Land Securities Group Plc · LSE:LAND
Land Securities — Non-Deal Roadshow (2007)
21 slides from Land Securities's roadshow presentation, 2007
Slide 1: UK Real Estate Investment Trusts – REITA Advisor Roadshows
UK Real Estate Investment Trusts REITA Advisor Roadshows Francis Salway, Group Chief Executive Spring 2007
Slide 2: Direct property
Direct property Pros Cons Security of asset backing Indivisibility of assets Long term contracts or leases Lack of liquidity – time and cost Typically upwards only rent of selling reviews Supply constraints on land and planning consents in UK Attractive return profile: high income yiel
Slide 3: REITs
REITs REITs are a quoted companies that own and manage income- producing property At least 90% of taxable income is distributed to shareholders through dividends Companies are largely exempt from corporation tax and capital gains tax REITs offer investors income and capital appreciation from
Slide 4: The UK REIT era
The UK REIT era Gearing restrictions debt equity Market Market 9 No of Cap Cap companies £bn % Total Real Estate 45 49.3 100 Development Sector activity Companies 9 converted to REIT 9 33.4 68 status on Jan 1 All companies announcing that they 14 37.3 76 Alternative intend to convert to business mod
Slide 5: The listed UK REIT companies
The listed UK REIT companies Market cap Portfolio Company name £bn size £bn Land Securities 10.0 15.0 British Land 8.0 15.9 Liberty International 4.6 7.1 Hammerson plc 4.2 6.3 Slough Estates 3.2 5.1 Brixton 1.4 1.9 Great Portland 1.1 1.4 Workspace 0.8 0.9 Primary Health Properties 0.1 0.1 Total mark
Slide 6: Growth of REITs: USA and Australia
Growth of REITs: USA and Australia Market Capitalisation US$ Market Capitalisation US$ 350 80 300 70 60 250 50 200 40 15 0 30 10 0 20 50 10 0 0 US REITs Australian LPTs Source: UBS Attractive income yield, capital growth and liquidity
Slide 7: The Global Real Estate Universe
The Global Real Estate Universe Countries Real Estate Total Listed ($ Listed as % of Stock Market Listed RE as % ($bn) bn) Total RE ($bn) of Stock Mkt United States 5,290 525 9.93% 16,075 3.27% Japan 1,999 116 5.81% 4,787 2.43% Germany 1,187 8 0.64% 1,502 0.51% United Kingdom 1,147 63 5.51% 3,477 1.
Slide 8: New shareholder base I – UK private shareholders
New shareholder base I – UK private shareholders % of share register (by value) represented by retail investors US Australia Japan Singapore UK 0 10 20 30 40 50 60 Broader equities REITs REITs (including investment via REIT Securities Fund) Source : Thomson Financial DataStream and UBS estimates (No
Slide 9: New shareholder base II – overseas funds
New shareholder base II – overseas funds Will global real estate investment funds experience a significant increase in allocations over the next 2 years? 6% 7% “50/50 split expected Yes between listed vehicles Undecided and direct property for No overseas investment” 88% Source: UBS 2006 Global Real
Slide 10: Liquidity vs volatility
Liquidity vs volatility
Slide 11: Land Securities - valuation
Land Securities - valuation Share price/market capitalisation and NAV 10,000 Market Cap, £million 9,000 NAV, £million 8,000 market cap versus NAV, £million 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Dec-86 Dec-96 Dec-79 Dec-89 Dec-99 Dec-83 Dec-93 Dec-03 Dec-97 Dec-87 Dec-81 Dec-91 Dec-01 Dec-82 De
Slide 12: Volatility – REITs & listed property companies
rolling five year beta, % 0.8 0.0 1.0 0.4 0.2 0.6 Sep-77 Sep-78 Sep-79 Sep-80 Sep-81 Source: UBS, Land Securities Sep-82 Sep-83 Sep-84 Sep-85 Sep-86 Sep-87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94 Sep-95 REITs less volatile than the general equity universe Sep-96 Sep-97 Sep-98 Sep-99 Sep-00
Slide 13: Liquidity risk
Liquidity risk Direct property vs open-ended property funds Taking a small risk daily … or a substantial risk once a decade
Slide 14: Illiquidity of property
Illiquidity of property 1990 2005 Isolated issues Crisis UK PUTs German open-ended funds The perils of offering investors more liquidity than there is in the underlying asset
Slide 15: Money into German open-ended funds
inflow / outflow, €million -5,000 -4,000 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 Jan-03 Source: BVI, UBS Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 Real evidence of liquidity risk May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Money into German open-ended funds Ja
Slide 16: AREF – rolling 12 month turnover in units
turnover, % capital value 0 10 20 5 15 25 Source: AREF Q1 1999 Q2 1999 Q3 1999 Q4 1999 Q1 2000 Sales Q2 2000 Q3 2000 Purchases Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 AREF – rolling 12 month turnover in u
Slide 17: Current pricing of property
Current pricing of property
Slide 18: Asset class yields
Asset class yields FTSE Gilts 5-15 years redemption yield 14 IPD Equivalent Yield 12 IPD Initial Yield FTSE All Share Dividend Yield 10 yield - % 8 6 4 2 0 Sep-87 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sour
Slide 19: All UK property – rental value vs income growth
All UK property – rental value vs income growth Rolling 12 month charge % pa 30 Rental Value Growth 25 Gross Income Growth 20 15 10 5 0 -5 -10 -15 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Source: IPD,
Slide 20: Property performance
Property performance Years to 31 March, total return 80% UK Property Unit Trust UK commercial property 60% UK property shares Global Property Shares 40% 20% 0% -20% -40% 2003 2004 2005 2006 2007 5 yr annualised Source: Manager’s website (UK PUT), IPD (for UK direct), EPRA (for property shares), Bloo
Slide 21: UK REITs
UK REITs ‘Democratisation of property’