Timbercreek Real Estate Fund (RCS No. B 144.640) SOCIÉTÉ D’INVESTISSEMENT À CAPITAL VARIABLE – FONDS D’INVESTISSEMENT SPÉCIALISÉ ALTERNATIVE INVESTMENT FUND (AIF) ACCORDING TO THE LUXEMBOURG LAW OF JULY 12, 2013 ANNUAL REPORT AS OF DECEMBER 31, 2015
____ COMPANY: TIMBERCREEK REAL ESTATE FUND ____
Timbercreek Real Estate Fund (RCS No. B 144.640) Subfund: Timbercreek Real Estate Fund US REIT Fixed Income ANNUAL REPORT AS OF DECEMBER 31, 2015
Report of the Board of Directors
3
The Key Facts, At a Glance, Profit and Loss Accounts, Changes in Net Assets, Classification of Investments a.o.
5
Statement of Assets and Liabilities
8
Remuneration Disclosure
11
Information pursuant to Article 21 of the Law of July 12, 2013 on Alternative Investment Fund Managers
13
Notes to the Financial Statements
15
Report of the Réviseur d’Entreprises agréé
16
Appendix – Significant changes during the reporting period
17
Partners
18
1
This Annual Report does not constitute an offer or an
The Prospectus is available free of charge at the Company, at
invitation to purchase shares of the Company. Statements on
the Custodian Bank and at the paying and distribution agents
future performances cannot be made on basis of this Annual
mentioned in this Report.
Report.
This
Report
should
be
read
exclusively
in
conjunction with the most recent version of the Prospectus,
A statement of the changes to the schedule of investments
the Statutes of the Company and the latest Annual Report.
in the period under review is available free of charge from
the
Company,
distribution agents.
the
paying
agents
and
the
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Report of the Board of Directors
Fund does not include mortgage REITs and is currently underweight in the self-storage sector. The reason for less
Fund Performance
exposure to the self-storage sector is mainly based on
2015 was a challenging year for the broader markets overall
security specific valuation and lower coupons. At the same
as macro-economic and political events dominated news
time the Fund holds larger weights in the retail sector –
headlines causing lacklustre investment performance across
which show solid balance sheets – with the aim of achieving
most asset classes around the world. The collapse in oil
higher coupons and limiting risk. Our security selection
prices (-30,5 %) played havoc on countries and currencies
process remains driven by coupon, duration to call and cash
reliant on energy exports. China’s decision to devalue the
flow as well as balance sheet risk. At the end of the year the
Yuan exacerbated currency volatility while igniting fears that
duration to call was 4,4 years with a 7 % implied annual
China’s economy, and by extension the global economy, is
coupon.
growing more slowly than anticipated. Emerging markets buckled, the USD surged (+9,3 % vs. a basket of currencies
The Fund utilizes three month forwards to hedge currency
and +19,1 % vs. the CAD) and high yield bonds spreads
risk for the Euro denominated share classes.
widened by over 200bps (peak-to-trough) causing angst among fixed income investors. “Grexit” fears peaked in June,
During the reporting period the Fund generated a total return
although cooler heads ultimately prevailed. Elections in the
of 2,86 %* (performance of B d Shares) respectively 0,16 %*
U.K. produced a very friendly market reaction, eliminating
(performance of B a Shares).
an exogenous risk. Outlook Despite increased volatility across the capital markets and
We expect 2016 to be another year of solid property
fixed income all together, U.S. REIT preferred securities
fundamentals in the U.S. led by stable but peaking
exhibited strong capital preservation characteristics, with the
occupancy rates, rising rents and positive releasing spreads
Fund outperforming investment-grade bonds, high yield
on new and renewal leases. GDP growth in the U.S. is
bonds, U.S. and global equities. Balance sheets for U.S.
expected to remain steady despite an uneven global economy
REITs are strong, Funds from Operations continue to
with landlords maintaining the upper hand across most
increase (albeit at a modest pace) and companies continue to
property types in most markets.
prune non-core assets at good prices, thereby improving their overall portfolio mix. We are comfortable with current
We believe portfolios focused on the U.S. west coast will
leverage ratios as the sector is better positioned today than it
outperform
was in the last cycle, which we believe make preferred shares
industrial, class A regional malls and self-storage will
of U.S. REITs an attractive place to take shelter from market
exhibit the strongest fundamentals during 2016. We expect
volatility.
suburban office market conditions to remain neutral and for
their
east
coast
peers
while
multifamily,
senior housing to face higher levels of new supply while Preferred shares of the office and self-storage REITs
investors look for signs of stabilizing REVPAR growth in the
delivered the best returns while lodging, shopping centres
lodging sector. We anticipate the shopping centre sector to
and healthcare lagged in 2015. Healthcare was the only
experience strong fundamentals in 2016, supported by
sector that showed negative returns.
continued growth in rents, stable occupancy rates and little impact from new supply.
During the year, the Fund added eight new positions while exiting seven. All positions sold had upcoming redemption
As we move deeper into the cycle, we anticipate that markets
options which we believe potentially would be exercised by
will become more balanced with respect to trends in net
the company. We believe all newly-established positions own
absorption. We are beginning to see pockets of supply-
high quality assets and offer attractive dividend yields, good
induced softness such as the hotel market in New York City
call protection, valuations trading around par and fixed
and senior housing properties nationally. Although apartment
charge coverage ratios greater than 2.0x.
deliveries are trending above average, we believe demand will be strong enough in 2016 to absorb the new units
During the year, the Fund’s exposure to regional malls,
coming to market. Our expectation is that industrial
office, manufactured homes and self-storage increased while
development will continue to be met by growing demand for
exposure to hotels, shopping centres, and diversified REITs
space due to strong growth in e-commerce and internet retail
decreased.
sales.
The
portfolio
remains
fully
invested
and
diversified across 11 sectors. The investment universe of U.S. REIT preferred securities included 134 issues at the end
In a world where interest rates remain “lower for longer”,
of the year with a market cap of about USD 25 billion. The
macro-economic conditions are challenging and return
3
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
expectations continue to decline, we believe the total return potential and current dividend yield of approximately 7,0 % from U.S. REIT preferred securities is favorable both on an absolute and relative basis. With market volatility on the rise, we believe U.S. REIT preferred securities offer strong capital preservation characteristics which make the asset class defensive in times of uncertainty. We expect that the cash flows underlying the preferred security will grow in 2016, resulting in better balance sheets and better cash flow coverage ratios. For all the factors mentioned above, we are positive on the market for U.S. REIT preferred shares in 2016 and believe that a mid-to-high single digit current yield supported by growing cash flow will lead to an attractive total return for investors over the next 12 months.
Luxembourg, March 7, 2016 Timbercreek Real Estate Fund, SICAV For the Board of Directors
Dr. Sven Janssen
Gilles Dusemon
*) calculated according to Bundesverband Investment und Asset Management e.V. (BVI)
4
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
THE KEY FACTS Investment policy
THE KEY FACTS (CONTINUED)
debt securities of U.S. real estate
Management fee p.a.
investment trusts (REIT) or REIT
Ad Shares
up to 0,80 %
preferred stock that take priority
Aa Shares
up to 0,80 %
over REIT common share owners
Bd Shares
up to 0,80 %
Ba Shares
up to 0,80 %
German Security Code 1)
A0RCW5
Aa Shares 2)
A1W0RW
Ad Shares Bd Shares Ba Shares
or minimum fee Operational and Administration fee p.a.
A1W0RX
Ad Shares
up to 0,14 %
A1W0RY
Aa Shares
up to 0,14 %
Bd Shares
up to 0,14 %
ISIN-Code Ad Shares
1)
LU0398516285
Aa Shares
2)
LU0946841375
Ba Shares
up to 0,14 % or minimum fee
Bd Shares
LU0946841458
Depositary fee p.a.
Ba Shares
LU0946841532
Ad Shares
up to 0,08 %
02.02.2009
Aa Shares
up to 0,08 %
EUR
Bd Shares
up to 0,08 %
Incorporation date Fund currency
Ba Shares
Initial subscription date Ad Shares
up to 0,08 %
01.04.2009
Aa Shares 2)
-
or minimum fee Distribution related service fee p.a.
Bd Shares
10.09.2014
Ad Shares
none
Ba Shares
13.11.2013
Aa Shares
none
01.01. - 31.12.
Bd Shares
up to 1,00 %
01.01.2015 - 31.12.2015
Ba Shares
up to 1,00 %
Redemption fee
up to 0,50 %
Conversion fee
up to 0,50 %
Financial year Reporting period First offering price Ad Shares
100,00 EUR
Aa Shares 2) Bd Shares Ba Shares
-
Dividends
101,00 EUR
Ad Shares
101,00 EUR
Aa Shares Bd Shares
(incl. 1,00 % sales charge in respect of any B Shares) Value at issue Ad Shares Aa Shares 2)
100,00 EUR -
Bd Shares
100,00 EUR
Ba Shares
100,00 EUR
Minimum initial subcription
none accumulating (18.12.2014)
0,67911 EUR
(06.05.2015)
1,53110 EUR
Ba Shares
accumulating
1)
All shares have been redeemed with effect 18.12.2014.
2)
The share class has not been active yet as at the end of the reporting period.
AT A GLANCE
31.12.2015
Ad Shares
500.000,00 EUR
Total Net Assets (EUR million)
Aa Shares
500.000,00 EUR
Shares outstanding - Bd Shares
Bd Shares
125.000,00 EUR
Bid price - Bd Shares (EUR per share)
105,213
Ba Shares
125.000,00 EUR
Offering price - Bd Shares (EUR per share)
106,265
Sales charge
Shares outstanding - Ba Shares
51,56 236.620,000
233.593,266
Ad Shares
none
Bid price - Ba Shares (EUR per share)
114,157
Aa Shares
none
Offering price - Ba Shares (EUR per share)
115,299
Bd Shares
up to 1,00 %
Ba Shares
up to 1,00 %
The accompanying notes form an integral part of these financial statements.
5
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
DEVELOPMENT OF THE NET ASSET VALUE (IN EUR)
DEVELOPMENT OVER THE LAST 3 YEARS
Bd SHARES
VALUES AT FINANCIAL YEAR-END
Highest net asset value per share
Reporting period
in the reporting period
(11.02.2015)
108,649
Lowest net asset value per share in the reporting period
Total Net Assets
(16.12.2015)
(in EUR) 01.01.2012 - 31.12.2012
1.455.423,01
103,388
01.01.2013 - 31.12.2013
11.491.737,60
2,86 %
01.01.2014 - 31.12.2014
23.337.121,95
7,46 %
01.01.2015 - 31.12.2015
51.561.748,76
*)
Performance during the reporting period *)**)
Performance since inception
Performance over the last 3 years DEVELOPMENT OVER THE LAST 3 YEARS
20%
VALUES AT FINANCIAL YEAR-END 10%
Reporting period 4,48%
-Ad-
-Bd-
-Ba-
01.01.2012 - 31.12.2012
214,664
-
-
01.01.2013 - 31.12.2013
182,187
-
96,858
01.01.2014 - 31.12.2014
-
103,785
113,976
01.01.2015 - 31.12.2015
-
105,213
114,157
2,86%
0%
-10% 10.09.14 - 31.12.14
Net Asset Value per Share (in EUR)
01.01.15 - 31.12.15
Performance*) of the reporting periods in %
STATEMENT OF CHANGES IN SHARES OUTSTANDING DEVELOPMENT OF THE NET ASSET VALUE (IN EUR) Ba SHARES
FOR THE PERIOD FROM 01.01.2015 TO 31.12.2015 Bd SHARES
Highest net asset value per share in the reporting period
Number of shares outstanding
(04.02.2015)
116,392
Lowest net asset value per share in the reporting period
at the beginning of the reporting period Number of shares issued
(16.12.2015)
112,205
Performance during the reporting period*)
0,16 %
Performance since inception*)**)
14,16 %
Number of shares redeemed
20.000,000 218.318,000 -1.698,000
Number of shares outstanding at the end of the reporting period
236.620,000
Performance over the last 3 years 20%
STATEMENT OF CHANGES IN SHARES OUTSTANDING
17,67%
10%
0%
FOR THE PERIOD FROM 01.01.2015 TO 31.12.2015 0,16% -3,14%
Number of shares outstanding
-10% 13.11.13 - 31.12.13
Ba SHARES
01.01.14 - 31.12.14
01.01.15 - 31.12.15
Performance*) of the reporting periods in %
at the beginning of the reporting period
186.542,389
Number of shares issued
130.765,000
Number of shares redeemed
-83.714,123
Number of shares outstanding *) calculated according to BVI Bundesverband Investment und Asset Management e.V. **) Performance calculated from initial subscription day to end of reporting period.
at the end of the reporting period
Past performance is no indication of current or future performance. The performance data do not take account of commissions and costs incurred on the issue and redemption of shares.
6
The accompanying notes form an integral part of these financial statements.
233.593,266
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
CHANGES IN NET ASSETS (IN EUR)
PROFIT AND LOSS ACCOUNTS (IN EUR)
FOR THE YEAR FROM 01.01.2015 TO 31.12.2015
FOR THE YEAR FROM 01.01.2015 TO 31.12.2015
Net assets at the beginning
(INCL. INCOME EQUALISATION)
of the financial year
23.337.121,95
Income Dividends
Distributions
-189.291,42
Subscriptions Bd Shares
23.255.243,17
Subscriptions Ba Shares
15.077.180,24
Redemptions Bd Shares
-178.360,97
Redemptions Ba Shares
-9.413.399,57
Total proceeds from share transactions
Redemption fee
21.262,67
Income equalisation
-5.841,89
Total Income
Interest payable on bank deposits
28.740.662,87
46.857,00
Management fee
Taxe d'Abonnement Audit fee
Net investment result
1.869.980,45
Other expenses Expense equalisation
Realized gain/loss
Total Expenses
on investments
2.496.249,05
Expenses
Depositary fee
Income equalisation
2.480.828,27
-2.300,59 -476.018,08 -47.330,75 -5.343,98 -9.313,20 -44.946,89 -41.015,11 -626.268,60
1.134.389,31
on foreign forward exchange contracts
-3.199.051,02
Net investment result
Realized gain/loss
Net change in unrealized appreciation/depreciation
1.869.980,45
-2.064.661,71
Net change in unrealized
on investments
406.042,43
on foreign exchange
-346.280,78
on foreign forward exchange contracts
-238.682,03
Result of operations
-373.601,64
appreciation/depreciation
-178.920,38
Result of operations
-373.601,64
CURRENCY CLASSIFICATION OF INVESTMENTS
Total net assets at the end of the financial year
% of
51.561.748,76
net assets USD
GEOGRAPHIC CLASSIFICATION
99,58 99,58
OF INVESTMENTS % of net assets USA
99,58
SECTOR CLASSIFICATION OF INVESTMENTS % of
99,58
net assets Real Estate Investment Companies
99,58 99,58
The accompanying notes form an integral part of these financial statements.
7
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
STATEMENT OF ASSETS AND LIABILITIES AS OF 31.12.2015
Currency
Quantity Securities description
Price in
Market value
currency
(EUR)
*)
%
of
net assets
31.12.2015
Securities listed on an official stock exchange or dealt in on another regulated market
Shares USD
43.887 PS Business Parks Inc.
26,330
Total Shares
1.061.399,02
2,06
1.061.399,02
2,06
REITs USD
43.256 Brandywine Realty Trust 6.9% Pfd. S. -E-
26,760
1.063.223,07
2,06
USD
68.867 CBL & Associates Properties Inc.
24,950
1.578.242,16
3,06
24,700
3.064.734,04
5,94
25,780
1.550.423,52
3,01
6.625% Pfd. S. -EUSD USD
135.084 Cedar Realty Trust Inc. 7.25% Pfd. S. -B65.475 Corporate Office Properties Trust 7.375% Pfd. S. -L-
USD
43.283 DDR Corp. 6.25% Pfd. S. -K-
25,000
993.915,10
1,93
USD
46.577 Digital Realty Trust Inc. 6.625% Pfd. S. -F-
26,160
1.119.183,19
2,17
USD
78.546 Digital Realty Trust Inc. 7% Preferred Shs -E-
25,830
1.863.547,24
3,61
USD
64.735 EPR Properties 6.625% Pfd. S. -F-
25,310
1.504.954,00
2,92
USD
43.026 Equity Lifestyle Properties Inc.
25,500
1.007.773,84
1,95
24,800
1.892.381,66
3,67
6.75% Pfd. S. -CUSD
83.074 General Growth Properties Inc. 6.375% Pfd. S. -A-
USD
25,640
2.818.446,24
5,47
USD
119.674 GLIMCHER Inc. 7.50% Pfd. S.-H87.989 Hersha Hospitality Trust Corp. 8% Pfd. S. -B-
25,330
2.047.177,49
3,97
USD
71.877 Inland Real Estate Corp. 8.125% Pfd. S. -A-
25,280
1.669.010,00
3,24
USD
27.243 Kilroy Realty Corp. 6.375% Pfd. S. -H-
25,420
636.095,62
1,23
USD
25.110 Kimco Realty Corp. 6% Pfd. -I-
25,870
596.671,19
1,16
USD
50.403 Lasalle Hotel Properties 6.375% Pfd. S. -I-
25,470
1.179.172,27
2,29
USD
32.359 National Retail Properties Inc.
26,060
774.571,35
1,50
25,820
2.131.579,65
4,13
6.625% 1/100th Pfd. S. -DUSD USD USD
89.878 Pebblebrook Hotel Trust 8% Pfd. S. -B82.032 Pennsylvania REIT 7.375% Pfd. S. -B110.132 Pennsylvania REIT 8.25% Pfd. S. -A-
25,650
1.932.691,77
3,75
25,770
2.606.872,99
5,06
USD
21.500 Public Storage 6.35% Pfd. -R-
25,830
510.099,38
0,99
USD
24.998 Realty Income Corp. 6.625% Pfd. S. -F-
26,490
608.245,84
1,18
USD
44.402 Regency Centers Corp: 6.625% Pfd. Series -6-
26,450
1.078.748,33
2,09
USD
106.608 Retail Properties of America Inc. 7% Pfd. S. -A-
25,650
2.511.707,67
4,87
USD
108.721 Sabra Health Care REIT Inc. 7.125% Pfd. S. -A-
25,250
2.521.545,14
4,89
USD
48.125 SL Green Realty Corp. 6.5% Pfd. S. -I-
25,460
1.125.436,69
2,18
USD
118.868 Stag Industrial Inc. 6.625% Pfd. S. -B-
25,340
2.766.709,06
5,37
USD
54.488 Stag Industrial Inc. 9% Pfd. S. -A-
26,060
1.304.269,10
2,53
USD
97.347 Sun Communities Inc. 7.125% Pfd. S. -A-
25,760
2.303.352,24
4,47
USD
57.691 Taubman Centers Inc. 6.25% Pfd. -K-
25,500
1.351.263,90
2,62
8
The accompanying notes form an integral part of these financial statements.
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
STATEMENT OF ASSETS AND LIABILITIES AS OF 31.12.2015
Currency
Quantity Securities description
Price in
Market value
currency
(EUR)
*)
%
of
net assets
31.12.2015
USD
26.918 Welltower Inc. Cum Red 6.5% Pfd. S. -J-
25,840
USD
66.535 WP GLIMCHER Inc. 6.875% Pfd. S.-I-
25,085
638.891,67
1,24
1.533.049,55
2,97
50.283.984,96
97,52
or dealt in on another regulated market
51.345.383,98
99,58
Total Portfolio
51.345.383,98
99,58
Bank deposits
261.356,48
0,51
256.330,42
0,50
40,00
0,00
256.370,42
0,50
51.863.110,88
100,58
-40.370,14
-0,08
Depositary fee payable
-3.604,04
-0,01
Taxe d'Abonnement
-1.300,00
0,00
Liabilities on redemptions
-6.203,61
-0,01
-218.798,56
-0,42
Total REITs
Total Securities listed on an official stock exchange
Other assets Dividends receivable Other assets Total Other assets
Total Assets
Liabilities Management fee payable
Liabilities on foreign forward exchange contracts Other liabilities
-31.085,77
-0,06
-301.362,12
-0,58
51.561.748,76
100,00
Total Liabilities
Total Net Assets
Net Asset Value per Share
Number of Shares outstanding
Bd Shares
105,213 EUR
236.620,000
Ba Shares
114,157 EUR
233.593,266
*) The rounding down of the percentage in the calculation can result in marginal rounding differences.
The accompanying notes form an integral part of these financial statements.
9
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
OUTSTANDING FOREIGN FORWARD EXCHANGE CONTRACTS AS OF 31.12.2015
Sale USD
Purchase 53.100.000,00
EUR
48.479.868,53
Forward
Unrealized
Exchange
result
rate
(EUR)
(Valuta)
party
-218.798,56
29.02.2016
1)
The above-mentioned outstanding foreign forward exchange contracts were entered into with the following counterparties: Sal. Oppenheim jr. & Cie. Luxembourg S.A. (Member of Deutsche Bank AG Group)
No collaterals have been deposited for the above mentioned foreign forward exchange contracts.
10
Counter-
0,917112
-218.798,56
1)
Maturity
The accompanying notes form an integral part of these financial statements.
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Remuneration Disclosure
VaR utilization vs. P&L performance, credit risk weighted assets, cost management and operational performance.
Oppenheim Asset Management Services S.à r.l. belongs to Sal. Oppenheim, member of Deutsche Bank AG Group (DB).
Non-financial
Its businesses encompass a wide range of products and
performance rankings, client retention, contribution to
services incorporating investment, corporate and retail
franchise, role model behaviours, leadership and diversity
banking as well as asset and wealth management. DB is
standards.
qualitative
performance
metrics:
subject to the EU’s Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) as a credit
DB’s variable compensation pools are subject to appropriate
institution domiciled in Germany and regulated by the
risk adjustment measures which include ex-ante and ex-post
European Central Bank. DB Group (and its legal entities
risk adjustments. Ex-ante risk adjustments include both
subject to the provisions of AIFMD incl. Oppenheim Asset
quantitative and qualitative criteria. All deferred awards
Management Services S.à r.l.) is responsible for complying
granted to regulated employees/identified risk takers are
with the remuneration requirements of CRD IV and CRR.
subject to clawback provisions linked to the performance of the employee, the respective corporate division and the
DB is a global organization operating in all regions across
Group as a whole. In addition, all deferred awards are
the world. We operate and strongly support a “One Bank”
subject to clawback following a policy or regulatory breach
approach in relation to compensation to ensure employees
by the employee. All other employees of Oppenheim Asset
are globally governed under the same principles, policy and
Management Services S.à r.l. with a deferred compensation
procedures. This ensures a fully transparent, balanced and
award also have the award subject to specific Group and
equitable approach to compensation. We operate a Global
individual performance and behavioral based forfeiture
Reward Governance Structure within the German Two Tier
provisions.
Board Structure which oversees all aspects of compensation
DB Group Compensation Report, which is part of the
and compliance with the global regulatory requirements.
Financial Report 2014.
The AWM business comprises of Asset Management and
All risk takers identified under AIFMD, to the extent they
Wealth Management services offering a wide range of
were
traditional and alternative investment products. The DB legal
(minimum 40-60 %) which are determined by a DB Group-
entities of the AWM business that are impacted by AIFMD
wide matrix. Moreover the deferred amount will be subject
are
to a number of clawback provisions, relating to the group’s
all
within
the
AWM
Governance
framework.
For
detailed
identified,
are
information
subject
to
please
substantial
see
the
deferrals
Consequently, Oppenheim Asset Management Services
performance,
S.à r.l. is subject to three robust and structured governance
performance forfeiture and policy or regulatory breaches.
layers (DB’s Group Governance, DB’s AWM Divisional
For further information, especially for a detailed description
Governance and Oppenheim Asset Management Services
of
S.à r.l. Management Board Governance).
Compensation Report, which is part of the Financial Report
the
compensation
AWM
components
Division’s
please
see
performance,
DB
Group
2014. All employees of the DB Group and of Oppenheim Asset Management
Services
S.à
r.l.
are
subject
to
our
compensation philosophy and principles which is reviewed on an annual basis. For detailed information please see the DB Group Compensation Report, which is part of the Financial Report 2014 1) . To assess performance within a considered risk framework that aligns performance with the risk of the business, a number of financial and risk adjusted metrics are used over a multi-year time horizon together with non-financial qualitative factors. In order to assess individual performance over a multi-year period and therefore individual allocations, the following key metrics may be utilised (non-exhaustive list): Financial
and
risk
adjusted
performance
metrics:
revenues, Net Income Before Bonus and Taxes (NIBBT), fund
performance,
assets
under
management,
asset
growth/retention, investment performance, net new assets,
The accompanying notes form an integral part of these financial statements.
11
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Total compensation for financial year 2014:
Oppenheim Asset Management Services S.à r.l. Human resources annual average Total compensation Oppenheim Asset Management Services S.à r.l. fix part of compensation variable part of compensation Total compensation of Managing Directors and employees whose activities have a material impact on the risk profile of Oppenheim Asset Management Services S.à r.l. Total compensation of Managing Directors2) Total compensation of employees whose activities have a material impact on the risk profile of Oppenheim Asset Management Services S.à r.l.3)
1) 2)
50 4.139.961,88 EUR 3.577.272,63 EUR 562.689,25 EUR 4.720.500,00 EUR 4.720.500,00 EUR 0,00 EUR
https://www.deutsche-bank.de/ir/de/download/Deutsche_Bank_Finanzbericht_2014.pdf Managing Directors are the members of the Board of Directors of Oppenheim Asset Management Services S.à r.l. Not all Managing Directors received a compensation of Oppenheim Asset
Management Services S.à r.l. The compensation received by the Managing Directors concerned by other entities within the DB Group, was included in the calculation of total compensation of Managing Directors. 3)
Other employees whose activities have a material impact on the risk profile of Oppenheim Asset Management Services S.à r.l. have not been identified for fiscal year 2014.
12
The accompanying notes form an integral part of these financial statements.
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Information pursuant to Article 21 of the Law of July 12, 2013 on Alternative Investment Managers Details regarding illiquid assets Percentage of illiquid assets, which are covered by particular regulations as of reporting date: 14,61 %. Details concerning new regulations for liquidity management During the reporting period no regulatory changes have been enacted for liquidity management. Risk Profile of the AIF: The following risk figures have been calculated in order to assess the main risks as of the reporting date: a)
Market Risk
The interest rate sensitivity measure DV01 is the change in the Net Asset Value (NAV) of the fund if market interest rates increase uniformly by one basis point (bp). The equity sensitivity, the so called Net Equity Delta, is the change in the NAV of the fund if share prices of equity positions in the portfolio increase uniformly by 1 %. The currency sensitivity, the so called Net Currency Delta, is the change in the NAV of the fund if currency prices of positions in the portfolio increase uniformly by 1 %. -2,83 511.573,93 28.472,79
DV01 Net Equity Delta Net Currency Delta (Information in Euro.)
The Regulatory limit (200 %) and the Market Risk limit (150 %) have not been exceeded. b)
Counterparty Risk
OTC counterparties with the highest market value of OTC derivatives of the AIF: OTC Counterparty Deutsche Bank AG
Percentage of NAV of the AIF -0,42 %
The counterparty risks can be reduced by collaterals, if applicable. Counterparties have the right to reuse collateral. c)
Liquidity Risk
Percentage of the portfolio assets that can be liquidated within the following periods at fair prices and with minimum market disruption.
1 Day or Less
2-7 Days
0,84 %
40,81 %
Percentage of NAV of the AIF 8-30 Days 31-90 Days 91-180 Days 25,58 %
18,16 %
181-365 Days
0,00 %
0,00 %
More than 365 Days 14,61 %
Value of free cash: 261.356,48 EUR Implemented Risk Management Systems Risk Controlling is executed based on internal Risk Management guidelines by a department that is independent from the portfolio management. In particular, Risk Controlling covers continuous Risk Management process for detection, evaluation and monitoring of Market, Liquiditiy and Counterparty Risks as well as the monitoring of leverage. Additionally, results from reasonable stress test scenarios for Market and Liquidity Risks are used by Risk Controlling and Portfolio Management for estimating the effect on portfolio risk that appear to be due to single investment positions. To measure market risks on a daily basis, a relative Value-at-Risk approach via historical simulation is used.
The accompanying notes form an integral part of these financial statements.
13
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Change of the Maximum Scope for Leverage No changes related to the maximum scope for leverage occurred during the reporting period. Overall Value of Leverage Leverage
Minimum
Maximum
Average
Limit
Gross Leverage
0,92
1,07
1,00
3,00
Commitment Leverage
0,96
1,11
1,02
3,00
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The accompanying notes form an integral part of these financial statements.
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Notes to the Financial Statements
During the financial year the fund paid an amount of EUR 184.968,25 as transaction fees for the sales and
Timbercreek Real Estate Fund (the "SICAV") is an open-
purchases of securities.
ended umbrella investment company with variable capital (société d’investissement à capital variable) specialised
Unrealized profits and losses resulting from the valuation of
investment
securities are taken into account in the result.
fund
(fonds
d'investissement
spécialisé)
registered in the Grand Duchy of Luxembourg on the official list of specialised investment funds pursuant to the
All liquid assets are valued at their nominal value.
Luxembourg law of 13 February 2007 relating to specialised investment funds. The SICAV is to be qualified as AIF
The total net assets of the existing sub-fund Timbercreek
within the meaning of the Luxembourg law of 12 July 2013
Real Estate Fund US REIT Fixed Income are expressed in
on alternative investment fund managers, as amended and/or
EUR, the value per share is expressed in the currency of
replaced from time to time.
each share class.
During the reporting period there were no structural changes
All assets and liabilities not expressed in EUR are converted
made to the Company.
into
EUR
at
the
exchange
rates
prevailing
as
of
December 31, 2015. Subsequent Event: -
Mr. Marco Schmitz left the Board of Directors with
US-Dollar
USD
1,088700
= EUR 1
effect February 11, 2016. As the payment for the depositary (up to 0,08 % p.a. or The accounting currency of the SICAV is EUR.
minimum fee), the remuneration of the fund administrator (management fee up to 0,80 % p.a., operational and
Due to the fact that Timbercreek Real Estate Fund only
administration fee up to 0,14 % or minimum fee) is
consisted of one sub-fund, the Timbercreek Real Estate Fund
computed on the basis of the daily Net Asset Value
US REIT Fixed Income, during the financial year, the
calculation. These are calculated and paid at the end of each
composition of the Total Net Assets, the Changes in Net
month. During the reporting period the management
Assets and the Statement of Operations of the Timbercreek
company
Real Estate Fund US REIT Fixed Income corresponds at the
EUR 476.018,08 (incl. operational and administration fee)
same time to the combined statements of Timbercreek Real
and the depositary received a depositary fee amounting to
Estate Fund.
EUR 47.330,75.
The financial accounts have been prepared in accordance
The Total Expense Ratio (TER) indicates the costs on the
with Luxembourg regulations relating to investment funds.
fund’s total assets for the year from January 1, 2015 until
received
a
management
fee
amounting
to
December 31, 2015. With the exception of the transaction Securities listed on a stock exchange or traded on any
costs, all costs of the fund are shown in relation to the
regulated market are valued at the last available price on that
average total fund assets.
stock exchange or market. Securities and other investments that are not listed on a
TER (in %) 1,15 1,19
B d Shares B a Shares
stock exchange or traded on another regulated market, and for which no appropriate price can be obtained, will be
Under Luxembourg legislation and regulations, the fund is
valued on the basis of valuation models. Valuation models
subject
are also used for securities and other investments for which
d’Abonnement“) of 0,01 % per annum of the fund’s net
no transactions are available.
assets.
The cost of securities is the weighted average cost of all the
Income, subject to taxation, includes an income equalization,
purchases of these securities. For securities that are priced in
representing the net income realized during the financial
a currency other than the fund’s currency, the average cost is
year, which is included in the subscription price and thus
calculated with the exchange rate of the purchase date.
paid by the subscriber and also included in the redemption
to
an
annual
subscription
tax
(„Taxe
price and thus paid out to the redeemer. The net realized profit and loss on sales of securities is determined on the basis of the average cost of the securities sold.
15
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Report of the Réviseur d’Entreprises agréé
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
Report on the financial statements
opinion.
Following our appointment by the ordinary general meeting of the Shareholders, we have audited the accompanying
Opinion
financial statements of Timbercreek Real Estate Fund,
In our opinion, the financial statements give a true and fair
SICAV and each of its sub-funds, which comprise the
view of the financial position of Timbercreek Real Estate
statement of net assets and the statement of investments and
Fund, SICAV and each of its sub-funds as of December 31,
other net assets as at December 31, 2015 and the statement
2015, and of the results of their operations and changes in
of operations and the statement of changes in net assets for
their net assets for the year then ended in accordance with
the year then ended and a summary of significant accounting
Luxembourg legal and regulatory requirements relating to
policies and other explanatory information.
the preparation of the financial statements.
Board of Directors of the SICAV responsibility for the
Other matter
financial statements
Supplementary information included in the annual report has
The Board of Directors of the SICAV is responsible for the
been reviewed in the context of our mandate but has not
preparation
been subject to specific audit procedures carried out in
and
fair
presentation
of
these
financial
statements in accordance with Luxembourg legal and
accordance
regulatory requirements relating to the preparation of the
Consequently, we express no opinion on such information.
financial statements, and for such internal control as the
However, we have no observation to make concerning such
Board of Directors of the SICAV determines is necessary to
information in the context of the financial statements taken
enable the preparation of financial statements that are free
as a whole.
with
the
standards
from material misstatement, whether due to fraud or error. Responsibility of the Réviseur d’Entreprises agréé
Luxembourg, April 14, 2016
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
KPMG Luxembourg, Société coopérative
accordance with International Standards on Auditing as
Cabinet de révision agréé
adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Petra Schreiner
financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The
procedures
selected
depend
on
the
judgement of the Réviseur d’Entreprises agréé, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the Réviseur d’Entreprises agréé considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies
used
and
the
reasonableness
of
accounting estimates made by the Board of Directors of the SICAV, as well as evaluating the overall presentation of the financial statements.
16
described
above.
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Appendix – Significant changes during the reporting period In accordance with Article 20 (2) d) of the Law of July 12, 2013 on Alternative Investment Fund Managers the Management Company informs below on significant changes of the fund during the reporting period.
Item
Concerning AIF / AIF-segment
Description of significant changes
Potential or expected impact of the principal changes for the investor
1
Timbercreek Real Estate Fund US REIT Fixed Income
-
-
Date of occurence of principal changes -
17
Timbercreek Real Estate Fund US REIT Fixed Income / Annual Report as of December 31, 2015
Partners COMPANY / AIF:
Timbercreek Real Estate Fund Société d’Investissement à Capital Variable RCS Luxembourg: B 144.640 Registered office of the AIF: 2, Boulevard Konrad Adenauer, L-1115 Luxembourg
BOARD OF DIRECTORS:
Chairman: Dr. Sven Janssen Schillerstrasse 27-29, D-60313 Frankfurt Mr. Gilles Dusemon 14, rue Erasme, L-2082 Luxembourg Mr. Marco Schmitz (until February 11, 2016) AIFM, CENTRAL ADMINISTRATIVE AGENT:
Oppenheim Asset Management Services S.à r.l. 2, Boulevard Konrad Adenauer, L-1115 Luxembourg Capitalisation: Euro 2,7 million (status: January 1, 2015) DEPOSITARY, REGISTRAR AND TRANSFER AGENT:
Sal. Oppenheim jr. & Cie. Luxembourg S.A. 2, Boulevard Konrad Adenauer, L-1115 Luxembourg Capitalisation: Euro 50 million (status: January 1, 2015)
AUDITOR:
KPMG Luxembourg, Société coopérative 39, Avenue John F. Kennedy, L-1855 Luxembourg
LEGAL ADVISOR:
Arendt & Medernach S.A. 41A, Avenue John F. Kennedy, L-2082 Luxembourg
INVESTMENT MANAGER:
TIMBERCREEK Asset Management Ltd. 25 Price Street Toronto, Ontario, Canada M4W 1Z1
18
Timbercreek Real Estate Fund, SICAV 2, Boulevard Konrad Adenauer 1115 Luxembourg Luxembourg
Phone +352 2215 22-1 Fax +352 2215 22-500 www.oppenheim.lu
