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Performance of Asia Pacific Hotel Investment Markets IPD Australia and New Zealand
3 July 2013
IPD Asia Pacific Hotel Index sponsors:
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• Hotel Index construction
• Performance hotel investment markets
Outline
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• Hotel Index construction
• Performance hotel investment markets
Outline
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Motivation for Index
• Provides a tool to appropriately measure hotel investment return performance
• Benchmark performance for hotel investment against competing core property sectors
• Increased transparency of the hotel sector to more effectively attract institutional investment
Index Profile
• Corporate hotels, where business is skewed towards commercial travellers
• Hotel properties where the owner is exposed to operating risk
• Institutional quality grade hotel assets
• Index excludes resorts and motels
Focus of the Hotel Property Return Index
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Hotel Index construction
Data Acquisition
Return Calculation
Engine
Index Segmentation
Asset level dataset
Income return
Capital return
Capital expenditure
(including FF&E)
Cash flow less outgoings
Asset valuation
Confidentiality Agreement
Quality
Market type
Space market
3, 4 & 5 Star
Country
RevPAR
Occupancy
Region
CBD / Non- CBD
ARR
Asset Owner
Fund Manager
Public Domain
Stage 1
Stage 3
Stage 2
A three stage process
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Components of investment return performance
Income Return
Total Return
Capital Return
Food & Beverage
Other (leisure) income
Gross Income
Room Night Sold (RNS)
Total Operating Expenses
Capital Expenditure
Capital expenditure
in the quarter (inc FF&E)
Gross purchases
Net Receipts
Capital receipts in the
quarter
Asset Revaluation
Change in capital value between two periods
Total statutory charges
Net sales
Wages & management
Other outgoings
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Japan17%
Singapore11%
Other10%
Australia42%
New Zealand1%
Hong Kong19%
Asia Pacific Hotels split by countrybased on asset values
Abacus Property Group
Auckland Airport
Amalgamated Holdings Ltd
AMP Capital Investors
Colonial First State GAM
Eureka Funds Management
Grand Hotel Group
IBA (Indigenous Business Australia)
IHG (Intercontinental Hotel Group)
LaSalle Investment Management
Mirvac
Arena Investment Management
Schwartz Family & Co
Tainui Group Holdings
Thakral
Tourism Asset Holdings Ltd (TAHL)
Note: not all data providers are shown.
IPD Asia Pacific property database
Significant representation of securitised property market players
COMMERCIAL PROPERTY INDEX DATABASE
AUSTRALASIAN HOTELS
SOURCE
REITs
Direct Data Providers
ASIA HOTELS
PARTICIPANTS: 22
SIZE: 77 assets
VALUE: cA$8 .1 bn
FREQUENCY: quarterly
PARTICIPANTS: 17
SIZE: 102 assets
VALUE: cA$5.0 billion
FREQUENCY: quarterly
REGION
SOURCE
(China, Malaysia, Thailand)
ASIA PACIFIC HOTEL PROPERTY
INDEX DECEMBER 2012
HONG KONG: cA$2.6bn (c$188 HKD)
JAPAN: cA$ 2.7bn (c¥244.0 JPY)
SINGAPORE: cA$1.3bn (c$1.5SGD)
OTHER: cA$1.2bn
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• Hotel Index construction
• Performance hotel investment markets
Outline
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Asia Pacific hotel investment performance
Property market investment cycle softening
• As at December 2012, annual total return was 11.1% comprised of a 6.7% income return and 4.1% capital return.
11.1%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Dec-06 Jun-08 Dec-09 Jun-11 Dec-12
Return performance for Asia Pacific hotelsrolling annual return on quarterly periods
Capital Return Income Return Total Return
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Hotel return performance across markets
All markets moderating except Japan
7.0%
13.5%
11.1%
6.6%
11.1%12.2%
10.4%
24.6%23.0%
6.2%
12.0%
6.0%
1.0%0.7%
5.5%7.9%
16.7%
9.5%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12 5yr 11 12
AP Asia HK Singapore Japan Australia
Performance across hotel markets
capital return income return total return
average annual return ending December
Note: 5yr indicates average annual return over 5 years to December 2012
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Income return premium across markets
Hotel investment offers an attractive premium over bonds
3.1%
2.8%
5.7%
5.4% 5.3%5.0% 4.9%
3.9%
0%
1%
2%
3%
4%
5%
6%
7%
1yr 3yr 1yr 3yr 1yr 3yr 1yr 3yr
Hong Kong Japan Singapore Australia
Income return premium across hotel markets
Source: RBA, MAS, MF, HKMA & IPD Research.
relative spread against 10 year bond rate as at December 2012
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Hotels continue to outperform industrial & office
All sectors moderating with the exception of the retail sector
-10%
-5%
0%
5%
10%
15%
20%
25%
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Asia Pacific total returns by sector annualised return March 2013
Hotels Retail Industrial Office
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Global markets and the macroeconomy
Moderating property returns linked to lower global economic growth
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
Economic growth for selected marketsannualised real GDP growth ending March 2013
Euro JPN
US AUS
HK CHN
SGP
Source: RBA, OECD and IPD Research.
GFC
Lehman Bros collapse
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Investment returns linked to GDP growth
Returns moderating with softening GDP growth
• Note: Japan & Singapore Nominal GDP is real GDP adjusted by CPI
Australia
Japan
Hong Kong
Australia
Japan
Hong Kong
Singapore
Singapore
0%
5%
10%
15%
20%
25%
30%
-2% 0% 2% 4% 6% 8% 10%
ann
ual
retu
rn
annual nominal GDP growth
GDP growth versus hotel returnsannual values as at December
Source: censtad Hong Kong, BA and IPD research
2012
2011
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Risk-adjusted return performance
Strong case for more capital allocated to hotels
Retail Office
Industrial
Hotels
0%
2%
4%
6%
8%
10%
12%
0% 1% 2% 3% 4% 5% 6%
av
era
ge
an
nu
al
retu
rn
annual volatility
Risk-reward trade-off for property quarterly observations on a 7 year period ending Dec 2012
Asia Pacific
Australia
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Where IPD is taking the Asia Pacific Hotel Index
Providing value to the hotel industry
COMMERCIAL PROPERTY INDEX DATABASE
INFORMATION TOOLS (INDICES)
GAUGE MARKET SIZE AND
GROWTH
IDENTIFY MARKET CYCLES
AND TRENDS
UNDERSTANDING DRIVERS OF
HOTEL INVESTMENT
FORECASTING
HOTEL DATABASE
ANALYTICAL TOOLS
PORTFOLIO BENCHMARKING
PORTFOLIO ATTRIBUTION
ANALYSIS
ASSET ALLOCATION
RISK MODELLING & ASSESSMENT
ASSET PRICING
ENHANCED TRANSPARENCY and
ACCESS TO CAPITAL
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Enquiries +61.2.9248.1900 www.ipd.com
Anthony De Francesco +61.2.9248.1901 [email protected]
Mitchell McCallum +61.2.9248.1905 [email protected]
Contacts at IPD Australia & New Zealand
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THANK YOU