CBRE Global Real Estate Income Fund · NYSE:IGR
CBRE Global Real Estate Income Fund — CBRE Investment Management — Investor Presentation (July 2022)
38 slides from CBRE Global Real Estate Income Fund's investor presentation, July 2022
Slide 1: Retail transformation in the Netherlands
CBRE fimgemene JULY 2022 Retail transformation in the Netherlands We aim to explore the transformation and re-purposing potential for retail in the Netherlands through the addition of residential functions
Slide 2: Executive summary
RETAIL TRANSFORMATION Executive summary Confidential & Proprietary | ©2022 CBRE Investment Management Housing shortages together with e-commerce disruption is catalysing a repricing of retail and residential in the Netherlands, which leads to a convergence in values. It is now possible to identify s
Slide 3: Executive summary
RETAIL TRANSFORMATION Executive summary Confidential & Proprietary | ©2022 CBRE Investment Management Against these factors, the focus should be on strategic divestments when following asset and location specific risks are material: 01 Substantial loss of leasable area 05 Cost of construction inflat
Slide 4: Introduction and forecast agenda
Introduction and forecast Agenda City factors Type of retail factor Type of asset factor Carbon Risks Implications NOP one Confidential & Proprietary | ©2022 CBRE Investment Management
Slide 5: Introduction and forecast
Introduction and forecast
Slide 6: Increase in long and structurally vacant retail since 2019
INTRODUCTION AND FORECAST Increase in long and structurally vacant retail since 2019 Source: Locatus The vacancy of below or max. 12 months is defined as frictional. The vacancy between 1 to 3 years is defined as long. The vacancy above 3 years is defined as structural. Before 2020 transformation pr
Slide 7: New homes are needed, and the space is available
INTRODUCTION AND FORECAST New homes are needed, and the space is available Stakeholder alignment In absolute terms per end of 2021 there was approximately 1,773,000 sq m of retail space vacant for longer than one year. Some of that space can potentially be transformed into residential units, conditi
Slide 8: Return forecasts
INTRODUCTION AND FORECAST In the Netherlands, regulated Total Return & Breakdown, %Y/Y, average, 2022-2026 Return forecasts housing residential rents were ™ $ frozen until June 2022 and 8% are capped at consumer price inflation +1% until 2023. Nevertheless, the outlook has previously strengthened du
Slide 9: Residential capital growth is abetted by house price rises
INTRODUCTION AND FORECAST Residential capital growth is abetted by house price rises during the pandemic Confidential & Proprietary | @2022CBRE Investment Management After record capital appreciation seen in 2021, cumulative capital growth for residential assets in the Netherlands is forecast at 13%
Slide 10: City factors in conversion
City factors in conversion
Slide 11: Capital value per sq m for small city centre retail vs multi-family residential
CITY FACTORS IN CONVERSION . Small city centres offer plenty ¢ r Capital value per of re-purposing opportunities r0000 r000 . when examining capital value 9.000 9.000 Sq m for small city conversion. These are often . smaller projects with small lot 8.000 8.000 centr e retail VS sizes in the sub-mark
Slide 12: Capital value per sq m for medium city centre retail vs multi-family residential
CITY FACTORS IN CONVERSION . In individual cases, the 10.000 10.000 Capital value per residential value already exceeds the retail value. This 9,000 9.000 sq m for medium city aids the ability to start a re- . purposing dialogue. More 8.000 centre retail VS conversion in capital value is +000 . . li
Slide 13: Capital value per sq m for large city centre retail vs multi-family residential
CITY FACTORS IN CONVERSION 7 Overall, retail in large city 20.000 Capital value per centres has the highest * average capital values per sq 18.000 sqm for large city m. At the same time, the lower . tail of large city centres 16.000 centre retail VS distribution brings the most . . interesting re-po
Slide 14: Type of retail factor in conversion
Type of retail factor in conversion
Slide 15: What is the residual value after (re-)positioning?
TYPE OF RETAIL FACTOR IN CONVERSION What is the residual value after (re-) positioning? Confidential & Proprietary | ©2022 CBRE Investment Management Residual capital values after capital expenditure indicate that the highest value uplift can be realised when converting secondary shopping centres. A
Slide 16: What is the residual value after (re-)positioning?
TYPE OF RETAIL FACTOR IN CONVERSION What is the residual 94 02 value after (re-) 03 positioning? Overall, prime HSR valuations in G4 Most opportunities are found through cities are likely too overheated to justify the conversion of secondary shopping conversion to residential when looking centres. I
Slide 17: Retail capital values for high street retail/prime shopping centres in G4 cities
TYPE OF RETAIL FACTOR IN CONVERSION Retail capital values for high street retail/prime shopping centres in G4 cities Confidential & Proprietary | @2022CBRE Investment Management En ae \~ —1 Q4 2 Q4 Q2 Q4 Q2 Q% Q2 Q4 Q2 Q%4 Q2 4 Q2 Q6 Q2 Q%4 Q2 Q4 Q2 4 Q2 Q6 2 O4 O2 Q4 Q2 % 2007 2008 2008 2009 2009 2
Slide 18: Dutch shopping centres make a case for value creation
TYPE OF RETAIL FACTOR IN CONVERSION Dutch shopping centres make a case for value creation Confidential & Proprietary | ©2022 CBRE Investment Management The majority of SC stock in the Netherlands was added before the 1980s. Much of this stock is now outdated and facing declining retailer interest. M
Slide 19: Type of asset factors in conversion
Type of asset factors in conversion
Slide 20: Shopping centre, as defined by Urban Land Institute 1957
Shopping centre, as defined by Urban Land Institute 1957. 66 A group of commercial establishments, planned, developed, owned and managed as a unit, with off-street parking provided on the property (in direct ratio to the building area) and related in location, size (gross floor area) and type of sho
Slide 21: Defining Dutch Shopping Centres
TYPE OF ASSET FACTORS IN CONVERSION Defining Dutch Shopping Centres Confidential & Proprietary | ©2022 CBRE Investment Management SIMILARITIES PEDESTRIAN PARADISE SC is separated from other traffic with shops on both sides of the street NO STACKING OF FUNCTIONS, Retail and housing are decoupled. Ser
Slide 22: Evolving customer needs suggest space utilisation in SCs
TYPE OF ASSET FACTORS IN CONVERSION Evolving customer needs suggest space utilisation in SCs Confidential & Proprietary | ©2022 CBRE Investment Management 1960s 1970s SC built in 1960s with rational customer definition in mind: SC built in 1970s with pleasure-seeking customer in mind - Separated hou
Slide 23: Business case for Shopping Centre transformation
TYPE OF ASSET FACTORS IN CONVERSION Business case for Shopping Centre transformation Confidential & Proprietary | @2022CBRE Investment Management The business case can be made for adding height in city fringes SCs as well as for conversion of redundant parking. These are the areas where the interest
Slide 24: Business case for Shopping Centre transformation
TYPE OF ASSET FACTORS IN CONVERSION SCs built after the 1960s are often located in city boroughs of the G4. They are often valued lower than SCs in the city centres due to factors such as older structures and secondary locations Business case for Shopping Centre transformation 01 02 03 04 One older
Slide 25: Department stores and HSR in the inner cities
TYPE OF ASSET FACTORS IN CONVERSION Department stores and HSR in the inner cities Confidential & Proprietary | ©2022 CBRE Investment Management Ground floor front-facing shops attract greater footfalls and, historically, cost more to rent. This is reflected in valuations with basement, first and upp
Slide 26: Business case for inner city shops transformation
TYPE OF ASSET FACTORS IN CONVERSION Business case for inner city shops transformation Confidential & Proprietary | ©2022 CBRE Investment Management When calculating the feasibility of the mixed-use redevelopment, it should be recognised that retail ERVs differ significantly across different levels o
Slide 27: Carbon
Carbon
Slide 28: Whole life carbon considerations
CARBON Whole life carbon considerations Source:1. Assessing the Carbon-Saving Value of Retrofitting versus Demolition and New Construction at the United Nations Headquarters, The UN Capital Master Plan, 2016. 2. The Fit for 55 is @ comprehensive legislative proposal in which the principles of the EU
Slide 29: Whole life carbon considerations
CARBON Whole life carbon considerations Source: 1.UK Parliament POST, Reducing the whole life carbon impact on buildings, 2021 2. The butterfly diagram visualising the circular c https:/ellenmacarthurfoundation org/circula diagram 3. An assessment of carbon emissions from retail fit-out in the Unite
Slide 30: Increasing building lifespan through the adaptability principle
CARBON Increasing building lifespan through the adaptability principle Source: 1.UK Parliament POST, Reducing the whole life ‘carbon impact on buildings, 2021 Confidential & Proprietary | @2022CBRE Investment Management Adaptability is a design principle that addresses not only current building need
Slide 31: End of life stage
CARBON End of life stage Confidential & Proprietary | ©2022 CBRE Investment Management At this stage, buildings can be demolished, re-used, disassembled or repurposed. Many stakeholders (including UK Royal Academy of Engineering, UK Green Building Council) prioritise re-use for obvious carbon benefi
Slide 32: Risks
Risks
Slide 33: Strategic focus on retail divestments
RISKS. Strategic focus on retail divestments Confidential & Proprietary | ©2022 CBRE Investment Management Redevelopment or re-purposing to mixed or alternative uses may not yield high return on investment if a considerable amount of capex needs to be budgeted in, significant leasable area loss is e
Slide 34: Case study: redevelopment breakdown
RISKS. Strategic focus on Case study: redevelopment breakdown From single use retail to mixed-use retail divestments Value future situation EUR 2,500 per sq m +/- GLA effect Negative:-2,000 sq m lost +/- Rent effect Positive: +EUR 63 per sqm - Value current situation - EUR 1,500 / sqm - Capex and in
Slide 35: Implications
Implications
Slide 36: Conclusion (1/2)
IMPLICATIONS Conclusion (1/2) Confidential & Proprietary | ©2022 CBRE Investment Management 01 Q2 03 O04 Dutch retail is in transition with structurally vacant stock being transformed to alterative uses. This was triggered by significant increases in vacancy due to a combination of the following fac
Slide 37: Conclusion (2/2)
IMPLICATIONS Conclusion (2/2) Confidential & Proprietary | ©2022 CBRE Investment Management 05 O06 07 08 Re-purposing by adding alternative use is a defensive strategy against assets becoming obsolete abetted by rising residential capital values and stakeholder alignment with municipalities. G4 SCs
Slide 38: Thank you
CBRE fimgemene JULY 2022 Thank you Contacts Darya A. Frolova Senior Associate Research [email protected] cbreim.com The information in this document is confidential and meant for use only by the intended recipient. This material is intended for informational purposes only, does not constitute
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