presentación degroof petercam: funds experience 2016

Update Oct2016

Expertise in European listed real estate

Olivier Hertoghe, Damien Marichal, Vincent Bruyère, Senior Portfolio Managers

2

Degroof Petercam Asset Management and European listed Real Estate

Delivering superior risk adjusted returns in a diversifying asset class

Sector overview: key debates for the asset class

1 Funds: Team, Philosophy & process

2 Outlook and strategy going forward

3

Cutting edges

4

3

The interest rate environment

1

Sector overview: key debates for the asset class.

4

Volatility of listed real estate

Efficiency of listed vs direct real estate

Sector valuation

Efficiency of listed real estate vs general equities

5

Quest for yield: yield gap still at high levels 1.1.1

Company data, Datastream, Morgan Stanley Research, 30/09/16

Ebitda/EV yield margin over local 5yr swap rate: Still sound gap between property yield and cost of debt

300-400bp margin

50-150bp gap

6

Who’s afraid of rising interest rates? 1.1.2

Property yields vs 10Y interest rates (%) There is effectively no relationship between property yields and nominal interest rates.

Interest rates are at a 30 year low but property yields are broadly in line with their historic average.

If interest rate’s rise slowly for the good reason: positive for real estate

20/9/16

7

…it is a misconception that bonds and real estate are highly correlated 1.1.3

DPAM Quant team, 10/16

The Modeled Correlation is estimated by a DCC-Garch Model. This model works in 2 steps. In a first step it captures the stylized fact that volatility tends to cluster and is subject to shocks. In a second step this time-varying volatility is filtered out and the remaining residuals are used to estimate the pure (and true) correlation behavior. The behavior of the correlations is modeled in a similar manner as in the first step: correlation today is dependent on a momentum or autoregressive component (i.e. today's correlations is linked to yesterday's correlation) and a shock component. Because of the autoregressive component the weights on the historical data decrease exponentially as opposed to the traditional way of calculating correlation where each observation (no matter how long ago) is considered equally important.

8

Who’s afraid of rising interest rates? 1.1.4

US REITs investors do not seem to be scared of latest and future interest rate hikes

30/5/16

9

Valuation : Discount to NAV and NAV growth 1.2


Downwards NAV growth revisions in the UK, but still positive on European level

10

1.3 Correlation with MSCI Europe

Sector Beta gradually back to historical levels

DPAM Quant team, 05/16

11

Efficiency of listed real estate vs equities 1.4

Degroof Petercam, 05/2016

Efficiency (return/volatility) of real estate divided by efficiency of equities for 3 year investments for the period 1995 to April 2016 Strong efficiency for European listed real estate compared to equities over the last 20yrs

12

Efficiency of listed real estate vs direct real estate 1.5

Value Added From Money Managers in Private Markets? An Examination of Pension Fund Investments in Real Estate” May 2012, University of Maastricht, The Netherlands, based on a survey on the behavior of 880 pension funds over 20 years. 1990-2009

422bp annual outperformance with a modest higher volatility / substantially less costly

Investment team

2

Funds: focus and process.

13

Petercam Securities Real Estate Europe Expertise and products

Petercam Real Estate Europe Dividend Atlas Real Estate and Degroof Real Estate

Vincent Bruyère Senior Portfolio Manager

Tel. + 32 2 287 94 80

[email protected]

Olivier Hertoghe Senior Portfolio Manager

Tel. + 32 2 287 96 10

[email protected]

Bank Degroof Petercam: Listed Real Estate Team

Damien Marichal Senior Portfolio Manager

Tel. + 32 2 287 96 09

[email protected]

14

15

Comprehensive and tailor-made product range (+/- EUR 1bln€)

Benchmarked Petercam Securities Real Estate Europe

Core approach

Inception Dec 1999

Outperform a defined benchmark

With a lower volatility than the benchmark (1%)

AUM fund EUR 374m + 45m clone accounts

2.3% annual excess over 15 years

Non-Benchmarked

Belgian approach (2007)

Only through segregated mandates

Outperform a defined benchmark

Predominantly investing in Belgian REITs

Lower risk/return profile

Circa EUR 28 m AUM

2.3% annual excess over 7 years

Petercam Real Estate Europe Dividend

No benchmark, concentrated on high convictions

Inception Dec 2010

Dividends or coupons above sector average

Total return approach

Lower Beta fund

Circa EUR 240 m AUM (hard-closed!)

High conviction approach (2005)

Only through segregated mandates

No benchmark, opportunistic approach and high convictions

Circa EUR 69 m AUM

2.5-3% annual excess vs EPRA/GPR over 11 years with 2.5% lower volatility

Funds Mandates

1 2 3 4

Market information

Fundamental analyse

Valuation check

Portfolio construction

16

Listed real estate companies

Capital markets

Direct RE markets

Property financing markets

Macro news

Seminars, property tours, company visits, sell-side research, …

Active search for additional information when needed

Assess impact on country, sub-sector, market cap allocation

Analyse impact on individual listed real estate companies

Internal valuation model Look for best execution via dealing desk

Respecting our investment restrictions and risk budget

Investment process

Analyse daily news items from:

Does this affect the current portfolio and our universe?

When we decide to change the existing positioning

Buy, sell or participate to capital market deals

17

In house valuation model (extract) CF Yield Dividend yield

Country 16E 17E 16E 17E 16E 17E

Atrium Austria 3.80 1,428 8.5% 8.7% 7.4% 7.4% -20.0% -17.5% 4.7% 1.2% -5.7% 1.7% 4.3 20.8%

Cofinimmo Belgium 105.85 2,221 6.0% 6.3% 5.2% 5.2% 12.1% 8.3% 1.6% 0.0% 3.0% 8.2% 110.0 9.1%

PSP Swiss Property Switzerland 88.40 3,719 4.3% 4.3% 3.7% 3.7% -13.6% -14.4% 0.0% 0.5% 0.9% 4.7% 94.3 10.4%

Swiss Prime Site Switzerland 81.60 5,212 4.4% 4.4% 4.5% 4.5% -6.3% -6.3% 0.7% 0.0% 0.0% 4.5% 82.2 5.3%

Vonovia Germany 31.33 14,600 4.1% 4.7% 3.5% 3.7% 20.0% 12.0% 7.2% 4.9% 6.6% 10.1% 35.0 15.2%

Deutsche Wohnen Germany 29.63 9,995 3.7% 4.1% 2.4% 2.7% 19.9% 7.8% 10.7% 15.6% 10.9% 13.3% 34.4 18.4%

Aroundtown Germany 4.32 2,592 4.6% 6.8% 1.4% 2.0% -21.3% -27.9% 24.7% 18.5% 19.9% 6.0 40.0%

LEG Germany 77.80 4,883 5.3% 6.0% 3.4% 3.9% 22.9% 14.6% 11.5% 9.0% 7.6% 11.0% 81.5 8.2%

Deutsche EuroShop Germany 38.82 2,094 5.8% 6.1% 3.6% 3.6% -5.2% -9.6% 2.4% 2.4% 3.9% 7.5% 42.9 14.0%

Alstria Germany 11.64 1,784 6.2% 6.3% 4.6% 4.7% 1.1% -1.6% 11.9% 3.2% 3.7% 8.2% 12.3 9.9%

TLG Germany 18.80 1,268 6.1% 7.0% 4.6% 5.3% -0.5% -2.1% 10.3% 9.9% 3.6% 8.9% 21.2 17.1%

VIB Vermogen Germany 19.21 528 6.8% 7.6% 2.9% 3.1% 20.9% 15.1% 9.5% 6.4% 4.5% 7.4% 21.6 15.1%

Axiare Spain 11.22 806 3.5% 5.7% 1.8% 3.4% -14.0% -21.4% 35.6% 136.8% 9.5% 11.3% 14.3 29.0%

Colonial Spain 6.16 2,199 3.8% 4.3% 3.0% 3.3% -16.1% -24.1% 37.5% 12.8% 11.6% 14.5% 8.12 34.7%

Hispania Spain 11.45 1,241 5.2% 6.1% 3.2% 3.8% -5.5% -14.2% 149.7% 10.2% 13.4% 13.3 19.7%

Merlin Spain 9.83 4,616 5.6% 6.3% 3.0% 5.0% -7.0% -13.5% 11.8% 42.0% 9.5% 12.6% 11.4 18.7%

Argan France 24.35 346 11.2% 12.3% 3.7% 3.9% -12.4% -17.7% 6.6% 3.3% 8.0% 11.8% 29.9 26.5%

F. des Regions France 78.79 5,275 6.4% 6.5% 5.5% 5.5% -5.0% -9.6% 1.1% 0.8% 4.1% 9.5% 82.0 9.5%

Gecina France 132.20 8,372 4.2% 4.3% 3.8% 3.8% -0.1% -5.2% 2.7% 1.0% 4.9% 8.7% 108.9 -13.9%

Icade France 65.97 4,856 6.4% 6.9% 6.0% 6.1% -15.7% -16.2% 4.7% 3.2% 1.8% 7.8% 70.0 12.1%

Fonciere de Paris France 135.88 1,038 3.8% 3.7% 4.6% 4.6% -8.2% -10.9% -5.5% 1.6% 8.8% 13.3% 96.9 -24.2%

Terreis France 35.00 884 3.6% 3.9% 2.4% 2.6% -23.8% -26.3% 5.5% 8.5% 6.0% 8.4% 42.8 24.5%

Klépierre France 38.08 11,859 5.9% 6.2% 4.7% 4.9% 3.0% -0.8% 4.3% 3.8% 4.5% 9.2% 44.7 22.1%

Unibail-Rodamco France 218.95 22,032 5.0% 5.4% 4.5% 4.7% 18.3% 9.7% 6.4% 3.6% 5.2% 9.8% 244.9 16.4%

Altarea-Cogedim France 170.10 2,054 8.1% 8.6% 6.5% 6.5% 13.1% 5.4% 6.0% 0.0% 7.7% 14.2% 215.7 33.3%

British Land United Kingdom 586 6,704 5.9% 6.0% 5.0% 5.2% -31.8% -22.9% 1.6% 3.0% -6.6% -1.6% 608.4 8.8%

Land Securities United Kingdom 979 8,590 4.5% 4.9% 3.7% 3.8% -28.6% -22.1% 2.4% 3.7% -5.0% -1.3% 1,067.9 12.8%

Hammerson United Kingdom 557 4,902 5.1% 5.3% 4.3% 4.5% -20.6% -14.9% 4.8% 5.0% -3.6% 0.6% 588.8 10.0%

Derwent London United Kingdom 2,422 2,993 3.2% 3.7% 2.0% 2.2% -32.5% -22.2% 9.0% 11.4% -5.2% -3.2% 2,645.4 11.2%

Great Portland United Kingdom 602 2,434 2.2% 3.0% 1.6% 1.7% -26.9% -20.4% 16.7% 15.0% -4.9% -3.4% 643.0 8.4%

Beni Stabili Italy 0.52 1,168 8.8% 9.0% 5.0% 5.4% -41.0% -41.9% -1.1% 7.7% 1.1% 6.1% 0.7 42.6%

Coima RES Italy 6.81 0 2.9% 7.3% 2.9% 5.3% -31.2% -31.9% 3.0% 5.9% 8.5 27.8%

Eurocommercial Netherlands 38.55 1,827 5.5% 5.7% 5.2% 5.3% -6.4% -9.8% 3.5% 2.0% 3.5% 8.7% 41.2 12.1%

Wereldhave Netherlands 43.58 1,755 7.8% 8.1% 7.2% 7.4% -15.2% -14.1% 4.8% 3.5% -0.5% 6.7% 54.0 31.1%

Entra Eiendom Norway 85.75 1,618 5.2% 5.5% 4.2% 4.4% -18.1% -25.4% 18.8% 11.4% 10.8% 15.0% 103.4 24.8%

Balder Sweden 204.30 3,382 5.6% 6.2% 0.0% 0.0% 17.2% -0.6% 12.2% 17.9% 17.9% 210.0 2.8%

Castellum Sweden 120.90 3,392 7.0% 7.8% 3.7% 3.9% -1.0% -7.9% 8.6% 3.9% 7.8% 11.5% 117.2 0.6%

Fabege Sweden 145.90 2,478 3.3% 3.6% 2.6% 2.7% 7.5% 3.8% 9.8% 6.7% 8.1% 10.7% 117.2 -17.1%

Average total (Ptf weighted) 1,444 4.8% 5.3% 3.75% 3.97% 0.5% -3.4% 4.6% 5.5% 4.4% 8.4% 13.7%

12-Oct-16 2,468

P / NAV -1 TSR 15-

18Target

Price +12M E ReturnName Price

CF gth

15-18

Div gth

15-18

NAV gth

15-18

Mark

cap m€

Universe Objective Strategy Restrictions

18

Invest in listed European property shares active in the various sub-sectors (offices, retail, residential, logistic warehouses, etc.).

Number of companies is limited to around 100

Outperform PEPS Index on a 3 year rolling period with an expected tacking error of maximum 4%

Targeting annualized excess return of 2% (4%+ last 2 years) => Information Ratio of 0.5

Consistently beat the benchmark with a lower volatility

Strong opinion of core companies thanks to frequent contacts with company management

Bias towards under-researched mid cap companies generating a significant portion of alpha

Dynamic and proactive management style maximizing ‘total shareholder return’

Maximum Out of Benchmark stocks of 30%

Individual holding over/underweight capped at 3%

Maximum over/underweight per sub-sector or country capped at 10%

Typically 45-75 stocks

Fully invested, cash capped at 5%

Petercam Securities Real Estate Europe 2.1

19

Petercam Securities Real Estate Europe

Benchmark = PEPS index, provided by Global Property Research (GPR)

39%

1%

24%

2% 5% 4% 3%

18%

4%

25%

10%

21%

3%

6%

6% 3%

21%

5%

Individual stock weight capped at 8% Today applicable on Vonovia and Unibail-Rodamco (weights in GPR 250 Europe 9% and 14%)

Fixed weight for Belgium

Objective: lower volatility and advantage of local knowledge

UK weight capped at 25% To limit impact of single country, higher volatility of UK shares and GBP 1

2

3

Specific PEPS Index rules

GPR 250 Europe 37 European companies (Dec 2015)

Petercam European Property Shares (PEPS) Index 51 companies (Dec2015)

Belgium

France

Netherlands

Sweden

Germany

Austria

Spain

U.K.

Switzerland

20

Track Record vs PEPS Index and EPRA since inception

Gross of fees as of August 2016 Performance vs Benchmark, our mission: consistent and long term outperformance 2,30% p.a. since inception

* EPRA NR since 2004

-100%

0%

100%

200%

300%

400%

500%

PetercamReal Estate 450.3%

PEPS 288.0% EPRA* 278.6%

21 Brussels, 28/09/16

Track Record vs PEPS index

Continuous outperformance with lower volatility

Performance vs Benchmark - 16 Years to August, 2016 Annual returns (gross of fees)

Petercam Real Estate

PEPS EPRA

7%

8%

9%

10%

11%

12%

15.8% 16.0% 16.2% 16.4% 16.6% 16.8% 17.0% 17.2%

An

n R

etu

rn

Ann Std Dev

Risk / Return

10.77% 8.48% 8.32%

Petercam

Real EstatePEPS

Annualised

standard dev15.91% 16.65% 16.95%

EPRA*

Annualised

Returns

Annual Returns (gross of fees)

YearPetercam

RealEstatePEPS EPRA*

2000 14.71% 13.03% 16.87%

2001 2.03% 0.91% -0.59%

2002 9.36% 7.82% 1.95%

2003 22.08% 19.53% 19.85%

2004 40.01% 35.76% 41.17%

2005 29.46% 25.17% 25.45%

2006 49.23% 47.29% 48.79%

2007 -25.10% -28.58% -32.19%

2008 -49.15% -49.40% -48.94%

2009 43.31% 41.77% 34.84%

2010 15.44% 16.88% 15.97%

2011 -9.77% -11.85% -10.04%

2012 27.45% 25.11% 27.52%

2013 10.99% 6.95% 10.35%

2014 27.97% 23.73% 25.01%

2015 20.56% 16.03% 17.99%

2016 YTD 4.93% 4.00% 0.14%

* FT EPRA DEV EUR NR€

22

Relative performance analysis Q3, 2016

Positive contributors Strong allocation and selection in Austrian companies exposed to the German market (+47bp) with Buwog (17bp) and Conwert (15bp)

Good allocation and selection on the UK (+21bp) with underweights on Capco (13bp) and Derwent London(6bp)

Good positioning on Switzerland being underweight (+15bp)

Negative contributors Weak selection and allocation to France (-19bp) with UW on Gecina (-21bp)

Weak selection to Spain (-11bp) with UW on Hispania (-7bp)

Underweight on Sweden not optimal with (-9bp) with underweight on Hufvudstaden (-8bp)

+0,39% for Retail share class, +0,60% for Institutional share class

23

Performance attribution/country Q3, 2016

DPAM INVEST B Real Estate Europe vs. PEPS

30/06/2016 to 30/09/2016

Euro

DPAM INVEST B Real Estate Europe PEPS Attribution Analysis

Port. Port. Port. Bench. Bench. Bench.

Beginning Ending Contrib. Beginning Ending Contrib. Allocation Selection + Total

Country of Domicile Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 4,10 100,00 100,00 3,55 0,73 -0,17 0,55

Austria 5,75 6,48 0,87 2,28 2,21 0,30 0,42 0,05 0,47

United Kingdom 21,44 21,43 0,39 25,00 25,09 0,24 0,06 0,15 0,21

Switzerland 4,97 4,43 -0,15 6,72 6,43 -0,22 0,14 0,01 0,15

Norway 0,55 0,96 0,12 -- -- -- 0,10 -- 0,10

Finland 1,01 1,02 0,12 -- -- -- 0,08 -- 0,08

Netherlands 2,75 2,93 0,29 1,22 1,22 0,15 0,14 -0,06 0,08

Luxembourg 2,26 2,39 -0,01 1,41 1,39 -0,08 -0,09 0,14 0,04

Germany 19,71 20,73 0,76 22,34 22,33 0,87 -0,06 0,06 0,00

[Unassigned] -- 0,00 -0,00 -- -- -- 0,00 -- 0,00

Bulgaria 0,21 0,11 0,00 -- -- -- -0,00 -- -0,00

[Cash] 0,79 0,32 -0,00 -- -- -- -0,04 -- -0,04

Belgium 4,15 4,01 0,09 10,00 10,02 0,36 -0,01 -0,06 -0,07

Italy 0,47 0,43 -0,07 -- -- -- -0,08 -- -0,08

Sweden 5,19 5,19 0,24 6,57 6,53 0,41 -0,03 -0,06 -0,09

Spain 3,93 3,76 0,24 3,94 4,17 0,35 -0,01 -0,10 -0,11

France 26,82 25,79 1,22 20,53 20,61 1,17 0,11 -0,31 -0,19

24

Top & Worst performance/company Q3, 2016


30/06/2016 to 30/09/2016

Euro




Security Name Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 4,10 100,00 100,00 3,55 0,55 -- 0,55

BUWOG AG 1,89 2,46 0,36 1,11 1,10 0,16 0,17 -- 0,17

conwert Immobilien Invest SE 0,53 1,17 0,16 -- -- -- 0,15 -- 0,15

Swiss Prime Site AG 2,67 2,26 -0,09 4,21 4,02 -0,16 0,13 -- 0,13

Capital & Counties Properties PLC 0,24 -- -0,00 1,40 1,30 -0,08 0,13 -- 0,13

CA Immobilien Anlagen AG 1,35 0,99 0,17 -- -- -- 0,11 -- 0,11

Entra ASA 0,55 0,96 0,12 -- -- -- 0,09 -- 0,09

Mercialys SA 1,18 0,99 0,12 -- -- -- 0,09 -- 0,09

Citycon Oyj 1,01 1,02 0,12 -- -- -- 0,08 -- 0,08

Wereldhave N.V. 1,90 2,23 0,25 1,22 1,22 0,15 0,07 -- 0,07

Argan SA 1,66 1,67 0,13 -- -- -- 0,07 -- 0,07

Befimmo SA 0,51 0,65 -0,01 1,34 1,36 -0,04 0,06 -- 0,06

Derwent London plc 1,40 1,13 -0,02 2,00 2,09 -0,07 0,06 -- 0,06

TAG Immobilien AG -- 0,41 0,00 0,92 0,99 0,09 -0,05 -- -0,05

Terreis 1,89 1,45 0,02 -- -- -- -0,05 -- -0,05

Frey SA 0,69 0,67 -0,03 -- -- -- -0,06 -- -0,06

Aroundtown Property Holdings Plc 1,77 1,45 -0,01 -- -- -- -0,06 -- -0,06

Hispania Activos Inmobiliarios, SOCIMI, S.A. -- -- -- 0,68 0,71 0,09 -0,07 -- -0,07

Hufvudstaden AB Class A -- -- -- 1,23 1,22 0,12 -0,08 -- -0,08

Aedifica -- -- -- 1,24 1,25 0,13 -0,09 -- -0,09

COIMA RES S.p.A. 0,47 0,43 -0,07 -- -- -- -0,09 -- -0,09

Gecina SA 1,49 1,08 0,20 3,10 3,19 0,48 -0,21 -- -0,21

25

Perf attribution by market cap Q3, 2016


30/06/2016 to 30/09/2016

Euro




MarketCap (EUR) Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 4,10 100,00 100,00 3,55 0,14 0,42 0,55

MarketCap (EUR) Bin 5: 1000.0 - 3000.0 27,43 29,03 1,81 22,23 22,03 0,92 0,05 0,69 0,74



[N/A] -- 0,00 -0,00 -- -- -- 0,01 -- 0,01

[Cash] 0,79 0,32 -0,00 -- -- -- -0,04 -- -0,04

MarketCap (EUR) Bin 1: > 10000.0 26,76 27,68 1,07 29,42 29,41 1,19 -0,02 -0,03 -0,05

MarketCap (EUR) Bin 6: 0.0 - 1000.0 12,08 10,91 0,35 4,52 4,44 0,20 0,04 -0,19 -0,15

MarketCap (EUR) Bin 2: 7000.0 - 10000.0 9,87 9,55 0,23 13,14 13,52 0,48 -0,02 -0,14 -0,16

26

Relative performance analysis YTD, 2016

Positive contributors Strong allocation and selection in France (+84bp) good performance of smaller cap companies as Terreis (43bp) and Argan (27bp)

Good positioning on indirect German plays through Austrian (+59bp) and Luxembourg (+49bp) listed companies as ADO Properties (+34bp)

Good selection on the UK (+45bp) with underweights on Capco (59bp) and INTU (20bp)

Negative contributors Underweight positioning on defensive Belgium (-78bp) with UW on Cofinimmo (-31bp)

Germany not optimal (-23bp) with underweight on Vonovia (-30bp)

Underweight positioning on defensive Switzerland (-10bp) with UW on SPS (-10bp)

+0,61% for Retail share class, +1,25% for Institutional share class

27

Performance attribution/country YTD, 2016


31/12/2015 to 30/09/2016

Euro




Country of Domicile Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 3,15 100,00 100,00 1,92 -0,26 1,49 1,23

France 25,61 25,79 2,98 20,94 20,61 1,79 0,36 0,49 0,84

Austria 4,69 6,48 0,76 3,29 2,21 0,14 0,35 0,23 0,59

Luxembourg 1,57 2,39 0,23 1,53 1,39 -0,27 -0,12 0,61 0,49

United Kingdom 25,14 21,43 -6,38 25,00 25,09 -6,46 0,08 0,37 0,45

Norway 0,50 0,96 0,22 -- -- -- 0,20 -- 0,20

[Cash] 0,88 0,32 -0,01 -- -- -- 0,03 -- 0,03

Bulgaria 0,40 0,11 0,01 -- -- -- 0,01 -- 0,01

[Unassigned] -- 0,00 -0,00 -- -- -- 0,01 -- 0,01

Spain 1,84 3,76 -0,08 4,54 4,17 -0,19 0,12 -0,13 -0,00

Netherlands 3,33 2,93 -0,19 2,92 1,22 -0,22 0,11 -0,13 -0,03

Finland 1,09 1,02 -0,05 -- -- -- -0,05 -- -0,05

Sweden 4,40 5,19 0,49 5,43 6,53 0,68 -0,16 0,07 -0,09

Italy -- 0,43 -0,09 -- -- -- -0,09 -- -0,09

Switzerland 5,63 4,43 0,60 6,31 6,43 0,74 -0,08 -0,02 -0,10

Germany 20,86 20,73 4,17 20,04 22,33 4,37 -0,33 0,10 -0,23

Belgium 4,04 4,01 0,51 10,00 10,02 1,34 -0,69 -0,09 -0,78

28

Top & Worst performance/company YTD, 2016


31/12/2015 to 30/09/2016

Euro




Security Name Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 3,15 100,00 100,00 1,92 1,23 -- 1,23

Capital & Counties Properties PLC 0,89 -- -0,35 1,79 1,30 -0,89 0,59 -- 0,59

Terreis 1,49 1,45 0,52 -- -- -- 0,43 -- 0,43

ADO Properties S.A. 1,00 1,63 0,37 -- -- -- 0,34 -- 0,34

Argan SA 1,53 1,67 0,34 -- -- -- 0,27 -- 0,27

BUWOG AG 1,22 2,46 0,43 0,95 1,10 0,21 0,21 -- 0,21

Entra ASA 0,50 0,96 0,22 -- -- -- 0,19 -- 0,19

Intu Properties plc -- 0,44 -0,06 1,45 1,52 -0,26 0,20 -- 0,20

VIB Vermoegen AG 0,98 1,07 0,18 -- -- -- 0,15 -- 0,15

conwert Immobilien Invest SE -- 1,17 0,18 -- -- -- 0,19 -- 0,19

Patrimoine et Commerce 0,78 0,78 0,16 -- -- -- 0,14 -- 0,14

Hufvudstaden AB Class A -- -- -- -- 1,22 0,13 -0,09 -- -0,09

Swiss Prime Site AG 3,03 2,26 0,40 3,88 4,02 0,54 -0,11 -- -0,11

TAG Immobilien AG -- 0,41 0,00 0,92 0,99 0,16 -0,13 -- -0,13

KENNEDY WILSON REAL ESTATE PLC ORD NPV (WI)0,77 1,01 -0,29 -- 0,51 -0,11 -0,19 -- -0,19

Vonovia SE 6,87 7,03 1,58 8,00 7,97 1,78 -0,30 -- -0,30

NewRiver REIT plc 0,98 1,08 -0,24 -- -- -- -0,24 -- -0,24

Workspace Group PLC 0,64 0,40 -0,25 -- -- -- -0,25 -- -0,25

Aedifica -- -- -- 1,14 1,25 0,31 -0,28 -- -0,28

Gecina SA 1,74 1,08 0,44 2,76 3,19 0,79 -0,32 -- -0,32

Cofinimmo SA 0,44 0,30 0,07 2,83 2,67 0,43 -0,31 -- -0,31

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Perf attribution by market cap YTD, 2016


31/12/2015 to 30/09/2016

Euro




MarketCap (EUR) Weight Weight To Return Weight Weight To Return Effect Interaction Effect

Total 100,00 100,00 3,15 100,00 100,00 1,92 1,79 -0,56 1,23

MarketCap (EUR) Bin 3: 5000.0 - 7000.0 9,64 6,96 -1,17 14,17 13,51 -1,92 0,84 0,11 0,95

MarketCap (EUR) Bin 6: 0.0 - 1000.0 12,29 11,62 1,46 4,26 4,44 0,69 0,99 -0,47 0,51

MarketCap (EUR) Bin 4: 3000.0 - 5000.0 14,77 14,34 0,00 18,37 17,56 -0,24 0,11 0,21 0,32

MarketCap (EUR) Bin 5: 1000.0 - 3000.0 24,17 29,10 1,29 21,30 21,56 1,15 0,20 -0,09 0,11

[Cash] 0,88 0,32 -0,01 -- -- -- 0,04 -- 0,04

[N/A] -- 0,43 -0,09 -- -- -- -0,09 -- -0,09

MarketCap (EUR) Bin 1: > 10000.0 29,91 28,68 -0,50 32,86 32,40 -0,33 0,11 -0,33 -0,22

MarketCap (EUR) Bin 2: 7000.0 - 10000.0 8,34 8,55 2,17 9,04 10,53 2,56 -0,40 0,02 -0,38


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Invest min. 75% in listed European property shares active in the various sub-sectors with a dividend yield above the sector average

Invest in RE fixed income (up to 25%)

The fund’s performance objective is to exceed the underlying gross dividend yield with a significantly lower volatility than the sector.

The strategy is not benchmarked and therefore only uses an index as a performance reference (FTSE EPRA Net Return)

Higher concentration in high conviction with a higher expected TSR

Fixed income positions in niche products issued by strong companies well covered by the portfolio managers

Bias towards under-researched and undervalued mid cap companies generating a significant alpha

Dynamic and proactive management style maximizing ‘total shareholder return’

Maximum fixed income weight 25%

Single holdings do not exceed 5%

Typically 35-60 lines

Fully invested, cash capped at 5%

Petercam Real Estate Europe Dividend 2.2

31

Correlation: lower Beta for the Dividend fund

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

1,00

12-2

012

02-2

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013

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013

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013

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014

04-2

014

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014

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014

10-2

014

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014

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015

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015

Bet

a

Beta EPRA Index

Petercam Real Estate EuropeDividend

Beta Petercam Securities Real EstateEurope

Beta versus MSCI Europe

32

Petercam Real Estate Europe Dividend vs FTSE EPRA Eurozone

Performance since inception (31/12/2010)

Gross of fee performances, 31/08/2016

Year Fund

Gross of fees

EPRA Eurozone (TR) Excess Return

vs. the EPRA Eurozone (TR)

2011 -8.36% -14.28% 5.92%

2012 17.11% 29.24% -12.13%

2013 15.02% 6.54% 8.48%

2014 23.83% 23.07% 0.76%

2015 19.63% 17.39% 2.24%

08/2016 YTD 8.64% 12.83% -4.19%

Cumulative 98.90% 92.40% 6.50%

Annualized 12.88% 12.24% 0.64%

33

Good efficiency of DPAM Real Estate Dividend fund

Data as from Dec 28, 2010 to April 30, 2016

34

Maximum drawdown Real Estate Dividend fund (up to end April 2016)

Eurozone crisis

Recent correction


Securities of the Eurozone real estate sector (REITs, shares, convertible bonds)

+/- 100 securities

To invest in the Euro zone Real Estate sector

To give the highest return possible on a long term basis, always remaining within the boundaries of a strict risk control.

Geographically and sector diversified

Higher concentration in conviction stories with a higher expected TSR and lower Beta

The investment style is primarily quantitative but is combined with a qualitative layer

Visibility and healthy growth of cash flows, quality of management and portfolio, good compliance are of key importance

Strong opinion of companies thanks to frequent contacts with company management and visit of assets

Liquidity is a priority !

Defensive stance

Buy and Hold

UCITS-compliant fund

FF Market cap: > € 100 m

Minimum average liquidity per day for each security: € 50,000 (last 6 months)

Total weight of the positions with a daily volume between € 50k- 100k: <2.5% of the assets

Out of benchmark securities: <=5% AUM; <2% per security

Over-/underweight per country : 15% relative and 3% absolute

Over-/underweight per individual holding <3%

Fully invested, cash <5%

Ex-ante Tracking <3%

Atlas Real Estate EMU 2.3

35

36

Atlas Real Estate EMU: breakdowns (30/06/16)

Gross dividend yield (%) 4.09

Current sector dynamics

3

Outlook and strategy going forward.

37

Strategy going forward

Investment themes

Return expectations

The case for the UK

38

Current sector dynamics 3.1

Hunt for yield again important driver in 2016 : lower for longer interest rates and strong demand for assets in direct market further yield compression on the Continent with upside to NAVs

Further deleveraging in the sector is very healthy. Weighted average loan to value in Europe is now 36%. External growth is mostly equity financed or through portfolio recycling. should cushion an eventual downturn when the market turns (unlike 2007)

BREXIT and end of UK property cycle are now a fact:

Values will go down in months to come and rents will stop rising

Balance sheet of UK companies are strong enough to absorb 20% decline in values

Shares are pricing in more than that and funding costs are at very low levels.

Financing of maturing debt and refinancing of existing debt is big theme with rates low cost of debt. Will continue to fuel bottom line by decreasing financing costs.

Valuation of experts lagging level of transactions : for most companies it would be impossible to replicate a similar portfolio in current markets and at current NAVs explains premiums to NAV of part of the universe

39 Brussels, 21/01/16

Current valuation of the sector 3.2

NAV growth, especially for the UK, is in now under review after Brexit vote …

Discount to NAV’s is 1% on average on NAV, with the UK at around 20% discount to post-Brexit NAV assumptions.

Cash flow yield is 5%, Dividend yield close to 4%, with both CF and Dividends expected to grow in 2016 and 2017

40

Strategy going forward 3.3

On market caps

We still see more value in smaller caps but no intention to increase exposure further

On country level

For the moment we are comfortable with current UW on the UK (preference for operationally geared companies)

OW on France, because of small cap growth stocks, UW on French blue chips (Gecina, Unibail, FDR, …)

LT conviction on German residential, increase on potential weakness

UW on Belgium on valuation, especially office players, only buy on weakness or at a discount from placings

Continue to focus on quality for its low cost of capital and accretive acquisition potential Strong balance sheets & average long lease duration, strong tenants

Sustainability of cash-flows and dividends

Superior total return = DY + NAV growth (target is close to double digit)

Monitor closely credible restructuring stories

Capital markets deals

Will continue to be a theme and a way to enter into a stock with a discount

41

Our stance on the UK 3.4

In 2015 en 2016 YTD the UK was a major contributor to our relative performance

We reduced our overweight from 4% at the end of H1 2015 to end EW at the end of 2015 (25% of portfolio). We sold to 5% UW and bought back on weakness in the second part of February 2016. We were slightly UW going into the Brexit vote and are +/- 3% UW today.

We had a stronger active share (more OW’s and UW’s) in the UK than in the past

We are OW operationally geared companies, strong retail operators, student housing and self storage (Unite, Safestore, NRR, …,)

We are UW London office companies, retail operators, industrials and high street shopping

We have almost no exposure to the expensive residential market

Debate on UK cycle, where are we now?

The yield shift (= value increases due to lower yields) is behind us

How severe will the downturn be, unclear as of today: estimates range from 0 to 20%

Compared to 2008, balance sheets are significantly stronger and bond yields are significantly lower

42

The case for the UK 3.5


Valuation looks attractive when looking at discount to NAV growth After correction shares are now trading at a substantial discount to NAV’s (around 21%)

But uncertainty is high concerning future NAV evolution

43

Virtuous circle in for companies trading at a premium 3.3

Companies trade at premiums to NAV

Issue new equity above NAV

Buy assets at an attractive risk premium

Finance 30% to 50% with cheap debt

Refinance existing debt at lower cost

Growth in cash-flow/share, NAV/share, size of the company and liquidity of the share

1 2

3

5 4

6

44

Investment themes (1)

Drivers Companies

German residential

Only European country where residential prices are below construction costs (<1.000€/m²) Rents are low (5€/m²/month) due to regulation but are rising gradually (around 2x inflation) while new leases are often signed 50%+ above previous levels Only institutionalized residential market in Europe Strong TSR with below average sector risk

ADO Properties

Vonovia

LEG Immobilien

Deutsche Wohnen

Buwog

Conwert

Continental Europe retail: alternatives to the majors

Majors -Unibail & Klepierre- deserve a premium valuation given their strong position for the future Some companies offer a similar track but are cheaper Others trade at a (too) deep discount

Within majors Klepierre’s discount to Unibail appears historically high Altarea – Mercialys Atrium ERE, Citycon, Wereldhave

Positioned for growth

In a low growth environment, companies that can show CF growth will make the difference War chest for accretive acquisitions or autonomous growth of pipeline. No near–term refinancing issues

Altarea-Cogedim

Vonovia

Balder

WDP

45


Drivers Companies

Dividend yield In a low rate environment 3,5%+ dividend yields are attractive Dividend yields of Continental European REITs more attractive than in UK Dividend offers satisfactory return even when excluding share price upside

TLG Immobilien

Warehouses De Pauw

Foncière des Régions

NewRiver Retail

Wereldhave

UK post Brexit Selectivity needed

UK REITS, especially the London exposed, reached a cyclical peak in H1 2016 while Brexit is likely to accelerate the inflection point => NAV declines are most likely throughout 2018 with insufficient div yield to avoid NAV discount Higher dividend yields offer a better support Models with good operating leverage also better protected

Underweight London exposure (Capital & Counties, British Land, Derwent London, Land Securities,…) NewRiver Retail, Tritax Big Box Safestore , Big Yellow, Unite, Empiric Student Property

46


Drivers Companies

Specific business models

Property owners but with focus on operating and development activities Potential higher growth

Altarea

NewRiver Retail

Safestore and Big Yellow Group

Buwog

Aroundtown Properties

Almost fully invested but keeping small pockets of cash

In the current environment, we see no reason to hold large cash positions Still, we like to keep a small pocket of cash (<2%) to be able to participate to opportunities at attractive entry points

Recent placements :

Altarea rights, Buwog, Intervest, …

Selected small caps / deep value

Financially sound Sustainable CF and dividend yields Companies combining an attractive valuation and a growth story to compensate for a lower liquidity (LT buy & hold)

France:

Terreïs, Argan, Altarea, Frey, Patrimoine & Commerce

Germany: VIB Vermögen

UK: ESP, Workspace Spain: Axiare

47


Drivers Companies

E-commerce Is viewed as a threat for retail But is an opportunity for distribution premises, Specifically in the European logistic hubs and in areas close to large cities

Tritax Big Box

WDP, Montea

VIB Vermoegen

Argan

Urbanisation Inner City retail Well located residential Prime assets in best city districts

Shafterburry Deutsche Wohnen Hufvudstaden, Terreïs, Société Foncière Lyionnaise

M & A Valuation must be compelling stand alone Analysis of the shareholder’s situation Quality of portfolio is key Potential further consolidation in German residential Generally small & mid cap companies

Conwert, Buwog, Ado Properties

Terreis, Argan

Empiric Student Properties

Capital & Regional

…

Cutting edges.

4

48

49

Lipper Fund Awards 4.1

2015 2014

50

Cutting Edges 4.2

1 Long-term successful track record and expertise in listed real estate

Stability and experience of the team

Close relationship with management teams of property companies

Better risk return proposal than benchmark and EPRA index

Bias towards under-researched 'close to home' mid-caps (France, Belgium, The Netherlands, Germany)

2 3 4 5

Hands-on pragmatic decision-making process

Bias towards ‘quality-growth’ companies

Actively managed core-satellite strategy against tailor-made benchmark

Size of funds enables rapidly implementing investment decisions

Commitment to enhance sector knowledge by being locally present (seminars, property tours, management meetings)

6 7 8 9

10

Present documents don’t constitute an investment advice nor do they form part of an offer or solicitation for

shares. bonds or mutual funds. or an invitation to buy or sell the products or instruments referred to herein.

Applications to invest in any fund referred to in this document can only validly be made on the basis of the Key

Investor Information Document (KIID). the prospectus and the latest available annual and semi-annual reports.

These documents can be obtained free of charge at the financial service provider or at the website

funds.degroofpetercam.com. All opinions and financial estimates herein reflect a situation on the date of

issuance of the documents and are subject to change without notice. Indeed. past performances are not

necessarily a guide to future performances and may not be repeated. Degroof Petercam Asset Management S.A.

(“DPAM”) has made its best efforts in the preparation of this document and is acting in the best interests of its

clients. without carrying any obligation to achieve any result or performance whatsoever. The information is

based on sources which DPAM believes to be reliable. However. it does not guarantee that the information is

accurate and complete. Present document may not be duplicated. in whole or in part. or distributed to other

persons without prior written consent of DPAM. This document may not be distributed to private investors and

is solely restricted to institutional investors.

The information contained in this mail and attachments (hereafter the ‘documents’) is provided for pure information purposes only.

Disclaimer

51

presentación degroof petercam: funds experience 2016

Economy & Finance