

• Website

• Marketing (pass the profitability to Google!)


Online retail, still in a pioneering phase

6

Any online-only retailers with

management teams with a proven

track record?


We need physical stores!

7

2006 Kiddicare online only 2013 Kiddicare multi-channel (15 stores)


But not as many as we currently have!

8


Retailers, wake-up and innovate

9

Concept store: Collette, Rue Saint Honore, Paris

Concept store: Excelsior, Galleria del Corso,

Milano

• Hear the music

• See the light show

• Smell (ever been in an Abercrombie store?)

• Touch (tablets, touch walls)

• Taste the coffee you’re served


Architects, adapt your malls

10

Les 3 fontaines, Cergy-Pontoise (Paris)

• 1970’s mall (1972)

• “Dead” hypermarket as key anchor

• Supported by 3-4 low margin big boxes

(Darty, FNAC): retail models of the past

• No leisure, no quality food, no experience

The Bullring, Birmingham

• Mall of the future (2003)

• Several, small mid size boxes, unique

retailers anchoring: Apple, Molton Brown,

Forever 21, Selfridges, Hollister, Hugo

Boss, Disney store

• Rihanna on stage in the mall


Good brand = good tenant -> pulls footfall*

11

1. Google

2. Ikea

3. LEGO

4. Microsoft

5. Efteling

6. Bol.com

7. Youtube

8. Discovery Channel

9. National Geographic

10. Douwe Egberts

11. Coca Cola

12. IDEAL

13. Albert Heijn

14. Disney

15. Apple

REIT management teams: “these brands

should be your best friends”

* Source: Brand Battle 2012, the 15 strongest brands in The Netherlands in 2012 (BrandAsset Valuator)


And they are opening stores

12


And so is Dutch brand no. 5

13


Entertainment, no. 1 newcomer

14

Source: Unibail-Rodamco investor presentation at KCM Retail property seminar (Amsterdam, December 2012)


Malls can become the new town centre

15

Stockport (UK), 30% town centre vacancy Manchester Trafford Centre, 0% vacancy

11 miles = 15min drive


1. Eerste antwoord

2. Tweede antwoord

42

Active property management, more important than ever!

Retailers going

through a once in

a lifetime change

Retail property

going through a

once in a lifetime

change

REIT management

teams should act

too

In-house property

and asset

management

Scale

Streamlining the

portfolio

Focus on dominant

malls or prime high-

street

Source: Les Echos (March 2013)

16


REIT’s staff increasingly focused on tech and marketing

17

Technology Marketing / branding

PPR, FNAC, L’Oréal = Retailer / marketing background


1. Eerste antwoord

2. Tweede antwoord

42

But don’t compete with the retailers!

18


* Source: Kempen & Co securities weekly update valuations 10th of March 2003 and 25th of March 2013

Active management of a REIT portfolio crucial today

Premium/discount (%) to spot NAV European retail

REIT’s 2003*

Premium/discount (%) to spot NAV European retail

REIT’s 2013*

-15

-19 -20

Corio Unibail Vastned

Dispersion: 5% points

25

-19

-37

Unibail-Rodamco Corio Vastned

Dispersion: 62% points


Increased dispersion in asset performance

22.1

12.0

20.6

-5.0

2005 2012

Unibail Klepierre

Rental uplifts on Spanish portfolio Unibail** vs. Klepierre (%) *

* Source: Published uplift on re-lettings and renewals Spanish portfolio, company annual reports 2005 and 2012.

** 2005 data are Rodamco Europe (before merger with Unibail in 2007)


Example of in-depth shopping centre analysis

All about bottom-up (asset and management quality)

1. Dominance in

catchment area

2. Accessability

3. Size and layout

4. Shape and architecture

5. Tenant mix / retail offer


Q&A


Disclaimer

This presentation of Kempen Capital Management NV (KCM) is for information purposes only. The information in this document is incomplete

without the verbal explanation given by an employee of KCM. This presentation provides insufficient information for an investment decision. Before

making such a decision, please read information such as simplified prospectuses, prospectuses or information memoranda of the investment funds.

These are available on the website www.kempen.nl.

KCM is included in the register of the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) as manager of investment

funds and as asset manager. Kempen Capital Management (UK) ltd. is subject to regulation of the Financial Services Authority and is registered

under no.166063.

No part of this presentation may be used without prior permission from KCM.

the multiple challenges of listed real estate · the multiple challenges of listed real estate...

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