Msci Inc. · NYSE:MSCI
Msci — Investor Presentation (April 2022)
29 slides from Msci's investor presentation, Apr 14, 2022
Slide 1: MSCI South African Annual Real Estate Index
MSCI South African Annual Real Estate Index RESULTS FOR 2021 Eileen Andrew, Vice President 14 April, 2022 © 2021 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document. Information Classification: GENERAL
Slide 2: MSCI Shedding light on investment
MSCI Shedding light on investment 45+ Indexes Analytics ESG Research Real Estate Years in Business • MSCI ACWI Index • Risk Management • MSCI ESG Ratings • MSCI Real Estate • MSCI World Index • Portfolio Construction • MSCI ESG Fund Ratings Enterprise Analytics 3,000+ • MSCI Emerging Markets Index •
Slide 3: Ukrainian War: Potential Direct and Indirect Impacts for Real Estate
Ukrainian War Potential Direct and Indirect Impacts for Real Estate Limited direct impact on global commercial real estate markets because: • Russian capital has very little presence in global commercial property markets: outbound flows have averaged just $330 million per year in the last five years
Slide 4: European Transaction Volumes: Uptick in uncertainty in Q1
European Transaction Volumes Uptick in uncertainty in Q1 Terminated And Pulled Offers As % Completed Deals. Europe. Transactions €5m+. Q1 Data to 29.01.21 Source: RCA Information Classification: GENERAL
Slide 5: Europe: Economic sentiment a good lead indicator for investment volumes
EUROPE: Economic sentiment has been a good lead indicator for investment volumes European CRE Transaction Volumes vs. European Economic Sentiment Indicator. Source: Eurostat. Investment Style Preference Source: Inrev; RCA Information Classification: GENERAL
Slide 6: European Transaction Volumes: Quarterly number on par with Q1'21
EUROPEAN TRANSACTION VOLUMES: Quarterly number on par with Q1’21. CEE slightly up as % Total market European Transaction Volumes into All CRE Split by Theatre. Transactions €5m+ Source: RCA Information Classification: GENERAL
Slide 7: Key themes for South African Real Estate
Key themes for South African Real Estate 1 2 3 Global View South Africa: South Africa: Where does South Africa Direct property Rentals and fit in the global picture? return vacancy What's different about performance What direction are the South Africa? fundamentals going? Are Have returns recovered
Slide 8: Global direct property returns – South Africa at the bottom since COVID
Global direct property returns – South Africa at the bottom of the pile since COVID Source: MSCI Information Classification: GENERAL
Slide 9: European quarterly returns show the large gap between sectors remains
European quarerly returns show the large gap between sectors remains Source: MSCI 9 Information Classification: GENERAL
Slide 10: European cities see office demand decrease
European cities see office demand decrease Source: MSCI Information Classification: GENERAL
Slide 11: Globally, industrial returns spread widens with yield compression
Globally, industrial returns spread widens with yield compression at the top end Net operating income yield per country as at Dec-09, Dec-20 and Dec-21 Source: MSCI BLOG “What Drove 2021 Real Estate Returns? – MSCI” Information Classification: GENERAL
Slide 12: South African asset classes – rebound in listed RE
South African asset classes – rebound in listed RE but direct real estate has been less volatile over longer term Information Classification: GENERAL
Slide 13: MSCI Real Estate South African Universe composition
MSCI Real Estate South African Universe composition Unlevered directly held real estate SECTOR WEIGHTING BY VALUE Hotel, Other, 3% Residentia… 0.4% 40 Retail, 56% 7 Industrial, 15% Office, 21% B N 2,224 properties, valued at R382billion from 26 portfolios 13 Information Classification: GENERAL
Slide 14: Property returns usually follow GDP growth down but lag upturn
Property Returns usually follow GDP growth down but lags upturn until excess supply is absorbed All Property, Standing Investments Absa forecast growt h supply overhang supply overhang demand shock demand shock demand shock Economic Downturn Source: MSCI; absa 14 Information Classification: GENERAL
Slide 15: South Africa: capital return negative, income return recovering
South Africa: capital return still in negative territory but income return recovering to pre-covid levels Standing Investments Source: MSCI 16 Information Classification: GENERAL
Slide 16: South Africa: Decomposing the return on capital
South Africa: Decomposing the return on capital – yields have weakened Source: MSCI Information Classification: GENERAL
Slide 17: South Africa: cap rates, in general, have softened
South Africa: cap rates, in general, have softened Source: MSCI; 18 Information Classification: GENERAL
Slide 18: Sectors returns
Sectors returns Negative capital return across sectors but most severe for offices Standing Investments Source: MSCI 19 Information Classification: GENERAL
Slide 19: 2021 Retail and industrial distribution of returns very similar
2021 Retail and industrial distribution of returns very similar Office underperformed & distribution had a longer negative tail 20 Information Classification: GENERAL
Slide 20: Returns by market segment
Returns by market segment Large retail still under pressure as capital returns are negative Standing Investments Total Return components, Capital Return and Income Return, by market segment fro 2021 15.0 11.2 9.8 10.2 10.0 8.0 7.9 8.4 7.5 6.3 6.2 5.5 4.1 4.7 5.0 0.7 1.0 0.0 1.5 1.0 ( 1.2) ( 0.1) ( 0
Slide 21: Retail distribution shows high performing properties across sectors
Retail distribution shows high performing properties across the sectors but the tails are skewed to the left 23 Information Classification: GENERAL
Slide 22: Net income growth has not yet recovered after COVID
Net income growth has not yet recovered after COVID Same Store Source: MSCI 24 Information Classification: GENERAL
Slide 23: Vacancies consistently lowest for distribution centers
Vacancies consistently lowest for distribution centers while super regionals and office creep up Standing Investments Vacancy as % of GLA 25.0 20.0 15.0 10.0 5.0 0.0 2019 2020 2021 Source: MSCI 25 Information Classification: GENERAL
Slide 24: Rental growth declining further to maintain occupancy
Rental growth declining further to maintain occupancy Same Store Base Rental Growth %, Same-store 15.00 9.87 10.00 6.37 5.00 4.15 3.61 1.04 0.00 -1.45 -0.88 -2.05 -2.92 -2.55 -5.00 -5.06 -6.31 -7.13 -10.00 -10.26 -15.00 2019 2020 2021 Source: MSCI 26 Information Classification: GENERAL
Slide 25: Bad debts generally down but not to pre-covid levels
Bad debts generally down but not to pre-covid levels. Information Classification: GENERAL
Slide 26: Gross cost to income ratios continue to climb
Gross cost to income ratios continue to climb and erode net operating income Same Store 100% 90% 80% Net Operating Income as % of Gross Income 70% 60% 50% 40% 38,8% 40,7% 33,7% 36,0% 30,0% 30% 20% 10% Total Gross Operating costs % of Gross Income 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 27: Summary
Summary • Global property returns, including South Africa, have bounced back to positive levels. However, South African returns are the lowest returns reported for 2021 thus far. • South Africa: – Returns are back to positive and in line with current inflation. Income return is back to pre-covid lev
Slide 28: 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 29: 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