Msci Inc. · NYSE:MSCI
Msci — Investor Presentation (October 2023)
36 slides from Msci's investor presentation, Oct 12, 2023
Slide 1: MSCI South African Real Estate Biannual Index
MSCI South African Real Estate Biannual Index RESULTS TO JUNE 2023 Eileen Andrew 12th October © 2023 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document. Information Classification: GENERAL
Slide 2: MSCI Real Estate South African Universe
MSCI Real Estate South African Universe Unlevered, directly held real estate 4 0 7 B N Information Classification: GENERAL 2
Slide 3: MSCI South African Bi-Annual Index for June 2023
MSCI South African Bi-Annual Index for June 2023 2008 INDEX INCEPTION DATE 2023 BIANNUAL RETURNS (%) 25 NUMBER OF PORTFOLIOS 1 837 NUMBER OF ASSETS All assets 367,4 UNIVERSE CAPITAL VALUE 3,5 58% MSCI COVERAGE 3% Non-operating investments Standing investments 12% -0,4 3,6 5% Retail Office 20% 59% In
Slide 4: UK returns have seen an improvement, but valuations are still negative
UK returns have seen an improvement, but valuations are still negative Source: MSCI Information Classification: GENERAL
Slide 5: MSCI Pan-European index showed an improvement in 2023 but valuations are negative
MSCI Pan-European index showed an improvement in 2023 but valuations are negative Source: MSCI Information Classification: GENERAL
Slide 6: US returns also shows an improvement in 2023 but valuations are negative
US returns also shows an improvement in 2023 but valuations are negative Source: MSCI Information Classification: GENERAL
Slide 7: South Africa faces its own set of challenges
South Africa faces it’s own set of challenges Source: Killien Ndlovu Information Classification: GENERAL
Slide 8: Total Return tracks GDP growth, 2023 is no different
Total Return tracks GDP growth, 2023 is no different Source: MSCI South Africa Annual dataset; *MSCI South African Biannual dataset Information Classification: GENERAL
Slide 9: Capital declined in June 2023 but income return remained constant
Capital declined in June 2023 but income return remained constant underpinning the return Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 10: Industrial sector provided the best returns, offices at the bottom
Industrial sector provided the best returns, offices at the bottom of the pile Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 11: 2022 Annual returns by sector - positive capital growth
2022 Annual returns by sector - positive capital growth Source: MSCI Information Classification: GENERAL
Slide 12: HY returns by sector – capital growth slowing across sectors
HY returns by sector – capital growth slowing across sectors Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 13: Income Return has improved for industrial and residential but declined for retail and office
Income Return has improved for industrial and residential but declined for retail and office over the last 6 years Standing investments Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 14: Capital values have declined over the last 5 years across all sectors
Capital values have declined over the last 5 years across all sectors Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 15: Spreads show that not all assets deliver the same returns
Spreads show that not all assets deliver the same returns Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 16: HY Returns by property type
HY Returns by property type – mid-size retail lower capital growth, offices capital growth declined; all industrials showing growth Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 17: Spread of returns has widened in Super Regionals
Spread of returns has widened in Super Regionals Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 18: Simplistic Valuation Methodology
Simplistic Valuation Methodology Discount Rate Discount Rate = - Income Growth Income Growth Assumptions Assumptions OR + = Cap Rate Cap Rate Information Classification: GENERAL
Slide 19: All Property valuations assumptions
All Property valuations assumptions 2018 2023 13,5 Discount Rate 12,7 = Discount Rate = 5,6 Income Growth 4,5 Income Growth Assumptions Assumptions OR + + 7,9 Cap Rate 8,2 Cap Rate Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 20: Capitalization rates show marginal movement
Capitalization rates show marginal movement Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 21: Valuer net income assumptions have declined overall but retail picked up
Valuer net income assumptions have declined overall but retail picked up in 2022/2023 Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 22: All Property Net Income improving – pulled up by industrial
All Property Net Income improving – pulled up be industrial Source: MSCI South Africa Annual dataset; *MSCI South African Biannual dataset Same Store Information Classification: GENERAL
Slide 23: Vacancies have improved resulting in growing base rental income
Vacancies have improved resulting in growing base rental income – but not in real terms Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 24: Total cost of occupation for tenants has increased more slowly than inflation
Total cost of occupation for tenants has increased more slowly than inflation 6,2% 4,0% Same Store Source: MSCI; Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 25: Total cost of occupation by sector growth was below inflation
Total cost of occupation by sector growth was below inflation in the 6 months Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 26: Annualised trading density growth slowed to 8.6% y/y
Annualised trading density growth slowed to 8.6% y/y but still higher than inflation Source: MSCI Retail Benchmarking Information Classification: GENERAL
Slide 27: Adjusting for inflation shows spend directed towards non-discretionary categories
Adjusting for inflation shows spend is directed towards non- discretionary tenant categories Source: MSCI Retail Benchmarking Information Classification: GENERAL
Slide 28: Costs as % of Total Gross Income has remained stable
Costs as % of Total Gross Income has remained stable Same Store Source: MSCI South Africa Annual dataset; *MSCI South African Biannual dataset Information Classification: GENERAL
Slide 29: By Sector, costs as % of total gross income were flat
By Sector, costs as % of total gross income has were flat 48,6 44,5 42,8 34,6 June 2023* Source: MSCI South Africa Annual dataset; *MSCI South African Biannual dataset; * 6 monthly average to June 2023 Information Classification: GENERAL
Slide 30: Operating costs are growing more slowly than before for retail and industrial
Operating costs are growing more slowly than before for retail and industrial, not for offices Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 31: Retail: Costs grew by 3,2% - Rates and R&M
Retail: Costs grew by 3,2% - Rates and R&M (incl. diesel) Source: MSCI South African Biannual dataset Information Classification: GENERAL
Slide 32: Loadshedding may be why we are spending less on electricity but more on diesel
Loadshedding may be why we are spending less on electricity but more on diesel – not seeing the impact of solar solutions yet Information Classification: GENERAL
Slide 33: Summary
Summary Capital growth movement 3,6% Total Return for the is negative 6-months to June 2023 Income Return remained constant Cap rates saw marginal upward movements over the last 5 years, reduced capital values are a factor of reduced market income assumptions Net Income increased but Costs are have
Slide 34: Discussion
Discussion 34 Information Classification: GENERAL
Slide 35: About MSCI
About MSCI MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and retu
Slide 36: Notice and disclaimer
Notice and disclaimer This document and all of the information contained in it, including without limitation all text, data, graphs, charts (collectively, the “Information”) is the property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or