Dexus Convenience Retail REIT · ASX:DXC
Dexus Convenience Retail REIT — APN Property Group — FY2018 Earnings Presentation
35 slides from Dexus Convenience Retail REIT's earnings presentation, Aug 23, 2018
Slide 1: FY2018 Results Presentation
FY2018 RESULTS PRESENTATION 23 AUGUST 2018 www.apngroup.com.au ASX Code: APD
Slide 2: FY2018 financial highlights
FY2018 financial highlights $8.2 million ▲12% pcp, 2.63 cents per share (cps) OPERATING EARNINGS1 Statutory NPAT: $13.6 million ▲27% pcp 97% income from recurring sources FUM $2.8 billion ▲$308 million, 12% 2 2.25 cps fully franked ▲13% DIVIDENDS Interim: 1.25 cps Final: 1.00 cps NTA: 37.7 cps BALAN
Slide 3: FY2018 operational highlights
FY2018 operational highlights Strong income focused returns achieved across the group ✓ Securities funds continue to generate strong income performance – true to ‘property for income’ label − FUM increased over $130 million, Asian REIT FUM increased 85% − Leadership succession plan implemented ✓ Str
Slide 4: Strong performance over five years
Strong performance over five years Dividend covered with recurring income and has increased 80% over this period Recurring Income Growth Total Shareholder Return $5,000 $4,042 $4,000
Slide 5: Strong operating earnings growth
Strong operating earnings growth Income Statement ($000s) FY2018 FY2017 Change Reflects additional assets acquired by Convenience Funds management fees 14,195 12,873 ▲ 10% Retail REIT (CRR) and full year contribution of WesTrac Performance & transaction fees 670 845 ▼ 21% in Industria REIT (IDR) Ass
Slide 6: Well capitalised for future growth
Well capitalised for future growth Balance Sheet ($000s) June 2018 June 2017 Change Cash1 14,986 18,640 ▼ 20% ▪ Includes $71.1m in IDR at $2.65 per security – IDR NTA now $2.70 (weighted average cap rate of 6.6%) Co-investments 102,201 77,820 ▲ 31% ▪ Includes co-investment in CRR as part of ASX list
Slide 7: Real Estate Securities
Real Estate Securities ▪ Leadership transition implemented, staged handover to Pete Division FuM growth Morrissey from Michael Doble $1,668m $1,571m $1,534m ▪ $81 million in net inflows into AREIT strategy, $7 million per month average (albeit slower last half year) $1,215m ▪ Wholesale mandate growi
Slide 8: APN Asian REIT Fund – undiscovered investment opportunity
APN Asian REIT Fund – undiscovered investment opportunity ▪ Asian REIT Fund $24 million of FuM at 30 June 2018, up 85% ▪ Achieved Lonsec Research ‘Investment Grade’ rating (July 2018) and SQM Research ‘Superior’ rating (June 2018) ▪ Institutional investment grade Asian commercial property (all liste
Slide 9: Industria REIT
Industria REIT FY2018 highlights ▪ FFO increased 2.2% year on year to 18.5 cps, in line with guidance ▪ 5.1% increase in NTA; reduced gearing to 31.0% ▪ Client engagement continues to generate leasing outcomes – completing 13,600 sqm, only 2% income expiring in FY2019 ▪ $15.7 million post balance da
Slide 10: Convenience Retail REIT
Convenience Retail REIT FY2018 highlights ▪ Listed on ASX on 27 July 2017 ▪ FFO 18.5 cps - above PDS forecast of 18.2 cps ▪ NTA increased by 14 cps to $2.87 – up 5.1% since IPO ▪ Four properties acquired totalling $27.4 million1 post listing Outlook ▪ Well positioned – sustainable and growing income
Slide 11: Direct Property
Direct Property Achievements $ million FuM ▪ APN Steller Development Fund – progressing well with 4 out of 6 APN Regional Property Fund $53 projects complete, and on track to deliver investors 18% IRR ▪ Maintaining active leasing strategy and portfolio management APN Coburg North Retail Fund $21 res
Slide 12: Direct Property – active but disciplined approach
Direct Property – active but disciplined approach 66 Vendor asking prices properties reviewed $1.4 billion $580 million 12% and conducted value of property value of offers above internal preliminary due transactions assessed submitted valuation assumptions diligence We are prepared to wait for super
Slide 13: APN Nowra Property Fund – new wholesale syndicate
APN Nowra Property Fund – new wholesale syndicate ▪ New Large Format Retail property investment opportunity – with a Investment type Single asset 5 year close ended unlisted property fund 13 year remaining lease term to Home Consortium Group Distributions 7.80% pa initial forecast yield* guaranteed
Slide 14: Market commentary and APN outlook
Market commentary and APN outlook Market and industry dynamics APN outlook and positioning ▪ Low interest rate environment continuing ▪ Excellent industry dynamics - growing superannuation sector ▪ Prices for risk assets (equities, property) remain high by most ▪ ‘Property for income’ products conti
Slide 15: Growth opportunities
Growth opportunities REAL ESTATE SECURITIES NEW PRODUCTS ▪ Expanding inflows into Securities Funds ▪ New products under active consideration ▪ Continue momentum growth of Asian Real Estate ▪ Leverage track record, equity raising platform Securities Fund ▪ Income orientated products remain in high de
Slide 16: Earnings and dividend guidance
Earnings and dividend guidance Subject to continuation of current market conditions FY2018 FY2019 Guidance Results Guidance Guidance only includes transaction / Includes recurring as well as Guidance only includes transaction / performance revenue items which transactional and performance based perf
Slide 17: Stapling proposal – update
Stapling proposal – update ▪ A stapled structure is essentially a trust contractually linked with Listed Stapled Security a company – with each unit in the trust stapled to a share in the APN Property Group (ASX: APD) Background company and traded on ASX as a single stapled security ▪ Board has revi
Slide 18: Stapling proposal – indicative financial impact
Stapling proposal – indicative financial impact Proposed stapled group - pro-forma key assumptions (for indicative purposes only): ▪ Requisite shareholder approval is obtained ▪ Majority of co-investments (75% CRR and 100% each of IDR and APN Asian REIT Fund) transferred to stapled Trust effective 1
Slide 19: Appendices
APPENDICES APN | Property Group 19
Slide 20: Overview
Overview Specialist real estate investment manager with a ‘Property for income’ focus As at 30 June 2018 APN PROPERTY GROUP LIMITED $2.8 BILLION FUM REAL ESTATE CONVENIENCE INDUSTRIA REIT DIRECT PROPERTY SECURITIES RETAIL REIT $664 MILLION FUM $127 MILLION FUM $1,668 MILLION FUM $343 MILLION FUM BAL
Slide 21: Overview – share price and volume
Overview Summary Share Price and Volume ▪ Listed on ASX (Code: APD) Volume (RHS) Price (LHS) $0.50 20.0k ▪ Melbourne-based specialist real estate investment Volume (daily shares traded) $0.45 manager 15.0k Share price $0.40 ▪ Established 1996, listed 2005 10.0k ▪ $2.8 billion in Funds under Manageme
Slide 22: Boards and Management team
Boards and Management team Experienced real estate team, Independent Boards Board of Directors – APN Property Group Limited Independent Responsible Entity – APN Funds Management Limited Chris Aylward ▪ Over 30 years experience in property and construction industry Geoff ▪ Chairman since April 2012 a
Slide 23: Established Equity Raising and Distribution Platform
Established Equity Raising and Distribution Platform Over 20 years APN has built a broad market distribution reach ▪ All the major institutional and independent brands Wraps and Platforms ▪ Market leading wraps and private labels for independents and private wealth ▪ ASX mFund availability through a
Slide 24: Funds under Management Summary
Funds under Management Summary Fee Basis APN Co-investment FuM Funds Sector Investors Manage- Perfor- $m Other $m % ment mance APN AREIT Fund Property Securities Retail & Institutional 1,262 ✓ − − APN AREIT Mandates Property Securities Institutional 198 ✓ − − APN AREIT PIE Fund Property Securities R
Slide 25: Direct property platform with scale and multiple capabilities
Direct property platform with scale and multiple capabilities $1.2 billion of properties across platform $395m $332m QLD $374m Office Industrial 52 Retail $223m 13 Office $151m $385m $53m Retail Development NSW $538m 4 Office $244m 1 Industrial $197m WA $36m SA $14m 9 Retail $97m 7 Retail $36m 1 Ind
Slide 26: Implied Funds Management platform valuation
Implied Funds Management platform valuation1 Market implied value of funds management platform of $23.1m based on $2.8bn FuM = 0.8% 50.0 45.0 Total co-investments of $102.2m 7.3 40.0 (2.2) A$ cents per share 35.0 4.8 1.6 4.4 30.0 25.0 8.3 45.0 20.0 15.0 10.0 20.8 5.0 0.0 IDR 2 CRR Other co- Investme
Slide 27: Profit to operating cash flow reconciliation
Profit to operating cash flow reconciliation $’000s Cashflow Reconciliation ($’000s) June 2018 June 2017 16,000 Statutory profit after tax 13,565 10,691 14,000 13,565 (7,996) Add/(deduct): 12,000 Non-controlling interests - 64 3,491 10,297 10,000 Mark to market revaluations (7,996) (4,520) Non-cash
Slide 28: Operating Profit After Tax Reconciliation
Operating Profit After Tax Reconciliation $‘000s 12,000 2,190 (348) (2,399) 10,000 1,322 (175) (102) (218) 621 8,211 8,000 7,320 6,000 4,000 2,000 - Operating Increase in funds Decrease in Decrease in Decrease in Increase in co- Decrease in rent Increase in Decrease in tax Operating earnings after t
Slide 29: Debt facility summary
Debt facility summary Corporate debt facility Asset debt facility Facility Limit $8.0 million Facility Limit $10.5 million Drawn at 30 June 2018 $6.0 million Drawn at 30 June 2018 $10.5 million Loan to Value Ratio (LVR) 9.7% Loan to Value Ratio (LVR) 43.5% LVR Covenant < 35.0% LVR Covenant < 50.0% D
Slide 30: APN Steller Development Fund
APN Steller Development Fund ▪ Established September 2015 Investment type Multi-site residential development, closed-end wholesale unlisted property fund ▪ All six projects are located within sought after locations in Development 209 apartments over 6 medium density projects in South East Melbourne’
Slide 31: APN Development Fund No. 2
APN Development Fund No. 2 Fund overview ▪ Wholesale fund – institutional investors ▪ Committed equity $58 million ▪ Capital returned $10 million 150 Collins St – Westpac Head Office ▪ JV development ▪ Completed November 2014 ▪ Sold via fund through ▪ Grocon litigation progressing Ingles St, Port Me
Slide 32: APN Coburg North Retail Fund
APN Coburg North Retail Fund ▪ Recently completed (2014) shopping centre anchored by Woolworths supermarket Investment type Single asset, closed-end unlisted property fund ▪ Woolworths continue to perform well with solid sales Investment objective Stable income and capital growth growth Property Cob
Slide 33: APN Regional Property Fund
APN Regional Property Fund Commercial office property fund, listed on the National Stock ▪ Net tangible assets at 30 June 2018 is $1.41 per unit, an Investment type Exchange (NSX) increase of 15.6% from the previous year The Fund comprises two A-grade office buildings located in ▪ Assets currently u
Slide 34: Disclaimer
Disclaimer The financial information included in this presentation is based on APN Property Group’s financial statements and results that have been prepared in accordance with the Corporations Act 2001 (Cth), applicable Accounting Standards and Interpretations and in compliance with other applicable
Slide 35: Contact details
Contact details APN Property Group Limited Follow @apngroup Tim Slattery Michael Groth Chief Executive Officer Chief Financial Officer +613 8656 1000 +613 8656 1000 tim.slattery@apngroup.com.au mgroth@apngroup.com.au ASX Code: APD APN Property Group Limited Level 30,101 Collins Street, Melbourne, Vi