CBRE Group Inc · NYSE:CBRE
CBRE — Investor Presentation (December 2020)
22 slides from CBRE's investor presentation, December 2020
Slide 1: CBRE PBSA Index: Ten Years of Strong Performance
December 2020 CBRE PBSA INDEX: TEN YEARS OF STRONG PERFORMANCE CBRE PBSA INDEX 2020
Slide 2: The CBRE PBSA Index: What Are We Measuring?
THE CBRE PBSA INDEX: WHAT ARE WE MEASURING? After excluding assets that have seen significant capex or have been transacted, the Index sample for Sep-20 climbed to 209 assets valued at £6.8bn (from 193 valued at £6.0bn a year earlier). This covers roughly 58,000 beds. Only “operational” assets are i
Slide 3: Ten Years of PBSA Performance: The Headlines
TEN YEARS OF PBSA PERFORMANCE: THE HEADLINES With total return On a risk- The long term Some assets that PBSA has out- of 4.9%, PBSA adjusted basis, trend of London were more reliant performed the all was the best- PBSA returns are and Super Prime on international property average, performing asset
Slide 4: Headline Performance
HEADLINE PERFORMANCE PBSA VERSUS MAINSTREAM REAL ESTATE
Slide 5: Total Return, PBSA versus Mainstream, Sep-2010 to Sep-2020
TOTAL RETURN, PBSA VERSUS MAINSTREAM, SEP-2010 TO SEP-2020 PBSA was the best-performing market in the year to September 2020, and has outperformed the Mainstream market as a whole and Retail and Office specifically over one, five and ten years. Only Industrial has out-performed over the longer time
Slide 6: Volatility and Correlation of Total Return, PBSA versus Mainstream
VOLATILITY AND CORRELATION OF TOTAL RETURN, PBSA VERSUS MAINSTREAM, SEP- 2010 TO SEP-2020 Given much lower volatility of returns, PBSA has produced risk-adjusted returns roughly three times as high as the Mainstream market and twice as high as the closest sector (Industrial). PBSA also offers a degr
Slide 7: Capital Growth, PBSA versus Mainstream, Sep-2010 to Sep-2020
CAPITAL GROWTH, PBSA VERSUS MAINSTREAM, SEP-2010 TO SEP-2020 PBSA saw the smallest decline in values in the year to September 2020, and has outperformed the Mainstream market as a whole and Retail and Office specifically over one, five and ten years. Only Industrial has out-performed over the longer
Slide 8: Rental Growth, PBSA versus Mainstream, Sep-2010 to Sep-2020
RENTAL GROWTH, PBSA VERSUS MAINSTREAM, SEP-2010 TO SEP-2020 PBSA rental growth has outperformed the Mainstream market as a whole and Retail and Office specifically over one, five and ten years. Only Industrial has out-performed over five years (but not ten). It has almost zero correlation with Mains
Slide 9: Yield Movement, PBSA versus Mainstream, Sep-2010 to Sep-2020
YIELD MOVEMENT, PBSA VERSUS MAINSTREAM, SEP-2010 TO SEP-2020 PBSA’s yield gap over the basket of Mainstream sectors held at around +50bps from 2010-2018 but the last two years have seen it shrink to -20bps in 2020. Within PBSA, yields have compressed in London and Super Prime and Prime Regional over
Slide 10: Detailed Performance
DETAILED PERFORMANCE RELATIVE PERFORMANCE WITHIN PBSA
Slide 11: PBSA Performance, by Number of Beds
PBSA PERFORMANCE, BY NUMBER OF BEDS Total returns for larger PBSA assets (500+ beds) were lower than small to medium-sized assets in the year to September 2020. Over the long term, performance has improved with size, with 500+ beds assets out-performing slightly. Performance by Number of Beds Rental
Slide 12: PBSA Performance, London and Regional
PBSA PERFORMANCE, LONDON AND REGIONAL London PBSA has out-performed Regional PBSA by c2%pa in the short, medium and long-term. Rental growth in London has been strongest over ten years, but not over one and five. The yield gap has widened from under 50bps in Sep-12 to over 150bps in Sep-20. Performa
Slide 13: PBSA Performance, Regional by Quality
PBSA PERFORMANCE, REGIONAL BY QUALITY Outside of London, PBSA returns have been notably weaker in Secondary locations, under-performing by 3.5%pa over ten years and c7% over one and five years. This is driven by both weaker rental growth and rising yields over the last five years. Performance by Reg
Slide 14: PBSA Performance, Applications to Town
PBSA PERFORMANCE, APPLICATIONS TO TOWN There is a clear pattern of performance whereby towns seeing an increase in student application numbers have out-performed over one, five and ten years. Stronger rental growth has underpinned this, but of late a yield gap has also opened up. Performance by Town
Slide 15: Asset Level Capital Growth
ASSET LEVEL CAPITAL GROWTH More PBSA assets saw values fall than rise in the year to Sep-20, with a tail of 10% of assets seeing values decline by more than -10%. London and Super Prime Regional assets offered greater resilience against downside at the asset level. Asset Level Capital Growth Distrib
Slide 16: Characteristics of Assets Ranked by Capital Growth, Year to Sep-2020
CHARACTERISTICS OF ASSETS RANKED BY CAPITAL GROWTH, YEAR TO SEP -2020 When ranking assets by capital growth, there is a clear tendency for certain characteristics (e.g. London, Applications Up) to appear towards the top and for others (Prime Regional, secondary, Applications Down) towards the bottom
Slide 17: PBSA Occupancy 2019/20 and 2020/21, Reliance on International Students
PBSA OCCUPANCY 2019/20 AND 2020/21, RELIANCE ON INTERNATIONAL STUDEN TS Although (for the subset of the sample for which we have data) 2020/21 occupancy is at or above 95% for a majority of assets, a number have seen occupancy fall below 85%, with many of these having been more reliant on internatio
Slide 18: Asset Characteristics
ASSET CHARACTERISTICS INCOME, COSTS AND VALUE PER BED
Slide 19: PBSA Operating Statistics, September 2020
PBSA OPERATING STATISTICS, SEPTEMBER 2020 Costs show far less variation than gross income; accordingly net income per bed averages 2.5x higher in London than in secondary assets. With yields also starkly differentiated, average London value per bed is over 5.0x higher than for secondary assets. Inco
Slide 20: Ten Years of PBSA Performance: The Headlines
TEN YEARS OF PBSA PERFORMANCE: THE HEADLINES With total return On a risk- The long term Some assets that PBSA has out- of 4.9%, PBSA adjusted basis, trend of London were more reliant performed the all was the best- PBSA returns are and Super Prime on international property average, performing asset
Slide 21: Ten Years of PBSA Performance: The Data
TEN YEARS OF PBSA PERFORMANCE: THE DATA Unique, ten year data set of operational PBSA Contact us real estate performance. Emily Gornall Senior Analyst, UK Research Full range of performance measures, including emily.gornall@cbre.com gross and net rental growth and yield movement. Dominic Smith Senio
Slide 22: Disclaimers and Waivers
DISCLAIMERS AND WAIVERS This presentation has been prepared in good faith based on CBRE’s current views of the commercial real-estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies,