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PROPERTY INVESTMENT VEHICLES

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PROPERTY INVESTMENT VEHICLES Powered By Docstoc
					          Global Property Forum
              Global Property Benchmarks

               16 September 2010
                 Ken Atchison

  ATCHISON
CONSULTANTS
Benchmarks
   Property index       - Listed Property
                         - Unlisted Property
                         - Composite
   Absolute return      - Real
                         - Total
   Income target
   Government bond yield + margin
                         = Property risk premium
   Peer Group
  ATCHISON
CONSULTANTS
                                                   2
Purpose of an Index

   Characteristics of an asset class
   Investment universe available to investors
   Benchmark for performance measurement
   Basis for a futures contract or ETF
   Does not dictate investment




  ATCHISON
CONSULTANTS
                                                 3
Sound Index Construction
   Appropriate to purpose
   Rules for construction are sound
   Investible in the market
   Comprehensive coverage
   Measurable on a frequent basis
   Transparency of construction
   Consistent in treatment of capital and income


  ATCHISON
CONSULTANTS
                                                    4
Global Property Benchmark
     31 December 1984 to 31 December 2009
     Measured annually
     Currently 24 advanced economies
     Representation of 85-98% of advanced economies
     Country indices used, or rental and capital returns
     Countries re-weighted by GDP every 5 years
     AUD, USD, Japanese Yen, Local (hedged)
     Includes all major property types
       (office, retail, industrial, residential)
     Benchmark available excluding home country


  ATCHISON
CONSULTANTS
                                                            5
Returns and Volatility of Returns
Hedged
             1 Year to   5 Years to   10 Years to   15 Years to   25 Years to
             Dec 2009    Dec 2009      Dec 2009      Dec 2009      Dec 2009
                           (p.a.)        (p.a.)        (p.a.)        (p.a.)
Return        (7.9%)       4.7%         6.0%           6.1%          6.4%

Volatility                10.0%         7.1%           5.8%          6.3%

Unhedged
             1 Year to   5 Years to   10 Years to   15 Years to   25 Years to
             Dec 2009    Dec 2009      Dec 2009      Dec 2009      Dec 2009
                           (p.a.)        (p.a.)        (p.a.)        (p.a.)
Return       (25.2%)       2.8%         4.5%           6.0%          8.1%

Volatility                16.9%         14.1%         13.0%         14.6%


  ATCHISON
CONSULTANTS                                                                 6
Correlation of Returns
- 5 Years to Dec 2009
                                    Global Property (Unhedged)
Australian Equities                           (0.46)
Overseas Equities (unhedged)                  (0.16)
Australian Direct Property                     0.44
Australian Listed Property                    (0.27)
Global Listed Property (unhedged)             (0.15)
Australian Fixed Interest                      0.36
Overseas Fixed Interest (hedged)               0.26
Australian Cash                                0.90

  ATCHISON
CONSULTANTS                                                      7
Correlation of Returns
- 5 Years to Dec 2009
                                    Global Property (Hedged)
Australian Equities                           0.22

Overseas Equities (unhedged)                  0.36
Australian Direct Property                    0.89

Australian Listed Property                    0.23
Global Listed Property (unhedged)             0.17
Australian Fixed Interest                    (0.17)
Overseas Fixed Interest (hedged)             (0.08)
Australian Cash                               0.39

  ATCHISON
CONSULTANTS
                                                               8
Size of the global property
marketplace
                                   2008 GDP             2008 Real Estate

                          ($ Bn)               (%)    ($ Bn)          (%)

North America             14,349              30.5    6,457          33.5

Europe                    17,579              37.3    7,815          40.6

Asia Pacific (ex Aust.)   10,989              23.3    3,663          19.0

Australia                  741                 1.6     333            1.7

Rest of World             3,448                7.3    1,002           5.2

TOTAL                     47,106              100.0   19,270        100.0

  ATCHISON
CONSULTANTS
                                                                            9
Global Property Asset Type

                                         Other, 5%


                      Residential, 10%




                                                         Office, 35%




         Industrial, 17%




                                           Retail, 33%




  ATCHISON
CONSULTANTS
                                                                       10
Property as an Asset Class
   Regular income streams via rent
   Growth in capital value
   Gearing and development
   Appraised based valuations
   Low correlations with other major asset classes
   Risk between fixed interest and equities


  ATCHISON
CONSULTANTS
                                                      11
Sources of Value Add
   Sector structure
   Geography
   Financial structure in particular gearing
   Development activity on the portfolio
   Management skill
   Tracking Error
   Fees – performance fee

  ATCHISON
CONSULTANTS
                                                12
Comparison of Overseas Investments
                                  Global Investments within a Diversified Growth Portfolio
       8.5%



                                               50%
                                                                                      50%
                                     40%                                 40%
       8.0%                                    30%          20%
                                                                                10%                      0%



                                                                                                   30%
                                                                                      10%                  40%
       7.5%
                                                                                                                              50%
    Return




                                                                  20%

       7.0%

                                               30%


                                                                                                     Global Listed Property
       6.5%                40%                                                                       Global Shares
                                                                                                     Global Fixed Interest
                                                                                                     Global Direct Property

                  50%
       6.0%
           4.0%     4.5%   5.0%         5.5%         6.0%         6.5%         7.0%         7.5%    8.0%          8.5%              9.0%
                                                              Volatility



  ATCHISON
CONSULTANTS
                                                                                                                                           13
Gearing a Portfolio
                                                    Effect of Increasing Gearing on Property
                                                      Forecast Analysis including Income

                  80%




                  60%




                  40%
  Return (p.a.)




                  20%




                   0%




                  -20%




                  -40%
                         0%   10%           20%              30%         40%              50%        60%          70%   80%
                                                                     Gearing level

                                    Geared Property Return Range    Geared Property Mean Return   Income return


  ATCHISON
CONSULTANTS                                                                                                                   14
Impact of Currency
         Impact of Currency on Global Direct Property Returns
60.0%

50.0%                                                           Hedged

40.0%                                                           Unhedged

30.0%

20.0%

10.0%

 0.0%

-10.0%

-20.0%

-30.0%
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  ATCHISON
CONSULTANTS                                                                15
Conclusions
   Characteristics of asset class - bonds plus
                                  - real return
   Investment universe available - index
   Benchmark to measure performance - peers
   Tracking error




  ATCHISON
CONSULTANTS
                                                  16
  Disclosures, licence and contact details
STATEMENT OF ANALYST INTEREST AND CERTIFICATION, WARNING AND DISCLOSURE
Analyst Interest and Certification:
      The Analyst(s) may hold an investment in any products discussed in this presentation. Atchison Consultants does not consider such holdings to be sufficiently
      material to compromise the information presented. The Analyst(s) certifies that with respect to content covered: (1) all of the views expressed accurately
      reflect his or her personal views; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or
      views expressed by that research analyst in this presentation.

Warning (General Advice Only):
     This presentation contains recommendations and advice of a general nature and does not have regard to the particular circumstances or needs of any
     specific person who may read it. Investors should assess either personally or with the assistance of a licensed financial adviser whether the Atchison
     Consultants recommendation or advice is appropriate to their situation before making an investment decision. The information contained in the report is
     believed to be reliable, but its completeness and accuracy is not guaranteed. Opinions expressed may change without notice. Atchison Consultants does not
     accept any liability, whether direct or indirect arising from the use of information contained in this report. No part of this presentation is to be construed as a
     solicitation to buy or sell any investment. Atchison Consultants does not accept any responsibility to inform you of any matter that subsequently comes to its
     notice, which may affect any of the information contained in this presentation. The performance of any investment in this presentation is not a representation
     as to future performance or likely return.

Disclosure (Commissioned Research):
      Atchison Consultants may or may not have received a fixed fee and/or travel expenses for the presentation and or presentation material. Atchison
      Consultants has no direct or indirect interest in the success or otherwise of any investments referred to in this presentation.

ATCHISON CONSULTANTS
     Atchison Consultants was established in 2001 by Ken Atchison and consists of a team of investment professionals with extensive experience in all aspects of
     financial markets. The principal focus of the business is the provision of advice and analysis across all components of managing investment portfolios by
     financial institutions, superannuation and insurance funds and investment managers. Primarily this involves property, or real estate, investments and related
     mortgage investments. Atchison Consultants’ services and capabilities cover two distinct areas being asset consulting and investment management
     consulting, with a focus on the property asset class.

Licence
       TAG Asset Consulting Group Pty Ltd (ABN 58 097 703 047), trading as Atchison Consultants, is the holder of Australian Financial Services Licence Number
       230846.
Contact Details
Atchison Consultants


                                                                                                                             ATCHISON
Address:                          Level 3, 155 Queen Street, Melbourne, Victoria 3000
Phone:                            03 9642 3835
Mobile:                           0425 754 731


                                                                                                                           CONSULTANTS
Fax:                              03 9642 8886
Email:                            ken@atchison.com.au
Website:                          www.atchison.com.au

                                                                                                                                                                    17

				
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