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Transcription of Finance News Network with Presima Portfolio Manager Asia Pacific, Marc-Andre Flageole
Lelde Smits: Hello, I'm Lelde Smits from the Finance News Network and joining me from Canadian investment manager Presima is Portfolio Manager Asia Pacific Marc-Andre Flageole. Marc-Andre, welcome to FNN.
Marc-Andre Flageole: Thank you very much, a pleasure to be here.
Lelde Smits: Could you start by introducing Presima, what do you primarily invest in?
Marc-Andre Flageole: Presima is a boutique investment manager that invests in global real estate securities and we’ve been investing in this space since 1999.
Lelde Smits: What is Presima’s investment strategy, how do you identify opportunities within the global listed real estate market?
Marc-Andre Flageole: We believe that in the long term real estate securities will offer returns that are consistent with physical real estate, but that the market offers some temporary mispricing. And, we strive at identifying that mispricing at a consistent manner.
To do so we look at three elements in real estate securities - The management teams and their ability to add value to shareholders for the long-term; The assets of the REITs, looking at their location their productivity, their quality and the lease terms; And finally, the capital markets in which the securities trade.
To do so we do underground research a lot a management meetings. Globally we meet about 500 companies per year. And, myself for instance I am responsible for the Asia Pacific region and I spend 6 to 8 weeks here in the region per year.
Lelde Smits: So Marc-Andre, what are the key benefits of investing in Presima?
Marc-Andre Flageole: Presima is a high conviction firm as we dedicate all our efforts to global real estate securities. The flagship product of the firm has one of the longest track records amongst our peers and holds only 30 to 40 names globally. What that means for investors is that we get an exposure that’s different from benchmarks, meaning that we invest in securities not because they are large in indices but because they really represent the best opportunities for our clients on a global basis.
Lelde Smits: What are the main differences between Australian Real Estate Investment Trusts and Global Real Estate Investment Trusts and how does that apply to Presima's strategy?
Marc-Andre Flageole: A-REITs are a sub-set of Global REITs and they account for approximately 8 per cent of the global REIT market today. Typically A-REITs in today’s market would offer dividends that are higher than global REITs and potentially more stable and that’s a function of annual rents escalation that we see embedded in A-REITs contracts.
If you look at the leverage side of the equation, since the GFC the A-REITs have de-levered to a large extent and they are now offering leverage levels that are lower than their global average.
Lelde Smits: What are the key risks Presima is considering right now?
Marc-Andre Flageole: From a sector perspective the main risk we view are in the commercial property space in Europe, particularly in France for the retail and office sector. We do view as well the markets like the Hong Kong and Singapore residential space as being at risk in the next 12 months, of experiencing a correction, so this is where we see the main risks.
Lelde Smits: Turning to your outlook for the sector, how do you see the global listed property market trending in 2014?
Marc-Andre Flageole: 2013 was a difficult year for global REITs as they underperformed global equities by a wide margin and we believe that going into 2014 we are in good shape. Looking at slow but steady economic growth, looking at earnings growth from REITs globally that are also growing their dividends, looking at the interest for commercial property by large institutional investors, we are positive for 2014.
Lelde Smits: In Australia what is your outlook for Australian Real Estate Investment Trusts this year?
Marc-Andre Flageole: So we are actually quite positive, cautiously positive, on the A-REITs as we believe they will deliver steady and potentially growing yields to their investors but also a potential for capital appreciation if fundamentals do stabilise this year.
Lelde Smits: Can Australians invest in Presima and how can they invest?
Marc-Andre Flageole: Yes Australian can invest in Presima and we have an Australian unit trust and more information is available on the National Australian Bank Limited (ASX:NAB) [NAB] invest website or by contacting your local NAB invest representative. There is a [Product Disclosure Statement] available online and the minimum investment is $20,000.
Lelde Smits: Marc-Andre Flageole, thank you for the introduction to Presima.
Marc-Andre Flageole: My pleasure, thanks.
Ends
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