The multiple challenges of listed real estate · The multiple challenges of listed real estate...
Transcript of 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
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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?
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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
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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
???
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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!)
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Online retail, still in a pioneering phase
6
Any online-only retailers with
management teams with a proven
track record?
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We need physical stores!
7
2006 Kiddicare online only 2013 Kiddicare multi-channel (15 stores)
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But not as many as we currently have!
8
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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
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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
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Good brand = good tenant -> pulls footfall*
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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)
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And they are opening stores
12
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And so is Dutch brand no. 5
13
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Entertainment, no. 1 newcomer
14
Source: Unibail-Rodamco investor presentation at KCM Retail property seminar (Amsterdam, December 2012)
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Malls can become the new town centre
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Stockport (UK), 30% town centre vacancy Manchester Trafford Centre, 0% vacancy
11 miles = 15min drive
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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
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REIT’s staff increasingly focused on tech and marketing
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Technology Marketing / branding
PPR, FNAC, L’Oréal = Retailer / marketing background
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1. Eerste antwoord
2. Tweede antwoord
42
But don’t compete with the retailers!
18
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* 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
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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)
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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
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Q&A
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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.