Sarasin Global Listed Real Estate – BCI Global …...21 May 2019 Creating Value in a Global Listed...

21 May 2019

Creating Value in a Global Listed Real Estate Portfolio through Thematic Investing

Sarasin Global Listed Real Estate –BCI Global Investment Conference

1Sarasin Global Listed Real Estate – BCI Global Investment Conference

About Sarasin & Partners

A broad range of domestic and overseas private clients, charities, pensionfunds, institutions and retail investors

Combined local management team owns a significant portion of the equity of the firm

Funds under management: c. £13.3bn*

A staff of 211 including 85 investment professionals

A committed team of investment professionals in the foreground* Source Sarasin & Partners LLP as at 31.03.2019, updated quarterly


Sarasin Global Listed Real Estate

Sarasin & Partners was one of the first European investors to develop a global listed real estate product

Our macro team helps define regional and sector exposure

JLL Our direct research consultant, Jones Lang Lasalle has 200+ offices, operates in 1000 locations in 71 countries

Within the Real Estate franchise we have over

£270m assets under management

(as at 31.12.18)

Our Real Estate GBP Fund launched in

2004A strong fund management team

combining over 30 years of experience

REITs and global listed property companies have tax/cost efficient corporate structures with access to a variety of funding sources

Drawing on the expertise of a specialist risk team, managers ensure that risk within the portfolio is

managed appropriately

Allows investors to move freely and cost effectively between regions and property sectors

Some of the highest quality real estate is only available via listed stocks


Thematic investing: A philosophy Built on Three Pillars

Integrated Stewardship Approach

A Distinctive Thematic Equity Process

Active long-term Investment Approach

Global investment partnership, strong motivated team, long-term perspective


Our Thematic Approach

Identifying the inexorable trends that will shape the world in which we live and invest

Uncovering the real estate companies best placed to benefit from these long-term themes

Filtering these ideas down to the very best investment opportunities in real estate

A philosophy which has been at the heart of Sarasin’s process for over 15 years


What are the Five Mega Themes?

DIGITALISATION

AGEING

EVOLVING CONSUMPTION CLIMATE CHANGE

URBANISATION

Meaningful

Disruption

….Investable for listed real estate portfolios

Long-term

Change


Thematic Investing in Real Estate


What are its consequences for real estate?

Theme: Digitalisation

Digitalisation - the enduring changes in consumer and corporate behaviour arising from increasingly universal interconnectivity and technological sophistication in the global economy

Cloud

• Data Centres

Digitalisation

E-Commerce

• Industrial

Network traffic

Towers


What are the consequences for real estate?

Theme: Evolving ConsumptionEvolving Consumption - the demographic, technological and socio-economic factors that are leading to unprecedented changes in patterns of global consumer behaviour

Emerging Market

Consumers

• China/HK

Retail REITs

Millennial Lifestyles

• Digital

• Experience

Disruptive Business Models

• Discounters

• eCommerce

Evolving Consumption


Theme: Ageing


Ageing - the world’s population is steadily getting older. The current distribution of population, mortality, birth, and immigration rates imply that the evolution of the population over the next few decades is reasonably certain, impacting governments, corporates and individuals.

Essential Consumption

• Retirement homes

Health Services

• Hospitals

Bucket List

• Travel/ Hotels

Ageing


Theme: Climate changeClimate change: a change of climate that is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and that is in addition to natural climate variability observed over comparable time periods. (United Nations Framework Convention on Climate Change).


Buildings

• Energy efficiency

Buildings

• Smart buildings

Infrastructure

• Flood defence• Malls in

Florida?

Climate Change


Theme: UrbanisationUrbanisation: refers to the population shift from rural areas to urban areas, the gradual increase in the proportion of people living in urban areas, and the ways in which each society adapts to this change. It is predominantly the process by which towns and cities are formed and become larger as more people begin living and working in central areas


Buildings

Developers

Major Cities

Landlords

Rental Sector

Landlords

Urbanisation


Real Estate Investment process: a combination of the old and the new


Full value chain of global real estate

Investing across Three Key PillarsCore

Best real estate assets around the world Most attractive locations/sectors Best REIT management teams Stable and growing income

Value-add

Exposure to long-term themes Top-down based on Sarasin’s house

view and bottom-up based on high growth niches

Opportunistic

Special situations Turnaround stories

40%-

50%

40%-

50%

0%-

20%

Income distribution and global exposure from core portfolio NAV growth strategy through value-add and opportunistic part of the portfolio Focused sourcing using best-in-class network established over decades in the market Portfolio construction based on conviction not on benchmark

Target allocation

Clean structure: best opportunities, best-in-class managers


Real Estate Investment Process

Core: Macroeconomic analysis

Analysis of leading indicators for the direct real estate market on a global and country level

Analysis of main real estate sub-sectors and their point in the property cycle

Value Add & Opportunistic

The identification of:

Long-term themes (mobility of population, ageing population, etc.)

Special situations (industry contacts, conferences, etc.)

Turnaround situations (undermanaged portfolio, new management team, etc.)

Company analysis

Narrow the universe of as a result of Step 1

Qualitative research on the quality of the portfolio (location, quality, etc.)

Qualitative research on the quality of the management team

Financial analysis on the stock and its valuation.

Portfolio allocation

Allocation based on risk/return expectation

For core pillar: 5-10% allocation per stock

For value add pillar: 3%-6% allocation per stock

For opportunistic pillar’: 1%-3% allocation per stock

1 32


Tracking Error 3.30%Coverage 22.50%Portfolio Beta 0.96Portfolio Volatility 12.60%Benchmark Volatility 12.70%Correlation (Port, BM) 0.97Portfolio Actual Stocks 30Benchmark Actual Stocks 511

Real Estate Investment PropositionCore Value-add Opportunistic

Allocation 40%-50% 40%-50% 0%-20%Target Core Theme driven Special situations

Niches Turn around storiesApproach Top down/Bottom up Top down/Bottom up Bottom upReturn target 5%-8% 10%-15% 15%+

Expected dividend yield 3.5-4.5%

Source: Sarasin & Partners; StyleAnalytics (31 March 2019)


Portfolio constructionCore

Value-addOpportunistic


The portfolio managers have track records going back to the 1990’s.

Sarasin has a strong track record in listed real estate going back to

2004.

Provides exposure to a portfolio of high-quality, responsibly-

screened real estate companies

Jones Lang LaSalle provides a unique and comprehensive view of global real estate research.

Offers investors diversification and liquidity in an underlying asset that normally lacks both

Our investment process is unique and a key differentiator:

- Benefits from the strong in-house equity research and macro teams

- Our thematic stock selection process delivers a high level of conviction at the company level

- In-depth in-house research with models on most companies

- Portfolio construction based on conviction not on benchmark

In summary, Sarasin & Partners’ Real Estate Franchise


Important InformationThis document is for investment professionals only and should not be relied upon by private investors.

This promotion has been approved by Sarasin & Partners LLP of Juxon House, 100 St Paul’s Churchyard, London, EC4M 8BU, a limited liability partnership registered in England & Wales with registered number OC329859which is authorised and regulated by the Financial Conduct Authority with firm reference number 475111 and passported under MiFID to provide investment services in the Republic of Ireland.

The investments of the fund are subject to normal market fluctuations. The value of the investments of the fund and the income from them can fall as well as rise and investors may not get back the amountoriginally invested. If investing in foreign currencies, the return in the investor’s reference currency may increase or decrease as a result of currency fluctuations. Past performance is not a guide to future returns andmay not be repeated.

There is no minimum investment period, though we would recommend that you view your investment as a medium to long term one (i.e. 5 to 10 years). Risks associated with investing in REITs include the following: declinesin the value of real estate, risks related to general and local economic conditions, overbidding and increased competition, increases in property taxes and operating expenses, changes in zoning laws, casualty orcondemnation losses, variations in rental income, changes in neighbourhood values, the appeal of properties to tenants and increases in interest rates. In addition, REITs may be affected by changes in the value of theunderlying property owned by the trusts or may be affected by the quality of credit extended. REITs are dependent upon management skills, may not be diversified and are subject to the risks of financing projects. The abilityto trade REITS in the secondary market can be more limited than other stocks. For efficient portfolio management the Fund may invest in derivatives. The value of these investments may fluctuate significantly, but the overallintention of the use of derivative techniques is to reduce volatility of returns.

All details in this document are provided for marketing and information purposes only and should not be misinterpreted as investment advice or taxation advice. This document is not an offer or recommendation to buy or sellshares in the fund. You should not act or rely on this document but should seek independent advice and verification in relation to its contents. Neither Sarasin & Partners LLP nor any other member of Bank J. Safra SarasinLtd. accepts any liability or responsibility whatsoever for any consequential loss of any kind arising out of the use of this document or any part of its contents. The views expressed in this document are those of Sarasin &Partners LLP and these are subject to change without notice.

The index data referenced is the property of third party providers and has been licensed for use by us. Our Third Party Suppliers accept no liability in connection with its use. See our website for a full copy of the indexdisclaimers.

This document does not explain all the risks involved in investing in the fund and therefore you should ensure that you read the prospectus and the Key Investor Information document which contain further informationincluding the applicable risk warnings. The prospectus, the Key Investor Information document as well as the annual and semi-annual reports are available free of charge from www.sarasinandpartners.com or from Sarasin &Partners LLP, Juxon House, 100 St Paul’s Churchyard, London, EC4M 8BU, Telephone +44 (0)20 7038 7000, Telefax +44 (0)20 7038 6850. Telephone calls may be recorded.

Where the data in this document comes partially from third party sources the accuracy, completeness or correctness of the information contained in this publication is not guaranteed, and third party data is provided withoutany warranties of any kind. Sarasin & Partners LLP shall have no liability in connection with third party data.

Persons domiciled in the USA or US nationals are not permitted to hold shares in the fund and shares may not be publicly sold, offered or issued to anyone residing in the USA or to US nationals. This publication is intendedfor investors in the United Kingdom and Republic of Ireland.

© 2019 Sarasin & Partners LLP – all rights reserved. This document can only be distributed or reproduced with permission from Sarasin & Partners LLP. Please contact [email protected].

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mailto:[email protected]


Sarasin & Partners LLP

Juxon House100 St. Paul’s ChurchyardLondon EC4M 8BU

T: +44 (0)20 7038 7000F: +44 (0)20 7038 6850

E: [email protected]

Sarasin Global Listed Real Estate – BCI Global …...21 May 2019 Creating Value in a Global Listed...

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