1. Global Listed Property Overview
Keillen Ndlovu
Head of Listed Property Funds
Senate Conference
March 2013

2. The STANLIB Listed Property Team
Keillen Ndlovu Riaan Gerber Ndabezinhle Mkhize Craig Smith
Head: Listed Property Funds Property Analyst Property Analyst Property Analyst
Portfolio Manager Offshore Focus Local Focus Local Focus
BCom (Hons) Finance
BCom(Hons) Finance B Compt (Hons) BSc (Actuarial Science) BSc (Hons) Property Studies
Property Development Programme Property Development Programme CAIA CFA
CAIB(SA) CA(SA) CFA Passed CAIA Level 1 exams
8 years 5 years 8 years 4 years
asset management experience asset management experience asset management experience physical property experience
(8 years listed property) (5 years listed property) (6 years listed property) (1.5 years listed property)
(8 years with STANLIB) (5 years with STANLIB) (2 years with STANLIB) (1.5 years with STANLIB)
3

3. Stanlib Global Property Fund
● Objective
● The Fund invests in the global property market comprising of both developed and emerging territories.
● To provide superior long term investment performance based on sound fundamental research.
● Portfolio Characteristics
● The Fund aims to outperform the UBS Global Real Estate Investors Index
● Manager selects stocks from the bottom up rather than attempting to take big regional bets.
● The Fund has a very strong bias toward investors rather than developers.
● Investment Style
● Involves selecting companies that generate above average growth in their rental streams
● We invest in companies that are trading at reasonable values relative to their growth prospects.
● We focus on defensive attributes such as balance sheet strength, tenant stability and core rental
earnings.
● Target Market
● Investors that seek a diversified portfolio of global property stocks that aims to diversify exposure
away from the South African listed property market
● Investors that need to add diversity to their offshore cash, equities and/or bond exposure.
● Investors that need to add diversity to currency exposure
3

4. We do stock picking in-house but we outsource most of the research
UBS MacQuarie
Credit Suisse Morgan Stanley
JP Morgan Merill Lynch
Morningstar Deutsche Bank
CB Richard Ellis Jones Lang La Salle
 Monthly or quarterly conference calls
Ad hoc conference calls
 Conversations
Email
Bloomberg chats
 Analysts visiting us at our offices
One-on-one meetings
Property markets reports
Daily reports
Weekly reports
Monthly reports
4

5. Increased appetite for STANLIB’s offshore listed property offering
The STANLIB Global Property Feeder Fund has grown to R790m making it the biggest
offshore property fund in South Africa
Source: I-Net & STANLIB
5

6. STANLIB Global Property offering – managed in-house - a top performer
● STANLIB Global Property Fund (underlying fund – US Dollar denominated)
● Ranked 2nd in the world over 2 years as at 31 December 2012 (in USD)
● STANLIB Global Property Feeder Fund (Rand denominated)
● Winner of the Morningstar Award
● Best Risk-Adjusted Return Over 1 and 3 years to Dec 2011
● South African ranking(in ZAR) – Jan 2013
● 1st over 1 year out of 6 funds
● 1st over 3 years out of 5 funds
● 1st over 5 years out of 3 funds
Source: Morningstar & FundsData
NB: We do not aim for this. It’s an outcome of our investment philosophy and process.
6

7. STANLIB Global Property Fund gross total returns to 31 December 2012 - USD
1 3 6 1 3 Since
Month Month Month Year Year Inception
(%) (%) (%) (%) (%) Sept
2009*
(%)
STANLIB Global Property Fund 3.25 4.67 9.97 26.79 16.13 16.60
Benchmark :
2.85 4.58 8.86 24.93 15.55 15.84
UBS Global Investors
Outperformance 0.40 0.08 1.11 1.86 0.59 0.76
*annualised
Official STANLIB takeover July 2009
Fully invested Sept 2009
Source: STANLIB Performance

8. STANLIB Global Property Fund gross total returns to 31 December 2012 ZAR
1 3 6 1 3 Since
Month Month Month Year Year Inception
(%) (%) (%) (%) (%) Sept
2009*
(%)
STANLIB Global Property Fund -1.55 7.03 13.85 32.85 21.68 21.05
Benchmark :
-1.93 6.94 1.70 30.90 21.06 20.26
UBS Global Investors
Outperformance 0.38 0.08 1.15 1.95 0.61 0.79
*annualised
Official STANLIB takeover July 2009
Fully invested Sept 2009
Source: STANLIB Performance

9. Our benchmark has achieved the highest return with the lowest risk
STANLIB Global Property Fund Benchmark
9%
8% UBS Global Investors
FTSE EPRA/ NAREIT
Total Return Per Annum
7%
Global
6%
5%
GPR 250
4%
MSCI World RE*
3%
UBS Global
2%
Developers
1%
0%
16% 18% 20% 22% 24% 26% 28%
Risk Per Annum
Source: UBS – Data from 1990 to 2012
9

10. STANLIB Global Property Fund exposure by region
Portfolio by Region
4.0%
5.6%
North America
5.6%
3.7% Europe
UK
Oceania
10.3%
Japan
54.7%
Hong Kong
5.7%
Singapore
10.3% cash
Singapore retail, Suntec City Mall
May 2009 site visit Source: STANLIB Research Dec 2012

11. STANLIB Global Property Fund exposure by sector
Portfolio by Sector
1.6%
5.6%
17.3%
office
retail
20.2%
industrials HOSPITALS
residential
diversified
11.1% hotels
37.1%
cash
7.2%
PRISONS
Source: UBS, Bloomberg Dec 2012
11

12. The retail sector has provided the best returns with the lowest risk
10%
9% Global Investors
8%
Retail
Return Per Annum
7%
6% Diversified
Residential
5%
Industrial
4%
3%
Office
2%
Global Developers
1%
0%
13% 15% 17% 19% 21% 23% 25% 27% 29% 31% 33%
Risk Per Annum
Source: UBS – May 2002 to Jan 2012
12

13. STANLIB Global Property Fund Current Holdings
Top 10 Holdings Portfolio % Top 10 Overweight Positions Relative
Westfield Group 2.0% American Campus Communities 0.72%
Wharf Holdings Ltd 2.0% Westfield Retail Trust 0.73%
Ventas Inc 2.0% Brookfield Office Properties 0.75%
Equity Residential 2.1% Can Real Estate Invest Trust 0.78%
Boston Properties Inc 2.2% Can Apartment Prop Real Estate 0.82%
Prologis Inc 2.5% Primaris Retail Real Estate 0.89%
Unibail-Rodamco Se 2.6% Simon Property Group Inc 1.02%
Public Storage 3.0% Tanger Factory Outlet Center 1.06%
New Europe Property Invest 3.4% Growthpoint Properties Austr 1.60%
Simon Property Group Inc 7.1% New Europe Property Invest 3.37%
28.8% 11.72%
Source: STANLIB Research as at Dec 2012
13

14. Imagination is a poor substitute for experience
Havelock Ellis
Some of our many site visits
NB: All photos taken by the STANLIB Listed Property team

15. Shopping JK Iguatemi, Sao Paulo – Brazil’s most beautiful shopping centre
July 2012
Owned by Iguatemi Empresa de Shopping Centers one of our holdings
15

16. Norte Shopping, Rio de Janeiro, Brazil – Low income centre – BR Malls
Source: STANLIB Research July 2012
16

17. USA – New York site visits – June 2012
Source: STANLIB Research June 2012
17

18. USA – New York Site Visits
Source: STANLIB Research June 2012
18

19. London Jan 2012 site visits - Westfield Stratford City – Westfield Group
 Opened in September 2011 and cost £1.45bn (R17.5bn) to build
 190,000m²- the largest shopping centre in Europe (Canal Walk in Cape Town is 150,000m²)
 Average lease length is 10 years
 Anchored by John Lewis (24,000m²), Marks & Spencer (20,000m²), Waitrose (3,200m²) & 6,500m² casino (UK’s largest)
 17 cinemas – all with 3D screens
 Vacancy of 6% - looks to be fully let before Olympic Games
 70% of the visitors to the Olympics will pass through Westfield Stratford
 58 trains per hour connect Stratford and Central London
Source: STANLIB Research January 2012
19

20. Westfield White City – London – Westfield Group - January 2013
• Opened in October 2008 and cost circa £1.6bn (R22bn) to build
• 150,000m² in size placing it at a similar size to Canal Walk in Cape Town
• 255 stores
• Anchored by Debenhams, M&S, Waitrose (3,200m²)
• The project took five years to build
• Shop front floor to ceiling height on upper level is double volume
Source: STANLIB Research Jan 2013
Source: Westfield, Stanlib Research 20

21. Canary Wharf, London - January 2012 & 2013
• Owned by Canary Wharf plc
• Canary Wharf precinct commenced in the mid to late 1980’s
Photo by Craig Smith Photo by Craig Smith
• precinct now comprises approx 1.5m m² of office and retail space
• Working population in excess of 105 000 people
• Occupiers include Thomson reuters, Ogilvy, McGraw-Hill, BP Shell, Chevron, Total, Clifford Chance, Allen and
,
Overy, HSBC, Barclays, Citi, Morgan Stanley, Credit Suisse, BNY Mellon, BOA Merrill Lynch, KPMG, Fitch, Moodys,
Standard & Poors, Mastercard, FSA, JP Morgan)
• The Cross rail line will link in to Canary Wharf and is expected to open in 2018
Source: STANLIB Research Jan 2013
Source: Songbird Estates, Stanlib Research 21

22. Hong Kong – One of the most densely populated cities
Source: STANLIB Research January 2012
22

23. No wonder why there’s queues at shopping centres in Hong Kong
Harbour City – Hong Kong’s largest mall – 177,000m²
Normal trading day. No specials.
Source: STANLIB Research January 2012
23

24. Hong Kong site visit - Langham Place Mall – Champion REIT
 Dividend yield 6.2%
 Gearing 26%
 Cost of debt 1.1%
 100% occupied
 Footcount up 5.2% to 8.5m visitors per month – management looking to improve it!
 Turnover up 24% year on year
 Rental growth up 20% over expiring rents
No weakness or slowdown expected in occupancies or rents Source: STANLIB Research January 2012
24

25. Romanian towns and cities visited by STANLIB in 2011
Areas where NEPI is exposed to
25

26. The new Romania – upmarket shopping centres - NEPI
Source: STANLIB Research May 2011
Promenada Mall , Braila - New Europe Property Investments (NEPI)
26

27. The new Romania – NEPI - modern office buildings with multinational tenants
City Business Centre, Timisoara Floreasca 169, Bucharest
Source: STANLIB Research
27

28. Singapore site visits – August 2011 – Strong fundamentals across all sectors
Marina Bay Sands
New CBD – letting very well. Taken up by banks No material impact on existing retail and hotels
New shopping centre on Orchard Road – fully let Old CBD – holding up despite increase in supply
28

29. Singapore site visits – August 2011- Strong fundamentals across all sectors
Hotel
Retail
Retail Retail – first
H&M store in
Singapore
29

30. Westfield Retail Trust, Australia - October 2011- Management breakfast
● A$9.3bn market capitalisation (R85bn)
● Owns malls in Australia and New Zealand
● Less than 2% of rent linked to sales turnover
● 99.5% of portfolio leased i.e. 0.5% vacancy
● Low gearing of 20%
Westfield Sydney, Sydney CBD, Australia
30

31. STANLIB offshore conferences, management meetings & site visits in 2012
● Hong Kong – January
● UK - January
● US – June
● UK - June
● Romania – June
● Brazil – July
● Singapore – August
31

32. Offshore conferences, mgnt meetings and site visits planned* for 2013 & 2014
● UK/France
● Romania/Turkey
● Philippines/Malaysia/Indonesia
● China/Hong Kong
● Australia/New Zealand
● USA/Canada
● Germany/Switzerland
● Japan/Singapore
* May change
32

33. Physical property fundamentals

34. Global Prime Retail – Rental market is looking good
Top 10 Prime Retail Rents in the World
Market R/m² per month
Hong Kong 34 803
New York 23 847
London 9 044
Paris 8 673
Sydney 8 151
Tokyo 7 828
Zurich 6 846
Melbourne 6 815
Moscow 5 930
Beijing 5 313
Source: CB Richard Ellis Q4 Report 2012 &
Source: Jones Lang LaSalle Q1 Report 2013 STANLIB conversions using € exchange rate of 11.8
34

35. Global Listed Property Prices are 30% below the peak achieved in 2007
Global Listed Property(USD): 30% below 2007 peaks SA Listed Property (ZAR): 33% above 2007 peaks
UBS Global Real Estate Investors Index SA Listed Property Index
3500
600
3000 +33%
-30% 500
2500
400
2000
300
1500 -76%
-37%
200
1000
500 100
0 0
It’s a similar story with, for example, the MSCI World Real Estate Index
and the S&P Global REIT Index Source: Bloomberg Feb 2013
35

36. Global Listed Property Prices are 30% below the peak achieved in 2007
Global Listed Property(USD): 30% below 2007 peaks SA Listed Property (ZAR): 33% above 2007 peaks
UBS Global Real Estate Investors Index SA Listed Property Index
3500
600
3000 +33%
-30% 500
2500
400
2000
300
1500 -76%
-37%
200
1000
500 100
0 0
It’s a similar story with, for example, the MSCI World Real Estate Index
and the S&P Global REIT Index Source: Bloomberg Feb 2013
36

37. Global Prime Office – Rental market is holding up
Source: Jones Lang LaSalle Q1 Report 2013 Source: CB Richard Ellis Q4 Report 2012
37

38. The Global Office Market Rent Cycle
Top 10 Prime Office Rents in the World
Markets R/m² per month
Hong Kong 1943
New York 1734
London 1557
Paris 1459
Sydney 1446
Tokyo 1417
Zurich 1374
Melbourne 1364
Moscow 1040
Beijing 1026
STANLIB view: Johannesburg and Cape Town FYI – Johannesburg is R175/m² per month and
fall under “Rental Decline Slowing” does not feature in the top 50 office markets
Source: CB Richard Ellis 2012
STANLIB conversions using a USD exchange rate of 8.8
38

39. Limited supply of global office space – Demand exceeds supply
Regional demand and supply as a % of existing stock
Global demand and supply as a % of existing stock
Manhattan offices, New York
USA site visit May 2011
Source: CB Richard Ellis Q3 2012
39

40. Global office vacancies are improving
Regional Vacancies
Source: CB Richard Ellis Q3 2012
Shinjuku office node, Tokyo
Hong Kong Central December 2010 site visits
April 2009 site visit
40

41. Global office rentals – a generally positive trend
Projected Value Changes in 2013
Marina Bay, Singapore
September 2010 site visit Source: Jones Lang la Salle Q1 2013
41

42. Prime Industrial Warehousing – Rental growth is fairly strong
Top 10 Prime Industrial Rents in the World
Markets R/m² per month
Tokyo 168
London 160
Singapore 139
Stockholm 113
Hong Kong 103
Sydney 99
Sao Paulo 99
Source: Jones Lang LaSalle Q1 Report 2013 Brisbane 93
Paris 87
Perth 87
Source: CB Richard Ellis Q4 Report 2012
STANLIB conversions using USD exchange rate of 8.8
Source: CB Richard Ellis Q3 2012
42

43. Valuations - Why investing in Global
Listed Property still makes sense

44. Global Listed Property Prices are 30% below the peak achieved in 2007
Global Listed Property(USD): 30% below 2007 peaks SA Listed Property (ZAR): 33% above 2007 peaks
UBS Global Real Estate Investors Index SA Listed Property Index
3500
600
3000 +33%
-30% 500
2500
400
2000
300
1500 -76%
-37%
200
1000
500 100
0 0
It’s a similar story with, for example, the MSCI World Real Estate Index
and the S&P Global REIT Index Source: Bloomberg Feb 2013
44

45. Attractive forward yields by region and sector
Region Forward Yield Sector Forward Yield
North America 3.6 Office 3.6
Europe 3.3 Retail 3.7
UK 3.8
Industrials 4.8
Oceania 6.2
Residential 3.5
Japan 3.4
Diversified 4.3
Hong Kong 2.8
Hotels 2.3
Singapore 5.0
Weighted Average 3.9 Weighted Average 3.9
All regions are trading comfortably above their respective bond yields
Source: Bloomberg, UBS , STANLIB at Dec 2012
45

46. Real estate physical values have sufficient protection
Current cap rate spread to 10-year bond yields by country or region (%)
Source: Jones Lang LaSalle, IPD, NCREIF, DataStream, UBS October 2012
*Average spread calculated over 11 years to 20 years depending on region
46

47. Global Listed Property trading in line with NAVs – Not cheap but not peak
0.3
0.2
PREMIUM
0.1
0
-0.1
-0.2
EXPENSIVE
-0.3
-0.4
Global Investors (Discount)/ Premium to NAV (LHS) Average
* Global Investors – Listed property companies with investment properties Source: UBS – Nov 2012
47

48. Global Property earnings track GDP growth
Source: UBS, Thomson Reuters, Datastream, JLL, IPD, NCREIF Dec 2012
48

49. Balance sheets have been repaired and debt is available and affordable
Global REITS Gearing (Net Debt-To-Total Assets)
o 35% is a comfortable level of gearing
o Most property companies are raising cheaper debt in the bond market
o 63% to 86% of the debt is fixed for 3 to 5 years Source: UBS and DataStream
49

50. The GDP outlook - though not as exciting - is still positive
IMF Projections 2012 2013 2014
World 3.2 3.5 4.1
Advanced Economies 1.3 1.4 2.2
US 2.3 2.0 3.0
Euro Area -0.4 -0.2 1.0
Japan 2.0 1.2 0.7
Emerging Economies 5.1 5.5 5.9
China 7.8 8.2 8.5
India 4.5 5.9 6.4
Brazil 1.0 3.5 4.0
Sub-Saharan Africa 4.8 5.8 5.7
South Africa 2.3 2.8 4.1 Source: IMF January 2013
GDP growth
Employment Growth
Demand for space
Lower vacancies
Higher rents
Higher NAVs & Higher Profits
Higher Share Prices
50

51. 4 reasons why it makes sense to include
Global Listed Property in a Balanced
Portfolio

52. 1.a) Global total returns (ZAR) – listed property has boosted returns
Annualised Returns of Portfolios with Different Weightings in Property
14
12.5
11.8
12 11.1
10.4
10
Annualised Return (%)
8.0 8.2 7.8
8 7.4 7.7 7.4
6.9
6.5
6.0 6.2
6 5.4 5.7
4
2.1 2.3 2.4 2.5
2
0
15 yrs 10 yrs 5 yrs 3 yrs 1 yr
Investment Horizon
0% Property 5% Property 10% Property 15% Property
 Equity – MSCI Index
 Bonds – JP Morgan Global Bond Index]
Source: BNP Paribus Cadiz Quantitative Research  Cash – US 3 Month Treasury Bill
 Property – UBS Global Real Estate Investors Index
52

53. 1.b) Global total returns (ZAR) – listed property has provided superior returns
160
Index Performance (rebased to 100) TR ZAR
150
140
130
120
110
100
90
EM Property EM Gov Bond EM Equity DM Property DM Equity DM Gov Bond
EM – Emerging Markets
DM – Developed Markets
Source: Bloomberg, MSCI, UBS, JP Morgan Dec 2012
53

54. 2) Global Listed Property provides a relatively stable income stream
50%
30%
10%
-10%
-30%
-50%
Income Return Price Return Total Retun
Source: UBS & Bloomberg Dec 2012
54

55. 3) Global Property is good diversifier
The average correlation is nowhere near “1” to either Equities or Bonds
1.20
1.00
0.80
0.60
0.40
0.20
0.00
-0.20
-0.40
-0.60
Dec-01
Dec-91
Dec-92
Dec-93
Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
REITs-Equity Correlation REITs-Bond Correlation Avg REIT-Equity Avg REIT-Bond
REIT = Real Estate Investment Trust = Listed Property Source: UBS
55

56. 4. Global Listed Property is a rand hedge – 2011 example
130.0 8.5
125.0
120.0 8.0
115.0
UBS Investors
110.0 7.5
Index
Based to 100 105.0
USDZAR
100.0 7.0
95.0
90.0 6.5
85.0
80.0 6.0
UBS Investors Index (ZAR) UBS Investors Index (USD) USDZAR
UBS Investors Index (Global Property) flat in USD but +20% up in Rand terms
Source: UBS, Bloomberg Jan 2012
56

57. Conclusion
● Global property is a great diversifier
● Currency
● Income, regions and sectors
● Upside risk
● Earnings profile has bottomed
● Physical property cap rates comfortably above bond yields
● Limited supply of new properties
● Low funding costs
● Downside risk
● Lower than expected GDP growth (recession) leading to lower rental growth and rising vacancies
● Global markets volatility
● Yield
● We are looking at USD income (yield) of 3.9% in 2013
● Global market consensus for total returns is 10% to 15% in USD in 2013
57
Prediction is very difficult, especially about the future
Niels Bohr

58. There is definitely a place for global listed property in offshore allocations.
Annualised Returns of Portfolios with Different Weightings in Property
14
12.5
11.8
12 11.1
10.4
10
Annualised Return (%)
8.2
7.4 7.7 8.0 7.8
8 6.9
7.4
6.5
6.0 6.2
6 5.4 5.7
4
2.1 2.3 2.4 2.5
2
0
15 yrs 10 yrs 5 yrs 3 yrs 1 yr
Investment Horizon
0% Property 5% Property 10% Property 15% Property
 Equity – MSCI Index
 Bonds – JP Morgan Global Bond Index]
Source: BNP Paribus Cadiz Quantitative Research 2013  Cash – US 3 Month Treasury Bill
 Property – UBS Global Real Estate Investors Index
58

59. THANK YOU FOR LISTENING

60. Legal Disclaimer
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Registration No: 1969/002753/06. A Financial Services Provider licensed under the Financial Advisory and Intermediary
Services Act, 37 of 2002. FSP license No: 719.