FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND INVESTOR PRESENTATION - DRAFT - August 2021 - Foresight Group
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DRAFT FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND INVESTOR PRESENTATION August 2021
Table of Contents
1 Introduction to Foresight 4
2 Investment Philosophy: Sustainable Real Estate 11
3 Investment Strategy and Process 17
4 The Portfolio 23
FP Foresight Sustainable Real Estate Securities Fund |2
OEICs
This has been approved as a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Foresight Group LLP
(“Foresight Group”). Foresight Group is authorised and regulated by the Financial Conduct Authority (FRN 198020). Its registered office is The Shard,
London SE1 9SG. FundRock Partners Limited is the authorised corporate director of the Fund and Foresight Group is the investment manager. We
recommend investors seek professional advice before deciding to invest. Investors must read the Fund Prospectus (“Prospectus”) and Key Investor
Information Document (“KIID”), dated June 2020, before making an investment decision. The opportunity described in this document may not be suitable
for all investors. Attention should be paid to the risk factors set out in the Prospectus. Words and expressions defined in the Prospectus shall have the
same meaning in this Investor Factsheet. Foresight Group does not offer investment or tax advice. The value of an investment in the Fund, and any
income from it, can fall as well as rise. Investors may not get back the full amount they invest. Past performance is not a reliable indicator of future
results. This presentation contains simulated past performance information, which is no guarantee of future performance. Personal opinions may change
and should not be seen as advice or a recommendation. There are a number of other risks connected to an investment in the Fund, including (but not
limited to) counterparty risk, liquidity risk and volatility. These risks are explained in the Fund Prospectus. The Fund focuses on the global listed real estate
sector only and will have a less diverse portfolio than the average OEIC. We respect your privacy and are committed to protecting your personal data. If
you would like to find out more about the measures we take in processing your personal information, please refer to our privacy policy, which can be
found at https://www.foresightgroup.eu/privacy-cookies/.
Capital is at risk.
FP Foresight Sustainable Real Estate Securities Fund |3
SECTION 1
Introduction to Foresight
FP Foresight Sustainable Real Estate Securities Fund |4
Foresight Group Overview
A leading sustainability-driven global infrastructure and private equity manager
£7.2bn £1.3bn
assets under Foresight Capital
management Management
AUM
241 12 ESG
group staff offices in 3 sustainability-led
globally continents investments
As at 30th July 2021 FP Foresight Sustainable Real Estate Securities Fund |5
Foresight Capital Management
Specialists in listed real assets
Listed Real ▪ The Foresight Capital Management team have been managing OEICs that invest in
Real Asset
Asset real assets since 2017.
Investment
Investment ▪ The team have a specialist and wide ranging knowledge of the listed real asset
Specialists
Specialists market, with investments in infrastructure, renewable energy and property.
Leaders in ▪ Foresight Capital Management are significant investors in companies that provide a
Investment
social or environmental benefit. This is a must for all investments.
Sustainable
Company
▪ The Foresight Sustainable Real Estate Securities Fund has included its Sustainable
Experience
Investing Investment Criteria into the Fund’s investment policy.
▪ A real asset perspective to equity investing rather than an equity perspective to real
An Asset First
Sustainability Lead
asset investing.
Investment
Approach Team
▪ The team are focused on the quality of both the asset and its future cash flows.
Active Mangers ▪ The Fund’s portfolios are truly global, and the management team have visited
companies in Europe, North America and Asia Pacific.
With Global ▪ The team are proactive in engaging with companies, both to assess their credentials
Reach and to encourage improvements to their levels of sustainability.
FP Foresight Sustainable Real Estate Securities Fund |6
Foresight Capital Management
Proven track record managing portfolios of listed real assets
Total Return
+34.73%
12 Month DPU
5.67p
NAV
£651m
Total Return
+39.15%
12 Month DPU
3.69p
NAV
£576m
As at 30th July 2021, performance since inception
FP Foresight Sustainable Real Estate Securities Fund |7
Foresight Capital Management
Investment Team
The Fund is managed by a team of listed real asset investment specialists and material investment decisions are
approved by the Fund’s Investment Committee.
Fund Managers Investment Committee
Mark Brennan Nick Scullion Eric Bright David Hughes Bernard Fairman Nigel Aitchison Philip Stephens
Lead Fund Manager Co-Manager Investment Manager Chief Investment Chairman and Head of Independent Director
Officer Founding Partner Infrastructure
Mark is the Lead Fund Nick is the Head of Foresight Eric Bright joined Foresight David joined Foresight in 2004 Bernard formed Foresight Nigel Aitchison joined Philip retired from the City
Manager responsible for Capital Management and is Group in 2019 and currently and is a member of the firm's Group in 1984. He has Foresight Group in 2009 and after nearly 40 years working
investment decisions. He is responsible for fund works as an Investment Executive Committee and has managed multiple portfolios is a Partner and Head of in UK Corporate Finance for
also the Lead Fund Manager management and growth of Manager. He has over 5 years over 40 years of investment through to IPO or trade sale. Infrastructure based in the various financial institutions
for the FP Foresight UK Foresight's open-ended fund of experience, previously experience having started his Responsible for strategic London office. A member of including Lazard, Chase
Infrastructure Income Fund, business. He is the lead managing a fund and career in 1974 at 3i where he direction and the firm's Executive Manhattan and UBS where he
where he has a successful manager of the FP Foresight discretionary portfolios at was responsible for advising management of Foresight Committee, he has over 30 was head of UK Corporate
track record of investing in Global Real Infrastructure Reyker Securities. He is public and private companies through organic growth and years of experience covering Finance. Since 2002 he has
REITs. Prior to joining Fund. He joined Foresight responsible for fund on corporate strategy, acquisition to leading specific areas such as waste served on the boards of many
Foresight in 2017, Mark held a Group in 2017 and has nine management in Foresight’s acquisitions, disposals, positions in the VCT and UK management, project finance companies as a non-executive
range of roles within the years of experience in fund open-ended funds business. mergers and capital raising. environmental infrastructure and fund management. Director mostly as Chairman.
alternative investment space, management, capital markets Eric is a CFA Charterholder. markets.
including at Aberdeen and corporate finance.
Standard Investments and the .
UK Green Investment Bank.
FP Foresight Sustainable Real Estate Securities Fund |8
FP Foresight Sustainable Real Estate Securities Fund
Fund features
Fund Features FP Foresight Sustainable Real Estate Securities Fund
Strategy Objective To provide an attractive income yield, that can be either distributed or reinvested, by investing in a global portfolio of
sustainable listed real estate companies.
Performance Objective The Fund aims to provide an income yield of 4% net of fees with a secondary objective to achieve capital growth over a rolling
5 year period.
Fund Structure FCA authorised UCITS.
Investment Universe Real estate companies, which will primarily be structured as a Real Estate Investment Trust “REIT”, who are listed on major
global stock exchanges. Each company must be a viable long term investment and meet the Fund’s Sustainable Investment
Criteria.
Investment Style A real asset approach to equity investing rather than an equity approach to real asset investing.
ESG Sustainability is fully integrated into the investment process and the Fund’s Investment Policy. All investments must meet the
Sustainable Investment Criteria.
Investment Basis Long-only.
Number of Stocks 20-35 listed real estate companies.
Currency Management GBP unhedged share class launching June 2020. Hedged share classes pending investor demand.
Inception 15 June 2020.
FP Foresight Sustainable Real Estate Securities Fund |9
FP Foresight Sustainable Real Estate Securities Fund
Five reasons to invest
A highly liquid route to real estate exposure
The Fund will invest solely into listed Real Estate Investment Trusts (and similar).
1 This means that liquidity is subject to being able to trade the shares on a stock
exchange, as with an equity fund, and not on buying or selling physical properties,
which can take weeks or months.
A resilient yield in a low rate environment
The Fund will target a 4% income yield, which will be generated by property
2
sectors enjoying tailwinds. In a low and uncertain income environment, this can
act a stable source of income for investors who are reliant on income.
Contributing directly to a sustainable future
We will invest only in companies that deliver a net social or environmental
3
benefit, meet the ten principles of the UN Global Compact and meet one of four
pre-defined UN Sustainable Development Goals.
Diversified global exposure to growth sectors
The Fund will provide investors with a globally diversified exposure to real
4 estate, investing in companies with assets in Europe, North America and
developed Asia. The portfolio will focus on growth sectors such as logistics,
medical properties, social housing and data centres.
Specialist and award winning fund management team
5 The Fund is managed by an award-winning fund management team, with a multi
year track record of investing in listed real estate.
FP Foresight Sustainable Real Estate Securities Fund | 10SECTION 2
Investment Philosophy: Sustainable Real Estate
FP Foresight Sustainable Real Estate Securities Fund | 11Sustainable Real Estate
“Sustainability in the real
estate sector is a prominent
issue as the industry has a
Real Estate houses the economy, and so an significant impact on the
approach to sustainability that fails to
environment; buildings are
address the energy consumption, carbon
emissions and wider implications of real responsible for 40% of
estate is destined to fail. energy consumption and
36% of CO2 emissions in
Modern day Real Estate is progressing, the EU.”
integrating new technology and increasing European Public Real Estate Association
efficiency to improve standards across the
board.
Aside from environmental factors,
Sustainable Real Estate can have a
significant positive impact on society.
Through the allocation of capital, ordinary
investors can play a vital role in supporting
those companies that are having the
biggest impact on a more sustainable
future for our communities and the planet.
FP Foresight Sustainable Real Estate Securities Fund | 12Introduction to Listed Real Estate
Since its
establishment in the £1.75tn
1960s, the listed real total capitalisation of the
estate sector has global listed REIT market
become a mature and
well established asset
class within public
markets
902
individual REITs
44%
of US households invest in
REITs
Source: Bloomberg & Nareit
As at 29th January 2021 FP Foresight Sustainable Real Estate Securities Fund | 13Benefits of Listed Real Estate
The Fund is designed to provide investors with a liquid exposure to real estate. This is achieved by the Fund
investing exclusively into the publicly traded shares of listed REITs, rather than directly into bricks and mortar. This
approach provides several core advantages:
Shares in REITs are daily traded like any other public company, and can
No liquidity be bought and sold at any point throughout the trading day. This fully As a % traded of market
mis-match aligns the daily liquidity of the Fund’s structure with the liquidity of the capitalization, UK REITs
assets it holds.
are more liquid than UK
equities, with Global REITs
Resilient
The Fund will invest into sectors of the property market that are well 4% more liquid than
positioned to take advantage of modern tailwinds, such as the growth
sectors
of e-commerce, evolving health care needs and data storage. Global Equities*
Through investing in a portfolio of REITs that each hold large numbers of properties, the Fund is able
Diversification to provide exposure to thousands of individual assets diversified across sectors and geographies .
Source: Bloomberg. Average 6 month daily traded volumes used. UK Equities = FTSE All Share Index & UK REITs = FTSE EPRA/NAREIT UK Index. Global Equities = FTSE All World Index & Global REITs = FTSE NAREIT Developed Index.
FP Foresight Sustainable Real Estate Securities Fund | 14Model Portfolio Back-Testing
Back-tested total returns of the Model Portfolio over the five years to June 2020 indicate the attractiveness of
sustainable real estate investments. Since June 2015, the back-tested Model Portfolio has returned 14.91% p.a.
vs 10.29% p.a. for global equities.
Model Portfolio Performance
% Total Return
140
120
100
80
60
40
20
0
-20
05/06/2015 05/12/2015 05/06/2016 05/12/2016 05/06/2017 05/12/2017 05/06/2018 05/12/2018 05/06/2019 05/12/2019
FP Foresight Sustainable Real Estate Securities Fund FTSE All-World Index
Source: Bloomberg. Returns to June 2020 in GBP. Total return index used.
FP Foresight Sustainable Real Estate Securities Fund | 15Recovery Potential of Listed Real Estate
REITs have historically outperformed equities after market falls
REITs have historically performed strongly following period of market turmoil. Using the equity market low in
2009 following the Global Financial Crisis, the below charts display the outperformance of REITs vs equities in
both the UK and the globally. REITs perform well in uncertain times.
3 Year Annualised Return % 5 Year Annualised Return %
UK REITs 30% UK REITs 28%
UK Equities 24% UK Equities 19%
Global REITs 34% Global REITs 23%
Global Equities 22% Global Equities 18%
UK REITs UK Equities Global REITs Global Equities
Source: Bloomberg. UK Equities = FTSE All Share TR Index & UK REITs = FTSE EPRA/NAREIT UK TR Index. Global Equities = FTSE All World TR Index & Global REITs = FTSE NAREIT Developed TR Index. All figures in GBP.
FP Foresight Sustainable Real Estate Securities Fund | 16SECTION 3
Investment Strategy and Process
FP Foresight Sustainable Real Estate Securities Fund | 17Portfolio Construction
Target screening of the REIT universe identified an attractive opportunity set
REIT Universe All listed companies that were tagged within Bloomberg as being classified
806
as REITs on a global basis. This screening generated 806 companies with a
combined market capitalisation of £1.3tn.
Listing
location All companies listed in non-OECD countries were removed. This left 706 706
companies.
Market Cap 414
and Volatility All companies with a market capitalisation less than £300m and/or volatility of
more than 35% were removed. This left 414 companies.
ESG Markers Finally, all remaining companies were screened using ESG markers, such as
Sustainalytics, and the UN Sustainable Development Goals. This left an 86 86
investable universe of 86 companies.
A total of 86 listed REITs were identified, with a combined market capitalisation of £637bn.
Launch
Portfolio
FP Foresight Sustainable Real Estate Securities Fund | 18Foresight Capital Management Investment Process
An active approach to company engagement
A Focus on Engagement Global Reach Strategy Assessment
We believe that engagement The Fund will hold assets in The company’s strategy is
is a vital part of our active multiple geographies in order assessed to ensure that the
management investment to provide a diversified company has the ability to
process. portfolio. meet the portfolio’s
investment objective.
Meeting with the The Fund management team
management teams of are proactive in their We are long term investors,
potential and current approach to engagement and and so the company must
companies allows for a have visited companies represent a viable long term
deeper understand of how throughout North America, strategy which can translate
the business operates and Europe and Asia. into returns for the Fund’s
their strategy. portfolio.
FP Foresight Sustainable Real Estate Securities Fund | 19Foresight Capital Management Investment Process
An asset up approach to investment due diligence
Assessment of the underlying assets
The underlying assets that make up the Company’s portfolio are analysed in
order to assess the quality of the assets themselves, and the quality of the
future cash flows.
Review of the REIT portfolio’s composition
The Company’s wider portfolio is reviewed to assess the core drivers of the
Company’s risk and return profile.
Evaluation of the Company’s stock market valuation
The prevailing valuation for the Company is evaluated to ensure an optimal entry
point and that fair value is achieved.
FP Foresight Sustainable Real Estate Securities Fund | 20Sustainability as an Enabler of Financial Performance
REITs that can target and deliver sustainability outcomes will have better access to capital markets, own higher
value assets and attract the best tenants. REF’s portfolio is focused on companies that are already operating at
the leading edge and therefore positioned to outperform financially over the long-term.
- REITs need ready access to debt and equity capital markets in order to grow their
Capital portfolios and earnings over the long-term
Markets - Institutional investors are increasingly focused on sustainability factors, and price their
capital accordingly
- Tenants, and in particular larger companies with their own sustainability reporting
requirements, are increasingly looking to lease real estate which performs strongly
Tenants against a range of factors
- Attracting and retaining high quality tenants on the best terms will therefore be
dependent upon REITs themselves targeting and delivering sustainability outcomes
- Real estate assets that perform strongly in areas such as energy efficiency will
Asset fundamentally be more valuable, as those factors deliver tangible financial benefits to
Value owners
FP Foresight Sustainable Real Estate Securities Fund | 21Foresight Capital Management Investment Process
Assessment against the Sustainable Investment Criteria
In order to be included with the portfolio, all investments must provide a net social or environmental benefit and
meet the Fund’s 3 part Sustainable Investment Criteria.
1 2 3
Stage 1: UN Global Compact Stage 2: UN Sustainable Stage 3: Qualitative Assessment
Development Goals
The company’s strategy, economic activity The company must make a demonstrable On the basis of detailed due diligence and
and fundamental purpose must be impact against one of four Sustainable discussion with management, does the
consistent with all of the 10 UN Global Development Goals. fund management team believe that
Compact Principles. sustainability is a core and long-term
focus of the company’s portfolio and
strategy?
FP Foresight Sustainable Real Estate Securities Fund | 22SECTION 4
The Portfolio
FP Foresight Sustainable Real Estate Securities Fund | 23Portfolio Sector Breakdown
The Fund has exposures to a variety of different sectors, proving multiple sources of returns
1.84%
3.06% 1.39%
3.17% 2.15% 1.31%
3.8% 26.61%
3.32% Logistics (26.61%)
Cash (23.40%)
5.27% Healthcare & Social Housing (21.33%)
Government Property (7.15%)
5.5%
Data Centres (5.27%)
7.15% Commercial (3.32%)
Offices (3.17%)
Early Learning Centres (3.06%)
Student Property (2.15%)
Forestry (1.84%)
6.9%
Communications (1.39%)
23.40% Self Storage (1.31%)
21.33%
As at 30th July 2021
FP Foresight Sustainable Real Estate Securities Fund | 24Geographic Asset Breakdown
The Fund is globally diversified, providing access to leading real estate across the globe
Asset % of Portfolio (listing location) Asset % of Portfolio (asset location)
4.7% 4.8%
5.9% 6.2% 1.0%
5.3%
13.2%
6.3%
47.3%
49.3%
28.9% 27.1%
US (47.31%) US (49.30%) Japan (4.80%)
UK (28.93%) UK (27.10%) Other (1%)
Canada (13.20%) Europe (6.30%)
Australia (5.86%) Australia (5.30%)
Japan (4.70%) Canada (6.20%)
As at 30th July 2021
*Other includes South America and Asia ex. Japan. FP Foresight Sustainable Real Estate Securities Fund | 25Top 10 Portfolio Holdings
The top 10 portfolio holdings contains exposures to multiple key sectors
Company Sector Listing Location Allocation
Dream Industrial REIT Logistics Canada 7.74%
Office Properties Income Trust Government Property United States 7.15%
Medical Properties Trust Healthcare & Social Housing United States 7.02%
Physicians Realty Trust Healthcare & Social Housing United States 6.50%
Primary Health Properties Healthcare & Social Housing United Kingdom 3.35%
Supermarket Income REIT Commercial United Kingdom 3.32%
Civitas Social Housing Healthcare & Social Housing United Kingdom 3.26%
Arena Early Learning Centres Australia 3.06%
LondonMetric Logistics United Kingdom 2.97%
Tritax Big Box Logistics United Kingdom 2.76%
As at 30th June 2021
FP Foresight Sustainable Real Estate Securities Fund | 26OEIC Performance Chartbook
REF vs Global REITs
Cumulative Total Return
%
27
22
17
12
7
2
-3
-8
Jun/2020 Jul/2020 Aug/2020 Sep/2020 Oct/2020 Nov/2020 Dec/2020 Jan/2021 Feb/2021 Mar/2021 Apr/2021 May/2021 Jun/2021 Jul/2021
FP Foresight Sustainable Real Estate Securities Fund FTSE EPRA Nareit Developed Index
30 Day Vol 90 Day Vol 180 Day Vol Beta One Year Sharpe Ratio Cumulative Total Return
FP Foresight Sustainable Real Estate Securities
10.38 8.90 9.74 0.34 PENDING 16.75
Fund
FTSE EPRA Nareit Developed Index 11.12 11.29 11.58 0.71 N/A 19.51
FP Foresight Sustainable Real Estate Securities Fund | 27OEIC Performance Chartbook
REF vs Active Real Estate Funds
Cumulative Total Return
%
30
25
20
15
10
5
0
-5
-10
Jun/2020 Jul/2020 Aug/2020 Sep/2020 Oct/2020 Nov/2020 Dec/2020 Jan/2021 Feb/2021 Mar/2021 Apr/2021 May/2021 Jun/2021 Jul/2021
Schroder Global Cities Real Estate Sarasin Sustainable Global Real Estate Equity FP Foresight Sustainable Real Estate Fund
30 Day Vol 90 Day Vol 180 Day Vol Beta One Year Sharpe Ratio Cumulative Total Return
FP Foresight Sustainable Real Estate Securities
10.38 8.90 9.74 0.34 PENDING 16.75
Fund
Schroder Global Cities Real Estate 11.23 11.16 13.25 0.55 1.77 22.02
Sarasin Sustainable Global Real Estate Equity 10.52 10.38 12.64 0.55 1.38 14.59
FP Foresight Sustainable Real Estate Securities Fund | 28Company name
Civitas Social Housing
Company Overview Investment Characteristics
UK-listed REIT focused on specialist housing for the Civitas receive rent from Housing Associations and Care Providers
supported living sector
The funding they receive comes directly from Local Authorities, who
Properties cater for individuals with long-term, non-acute themselves are funded by the UK Welfare Budget
physical and mental impairments and disabilities
This 100% central government funding provides very robust income
Listed in 2016, with current market capitalisation of £665m security for Civitas and provides a long term market for the high
Portfolio of 599 properties and over 4,000 individual tenants quality, specialist supported living properties that they develop and
lease
At the current share price, will deliver a 5% yield
Sustainability Review
Very high impact on social outcomes for individuals and
communities
Clear alignment with SDG 3: Good Health and Wellbeing
Explicit corporate objectives:
1. Availability. To increase the availability of social housing across
England and Wales, particularly for vulnerable people.
2. Quality. To improve the quality of social housing.
3. Value For Money. To offer value for money for the public purse
FP Foresight Sustainable Real Estate Securities Fund | 29Company name
Tritax Big Box
Company Overview Investment Characteristics
£2bn UK listed REIT that invests solely into Big Box logistics Modern and purpose built asset base
assets
High quality tenant base, with Amazon 13% of the rent roll
High quality tenants, over 80% of which are listed on major
Demand for quality assets remains strong
stock exchanges
Portfolio well positioned to enjoy e-commerce tailwind
Big Box warehouses are extremely large, strategically located
and form a key part of a company’s supply chain At the current price, the dividend yield is over 4% with potential for
growth
Over 50% feature robotics and automation
Sustainability Review
All assets are subject to a Green Property Review
87% of portfolio now have an EPC of A-C
All new developments have a BREEAM rating of at least very good,
with some rated excellent
The modern portfolio means that assets are energy efficient and are
able to facilitate modern automation
Directly aligns with SDG 9: Industries, innovation & infrastructure
FP Foresight Sustainable Real Estate Securities Fund | 30FP Foresight Sustainable Real Estate Securities Fund
Key Features
Fund Name: FP Foresight Sustainable Real Estate Securities Fund
Fund Structure: A sub-fund of FP Foresight OEIC, a UK open-ended investment company (“OEIC”)
Regulatory Status: FCA Authorised UCITS
IA Sector: Property Other
Unit Type: Income & Accumulation
Currency: GBP (unhedged)
Lump Sum: £1,000 + subsequent increments of £500
Minimum Investment:
Regular Savings: £100 per month
Ongoing Charge: 0.85%
Transaction Costs: Please refer to your platform or the latest fund EMT
Fund Price At Launch: 100p
Expected Return: An income yield of 4% with the potential for capital growth over a rolling 5 year period.
Income: Quarterly from 31 November 2020 (Jan, Apr, Jul, Oct)
Distributions:
Accumulation: Reinvested
Authorised Corporate Director (ACD): FundRock Partners Limited
Investment Manager and Distributor: Foresight Group
Launch Date: 15 June 2020
Final Accounting Date: 31st May
Interim Accounting Dates: Last day of February; 31st August and 30th November
FP Foresight Sustainable Real Estate Securities Fund | 31FP FORESIGHT SUSTAINABLE REAL ESTATE SECURITIES FUND
Appendices
FP Foresight Sustainable Real Estate Securities Fund | 32Benefits of blending…
Low correlation to Foresight’s infrastructure strategies
The table below displays the performance characteristics of combining REF with GRIF or FIIF in a portfolio,
calculated from GRIF’s launch in June 2019 to REF’s launch in 2020 (and from FIIF’s inception). This analysis
combines FIIF and GRIF’s actual performance, and REF’s simulated performance using a back-test of the launch
portfolio.
- Volatility is reduced by roughly one third
- Equity beta is roughly halved
Return (since 3 June 2019) Volatility Beta (vs FTSE All World)
REF 15.90% 29.16% 0.85
GRIF 15.52% 29.44% 0.86
50/50 portfolio 15.92% 20.44% 0.43
Return (since 3 Dec 2017) Volatility Beta (vs FTSE All Share)
REF 33.62% 17.95% 0.66
FIIF 23.65% 13% 0.47
50/50 portfolio 28.92% 12.65% 0.27
FP Foresight Sustainable Real Estate Securities Fund | 33Crossover Between REF and the FCM Infrastructure Funds
Crossover between the three FCM OEICs remains relatively low. We believe the fund range should be able to be
included as part of a diversified portfolio given the different risk and return factors that drive the underlying
asset classes.
REF
FIIF = 7.75%
Civitas Social Housing: 2%
GRIF = 3.5%
Office Properties Income: 2% Medical Properties Trust: 3.5%
Physicians Realty: 2%
Primary Health Properties
1.75%
As at 31 December 2020.
FP Foresight Sustainable Real Estate Securities Fund | 34Ten Principles of the UN Global Compact
By incorporating Global Compact principles into strategies and establishing a culture of integrity,
companies are not only upholding their basic responsibilities to people and planet, but also setting
the stage for long-term success.
1. Businesses should support and respect the protection of internationally proclaimed human rights; and
Human Rights 2. Business should ensure they are not complicit in human rights abuses.
3. Businesses should uphold freedom of association and the effective recognition of the right to collective bargaining;
4. The elimination of all forms of forced and compulsory labour;
Labour
5. The effective abolition of child labour; and
6. The elimination of discrimination in respect of employment and occupation.
7. Businesses should support a precautionary approach to environmental challenges;
Environment 8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion of environmentally friendly technologies
Anti-Corruption 10. Businesses should work against corruption in all its forms, including extortion and bribery
FP Foresight Sustainable Real Estate Securities Fund | 35Listed Real Estate as a Recovery Strategy
REITs have historically outperformed equities after market falls
REITs have historically performed strongly following periods of market turmoil. Using the equity market low in 2002
following the Dot Com Bubble, the below charts display the outperformance of REITs vs equities in both the UK and
the globally. REITs perform well in uncertain times.
3 Year Annualised Return % 5 Year Annualised Return %
UK REITs 28% UK REITs 21%
UK Equities 18% UK Equities 17%
Global REITs 26% Global REITs 23%
Global Equities 18% Global Equities 17%
UK REITs UK Equities Global REITs Global Equities
Source: Bloomberg. UK Equities = FTSE All Share TR Index & UK REITs = FTSE EPRA/NAREIT UK TR Index. Global Equities = FTSE All World TR Index & Global REITs = FTSE NAREIT Developed TR Index. All figures in GBP.
FP Foresight Sustainable Real Estate Securities Fund | 36Sector Overview: Logistics
Real Estate Characteristics
• Warehouses of all sizes
• Typically located near population hubs
• Often modern and purpose built
Typical Tenants
• E-commerce retailers, such as Amazon, ASOS or Ocado
• Logistics companies, such as FedEx, DHL and Royal Mail
• Industrial manufacturing firms, such as Tesla and Bosch
COVID-19/recession resilience
• COVID-19 has accelerated the trend towards e-commerce
• Tenant’s credit quality has improved
• Value of supply chain reinforced, which should drive
investment
Investment rationale
• Growth of e-commerce is increasing demand for the assets
• High quality tenants with long leases, typically around 10
years
• Assets are at the forefront of innovation, using robotics and
automation
FP Foresight Sustainable Real Estate Securities Fund | 37Sector Overview: Data Centres & Communications
Real Estate Characteristics
• Varying size depending on tenant needs
• Assets are secure and pride themselves on high availability
• Communications assets are towers and new micro-cells
• Often located close to population hubs
Typical Tenants
• Cloud computing companies such as Microsoft and IBM
• Network carriers such as T-Mobile and AT&T
• Content providers such as Netflix and Spotify
COVID-19/recession resilience
• Tenants are sticky as moving data centre adds risks
• Enforced lockdowns have seen data usage boom
• Strong counterparties who operate in what are now
defensive industries
Investment rationale
• The growth of cloud computing is a strong tailwind
• Data usage is forecast to grow exponentially from 5G
• Assets provide diversification to traditional real estate
FP Foresight Sustainable Real Estate Securities Fund | 38Sector Overview: Offices & Government Property
Real Estate Characteristics
• Modern and purpose built office space
• Located in prime areas with strong economics
• Favouring companies with best in class sustainability
credentials
Typical Tenants
• Government agencies
• Large technology companies, such as Sony, Apple and IBM
• Media companies such as Netflix and Disney
COVID-19/recession resilience
• US government is a is a strong counterparty
• Favoured REITs have seen strong rent collection
• Prime areas continue to be seen as strategically important to
tenants
Investment rationale
• Prime building locations is a driver of value growth
• Resilient tenant base, who are growing in credit quality
• Shares trading at a discount to NAV
FP Foresight Sustainable Real Estate Securities Fund | 39Sector Overview: Healthcare & Social Housing
Real Estate Characteristics
• Varying property sizes from large hospitals to GP surgeries
• Assets are built to a high specification
• Occupancy levels are high, and leases are often inflation
linked
Typical Tenants
• Private operators, who are typically investment grade
• Government operators, such as NHS Trusts
COVID-19/recession resilience
• COVID-19 has highlighted the criticality of these assets
• Operators have been subject to government funded financial
support
Investment rationale
• Strong growth drivers across multiple geographies
• High occupancy and proportion of investment grade tenants
• Provision of essential, long term health care services
FP Foresight Sustainable Real Estate Securities Fund | 40Sector Overview: Self Storage
Real Estate Characteristics
• Purpose built, multi-story assets
• Emphasis on being located near roads for easy access
• Emphasis on security
Typical Tenants
• A variety of individuals and business users
• Tenants using for short term storage
• Tenants using for long term storage or as a business base
COVID-19/recession resilience
• Trading in Q1 2020 had limited impact from COVID-19
• Using storage becomes a money saving exercise for certain
businesses
• Individuals and businesses typically look to downsize and
utilise storage
Investment rationale
• Growth market, with the UK underserved compared to the
US
• Sector has weather multiple downturns well, and performed
well in a recessions
• Companies within the sector are well capitalized
FP Foresight Sustainable Real Estate Securities Fund | 41Sector Overview: Forestry
Real Estate Characteristics
• Sustainable timberlands
• Forests are primarily located in North America
• Emphasis on sustainability
Typical Tenants
• Forestry assets are owned on balance sheet
• Cash generated by the sale of timber and seedlings
• Cash flow supported by strength of construction markets
COVID-19/recession resilience
• Timber remains a key resource for construction
• Construction has been deemed as essential work by most
governments, and so has been able to continue
Investment rationale
• Forestry REITs have strong sustainability credentials
• Companies are large and well established in markets where
scale is not easy to achieve
• Historically strong dividend investments
FP Foresight Sustainable Real Estate Securities Fund | 42Sector Overview: Commercial
Real Estate Characteristics
• Real estate that is used for business purposes, such as
industrial, manufacturing, trade stores and supermarkets
• Typically let on long, inflation linked leases
• Often simple structures that can be repurposed
Typical Tenants
• Supermarket operators such as Tesco, Sainsbury’s and Lidl
• Manufacturing firms such as Rolls-Royce
• Trade stores such as Wickes and B&Q
COVID-19/recession resilience
• Assets are often mission critical to their tenants, and so
there have been strong levels of rent collection
• Supermarkets have performed strongly through COVID-19
• Tenants are typically of a high credit quality
Investment rationale
• Long dated cash flows provide forecastable dividend streams
• Inflation linkage in leases means that returns grow at a real
rate
• Sector provides high and dependable dividend yields
FP Foresight Sustainable Real Estate Securities Fund | 43For further information, please contact: Foresight Group LLP The Shard t: +44 (0)20 3667 8100
32 London Bridge Street e: info@foresightgroup.eu
London SE1 9SG w: foresightgroup.eu
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