ABPF 'Irish Property Outlook post Covid' - Appian Asset ...
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‘Irish Property Outlook post Covid’
ABPF
Irish Property Outlook post COVID
• Strategic view
• 2021 and beyond
• Appian Burlington Property Fund update
1
Irish Property -
Strategic view
➢ Attractive asset class
➢ Strong fundamental value
➢ Sustainable income yield
➢ Driven by positive economics and demographics
➢ Inflation proof – via rent review process
2
Inflation looming
➢ Era of low inflation
➢ Global response to economic shock
➢ Inflation likely to rise
➢ Inflation assets will benefit
➢ Property via rent reviews
3
Fundamental Value
➢ Proposition:- Irish commercial property represents good value by reference to :
➢ History and Bond/cash alternative
➢ Values still down on average 40% since the peak in 2007*
➢ Average income yield is 5.8% across Irish commercial property*
➢ Compelling income differential Vs Bonds
➢ Some sectors are fully priced – e.g. Dublin CBD but others offer value:
➢ Dublin suburban office values
➢ Industrial/logistics
• *MSCI
4
0
20
40
60
100
120
80
Dec 2007
Apr 2008
Aug 2008
Dec 2008
Apr 2009
Aug 2009
Dec 2009
Apr 2010
Aug 2010
Dec 2010
Apr 2011
Aug 2011
Dec 2011
Retail market in Ireland
Apr 2012
Aug 2012
UK
Dec 2012
Apr 2013
Aug 2013
Dec 2013
5
Apr 2014
IRELAND
Aug 2014
Dec 2014
Apr 2015
Aug 2015
SPAIN
Dec 2015
Apr 2016
Aug 2016
Dec 2016
Apr 2017
Aug 2017
MSCI/IPD Capital Value Index - UK - IRELAND- SPAIN
Dec 2017
Apr 2018
Aug 2018
Dec 2018
Apr 2019
Aug 2019
*Source: MSCI/IPD
Irish Property Market – 2021 and beyond
➢ Covid – sharp shock but long term
consequences
➢ Immediate impact on many tenants
➢ Shift in work and shopping patterns
➢ Test of robustness of business models
➢ Brexit still a major issue!
➢ Market down c. 5% in 2020*
➢ *Source: MSCI/IPD
6
Winners and losers in property
➢ Downtown CBD*s challenged
➢ Greater suburban focus for occupiers -
➢ Office and Retail
➢ New working patterns but offices still critical for most
organisations
➢ Retail most impacted but not universal
➢ Industrial/Logistics a winner
➢ €2 bn invested in 2020, 75% international**
• *Central Business Districts ** Cushman & Wakefield 2020
7
Conclusions
• Value and Income will attract capital
• Irish market on European map - 70% of overseas
investors are EU
• Rebound in real economy will generate demand
• Supply will come slower
• Dynamic will impact on rents
8
Appian Burlington Fund update
• Portfolio of 9 properties valued at €48.2 million by Cushman &
Wakefield*
• Rental income of €3.4 million pa – 100% occupancy*
• Rent reviews on 50% of the portfolio*
• Income yield of 7.1% on portfolio* expected to rise to 7.7% post
reviews based on latest valuation.
• * as at 31.12.20
9Positioning of our Fund
➢ Investment strategy proven robust
➢ Focus on value insulates downside
➢ Strong diversified tenant portfolio
➢ 100% occupancy
➢ Suburban locations
➢ Less impacted and likely to benefit
➢ Our retail is less vulnerable to encroachment from on-line (and Covid mostly!)
➢ Inflation proofed - all properties have rent review provisions
10Highlights
• Outstanding returns – winner MSCI award best
performing portfolio in Ireland over 3 years
• Outperformance post Covid - property total return in
2020 : +1.6% Vs MSCI index -0.9%
• Return to date 7.5% pa since inception per MSCI
• Purchase costs on properties written off
11Investment Strategy
• Objective is to provide exposure to Irish commercial property on low risk basis with above average secure income and
strong prospects for value enhancement.
• Target size €100m plus within 2 years
• Assets are office, retail and industrial investment properties.
• Risk mitigated by diversification across sectors: Range
Office 40% - 60%
Retail 30%- 40%
Industrial 10% - 20%
• Focus on greater Dublin area (80% - 100%) and regional urban centres (0% - 20%) in Ireland
• Typical properties will be let on long leases to sound financial covenants
• Target dividend yield to investors 5% pa *
• Gearing to maximum of 50% LTV – non recourse debt cross secured against underlying properties
• Target total medium term returns of 5%-10% pa to investors after all costs*
* This is a target return only and not a profit forecast. There can be no assurance that the target can or will be met and it should not be seen as an indication of the
Fund’s expected or actual results or returns.
12Investor Details
• Management Fee:1.35% of GAV (Gross Asset Value) or 2% of NAV
(Net Asset Value)
• ADL (Anti Dilution Levy):9%
• 2 Year Lock In with Liquidity at the discretion of the Directors thereafter
• Fund Custodian: Societe Generale
• Valuers of the Fund: Cushman Wakefield
13Current Property Portfolio*
Fenward House, Sandyford
•Office investment
•20,000 sq. ft and 34 car spaces
•Let on 10 year lease from July 2015
•Initial yield - 8%
•Recent rent review increase of 15%
Tuansgate, Tallaght Town Centre
• 6 storey, Grade A office investment
• 39,510 sq. ft and 103 car spaces
• Let to State agency (82%) and major multinational (18%)
• Initial net yield – 7%
• Rent of €11.30 per sq. ft , review underway
• WAULT 4 years
* Source Burlington RE March 2021
14Bank of Ireland, Drogheda
•Retail/commercial investment
•Landmark building in town
•7,000 sq. ft
•Let to Bank of Ireland on a 25 year lease from
2006, 11 years remaining
•Initial yield – 7.1%
73 &74/75 Patrick Street, Cork
• Retail investment
• 12,400 sq. ft
• Let at average rent of €34 per sq. ft.
• Initial Net yield – 6% increasing to 6.25% in 2018
• WAULT 4.5 years
15 Source: Burlington RE March 2021Boroimhe Shopping Centre, Swords
• Well established local centre with 10 retail tenants.
• Super-Valu store as anchor tenant
• Tenants include creche, PO, gym and health centre
• 33,530 sq. ft and 75 car spaces
• Initial net yield – 7.8%
• WAULT 8.7 years
Beaver House, Beech Hill, Clonskeagh
• 29,500 sq. ft 3 storey modern office investment with 84 car
spaces
• Let to quoted US multinational (66%) and 2 Irish private
companies (34%)
• Rent per sq. ft ranging from €14 to €18.50
• Rent review in 2020 increased rent by 59%.
• WAULT 4.5 years
16 Source: Burlington RE March 2021Magna Business Park, Citywest Dublin 24
• Well established quality business park
• Detached HQ building
• Let to JE O’Brien and Co
• 31,600 sq. ft 1.5 acre site and 35 car spaces
• Initial net yield – 7.8%
• WAULT 6 years
Damastown Way, Dublin 15
• Well established industrial park off M3 motorway
• Let to Rennicks Group Ltd
• 21,500 sq. ft building
• Initial net yield of 6.6% with strong reversionary potential at rent
review in 2022.
• WAULT 7 years
• Source: Burlington RE March 2021
17Polite Notice Re GDPR Requirements
By attending this presentation we are assuming your permission for Appian
to contact you in the future. If you would rather not please let us know on
the contact details providedWilliam.mcdonald@appianasset.ie
+353 (1) 6623982
John.Flavin@appianasset.ie
+353 (1) 6624053
Ian.naughton@appianasset.ie
+353 (1) 6623986
Sean.breheny@appianasset.ie
+353 (87) 1806784
Patrick.lawless@appianasset.ie
+353 (1) 6623001Disclaimer
Warning
• If you invest in any of the funds you may lose some or all of the money you invest
• Past performance is not a reliable guide to future performance
• Appian Funds may be affected by changes in currency exchange rates
• The value of your investment may go down as well as up
Please note that any target return noted in this material is not guaranteed.
The Appian Multi-Asset Fund, Appian Impact Fund, Appian Global Dividend Growth Fund, Appian Global Small Companies Fund and the Appian Euro Liquidity Fund are Retail
Investment Alternative Investment Funds and are sub-funds of the Appian Unit Trust.
The Appian Burlington Property Fund is a limited Liquidity fund and is only open to Qualifying Investors. A minimum investment threshold of €100,000 applies. Redemptions are at the
discretion of the directors and minimum investment term prior to any redemption request being considered is two years from investment.
Further information in relation to all risks for each fund is provided in the relevant Fund Prospectus and supplements available on request.
The information contained in this material is not financial advice. Nor does it constitute an offer for the purchase or sale of any financial instruments, trading strategy, product or service. No
one receiving this material should treat any of its contents as constituting advice. It does not take into account the investment objectives, knowledge, experience or financial situation of any
particular person. You should seek advice in the context of your own personal circumstances prior to investing or taking out any product from your own independent adviser.
This material has been prepared and issued by Appian Asset Management Limited on the basis of publicly available information, internally developed data and other sources believed to be
reliable. While all reasonable care has been given to the preparation of the information, no warranties or representation, express or implied are given or liability accepted by Appian Asset
Management Limited or its affiliates or any directors or employees in relation to the accuracy, fairness or completeness of the information contained herein. Any opinion expressed
(including estimates and forecasts) may be subject to change without notice.
The above disclaimer and limitations of liability are applicable to the fullest extent permitted by law, whether in Contract, Statute, Tort (including without limitation, negligence) or
otherwise.
Appian Asset Management Limited is regulated by the Central Bank of Ireland.
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