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Deutsche Bank
Markets Research
North America
United States
Financial
REITs
Industry
US REIT 3Q16
Earnings Preview
REIT pullback & low bar could spark
3Q rallies, but don't get too excited
House view remains constructive for REITs as fundamentals moderate
Following a strong start to 2016 the REITs have traded off 10% since 8/1. The
decline coincides with a 30bps rise in the 10-year yield and increasing
probabilities of a Dec rate hike. While painful, the move has reset
valuations,
which now appear much healthier. As we have stated in the past, we think the
REITs remain in macro limbo, with expectations regarding yields and overall
risk appetites trumping bottom up trends. Given the DB house view, which
calls for muted GDP growth, a stable 10-year environment, and no recession
through 2017, combined with less aggressive REIT valuations, we think the
stocks have a little room to run if 3Q can exceed low expectations.
Data Centers remain our focus, despite expected leasing volume decline
Following several Q's of record leasing we think the Data Centers could be
poised to see some moderation in 3Q as activity naturally ebbs and flows.
There are some concerns that public cloud players may take a pause in leasing
activity following a rapid period of expansion, but with penetration of cloud
workloads still low, we think any such pause would be temporary. Also, with
the 10% and 14% drops in DLR and CONE, respectively since 8/1, we think
expectations are low, making for an interesting setup for 2 names with
secular
demand drivers and above average growth prospects over the next few years.
Strip valuations looking better, but Sports Authority optics could be a
challenge
Last Q we got less positive on the Strips as valuations had gotten ahead of
fundamentals. With the markets seemingly feeling less risk averse, the Strips
have pulled back by 11%, easing valuation concerns. 3Q could be optically
challenging, however, as the impact from the Sports Authority bankruptcy, as
flagged as it has been, finally hits reported SS NOI results. We will be more
focused on how much progress has been made on releasing these boxes and
who else might be next, with Golfsmith's bankruptcy a much smaller impact
on the space. With still substantial relative value discounts in the space,
we
remain constructive on Buy-rated RPT, RPAI, and BRX.
Slowing trends expected in the Apartments, Malls, and Office sectors._
We are looking for moderating fundamentals for the Apartments and Office as
supply in gateway markets remains elevated and job growth has slowed. While
the issues in S.F. and NYC have been making headlines for some time, we will
be focused on L.A. where job growth has decelerated for the past 2 months
and D.C. where trends have improved. SLG, however, appears to have had
another good leasing Q, with 2.3msf of YTD activity as of mid-September
EFTA01437758
suggesting over 800ksf of deals signed with a couple of weeks left in 3Q.
_Healthcare fundamentals healthy, but investment volumes remain soft
Health care operating trends were positive in the Q per data from NIC, as
occupancy was up and rent growth improved versus last Q. Although we have
been concerned about pending supply, demand appears to be healthy.
Concerns about the acquisition environment, however, remain; with Sr.
Housing transaction volume continuing to fall in 3Q and VTR's recent
acquisitions in the life sciences and hospital segments also suggesting fewer
opportunities in traditional Sr. Housing.
Estimates, valuations, and risks
Our target prices are based on our forward NAV estimates and earnings
multiples. Risks are supply/demand imbalances and capital market conditions.
See pgs 54-55 for a summary of our target price and estimate changes.
Date
18 October 2016
Results
Vin Chao, CFA
Research Anal st
Mike Husseini, CFA
Research Associate
Vlad Rudnytsky
Research Associate
WPM
Research Associate
Research Associate
Key Changes
Company
CIO.N
CONE.OQ
DLR.N
Target Price
15.00 to
Rating
15.50(USD)
60.00 to
59.00(USD)
112.00 to
108.00(USD)
EFTA01437759
Deutsche Bank Securities Inc.
Distributed on: 18/10/2016 05:00:00 GMT
Deutsche Bank does and seeks to do business with companies covered in its
research reports. Thus, investors should
be aware that the firm may have a conflict of interest that could affect the
objectivity of this report. Investors should
consider this report as only a single factor in making their investment
decision. DISCLOSURES AND ANALYST
CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.
EFTA01437760
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Table Of Contents
REIT 3Q16
preview
3
Set up into 3Q better than it's been in a long
time_
3
...but catalysts remain
elusive
4
Data Centers remain our favorite property
type
4
Strip REIT valuations looking better, but Sports Authority optics could be a
challenge
5
Slowing trends expected in the Apartments, Malls, and Office
sectors...
5
...Healthcare fundamentals healthy, but investment volumes remain
soft
5
3Q16 earnings call
schedule
6
REIT
outlook
Macro outlook calling for sub 2.0% GDP growth and continued low
yields
7
CRE fundamental slowing, but still
growing
8
Pricing in the private markets proving
resilient
9
Unsecured markets remain
healthy
10
DB REIT coverage trading at a 7.1% discount to consensus NAV meaningfully
below the 5.0% premium seen in
July
11
Rising yields weighing on REIT
stocks
12
REIT performance trends
13
DB REIT coverage
returns
13
Index level
performance
14
Sector
Previews
15
Apartment: Slowing job growth and new supply continue to impede rent
growth
EFTA01437761
15
Malls: Rising demand headwinds and slowing SS NOI growth expected
22
Shopping Centers: Store closures to hit 3Q internal growth, but progress for
retenanting
more
important
27
Office: Valuations remain attractive, but specter of recession remains an
overhang
37
Data Centers: Measuring growth in years not
quarters
43
Industrial: Fundamentals remain solid, backed by e-commerce and retail
demand
47
Healthcare: Rents continue upward climb as primary markets mostly shrug off
new
supply
49
Summary of ratings and estimate changes
54
Valuation and
risks
56
DB REIT comp
sheet
57
Page 2
Deutsche Bank Securities Inc.
EFTA01437762
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
REIT 3Q16 preview
Set up into 3Q better than it's been in a long time...
Broad-based sell-off since 8/1/16
Since the YTD peak on 8/1, the RMZ has dropped by almost 10% versus a
1.3% drop for the S&P500. Uncertainty regarding the direction of rates
remains
an issue with the 10-year yield ranging from as low as 1.50% to as high as
1.80% over that time. Concerns ranging from the potential for nearer-term
rate
hikes, the impact of the U.S. election, and to the probability of a recession
have all been cited as reasons for the weakness, but overall the market's
taste
for yield appears to have diminished since early August with the S&P Electric
Utilities Index also falling over 7%. The pullback in the REITs could also
simply
reflect profit taking on a group that has outperformed for most of the year
and
was trading almost 2 standard deviations above historical multiple averages
at
the YTD peak established on 8/1. With the stocks now back in line with
historical multiples, our coverage trading at an 8% discount to NAV, and with
low expectations into the Q, we think the setup for the group is better than
it's
been in a while.
Figure 1: YTD RMZ performance
10.0%
15.0%
20.0%
25.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
as of 10-14-16
MSCI US REIT (RMS)
Figure 2: Performance by risk bucket since 8/1/16
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
-7.7%
-8.4%
-9.0%
EFTA01437763
Small
Cap
Mid
Cap
-9.5%
Large
Cap
Div
Yield
>3.5%
as of 10-14-16
Property sector performance more nuanced
The market's improving economic outlook has helped reduce near-term
recession fears and pushed 10-year yields higher over the past few months,
which has led to significant underperformance of Freestanding Retail (triple
nets), which have fallen 11% since 8/1 but remain a top performing sector YTD
at +25%. Other more economically sensitive property types like Office and
Apartments, which were some of the weakest performers earlier in the year,
have done "less bad" in the post 8/1 period down only 7% and 8.4%,
respectively.
While yield concerns have weighed on REITs overall over the past few months,
performance by property type was not just yield driven, with Data Centers
falling almost 8% since 8/1 after running up 36% YTD up to that point.
Concerns about a near-term pullback in hyper-scale cloud demand and the
lack of near-term flow through from recent leasing activity drove some profit
taking in a group that remains up over 25% YTD. Malls have also fared poorly
Deutsche Bank Securities Inc.
Page 3
-8.4%
-8.9%
-10.1% -10.1%
Div
Yield
<=3.5%
High
Growth
>5.0%
'16 FFO
growth
Low
Growth
<=5.0%
'16 FFO
growth
Change since 08/01/16
Debt / Debt /
EBITDA
>5.0x
EBITDA
<=5.0x
EFTA01437764
Avg
volume
> 1MM
Avg
volume
<= 1MM
-7.9%
-9.1%
-8.3%
EFTA01437765
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
in the face of slowing rent spreads and NOI growth, while concerns about
retailer health, in particular teen apparel and department stores remain in
high
focus. Malls as a group have dropped 14% since 8/1. Industrial, which remains
an investor favorite as e-commerce demand and rational supply growth make
it one of the few property types seeing improving internal growth and
continued development opportunities, is up 25% YTD and down only 6.5%
since early August. Healthcare, which is typically considered defensive and
more yield oriented has not pulled back as much as we would have thought.
Figure 3: REIT performance pre 8/1/16
40.4%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
-5.0%
0.0%
5.0%
36.4% 36.0%
33.6%
25.5%
22.6%
20.6%
17.9% 17.8%
14.8%
7.2%
Figure 4: REIT performance post 8/1/16
-1.4%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
-6.5% -6.9%
-7.8% -8.4% -8.4%
-10.2% -10.4% -10.8% -10.9% -10.9%
-12.7%
-13.6%
YTD as of 8/1/16
Performance Since 8/1/16
EFTA01437766
...but catalysts remain elusive
While the set up is good, we aren't expecting 3Q to provide a lot of sparks
to
the upside as only a handful (BXP, FRT, GGP, CLI, SRC in our coverage) are
expected to provide initial 2017 guidance this Q and internal growth trends
are
likely to slow for the Apartments, Malls, and Strips, while leasing volumes
for
CBD office could also moderate with D.C. in election related lock down and
S.F. job growth slowing. NYC, however could surprise to the upside with JLL
reporting a pickup in 3Q office net absorption versus the past few quarters.
SLG also reported YTD leasing activity as of mid-September that suggested
another strong quarter of leasing in 3Q.
Data Centers remain our favorite property type
Data center leasing volume, recently driven by accelerating hyper-scale cloud
demand, has also come into question as there has been some discussion of a
near-term pullback in demand from this group. Additionally, there could again
be some flow through concerns as any 3Q leasing activity is unlikely to have
a
significant impact on 2016 revenues given commencement timing. CONE,
which has been one of the biggest beneficiaries of the aforementioned
hyperscale
cloud demand, could see the biggest deceleration in volumes in our data
center coverage from recently-elevated levels, but we think this is already
reflected in the 14% decline in the shares since 8/1. CONE also remains the
cheapest on AFFO, despite its recent equity raise that took leverage down to
the mid-4x range. We also think expectations for DLR are low, with leasing
activity trailing its peers for most of the post Telx acquisition period,
still no
backfill for the head of sales role, and the stock off 10% since early
August. If
Page 4
Deutsche Bank Securities Inc.
EFTA01437767
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
DLR can follow up on its already reported strong early 3Q leasing activity,
we
think the stock could see a nice near-term move higher.
Strip REIT valuations looking better, but Sports Authority
optics could be a challenge
Last quarter we got less positive on the Strips as valuations had gotten
ahead
of fundamentals as investors sought the safety of grocery-anchored Strip
centers with stable, albeit unexciting internal growth preferred given macro
uncertainties. With the markets seemingly feeling less risk averse, the
Strips
have pulled back by 11%, pushing valuations into much more comfortable
territory. The group continues to benefit somewhat as a safety trade, as
reflected in smaller discounts to NAV than most of our coverage. Within the
Strips, there remains a substantial, and in our view unwarranted, disparity
in
valuations, which we think will narrow as markets become more comfortable
with the improving operating and financial risk profiles of Buy-rated names
like
RPT, RPAI, and BRX. 3Q could be optically challenging, however, as the impact
from the Sports Authority bankruptcy, as flagged as it has been, finally hits
reported SS NOI results. We will be more focused on how much progress has
been made on releasing these boxes and who else might be next, with
Golfsmith's bankruptcy a much smaller impact on the space.
Slowing trends expected in the Apartments, Malls, and
Office sectors...
We are looking for moderating fundamentals for the Apartments and Office as
supply in gateway markets remains elevated and job growth has slowed.
While the issues in S.F. and NYC have been making headlines for some time,
we will be focused on L.A. where job growth has decelerated for the past 2
months and D.C. where trends have improved. SLG, however, appears to have
had another good leasing Q, with 2.3msf of YTD activity as of mid-September
suggesting over 800ksf of deals signed with a few weeks left in 3Q.
_Healthcare fundamentals healthy, but investment
volumes remain soft
Health care operating trends were positive in the Q, per data from NIC, as
occupancy was up and rent growth improved versus last Q. Although we have
been concerned about pending supply, demand appears to be healthy.
Concerns about the acquisition environment, however, remain; with Sr.
Housing transaction volume continuing to fall in 3Q and VTR's recent
acquisitions in the life sciences and hospital segments also suggesting fewer
opportunities in traditional Sr. Housing.
Deutsche Bank Securities Inc.
Page 5
EFTA01437768
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
3016 earnings call schedule
Figure 5: DB Earnings Call Schedule
3016 FFO
Expected Earnings
Release
Thursday, Oct 20
Prologis
SL Green Realty Corp.
Tuesday, Oct 25
Brixmor
American Campus Communities, Inc
AvalonBay Communities Inc.
Wednesday, Oct 26
Mack-Cali Realty Corp.
Simon Property Group Inc.
Equity Residential
QTS Realty Trust
Boston Properties Inc.
Thursday, Oct 27
Equity One Inc.
DDR Corp.
Kilroy Realty Corp.
Digital Realty Trust
Friday, Oct 28
Independence Realty Trust
Ventas Inc.
Kimco Realty Corp.
Camden Property Trust
Macerich Co.
Monday, Oct 31
CyrusOne Inc.
Tuesday, Nov 01
General Growth Properties
Vornado Realty
Post Properties Inc.
Wednesday, Nov 02
Ramco-Gershenson Properties Trust
Regency Centers Corp.
Welltower, Inc.
Retail Properties of America
Taubman Centers Inc.
Thursday, Nov 03
Paramount Group
Federal Realty Investment Trust
Spirit Realty Capital 4
Friday, Nov 04
Kennedy Wilson 2
Monday, Nov 07
EFTA01437769
City Office
Yet to announce date
American Farmland
Medical Properties Trust
PLD
SLG
BRX
ACC
AVB
CLI
SPG
EQR
QTS
BXP
EQY
DDR
KRC
DLR
IRT
VTR
KIM
CPT
MAC
CONE
GGP
VNO
PPS
RPT
REG
HCN
RPAI
TCO
PGRE
FRT
SRC
KW
CIO
AFCO
MPW
BMO, 10/20
AMC, 10/19
AMC, 10/24
AMC, 10/24
AMC, 10/24
AMC, 10/25
BMO, 10/26
AMC, 10/25
AMC, 10/25
AMC, 10/25
AMC, 10/26
AMC, 10/26
EFTA01437770
AMC, 10/26
AMC, 10/27
BMO, 10/28
BMO, 10/28
AMC, 10/27
AMC, 10/27
AMC, 10/27
BMO, 10/31
AMC, 10/31
AMC, 10/31
AMC, 10/31
AMC, 11/1
AMC, 11/1
BMO, 11/2
AMC, 11/1
AMC, 11/1
AMC, 11/2
AMC, 11/2
AMC, 11/2
AMC, 11/3
BMO, 11/7
Dial In
Call Time
Number
Code
(if needed DB1
12:00PM
81585906
2:00PM (
5055428
10:00AM
2633815
10:00AM
10092501
11:00AM
7799607
9:30AM (
ack-Cali
11:00AM
83479240
11:00AM
10:00AM
7711235
6876189
10:00AM
23629459
9:00AM
10:00AM
9742418
N/A
1:00PM (
7486596
5:30PM
9116034
9:30AM (
6007206
10:00AM
10:00AM
12:00PM
EFTA01437771
2:00PM
Ventas
3003492
6983019
7700937
11:00AM
9:00AM
N/A
N/A
10:00AM
10:00AM
5778078
9:00AM
10:00AM
N/A
N/A
10:00AM
11:00AM
11:00AM
N/A
9675582
10:00AM
N/A
11:00AM
11:00AM
N/A
10:00AM
N/A
11:00AM
$0.81
$1.43
$0.50
$0.45
$2.18
$0.56
$2.65
$0.81
$0.62
$1.42
$0.27
$0.31
$0.87
$1.37
$0.19
$1.01
$0.17
$1.11
$1.04
$0.58
$0.35
$1.25
3587461
4724138
5378394
ity Office
EFTA01437772
$0.80
$0.33
$0.23
$1.13
$0.25
$0.86
$0.18
$1.44
$0.19
$0.07
$0.22
$0.07
$0.30
1 DB est prior to report. In some cases this has been adjusted from prior
publications for comparability to reported results
2 KW estimates refer to EPS
3 Guidance shown equates to NAREIT FF0 guidance except as noted via " * "
4
5
Spirit estimates refer to AFFO
Consensus estimates are as of 10-14-16
DB Proformal
Cons.5
$0.69
$1.43
$0.50
$0.45
$2.08
$0.56
$2.65
$0.78
$0.62
$1.42
$0.33
$0.31
$0.87
$1.49
$0.22
$1.01
$0.38
$1.11
$1.04
$0.64
$0.36
$1.27
$0.80
$0.33
$0.80
$1.13
$0.26
EFTA01437773
$0.86
$0.19
$1.44
$0.22
$0.76
$0.26
$0.07
$0.30
$0.70
$1.50
$0.51
$0.43
$2.11
$0.55
$2.68
$0.78
$0.65
$1.43
$0.34
$0.31
$0.87
$1.44
$0.22
$1.00
$0.18
$1.10
$1.05
$0.62
$0.36
$1.27
$0.81
$0.34
$0.80
$1.14
$0.26
$0.89
$0.19
$1.42
$0.22
($0.05)
$0.26
$0.03
$0.30
FY16 FF0
Lo - pre Hi
pre
$2.52
$8.17
$2.03
$2.19
$8.26
$2.07
EFTA01437774
$2.58
$8.25
$2.06
$2.31
$8.46
$2.13
$10.77 $10.85
$3.05
$2.55
$5.92
$3.11
$2.65
$5.99
$1.36
$1.23
$3.36
$5.65
$0.84
$4.05
$1.34
$4.50
$4.05
$2.50
$1.51
$3.20
$1.33
$3.22
$4.50
$1.04
$3.75
$0.81
$5.62
$0.87
$1.40
$1.26
$3.44
$5.75
$0.88
$4.13
$1.42
$4.60
$4.15
$2.58
$1.55
$3.24
$1.37
$3.27
$4.60
$1.07
$3.90
$0.85
EFTA01437775
$5.68
$0.89
2016 Guidance (pre3Q16
report)3
$2.52-$2.58*
$8.17-$8.25
$2.03-$2.06
$2.19-$2.31*
$8.26-$8.46
$2.07-$2.13
$10.77-$10.85
$3.05-$3.11*
$2.55-$2.65*
$5.92-$5.99
$1.36-$1.40*
$1.23-$1.26
$3.36-$3.44
$5.65-$5.75*
$0.84-$0.88*
$4.05-$4.13
$1.34-$1.42
$4.50-$4.60
$4.05-$4.15
$2.50-$2.58*
$1.51-$1.55*
N/A
$3.20-$3.24
$1.33-$1.37*
$3.22-$3.27*
$4.50-$4.60*
$1.04-$1.07*
$3.75-$3.90
$0.81-$0.85*
$5.62-$5.68
AFFO $0.87-$0.89
N/A
N/A
N/A
$1.29
$1.33
$1.29-$1.33
DB1
$2.94
$8.19
$2.05
$2.33
$8.38
$2.21
DB Proformal
Cons.5
$2.57
EFTA01437776
$8.19
$2.08
$2.28
$8.20
$2.12
$10.80 $10.80
$2.98
$2.54
$5.97
$3.07
$2.62
$5.97
$1.29
$1.25
$3.40
$5.53
$0.69
$4.10
$1.38
$4.53
$4.08
$2.28
$1.51
$4.88
$3.21
$1.38
$2.72
$4.50
$1.12
$3.84
$0.87
$5.65
$0.85
$1.39
$1.25
$3.40
$5.73
$0.80
$4.10
$1.50
$4.56
$4.10
$2.56
$1.54
$4.94
$3.24
$1.36
$3.27
$4.56
$1.06
$3.59
EFTA01437777
$0.85
$5.63
$0.89
($0.21) $1.79
$0.54
$0.22
$1.29
$1.01
NA
$1.29
$2.57
$8.29
$2.06
$2.25
$8.33
$2.11
$10.86
$3.08
$2.60
$5.98
$1.39
$1.26
$3.40
$5.70
$0.85
$4.12
$1.38
$4.55
$4.11
$2.56
$1.53
$4.87
$3.23
$1.37
$3.26
$4.58
$1.07
$3.84
$0.85
$5.66
$0.88
($0.28)
$1.07
$0.11
$1.26
Page 6
Deutsche Bank Securities Inc.
EFTA01437778
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
REIT outlook
Macro outlook calling for sub 2.0% GDP growth and
continued low yields
The DB House View now calls for GDP growth of 1.3% in 2016, down modestly
from 1.5% back in July, but the outlook for 2017 was pulled to +1.7% from
+2.2%. DB has also adjusted its outlook for the 10-year which is expected to
end 2016 at 1.75%, up 50bps from the July forecast, and is expected to
increase 25bps finishing 2017 at 2.0%.
Figure 6: House view Estimates
Indicator
Real GDP Growth
Unemployment rate
Compensation per empl.
U.S. 10Y yield
U.S. Key official interest rate
Energy - WTI
Energy - Brent
Unit
% yoy
% yoy
USD/bbl
USD/bbl
2016E
1.30
4.9
2.50
1.75
0.625
43.27
45.00
Estimates
2017E
1.70
4.6
4.50
2.00
1.125
53.00
55.00
2018E
1.90
4.6
4.50
N/A
EFTA01437779
1.625
65.00
70.00
Figure 7: Real GDP growth
2.50
Figure 8: Employment and wages
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
2.40 2.60
2.20
1.80
1.60
1.70
1.30
1.70
1.90
10.0
12.0
-0.30
-2.80
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E
Real GDP
0.0
2.0
4.0
6.0
8.0
2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E
Unemployment rate
Compensation per empl.
Deutsche Bank Securities Inc.
Page 7
EFTA01437780
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
CRE fundamental slowing, but still growing
Fundamentals in 3Q demonstrated relatively steady vacancy rates with some
moderation in rent growth, particularly in the Apartment space, which should
come as no surprise. More volatile and generally slowing job growth trends
have combined with still elevated supply to drive rent growth at the national
level lower by 70bps versus 2Q as landlords collectively pushed occupancy
over rate with vacancy falling 10bps q/q. Rents in the Office markets also
moderated from last Q, but remained healthy at +2.8% nationally, according to
data from Reis, while vacancy held steady. In NYC, office net absorption
showed a nice pick up from recent quarters according to JLL data, although
market rents decelerated in 4 of the 5 major CBD office markets in 3Q, with
DC
the lone exception. Shopping center trends also demonstrated some
moderation with rent growth off by 10bps from 2Q's level and vacancy up
10bps, likely due to Sports Authority related vacancy, though vacancy has
been hovering near 10% since early 2015. Malls have found some equilibrium
as well with the national vacancy rate at 7.8% in 3 of the past 4 quarters,
while
rent growth has been in the +2.0-2.2% range for the past year and a half.
Healthcare, and more specifically, Sr. Housing trends were positive in 3Q,
with
rent growth improving by 60bps to +3.8%, while vacancy fell by 10bps q/q.
Notably, construction as a percent of inventory fell, albeit modestly in the
Q.
Figure 9: Vacancy rates
10.0%
12.0%
14.0%
16.0%
18.0%
0.0%
2.0%
4.0%
6.0%
8.0%
16.0%
Figure 10: Rent growth
10.0%
7.8%
4.4%
10.5%
10.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
EFTA01437781
3.0%
3.5%
4.0%
4.5%
Apartment
Shopping
Center
Malls
Vacancy rate
3016
Apartment
Shopping Center
Malls
Office
Industrial
Sr Housing
Vacancy rate Q/Q Trend
-10bp
10bp
-10bp
Obp
Obp
4.4%
10.0%
7.8%
16.0%
10.5%
10.2%
-10bp
3Q16
Apartment
Shopping Center
Malls
Office
Industrial
Sr Housing
Office
Industrial
Sr Housing
3.8%
2.8%
2.3%
2.0%
2.0%
3.8%
Apartment
Shopping
Center
Malls
EFTA01437782
Office
Rent Growth y/y
Rent Growth y/y Q/Q Trend
3.8%
2.0%
2.0%
2.8%
2.3%
3.8%
-0.7%
-0.1%
0.0%
-0.3%
-0.2%
0.6%
Industrial
Sr Housing
Page 8
Deutsche Bank Securities Inc.
EFTA01437783
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Pricing in the private markets proving resilient
Private market pricing as measured via cap rate or price indices has remained
resilient, despite volatile Treasury rates, CMBS market concerns,
macroeconomic uncertainty, recently moderating fundamental trends, and still
weak investment volumes. The recent widening of CMBS spreads, continued
declines in investment volumes, and tightening lending standards for CRE
overall bear watching. Given the lagging nature of real estate and anecdotal
data suggesting still wide bid/ask spreads, we don't want to be complacent
about the potential for falling asset values. That said, we note the
financing
environment remains healthy overall, cap rate spreads to the 10-year remain
wide by historical standards, and DB's house view calls for a muted economic
outlook that should keep the 10-year relatively contained. We also think that
global uncertainties will keep interest in U.S. CRE elevated given what we
believe is a still attractive risk/reward opportunity versus global
alternatives.
Figure 11: National investment volume growth y/y
20.0%
40.0%
60.0%
80.0%
-60.0%
-40.0%
-20.0%
0.0%
60%
49%
36%
27%
22%
11%
27%28%
22%
10%
15%
18%
9%13%
6%
-4%
-7%
3%
-17%
-9%
-21%
-37%
7%
39%
46%
EFTA01437784
30%
41%
-21%-23%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Figure 12: National cap rate trends
10.00%
100
200
300
400
500
600
as of Aug-16
0
Y/Y ch in deal volume
l
ap Rate Spread to 10-yr
Investment volumes remain weak, down 23% in
August and 15% YTD, though record volumes in
2015 are making comparisons difficult
IIRetail (-35%), Office (-20%), and Industrial (-17%)
volumes fell the most in August, Apartment
volumes fell 11%
IIYTD, Industrial (-28%), Retail (-17%), and Office (12%)
have experienced the biggest y/y volume
declines while Apartments (+5%) delivered a y/y
volume gain, mostly via Garden style deals
Cap Rate
Avg Cap Rate
Avg Spread
IIWeak volumes have had little impact on cap
rates, which were down 10bps m/m and 23bps
y/y in August at 6.09%
IICap rates fell m/m for all the major property
types in August: Industrial (-2bps) experienced
the smallest decline, while Office cap rates fell
the most (-33bps)
EFTA01437785
IIThe cap rate spread to the 10-year is about
70bps wide of long run averages
Deutsche Bank Securities Inc.
Page 9
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Jan-01
Aug-01
Mar-02
Oct-02
May-03
Dec-03
Jul-04
Feb-05
Sep-05
Apr-06
Nov-06
Jun-07
Jan-08
Aug-08
Mar-09
Oct-09
EFTA01437786
May-10
Dec-10
Jul-11
Feb-12
Sep-12
Apr-13
Nov-13
Jun-14
Jan-15
Aug-15
Mar-16
EFTA01437787
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 13: Moody's/RCA CPPI index trends
0.00
50.00
100.00
150.00
200.00
250.00
300.00
Figure 14: CRE pricing versus prior peak levels
100.0%
120.0%
140.0%
160.0%
180.0%
as of 08-16
20.0%
40.0%
60.0%
80.0%
0.0%
Apt
National
Major Markets
Non-Major Markets
IIMay marked the 4th consecutive m/m increase
post Jan and Feb declines, which were the first
since early 2010
Data as of 16Q2
Retail
Ind
Off-CBD
All Major Non-Major
IISuburban Office still below prior peak
IIRetail now back to prior peak levels
IIApartment prices continue to rise up 8% since
the end of 2015 vs a 4% rise for all properties
Off-Sub
National
Unsecured markets remain healthy
Figure 15: U.S. CMBS issuance
Figure 16: U.S. REIT Unsecured Issuance
$10.0
EFTA01437788
$12.0
$14.0
$2.0
$4.0
$6.0
$8.0
$$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
U.S.
CMBS Issuance
Avg
U.S. REIT Unsecured Issuance
Avg
Page 10
Deutsche Bank Securities Inc.
Dec-00
Sep-01
Jun-02
Mar-03
Dec-03
Sep-04
Jun-05
Mar-06
Dec-06
Sep-07
Jun-08
Mar-09
Dec-09
Sep-10
Jun-11
Mar-12
Dec-12
Sep-13
Jun-14
Mar-15
Dec-15
in B's
149.7%
166.1%
133.8%
100.3%
118.9%
90.6%
EFTA01437789
109.2%
116.7%
100.4%
139.3%
146.0%
99.0%
91.9%
99.0%
85.4%
120.6%
138.6%
105.6%
EFTA01437790
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 17: 10-year new issue AAA CMBS spreads
100
120
140
160
180
20
40
60
80
0
Figure 18: IG and HY spreads to 10Y Tsy
as of 10-14-16
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
as of Sep-16
New Iss 10-yr AAA CMBS Spreads
Avg
IIAfter dropping back to the average level since
2014, spreads again blew out in early October
IIRecent tick up in spreads appears to have been
driven by portfolio quality
IG spread to 10-year
P
vg IG spread
High yield spread to 10-year
Avg HY spread
IG spread of 147bps is down 77bps from the
224bps YTD peak in mid-February
IIHY spread of 480bps is down 295bps from the
775bps YTD peak in mid-February
DB REIT coverage trading at a 7.1% discount to consensus
NAV meaningfully below the 5.0% premium seen in July
Figure 19: Historical premium/discount to NAV
-7.1% discount
EFTA01437791
10.0%
15.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
Figure 20: Quarterly REIT capital raising
$10,000
$15,000
$20,000
$25,000
$5,000
Data as of 10/14/16
$0
Equity
Debt
DB Coverage
Avg
Median
+2 st dev
2 st dev
IIDB REIT coverage trading at a 7.1% discount to
NAV vs a -1.4% discount historically
Preferred
Deutsche Bank Securities Inc.
Page 11
Prem/(Disc) to NAV
10/14/11
1/14/12
4/14/12
7/14/12
10/14/12
1/14/13
4/14/13
7/14/13
10/14/13
1/14/14
4/14/14
7/14/14
10/14/14
1/14/15
4/14/15
7/14/15
10/14/15
1/14/16
4/14/16
EFTA01437792
7/14/16
10/14/16
EFTA01437793
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Rising yields weighing on REIT stocks
Following a strong start to 2016 that saw the RMZ deliver a 19% total return
through 8/1, the REITs have since traded off, down 10% through 10/14. The
decline coincides with a 30bps rise in the 10-year yield and an increase in
the
probability of a December rate hike to 66% from 37%. While painful, the move
has reset valuations which now appear much healthier. Our coverage is now
trading at a 5.6% implied cap rate, a 7% discount to consensus NAV (8%
discount to DBe), roughly in-line with historical FFO and FAD multiples, and
a
still wider (44bps) dividend yield spread to the 10-year. As we have stated
in
the past, we think the REITs remain in macro limbo, with expectations
regarding yields and overall risk appetites, trumping bottom up trends
However, the DB house view, which calls for muted GDP growth, a stable lOyear
environment, no recession through 2017, and REIT valuations now much
less aggressive, we think the stocks have a little room to run if 3Q can
exceed
low expectations.
Figure 21: NTM P/FFO
13.0x
14.0x
15.0x
16.0x
17.0x
18.0x
19.0x
20.0x
0.0x st dev from avg
Figure 22: NTM P/FAD
Data as of 10/14/16
13.0x
15.0x
17.0x
19.0x
21.0x
23.0x
25.0x
27.0x
0.3x st dev from avg
Data as of 10/14/16
DB Coverage
Avg
Data is based on consensus estimates
Median
+2 st dev
-2 st dev
EFTA01437794
DB Coverage
Avg
Data is based on consensus estimates
Median
+2 st dev
-2 st dev
Figure 23: Dividend Yield Spread to 10-year
Current - Avg = 44bps
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Figure 24: Premium/Discount to NAV
-7.1% discount
10.0%
15.0%
Data as of 10/14/16
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
Data as of 10/14/16
Spread
Avg
Data is based on consensus estimates
Median
+2 st dev
-2 st dev
DB Coverage
Avg
Data is based on consensus estimates
Median
+2 st dev
-2 st dev
Page 12
Deutsche Bank Securities Inc.
Div Yield Spread to !0-yr
NTM P/FFO
10/14/11
1/14/12
4/14/12
7/14/12
10/14/12
1/14/13
EFTA01437795
4/14/13
7/14/13
10/14/13
1/14/14
4/14/14
7/14/14
10/14/14
1/14/15
4/14/15
7/14/15
10/14/15
1/14/16
4/14/16
7/14/16
10/14/16
10/14/11
1/14/12
4/14/12
7/14/12
10/14/12
1/14/13
4/14/13
7/14/13
10/14/13
1/14/14
4/14/14
7/14/14
10/14/14
1/14/15
4/14/15
7/14/15
10/14/15
1/14/16
4/14/16
7/14/16
10/14/16
Prem/(Disc) to NAV
NTM P/FAD
10/14/11
1/14/12
4/14/12
7/14/12
10/14/12
1/14/13
4/14/13
7/14/13
10/14/13
1/14/14
4/14/14
7/14/14
10/14/14
EFTA01437796
1/14/15
4/14/15
7/14/15
10/14/15
1/14/16
4/14/16
7/14/16
10/14/16
10/14/11
1/14/12
4/14/12
7/14/12
10/14/12
1/14/13
4/14/13
7/14/13
10/14/13
1/14/14
4/14/14
7/14/14
10/14/14
1/14/15
4/14/15
7/14/15
10/14/15
1/14/16
4/14/16
7/14/16
10/14/16
EFTA01437797
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
REIT performance trends
DB REIT coverage returns
Figure 25: 1-Month REIT coverage returns
MPW
ACC
DLR
UBA
KRC
EQR
CIO
RPT
PLD
AVB
BRX
CLI
QTS
KIM
CONE
VTR
RPAI
EQY
AVERAGE
REG
CPT
AFCO
VNO
SRC
PPS
TCO
MAC
FRT
SLG
KW
GGP
SPG
BXP
DDR
HCN
PGRE
IRT
-10.6%
5.1%
3.0%
2.9%
2.7%
2.0%
1.8%
0.5%
EFTA01437798
-0.1%
-0.4%
-0.6%
-0.8%
-0.9%
-0.9%
-1.0%
-1.0%
-1.3%
-1.7%
-1.9%
-2.0%
-2.2%
-2.4%
-2.6%
-2.7%
-2.8%
-2.8%
-3.3%
-4.0%
-4.1%
-4.6%
-4.7%
-4.9%
-5.2%
-5.4%
-5.6%
-5.6%
-5.9%
as of 10-14-16
-12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%
1 month Returns
AFCO
IRT
KW
PPS
KRC
BRX
PLD
MPW
SRC
SLG
QTS
ACC
VNO
VTR
PGRE
AVERAGE
CLI
TCO
6.0%
EFTA01437799
RPAI
BXP
CIO
CPT
EQY
HCN
EQR
AVB
REG
KIM
FRT
CONE
SPG
DLR
RPT
UBA
MAC
DDR
GGP
-1.6%
-2.4%
-2.7%
-4.1%
-4.1%
-4.7%
-4.9%
-5.0%
-5.1%
-5.6%
-5.7%
-6.0%
-6.2%
-6.4%
-6.7%
-7.7%
-7.8%
-8.1%
-8.2%
-8.4%
-9.5%
-10.3%
-10.6%
-10.7%
-10.7%
-11.0%
-11.1%
-12.9%
-13.4%
-14.9%
as of 10-14-16
-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
EFTA01437800
3 month Returns
Figure 26: 3-Month REIT coverage returns
22.4%
7.0%
5.1%
2.0%
0.9%
0.8%
0.6%
Figure 27: 12-Month REIT coverage returns
CONE
DLR
SRC
MPW
ACC
IRT
CLI
PLD
VTR
QTS
UBA
EQY
RPT
REG
CIO
RPAI
KIM
AVERAGE
BRX
CPT
PPS
BXP
FRT
HCN
DDR
KRC
SPG
MAC
VNO
GGP
TCO
AVB
EQR
SLG
PGRE
KW
-9.9%
-20.0% -10.0%
0.0%
EFTA01437801
10.0%
20.0%
12 month Returns
30.0%
20.9%
20.3%
18.8%
18.5%
18.3%
17.1%
15.3%
15.2%
14.6%
14.2%
11.0%
9.5%
9.0%
8.2%
7.8%
6.2%
6.2%
4.9%
3.4%
2.5%
0.3%
-0.7%
-2.2%
-3.3%
-5.1%
-7.1%
as of 10-14-16
40.0%
50.0%
30.5%
29.2%
28.8%
25.1%
46.0%
40.4%
37.7%
37.5%
36.8%
Figure 28: YTD REIT coverage returns
MPW
CONE
SRC
DLR
IRT
VTR
ACC
EFTA01437802
PLD
QTS
UBA
CLI
KRC
RPAI
REG
EQY
RPT
CPT
AVERAGE
KIM
PPS
BRX
CIO
HCN
AFCO
SPG
FRT
BXP
DDR
GGP
MAC
VNO
TCO
SLG
AVB
EQR
PGRE
KW
-20.0%
24.3%
22.4%
22.3%
21.7%
18.2%
17.6%
14.6%
12.7%
11.6%
11.5%
9.7%
9.6%
9.4%
9.0%
9.0%
8.9%
8.2%
8.0%
5.8%
5.3%
EFTA01437803
3.8%
2.7%
1.0%
0.9%
-1.9%
-2.8%
-2.8%
-4.6%
-5.0%
-6.2%
-10.1%
-11.1%
-12.5%
-10.0%
0.0%
10.0%
YTD Returns
20.0%
as of 10-14-16
30.0%
40.0%
32.9%
30.6%
30.4%
28.9%
Deutsche Bank Securities Inc.
Page 13
EFTA01437804
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Index level performance
Figure 29: 1-mo broad market
returns
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
0.9%
0.8%
0.5%
0.10%
0.2%
Figure 30: 1-mo returns by risk
bucket
-1.8%
-1.6%
-1.4%
-1.2%
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
-1.4%
-1.8%
MSCI US
REIT (RMZ)
as of 10-14-16
10 Year T
Note
S&P 500
Electric
Utilities
S&P 500
Financials
1 month
S&P 500 NASDAQ Russell 2000
as of 10-14-16
1 month
EFTA01437805
0.2%
-0.4%
-0.9%
-0.8%
-1.2%
-0.8%
-1.2%
-1.3%
Small
Cap
Mid Cap Large
Cap
Div
Yield
>3.5%
Div
Yield
<=3.5%
High
Growth
>7.0%
'17 FF0
growth
-1.6%
Low
Growth
<=7.0%
'17 FF0
growth
Debt / Debt /
EBITDA
>5.0x
EBITDA
<=5.0x
Avg
volume
> 1MM
-0.8%
-1.2%
Avg
volume
<= 1MM
as of 10-14-16
1 Month
Average
Figure 31: 1-mo property type
returns
-6.0%
-5.0%
-4.0%
EFTA01437806
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
1.6%
1.1%
-0.3%
-0.6% -0.7%
-1.0%
-1.7% -1.9% -2.1% -2.2% -2.3%
-1.3%
-4.9%
Figure 32: YTD broad market returns
10.0%
12.0%
14.0%
16.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
7.2%
6.2%
4.1%
2.0%
13.5%
8.0%
Figure 33: YTD returns by risk bucket
10.0%
12.0%
14.0%
16.0%
18.0%
0.0%
2.0%
4.0%
6.0%
8.0%
-0.47%
MSCI US
REIT (RMZ)
as of 10-14-16
10 Year T
Note
S&P 500
Electric
EFTA01437807
Utilities
S&P 500
Financials
YTD
S&P 500 NASDAQ Russell
2000
as of 10-14-16
Small
Cap
Mid
Cap
15.5%
13.8%
10.9%
8.5%
6.3%
6.9%
11.7%
10.4%
9.1%
8.5%
11.4%
Figure 34: YTD property type returns
10.0%
15.0%
20.0%
25.0%
30.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
Large
Cap
Div
Yield
>3.5%
Div
Yield
<=3.5%
High
Growth
>7.0%
'17 FF0
growth
YTD
Low
Growth
<=7.0%
EFTA01437808
'17 FF0
growth
as of 10-14-16
YTD
Average
Debt / Debt /
EBITDA
>5.0x
EBITDA
<=5.0x
Avg
volume
> 1MM
Avg
volume
<= 1MM
25.7% 25.2% 24.9%
18.7%
15.0%
9.8% 9.3%
7.4%
3.1% 1.8%
-1.8%
-11.6%
7.2%
Page 14
Deutsche Bank Securities Inc.
EFTA01437809
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Sector Previews
Apartment: Slowing job growth and new supply continue
to impede rent growth
Figure 35: 1-Month Apartment performance
Apartment
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
6.9%
3.0%
1.8%
-0.6%
-1.0%
-1.7%
-2.0%
-2.4%
-2.6%
-2.8%
-2.8%
-3.2%
-3.4%
-3.7%
-4.9%
-10.6%
-20%
-10%
0%
10%
20%
30%
40%
50%
46.6%
Figure 36: YTD Apartment performance
Apartment
24.3%
22.3%
12.9% 11.9%
9.5% 9.4% 8.9% 8.7%
2.8%
EFTA01437810
1.4%
-1.8%
-6.2%
-7.2%
-10.1% -11.0%
As of 10/14/16
As of 10/14/16
Figure 37: Rent growth slows in 3Q16, vacancy stays flat
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Figure 38: SS NOI growth expected to slow in 2H16
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Y/Y ch in Effective Rent (LHS)
VacPercent (RHS)
IIEffective rent growth at 3.8% in 3Q per REIS
data, down from 4.5% in 2Q. This is the third
consecutive y/y decline in rent growth with REIS
projecting rent growth to stay below 4%
IIVacancy remained flat vs. 2Q at 4.4%. New
EFTA01437811
supply is expected to drive the vacancy rates
higher in 2016
AVB
CPT
EQR
IRT
PPS
2015 3Q15 4Q15 1016 2Q16
IIDBe of 4.4% SS NOI growth in 3016, up slightly
from 4.3% in 2016 as NOI growth at less supply
impacted names (IRT and PPS) is supporting the
overall average
IIWe project full year SS NOI growth of 4.6% in
2016 and 2.8% in 2017. 2015 actual SS NOI
growth was 4.9%
Key Apartment topics/questions for 3Q16
IIAbility to push rents with further deceleration and rising vacancies
expected by year-end
Deutsche Bank Securities Inc.
Page 15
Average
SS NOI Growth, Y/Y
EFTA01437812
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
IIAsking rates on renewals and new leases in 4Q
IISupply expectations for the balance
IIUpdated job growth outlook by metro
IIDevelopment update on yield trends,
construction lending
IIRegional trends: DC, Houston, NYC, LA, Western tech markets
IIRent growth and construction outlook by asset quality (Class A vs.
Class B) and market type (urban vs. suburban)
IIMost attractive use of capital in today's environment
IIMove-outs for home purchases vs. long term average
IIConsolidation/privatizations
Figure 39: AVB's 3Q16 results preview
AVB
Earnings
FFO/sh
Core FFO/sh, reported
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average SS Occupancy (as initially reported)
y/y ch (as initially reported)
Average SS Rental Rate (as initially reported)
y/y ch (as initially reported)
3Q15
2Q16
Actual Actual
$2.02
$1.93
$1.99
$2.03
Actual Actual
5.1% 5.0%
5.4% 5.0%
6.4% 4.7%
95.3% 95.5%
-40bp
-10bp
$2,400 $2,417
5.8% 5.2%
of the year as well as for 2017
land and construction costs, and
EFTA01437813
Note: consensus estimates are based on ThomsonReuters compiled data as of
10/14/16
IIBased on AVB's full year guidance provided on 7/25, the implied SS revenue
growth for 2H16 is at +3.75%. We
expect the slowdown vs. 1H16 to be gradual with 90bps of deceleration in 3Q
(DBe: +4.1%) followed by
another 70bps in 4Q (DBe: +3.4%)
IIUpdate on West Coast markets, most notably softness in SF (new supply;
increased concessions; slowing tech
ob growth) and resilience of demand in Seattle (job growth outlook vs.
elevated construction)
IIExpect the East Coast update to focus on recovery in DC, weakness in NYC
(new supply; muted high-paying
ob creation), and demand concerns in New England (job growth fell below
expectations in 1H; increase in
concessions)
IILeasing progress at AVB's Willoughby Square/AVA DoBro, Northstation, and
West Hollywood development
projects and an update on overall development pipeline trends
IIWe don't expect any material changes to AVB's 2016 same store outlook, in
light of EQR's recently reaffirmed
2016 SS revenue growth outlook
II3Q core FFO/sh guidance of $2.05-$2.11 (DBe: $2.08), 3Q FFO/sh guidance of
$2.14-$2.20 (DBe: $2.18)
3Q16
Actual DBe
$2.18
$2.08
Actual
Cons
$2.11
DBe
4.9% total
4.1% total
2.5% total
95.5%
20bp
2016
Pre 3Q Guide Post 3Q Guide
$8.26 - $8.46
$8.13 - $8.33
Pre 3Q Guide Post 3Q Guide
5.00% - 5.75%
4.25% - 4.75%
2.00% - 2.75%
EFTA01437814
DBe
DBe
5.45% total
4.50% total
2.39% total
Cons
$8.38 $8.33
$8.20
Page 16
Deutsche Bank Securities Inc.
EFTA01437815
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 40: CPT's 3Q16 results preview
CPT
Earnings
FFO/sh
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average SS Occupancy (as initially reported)
y/y ch (as initially reported)
Average SS Rental Rate (as initially reported)
y/y ch (as initially reported)
3Q15
2Q16
Actual Actual
$1.14
$1.15
Actual Actual
5.5% 3.7%
5.5% 4.3%
5.7% 5.3%
96.0% 95.5%
10bp
-50bp
$1,499 $1,598
4.3% 4.8%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdates on Houston and DC: Houston SS rev growth projected to be flat to
slightly negative in 2016; DC revenue
growth projected at +1-2% for 2016, despite a construction-related setback
lin 2Q
Disposition update on $310MM of assets being marketed at the end of July
Update on two projects in lease-up (Glendale and Chandler) and completion
of Camden Victory Park in Dallas
IIDevelopment and capital deployment expectations. CPT previously called for
up to $200MM of starts in 2H16
II3Q FFO/sh guidance of $1.07-$1.11 (DBe: $1.11)
Actual
Actual
3Q16
DBe
$1.11
EFTA01437816
2016
Cons
$1.10
DBe
3.7% total
3.7% total
3.7% total
95.5%
-50bp
Pre 3Q Guide Post 3Q Guide DBe
$4.50 - $4.60
Pre 3Q Guide Post 3Q Guide
+4.00% to 4.50%
+3.85% to 4.35%
+3.50% to 4.00%
$4.56
Cons
$4.55
DBe
4.3% total
4.1% total
3.8% total
Deutsche Bank Securities Inc.
Page 17
EFTA01437817
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 41: EQR's 3Q16 results preview
EQR
Earnings
FFO/sh
Normalized FFO/sh, reported
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average SS Occupancy (as initially reported)
Average SS Rental Rate (as initially reported)
y/y ch (as initially reported)
3Q15
2Q16
3Q16
Actual Actual
$0.87
$0.89
$0.90
$0.76
Actual Actual
6.7% 5.3%
5.4% 4.2%
2.8% 1.7%
96.1% 96.3%
$2,344 $2,549
5.3% 4.0%
Actual
Actual
DBe
$0.81
$0.78
Cons
$0.78
DBe
3.0% total
3.5% total
4.5% total
Pre 3Q Guide
$2.96 - $3.02
$3.05 - $3.11
Pre 3Q Guide
3.75% - 4.25%
3.50% - 4.00%
2.50% - 3.00%
95.9%
2016
Post 3Q Guide
EFTA01437818
DBe
$2.98
$3.07
Post 3Q Guide
Cons
$3.08
DBe
4.1% total
3.8% total
2.7% total
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIEQR reaffirmed 2016 SS revenue growth guidance of 3.5%-4.0% in an
operating update issued on 9/27. With
new rents tracking +1.1% through 9/19 and renewals at +5.4%, we expect 3Q16
SS rev growth to come in
slightly below or in line with our +3 5% estimate
IIUpdate on new supply and move-in concessions in NY & SF as pricing power
deteriorated further in 3Q16
IIUpdate on Seattle's ability to continue absorbing new supply and market
trends in DC
IIUpdate on development and properties in lease-up, most notably two new
small projects planned for DC and
leasing progress of three recently completed developments (two in downtown
SF & one in North San Jose)
IIUpdate on use of additional debt proceeds from the recent $500MM, 2.85% 10-
yr issuance with only $200$250MM
f issuance assumed in the prior guidance range
1
Disposition update including any intention to sell additional assets this
year. Previous guidance was reduced due
to $150MM of sales likely being pushed into 1Q17 and another $200MM EQR
decided to hold on to
IIViews on single asset pricing today. EQR's previous guidance called for
$150MM of acquisitions during the
balance of 2016 (our model assumes the entire $150MM is acquired in 3Q)
II3Q Normalized FFO/sh guidance of 75c-79c (DBe: 78c), 3Q FFO/sh guidance of
82c-86c (DBe: 81c)
Page 18
Deutsche Bank Securities Inc.
EFTA01437819
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 42: IRT's 3Q16 results preview
IRT
Earnings
FFO/sh
Core FFO/sh
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average Occupancy, (as initially reported)
y/y ch (as initially reported)
Average Rental Rate (as initially reported)
y/y ch (as initially reported)
3Q15
Actual
$0.86
$0.20
Actual
2Q16
Actual
$0.18
$0.22
Actual
2.0% 5.0%
5.2% 3.1%
8.8% 1.1%
94.0% 94.4%
40bp
$950
80bp
$961
3.60% 14.40%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIExpect SS rev growth to accelerate to +5.4% in 3Q16 based on 2016 guidance
issued last Q. Blended rent
growth for new leases and renewals during July, August, and September was
tracking around +5.3% per IRT's
20 call
IICommentary on current dividend level given the dilution from equity
offering and our estimated FAD payout
ratio being north of 100%
IIManagement's views on further de-levering the balance sheet and
p
otentially resuming acquisitions
I Details on how management will drive —$2MM of annual net G&A cost savings
II
EFTA01437820
following the internalization
IIMarket trends, particularly in Oklahoma City (job losses in energy sector)
and Little Rock (muted job growth)
IIAbility to continue pushing rents with management targeting +4.0% growth
during the next couple of years
IIWe are updating estimates after reviewing the recent 8-K filing with final
details regarding the equity offering
and internalization. Our core FFO/sh estimates are decreasing by lc to 80c
for 2016 and by 2c to 75c for 2017.
Please see Figure 98 for a summary of our full year estimate revisions
Actual
3016
DBe
$0.19
$0.22
Actual
DBe
7.4% total
5.4% total
2.8% total
94.0%
Obp
2016
Cons
$0.22
Pre 3Q Guide
$0.84 - $0.88
Pre 3Q Guide
4.50% - 5.50%
4.00% - 5.00%
2.00% - 3.00%
Post 3Q Guide
DBe
$0.69
$0.80
Post 3Q Guide
DBe
6.2% total
4.5% total
2.5% total
93.75%
Cons
$0.85
Deutsche Bank Securities Inc.
Page 19
EFTA01437821
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 43: PPS's 3Q16 results preview
PPS
Earnings
FFO/sh
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average SS Occupancy (as initially reported)
y/y ch (as initially reported)
Average SS Rental Rate (as initially reported)
y/y ch (as initially reported)
3Q15
Actual
$0.76
Actual
2.2%
2.8%
3.8%
97.0%
60bp
$1,459
2.0%
2Q16
Actual
$0.82
Actual
2.4%
3.2%
4.5%
96.2%
20bp
$1,483
2.7%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIExpect SS NOI growth to accelerate to +3.1% in 3Q with slower expense
growth more than offsetting a q/q
decline in SS rev growth
IILooking for an update on the merger with MAA in terms of timing and any
new details management can discuss
IIUpdate on new lease rates and renewals which tracked +2.0% and +4.5%,
respectively, in early August; Update
on move outs due to price (10% in 2Q) and move outs to buy (19% in 2Q)
IILease-up progress at Parkside at Wade (Raleigh) development (avg. of 34
EFTA01437822
units per month in 2Q); Update on the
planned 3Q16 completion of Post Afton Oaks (Houston) and any leasing so far
vs. budget
IIUpdate on PPS's top four markets: Atlanta, DC, Dallas, and Tampa with
particular focus on submarkets
pressured by supply this year (Buckhead in Atlanta, Alexandria in DC, &
Uptown Dallas)
3016
2016
Actual
Actual
DBe
$0.80
DBe
3.14% total
2.90% total
2.50% total
96.0%
-105bp
Cons
$0.81
Pre 3Q Guide
$3.20 - $3.24
Pre 3Q Guide
2.50% - 3.30%
3.00% - 3.30%
3.30% - 3.70%
Post 3Q Guide
Post 3Q Guide
DBe
$3.21
DBe
2.9% total
3.2% total
3.5% total
Cons
$3.23
Page 20
Deutsche Bank Securities Inc.
EFTA01437823
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 44: ACC's 3Q16 results preview
ACC
Earnings
FFOM/sh 1
Operating Metrics
SS NOI growth, y/y
SS Revenue growth, y/y
SS Expense growth, y/y
Average wholly-owned Occ. (as initially reported)
Development starts (in MM's)
Owned projects under construction (in MM's)
On-campus award pipeline (in MM's)
Dispositions (in MM's)
3Q15
Actual
$0.43
Actual
2Q16
Actual
$0.54
Actual
5.9% 2.5%
3.7% 2.5%
2.1% 2.4%
91.3% 92.5%
$0
$440
$182
$32
$188
$912
$407
$0
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
1 ACC reports FFOM due to accounting rules requiring it to consolidate its
on-campus properties
IIUpdate on the 19 non-core asset portfolio that is under LOI and expected
to close in 4Q16. Guidance calls for
$126MM to $526MM in planned 2016 dispositions. We are modeling $526MM to
close during 4Q. Also expect
an update on ACC potentially retaining management of sold assets
IIComments on the conclusion of the 2016-2017 academic year lease-up and
expectations for next year with
$600MM of deliveries finalized for Fall 2017
IIUpdate on the 2018 development pipeline and development yields for on-
EFTA01437824
ampus vs. off-campus
1
Color on final leasing stats for the 2016/2017 school year
IIUpdate on expected SS NOI growth in 2017. ACC previously projected that
+3% of rent growth, a 70-80bps
pickup in occupancy, and operating expenses growing at 2% or lower would
drive SS NOI growth towards the
high end of 3%-6% range in 2017
IIUpdate on national supply trends vs. ACC construction (ACC accounts for
13.7% of all 2017 development
deliveries in their markets, up from 5.1% in 2016)
Actual
Actual
3Q16
DBe
$0.45
DBe
3.6%
2.7%
1.9%
92.7%
$131
$912
$407
$0
2016
Cons
$0.43
Pre 3Q Guide Post 30 Guide DBe
$2.19 - $2.31
Pre 3Q Guide Post 30 Guide
2.0% - 3.8%
2.2% - 2.9%
1.8% - 2.3%
$2.28
Cons
$2.25
DBe
3.0% total
2.6% total
2.1% total
96.7%
$200 - $600
$600
Deutsche Bank Securities Inc.
Page 21
EFTA01437825
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Malls: Rising demand headwinds and slowing SS NOI
growth expected
Figure 45: 1-Month Mall performance
Mall
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
Figure 46: YTD Mall performance
Mall
-3.0%
-3.3%
-4.0%
-4.9%
-4.9%
-5.2%
-6.4%
WPG
As of 10/14/16
TCO
MAC
GGP
SPG
CBL
-7.4%
PEI
-10%
-5%
0%
5%
10%
15%
20%
17.0%
3.8%
1.7%
1.8%
1.3%
-1.9%
-2.8%
-4.6%
WPG
EFTA01437826
As of 10/14/16
SPG
CBL
PEI
GGP
MAC
TCO
Figure 47: Vacancy decreases and rent growth steady in
3Q
10.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Figure 48: NOI growth guidance suggest deceleration
through 2H
10.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
GGP
Asking Rent y/y ch
Vacancy Rate
IINational vacancy decreased by 10bps in 3Q to
7.8%
EFTA01437827
2Q15
MAC
3Q15
SPG
4Q15
TCO
1Q16
Average
2Q16
IIAverage SS NOI growth guidance for year of
—4.4% at the midpoint suggests deceleration in
2H to around the —3.7% range.
Key Mall topics/questions for the quarter
IIUpdate on e-tailers looking for physical space, with recent press
reports on Warby Parker and Bonobos and their store plans
IITenant outlook and trends, particularly with teen and fast fashion retail
as well as department stores
IIUpdate on SPG/GGP JV's plans for Aeropostale and potential impact
on the overall mall sector
IIUpdate on tenant watch list and store closing expectations for
Aeropostle, PacSun and others. (ARO and PSUN, both DB not rated)
IIUpdate on sales expectations this holiday season, with NRF
expectations for Nov and Dec at +3.6% (ex autos, gas, restaurants)
Page 22
Deutsche Bank Securities Inc.
SS NOI Cash
EFTA01437828
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
IIOutlook and opportunity of shadow development/redevelopment
pipelines
IIUpdate on any conversations with Macy's (M: DB Hold rated,
USD35.57 by Paul Trussell) or other department stores for the
potential to take back space or partner within a JV
IIUpdate on Sears (SHLD: DB not rated) JV's and outlook for this retailer
given rising concerns about a potential bankruptcy
IIUpdate on retailer conditions in tourist heavy markets
IIUpdate on the consumer
Figure 49: SPG 3Q16 results preview
SPG
Earnings
FFO/sh
Pro-forma FFO/sh
Operating Metrics
Occupancy (US Mall/Outlets, Total portfolio, signed)
q/q ch
y/y ch
Rent spread (US Malls/Outlets , Total portfolio, TTM)
Tenant Sales/sqf (US Malls/Outlets total portfolio, TTM)
y/y ch
SS NOI growth y/y (US Malls/Outlets, Total portfolio, ex-lease term, ex-
redev)
Note: consensus data is based on Thomson compiled data as of 10/14/16
3Q15
2Q16
Actual Actual
$2.54
$2.54
$2.63
$2.63
Actual Actual
96.10% 95.90%
Obp
-80bp
30bp
-20bp
18.4% 14.8%
$616
$607
0.5% -2.1%
4.3% 3.2%
IICommentary, rationale and expectations around ARO deal with GGP and ABG
EFTA01437829
II
Observations and
by Warwick Okines)
King of Prussia as
the mall
IIUpdate
IIUpdate
space.
IITenant
IIUpdate
IIUpdate
traffic
opening
well as
trends from Primark (ABF: DB Buy rated, GBP2,641
at
overall feedback from 155ksf expansion opening at
on retailer environment, store closings, releasing activity
on department store health, vacancies and opportunity to take back
sales trends and trends at tourism driven centers and outlets
on traffic trends at malls vs outlets
on Sears JV and plans
IIPricing on recent non core asset sales, including the press-reported sales
of 3 of the The Mills Limited
Partnership assets (The Galleria at White Plains, Northpark Mall, and The
Esplanade)
IIUpdate on the HBC-JV outlook (HBC.TSX DB not rated).
IIUpdate on project progress within the —$2.1B re/development pipeline (at
share) at an 8% expected yield
IIUpdate on Brickell City Center in Miami and the market overall
≥+3.5%
Actual
Actual
3Q16
DBe
$2.65
$2.65
DBe
96.00%
10bp
-10bp
15.0% quarterly rent spread
Cons
2.68
Pre 3Q Guide
$10.77 - $10.85
Pre 3Q Guide
2016
Post 3Q Guide
DBe
$10.80
$10.80
Post 3Q Guide
EFTA01437830
Cons
10.86
DBe
96.45%
35bp
15.6%
Deutsche Bank Securities Inc.
Page 23
EFTA01437831
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 50: GGP 3Q16 results preview
GGP
Earnings
Company FFO/sh
Operating Metrics
Occupancy (Total malls, commenced)
q/q ch
y/y ch
SS initial rent spread for 2016 commencement
Tenant Sales/sqf (Total Malls, TTM, <10ksf)
Tenant sales (all less anchor y/y ch)
SS NOI growth y/y
3Q15
2Q16
3016
Actual Actual
$0.36
$0.35
Actual Actual
95.4% 95.1%
90bp
30bp
-10bp
60bp
9.4% 12.7%
$593
$583
3.7% 2.8%
5.1% 4.0%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IICommentary, rationale and expectations around ARO deal with SPG and ABG
IIUpdate on retailer environment, store closings, releasing activity
IIUpdate on the 3 remaining large format Sports Authority locations
IIUpdate on expectations around PSUN, as of 2Q16, 6 expected to vacate by
year end, with 65 stores retained.
IIUpdate on Sears JV and plans
IIUpdate on progress on projects within the —$500M active development
pipeline, and detail on plans for other
projects to backfill. Update preleasing at the Norwalk development.
IIUpdate on department store health and potential for taking back more space
or doing more JV deals
EFTA01437832
II Update on opportunities to monetize Street retail and remaining non core
assets
IIUpdate on Miami Design District and Miami outlook overall
II3Q company FF0 guidance is $0.34-0.36 (DB at $0.36 ) and NAREIT FFO/sh
guidance is $0.33-$0.35 (DB at
$0.35)
IIGGP typically provides its preliminary company FF0 guidance for the
following fiscal year in 3Q. Both DB and
consensus are at $1.60
mid —4%
Actual
Actual
DBe
$0.36
DBe
95.1%
Obp
-30bp
Cons
$0.36
2016
Pre 3Q Guide Post 3Q Guide DBe Cons
$1.51 - $1.55
Pre 3Q Guide Post 3Q Guide
$1.54 $1.53
DBe
95.4%
-110bp
Page 24
Deutsche Bank Securities Inc.
EFTA01437833
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 51: TCO 3Q16 results preview
TCO
Earnings
FFO/sh
Pro-forma FFO/sh
Operating Metrics
Ending occupancy (all centers, commenced)
q/q ch
y/y ch
Opening/Closing Spread (Combined, TTM)
Tenant Sales/sqf (TTM)
y/y ch (as reported)
SS NOI growth y/y (ex-lease term)
3Q15
Actual
$0.89
$0.86
Actual
2Q16
3Q16
Actual
$1.04
$0.79
Actual
92.20% 92.5%
160bp
320bp
Obp
190bp
21.4% 24.2%
$805
$789
1.9% -1.0%
2.8% 6.2%
Note: consensus data is based on Thomson compiled data as of 10/14/16
IIUpdate on Beverley Center, updated conversations with existing tenants,
any rent relief requests, vacancy etc.
IIDevelopment update; Leasing and sales trends at Xi'an (at 2Q, 90% occupied
and expected to be fully occupied
by YE); Still on track for March opening at Zhengzhou?; Hanam and Hawaii
traffic and sales trends since recent
openings; San Juan leasing and sales commentary
IIUpdate on future opportunities in South Korea and China with previous
commentary of potentially breaking
ground on something in 2017.
EFTA01437834
IIUpdate on Country Club Plaza plans and opportunity
IIPlans for the 3 Sports Authority boxes and Saks space at Short Hills
IIUpdate and expectations on the retailer environment in tourism focused
markets
—5%
Actual
DBe
$0.86
$0.86
Actual
DBe
92.5%
Obp
30bp
12.0% quarterly rent spread
Cons
$0.89
Pre 3Q Guide
$3.75 - $3.90
$3.50 - $3.65
Pre 3Q Guide
—95.5% comp
30bp
18.4%
2016
Post 3Q Guide
DBe Cons
$3.84 $3.84
$3.59
Post 3Q Guide
DBe
94.50%
Deutsche Bank Securities Inc.
Page 25
EFTA01437835
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 52: MAC 3Q16 results preview
MAC
Earnings
FFO/sh
FFO/sh as adjusted
Operating Metrics
Occupancy (Total centers, signed)
q/q ch
y/y ch
Opening/closing rent spread (TTM, cash)
SS NOI growth y/y (consolidated)
3Q15
2Q16
Actual Actual
$1.01
$1.01
$1.02
$1.02
Actual Actual
95.4% 95.0%
-10bp
-20bp
Tenant sales/sqf (comparable properties), as initially reported $630
y/y ch, as initially reported
-10bp
-50bp
16.3% 16.1%
$644
7.7% 2.4%
7.0% 6.5%
Note: consensus estimates are based on SNL compiled data as of 10/14/16
IIUpdate on refinancings at Fresno (CMBS deal expected in —$350M range),
Corte Madera and Eastland.
IIUpdate on potential outlet development in Carson, CA (entered into
negotiating agreement with city for
—500ksf outlet mall)
IIUpdate on department store health and potential for taking back more space
or doing more JV deals
IIDevelopment update (—$511-546M in process pipeline) with expected yields
ri
n the 4-11% range
IIUpdate on Country Club Plaza plans and opportunity
EFTA01437836
Update on 22 ARO stores
Update on WithMe partnership
Update on development plans with the Sears JV
IIFeedback and traffic on renovated and scaled down Sears boxes and initial
trends at the recently opened
Primark stores in Danbury and Freehold
Actual
Actual
3Q16
DBe
$1.04
$1.04 $1.05
DBe
95.3%
25bp
-15bp
15.0%
+4.50% - 5.00%
$4.05 - $4.15
Pre 3Q Guide
2016
Cons
Pre 3Q Guide
Post 3Q Guide DBe Cons
$4.08
Post 3Q Guide
$4.10 $4.11
DBe
95.75%
-35bp
15.4%
Color on the recent opening of the Broadway Plaza expansion that is over 90%
leased and the Fashion Outlets
of Philadelphia that recently commenced construction
Page 26
Deutsche Bank Securities Inc.
EFTA01437837
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Shopping Centers: Store closures to hit 3Q internal growth,
but progress for re-tenanting more important
Figure 53: 1-Month Shopping Center performance
Local Retail
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
2.7%
2.5%
Figure 54: : YTD Shopping Center performance
Local Retail
-0.1% -0.8% -0.8%
-0.8%
-1.0%
-2.1%
-1.0%
-1.2%
-1.7%
-2.2%
-1.9%
-2.5% -2.9%
-4.0% -4.1%
-5.6%
0%
5%
10%
15%
20%
25%
30%
35%
29.4%
20.7%
17.6%
15.8% 15.8%
11.6%
11.8%
11.5%
9.7%
9.6%
EFTA01437838
8.2% 6.6%
5.4%
2.7% 2.1%
0.9%
9.0%
9.3%
As of 10/14/16
As of 10/14/16
Figure 55: Vacancy up and rents down modestly in 3Q
10.0%
12.0%
0.0%
2.0%
4.0%
6.0%
8.0%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Figure 56: 2016 SS NOI growth similar to 1H level
0%
1%
2%
3%
4%
5%
6%
BRX
2Q15
Y/Y ch in Effective Rent
VacPercent
IINational vacancy rate was up 10bps q/q to 10%
IIEffective rent growth was down relative to last Q
to 1.9% y/y.
DDR EQY FRT KIM (US) REG RPAI RPT Average
3Q15
4Q15
1Q16
2Q16
EFTA01437839
II2016 SS NOI guidance on average at the
midpoint is —3%, implying steady results in 2H,
although additional potential store closures
present downside risk.
Key Shopping Center topics/questions for the quarter
II
II
II
II
Development and redevelopment outlook
Anchor and small shop retailer health
Sports Authority releasing, downtime and capex update
Logans Roadhouse and Golfsmith exposure and store closures
IIOutlook and thoughts on Staples/Office Depot (SPLS: DB Hold rated,
USD7.56/ODP: DB Hold rated, USD3.34, both by Mike Baker)
IINew watchlist tenants
Deutsche Bank Securities Inc
Page 27
SS NOI
EFTA01437840
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
IIUpdate on disposition market pricing and trends (any changes in
demand, negotiation, bidder pool or buyer make-up)
IICMBS and overall financing market update
IIRecent cap rate trends primary vs secondary markets
IIUpdate on changing trends, e-tailers, mall tenants moving to the
shopping centers and vice versa
IIRecent grocer trends in light of continued food at home deflation and
Amazon's (AMZN: DB Buy rated, USD822.96 by Ross Sandler)
continued push into the grocery business, most recently announced
plans to build convenience stores and curbside pickup locations.
Figure 57: BRX 3Q16 results preview
BRX
Earnings
FFO/sh
FFO/sh, ex-items
Operating Metrics
Total leasing volume (signed)
New leasing volume (signed)
Renewal leasing volume (signed)
Total occupancy (billed)
q/q ch
y/y ch
Total Lease Spread (signed, cash)
New Lease Spread (signed, cash)
Renewal lease Spreads (signed, cash)
SS NOI (incl redev, GAAP)
SS NOI (ex redev, GAAP)
3Q15
Actual
$0.51
$0.50
Actual
3,333,715
600,829
2,732,886
90.9%
60bp
10bp
15.2%
49.0%
11.5%
3.6%
3.6%
EFTA01437841
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
* % leased
II
II
II
II
Update on redevelopment opportunities within the portfolio
Update on plans to reduce single asset markets which total over 90
Update on Sports Authority releasing at 5 remaining locations
Update on plans to improve small shop occupancy, outparcel leasing and
entertainment and restaurant use.
IIUpdate on strategy to get stabilized occupancy up to the mid 90's from
90.6% at 2Q end.
Update on changes or plans to change leasing agent compensation structure.
Dispositions update with $75-175M in guidance and —$21M closed in 1H.
Update on the growth outlook over next 1-2 years and strategy between
repositioning and occupancy gains
Update on any new information from potential SEC investigation
2Q16
Actual
3Q16
Actual
$0.50
$0.52
Actual
3,589,288
893,212
2,696,076
90.6%
20bp
30bp
12.1%
24.7%
9.1%
3.5%
3.5%
90.5%
-15bp
-45bp
10.0% - 15.0%
8.5% commenced
2.5% - 3.5%
8.5% commenced
92.8% - 93.0%*
90.7%
EFTA01437842
28bp
Actual
DBe
$0.50
$0.50
DBe
Cons
$0.51
Pre 3Q Guide
$2.03 - $2.06
Pre 3Q Guide
2016
Post 3Q Guide
DBe
$2.05
$2.08
Post 3Q Guide
DBe
Cons
$2.06
Page 28
Deutsche Bank Securities Inc.
EFTA01437843
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 58: DDR 3Q16 results preview
DDR
Earnings
FFO/sh
Operating FFO/sh
Operating Metrics
Total leasing volume (100%)
New leasing volume (comp+non-comp, 100%)
Renewal leasing volume ( 100%)
Occupancy (pro-rata, commenced)
q/q ch
y/y ch
Blended rent spread (pro-rata, signed, cash)
New lease Spread (pro-rata, signed, cash)
Renewal Spread (pro-rata, signed, cash)
SS NOI growth y/y (pro-rata, cash)
3Q15
Actual
$0.31
$0.31
Actual
2,877
693
2,184
94.20%
-20bp
-70bp
7.9%
12.3%
7.1%
3.2%
2Q16
Actual
$0.33
$0.33
Actual
2,349
430
1,919
94.40%
20bp
20bp
9.1%
27.7%
7.0%
3.1%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
EFTA01437844
II Updated commentary from CEO, Tom August in terms of operations, structure
and policies, and strategic
vision.
IITiming and update on CFO search
IIUpdate on re/development opportunities with commentary in 20 of
potentially more available in the portfolio
IIUpdate on additional sales from unwinding JVs and potential opportunities
to purchase select assets
IICap rate on the recently closed 16 property portfolio largely in Upstate
NY for $390M
IIProforma the Upstate NY sale and 1H dispositions, DDR will have disposed
of close to $700M YTD (FY
guidance $600-800M).
IIUpdate on Sports Authority with 9 locations likely still to deal with post
20 end.
IIUpdate on strategy and conditions on the ground in Puerto Rico
94.10%
-30bp
-10bp
10.0% commenced
2.5% - 3.5%
94.60%
30bp
10.0% commenced
3Q16
2016
Actual
Actual
DBe
$0.31
$0.31
DBe
Cons
$0.31
Pre 3Q Guide Post 3Q Guide
$1.23 - $1.26
$1.23 - $1.26
Pre 3Q Guide Post 3Q Guide
DBe
$1.25
$1.25
DBe
Cons
EFTA01437845
S1.26
Deutsche Bank Securities Inc.
Page 29
EFTA01437846
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 59: EQY 3Q16 results preview
EQY
Earnings
FFO/sh
Core FFO/sh
Operating Metrics
Total leasing volume (consolidated)
New leasing volume (comp + non-comp, consolidated)
Renewal leasing volume (consolidated)
Total occupancy (consolidated, signed)
q/q ch
y/y ch
Blended rent spread (cash, consolidated)
New lease Spread (cash, consolidated)
Renewal Spread (cash, consolidated)
SS NOI growth y/y (cash, consolidated, ex redev)
3Q15
Actual
$0.31
$0.33
Actual
600
290
311
95.6%
10bp
120bp
10.8%
6.3%
11.9%
4.7%
2Q16
Actual
$0.34
$0.35
Actual
516
213
303
96.3%
10bp
80bp
7.0%
6.4%
7.3%
4.5%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
EFTA01437847
ll Update on small shop occupancy (90.3% at 2Q) and FL in particular (89% at
2Q).
llUpdates on Serramonte
llUpdate on Harvard Square and Westwood development plans. As of 2Q at
Westwood, EQY was in detailed
sketch plan review process with hopes of entitlements and leasing to follow.
llAny updates on the potential $1B of identified redevelopment opportunity
in 12 of EQYs assets that were
identified to backfill the pipeline over several years.
llUpdate on 2 remaining Sports Authority locations to lease (Westbury Plaza
I
nd Plaza Escuela)
Incremental impact from Hurricane Matthew
llUpdate on the acquisition and disposition market and any opportunities on
the horizon (guidance calls for
selective' acquisitions and 'ongoing one-off' sales of non-core assets).
3Q16
2016
Actual
Actual
DBe
$0.27
$0.33
DBe
Cons
$0.34
Pre 3Q Guide
$1.26 - $1.30
$1.36 - $1.40
Pre 3Q Guide
Post 3Q Guide
Post 3Q Guide
DBe
$1.29
$1.39
DBe
Cons
$1.39
95.9%
-38bp
32bp
10.0% commenced
3.25% - 4.25%
SS Occ 96.0% - 96.5%
EFTA01437848
96.58%
57bp
14.0% commenced
Page 30
Deutsche Bank Securities Inc.
EFTA01437849
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 60: FRT 3Q16 results preview
FRT
Earnings
FFO/sh
Pro-forma FFO/sh
Operating Metrics
Total retail leasing volume (signed)
3Q15
2Q16
Actual Actual
$1.36
$1.36
$1.42
$1.41
Actual Actual
560,884 467,364
New retail leasing volume (comp + non-comp, signed) 189,047 199,893
Renewal retail leasing volume (signed)
Retail occupancy (signed)
q/q ch
y/y ch
-20bp
Blended rent spread (cash, signed)
New lease Spread (cash, signed)
Renewal Spread (cash, signed)
SS NOI growth y/y (cash, ex-redev)
40bp
-10bp -120bp
14.0% 12.0%
19.0% 23.0%
23.0% 7.0%
2.0% 2.9%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on potential acquisition opportunities and commentary over pricing
(noted on 2Q call they were working
on a "number of important deals")
IIThoughts on potential weakness in the tech environment potentially
changing the demand dynamic at Santana;
and update on Splunk (SPLK: DB Buy rated, USD56.71 by Karl Keirstead) space
and how much of their leased
space they will occupy in January.
IIUpdate on 4 remaining Sports Authority locations to lease
IIUpdate on the redevelopment opportunity for Coco Walk and Sunset Plaza.
Recent press reports that plans
EFTA01437850
have been submitted to the city for the de-malling of Sunset and a major
renovation
IIUpdates on re/development projects, particularly Pike and Rose incremental
retail and residential lease up
IIFRT typically provides its initial FF0 guidance for the following fiscal
year in 3Q. We are at $6.04 and consensus
is at $6.12
IIWe decrease our 2017 FF0 estimate from $6.08 to $6.04 largely on more
conservative development
assumptions.
371,837 267,471
95.50% 94.50%
Actual
Actual
3Q16
DBe
$1.44
$1.44
DBe
2016
Cons
$1.42
Pre 3Q Guide
Pre 3Q Guide
$5.62 - $5.68
Post 3Q Guide DBe
$5.65
$5.63
Post 3Q Guide
DBe
Cons
$5.66
94.65%
15bp
94.90%
-85bp
15.0% commenced
-+3% incl redev
60bp
13.8% commenced
Deutsche Bank Securities Inc.
Page 31
EFTA01437851
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 61: KIM 3Q16 results preview
KIM
Earnings
FFO/sh
FFO/sh, as adjusted
Operating Metrics
Total leasing volume (pro-rata, signed)
New leasing volume (comp + non-comp, pro-rata, signed)
Renewal leasing volume (pro-rata, signed)
Total occupancy (pro-rata, signed)
q/q ch
y/y ch
Blended SS US rent spread (cash, pro-rata, signed)
SS US new lease spread (cash, pro-rata, signed)
SS US renewal spread (cash, pro-rata, signed)
US SS NOI growth y/y (cash, pro-rata, incl redevs)
3015
Actual
$0.40
$0.36
Actual
1,898
604
1,294
10bp
10.6%
28.6%
6.2%
2.4%
2016
Actual
$0.38
$0.37
Actual
1,256
532
724
95.40% 95.90%
-10bp
50bp
40bp
16.2%
29.8%
10.7%
3.1%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on Sports Authority exposure with previously commentary of 22
EFTA01437852
remaining boxes to release as of 20
IICommentary regarding investment market conditions — demand, buyer make up,
cap rate trends. KIM has
disposed of —$920M YTD (2016 guidance of $1-1.15B) at share and acquired
I
452MM (2016 guidance of $450$550M)
Update on conditions in Puerto Rico (-3% of ABR) with previous commentary of
sales volume and traffic
holding up.
IIAlbertsons update
IIUpdate on —$900M active re/development pipeline with expected incremental
returns of 8-13% and
opportunities to backfill
IITalk about the potential redevelopment opportunity at recent Gateway
Shopping Center acquisition in the
Seattle metro
IIThoughts on Amazon's continued push into grocery
95.60%
-30bp
20bp
5.0% commenced
2.5%-3.5%
95.85%
45bp
8.4% commenced
Actual
3Q16
2016
Actual
DBe
$0.17
$0.38
Cons
$0.18
DBe
Pre 3Q Guide Post 3Q Guide
$1.34 - $1.42
$1.48 - $1.52
Pre 3Q Guide Post 30 Guide
DBe
$1.38
$1.50
DBe
Cons
$1.38
EFTA01437853
Page 32
Deutsche Bank Securities Inc.
EFTA01437854
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 62: REG 3Q16 results preview
REG
Earnings
FFO/sh
Core FFO/sh
Operating Metrics
Leasing volume (pro-rata, signed, op properties)
New leasing vol (pro-rata, comp + non-comp , signed)
Renewal leasing volume (pro-rata, signed)
Occupancy (pro-rata, signed, op properties)
q/q ch
y/y ch
Blended rent spread (cash, pro-rata, signed, op properties)
New lease Spread (cash, pro-rata, signed)
Renewal Spread (cash, pro-rata, signed)
SS NOI growth y/y (cash, pro-rata, ex-termination fees)
3Q15
2Q16
Actual Actual Actual
$0.76
$0.76
$0.81
$0.82
Actual Actual Actual
1,156
360
796
1,542
392
1,150
96.1% 96.0%
20bp
20bp
-20bp
10bp
8.8% 12.2%
12.9% 29.0%
7.6% 9.1%
4.7% 3.4%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIExpect SS NOI to moderate in 2H from higher comps and bankruptcies
IIUpdate on redevelopment plans of the office building at the recent
Clarendon acquisition.
IIUpdate on any acquisition opportunities in the marketplace
EFTA01437855
II Update on leasing two remaining Sports Authority boxes
IIThoughts on Amazon's continued push into grocery
IIUpdate on re/development opportunities
94.9% commenced
25bp
170bp
10.0% commenced
96.0% - 96.5% SS occ
95.35% commenced
25bp
12.0% commenced
3Q16
DBe
$0.23
$0.80
DBe
2016
Cons
$0.80
Pre 3Q Guide
$2.71 - $2.76
$3.22 - $3.27
Pre 3Q Guide
Post 3Q Guide
DBe
$2.72
$3.27
Post 3Q Guide
DBe
Cons
$3.26
2.75% to 3.5%
Deutsche Bank Securities Inc.
Page 33
EFTA01437856
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 63: RPAI 3Q16 results preview
RPAI
Earnings
FFO/sh
Operating FFO/sh
Operating Metrics
Total leasing volume (pro-rata)
New leasing volume (comp + non-comp)
Renewal leasing volume
Total occupancy (commenced, consolidated)
q/q ch
y/y ch
Blended rent spread (pro-rata)
New lease Spread (pro-rata)
Renewal Spread (pro-rata)
SS NOI growth y/y (cash, consolidated)
3Q15
Actual
$0.23
$0.27
Actual
666
254
412
-60bp
2Q16
Actual
$0.31
$0.28
Actual
920
339
581
93.1% 93.6%
10bp
-40bp
60bp
9.4% 8.1%
19.6% 16.3%
7.3% 6.9%
2.0% 4.2%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on disposition progress ($600-700M FY guidance). As of early
August, RPAI had closed or was under
contract for —$414M.
IIUpdate on the Rite Aid (RAD: DB Hold rated, USD7.06, by George Hill)
EFTA01437857
portfolio sales.
IIUpdate on leasing remaining space at the Zurich asset
IIUpdate on Sports Authority exposure and releasing progress. As of 2Q,
Dicks (DKS: DB Buy rated, USD54.46 by
Mike Baker) had assumed right of 1 store and was expected to assume the
lease, 1 has been released and 1 is
part of a redevelopment. 7 other stores remain to be released with 4 in
active negotiation.
II Current acquisition and sales environment commentary
Staples/Office Depot plans
I One Loudoun acquisition commentary and incremental detail on longer term
plans at the asset
Actual
Actual
3Q16
DBe
$0.25
$0.26
DBe
2016
Cons
$0.26
Pre 3Q Guide
$1.11 - $1.14
$1.04 - $1.07
Pre 3Q Guide
Post 3Q Guide
Post 3Q Guide
DBe
$1.12
$1.06
DBe
Cons
$1.07
93.7%
14bp
94.2%
64bp
7.5%
+2.50% to 3.50%
-6bp
7.3%
Page 34
Deutsche Bank Securities Inc.
EFTA01437858
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 64: RPT 3Q16 results preview
RPT
Earnings
FFO/sh
Operating FFO/sh
Operating Metrics
Total leasing volume (signed)
New leasing volume (comp + non-comp, signed)
Renewal leasing volume (signed)
Total occupancy (100%, commenced)
q/q ch
y/y ch
Blended rent spread (signed)
New lease Spread (signed)
Renewal Spread (signed)
SS NOI growth y/y (cash, consolidated, excl redevs)
3Q15
2Q16
Actual Actual
$0.37
$0.37
$0.36
$0.35
Actual Actual
392,462 628,188
63,281 101,278
329,181 526,910
93.50% 94.10%
-30bp
-40bp
40bp
30bp
9.3% 8.0%
31.3% 33.0%
7.6% 6.3%
2.2% 3.8%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIPricing and color on recent MI dispositions for a combined —$40M, which
put YTD dispositions at —$122M
($100-125M in guidance) and acquisition of Centennial Shops in MN for $32M.
Previous commentary
suggested acquisitions would be funded with additional dispositions above
and beyond guided dispositions.
IIUpdates on the disposition buyer pool and pricing trends in the market
place
EFTA01437859
II
Update on efficiency improvements around leasing and redevelopment through
decentralizing east and west
regions
IIUpdate on Office Depot (11 locations), Staples (7 locations), and Gander
Mountain (2 locations)
IIUpdate on remaining 3 Sports Authority locations left to lease
IICommentary on Logan's (4 locations) and Golfsmith (2 locations), which are
in bankruptcy
IIUpdate on CAO search
Actual
Actual
3Q16
DBe
$0.33
$0.33
DBe
2016
Cons
0.34
Pre 3Q Guide Post 3Q Guide
$1.33 - $1.37
Pre 3Q Guide Post 3Q Guide
DBe
$1.38
$1.36
DBe
Cons
1.37
93.50%
-60bp
93.80%
Obp
8.0% commenced
2.0% to 3.0%
Obp
4.0% commenced
Deutsche Bank Securities Inc.
Page 35
EFTA01437860
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 65: SRC 3Q16 results preview
SRC
Earnings
AFFO/sh
Operating Metrics
Occupancy
q/q ch
y/y ch
Unit level rent coverage
Acquisitions
Avg cap rate on acquisitions
Dispositions
3Q15
Actual
$0.22
Actual
98.5%
-20bp
50bp
2.9x
159,761
7.4%
81,950
2Q16
3Q16
Actual
$0.22
Actual
98.3%
-40bp
-40bp
3.0x
165,000
7.6%
138,166
Note: consensus estimates are based on SNL compiled data as of 10/14/16
IIUpdate on the deal pipeline and cap rate trends
IIUpdate on Haggen; remaining store sales (3 sold and 4 in the market as of
2Q) with SRC previously confident
that overall they would recapture at least $40M in excess of initial Haggen
investment; Update on the
unsecured damages claim vs Haggen ($21M claim which they expected to recover
at a minimum of $15M
thereof).
IIUpdate on Dallas on support staff hiring.
EFTA01437861
II Update on tenant watch list, with a focus on restaurant commentary
IIPlans for the remaining 2017 CMBS maturities following a $300MM private
placement of 10-year 4.45% notes
in August
IISRC typically initiates FF0 guidance for the following fiscal year in 3Q.
For AFFO, DB is at $0.93 and consensus
is at $0.92
474,600
7.4%
64,000
815,182
7.5%
383,441
Actual
Actual
DBe
$0.22
DBe
94.6%
30bp
148bp
Cons
$0.22
Pre 3Q Guide
$0.87 - $0.89
Pre 3Q Guide
2016
Post 3Q Guide
Post 3Q Guide
DBe
$0.89
DBe
94.6%
4bp
146bp
Cons
$0.88
Page 36
Deutsche Bank Securities Inc.
EFTA01437862
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Office: Valuations remain attractive, but specter of
recession remains an overhang
Figure 66: 1-Month Office performance
Office
-8%
-6%
-4%
-2%
0%
2%
4%
6%
3.7%
2.1% 2.0%
1.6%
1.3%
1.1%
0.9% 0.6%
0.5%
0.4%
0.2%
0.0%
-0.5%
-0.7%-0.7%
-1.7%
-2.8%
-3.3%
-4.2%-4.6%
-5.3%-5.4%
-5.9%-6.0%
-0.9%
-1.2%
-1.2%
Figure 67: YTD Office performance
Office
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
40.6%
39.0%
30.5%
21.6%
EFTA01437863
19.4%
21.1%
18.0%
18.8%
17.7%
17.5%
17.0%
14.7%14.6%
13.9%
13.4%12.7%
9.8%8.0%
2.0%1.0%
9.8%
-3.0%-5.0%
-7.8%
-11.1%
-16.3%
-18.4%
As of 10/14/16
As of 10/14/16
Figure 68: vacancy flat while rents decelerate
Major Markets
10.0%
12.0%
14.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Figure 69: SS NOI (Cash) growth Y/Y
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
10.0%
15.0%
20.0%
25.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
BXP
Market Rent Growth (Y/Y)
EFTA01437864
VacPercent
IIY/Y market rent growth of +3.5% in 3016 is
down 40bps from 2016, and has been on a
decelerating trend since 4015
IIRent growth slows vs. 2016 in NY (+3.8%), LA
(+3.4%), and Boston (+2.7%). DC improved
(+2.5%) while SF was unchanged (+5.1%)
IIVacancy flat q/q. Boston, LA, and SF improved,
NY was unchanged, while vacancy increased in
DC
Note: major markets comprise NY, DC, Boston, LA, and SF
Key Office topics/questions for 3016
2015
CLI
3015
KRC
SLG
4Q15
VNO (NY,
VNO (DC,
SS EBITDA) SS EBITDA)
1Q16
Average
2Q16
IIRent commencement of previously-signed leases
and free rent burn off should support elevated SS
NOI growth
Health of the leasing environment, with national momentum generally
healthy
IISupply in the major markets, and impact on pricing power
Deutsche Bank Securities Inc.
Page 37
EFTA01437865
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Foreign capital flows into US CRE
Investment market update. The CBD price index has been generally
trending up since May, following a weak start in 2016
IIBest use of capital in today's compressed yield environment
IIState of current capital markets
IIOverall demand trends in NYC, the impact of Hudson Yards and
Manhattan West, and the strength of the high end market
IID.C. market tenant trends with brokers highlighting muted demand
IIFundamentals in Boston which continues to benefit from a diverse
tenant base
IISan Francisco sub-lease space/demand trends and overall tenor of
technology tenants, given market concerns. Pre-leasing activity has
ept up with new supply so far
Ill
Health of the LA market, where demand has been strong recently, but
job growth has slowed of late
IIUpdate on Penn Station redevelopment RFP
Figure 70: BXP 3Q16 results preview
BXP
Earnings
FFO/sh
Operating Metrics
Total leasing volume (100%)
Total occupancy (100%)
q/q ch
y/y ch
Total gross rent spread (cash, 100%)
SS NOI growth y/y (cash, pro-rata)
3Q15
Actual
$1.41
Actual
20bp
-70bp
2Q16
Actual
$1.43
Actual
EFTA01437866
1,329,648 925,601
91.30% 90.80%
-20bp
-30bp
5.6% 18.3%
-0.5% 3.3%
3016
2016
Actual
Actual
DBe
$1.42
DBe
90.15%
-65bp
-115bp
15.0% commenced
1.00% - 3.00%
Note: consensus estimates are based on ThomsonReuters compiled data as of
10/14/16
IIUpdate on the high end NYC market, with recent commentary from BXP more
positive compared to peers. BXP
has some available space in the GM Building and 250 West 55th Street that
would fall under this category
IIDeal flow in LA following Colorado Center purchase
IIManagement recently signaled a potential increase to the dividend
following the scheduled Board meeting in
October
IIUpdate on the $80MM NOI bridge through 2017
IIUpdate on Salesforce Tower, which was 59% preleased as of 2016 (management
expects to reach 70% by
YE2016)
IIUpdate on potential 2016 development starts: Springfield Metro North, 20
City Point, and Reston Block 5
IIUpdate on preleasing activity at Kendall Center, with management noting
during the 2Q call that they were in
"advanced discussions" for a 400ksf prelease
IIBXP typically provides its initial FFO guidance for the following fiscal
year in 3Q. We are at $6.50 and
consensus is at $6.40
II3Q FFO/sh guidance of $1.40-$1.42. (DBe at $1.42)
Cons
EFTA01437867
$1.43
Pre 3Q Guide Post 30 Guide
$5.92 - $5.99
Pre 3Q Guide Post 30 Guide
90.0% - 91.5%
DBe
$5.97
DBe
Cons
$5.98
90.84% avg
Obp
11.3% commenced
Page 38
Deutsche Bank Securities Inc.
EFTA01437868
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 71: CIO 3Q16 results preview
CIO
Earnings
FFO/sh
Core FFO/sh
Operating Metrics
SS NOI growth, y/y
Occupancy (commenced)
q/q ch
y/y ch
Occupancy (signed and commenced)
q/q ch
y/y ch
Total leasing volume (ksf)
3Q15
Actual
$0.17
$0.33
Actual
N/A
2Q16
Actual
$0.19
$0.22
Actual
-9.3%
94.9% 88.2%
90bp
90bp
320bp
230bp
61
-580bp
95.4% 92.8%
20bp
-40bp
-240bp
7
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on acquisition pipeline following preferred equity capital raise,
and timing of other expected
acquisitions
IIUpdate on investor demand in CIO's target markets
IIMarket conditions in secondary markets, with JLL noting favorable
fundamentals
EFTA01437869
II Update on Fairwinds Credit Union's decision to move, which is expected by
YE2016. If they do not vacate, their
lease renews for a 9 year term
IIWe are updating our model to reflect the recently announced preferred
equity capital raise, and using proceeds
to assume $250MM of acquisitions at a 7% cap rate. Our 2016 core FFO/sh
estimate move to $1.01 from $1.08,
NAREIT FFO moves to 54c from 63c, and FAD moves to 58c from 65c. In 2017,
core FFO/sh moves to $1.35
from $1.27, NAREIT FFO moves to $1.23 from $1.19, and FAD moves to $1.15
from $1.08. Please see Figure 98
for a summary of our estimate revisions
IIWe are increasing our target price to $15.50 from $15 as we model in
increased acquisitions. Please see Figure
97 for details on our target price
Actual
3Q16
DBe
$0.22
$0.26
Actual
DBe
92.6%
439bp
-231bp
2016
Cons
$0.26
Pre 3Q Guide
$1.06 - $1.10
Pre 3Q Guide
Post 3Q Guide
DBe
$0.54
$1.01
Post 3Q Guide
DBe
90.3%
Cons
$1.07
Deutsche Bank Securities Inc.
Page 39
EFTA01437870
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 72: CLI 3Q16 results preview
CLI
Earnings
FFO/sh
Pro-forma FFO/sh'
Operating Metrics
Total leasing volume (in-service consolidated, executed)
Total occupancy (Q-end, SF leased)
q/q ch
Office rent spread (Cash)
SS NOI growth y/y (cash)
SS NOI growth y/y (GAAP)
3Q15
2Q16
Actual Actual
$0.51
$0.48
$0.64
$0.55
Actual Actual
956
660
85.8% 86.7%
350bp
-50bp
2.8% 17.2%
6.5% 2.1%
6.5% 8.3%
Note: consensus data is based on Thomson compiled data as of 10/14/16
IIUpdate on disposition plans. Management noted —$150MM is expected to be
sold through 2016
IIWe expect management to provide initial 2017 guidance during the 3Q call
IIThoughts on the NJ waterfront, and traction from the front office
IIUpdate on the development pipeline where the focus remains on multi-family
projects
IIRecent leasing velocity in Parsippany, Metropark, and Jersey City
IICLI will provide initial guidance for the following fiscal year in 3Q. For
FFO, we are at $2.21 and consensus is at
$2.22
87.2%
50bp
3% total
EFTA01437871
5.0% - 6.0%
9.5% - 10.5%
89.0% - 91.0%
88.0%
3% total
Actual
Actual
3016
DBe
$0.56
$0.56
2016
Cons
$0.55
DBe
Pre 3Q Guide
$2.07 - $2.13
Pre 3Q Guide
Post 3Q Guide DBe
$2.21
$2.12
Post 3Q Guide
Cons
$2.11
DBe
Figure 73: KRC 3016 results preview
KRC
Earnings
FFO/sh
Pro-forma FFO/sh ex-items
Operating Metrics
Total leasing volume (commenced)
Total leasing volume (executed)
Stabilized Occupancy at Q-end
q/q ch
y/y ch
Rent spread (commenced, cash, 2nd generation)
Rent spread (executed, cash, 2nd generation)
SS NOI growth y/y (cash)
SS NOI growth y/y (GAAP)
3015
2016
3016
Actual Actual
$0.77
$0.77
$0.86
$0.87
Actual Actual
386
384
EFTA01437872
273
266
95.6% 95.5%
-110bp
60bp
150bp -120bp
26.9% 7.3%
39.2% 19.0%
-2.5% 12.4%
1.6% 3.2%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on KRC's disposition plans. We note that a JV sale to Norges Bank
closed in August, with another sale
expected to close in 4Q
IIUpdate on leasing up the Exchange, with the focus shifting to multi-tenant
leases although an agreement with
one tenant for the entire space remains possible
IIUpdate on 100 Hooper, where management was negotiating LOIs per the 2Q
call. Construction could commence
by YE2016 if pre-leasing reaches 50%
IIUpdate on demand in the West Coast from technology tenants
IIUpdate on SF sublease space availability and demand for block space
(>100ksf)
IIUpdate on 515ksf of leases under LOI, split evenly between stabilized and
developments properties
IITrends in SoCal where job growth has been slowing
95.3%
-25bp
-35bp
15.0%
high end of 94.5-95%
15.0%
+9.0% to 11.0%
95.0%
20bp
15.0%
Actual
Actual
DBe
$0.87
$0.87
Cons
$0.87
DBe
EFTA01437873
Pre 3Q Guide
$3.36 - $3.44
Pre 3Q Guide
2016
Post 3Q Guide
Post 3Q Guide
DBe
$3.40
$3.40
DBe
Cons
$3.40
Page 40
Deutsche Bank Securities Inc.
EFTA01437874
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 74: PGRE 3Q16 results preview
PGRE
3Q15
Earnings
Core FFO/sh
Operating Metrics
Signed Occupancy
q/q ch
Total Leasing Volume
Rent spreads (cash)
SS NOI growth (cash, y/y)
ADtual
$0.20
ADtual
390,142
2Q16
Actual
$0.23
Actual
92.9% 92.9%
-190bp
13.4% 22.9%
N/A
-270bp
148,896
-14.0%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
I Update on vacant space at 1633 Broadway, 1301 Ave of the Americas, 31 West
52nd St.
Tenant interest in 150ksf being vacated in January at 1325 Ave of the
Americas
I Update on retail leasing plan at 1633 Broadway
Commentary regarding large block demand and high end office demand in NYC
Overall pace of leasing in D.C. as the election nears
I We are updating our model to reflect the One Front Street acquisition and
recent financing activity. Our 2016
NAREIT FFO/sh estimate moves to 87c from 86c, core FFO moves to 85c from
83c, and FAD moves to 37c from
35c. Our 2017 NAREIT and core FFO estimates move to 96c from 89c, and FAD
moves to 54c from 48c. Please
see Figure 98 for a summary of our estimate revisions
Actual
EFTA01437875
Actual
3016
DBe
$0.19
DBe
92.4%
-47bp
36,785
15.0%
2016
Cons
$0.19
Pre 3Q Guide Post 3Q Guide
$0.81 - $0.85
Pre 3Q Guide Post 3Q Guide
DBe
$0.85
DBe
92.6%
402,416
15.0%
Cons
$0.85
Figure 75: SLG 3016 results preview
SLG
Earnings
FFO/sh
Operating Metrics
Manhattan leasing volume (signed)
Manhattan occupancy (commenced)
Manhattan rent spread (signed)
Manhattan rent spread (commenced)
Suburban leasing volume (signed)
Suburban occupancy (commenced)
Suburban rent spread (signed)
Suburban rent spread (commenced)
SS NOI growth y/y (cash, combined)
3015
Actual
$1.65
Actual
533,697
92.6%
15.6%
26.8%
131,366
79.8%
-3.8%
-5.2%
6.5%
2016
EFTA01437876
Actual
3016
Actual
$3.39
Actual
621,150
95.6%
16.1%
11.8%
177,684
80.6%
2.5%
2.8%
6.5%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIWith the construction loan in place, update on the funding plans for One
Vanderbilt: JV now, JV following some
leasing, or wholly-own the asset
IISLG recently noted deceleration in high end leases, while BXP has been
more positive
IIUpdate on leasing goal. Per management commentary, SLG had leased -2.3msf
as of mid-September,
suggesting —830ksf of leasing in 3Q with a few weeks to go
IIPress reports from The Real Deal suggesting that SLG is looking to sell
its 16 Court St. office tower in Brooklyn
for $160MM
IIUpdate on the health of luxury street retail
IIView on the health of SLG's structured finance business
Actual
DBe
$1.43
Cons
$1.50
DBe
95.6%
11.6%
80.9%
11.6%
6.0% - 6.5%
2016
Pre 3Q Guide Post 30 Guide DBe
$8.17 - $8.25
Pre 3Q Guide Post 3Q Guide
2,600,000
97%+
EFTA01437877
22%
$8.19
Cons
$8.29
DB est
95.9%
20.4%
81.1%
8.2%
Deutsche Bank Securities Inc.
Page 41
EFTA01437878
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 76: VNO 3Q16 results preview
VNO
Earnings
FFO/sh
FFO/sh adjusted for comparability
Operating Metrics
NYC occupancy (pro-rata, signed)
q/q ch
NYC office rent spread (cash, pro-rata, signed)
NYC office SS EBITDA (cash, pro-rata)
DC occupancy (pro-rata, signed)
q/q ch
DC office rent spread (cash, pro-rata, signed)
DC office SS EBITDA (cash, pro-rata)
3Q15
Actual
$1.25
$1.24
Actual
2Q16
Actual
$1.21
$1.23
Actual
96.20% 96.00%
-30bp
-20bp
24.7% 21.7%
-0.3% 5.9%
84.70% 84.00%
-10bp
-80bp
-4.6% -6.7%
-9.4% -2.5%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIVNO, along with 2 partners, won the bid for the Farley building
redevelopment. Update on RFP process for the
Penn Station redevelopment
IISales update at 220 Central Park South, with management noting during the
2Q call increased activity following
a period of slowdown
IIUpdate on the potential spin off of the Washington business
IIUpdate on the Skyline properties, with VNO in negotiation with special
servicer per the 2Q call
EFTA01437879
II
Update on leasing pipeline, which stood at over lmsf per the 20 call
IIWe are updating estimates to reflect recently announced financing
activity. Our 2016 FFO/sh estimate moves to
$4.88 from $4.84, while FAD moves to $2.70 from $2.66. For 2017, our FFO
estimate moves to $5.55 from $5.43
while FAD moves to $3.79 from $3.67. Please see Figure 98 for a summary of
our estimate revisions
Actual
Actual
3Q16
DBe
$1.25
$1.27
DBe
96.00%
Obp
15.0% commenced
85.00%
100bp
-5.0% commenced
2016
Cons
$1.27
Pre 3Q Guide Post 30 Guide DBe
$4.88
$4.94
Pre 3Q Guide Post 30 Guide
DBe
96.00%
-40bp y/y
20.0% commenced
86.00%
-4.8% commenced
Cons
$4.87
Figure 77: KW's 3Q16 results preview
Management's plans to bridge the value gap
Impact from Brexit on assets in the UK, specifically, and more broadly in
Europe
IIManagement expectations for the pace of investment activity through 2016
IIUpdate on the acquisition pipeline in the US and Europe, and the
disposition pipeline in the US. KW announced
—$400MM of acquisitions and $207MM of dispositions in the multifamily
portfolio in 3Q
EFTA01437880
II Update on multi-family demand and fundamentals in West Coast markets
IIUpdate on the company's leasing efforts of its SoCal commercial portfolio
IIDevelopment pipeline progress and impact on NOI
IIUpdate on the KW and KWE (KWE LON: DB Hold rated, 1002GBp by Oliver Reiff)
share repurchase programs
Page 42
Deutsche Bank Securities Inc.
EFTA01437881
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Data Centers: Measuring growth in years not quarters
Figure 78: 1-month Data Center performance
Data Center
-3%
-2%
-1%
0%
1%
2%
3%
4%
3.5%
2.9%
1.8%
1.6%
-0.9%
-1.0%
-1.8%
COR
As of 10/14/16
DLR
EQIX
QTS
CONE
DFT
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
39.5%
33.8%
30.6%
28.9%
25.7%
21.5%
18.2%
Figure 79: YTD Data Center performance
Data Center
COR
DFT
As of 10/14/16
EFTA01437882
CONE
DLR
EQIX
QTS
Figure 80: Strong fundamentals as seen by net absorption
Net absorption (MW)
10
20
30
40
50
-10
0
NOVA
4Q14
Silicon
Valley
1Q15
NYC/NJ Chicago Dallas / Ft.
Worth
2Q15
4Q15
Average
2Q16
IIDemand outpacing supply in key markets of
NOVA and Chicago
Further M&A opportunities in the space
2Q15
Figure 81: Leasing trending up
$20
$40
$60
$80
$100
$120
$0
DLR
3Q15
CONE
4Q15
QTS
1Q16
Total
2Q16
IICONE continues to benefit from leasing trends
EFTA01437883
Bookings ($mm)
Integration and synergies from recent consolidation wave
IICompetitive landscape as more players move towards a flexible
product offering
IILeasing momentum and pricing trends in key markets like NOVA and
Chicago
Development cost and yield trends
Impact on leasing from enterprise adoption of the public cloud
IIExpansion opportunities in new geographies and verticals
Hyperscale cloud demand outlook over the next 12 months
Deutsche Bank Securities Inc.
Incremental demand in Houston in light of energy headwinds
Page 43
EFTA01437884
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 82: CONE's 3Q16 results preview
CONE
Income Statement ($ in MM's, except per share)
GAAP Revenue
Adjusted EBITDA
Adjusted EBITDA margin
FFO/sh, normalized
Operating Metrics (in 000's, excect per share)
GAAP rent annualized ($mm)
MW signed
Rent/KW/Month
Quarterly churn rate
3Q15
2Q16
Actual Actual
$111.2
$59.0
53.1% 53.3%
$0.57
Actual
$12.14
4.8
Actual
$130.1
$69.4
$0.67
Actual
$57.19
40.0
$210.83 $119.15
0.7% 2.7%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIExpectations are elevated following 3 back-to-back quarters of strong
leasing. Update on the size of the leasing
pipeline
II
Recent changes in conversations with enterprise and public cloud players
Pricing, yield and construction cost trends
IIFundamentals in key markets, specifically in NOVA, Houston, Dallas, and
Phoenix
IIConstruction plans in the Pacific Northwest and NOVA following land
purchases. CONE recently acquired 29
acres in the Phoenix metro while highlighting Santa Clara as an area of focus
IILeasing activity at the CME property in Chicago
EFTA01437885
II Expansion plans in 2016 for new markets, and potential for additional
acquisitions
Impact from weakness in the energy industry on CONE's oil and gas tenants
IIWe are updating estimates to reflect our expectation of an earlier
exercise of the forward equity sales offering in
2017 and a modest reduction in rent commencements in 2017. Our 2016
estimates are unchanged. For 2017,
our core FFO/sh estimate moves to $2.95 from $3.01, NAREIT FF0 moves to
$2.71 from $2.77, FAD moves to
$2.90 from $2.97, and EBITDA moves to $337.7MM from $345.8MM. Please see
Figure 98 for a summary of
our estimate revisions
IIWe are lowering our target price to $59 from $60 as a result of our
estimate revisions. Our target multiple are
unchanged (17.4x EBITDA and 19.1x FAD) Please see Figure 97 for details on
our target price
Actual
3Q16
DBe
$136.6
$71.2
2016
Cons
$136.1
$69.3
52.1% 51.0%
$0.64
$0.62
DBe
Pre 3Q Guide
$520 - $530
$270 - $280
$2.50 - $2.58
Pre 3Q Guide
Post 3Q Guide
DBe
$525.2
$275.3
Post 3Q Guide
DBe
Cons
$526.7
$275.0
52.4% 52.2%
$2.56
$2.56
EFTA01437886
2.5%
Page 44
Deutsche Bank Securities Inc.
EFTA01437887
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 83: DLR's 3Q16 results preview
DLR
Income Statement
FFO/sh
Core FFO/sh
Operating Metrics
Signed $ leasing volume (MM's)
Rent/KW/Month
TKF new leasing volume (ksf signed)
TKF new lease rent/sf (signed)
TKF renewal rent spread (GAAP)
Colo new leasing volume (ksf signed)
Colo new lease rent/sf (signed)
Colo renewal rent spread (GAAP)
Total occupancy (commenced)
Same-capital NOI growth
3Q15
Actual
$1.28
$1.32
Actual
$33,000
$259
159
$186
7.7%
12
$239
9.1%
93.00%
2.20%
2Q16
Actual
$1.36
$1.42
Actual
$23,000
$247
39
$216
9.5%
26
$229
5.2%
90.40%
3.30%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
EFTA01437888
II We expect DLR to recover following 2Q's moderate leasing level. Through
July, DLR had signed —$20MM of
new leases
IIExpect above market leases in NJ and Phoenix to roll in 2H16, resulting in
negative spreads
IILeasing demand from SMACC tenants
IIUpdate on DLR's building an ecosystem as the company looks to benefit from
Telx's product offering
IIPlans for international expansion, specifically Japan and Germany
IIThoughts on further consolidation opportunities
IIUpdate on the search for the Sales &
following Matt Miszewski's departure
IIWe are updating estimates to reflect
for a portion of the forward equity
sales offering and lowering our 2H16 leasing
NAREIT FFO/sh estimates are
unchanged, while FAD moves to
FF0 move to $6.09 from $6.24,
while FAD moves to $5.21 from
our estimate revisions
IIWe are lowering our target price to $108
lowered estimates. Our target multiple are
unchanged (18.0x EBITDA and 19.6x FAD). Please see Figure 97 for details on
our target price
90.60%
+ / - 50bps
2.5% - 4.0%
90.60%
Actual
Actual
3Q16
DBe
$1.37
$1.49
DBe
2016
Cons
$1.44
Pre 3Q GuidePost
$5.50 - $5.55
$5.65 - $5.75
Pre 3Q GuidePost
Marketing leadership position
our expectation of a delayed exercise
assumptions. Our 2016 Core and
$5.09 from $5.10. For 2017, Core and NAREIT
$5.36. Please see Figure 98 for a summary of
from $112 as a result of our
Bank, company data, Thomson
3Q Guide
3Q Guide
EFTA01437889
DBe
$5.53
$5.73
DBe
Cons
$5.70
Cons
Deutsche Bank Securities Inc.
Page 45
EFTA01437890
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 84: QTS's 3Q16 results preview
QTS
3Q15
Income Statement ($ in 000's, except per share)
GAAP Revenue
GAAP NOI
NOI margin
Adjusted EBITDA
Adjusted EBITDA margin
Operating FFO/sh
Operating Metrics (in 000's, except per share)
MRR at period end
Churn rate
Incremental annualized rent, net of downgrades
Booked-not-billed (annualzied rent)
C2/C3 renewal spread (signed)
Total in progress construction pipeline
Annualized ROIC
Actual
$88,890
$56,503
63.6%
$39,131
44.0%
$0.61
Actual
$26,214
0.8%
$5,583
$61,300
-0.7%
$72,000
15.7%
Note: consensus estimates are based on Thomson compiled data as of 10/14/16
IIUpdate on leasing activity at the Chicago facility. Phase 1 with 48krsf
was opened in July
I Update on NJ facility acquired from DFT
Management expects a reduction to ROIC as Chicago and NJ are leased up
Interest in wholesale leases at recently developed facilities
Expectations for churn as QTS continues the migration from leased to owned
facilities
Tenant conversations regarding C2 and C3 demand and impact from the public
EFTA01437891
cloud
IIDevelopment capex spending expectations for the remainder of 2016
2Q16
Actual
$98,687
$64,021
64.9%
$45,613
46.2%
$0.63
Actual
$28,872
1.3%
$13,310
$49,100
2.0%
$103,000
15.1%
Actual
Actual
3Q16
DBe
$104,481
$65,844
63.0%
$46,202
44.2%
$0.62
DBe
$31,033
5.0% - 8.0%
2016
Cons
$102,115
$45,402
44.5%
$0.65
Pre 3Q Guide
mid-teens
$179,000 - $187,000
$2.55 - $2.65
Pre 3Q Guide
Post 3Q Guide
Post 3Q Guide
DBe
Cons
$405,992 $401,346
$260,609
64.2%
EFTA01437892
5184,225 5180,717
45.4%
52.62
DBe
45.0%
52.60
Cons2
Page 46
Deutsche Bank Securities Inc.
EFTA01437893
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Industrial: Fundamentals remain solid, backed by ecommerce
and retail demand
Figure 85: 1-Month Industrial performance
Industrial
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
3.1%
2.4%
1.6%
0.8% 0.7%
0.5%
Figure 86: YTD Industrial performance
Industrial
-0.3%
-0.3%
-0.4%
-1.8%
-2.8%
-3.2%
LPT
REXR STAG DCT
As of 10/14/16
PSB
EGP TRNO PLD
FR
MNR
DRE
0%
5%
10%
15%
20%
25%
30%
35%
40%
36.4%
33.5%
31.9% 31.9%
27.8% 27.0%
EFTA01437894
25.3% 25.0%
22.5% 21.7%
18.1%
24.9%
REXR
LPT MNR STAG EGP
As of 10/14/16
DCT
PSB
DRE
FR
PLD TRNO
Figure 87: Warehouse vacancy rate & rent growth
Figure 88: PLD SS NOI growth
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Effective rent growth y/y (rhs)
Vacancy rate (lhs)
IIPreliminary REIS data shows that 3Q demand
slowed with net absorption of 14.7msf vs.
21.8msf last quarter. Rent growth accelerated at
a moderate rate similar to 2Q
IIWhile demand slowed so did new construction,
which fell to 13.4msf from 19.6msf in 2Q with
52% concentrated in 5 of the primary markets
EFTA01437895
IIVacancy rate remained stable as net absorption
came in slightly higher than new construction.
Effective rent growth slowed slightly to around
+2.3% vs. +2.4% in 2Q
ll
In a similar fashion, data from Jones Lang
LaSalle shows net absorption was concentrated
as well with more than a third of 3Q activity
spread across 4 primary markets
GAAP
Cash
6/30/15
5.9%
5.2%
9/30/15
6.2%
4.5%
12/31/15
6.6%
4.5%
3/31/16
7.4%
6.0%
6/30/16
6.1%
5.3%
Deutsche Bank Securities Inc.
Page 47
SS NOI (Owned & Managed)
EFTA01437896
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Key Industrial topics/questions for 3016
IISupply update across markets
IIViews on industrial fundamentals in the UK and Europe with Brexit
trade negotiations likely to start around March
IIUpdate on impact of weaker GBP
IICommentary on investor appetite for industrial assets
IITrajectory of e-commerce driven demand
IIEuropean asset pricing
IIU.S. investment market update in light of recent portfolio sales and
portfolios on the market
Figure 89: PLD 3Q16 results preview
PLD
Earnings
Core FFO/sh
Operating Metrics
Total leasing volume (signed, owned &
New leasing volume (Op + CIP, signed,
Renewal leasing volume (signed, owned
Occupancy (commenced, owned & managed
q/q ch
y/y ch
Rent spread (signed, cash, PLD share)
SS NOI growth y/y (GAAP, PLD share)
SS NOI growth y/y (cash, PLD share)
3015
2016
Actual Actual
$0.58
$0.60
Actual Actual
42,162 48,509
15,292 21,827
26,870 26,682
95.4% 95.7%
60bp
110bp
20bp
90bp
3.6% 7.9%
6.2% 6.1%
4.5% 5.3%
Note: consensus estimates are based
managed)
owned & managed)
& managed)
on Thomson compiled data as of 10/14/16
EFTA01437897
II Updated FX outlook for 2016 and impact on promote income. Guidance for
promote income issued in July
factored in stable FX rates
IIUpdate on PLD's supply pressured markets in Houston (2.0% of NOI),
Columbus (1.0%), and Poland (1.9%)
IIUpdate on fund inflows and redemptions in Europe. PLD had 2 sterling
investors potentially looking to
withdraw €45MM but also had €400MM of inflows queued up for its open-ended
PTELF fund in July
IIDevelopment update with comments on trajectory of margins, starts outlook,
and mix of built-to-suit projects
IIRental rate/spread trends with portfolio 13-15% below market as of 2Q
(-15% below market in the U.S.)
IICap rate and vacancy trends in Europe. PLD previously forecasted a 20bps
drop in vacancy to 5.8% by year-end
(80bps decline vs. 2015). Pre-Brexit cap rate outlook called for 15-30bps of
compression this year
IIUpdate on disposition plans and buyer interest across different
geographies and asset types
Actual
Actual
306
DBe
$0.69
Cons
$0.70
DBe
Pre 3Q Guide
$2.52 - $2.58
Pre 3Q Guide
2016
Post 3Q Guide
Post 3Q Guide
DBe
$2.57
DBe
Cons
$2.57
96.3%
64bp
94bp
+96.0% to 97.0%
97.3%
100bp
EFTA01437898
15.0% commenced
+4.75% to 5.25%
15.2% commenced
Page 48
Deutsche Bank Securities Inc.
EFTA01437899
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Healthcare: Rents continue upward climb as primary
markets mostly shrug off new supply
Figure 90: 1-Month Healthcare performance
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Healthcare
5.3% 5.1% 4.9%
2.4%
1.0%
0.9%
0.4%
0.0%
-2.2%
-0.2%
-0.8%-1.3% -1.9%
-2.1%
-5.0%
-5.6%
-7.0%
-10.4%
UHT MPW CHCT DOC SNH SBRA HTA NHI LTC CTRE VTR HCP HR OHI HCN CCP SNR
As of 10/14/16
Figure 91: YTD Healthcare performance
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Healthcare
57.3%
33.1%32.9%
30.9% 29.0%
26.0%
EFTA01437900
25.4%
22.4%
24.5%
20.1%20.0%
17.6% 12.2%
5.8%
0.0%
-0.6%
-6.9%
SNH CTRE MPW NHI CHCT UHT DOC SBRA VTR LTC HTA HR SNR HCN OHI HCP CCP
As of 10/14/16
15.0%
Figure 92: Primary mkt Sr Housing occ & rent growth
84.00%
85.00%
86.00%
87.00%
88.00%
89.00%
90.00%
91.00%
92.00%
Sr Housing Rent Growth
Sr Housing Occupancy
IISr Housing occupancy up 12bps q/q in 30 but
D
own 9bps y/y
IL occupancy up 16bps q/q and up 2bps y/y
IIAL occupancy up 6bps q/q and down 22bps y/y
IISr Housing rent growth improved to +3.78% vs
+3.18% in 2Q driven by IL +4.21% (+3.43% in
20) and AL +3.16% (+2.81% in 2Q). This is the
ighest rent growth since 2007
IL starts declined to 1,500 units in 3Q (2,100 in
2Q), staying in line with the 4-quarter average.
AL construction starts in primary markets picked
up with 2,600 units started in 3Q (2Q starts
revised to 2,100 from 1,800), slightly below the
rolling 4-quarter average of 2,800
IIConstruction as a % of inventory was down
slightly to 5.78% in 3Q vs 5.99% in 20 (IL 3.89%
from 4.25% and AL 8.34% from 8.36%)
EFTA01437901
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
Figure 93: Total portfolio SS NOI growth
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
HCN
2015
3015
4015
1016
VTR
2016
IIPre-3Q guidance for both companies implies
some deceleration in 2H16
IIWhile rent growth and occupancy remained
healthy in 3Q as per NIC data, elevated supply
continues to be a near-term concern for SHOP
growth
IISNFs remain a risk as well with HCN more
exposed vs. VTR. As the post-acute sector
transitions to value-based payment systems,
uncertainty around Medicare reimbursements
will continue to weigh on SNF assets and
valuation
Deutsche Bank Securities Inc.
Page 49
Occupancy
0604
0702
0704
0802
EFTA01437902
08Q4
09Q2
09Q4
10Q2
10Q4
11Q2
11Q4
12Q2
12Q4
13Q2
13Q4
14Q2
14Q4
15Q2
15Q4
16Q2
y/y Rent Growth
Cash SS NOI growth (y/y, total)
EFTA01437903
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Key Healthcare topics/questions for 3016
IIPricing/occupancy in markets with elevated supply such as Atlanta,
San Antonio, Houston, Kansas City, Denver, Orlando, Chicago, Dallas,
and Sacramento, with each having over 9% of inventory currently
under construction
IIUpdated FX outlook for 2016 with GBP 7-8% weaker vs. 2Q. We
expect HCN's and VTR's earnings to be largely insulated from GBP
devaluation given hedging
IILong-term views on asset values in the UK
IIUpdate on supply and demand dynamics across VTR and HCN
markets. Recent reports show that AL construction remains highly
concentrated while IL construction is heaviest in secondary markets
IIOperating expense and labor costs trends. Recent NIC data suggests
hourly wage growth for AL employees have decelerated to +2% y/y,
down from roughly 4% posted during the last few quarters
IIUpdate on skilled nursing, including reasons behind recent occupancy
declines. NIC data shows 2Q (1-Q lag) occupancy at a 5-year low (123bps
q/q, -170bps y/y) with quality mix down as well (-140bps q/q, -
130bps y/y)
IIState of the transaction markets and investor interest given current
cost of capital with Sr Housing & nursing care volume decreasing
again to $2.06 from $2.6B in 2Q (5th consecutive 0 with <$5.06 in
volume)
IIUpdate on cap rate trends in light of low transaction activity for Sr
housing (upward trend in cap rates continued in 3Q as per NIC report)
IIUpdated hospital outlook given recent transaction activity in the sector
IIAcquisition outlook and investment appetite given current cost of
capital
Page 50
Deutsche Bank Securities Inc.
EFTA01437904
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 94: HCN 3Q16 results preview
HCN
Earnings
Normalized FFO/sh ex-items
Operating Metrics
SS NOI growth y/y (cash)
SS NOI growth y/y (Sen Housing NNN)
SS NOI growth y/y (Post Acute)
SS NOI growth y/y (Sen Housing Operating)
SS NOI growth y/y (MOB)
EBITDAR coverage (stable portfolio, TTM basis)
Private pay (% of facility revenue, stable portfolio)
SNF occupancy (stable portfolio)
Senior Housing Operating occupancy (stable portfolio)
MOB occupancy (total)
3Q15
2Q16
Actual Actual
$1.12
$1.15
Actual Actual
3.0% 3.3%
3.3% 2.8%
3.4% 3.6%
2.7% 4.0%
2.5% 2.4%
1.25x
1.21x
87.3% 89.2%
85.9% 86.9%
90.5% 91.0%
95.2% 94.9%
Note: consensus estimates are based on ThomsonReuters compiled data as of
10/14/16
Note: SNF data is LT/Post Acute in 4Q14 and beyond
IIGrowth trajectory of senior housing portfolio in the UK and Canada. All
four SHOP development projects
scheduled for 4Q16 delivery and two NNN projects scheduled for 3Q16 are in
the UK
IIMore detail on the recently completed acquisition of $1.15B sr. housing
assets in California as well as HCN's
outlook for further capital deployment
IIUpdate on the development pipeline and yields. Deliveries for 3Q16 include
four senior housing NNN assets
(two in the UK) and one MOB with a projected yield of 7.0%
EFTA01437905
II Update on the start timing of HCN's memory care project in Manhattan (The
Welltower)
IIUpdate on timing of $1.3B in planned dispositions. Our model reflects
$803MM of sales and repayments in
306 and $204MM in 4Q16
IIProgress on decreasing SNF exposure with 60% of $1.3B dispo guidance
consisting of SNF assets. Update on
sales from the Genesis portfolio and any plans to dispose of additional
Genesis assets (management indicated
this could be a possibility on 2Q's call)
IIOutlook for the post-acute care segment including an update on Genesis
IISupply update in HCN's markets with Chicago and Atlanta being highlighted
earlier this year of facing supply
pressure and having weaker economies
Actual
Actual
306
DBe
$1.13
DBe
2016
Cons
$1.14
Pre 3Q Guide
$4.50 - $4.60
Pre 3Q Guide
2.75% - 3.25%
Post 3Q Guide
Post 3Q Guide
DBe
$4.56
DBe
Cons
$4.58
Deutsche Bank Securities Inc.
Page 51
EFTA01437906
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 95: VTR 3Q16 results preview
VTR
Earnings
Normalized FFO/sh
Normalized FAD/sh
Operating Metrics
Total SS NOI growth (cash, y/y)
SHOP SS NOI growth (cash, y/y)
SS Avg occupancy ch (y/y)
SS Avg monthly REVPOR growth (y/y)
NNN SS NOI growth (cash, y/y)
Total Coverage
MOB SS NOI growth (cash, y/y)
End occupancy ch (y/y)
Avg rent per occupied sf (y/y)
3Q15
2Q16
3Q16
Actual Actual
$1.09
$0.97
$1.04
$0.96
Actual Actual
4.3% 3.5%
3.2% 2.1%
-0.3% -0.7%
3.5% 3.9%
5.7% 6.2%
1.6x
1.7x
3.1% 0.8%
-0.4% -0.7%
2.6% 0.9%
Note: consensus data is based on Thomson compiled data as of 10/14/16.
Historical data has not been restated
IIUpdated views on acute care hospitals including sector outlook, commentary
on the recent debt investment in
the Ardent/LHP merger, and plans for further expanding hospital exposure
IIExpect an update on the six development projects VTR had at the end of 2Q
and the two in-process
developments acquired from Wexford
IIUpdated outlook for future growth opportunities resulting from the
exclusive development agreement with
Wexford and the 9 development sites VTR acquired
EFTA01437907
II Update on disposition plans. Our model assumes $300MM in 3Q16 and $75MM in
4016
IIUpdate on seniors housing supply in VTR's markets, most notably Atlanta,
Denver, San Francisco, and
Sacramento
IIUpdated plans to fully fund the Wexford deal and the new Ardent debt
investment after a $450MM senior note
issuance in September
IIOperator update including comments on recent Kindred performance
IIWe are updating our model for the recently announced debt investment to
help fund the Ardent operating
company merger with LHP and recent financing activity. Our 3Q16 normalized
and NAREIT FFO/sh estimates
are unchanged. Our 2016 norm and NAREIT FFO/sh estimates are both unchanged
at $4.10 and $4.07,
respectively. Our 2017 norm. FFO/sh moves to $4.42 from $4.34 and our NAREIT
FFO/sh estimate moves to
$4.42 from $4.33, which reflect the new $700MM debt investment in 1017 and
additional debt financing
activity in 2H17. Please see Figure 98 for a summary of our full year
estimate revisions.
1.0% - 2.0%
Actual DBe Cons
$1.01 $1.00
$0.90
Actual
DBe
Pre 3Q Guide
$4.05 - $4.13
$3.69 - $3.73
Pre 3Q Guide
2.0% - 3.0%
1.5% - 3.0%
2016
Post 3Q Guide
DBe Cons
$4.10 $4.12
$3.70
Post 3Q Guide
DBe
3.5% - 4.0%
Page 52
Deutsche Bank Securities Inc.
EFTA01437908
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 96: MPW 3Q16 results preview
MPW
Earnings
Normalized FFO/sh
FFO/sh
FAD/sh
Operating Metrics
Total Portfolio EBITDAR Coverage (stable portfolio, TTM basis)
General Acute Care
LTACH
IRF
Master Lease EBITDAR Coverage (stable portfolio, TTM basis)
Master Leases as % of Total Portfolio
Construction Pipeline
Deliveries
3Q15
Actual
$0.32
$0.18
$0.30
Actual
3.8x
4.7x
1.9x
2.9x
3.1x
80%
326.7
24.0
Note: consensus estimates are based on ThomsonReuters compiled data as of
10/14/16
IIUpdated sector outlooks for acute care hospitals, freestanding emergency
rooms, long-term acute care
hospitals, and inpatient rehab facilities
IIAdditional details on the Steward acquisition and future growth potential
stemming from the new relationship
with Steward and Cerberus
IIComments on the pace of $300MM in Median acquisitions and expected timing
(2016 closings vs. 2017)
IIUpdated investment outlook and which assets/regions are most attractive
for capital deployment. With our
pro-forma net debt-to-EBITDA of roughly 5.0x we believe MPW has plenty of
dry powder to make accretive
investments
EFTA01437909
Disposition update and plans to sell additional LTACHs (7% exposure as of
last Q's call)
IIDevelopment pipeline update as $62MM of freestanding ER completions are
d
cheduled for 3Q16
IIOperator/tenant update, most notably comments on Prime Healthcare (on-
going DOJ lawsuit) and Adeptus
Health (views on recent freestanding ER scrutiny)
IIUpdate on EBITDAR rent coverage (reported on a 1-0 lag) and the impact of
2016 LTACH and IRF sales on
coverage ratios
IIAfter updating our model to reflect the Steward deal and related financing
activity, our 2016 norm FFO/sh
estimate remains unchanged at $1.29 (vs. $1.29-$1.33 guidance). Our 2017
norm FFO/sh moves to $1.39 from
$1.32. Our norm FAD/sh estimates move to $1.17 (from $1.16) in 2016 and to
$1.29 (from $1.20) in 2017.
Please see Figure 98 for a summary of our full year estimate revisions
2016
Actual
$0.32
$0.23
$0.28
Actual
3.6x
4.5x
1.8x
2.2x
3.0x
71%
255.0
30.9
Actual
Actual
3Q16
DBe
$0.30
$0.30
$0.27
DBe
2016
Cons
$0.30
Pre 3Q Guide
$1.29 - $1.33
Post 3Q Guide
EFTA01437910
DBe
51.29
51.14
51.17
Pre 3Q Guide
Post 3Q Guide
DBe
Cons
51.26
255.0
62.2
Deutsche Bank Securities Inc.
Page 53
EFTA01437911
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Summary of ratings and
estimate changes
Figure 97: Price target and ratings changes
Old
Last Price
Office
City Office Reit Inc
Data Center
CyrusOne Inc
Digital Realty Trust Inc
CIO
CONE
DLR
$12.18
$47.75
$94.71
Rating
Buy
Buy
Buy
New
Rating
Buy
Buy
Buy
Old Cap
Rate
7.0%
NA
NA
New Cap
Rate
7.0%
NA
NA
Old
Prem
New
Prem Old TP
-10% -10%
NA
NA
N/A
$15.00
$60.00
NA $112 00
Key changes
EFTA01437912
IICIO: We are increasing our target price to $15.50 from $15 as we
model in increased acquisitions.
IICONE: We are lowering our target price to $59 from $60 as a result of
our estimate revisions. Our target multiple are unchanged (17.4x
EBITDA and 19.1x FAD).
IIDLR: We are lowering our target price to $108 from $112 as a result of
our lowered estimates. Our target multiple are unchanged (18.0x
EBITDA and 19.6x FAD).
Figure 98: FFO/sh, Pro-forma FFO/sh, and FAD/sh estimate
2016
Apartment
Independence Realty Trust Inc
Healthcare
Ventas Inc
Medical Properties Trust Inc
Office
City Office Reit Inc
Paramount Group Inc
Vornado Realty Trust
Data Center
CyrusOne Inc
Digital Realty Trust Inc
Local Retail
Federal Realty Investment Trust
Key changes
IICIO: We are updating our model to reflect the recently announced
preferred equity capital raise, and using proceeds to assume $250MM
of acquisitions at a 7% cap rate. Our 2016 core FFO/sh estimate move
Page 54
Deutsche Bank Securities Inc.
2017
Old FFO New FFO Old FFO New FFO
IRT
$0.70
VTR $4.07
MPW $1.18
CIO
$0.63
PGRE $0.86
VNO $4.84
CONE $2.28
DLR $5.53
$0.69
$4.07
$1.14
$0.54
EFTA01437913
$0.87
$4.88
$2.28
$5.53
$0.67
$4.33
$1.32
$1.19
$0.89
$5.43
$2.77
$6.24
$0.65
$4.42
$1.38
$1.23
$0.96
$5.55
$2.71
$6.09
2016
Old Proforma
FF0
$0.81
$4.10
$1.29
$1.08
$0.83
$4.90
$2.56
$5.73
New Proforma
FF0
$0.80
$4.10
$1.29
$1.01
$0.85
$4.94
$2.56
$5.73
2017
Old Proforma
FF0
$0.77
$4.34
$1.32
$1.27
$0.89
$5.49
$3.01
EFTA01437914
$6.24
New Proforma
FF0
$0.75
$4.42
$1.39
$1.35
$0.96
$5.61
$2.95
$6.09
2016
2017
Old FAD New FAD Old FAD New FAD
$0.68
$3.68
$1.16
$0.65
$0.35
$2.66
$2.44
$5.10
$0.67
$3.67
$1.17
$0.58
$0.37
$2.70
$2.44
$5.09
$0.67
$3.90
$1.20
$1.08
$0.48
$3.67
$2.97
$5.36
$0.65
$3.99
$1.29
$1.15
$0.54
$3.79
$2.90
$5.21
New TP
$15.50
$59.00
$108.00
FRT
EFTA01437915
$5.65
$5.65
$6.08
$6.04
$5.63
$5.63
$6.04
$6.04
$4.91
$4.91
$5.08
$5.08
EFTA01437916
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
to $1.01 from $1.08, NAREIT FFO moves to 54c from 63c, and FAD
moves to 58c from 65c. In 2017, core FFO/sh moves to $1.35 from
$1.27, NAREIT FFO moves to $1.23 from $1.19, and FAD moves $1.15
from $1.08.
IICONE: We are updating estimates to reflect our expectation of an
earlier exercise of the forward equity sales offering in 2017 and a
modest reduction in rent commencements in 2017. Our 2016
estimates are unchanged. For 2017, our core FFO/sh estimate moves
to $2.95 from $3.01, NAREIT FFO moves to $2.71 from $2.77, FAD
moves to $2.90 from $2.97, and EBITDA moves to $337.7MM from
$345.8MM.
IIDLR: We are updating estimates to reflect our expectation of a
delayed exercise for a portion of the forward equity sales offering and
lowering our 2H16 leasing assumptions. Our 2016 Core and NAREIT
FFO/sh estimates are unchanged, while FAD moves to $5.09 from
$5.10. For 2017, Core and NAREIT FFO move to $6.09 from $6.24,
while FAD moves to $5.21 from $5.36.
IIFRT: We decrease our 2017 FFO estimate from $6.08 to $6.04 largely
n more conservative development assumptions.
1
IRT: We are updating estimates after reviewing the recent 8-K filing
which contained additional debt repayment and share buyback pricing
details. Our 2016 NAREIT FFO/sh moves to 69c from 70c and 2017
moves to 65c from 67c. Our core FFO/sh estimates are also decreasing
by lc to 80c for 2016 and by 2c to 75c for 2017.
IIMPW: After updating our model to reflect the Steward deal and
related financing activity, our 2016 norm FFO/sh estimate remains
unchanged at $1.29 (vs. $1.29-$1.33 guidance). Our 2017 norm
FFO/sh moves to $1.39 from $1.32. Our norm FAD/sh estimates move
to $1.17 (from $1.16) in 2016 and to $1.29 (from $1.20) in 2017.
IIPGRE: We are updating our model to reflect the One Front Street
acquisition and recent financing activity. Our 2016 NAREIT FFO/sh
estimate moves to 87c from 86c, core FFO moves to 85c from 83c,
and FAD moves to 38c from 36c. Our 2017 NAREIT and core FFO
estimates move to 96c from 89c, and FAD moves to 52c from 46c.
IIVNO: We are updating estimates to reflect recently announced
financing activity. Our 2016 FFO/sh estimate moves to $4.88 from
$4.84, while FAD moves to $2.68 from $2.64. For 2017, our FFO
estimate moves to $5.55 from $5.43 while FAD moves to $3.77 from
$3.64.
IIVTR: We are updating our model for the recently announced debt
EFTA01437917
investment to help fund the Ardent operating company merger with
LHP and recent financing activity. Our 3016 normalized and NAREIT
FFO/sh estimates are unchanged. Our 2016 norm and NAREIT FFO/sh
estimates are both unchanged at $4.10 and $4.07, respectively. Our
2017 norm. FFO/sh moves to $4.42 from $4.34 and our NAREIT
FFO/sh estimate moves to $4.42 from $4.33, which reflect the new
$700MM debt investment in 1Q17 and additional debt financing
activity in 2H17.
Deutsche Bank Securities Inc.
Page 55
EFTA01437918
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Valuation and risks
CIO
Valuation
Our target price is based on a 10% discount to our 2-year forward NAV
estimate at a 7% cap rate. Our cap rate assumption is based off private
market
transactions and our assessment of property types, regions, and asset
quality.
We think this metric is appropriate as we believe REITs should trade near the
private market value of their assets. We apply a 10% discount to reflect our
view of CIO's elevated risk profile.
Risks
We believe CIO's risk profile is higher than average, largely due to its
size. We
view portfolio concentration, tenant concentration, leverage, limited trading
liquidity, ownership concentration, an elevated dividend payout ratio, and a
reliance on external capital to fund growth beyond 2016 as the key downside
risks to our Buy-rating.
PGRE
Valuation
With trophy CBD office assets trading in the sub-4% range, we are
conservatively applying a 4.5% cap rate to our 2-yr forward NOI estimates to
arrive at NAV. To account for the limited visibility on the timing of
expected
NOI increases and to account for the potential for higher-than-average
quarterly earnings volatility due to the size of the portfolio, we are also
applying a 5% discount to NAV to arrive at our target price.
Risks
The key risks to PGRE are tied to its small overall portfolio size and
limited
visibility as to when some of the expected NOI upside will be achieved. With
just 12 assets, PGRE's quarter-to-quarter results can be highly influenced by
the move-in or move-out of anchor tenants. It also subjects the company to
above average concentration risks, with —76% of its annualized base rent
(ABR) generated from the NYC market and 68% of ABR from financial services
and legal tenants. As noted above, while we see substantial NOI upside
potential in the portfolio, the exact timing of when this upside will be
realized
is difficult to project on a quarterly basis, which could result in
heightened
trading volatility around earnings. We also expect heightened tenant
improvement and leasing costs over the next few years as vacancy is leased
up, something that will likely act as a headwind to FAD until the portfolio
reaches a more stabilized level.
Page 56
Deutsche Bank Securities Inc.
EFTA01437919
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
DB REIT comp sheet
Figure 99: Deutsche Bank Real Estate Coverage Universe
Sector
Company
Apartment
American Campus Communities
AvalonBay Communities
Camden Property Trust
Equity Residential
Independence Realty Trust
Post Properties
Sector wt'd average / sum
Sector median
Health Care REITs
Medical Properties Trust
Welltower Inc.
Ventas Inc
Sector wt'd average / sum
Sector median
Industrial
Prologis, Inc.
Sector wt'd average / sum
Sector median
Office
Boston Properties
City Office
Kilroy Realty Corp.
Mack-Cali Realty Corp.
Paramount Group, Inc.
SL Green Realty
Vornado Realty Trust
Sector wt'd average / sum
Sector median
Data Center
CyrusOne Inc.
Digital Realty Trust
QTS Realty Trust Inc.
Sector wt'd average / sum
Sector median
Retail, Local
Brixmor
DDR Corp.
Equity One, Inc.
Federal Realty Investment Trust
Kimco Realty Corp.
Ramco-Gershenson Property Trust
Regency Centers
Retail Properties of America
EFTA01437920
Spirit Realty Capital
Urstadt Biddle Properties Inc.
Sector wt'd average / sum
Sector median
Retail, Regional
General Growth Properties
Macerich Co.
Simon Property Group
Taubman Centers Inc.
Sector wt'd average / sum
Sector median
Other
American Farmland Company
Kennedy Wilson *
Sector wt'd average / sum
Sector median
* Pro-forma FFO for KW is basic
Total Wt'd Avg/Sum (ex-other)
Total Median (ex-other)
AFCO Hold
KW Buy
$7.20
$20.52
GGP Buy
MAC Hold
SPG Buy
TCO Hold
$26.17
$76.43
$196.99
$71.42
BRX Buy
DDR Hold
EQY Hold
FRT Hold
KIM Hold
RPT Buy
REG Hold
RPAI Buy
SRC Buy
UBA Hold
$26.91
$16.44
$29.13
$147.25
$28.09
$17.56
$74.45
$15.99
$12.52
adjusted EPS
data, Thomson
EFTA01437921
$21.85
CONE Buy
DLR Buy
QTS Hold
$47.75
$94.71
$52.22
BXP Buy
CIO Buy
KRC Buy
CLI Hold
PGRE Buy
SLG Buy
VNO Hold
$126.90
$12.18
$70.11
$26.12
$15.80
$105.07
$95.25
PLD Hold
$50.87
MPW Buy
HCN Hold
VTR Hold
$14.55
$69.43
$66.71
DB
Rating Price
10/14/2016
ACC Hold
AVB Buy
CPT Hold
EQR Hold
IRT Hold
PPS Hold
$49.27
$168.93
$77.83
$61.40
$8.70
$62.96
$6,534
$23,278
$7,169
$23,520
$525
$3,377
$64,404
EFTA01437922
$6,428
$23,196
$6,803
$22,445
$568
$3,368
$62,809
10.23%
36.9%
10.8%
35.7%
0.9%
5.4%
100.0%
1.7%
6.0%
1.8%
5.8%
0.1%
0.9%
16.4%
Market Cap
incl OP
(MMs)
Equity
Mkt Cap
(MMs)
Sector Coverage
Weight
Weight
90 Day
90 Day
(000's)
DBe
Avg (Vol) Avg ($ vol) Cap Rate
(000's)
815
780
619
2,517
764
603
6,098
$40,179
$131,745
$48,197
$154,525
$6,646
$37,960
$419,253
5.4%
EFTA01437923
4.5%
5.3%
4.6%
6.1%
5.2%
4.8%
5.2%
$4,120
$25,032
$23,605
$48,638
$4,549
$24,850
$23,439
$52,837
8.6%
47.0%
44.4%
100.0%
1.2%
6.5%
6.1%
13.8%
3,341
2,044
2,214
7,599
$48,616
$141,915
$147,669
$338,199
8.0%
6.6%
6.4%
6.6%
15.8%
$27,682
$27,682
$26,806
$26,806
100.0%
100.0%
7.0%
7.0%
2,935
2,935
$149,296
$149,296
5.3%
5.3%
5.3%
EFTA01437924
$21,813
$295
$6,711
$2,622
$4,180
$11,074
$19,232
$65,927
$19,504
$297
$6,469
$2,342
$3,468
$10,541
$17,980
$60,600
32.2%
0.5%
10.7%
3.9%
5.7%
17.4%
29.7%
100.0%
5.1%
0.1%
1.7%
0.6%
0.9%
2.7%
4.7%
15.8%
709
168
609
593
852
714
851
4,496
$89,982
$2,046
$42,700
$15,481
$13,467
$75,022
$81,020
$319,717
4.5%
7.3%
4.9%
EFTA01437925
7.0%
4.5%
4.5%
4.7%
4.7%
4.7%
$3,961
$15,232
$2,911
$22,104
$3,987
$13,909
$2,491
$20,388
19.6%
68.2%
12.2%
100.0%
1.0%
3.6%
0.6%
5.3%
1,176
1,760
398
3,334
$56,171
$166,660
$20,758
$243,589
N/A
N/A
N/A
N/A
N/A
$8,199
$6,022
$4,195
$10,676
$11,865
$1,544
$7,791
$3,796
$6,021
$574
$60,683
$8,103
$6,015
$4,188
$10,518
$11,799
EFTA01437926
$1,392
$7,779
$3,796
$6,006
$647
$60,242
13.5%
10.0%
7.0%
17.5%
19.6%
2.3%
12.9%
6.3%
10.0%
1.1%
100.0%
2.1%
1.6%
1.1%
2.7%
3.1%
0.4%
2.0%
1.0%
1.6%
0.2%
15.7%
2,667
3,361
883
398
2,734
478
620
1,286
4,784
172
17,384
$71,767
$55,247
$25,728
$58,632
$76,810
$8,400
$46,126
$20,569
$59,901
$3,766
$426,946
6.4%
EFTA01437927
6.1%
5.3%
4.5%
5.8%
6.4%
5.2%
6.2%
6.5%
5.8%
5.7%
6.0%
$25,086
$11,508
$71,264
$6,190
$114,047
$23,154
$10,977
$61,899
$4,313
$100,343
23.1%
10.9%
61.7%
4.3%
100.0%
6.0%
2.9%
16.1%
1.1%
26.1%
3,924
874
1,237
335
6,370
$102,690
$66,810
$243,700
$23,920
$437,120
4.9%
4.7%
4.6%
4.3%
4.7%
4.7%
$145
$2,308
$2,453
$145
EFTA01437928
$2,308
$2,454
5.9%
94.1%
100.0%
0.0%
0.6%
0.6%
152
482
$1,095
$9,884
$10,979
8.0%
N/A
$51.37
NAV
2-yr fwd
$48.19
$193.28
$88.00
$67.41
$9.65
$64.47
Assumed
Prem/(Disc) Prem/(Disc)
to NAV
to NAV
2.2%
-12.6%
-11.6%
-8.9%
-9.9%
-2.3%
-9.1%
-9.4%
$14.01
$64.39
$60.43
3.9%
7.8%
10.4%
8.6%
7.8%
-1.0%
-1.0%
-1.0%
$151.86
$17.30
$80.43
$27.60
EFTA01437929
$21.06
$130.66
$105.96
-16.4%
-29.6%
-12.8%
-5.4%
-25.0%
-19.6%
-10.1%
-14.8%
-16.4%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$30.15
$18.71
$29.74
$144.74
$28.00
$20.44
$73.73
$17.44
$12.26
$23.32
-10.8%
-12.1%
-2.1%
1.7%
0.3%
-14.1%
1.0%
-8.3%
2.1%
-6.3%
-3.0%
-4.2%
$36.66
$87.28
$233.41
$82.88
-28.6%
-12.4%
-15.6%
-13.8%
-18.2%
EFTA01437930
-14.7%
$16.02
N/A
-55.1%
N/A
0%
0%
-10%
0%
-10%
-6%
-1.5%
-3.0%
0%
0%
0%
0.0%
0.0%
0%
0.5%
0.5%
0%
-10%
0%
0%
-5%
0%
0%
-0.3%
0.0%
N/A
N/A
N/A
N/A
N/A
0%
-5%
5%
5%
0%
0%
5%
0%
0%
0%
1.4%
0.0%
0%
0%
0%
-5%
EFTA01437931
-0.2%
0.0%
0%
N/A
$8.00
$31.00
$37.00
$87.00
$233.00
$81.00
$59.00
$108.00
$57.00
$152.00
$15.50
$80.00
$28.00
$20.00
$131.00
$106.00
$51.00
$17.00
$73.00
$72.00
Tgt
Price
$48.00
$193.00
$80.00
$67.00
$9.00
$65.00
Est'd
Gain
-2.6%
14.2%
2.8%
9.1%
3.4%
3.2%
8.8%
3.3%
16.8%
5.1%
7.9%
7.4%
7.9%
0.3%
0.3%
0.3%
19.8%
EFTA01437932
27.3%
14.1%
7.2%
26.6%
24.7%
11.3%
17.4%
19.8%
23.6%
14.0%
9.2%
15.3%
14.0%
$30.00
$18.00
$31.00
$153.00
$28.00
$21.00
$77.00
$18.00
$14.00
$24.00
11.5%
9.5%
6.4%
3.9%
-0.3%
19.6%
3.4%
12.6%
11.8%
9.8%
6.5%
9.7%
41.4%
13.8%
18.3%
13.4%
22.9%
16.1%
11.1%
51.1%
48.7%
31.1%
Expected
Total
Return
0.8%
17.4%
6.6%
EFTA01437933
12.4%
11.7%
6.2%
12.1%
9.2%
23.1%
10.1%
12.3%
12.2%
12.3%
3.6%
3.6%
3.6%
21.9%
35.0%
16.2%
9.5%
29.0%
27.5%
13.9%
19.9%
21.9%
26.7%
17.7%
11.9%
18.8%
17.7%
15.1%
14.1%
9.4%
6.6%
3.3%
24.4%
6.1%
16.7%
17.4%
14.6%
10.2%
14.4%
44.4%
17.4%
21.6%
16.7%
26.2%
19.5%
14.1%
53.8%
51.4%
33.9%
$1.68
$0.91
EFTA01437934
$3.44
$2.92
Net Debt
Dividend
2016
$1.66
$5.40
$2.95
$2.02
$0.72
$1.88
Yield
3.4%
3.2%
3.8%
3.3%
8.3%
3.0%
3.3%
3.3%
6.3%
5.0%
4.4%
4.8%
5.0%
3.3%
3.3%
3.3%
$2.70
$0.94
$1.48
$0.60
$0.38
$2.99
$2.52
2.1%
7.7%
2.1%
2.3%
2.4%
2.8%
2.6%
2.5%
2.4%
$1.52
$3.52
$1.44
3.2%
3.7%
2.8%
3.5%
EFTA01437935
3.2%
$0.98
$0.76
$0.88
$3.92
$1.02
$0.84
$2.00
$0.66
$0.70
$1.04
3.6%
4.6%
3.0%
2.7%
3.6%
4.8%
2.7%
4.1%
5.6%
4.8%
3.7%
3.9%
$0.78
$2.72
$6.50
$2.38
3.0%
3.6%
3.3%
3.3%
3.3%
3.3%
$0.22
$0.56
3.0%
2.7%
2.7%
2.9%
FF0 Payout
2016E
72.7%
64.4%
65.1%
67.6%
104.8%
58.5%
66.5%
66.4%
80.0%
76.5%
EFTA01437936
71.8%
74.7%
76.5%
57.2%
57.2%
57.2%
45.2%
173.5%
43.4%
27.2%
43.9%
36.5%
51.6%
45.3%
43.9%
66.8%
63.7%
56.6%
63.4%
63.7%
47.7%
61.0%
68.3%
69.4%
73.5%
61.1%
73.7%
58.9%
81.9%
81.0%
67.4%
68.9%
51.7%
66.7%
60.2%
62.0%
59.0%
61.1%
97.4%
N/A
5.8%
97.4%
2017E
68.3%
60.8%
63.7%
65.0%
110.4%
55.4%
63.5%
64.3%
EFTA01437937
65.9%
72.1%
66.1%
68.9%
66.1%
52.9%
52.9%
52.9%
41.5%
76.3%
41.2%
27.1%
39.6%
44.9%
45.4%
42.7%
41.5%
56.1%
57.8%
50.2%
56.5%
56.1%
45.6%
60.9%
58.5%
64.9%
63.8%
58.6%
57.0%
63.5%
76.6%
79.0%
61.3%
62.2%
49.5%
62.1%
55.7%
63.0%
55.3%
58.9%
85.7%
N/A
5.1%
85.7%
FAD Payout
2016E
77.7%
70.2%
75.2%
78.0%
106.8%
EFTA01437938
69.5%
74.6%
76.4%
77.6%
86.9%
79.6%
82.9%
79.6%
67.7%
67.7%
67.7%
66.2%
163.0%
60.1%
79.0%
103.5%
54.0%
93.4%
74.6%
79.0%
62.3%
69.2%
56.1%
66.2%
62.3%
57.9%
67.9%
73.5%
79.8%
79.4%
67.6%
66.7%
77.8%
78.7%
114.9%
73.3%
75.6%
55.8%
75.4%
63.3%
76.8%
63.5%
69.4%
105.0%
N/A
6.2%
105.0%
2017E
72.5%
64.5%
74.4%
EFTA01437939
74.9%
110.4%
64.7%
70.5%
73.4%
70.4%
81.2%
73.3%
76.7%
73.3%
60.6%
60.6%
60.6%
58.2%
81.9%
57.2%
92.9%
70.3%
61.0%
66.4%
63.2%
66.4%
52.3%
67.6%
48.5%
62.3%
52.3%
53.8%
69.7%
70.2%
77.1%
82.1%
67.5%
63.5%
71.9%
75.3%
83.9%
71.3%
71.0%
56.6%
68.7%
60.5%
83.9%
61.5%
64.6%
100.3%
N/A
5.9%
100.3%
to EBITDA Total Debt
to Cap
EFTA01437940
NTM
5.8
5.4
4.2
5.4
10.3
4.8
5.4
5.4
5.1
5.4
5.7
5.5
5.6
4.8
4.8
4.8
5.8
8.0
5.2
6.8
7.7
7.4
7.1
6.7
7.1
4.6
4.8
4.7
4.8
4.7
6.6
6.9
5.3
5.2
6.4
6.1
4.2
5.7
6.1
4.4
6.0
5.9
7.7
7.5
5.4
9.0
6.4
7.6
10.0
11.2
EFTA01437941
11.2
10.6
28.7%
22.8%
26.7%
27.5%
60.8%
21.8%
26.1%
27.1%
37.8%
34.3%
31.7%
33.5%
34.3%
29.4%
29.4%
29.4%
33.7%
49.4%
27.4%
49.1%
45.4%
43.2%
38.1%
37.8%
43.2%
23.9%
30.6%
24.9%
28.7%
24.9%
42.4%
45.1%
24.5%
20.2%
30.5%
42.5%
20.3%
37.5%
37.7%
29.7%
32.7%
34.0%
37.6%
30.9%
27.0%
41.3%
30.9%
34.2%
35.8%
EFTA01437942
67.0%
65.2%
51.4%
$407,605
$384,025
100.0%
48,216
5.2%
5.3%
-8.4%
-10.0%
-0.1%
0.0%
13.0%
11.4%
16.5%
14.9%
3.4%
3.3%
61.7%
64.1%
57.4%
59.7%
71.7%
75.3%
66.9%
70.0%
5.9
5.7
31.8%
31.3%
Deutsche Bank Securities Inc.
Page 57
EFTA01437943
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 100: Comp sheet continued
Sector
Company
Apartment
American Campus Communities
AvalonBay Communities
Camden Property Trust
Equity Residential
Independence Realty Trust
Post Properties
Sector wt'd average / sum
Sector median
Health Care REITs
Medical Properties Trust
Welltower Inc.
Ventas Inc
Sector wt'd average / sum
Sector median
Industrial
Prologis, Inc.
Sector wt'd average / sum
Sector median
Office
Boston Properties
City Office
Kilroy Realty Corp.
Mack-Cali Realty Corp.
Paramount Group, Inc.
SL Green Realty
Vornado Realty Trust
Sector wt'd average / sum
Sector median
Data Center
CyrusOne Inc.
Digital Realty Trust
QTS Realty Trust Inc.
Sector wt'd average / sum
Sector median
Retail, Local
Brixmor
DDR Corp.
Equity One, Inc.
Federal Realty Investment Trust
Kimco Realty Corp.
Ramco-Gershenson Property Trust
Regency Centers
Retail Properties of America
Spirit Realty Capital
EFTA01437944
Urstadt Biddle Properties Inc.
Sector wt'd average / sum
Sector median
Retail, Regional
General Growth Properties
Macerich Co.
Simon Property Group
Taubman Centers Inc.
Sector wt'd average / sum
Sector median
Other
American Farmland Company
Kennedy Wilson *
Sector wt'd average / sum
Sector median
* Pro-forma FFO for KW is basic adjusted EPS
Total Wt'd Avg/Sum (ex-other)
Total Median (ex-other)
AFCO
KW
GGP
MAC
SPG
TCO
BRX
DDR
EQY
FRT
KIM
RPT
REG
RPAI
SRC
UBA
CONE
DLR
QTS
BXP
CIO
KRC
CLI
PGRE
SLG
VNO
PLD
ACC
AVB
CPT
EQR
IRT
PPS
EFTA01437945
Implied
Cap Rate
5.3%
5.0%
6.0%
5.1%
6.4%
5.3%
5.2%
5.3%
MPW 7.8%
HCN
VTR
6.3%
5.9%
6.2%
6.3%
5.3%
5.3%
5.3%
5.1%
8.3%
5.5%
7.2%
5.3%
5.4%
5.1%
5.3%
5.4%
7.4%
6.5%
11.7%
7.3%
7.4%
6.9%
6.6%
5.4%
4.4%
5.7%
7.0%
5.2%
6.5%
6.4%
6.0%
5.8%
6.2%
6.2%
5.1%
5.3%
4.8%
5.5%
EFTA01437946
5.2%
N/A
N/A
Price to
FF0
2016E
21.1
20.2
17.2
20.6
12.7
19.6
20.0
19.9
12.8
15.4
16.4
15.6
15.4
17.3
17.3
17.3
21.3
22.5
20.6
11.8
18.2
12.8
19.5
18.7
19.5
21.0
17.1
20.5
18.3
20.5
13.1
13.2
22.6
26.1
20.2
12.8
27.4
14.2
14.6
17.0
19.5
15.8
17.4
18.7
18.2
EFTA01437947
18.6
18.1
18.4
32.6
N/A
1.9
32.6
2017E
20.3
19.0
16.8
19.8
13.3
18.6
19.1
18.8
10.5
14.6
15.1
14.5
14.6
16.0
16.0
16.0
19.5
9.9
19.6
11.8
16.5
15.8
17.1
17.7
16.5
17.6
15.6
18.2
16.3
17.6
12.5
13.2
19.4
24.4
17.6
12.3
21.2
15.3
13.7
16.6
17.6
16.0
17.5
EFTA01437948
16.6
17.5
16.9
18.9
17.0
17.2
28.7
N/A
1.7
28.7
2016E
-3.4%
3.6%
-0.1%
-14.3%
-50.1%
7.7%
-4.2%
-1.8%
21.0%
11.4%
-0.5%
6.9%
11.4%
17.8%
17.8%
17.8%
11.5%
-34.5%
0.2%
17.5%
-12.2%
28.3%
-11.0%
5.2%
0.2%
42.7%
13.7%
17.0%
19.8%
17.0%
4.2%
30.0%
5.5%
11.9%
-9.6%
0.8%
-6.8%
16.7%
4.2%
14.8%
EFTA01437949
4.9%
4.9%
11.1%
7.1%
9.5%
15.9%
9.9%
10.3%
N/A
0.0%
N/A
Growth
FF0
2017E
6.4%
6.0%
2.3%
4.1%
-5.1%
5.6%
4.8%
4.8%
21.3%
6.1%
8.6%
8.5%
8.6%
8.3%
8.3%
8.3%
8.9%
127.2%
5.3%
0.4%
10.7%
-18.7%
13.8%
5.5%
8.9%
19.2%
10.2%
12.7%
12.3%
12.7%
4.7%
0.1%
16.8%
6.9%
15.1%
4.2%
EFTA01437950
29.1%
-7.3%
6.8%
2.6%
10.1%
5.8%
4.5%
7.3%
8.0%
-1.6%
6.7%
5.9%
13.6%
N/A
0.8%
13.6%
2-yr
2.8%
9.8%
2.2%
-10.9%
-52.7%
13.8%
0.5%
2.5%
46.8%
18.2%
8.0%
16.2%
18.2%
27.6%
27.6%
27.6%
21.4%
48.9%
5.4%
18.0%
-2.8%
4.3%
1.3%
9.4%
5.4%
70.1%
25.3%
31.9%
34.9%
31.9%
9.1%
30.1%
23.3%
19.6%
EFTA01437951
4.0%
5.0%
20.3%
8.2%
11.4%
17.7%
14.6%
14.5%
16.1%
14.9%
18.3%
14.0%
17.2%
15.5%
N/A
0.0%
N/A
Price to
Pro-forma FF0
2016E
21.6
20.6
17.1
20.0
10.9
19.5
20.0
19.7
11.3
15.2
16.3
15.4
15.2
19.8
19.8
19.8
21.2
12.1
20.6
12.3
18.5
12.8
19.3
18.6
18.5
18.6
16.5
19.9
17.3
18.6
EFTA01437952
13.0
13.1
20.9
26.1
18.7
12.9
22.7
15.0
14.2
17.1
18.5
16.1
17.0
18.6
18.2
19.9
18.1
18.4
32.6
11.5
12.7
22.0
2017E
20.3
19.0
16.8
19.7
11.6
18.6
19.1
18.8
10.5
14.5
15.1
14.4
14.5
19.5
19.5
19.5
19.5
9.0
19.6
11.8
16.4
15.8
17.0
17.6
16.4
16.2
15.6
18.2
EFTA01437953
16.0
16.2
12.5
13.2
19.4
24.4
17.6
12.3
21.2
15.3
13.7
16.7
17.6
16.0
16.4
17.5
16.9
18.9
16.9
17.2
28.7
12.7
13.7
20.7
2016E
-3.4%
8.1%
0.5%
-11.4%
0.1%
8.5%
-0.9%
0.3%
3.0%
3.9%
-8.4%
-1.6%
3.0%
15.7%
15.7%
15.7%
8.8%
-17.7%
5.9%
14.6%
4.8%
28.3%
0.6%
9.3%
5.9%
17.8%
EFTA01437954
8.8%
14.2%
11.2%
14.2%
4.4%
2.2%
5.3%
5.3%
1.7%
-2.3%
7.5%
0.0%
8.4%
8.6%
4.3%
4.8%
6.9%
3.9%
8.3%
5.1%
7.4%
6.0%
-11.5%
-10.9%
-11.5%
Pro-forma
Growth
2017E
6.4%
8.5%
1.7%
1.4%
-5.9%
4.9%
4.7%
3.3%
7.4%
5.2%
7.9%
6.6%
7.4%
1.2%
1.2%
1.2%
8.9%
34.6%
5.3%
4.3%
12.6%
-18.7%
EFTA01437955
13.6%
5.3%
8.9%
14.9%
6.2%
9.5%
8.3%
9.5%
3.5%
-0.8%
8.0%
7.3%
6.4%
4.8%
7.1%
-1.9%
3.7%
2.8%
4.8%
4.3%
4.0%
6.7%
8.0%
5.2%
6.8%
6.0%
13.6%
-9.9%
-8.5%
1.8%
2-yr
2.8%
17.2%
2.2%
-10.1%
-5.8%
13.8%
4.0%
2.5%
10.7%
9.3%
-1.1%
4.8%
9.3%
17.1%
17.1%
17.1%
18.4%
10.8%
11.4%
19.5%
EFTA01437956
18.0%
4.3%
14.3%
14.0%
14.3%
35.3%
15.5%
25.0%
20.6%
25.0%
8.1%
1.4%
13.7%
12.9%
8.2%
2.4%
15.1%
-1.9%
12.4%
11.7%
9.3%
10.0%
11.2%
10.8%
17.0%
10.6%
14.7%
11.0%
-20.3%
-19.1%
-20.3%
Price to
FAD
2016E
23.1
22.0
19.8
23.8
12.9
23.3
22.5
22.5
12.4
17.5
18.2
17.4
17.5
20.5
20.5
20.5
EFTA01437957
31.1
21.1
28.6
34.4
43.0
19.0
35.3
30.7
31.1
19.6
18.6
20.3
19.0
19.6
15.9
14.7
24.3
30.0
21.9
14.1
24.8
18.8
14.1
24.1
21.2
20.3
18.7
21.2
19.2
23.0
19.5
20.2
35.2
N/A
2.1
35.2
2017E
21.5
20.2
19.6
22.8
13.3
21.7
21.2
20.8
11.3
16.4
16.7
16.1
16.4
18.4
EFTA01437958
18.4
18.4
27.4
10.6
27.2
40.5
29.2
21.4
25.1
26.2
27.2
16.4
18.2
17.6
17.8
17.6
14.8
15.1
23.2
29.0
22.6
14.1
23.6
17.3
13.5
17.6
20.6
17.5
19.0
19.3
18.3
25.2
18.9
19.1
33.6
N/A
2.0
33.6
2016E
-2.8%
7.3%
3.9%
-13.9%
-2.6%
7.4%
-1.8%
0.7%
0.1%
13.0%
0.6%
6.4%
EFTA01437959
0.6%
2.4%
2.4%
2.4%
22.7%
-40.5%
15.1%
-34.0%
28.0%
69.5%
-4.4%
19.8%
15.1%
9.3%
16.9%
16.6%
15.4%
16.6%
13.7%
9.3%
53.8%
14.9%
11.9%
-2.0%
17.9%
16.3%
2.1%
9.6%
15.0%
12.8%
22.0%
10.5%
12.8%
7.0%
14.4%
11.6%
30.9%
N/A
1.8%
30.9%
FAD
Growth
2017E
7.2%
8.8%
1.1%
4.2%
-3.3%
7.4%
6.0%
5.7%
EFTA01437960
10.3%
7.1%
8.6%
8.0%
8.6%
11.6%
11.6%
11.6%
13.7%
98.9%
5.1%
-15.0%
47.2%
-11.5%
40.6%
17.6%
13.7%
19.0%
2.3%
15.5%
7.2%
15.5%
7.7%
-2.7%
4.6%
3.5%
-3.3%
0.2%
5.1%
8.2%
4.5%
37.0%
3.1%
4.6%
-1.3%
9.8%
4.6%
-8.5%
3.3%
1.7%
4.7%
N/A
0.3%
4.7%
2-yr
4.2%
16.7%
5.1%
-10.3%
-5.8%
15.3%
EFTA01437961
4.3%
4.6%
10.4%
20.9%
9.2%
14.8%
10.4%
14.3%
14.3%
$2.49
$2.94
$3.18
$2.22
$2.57
$2.60
$2.42
$2.48
$2.77
Funds from
Operations (FFO)
2015E 2016E 2017E
$2.39
$8.09
$4.54
$3.48
$1.38
$2.98
$2.33
$8.38
$4.53
$2.98
$0.69
$3.21
$2.47
$8.88
$4.63
$3.10
$0.65
$3.39
Pro-Forma Funds from
Operations (FFO)
2015E 2016E 2017E
$2.37
$7.59
$4.54
$3.46
$0.80
$2.98
$2.28
$8.20
$4.56
EFTA01437962
$3.07
$0.80
$3.24
$2.43
$8.89
$4.63
$3.11
$0.75
$3.39
Funds Available
For Distribution (FAD)
2015E 2016E 2017E
$2.20
$7.17
$3.78
$3.00
$0.69
$2.52
$2.14
$7.70
$3.92
$2.58
$0.67
$2.71
$2.29
$8.37
$3.97
$2.69
$0.65
$2.90
$0.94
$4.04
$4.09
$1.14
$4.50
$4.07
$1.38
$4.77
$4.42
$1.25
$4.39
$4.47
$1.29
$4.56
$4.10
$1.39
$4.80
$4.42
$1.17
$3.50
$3.65
EFTA01437963
$1.17
$3.96
$3.67
$1.29
$4.24
$3.99
39.5%
18.4%
21.1%
-43.9%
88.3%
50.0%
34.4%
37.3%
34.4%
30.1%
19.6%
34.6%
23.5%
30.1%
22.4%
6.4%
60.9%
18.9%
8.1%
-1.9%
23.9%
25.8%
6.8%
50.2%
18.7%
20.7%
20.4%
21.3%
18.0%
-2.1%
18.1%
19.2%
37.1%
N/A
2.2%
37.1%
$5.36
$0.83
$3.39
$1.88
$0.99
$6.38
$5.48
$5.97
$0.54
EFTA01437964
$3.40
$2.21
$0.87
$8.19
$4.88
$6.50
$1.23
$3.58
$2.21
$0.96
$6.66
$5.55
$5.49
$1.22
$3.21
$1.85
$0.81
$6.38
$4.91
$5.97
$1.01
$3.40
$2.12
$0.85
$8.19
$4.94
$6.50
$1.35
$3.58
$2.21
$0.96
$6.66
$5.61
$3.32
$0.97
$2.13
$1.15
$0.29
$3.27
$2.82
$4.08
$0.58
$2.45
$0.76
$0.37
$5.54
$2.70
$4.64
$1.15
$2.58
$0.65
EFTA01437965
$0.54
$4.90
$3.79
$1.59
$4.86
$2.17
$2.28
$5.53
$2.54
$2.71
$6.09
$2.87
$2.18
$5.27
$2.29
$2.56
$5.73
$2.62
$2.95
$6.09
$2.87
$2.23
$4.35
$2.20
$2.44
$5.09
$2.57
$2.90
$5.21
$2.97
$1.97
$0.96
$1.22
$5.05
$1.54
$1.36
$2.91
$0.96
$0.82
$1.12
$2.05
$1.25
$1.29
$5.65
$1.39
$1.38
$2.72
$1.12
$0.85
$1.28
$2.15
EFTA01437966
$1.25
$1.50
$6.04
$1.60
$1.43
$3.51
$1.04
$0.91
$1.32
$1.99
$1.23
$1.32
$5.35
$1.47
$1.39
$3.04
$1.06
$0.81
$1.17
$2.08
$1.25
$1.39
$5.63
$1.50
$1.36
$3.27
$1.06
$0.88
$1.27
$2.15
$1.25
$1.50
$6.04
$1.60
$1.42
$3.51
$1.04
$0.91
$1.31
$1.49
$1.02
$0.78
$4.27
$1.15
$1.27
$2.54
$0.73
$0.87
$0.83
$1.69
$1.12
EFTA01437967
$1.20
$4.91
$1.29
$1.24
$3.00
$0.85
$0.89
$0.90
$1.82
$1.09
$1.25
$5.08
$1.24
$1.24
$3.15
$0.92
$0.93
$1.24
$1.36
$3.81
$1.51
$4.08
$3.84
$1.58
$4.38
$9.86 $10.80 $11.66
$3.31
$3.78
$1.44
$3.95
$1.54
$4.10
$3.59
$1.60
$4.38
$9.97 $10.80 $11.66
$3.41
$3.78
$1.15
$3.27
$1.40
$3.61
$3.10
$1.38
$3.96
$9.10 $10.26 $10.74
$2.90
$2.84
($0.48) $0.22
N/A
N/A
EFTA01437968
$0.25
N/A
($0.48) $0.22
$2.02
$1.79
$0.25
$1.61
$0.16
N/A
$0.20
N/A
$0.21
N/A
5.6%
5.8%
18.3
18.2
17.1
16.7
6.7%
7.4%
7.4%
6.6%
14.4%
14.5%
18.2
18.4
17.3
16.7
5.4%
5.2%
5.6%
5.7%
11.1%
11.3%
21.8
20.8
20.2
19.1
10.8%
9.5%
7.4%
6.1%
18.5%
18.7%
Page 58
Deutsche Bank Securities Inc.
EFTA01437969
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Figure 101: Companies mentioned
Company
American Campus Communities
American Farmland Company
AvalonBay Communities
Boston Properties
Brixmor
Camden Property Trust
City Office REIT
CyrusOne Inc.
DDR Corp.
Digital Realty Trust
Equity One, Inc.
Equity Residential
Federal Realty Investment Trust
General Growth Properties
Independence Realty Trust
Kennedy-Wilson Holdings
Kilroy Realty Corp.
Kimco Realty Corp.
Macerich Co.
Mack-Cali Realty Corp.
Medical Properties Trust
Paramount Group
Post Properties
Prologis, Inc.
QTS Realty Trust Inc.
Ramco-Gershenson Property Trust
Regency Centers
Retail Properties of America
Simon Property Group
SL Green Realty
Spirit Realty Capital
Taubman Centers Inc.
Urstadt Biddle Properties Inc.
Ventas Inc
Vornado Realty Trust
Welltower
Adeptus Health
Aeropostale
Albertsons
Amazon
Ardent Health Services
Bonobos
Brookdale Senior Living
Dicks Sporting Goods
Gander Mountain
Genesis Healthcare
EFTA01437970
Golf smith
Haggen
Hudson Bay (HBC)
Kennedy Wilson Europe
Kindred Healthcare
LHP Hospital Group
Logan's
Macys
Office Depot
PacSun
Primark
Prime Healthcare
Rite Aid
Saks Fifth Ave
Sears
Splunk
Staples
Steward Health Care System
The Sports Authority
Warby Parker
WithMe
Ticker
ACC
AFCO
AVB
BXP
BRX
CPT
CIO
CONE
DDR
DLR
EQY
EQR
FRT
GGP
IRT
KW
KRC
KIM
MAC
CLI
MPW
PGRE
PPS
PLD
QTS
RPT
REG
RPAI
EFTA01437971
SPG
SLG
SRC
TCO
UBA
VTR
VNO
HCN
ADPT
ARO
Private
AMZN
Private
Private
BKD
DKS
Private
GEN
Private
Private
HBC
KWE.LON
KND
Private
Private
M
ODP
PSUN
ABF
Private
RAD
HBC
SHLD
SPLK
SPLS
Private
Private
Private
Private
Deutsche Bank Securities Inc.
Page 59
EFTA01437972
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Appendix 1
Important Disclosures
*Other information available upon request
*Prices are current as of the end of the previous trading session unless
otherwise indicated and are sourced from
local exchanges via Reuters, Bloomberg and other vendors . Other information
is sourced from Deutsche Bank,
subject companies, and other sources. For disclosures pertaining to
recommendations or estimates made on
securities other than the primary subject of this research, please see the
most recently published company report or
visit our global disclosure look-up page on our website at http://gm.db.com/-
ger/disclosure/DisclosureDirectory.eqsr
Analyst Certification
The views expressed in this report accurately reflect the personal views of
the undersigned lead analyst about the
subject issuers and the securities of those issuers. In addition, the
undersigned lead analyst has not and will not receive
any compensation for providing a specific recommendation or view in this
report. Vin Chao
Equity rating key
Buy: Based on a current 12- month view of total
share-holder return (TSR = percentage change in
share price from current price to projected target price
plus pro-jected dividend yield ) , we recommend that
investors buy the stock.
Sell: Based on a current 12-month view of total shareholder
return, we recommend that investors sell the
stock
Hold: We take a neutral view on the stock 12-months
out and, based on this time horizon, do not
recommend either a Buy or Sell.
Newly issued research recommendations and target
prices supersede previously published research.
Equity rating dispersion and banking relationships
100
200
300
400
500
600
0
Buy
Hold
Sell
Companies Covered Cos. w/ Banking Relationship
North American Universe
52 %
EFTA01437973
45 %
57 %
47 %
2 %19 %
Page 60
Deutsche Bank Securities Inc.
EFTA01437974
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
Additional Information
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EFTA01437975
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Deutsche Bank Securities Inc.
Page 61
EFTA01437976
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
flows), increases in interest rates naturally lift the discount factors
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Trading in options involves risk and is not suitable
EFTA01437977
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Page 62
EFTA01437978
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Deutsche Bank Securities Inc.
EFTA01437979
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
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EFTA01437980
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Page 63
EFTA01437981
18 October 2016
REITs
US REIT 3Q16 Earnings Preview
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Page 64
Deutsche Bank Securities Inc.
EFTA01437982
David Folkerts-Landau
Group Chief Economist and Global Head of Research
Raj Hindocha
Global Chief Operating Officer
Research
Anthony Klarman
Global Head of
Debt Research
Michael Spencer
Head of APAC Research
Global Head of Economics
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Head of EMEA
Equity Research
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EFTA01437983
Dave Clark
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Equity Derivatives Research
EFTA01437984
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