TR Property AGM Presentation...AGM Presentation Marcus Phayre-Mudge Fund Manager 24 July 2018...
Transcript of TR Property AGM Presentation...AGM Presentation Marcus Phayre-Mudge Fund Manager 24 July 2018...
TR Property Investment TrustAGM Presentation
Marcus Phayre-Mudge
Fund Manager
24 July 2018
Classification: Public
Contents
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• Results review – what drove performance in the year to March 2018
• Key features and positioning
• What has happened since the year end (a lot!)
• Outlook
Investment risks
3
The value of investments and any income derived from them can go down as well as up as a result of
market or currency movements and investors may not get back the original amount invested.
The market value of the shares of TR Property may not reflect the underlying net asset value of the
investments held by TR Property.
TR Property is able to borrow to raise further funds for investment purposes if the fund manager and the
board of directors consider that it may be commercially advantageous to do so. This is generally
described as "gearing". An investment trust which has made investments as a result of gearing may
have a more volatile share price as a result; gearing can increase shareholder returns in rising markets
but conversely can increase the extent to which the value of the funds attributable to shareholders
decreases in falling markets.
The value of property-related securities and directly held property reflect the opinion of valuers and are
reviewed periodically. These assets can also be illiquid and significant or persistent redemptions may
require the manager to sell properties at a lower market value adversely affecting the value of your
investment.
TR Property Investment Trust
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• Largest Pan-European property equity closed-ended fund
• Market cap: £1.21bn (£988m – March ‘17)
• Net assets: £1.25bn (£1.12bn – March ‘17)
• Equities 93% of assets (92% - March ‘17)
• Physical property 7% of assets (8% - March ‘17)
• Gearing: 14.6% (13.3% - March ‘17)
Source: BMO Global Asset Management as at 30.03.2018
Highlights for the year to March 2018
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• Total shareholder return of 25.5%
• Share price close to asset value
• Relative outperformance of the benchmark (after fees) 530bps
• Dividend growth (year on year) of 16.2%
• Pan European exposure proved resilient
• Retail remains our greatest concern
Standardised performance
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Percentage Growth (%)
TR Property Investment Trust (Capital Only
NAV)
FTSE EPRA/NAREIT Developed Europe
Capped Index (Net, GBP, Capital Only)
TR Property Investment Trust (NAV with
Income)
FTSE EPRA/NAREIT Developed Europe
Capped Index (Net, GBP, Total Return)
Share Price
Source : BMO Global Asset Management. Data as at 30.03.2018
Past performance should not be seen as an indication of future performance. All fund performance is presented net of fees.
Mar 13 -
Mar 14
Mar 14 –
Mar 15
Mar 16 -
Mar 17
Mar 17 -
Mar 18
Mar 15 -
Mar 16
18.2% 24.8% 5.9% 4.5% 12.1%
11.2% 19.7% 2.9% 3.6% 7.2%
22.4% 28.3% 8.2% 8.0% 15.5%
14.9% 23.3% 5.4% 6.5% 10.2%
37.7% 29.5% -1.6% 9.1% 25.5%
Last 2 years performance
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Source: BNP Paribas, Bloomberg as at 31.03.2017 and 30.03.2018. NAV - Net Asset Value.
Benchmark: FTSE EPRA/NAREIT Developed Europe Capped TR Net GBP
Past performance is not a guarantee to future performance
6.5%
10.2%
8.0%
15.5%
9.1%
25.5%
0%
5%
10%
15%
20%
25%
30%
Year to March 2017 Year to March 2018
Benchmark NAV total return NAV total return Share price total return
Dividend history
Source : BMO Global Asset Management. Data as at 04.07.2018
8
0
2
4
6
8
10
12
14
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18
Pence P
er
Share
Interim Final
10 year average compound annual growth rate: 8.1%
Share price and discount
Source: BNP Paribas, Bloomberg as at 29.06.2018
9
100
150
200
250
300
350
400
450
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18
Share Price (P)
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18
Discount to NAV (with income)
Past performance is not a guarantee to future performance.
Discount
tightens driving
share price
Track record
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Source : BMO Global Asset Management. Data as at 29.06.2018
Past performance is not a guarantee to future performance.Benchmark: Prior to 01.04.2013 FTSE EPRA/NAREIT Developed Europe Index (Net, GBP). Prior to 01.04.2012 FTSE EPRA/NAREIT Developed Europe Index (GBP). Prior to
01.04.2007 S&P Citigroup European Property Index. Prior to 01.09.2001 FTSE Real Estate index.
0%
200%
400%
600%
800%
1,000%
1,200%
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
TR Property Investment Trust (Capital Only NAV)
FTSE EPRA/NAREIT Developed Europe Capped Index (Net, GBP, Capital Only)
Pan-European real estate equities have outperformed broader European equities
Source: Bloomberg as at 29.06.2018
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-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2014 2015 2016 2017 2018 H1
Pan-European Real Estate Equities (FTSE EPRA/NAREIT Developed Europe Capped Index Net GBP)
STOXX Europe 600 Net EUR
FTSE All-Share Index Total Return GBP
Past performance is not a guarantee to future performance.
See-through geographic exposure – didn’t change much
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Source: BMO Global Asset Management see-through exposure calculation model. Data as at 30.03.2018.
March 2017 March 2018
UK, 36%
Germany, 20%
France,15%
Sweden, 8%
Spain, 5%
Switzerland,3%
Italy, 2%
Rest of Europe,
11%
UK,38%
Germany, 22%
France, 15%
Sweden,9%
Spain6%
Switzerland, 1%
Italy, 2%
Rest of Europe,
7%
UK vs. Continental Europe – Brexit still weighs heavily
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Source: BMO Global Asset Management as at 29.06.2018
in £
in €
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18
FTSE EPRA/NAREIT Developed Europe ex UK Index TR GBP
FTSE EPRA/NAREIT Developed Europe ex UK Index TR EUR
FTSE EPRA/NAREIT UK Index TR GBP
Past performance is not a guarantee to future performance.
Intra European total return performance (in local currency) -FY 2017 & 2018
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Source: BMO Global Asset Management as at 31.03.2017 and 30.03.2018
Past performance is not a guarantee to future performance.
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
SW NL BL & LUX FR GR SP SW IT
2017 2018
Key positioning and where it worked (or not)
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UK physical portfolio (7% of assets)
Returned 14.6% broadly in line with the equity portfolio
Underweight Belgium
Underperformed
Overweight Spain – particularly hotels
Hispania (our largest overweight) returned 28.3%
But…overweight Landsec not British
Land (BL outperformed LAND strongly)
But…underweight Southern Europe overall
Lack of Italian exposure
Underweight Switzerland
Underperformed
Overweight Stockholm
Faberge (a large overweight) returned 26.8%
Overweight UK
London reduced, industrial / logistics increased,
‘alternatives’ increased
But…overall neutral Scandinavia
Region was a stronger performer, we should
have been longer
Top contributors to relative performance FY 17/18
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Source: Bloomberg as at 30.03.2018
-0.8% -0.6% -0.4% -0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2%
UK MAJORS
SPANISH DIVERSIFIED
GERMAN OFFICES
BENELUX DIVERSIFIED
UK STUDENT HOUSING
LONDON OFFICE
UK DIVERSIFIED
HOTELS
INDUSTRIALS
Portfolio profile – largest 10 holdings
• Top 10 is c.56% of portfolio
Source: BMO Global Asset Management as at 04.07.2018
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-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
VONOVIA
UNIBAIL-RODAMCO
DEUTSCHE WOHNEN
LEG IMMOBILIEN
LANDSEC
HISPANIA ACTIVOS
SEGRO
GECINA
UNITE GROUP
MCKAY SECURITIES
Fund Weight Relative
Portfolio profile – largest active positions vs. benchmark
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• Active positioning of equity portfolio (all overweights and underweights / 2): c.42%
Source: BMO Global Asset Management as at 04.07.2018. FTSE EPRA/NAREIT Developed Europe Capped Net Total Return Index (GBP).
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0%
BRITISH LAND CO
KLEPIERRE
SWISS PRIME SITE
ICADE
GRAND CITY PROPERTIES
UNITE GROUP
CLS HOLDINGS
MCKAY SECURITIES
LEG IMMOBILIEN
HISPANIA ACTIVOS
Physical property portfolio
1. Bayswater
2. Wandsworth
3. Harlow
4. Bristol
5. Gloucester
3
1
2
5
4
19
Asset management
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Source: BMO Global Asset Management. *March 2018
Unit H1
Parkway Industrial Estate
Plymouth
Beacon House
Worple Road
Wimbledon SW19
Ferrier Street
Industrial Estate
Wandsworth SW18
• 2016 Rent Review - rent
increased by 14.4%
• 6.3% ahead of valuers ERV*
• Sold for £4.3m in December
2017
• 11% premium to the March
2017 valuation
• 12,000 sq ft office
• Permitted development
achieved for 17 flats
• Sold for £5.8m in November
2017
• 35% premium to March
2017 valuation
• 16 units fully let with leases
extended to September
2019
• Planning policy designation
changed from ‘employment’
to ‘mixed use’
• Progressing planning
application for submission in
Q4 2018
Property portfolio performance – kept up with the equity portfolio and outperformed IPD
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TRPIT - TR Property Investment Trust. IPD - Investment Property Databank.
Source: BMO Global Asset Management. Investment Property Databank (MSCI, IPD) as at 30.03.2018.
0%
5%
10%
15%
20%
25%
30%
35%
40%
FY13 FY14 FY15 FY16 FY17 FY18
Total Return
TRPIT IPD
Past performance is not a guarantee to future performance.
Outlook
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• Don’t fight the Central Banks – rates staying low across Europe (but rising in the US)
• Pockets of strong rental growth – industrial / logistics, German residential, Paris
CBD offices, Stockholm offices, Madrid offices
• Capital markets – doing brisk business. Record low funding cost for property companies
• UK – surprisingly strong Central London investment markets. Global capital looks beyond Brexit
BUT…macro risks remain elevated
Discord over migrant issues, Macron failing to win support for greater EU financial
integration, Italian banking sector concerns
Brexit negotiations overshadowing investment and creating instability. Ongoing GBP
weakness
FED interest tightening cycle continues, USD continues to strengthen
$80 per barrel…inflationary pressures building
CBD - Central Business District
Disclaimer
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