AEW Global Focused Real Estate Fund Class C · NASDAQ:NRCFX

AEW Global Focused Real Estate Fund Class C — AEW Capital Management — Public vs Private Real Estate Webinar June 2018

16 slides from AEW Global Focused Real Estate Fund Class C's conference presentation, June 2018

  1. Slide 1: This material is intended for information purposes only. It does not constitute investment advice

    This material is intended for information purposes only. It does not constitute investment advice or a recommendation. The information and opinions presented in this material have been prepared internally and/or obtained from sources which AEW believes to be reliable, however AEW does not guarantee

  2. Slide 2: AEW Real Estate Securities Relative Value Index

    AEW REAL ESTATE SECURITIES RELATIVE VALUE INDEX HISTORICAL AVERAGE: 2.3% premium to NAV 117 bps to UST, (120) bps to BBB 1.16x ratio S&P 500 P/E to REIT 2.5 P/AFFO REITs are 9.8% expensive 2.0 4.0% 4/10 relative 5/18: 8.4% 1/07 to stocks, 7.0% discount to NAV 1.5 Spreads: 149 to UST, (37) to BBB 9/9

  3. Slide 3: REIT Premium/Discount to NAV

    REIT PREMIUM/DISCOUNT TO NAV 40%  There have been 30 M&A deals totaling $63B 30%  announced Most traditional or institutional completed property over one- types year trading ending at 6/26/18, up PREMIUM 20% discounts from to underlying 22 deals totaling NAV in the $35B public market prior one- 10

  4. Slide 4: Relative Yields During the Modern REIT Era

    RELATIVE YIELDS DURING THE MODERN REIT ERA  There have been 30 12%  M&A REIT deals dividend yields totaling $63B briefly surpassed announced or Moody’s BAA completed overyields in 1-year 10% February before up thefrom ending 6/26/18, sector 22 rallied; deals they totaling $35B remain in tighter th

  5. Slide 5: Multiple Comparison

    MULTIPLE COMPARISON REITS vs. General Equities 30  Since 2011, REIT multiples have been flat to down slightly while 25 stock multiples have trended up 20  REIT multiples may never look as discounted relative to 15 other stocks as they did in the tech bubble era 10 5 1994 1995 1996 1997 1998 1999 2

  6. Slide 6: REIT Premium/Discount to NAV by Sector

    REIT PREMIUM/DISCOUNT TO NAV BY SECTOR Manufactured Homes Net Lease  Most traditional institutional property Data Center types trading at Self Storage RESEARCH discounts to underlying Adrienne D. Ortyl NAV in public market Hotel 19 years of experience 14 years at AEW Industrial Lab Space Health Car

  7. Slide 7: Direct Property = Treasuries, Listed = BAA

    DIRECT PROPERTY = TREASURIES, LISTED = BAA CASH YIELDS, FOUR QUARTER MOVING AVERAGES 9.0%  Listed property yields now 8.0% comparable to Baa bonds 7.0% RESEARCH Adrienne D. Ortyl 19 years of experience 6.0% 14 years at AEW  Direct property 5.0% cash yields now comparable to 4.0% Treasuries 3.0% 2.

  8. Slide 8: Strongest NOI Growth of the Cycle Is Behind Us

    STRONGEST NOI GROWTH OF THE CYCLE IS BEHIND US ANNUAL NOI GROWTH 14.0%  Positive but slower NOI growth expected over 12.0% the next two-to-three years 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% REIT - Major Sectors NPI - Private Direct Real Estate Source: NCREIF, Green Street Focused on the F

  9. Slide 9: Public Market vs Private Market: Apartment

    PUBLIC MARKET VS PRIVATE MARKET NOI GROWTH AND CAP RATES Apartment NOI Growth Apartment Cap Rate  Cap rate spread 15.0% 10.00% between listed and direct markets roughly 9.00% RESEARCH at average for the past 10.0% 8.00% Adrienne D. Ortyl two decades 19 years of experience 14 years at AEW 7.00% 5.0%

  10. Slide 10: Public Market vs Private Market: Industrial

    PUBLIC MARKET VS PRIVATE MARKET NOI GROWTH AND CAP RATES Industrial NOI Growth Industrial Cap Rates  Comparable industrial 10.0% 11.00% property pricing in 10.00% both markets 8.0% RESEARCH 9.00% 6.0% Adrienne D. Ortyl 19 years of experience 8.00% 4.0% 14 years at AEW 7.00% 2.0% 6.00% 0.0% 5.00% -2

  11. Slide 11: Public Market vs Private Market: Office

    PUBLIC MARKET VS PRIVATE MARKET NOI GROWTH AND CAP RATES Office NOI Growth Office Cap Rate  Office property cap 20.0% 10.00% rates nearing 6% in public market 9.00% RESEARCH 15.0% 8.00% Adrienne D. Ortyl 19 years of experience 7.00% 14 years at AEW 10.0% 6.00% 5.0% 5.00% 4.00% 0.0% 3.00% 2.00% -5.0

  12. Slide 12: Public Market vs Private Market: Shopping Center

    PUBLIC MARKET VS PRIVATE MARKET NOI GROWTH AND CAP RATES Shopping Center NOI Growth Shopping Center Cap Rates  Shopping centers 8.0% 12.00% trading at large discount to NAV in 6.0% listed market 10.00% RESEARCH Adrienne D. Ortyl 19 years of experience 4.0% 14 years at AEW 8.00% 2.0% 6.00% 0.0% 4.00

  13. Slide 13: Public Market vs Private Market: Mall

    PUBLIC MARKET VS PRIVATE MARKET NOI GROWTH AND CAP RATES Mall NOI Growth Mall Cap Rates  Mall NOI growth 10.0% 10.00% holding up better in 9.0% REIT-owned properties 9.00% 8.0% RESEARCH 8.00% Adrienne D. Ortyl 7.0% 19 years of experience 6.0% 7.00% 14 years at AEW 5.0% 6.00% 4.0% 5.00% 3.0% 2.0% 4.

  14. Slide 14: Conclusions

    CONCLUSIONS  U.S. REITs are attractively valued relative to other yield assets and direct property  Traditional institutional property types least favored in public market  Implied property cap rates from current REIT valuations much higher than private market  History suggests that public marke

  15. Slide 15: Questions?

    QUESTIONS? Please feel free to contact Mike, Russ or Caroline regarding any of the information contained herein michael.acton@aew.com or 617.261.9577 russ.devlin@aew.com or 617.261.9221 caroline.clapp@aew.com or 617.261.9289 Michael J. Acton, CFA, is Director of Research for AEW Capital Management,

  16. Slide 16: AEW office locations

    BOSTON LOS ANGELES LONDON PARIS DÜSSELDORF HONG KONG SINGAPORE SYDNEY | AEW.COM

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