EXAMINING REIT JURISDICTIONS, STRUCTURES AND INVESTOR APPETITE ACROSS ASIA PACIFIC MARKETS GLEN DOGAN, SENIOR SALES & RELATIONSHIP MANAGER PERPETUAL CORPORATE TRUST
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EXAMINING REIT JURISDICTIONS, STRUCTURES AND INVESTOR APPETITE ACROSS ASIA PACIFIC MARKETSGLEN DOGAN, SENIOR SALES & RELATIONSHIP MANAGER
PERPETUAL CORPORATE TRUST
PERPETUAL: 128 YEARS OF HISTORY
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We are one of Australia’s most experienced asset managers, and a leading Asia Pacific trustee.We are one of Australia’s most experienced asset managers, and a leading Asia Pacific trustee.
Perpetual Investments –$29.8 billion FUMPerpetual Investments –$29.8 billion FUM
Perpetual Private –$12.6 billion FUMPerpetual Private –$12.6 billion FUM
Perpetual Corporate Trust –$484 billion FUAPerpetual Corporate Trust –$484 billion FUA
*As at 31 December 2013. Source: Perpetual
ABOUT APREA
The Asia Pacific Real Estate Association (APREA) is a non-profit industry association that represents and promotes the real estate asset class in the Asia Pacific region. It is the industry body for the suppliers and users of capital in the real estate sector.
Represent and promote the Asia Pacific real estate asset class
Represent and promote the Asia Pacific real estate asset class
Encourage greater investment in the Asia Pacific real estate sector through the provision of better information to investors, improving the general operating environment, encouraging best practices and generally unifying and strengthening the industry
Encourage greater investment in the Asia Pacific real estate sector through the provision of better information to investors, improving the general operating environment, encouraging best practices and generally unifying and strengthening the industry
Enhance regional and global networks for capital suppliers and users
Enhance regional and global networks for capital suppliers and users
Represent the sector to governments and regulators to improve the commercial operating environment for members
Represent the sector to governments and regulators to improve the commercial operating environment for members
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APREA’s mission is to:
ARE THE REIT REGIMES ALIGNED TO ACHIEVE THE DESIRED PURPOSE?
ASIA PACIFIC REITs:A Comparative regulatory and tax study
APREA Survey Response Findings2. APREA Survey Response Findings2.
Growth of Asia REIT Market1. Growth of Asia REIT Market1.
Asia Pacific REITs: A Scorecard4. Asia Pacific REITs: A Scorecard4.
Success of Asia-Pacific REITs3. Success of Asia-Pacific REITs3.
Specialist, expert property asset management
Investor exposure to quality real estate assets
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GROWTH OF REITs
Growth of REITsGrowth of REITs in past 20 years
Today:
• 22 countries, 500 REITs
• US $850 billion market capitalised
• 45% listed real-estate exposure
Leading REIT markets
• US – 55% market share
Growth of REITsGrowth of REITs in past 20 years
Today:
• 22 countries, 500 REITs
• US $850 billion market capitalised
• 45% listed real-estate exposure
Leading REIT markets
• US – 55% market share
Growth of Asian REITsRapid expansion in the last 14 years
• 7 countries
• 140 REITs
• US $140 billion
Driving factors
• Supply side
• Demand side
Growth of Asian REITsRapid expansion in the last 14 years
• 7 countries
• 140 REITs
• US $140 billion
Driving factors
• Supply side
• Demand side
Australia (1971)United States (1960)Netherlands (1969)
Canada (1994)Belgium (1995)
Brazil (1995)
Nigeria (2010)Thailand (2012)Pakistan (2013)
Japan (2000)South Korea (2001)Singapore (2002)
France (2003)Taiwan (2003)
Hong Kong (2003)Malaysia (2005)Germany (2007)
United Kingdom (2007)Italy (2007)
New Zealand (2007)
DubaiIndonesiaPhilippines
Legislation In Place
ChinaIndia
Under ConsiderationListed REITs
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HUGE GROWTH IN ASIAMarket capitalisation of major Asian REIT markets ( $USm)
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013
Japan 41,197 28,398 27,835 45,167 37,810 50,193 71,199
Singapore 15,913 7,435 17,551 23,975 23,847 36,391 40,301
Hong Kong 8,614 5,951 9,591 12,376 12,432 17,554 17,189
Malaysia 1,276 971 1,283 3,073 3,765 6,474 6,808
Taiwan 1,531 1,350 1,635 1,882 2,045 2,636 2,759
Total 68,530 44,104 57,895 86,473 79,899 113,247 138,255
Driving Forces in AsiaDriving Forces in AsiaSupply$7 trillion investable real-estate
25% global market
Demand10%-20% allocated to real estate
Source: Prof . Graeme Newell, 20126
APREA SURVEY RESPONSE FINDINGS
47.4%
52.6%
REITs should have management local to its country of listing
It does not matter if REIT management is local
84.2%
15.8%
REITs should have management local to its country of operations
It does not matter if REIT management is local
Please indicate if you prefer that a REIT should ha ve management that is local to its country of listing.
Please indicate if you prefer that a REIT should ha ve management that is local to its country of operatio ns.
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APREA SURVEY RESPONSE FINDINGS
47.4%
52.6%
Yes No
15.8%
15.8%
36.8%
26.3%
5.3%
No limit
50% or less
30% or less
20% or less
10% or less
No
0% 10% 20% 30% 40%
Would you subscribe to the idea of having a single standardised REIT model that is applied across jurisdictions?
Do you think a REIT should be allowed to undertake development risk? If so, what is the maximum thresh old (percentage of assets under management) you would be comfortable with?
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APREA SURVEY RESPONSE FINDINGS
2.3
2.5
2.7
3.2
2.5
4.3
Taiwan
Malaysia
Hong Kong
Singapore
Japan
Australia
0 1 2 3 4 5
Which jurisdictions have the greatest level of REIT market confidence and integrity in this respect?
5.3%
10.5%
84.2%
1. Not important
2
3
4
5. Very important
0 20 40 60 80 100
How important is regulation of related party transactions to REIT market confidence and integrit y?
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SUCCESS OF ASIA PACIFIC REITs
Average Annual Return Risk Risk-Adjusted Returns
Country REITs Stocks REITs Stocks REITs Stocks
Japan 5.6% 0.2% 26.3% 21.5% 0.21 0.01
Singapore 14.2% 11.5% 26.0% 22.9% 0.50 0.45
Hong Kong 13.6% 11.7% 22.4% 26.9% 17,554 0.38
Malaysia 9.0% 13.0% 11.9% 16.3% 6,474 0.62
Thailand 3.5% 13.5% 10.4% 26.7% 2,636 0.40
Taiwan 11.1% 5.8% 17.8% 27.3% 2,636 0.17
South Korea 1.5% 10.5% 20.9% 27.3% -0.09 0.26
10 Source: Prof . Graeme Newell, 2012
THE HALLMARKS OF A SUCCESSFUL REIT IN ASIA PACIFIC
Commercial Considerations:
• Liquidity• Dividends• Debt levels• Development• Diversification
Regulatory & Tax Requirements:
• Corporate governance• Disclosure requirements• Transparency• Tax treatment/
concessions
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Listing structureGeographic restrictions
Real estate development Gearing restrictions Dividend payout
Japan External None Restricted None ≥ 90%
Singapore External None <10%<35%
of asset value≥ 90%
Hong Kong Internal / external None No<45%
of asset value≥ 90%
Malaysia External None No<50%
of asset valueNot specified
Thailand External Domestic only Restricted<10%
of asset value≥ 90%
Taiwan Internal / external None <15%<50%
of asset value≥ 90%
South Korea Internal / external None Yes None ≥ 90%
Australia NIL NoneYes –
StapledNone Not Specified
Commercial Considerations:• Liquidity• Dividends• Debt levels• Development• Diversification
Regulatory &Tax Requirements:• Corporate governance• Disclosure requirements• Transparency• Tax treatment/
concessions
THE HALLMARKS OF A SUCCESSFUL REIT IN ASIA PACIFIC
12 Source: Prof Graeme Newell, 2012
ASIA PACIFIC REITs - SCORECARDREIT Regulatory regimes regarded as conducive
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Australia
Singapore
Japan
Hong Kong
Malaysia
Thailand
New Zealand
Taiwan
South Korea
Strongly Disagree
Disagree
Neutral
Agree
Strongly Agree
Key Factors to Consider:- Is the regulatory regime conducive- Investment performance- Investor demand
Key Factors to Consider:- Is the regulatory regime conducive- Investment performance- Investor demand
13 Source: Atchison & Syeung, 2014
OPPORTUNITIES FOR CROSS BORDER STRUCTURES
Dec 2007 Dec 2008 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013
Market capitalisation of S-REITs
15,913
7,435
17,551
23,97523,847
36,391
40,301
Singapore
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ASIA PACIFIC REITs - SCORECARDInvestor Demand: Intention to increase future alloc ation to Asia REITs
Strongly AgreeAgreeNeutralDisagreeStrongly Disagree
Australia
South Korea
Taiwan
New Zealand
Thailand Malaysia
Hong Kong
Japan
Singapore
15 Source: Atchison & Syeung, 2014
CONTACTS
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AUSTRALIAGlen DoganSenior Sales & Relationship Manager
[email protected] +61 2 9229 9618Mobile +61 403 891 503
Perpetual Corporate Trust [email protected]
IMPORTANT INFORMATION
This presentation has been prepared by Perpetual Trustee Company Limited, ABN 42 000 001 007 AFSL 236643. It is general information and is not intended to provide you with financial, legal or tax advice. Whilst we have undertaken every effort to ensure the information in this presentation is accurate, to the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.
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