Invesco Overview January 2019 The following presentation is being provided to you as an institutional client in response to your request. This educational presentation is intended to assist your internal analysis and is not for further distribution. It should not be the basis for any investment decision nor is it an offering to buy or sell any security. All materials are compiled from sources believed to be reliable, but accuracy cannot be guaranteed. Past performance is not indicative of future returns. INVESCO REAL ESTATE North America: Dallas San Francisco Newport Beach New York Atlanta Europe: London Paris Munich Prague Madrid Luxembourg Asia Pacific: Beijing Hong Kong Shanghai Tokyo Seoul Singapore Sydney
Executive Summary Invesco Real Estate is one of the largest real estate investment management firms globally with $64.1 billion in assets as of September 30, 2018 Invesco Real Estate benefits from the firm s exclusive focus on investment management and performance driven culture Invesco Real Estate offers clients access to a range of global investment strategies spanning from core to opportunistic in the private and public space Invesco Real Estate is a highly stable organization The Global Senior Management Team is comprised of 43 Managing Directors with an average tenure of 16 years with Invesco and 27 years of industry experience. Jefferson Marketplace Apartment Washington DC, US Approximately 400 institutional relationships actively investing across risk/return spectrum in core, value-add, and opportunistic strategies globally. Our team aims to optimize risk-adjusted returns for our clients through maximizing the consistency of investment returns while minimizing the risk of capital loss Southside Retail London, UK 77 King Street Office Sydney, Australia 2 Photographs shown above represent recently acquired core real estate assets. For illustrative purpose only. Performance was not a criteria for selection.
Invesco Ltd. is a leading independent global investment management firm We have one culture with a broad range of distinctive investment capabilities united by our shared purpose. We are differentiated by: We are privileged to be trusted with managing $980.9 billion in assets on behalf of clients worldwide. US & Canada UK & Continental Europe Specialized investment teams managing investments across a comprehensive range of asset classes, investment styles and geographies More than 7,000 employees across the globe focused on client needs Proximity to our clients with on-theground presence in more than 25 countries Solid corporate financials, investment grade debt rating and strong balance sheet Asia Australia 3 All data as of September 30, 2018. AUM figure includes all assets under advisement, distributed and overseen by Invesco.
Invesco Real Estate As of September 30, 2018 $64.1 Billion Under Management 491 Employees Worldwide; 21 Offices; 16 Countries San Francisco Newport Beach New York Dallas Atlanta Luxembourg London Warsaw Paris Prague Madrid Munich Milan Beijing Seoul Shanghai Tokyo Hong Kong Hyderabad Singapore North America Europe Asia Sydney 215 Employees 151 Employees 125 Employees North American Direct $31.0 Billion Since 1983 Global Securities $15.6 Billion Since 1988 European Direct $11.5 Billion Since 1996 Asian Direct $6.0 Billion Since 2006 4 Source: Invesco Real Estate (IRE) September 30, 2018
Who do we invest for? Institutional & high net worth investors Public Pension Funds - Funds for retirement savings - Government or public sector employees Corporate Pension Funds - Arrangement between a company and its employees, or the employees' union - Provides funding for the employees' retirement Foundations/Endowment Funds - Investment fund established by a foundation - Often used by universities, nonprofit organizations, churches and hospitals - Generally utilized for specific needs or to further a company s operating process Sovereign Wealth Funds - State-owned fund that invests in real and financial assets (stocks, bonds, real estate, etc.) - Invest globally Insurance Companies - Accumulate substantial amounts of cash that are used to purchase invested assets - Assets accumulated by insurers include those associated with the company s policyholders surplus (or capital), as well as assets that support the insurance company s policy reserves, which are used to pay policyholder obligations as they become due Taft Hartley Funds - Multiemployer benefit trust funds - Created solely for the benefit of collectively bargained employees High Net Worth - individuals or a families with liquid assets above a certain figure
Invesco Market Coverage National reach; local presence San Francisco 2 Investment Sourcing Teams 5 Asset Management Teams 2 Portfolio Management Teams Product Management Client Portfolio Management New York 3 Investment Sourcing Teams 5 Asset Management Teams Portfolio Management Client Portfolio Management Newport Beach 3 Investment Sourcing Teams 4 Asset Management Teams Portfolio Management Client Portfolio Management Atlanta Client Portfolio Management Dallas - Headquarters Investment Sourcing Asset Management Portfolio Management Research Product Management Client Portfolio Management Accounting Corporate IRE regional offices Qualified markets As of September 2018 6
Portfolio: Property Types $31 Billion as of 3Q-2018 Office portfolio: Centers of global comparative advantage $11.2 billion/38% of portfolio Apartment portfolio: Urban, walkable, transit-oriented $9.3 billion/31% of portfolio 101 Second San Francisco Cadence Denver Retail portfolio: Unique goods, services & experiences $5.8 billion/20% of portfolio Industrial portfolio: Ports, population & strong functionality $3.5 billion/12% of portfolio Legacy West Dallas Empire Gateway Riverside 7
Portfolio: Geography $31 Billion as of 3Q-2018 Midwest $0.9 billion 3% of portfolio East $8.6 billion 29% of portfolio West $12.4 billion 42% of portfolio South $7.8 billion 26% of portfolio
Global Property Market Research Platform An Understanding of Market Fundamentals Drives Our Investment Strategies San Francisco Newport Beach Dallas Atlanta New York Madrid London Paris Munich Milan Prague Luxembourg Warsaw Tokyo Seoul Beijing Shanghai Hong Kong Singapore Sydney Dedicated team of 17 real estate market researchers with an average experience of 16 years. Property Market research is a separate global function providing a resource for the whole firm. Invesco Real Estate Office Location Invesco Real Estate Office and Research Location Leads the Invesco Real Estate House View process. Tim Bellman, Head of Global Research (2) * Mike Sobolik Head of North American Research US Property Market Research Team (5) * Michael Beseell Head of European Research European Property Market Research Team (5) * Thomas Au Head of Asia Pacific Research Asia Pacific Property Market Research Team (5) * 9 Source: Invesco Real Estate. Data as of September 30, 2017. * (#) shows number of real estate market researchers within the applicable area.
E-commerce/Last Mile Delivery Overview January 2019 The following presentation is being provided to you as an institutional client in response to your request. This educational presentation is intended to assist your internal analysis and is not for further distribution. It should not be the basis for any investment decision nor is it an offering to buy or sell any security. All materials are compiled from sources believed to be reliable, but accuracy cannot be guaranteed. Past performance is not indicative of future returns. INVESCO REAL ESTATE North America: Dallas San Francisco Newport Beach New York Atlanta Europe: London Paris Munich Prague Madrid Luxembourg Asia Pacific: Beijing Hong Kong Shanghai Tokyo Seoul Singapore Sydney
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 Planned Ecommerce growth Online growth changing supply chains, driving demand; Amazon dominates Ecommerce sales (Rolling 4Q total, $Bil.) Amazon US fulfilment center openings (Mil. SF) $500 Sales (LHS) Share of retail sales (RHS) 13 35 $450 $400 $350 12 11 10 9 30 25 $300 8 20 $250 $200 $150 7 6 5 4 15 10 $100 $50 $0 3 2 1 0 5 0 E-commerce sales as a share of total retail sales, excluding autos and parts, food and drinking places, and fuel dealers Includes fulfillment, sortation, delivery, and fresh pantry centers 11 E-commerce sales as a share of total retail sales, excluding autos and parts, food and drinking places, and fuel dealers. Source: Invesco Real Estate using data from Moody s Analytics and MWPVL International as of August 2018
2010 2011 2012 2013 2014 2015 2016 2017 Last-mile logistics Consumers demanding speedier delivery, driving logistics closer to population Average daily parcel deliveries in US by major companies (Mil) UPS Ground FedEx Ground USPS Parcel Select 35 30 Driven by the growth of online retail, domestic parcel deliveries have nearly doubled since 2010. Consumers are demanding speedier delivery of packages, accentuated by Amazon Prime s two-day promise. 25 20 15 10 5 But, the last mile of the delivery chain can be costly, by some estimates representing about 50% of total delivery costs. As a result, retailers and parcel services are to looking to become more efficient and seek last-mile distribution points closer to consumers. This is creating demand for infill industrial product for sortation and delivery, particularly in large, densely populated markets. 0 This product is often older and may come with functional challenges, but location and access is typically more important than ceiling height. 12 Source: Invesco Real Estate using data from company annual reports as of August 2018 From an investment perspective, infill product may also offer the potential to be converted to other uses at some point in the future.
Last Mile Logistics E-commerce driven What is last mile logistics? It is the final step of the delivery process that involves the use of parcel or small package carriers to deliver products to consumers Although the name implies, it is the final mile delivery, actual last mile delivery can range from a few blocks to 50 or 100 miles, Last Touch Last mile logistics allow shippers to get more products to consumers faster and cost-effectively, critical concerns in the e-commerce and omnichannel supply chain. In fact, consumers are willing to pay premiums for better last mile delivery services, such as same-day or instant delivery Shippers of all sizes have identified last mile logistics as the cornerstone to driving growth and profitability 13 Source: Invesco Real Estate using data from Green Street Advisors, US Industrial Outlook, January 19, 2018
Last Mile Logistics Line to loop Logistics networks have evolved from line to loop, reconfiguring and decentralizing the consumption end of the supply chain, thereby fragmenting the last mile It takes more space to fulfill individual requirements than shipping bulk goods to and from a central warehouse Emphasis on greater levels of service with home deliveries, the dominant method of receiving goods, coupled with consumer demand for more flexible and speedy delivery is pushing the last mile into the urban core where consumption is rising fastest 14 Source: Invesco Real Estate using data from CBRE as of December 2018
Facility Size Urban Infill Facility Breakdown Facility types within markets differ depending on function Single story warehouse/ Nonwarehouse adaptive re-use (3,4) Key features to make successful deliveries include: Location Access to consumers & labor Facility Size & Quality Functionality Ingress & Egress Parking Building Attributes Zoning 15 Source: Invesco Real Estate. Data as of January 2019
Facility Size Examples Sortation Center ~100 500,000 Sq Ft Fulfillment Center ~500k - 1,000,000 Sq Ft Delivery Station ~60 100,000 Sq Ft Delivery Stations - Mid-sized facilities typically between 60-100,000 sq. ft. - Represent the last leg of the delivery network - Customer packages travel from the Fulfillment Centers to the regional Sort Centers and finally end up at the local Delivery Station - Packages are sorted by zip code and then dispatched directly to the customer via delivery service providers (couriers) 16 Source: Invesco Real Estate using Costar Data as of January 2019. For illustrative purposes only. It does not constitute recommendation or advice.
Disrupters Ahead Impact of technology could add uncertainty to mid/longer term outlook Autonomous vehicles Delivery drones Robotics Timing varies for widespread acceptance, but these technologies are moving fast. Potential implications are primarily related to location. Autonomous trucks may allow distribution centers to move further from population centers; distance no longer constrained by driver hours, trucks could drive 24/7. Drones or delivery robots may impact location of lastmile properties. Use of robotics may reduce the need for labor as a primary location driver dark warehouses can be anywhere. 17 Source: Invesco Real Estate as of August 2018