2021 Market Prospects and Sustainable Financial disclosure - Joint Investor Event from the Real Estate Investors Forum, PropertyMatch and AREF ...
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2021 Market Prospects and Sustainable Financial disclosure
Joint Investor Event from the Real Estate Investors Forum,
PropertyMatch and AREF
Thursday 7th January 2021
Moderator Welcome Melville Rodrigues Fund Services at Ocorian
Agenda for today
09.15 Webinar start
09.15 Welcome – Melville Rodrigues, Ocorian
09.20 Presentation from Ruth Hollies, CBRE Ltd
‘2021 market forecast, relevant to indirect real estate investors’
09.40 Presentation from Sasha Njagulj, CBRE Global Investors
‘How should investors address Sustainable Financial Disclosure
challenges?’
09.55 Final discussion and closing remarks from Melville Rodrigues
10.00 Close
Speakers
Sasha Njagulj, Ruth Hollies,
Global Head of ESG Head of European
CBRE Global Investors Forecasting
CBRE Ltd
Presentation
Ruth Hollies, Head of European Forecasting
CBRE LtdA TIME OF CHANGE ….AND MORE TO COME IN THE LONGER TERM
• Forecasts assumptions
• economy
• interest rates
• risk
• Sector outlooks – office, retail, residential &
industrial
• Comparison and conclusionUK GDP OUTLOOK USED IN NOVEMBER FORECASTS
Largest fall in activity in Q2
20 110
Bounce-back in Q3
15
105
Second lockdown Q4
10
100
5 Conditional on:
GDP level (2019q1=100)
95
per cent per quarter
0 • Lockdown 2.0 not being as
90 damaging to the economy
•
-5
Government support measures
85
being effective
-10
80 • Vaccine rollout
-15
Annual fall in GDP of 11.4% in 2020
75
-20 with a bounce to 5.6% in 2021
-25 70
Lockdown 3.0 will see 2021 output
2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2 2022Q3 revised down to circa 3%
Source: Oxford Economics, Macrobond, CBRELONG RATE (RISK FREE) AND ALL PROPERTY EQUIVALENT YIELD
14% long rate Equivalent yield
FORECAST
12%
10%
8%
6%
4%
2%
0%
Source: Oxford Economics, Macrobond, CBRECORPORATE BOND SPREAD (RISK PREMIUM) AND ALL PROPERTY EQUIVALENT YIELD
10% Equivalent yield Corporate Bond Spread (RHS) 6
FORECAST
9% 5
8% 4
7% 3
6% 2
5% 1
4% 0
Source: Oxford Economics, Macrobond, CBREALL OFFICE PERFORMANCE
25%
20%
15%
10%
5%
0%
-5%
-10%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capital Growth Rental Growth Total Return
Source: CBREEUROZONE & UK PRIME AVERAGE OFFICE YIELDS
%pa
7.5%
7.0%
6.5%
6.0%
5.5%
5.0%
4.5%
4.0%
European offices UK Offices ?
3.5%
3.0%
Source: CBREALL RETAIL PERFORMANCE
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capital Growth Rental Growth Total Return
Source: MSCI, CBRERETAIL SEGMENT EQUIVALENT YIELD
10
9
8
7
6
5
4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Standard Shops Shopping Centres Retail Warehouse
Source: MSCI, CBRERETAIL SUB-SECTORS – CAPITAL VALUE CHANGE
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Standard Shops Shopping Centres All Retail Warehouses Supermarkets Department Stores
Source: MSCI, CBREALL RESIDENTIAL PERFORMANCE
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capital Growth Rental Growth Total Return
Source: MSCI, CBREALL INDUSTRIAL PERFORMANCE
25%
20%
15%
10%
5%
0%
-5%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Capital Growth Rental Growth Total Return
Source: MSCI, CBREFORECASTS & PRICING
Premium/discount to NAV vs 2021 capital growth forecast
10%
5%
%
NAV, %
vs NAV,
0%
price vs
growth, price
capital growth,
-5%
capital
-10%
-15%
-20%
-25%
Retail London Offices Industrials Generalist Long Income Other
1yr - CBRE 1yr - IPF High Average Low REIT pricing REIT pricing
Source: CBRE Research, November 2020; IPF Consensus Forecast, November 2020; PropertyMatch January 2021SUMMARY • ECONOMIC UNCERTAINTY Covid The evolving new EU relationship Scarring • REBOUND • STRUCTURAL RISKS nt up demand Working from home and Office usage Online shopping • REAL ESTATE OUTLOOK Income Hotels and leisure Residential Quality and function Adaptability Sustainability
DISCLAIMERS and WAIVERS This presentation has been prepared in good faith based on CBRE’s current views of the commercial real-estate market. Although CBRE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE’s control. In addition, many of CBRE’s views are opinion and/or projections based on CBRE’s subjective analyses of current market circumstances. Other firms may have different opinions, projections and analyses, and actual market conditions in the future may cause CBRE’s current views to later be incorrect. CBRE has no obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. Nothing in this presentation should be construed as an indicator of the future performance of CBRE’s securities or of the performance of any other company’s securities. You should not purchase or sell securities – of CBRE or any other company – based on the views herein. CBRE disclaims all liability for securities purchased or sold based on information herein, and by viewing this presentation, you waive all claims against CBRE and the presenter as well as against CBRE’s affiliates, officers, directors, employees, agents, advisers and representatives arising out of the accuracy, completeness, adequacy or your use of the information herein.
Slido.com - ref: #2572 Discussion
Presentation
Sasha Njagulj, Global Head of ESG
CBRE Global InvestorsDATA IS CRUCIAL FOR INVESTMENT DECISION-MAKING
WHAT INVESTORS AND WHAT IS AVAILABLE?
NEED? DOZENS OF REPORTING FRAMEWORKS AND
RATINGS
COMPARABLE
ACCURATE
CLEAR
CONSISTENT
COMPREHENSIVE
Sustainable Finance
DATA Disclosure Regulation
Non-Financial Reporting
Directive(NFRD)
(SFDR)
Taxonomy Regulation
CONFIDENTIAL AND PROPRIETARY | CBRE GLOBAL INVESTORS| 22EU TAXONOMY
Six environmental objectives - Real Estate
CONTRIBUTE AND DO NO SIGNIFICANT HARM Sustainable urban
drainage systems
Smart buildings
Energy efficiency Air pollutant emissions
(EU EPC rating) Ozone depleting emissions
Carbon footprint/intensity Land and water pollution
Renewable energy
Waste management Biodiversity
Recycling rate Protected areas
Hazardous waste
Water
consumption
Water recycling
CONFIDENTIAL AND PROPRIETARY | CBRE GLOBAL INVESTORS| 23EU TAXONOMY
Governance safeguards – Real Estate
POLICIES PRINCIPAL ADVERSE IMPACT (do no harm)
Sustainability risks policy ESG violations/incidents
Remuneration policy Gender pay gap
Labour rights policy CEO pay ratio
Human rights policy Board diversity
Anti-corruption/bribery Exposure to suppliers/operations
policy Convictions and fines
D&I policy Accident/fatality rates
CONFIDENTIAL AND PROPRIETARY | CBRE GLOBAL INVESTORS| 24TIMELINE
1st reference period 2nd reference period 3rd reference period
Mar 2021 Jun 2021 Dec 2021 Dec 2022 Dec 2023
“Effective date” Latest date for Entity PAI Fund level PAI Reference
for PAI considering PAI disclosure disclosure periods
Funds publish Entity comparison
prospectus governance disclosure
disclosure
CONFIDENTIAL AND PROPRIETARY | CBRE GLOBAL INVESTORS| 25WHAT SHOULD YOUR MANAGERS BE DOING?
Review and align all policies
Review and align risk management/investment process
Identify products ‘captured’ by SFDR or Articles 8&9
Put in place robust data management system for entity and product data
Determine corporate data gaps & sources, and gather information
Determine investment data gaps & sources, and gather information (stakeholder engagement crucial)
Prepare website for disclosure AND compliance with other regulations (US Investment Advisers Act 1940, Rule 206(4)(1))
Keep monitoring technical developments for environmental screening criteria
Not wait for UK clarifications – prepare for the most stringent disclosure
CONFIDENTIAL AND PROPRIETARY | CBRE GLOBAL INVESTORS| 26Slido.com - ref: #2572 Discussion
Slido.com - ref: #2572 Thank you
Contact details Melville Rodrigues, Ocorian - Melville.Rodrigues@ocorian.com Ruth Hollies, CBRE Research - Ruth.Hollies@cbre.com Sasha Njagulj, CBRE Global Investors - sasha.njagulj@cbreglobalinvestors.com
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