GCP Asset Backed Income Fund Ltd. · LSE:GABI
GCP Asset Backed Income Fund — VT Gravis UK Listed Property Fund — Investor Presentation (March 2023)
37 slides from GCP Asset Backed Income Fund's investor presentation, March 2023
Slide 1: VT Gravis UK Listed Property Fund
VT GRAVIS UK LISTED PROPERTY FUND March 2023
Slide 2: Contents
CONTENTS 3 The UK property sector 11 Introduction to the Fund 19 Market Themes 25 Current Positioning 30 Appendix 2
Slide 3: The UK property sector
The UK property sector Gravis GRAVIS
Slide 4: Benefits of REITs
BENEFITS OF REITS REITs are structurally suited to provide liquid access to an illiquid asset class. Investment in REITs allows a focus on long term portfolio returns rather than provision of short term liquidity. Real Estate Investment Trusts Open Ended Fund Direct Property Funds Structure LSE list
Slide 5: REITs benefit multi-asset portfolios
REITS BENEFIT MULTI-ASSET PORTFOLIOS REITs “improve a multi-asset portfolio’s risk-return characteristics”*. Allocation to REITS+ 8% 5% 3% REITS Cash Alternatives Equities Fixed Interest Defensive Portfolio Balanced Portfolio Growth Portfolio *‘Listed real estate in a multi-asset portfolio: A Europe
Slide 6: Key themes
KEY THEMES There are five key themes in the real estate sector: ageing population, digitisation, urbanisation, generation rent and changing consumer behaviour. PROPERTY TRENDS Changing Ageing Population Digitalisation Urbanisation Generation Rent Consumer Behaviour Healthcare Alternative Industrial
Slide 7: Case study – ageing population & generation rent
CASE STUDY – AGEING POPULATION & GENERATION RENT Ageing population: GP surgeries ‘Generation Rent’: Purpose Built Student Accommodation • Over 85s visit their GP 13 times on average each year1 • Long term growth drivers: UK demographics, growth in UK 18-year-olds and ageing university estates3 • Num
Slide 8: Case study – digitalisation & urbanisation
CASE STUDY – DIGITALISATION & URBANISATION Digitalisation: E-Commerce Urbanisation: Office Space • Online retailing requires 3x more warehouse space than • High BREEAM ratings increase London office rents by up to traditional retailing 12.3%2 • The pandemic has accelerated the change in consumer • G
Slide 9: Specialist REITs outperform diversified REITs over long term
SPECIALIST REITS OUTPERFORM DIVERSIFIED REITS OVER LONG TERM 10 year annualised return by sector (28.02.13 – 28.02.23)1 20.67% 15.24% 10.62% 7.15% 5.71% 4.49% 2.93% Retail Self Storage Industrial Residential Global Real Healthcare UK Real Estate Diversified Estate Equities Equities -20.47% 12 month
Slide 10: Introduction to The Fund
Introduction to The Fund Gravis GRAVIS
Slide 11: Proven investment process
PROVEN INVESTMENT PROCESS FACTORS DRIVING DISCRETIONARY INVESTMENT DECISIONS FUND ACTIVE MANAGEMENT CONSTRUCTION Ensure diversification & COST Attractive valuation across the UK listed real AWARENESS estate sector through Seeks opportunities to security selection minimise the entry price Inflation h
Slide 12: Fund overview and objectives
FUND OVERVIEW AND OBJECTIVES Objectives Limits within which the Fund is managed Deliver real estate like returns with daily liquidity Minimum of 16 holdings – currently 24 Achieve capital appreciation over market cycles3 Maximum holding 9.5% Cash yield of 4% p.a.4 paid quarterly No shorting of stock
Slide 13: Portfolio construction – liquidity & quality
PORTFOLIO CONSTRUCTION – LIQUIDITY & QUALITY UK Real Estate 80+ Listed Companies >£90bn combined market cap Excluding Retail 70+ Listed Companies >£80bn combined market cap Liquid & Tradable 45+ Listed Companies >£50bn combined market cap >£80mn average daily volume VT Gravis UK Listed Property 20+
Slide 14: Portfolio construction – security selection is key
PORTFOLIO CONSTRUCTION – SECURITY SELECTION IS KEY REITs can be worth much more than the external valuer’s assessment Operating platforms Property valuation Valuers assign underappreciated. is an art. no portfolio premium2. NAVs don’t capture The net asset value (NAV) is NAVs just sum economies of s
Slide 15: Security selection is key – beware of discount traps
SECURITY SELECTION IS KEY – BEWARE OF DISCOUNT TRAPS Good quality REITs trade at a premium Annualised total return over 8 years1 10% 9% Discount dangers - over the past 8 years a 8% portfolio of REITs trading at the largest discount to NAV1 has lost money. Over the 7% same period a portfolio of REIT
Slide 16: Portfolio construction – building a diversified portfolio
PORTFOLIO CONSTRUCTION – BUILDING A DIVERSIFIED PORTFOLIO The Fund invests in multiple REITs, which own or invest in a diversified pool of properties VT GRAVIS UK LISTED PROPERTY FUND Portfolio of REITs & REOCs Primary Health Impact Healthcare Segro Derwent London Unite Group Tritax Big Box Safestor
Slide 17: Attractive development pipelines
ATTRACTIVE DEVELOPMENT PIPELINES Development pipelines deliver superior returns to investors in specialist REITs1 Tritax Symmetry Park, Bicester. First net zero carbon building in construction in the Tritax portfolio, pre-let to DPD Group. EPC Rating: A Development Projects & Targeted Returns Secure
Slide 18: Market Themes
Market Themes Gravis GRAVIS
Slide 19: Climate change risk – REITs own higher quality assets
CLIMATE CHANGE RISK – REITS OWN HIGHER QUALITY ASSETS Government Minimum Energy Efficiency Standards require non-domestic properties to have a minimum EPC rating of B by 2030, with an interim target of EPC C by 2027. The EPC rating of GULP’s underlying assets have improved through time (2019 to 2021
Slide 20: Climate change risk – future proofed portfolio
CLIMATE CHANGE RISK – FUTURE PROOFED PORTFOLIO The energy efficiency of buildings is increasingly important from both an environmental and investment perspective Obsolescence risk is reduced through investing in REITs owning and developing high quality assets England & Wales: 11% EPC A+-B* GULP: 51%
Slide 21: Inflation proofing – income growth and fixed rate debt
INFLATION PROOFING – INCOME GROWTH AND FIXED RATE DEBT Hybrid, 1% Growing Rents c. 36% Inflation-linked or Fixed Uplifts CPI/RPI, 8.5 years – weighted average unexpired 29% Portfolio lease term (WAULT) Leases Open Market, 63% Fixed, 7% Fixed Rate Debt Av. Cost of Av. Debt % Fixed or Loan to Value 72
Slide 22: Inflation proofing – long leases and rent escalators
INFLATION PROOFING – LONG LEASES AND RENT ESCALATORS Lease lengths and rent profiles Portfolio average WAULT 8.5yrs 100% 32% 68% CPI/RPI-linked Income 10% 60% 30% Fixed Uplifts 100% Open Market Income Hybrid 47% 14% 39% 54% 10% 28% 8% 100% 64% 34% 2% 96% 4% 0 5 10 15 20 25 30 Weighted Average Unexpi
Slide 23: Inflation and interest rate risk – rising rates and REITs
INFLATION AND INTEREST RATE RISK – RISING RATES AND REITS Risings rents matter more than rising rates Economic growth typically drives tenant demand Identifying powerful socio-economic trends and investing in best-in-class assets tends to trump rising rates Many high-performing specialist REITs didn
Slide 24: Current Positioning
Current Positioning Gravis GRAVIS
Slide 25: Portfolio exposure and top holdings
PORTFOLIO EXPOSURE AND TOP 10 HOLDINGS Portfolio as at 28 February 2023 Company Holding Sector Breakdown Unite Group PLC 9.16% SEGRO PLC 7.25% Industrial & Logistics 32.3% Grainger PLC 7.10% Housing & Accom 25.6% Healthcare 15.8% Tritax Big Box REIT PLC 7.03% Self storage 13.3% PRS Reit PLC 5.58% Of
Slide 26: Reliable distributions and cost savings
RELIABLE DISTRIBUTIONS AND COST SAVINGS Dividends 2019 + 0.1556p Q1 Q2 2020 3.0501p Q3 Q4 2021 * 3.5129p 2022 3.7404p 0 1 2 3 4 Cost Savings Since inception, the Fund has made savings of 129bps by investing c. £13.2 million across 22 placings Number of participating Date Amount Invested (£m) Saving
Slide 27: Reliable distribution
RELIABLE DISTRIBUTION Driven by strong underlying investments the Fund has declared 9 distributions since inception Company Years of Consecutive Dividend per Share Growth 29 26 12 10 9 8 27
Slide 28: Performance since launch
PERFORMANCE SINCE LAUNCH Performance from 31 October 2019 to 28 February 2023 140 UK IMI Core Real Estate World IMI Core Real Estate 130 VT Gravis UK Listed Property A Acc 120 110 100 90 80 70 60 Oct 19 Mar 20 Aug 20 Jan 21 Jun 21 Nov 21 Apr 22 Sep 22 Feb 23 Returns 1 Month 3 Month 12 Month Since La
Slide 29: Appendix
Gravis GRAVIS
Slide 30: Fund investment team
FUND INVESTMENT TEAM Matthew Norris CFA - Director of Real Estate & Fund Adviser Emma Ballard – Associate Matthew is the lead adviser to the VT Gravis UK Listed Property Fund and Emma is an Associate at Gravis, assisting on VT Gravis UK Listed Property the VT Gravis Digital Infrastructure Income Fun
Slide 31: Key terms
KEY TERMS VT Gravis UK Listed Property Fund Fund Size £96.02m (as at 28 February 2023) Yield (A Inc GBP) 4.29% Share Classes Income & Accumulation / GBP, USD & EURO Minimum Investment £100 Capped fund operating charges* 0.7% Synthetic OCF** 1.29% Launch Date 31/10/2019 Launch Price (31/10/2019) £1 V
Slide 32: Gravis responsible investment
GRAVIS RESPONSIBLE INVESTMENT Gravis’ Commitments • Committed to running operations on a carbon-neutral basis by 2023 • Signatory to the Principles for Responsible Investment since January 2019 • Participant in the UN Global Compact Network • Abide by the UK Stewardship Code 2020 • Working towards a
Slide 33: Platforms and wrappers
PLATFORMS AND WRAPPERS Available on the following platforms Suitable for 7IM Nucleus Direct investors Aegon Old Mutual SIPPs AJ Bell Quilter ISAs Allfunds Pershing Charities Ascentric Raymond James Companies Aviva Sanlam Offshore Bonds Barclays SEI CoFunds Standard Life - Elevate Fidelity Funds Netw
Slide 34: Contact information
CONTACT INFORMATION Investment Manager and Dealing Valu-Trac Investment Management Limited Valu-Trac Dealing 01343 880217 01343 880344 GULP@valu-trac.com Investment Adviser Matthew Norris Fund Adviser, Director of Real 020 3405 8553 matthew.norris@graviscapital.com Estate Securities Distribution Wil
Slide 35: Investment and distribution
INVESTMENT AND DISTRIBUTION Investment Manager Investment Advisor Distribution Valu-Trac Investment Management Ltd. Gravis Advisory Ltd. Gravis Advisory Ltd. i. Valu-Trac Investment Management i. Gravis Advisory Ltd. is owned and i. The team of four consultants has Limited was established as an mana
Slide 36: Important notice
IMPORTANT NOTICE WARNING: The information in this Report is presented by Valu-Trac using all The information provided is "as is" without any express or implied warranty of reasonable skill, care and diligence and has been obtained from or is based on any kind including warranties of merchantability,
Slide 37: Investment ideas for the long run
INVESTMENT IDEAS FOR THE LONG RUN
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