Real Estate Investments

Gonçalo Nascimento Rodrigues
goncalonr@gmail.com
www.outofthebox.com.pt
out-of-the-boxthinking.blogspot.com
Family Office in Portugal
CONFERENCE
Real Estate Investments

2
Family Office in Portugal Conference 24ᵗʰ September 2015 Four Seasons Hotel Ritz , Lisbon, Portugal
Security
Real
Assets
Increasing
value
Ability to
leverage
Stability
over the
long term

3

4

5
Portugal House Price Index

6
Presentation Framework
1
2
3
How/Why invest in Real Estate?
The Real Estate Market in Portugal
Invest in Portugal?

7
Family Offices Real Estate Investments
 Drivers:
 Diversification;
 Tax Efficiency;
 Hedging;
 Risk / Return optimization.
1

8
 Direct investments – commercial real estate, development;
 Indirect investments – acquiring units from investment vehicles.
1

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 Investment Vehicles
 Real Estate Funds;
 Real Estate Investment Trusts;
 Sicav, Sicaf;
 Other type of vehicles, more complex structures.
1

10
 Family Offices tend to invest:
 Directly;
 In income producing properties;
 Core and opportunistic investments;
 Low leverage;
 Long term positions;
 Focus on fundamentals:
 Eye on location;
 “Quality” of the tenant;
 Rental contract length.
 Properties with higher yields.
1

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 Commercial Real Estate Investment near all-time high
 Investments, nowadays, are financially driven;
 Lack of attention to fundamentals.
2

12
 Residential prices and sales climbing
 ARI gave an important boost to the market;
 Credit still scarce and expensive.
2

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 Commercial Real Estate Investment growing
Source: C&W
2

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 Office rents at all-time low
Source: Workx
2

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 Prime Yields at all-time low
4,00%
5,00%
6,00%
7,00%
8,00%
9,00%
10,00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 2015
Offices Logistics Shopping Centre Retail Hihgstreet
Source: B. Prime, CBRE
2

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Source: Out of the Box
0,00
0,50
1,00
1,50
2,00
2,50
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Rents vs. Investment*
Average Rents Index CommercialREInvestment Index
*Regards to the Lisbon office market
 Disruption between rents and investment, or, fundamentals and
financial drivers
2

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-4,0%
-3,0%
-2,0%
-1,0%
0,0%
1,0%
2,0%
3,0%
4,0%
0
200
400
600
800
1 000
1 200
1 400
1 600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Commercial RE Investment and yield spread vs. OT
Investment Spread
 How yields affect real estate investments
2
Source: Out of the Box

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 Potential upside through rental growth
2

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 Effects on prime rent through yield variation
18,0
19,5
21,0
22,5
24,0
14,0
16,0
18,0
20,0
22,0
24,0
26,0
6% 6,50% 7% 7,50% 8%
€/sq.mt.
Prime Yield
2

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 Residential prices and sales recovering
2
Source: Statistics Portugal
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
75,00
80,00
85,00
90,00
95,00
100,00
105,00
1Q2009
2Q2009
3Q2009
4Q2009
1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
2Q2012
3Q2012
4Q2012
1Q2013
2Q2013
3Q2013
4Q2013
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
Portugal Residential Index
Prices Sales

21
 Golden Visas (ARI’s) gave an important boost
2
494
1 526
443
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2012 2013 2014 2015
Nº of Golden Visas Granted
Source: SEF
2

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 Golden Visas (ARI’s) on a slow move
Source: SEF
1,154
1,208
1,253
1,301 1,305
1,325 1,33
1,35
1,05
1,1
1,15
1,2
1,25
1,3
1,35
1,4
Jan Feb Mar Apr May Jun Jul Aug
Amount invested in RE through ARI's (€ Bll)
2

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 Housing loans still scarce and expensive
Source: Bank of Portugal
2
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
jan/04
jun/04
nov/04
abr/05
set/05
fev/06
jul/06
dez/06
mai/07
out/07
mar/08
ago/08
jan/09
jun/09
nov/09
abr/10
set/10
fev/11
jul/11
dez/11
mai/12
out/12
mar/13
ago/13
jan/14
jun/14
nov/14
abr/15
Montlhy housing loans (€ Million)

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 Housing loans still scarce and expensive
Source: Statistics Portugal
2
0
50
100
150
200
250
300
350
mar/08
jul/08
nov/08
mar/09
jul/09
nov/09
mar/10
jul/10
nov/10
mar/11
jul/11
nov/11
mar/12
jul/12
nov/12
mar/13
jul/13
nov/13
mar/14
jul/14
nov/14
mar/15
BasisPoins
Average Spread Housing Loans

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Invest in Portugal?3
Commercial
Real Estate
Residential
Hotels /
Tourism
“Alternative”
Investments
• Offices / High street retail;
• Some logistic operations;
• Corporate Sale & Leaseback;
• Focus on fundamentals;
• Eye on rents;
• Prime locations.
• Buy-to-let Lisbon outskirts;
• High-yield.
• 4 and 5 star Hotels in
Lisbon and Oporto.
• Student Accommodation;
• Senior Living.

Thank You!
Family Office in Portugal
CONFERENCE
Gonçalo Nascimento Rodrigues
goncalonr@gmail.com
www.outofthebox.com.pt
out-of-the-boxthinking.blogspot.com

Real Estate Investments

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