Abacus Group · ASX:ABG
Abacus — Investor Presentation (February 2023)
44 slides from Abacus's investor presentation, Feb 16, 2023
Slide 1: HY23 Results Presentation
HY23 RESULTS PRESENTATION 16 FEBRUARY 2023
Slide 2: Acknowledgement of the Traditional Owners
ABACUS ACKNOWLEDGES THE TRADITIONAL OWNERS OF THE LAND ON WHICH OUR BUSINESS OPERATES, AND WE PAY OUR RESPECT TO ELDERS PAST, PRESENT AND EMERGING Abacus Group | HY23 results presentation 2
Slide 3: Agenda
ABACUS GROUP HY23 RESULTS Agenda Operating Operating 01 Overview 02 Key financial metrics 03 performance Self Storage 04 performance Commercial 05 Outlook and guidance Steven Sewell, Evan Goodridge, Nikki Lawson, Steven Sewell, Steven Sewell, Managing Director CFO GGM Strategy – Managing Director Ma
Slide 4: Platform Metrics HY23
PLATFORM METRICS HY23 TOTAL ASSETS WEIGHTED AVG CAP RATE1,2 GEARING NET TANGIBLE ASSETS $5.7bn 5.46% 32.2% $3.86ps 6.0% on FY22 7bps on FY22 350bps on FY22 0.3% on FY22 STATUTORY PROFIT FFO FFO PER SECURITY DPS $84.5m $81.4m 9.1cps 9.0cps 73.2% on HY22 0.4% on HY22 7.0% on HY22 2.9%
Slide 5: HY23 Highlights
HY23 HIGHLIGHTS Self Storage Commercial 1081 delivered 25% growth on HY22 221 delivered 6% growth on HY22 in Self Storage net property in commercial net property assets rental income to $72.2million2 Development assets rental income to $50.8 million2 completions driving higher • 8 new assets acquire
Slide 6: Portfolio Repositioning
PORTFOLIO REPOSITIONING Delivering strong recurring income growth Deployment of over $150 million HY23 on Self Storage developments $5.7bn Total Assets HY23 100% recurring income Deployment of over $300 million Acquisition of on Commercial Storage King developments Wind up of Divestment of platform
Slide 7: Balance Sheet Allocation
BALANCE SHEET ALLOCATION 31 December 2022 30 June 2022 $ 5.7bn Total Assets1 $ 5.4bn Total Assets1 52% SELF STORAGE $2.8bn 48% COMMERCIAL $2.6bn 51% SELF STORAGE $2.6bn 49% COMMERCIAL $2.5bn Established2 $1,590m Office $1,978m Established2 $1,509m Office $1,903m Acquisitions3 $351m Retail $484m Acqu
Slide 8: HY23 ESG Focus
HY23 ESG FOCUS Environmental Social Governance 4.5 star Office NABERS water rating1 Giving @ Abacus employee initiative and employee volunteer days supporting: The 2nd Modern Slavery Report published 4.8 star Office NABERS energy rating1 Infants Home and Good 360 Progress to date Self Storage LED up
Slide 9: Abacus Establishes New Corporate Office in Owned Castlereagh Street
ABACUS ESTABLISHES NEW CORPORATE OFFICE IN OWNED 77 CASTLEREAGH STREET Showcasing the opportunity for superior workspaces within non-A and Premium grade buildings “Co-created by a cross functional team at Abacus together with a team of designers and builders, delivering a modern workspace that align
Slide 10: Key Financial Metrics
ABACUS KEY FINANCIAL METRICS
Slide 11: HY23 Key Financial Metrics
HY23 KEY FINANCIAL METRICS $ millions HY23 HY22 Funds From Operations 81.4 81.1 Depreciation and amortisation (4.1) (3.8) Rent straight-lining, incentives, movement in lease liabilities, finance costs & one off adjustments (4.9) (5.6) Gains/(losses) in divestments - (1.3) Tax benefit/(expense) on FF
Slide 12: HY23 Key Financial Metrics
HY23 KEY FINANCIAL METRICS $ millions HY23 HY22 Change Drivers Self Storage 86.7 74.8 15.9% • Strong net property rental income growth achieved across the established (+$6m), acquisitions (+$4m) and stabilising (+$2m) portfolios • Fee income growth due to increase in and strong performance of Storag
Slide 13: Capital Management
CAPITAL MANAGEMENT Solid capital position with minimal debt expiry until HY26 “Weighted average cost of debt in FY23 is anticipated to be 2.75 – 3.00%” NTA Abacus total assets Acquisition capacity1 Avg cost of drawn debt Gearing Debt term to maturity $3.86ps $5.7bn $238m 2.6% 32.2% 4.0yrs FY22: $3.8
Slide 14: Investment Portfolio
INVESTMENT PORTFOLIO “The HY23 revaluation process for the Group resulted in a net increase to investment property value of $5.7 million.” Total Abacus Group Investment Portfolio Self Storage Office Retail & Other Investment Portfolio 127 assets 18 assets 6 assets 151 assets No. of assets HY23 carry
Slide 15: Operating Performance: Self Storage
OPERATING PERFORMANCE SELF STORAGE
Slide 16: Self Storage Snapshot
SELF STORAGE SNAPSHOT Self Storage portfolio valued at $2.8 billion (52% of total assets1) Established portfolio2 Acquisitions3 Stabilising portfolio4 Assets 76 18 33 Value $1,590m $351m $545m Net lettable area 392,000 sqm 96,000 sqm 81,000 sqm Occupancy5 91.7% 91.2% 69.8% Average rent psm5 $346 $33
Slide 17: Self Storage Growth Strategy
SELF STORAGE GROWTH STRATEGY Portfolio additions driving income growth Acquisitions • Disciplined, acquisition strategy with a priority on securing assets within high quality locations as per the Abacus Network Strategy • $87 million invested in HY23 including 8 new Self Storage sites, with a furthe
Slide 18: Self Storage Development Pipeline
SELF STORAGE DEVELOPMENT PIPELINE Development pipeline to deliver 17 stores in the short to medium term Spent to date Cost to complete Est completion value NLA Expansion opportunities1 Expansion NLA $192m $212m $483m 96,900sqm $31m 18,400sqm NLA breakdown by market NLA development pipeline (sqm) 70,
Slide 19: Self Storage Operating Trends
SELF STORAGE OPERATING TRENDS Rate and occupancy dynamics driving Established Portfolio1,2 RevPAM growth Occupancy (RHS) Rental Yield ACT QLD VIC $440 100% $360 100% $360 100% 75% 75% 75% $360 $280 $280 50% 50% 50% $280 $200 $200 25% 25% 25% $200 0% $120 0% $120 0% Jul-22 Jan-21 Jul-21 Nov-21 Jan-22
Slide 20: Storage King Store Network
STORAGE KING STORE NETWORK1 Abacus owned QLD 25 133 Assets owned by Abacus 108 trading stores • SUNSHINE COAST 1 WA 25 future stores 11 • BRISBANE 16 • GOLD COAST 8 66 SA 3 • PERTH 11 ACT 6 NSW 48 • NEWCASTLE 2 11 AUCKLAND • % • CENTRAL COAST 2 4 3 ADELAIDE • • SYDNEY 40 • CANBERRA 6 of Australian S
Slide 21: Storage King
STORAGE KING Strengthening our brand value 80,000+ Customer units1 195 Storage King 3.4 years network stores1 Average length of stay2 108 Abacus owned stores 87 Managed and licensed rated most recognised Self Storage brand in Australia 1. All Abacus and managed stores. 2. For existing customers in t
Slide 22: Operating Performance: Commercial
OPERATING PERFORMANCE COMMERCIAL
Slide 23: Commercial: Office Snapshot
COMMERCIAL: OFFICE SNAPSHOT Portfolio of 18 asset Office valued at $2.0 billion (36% of total assets1) OCCUPANCY2 WALE2 LEASING DEALS YTD LFL INCOME GROWTH2 94.8% 3.8yrs 54 3.0% FY22: 94.7% FY22: 3.8yrs HY22: 39 HY22: 6.6% WACR3 A GRADE BUILDINGS4 TENANT CUSTOMERS5 SME CUSTOMERS6 5.28% 72% 367 64% F
Slide 24: Commercial: Office Leasing Metrics
COMMERCIAL: OFFICE LEASING METRICS 25,379sqm 31% 9.4% 4.1% $737psm leased1 in HY23 average gross incentive leasing spreads average rent review average net face rent2 75% new 32% on new deals 13.7% on new deals 99% fixed $869 average CBD2 rent 25% renewals 29% on renewals 5.0% on renewals 1% CPI $449
Slide 25: Commercial: Office Leasing Expiry
COMMERCIAL: OFFICE LEASING EXPIRY1 Lease expiry profile by gross income 41% 16% 14% 13% 10% 4% 2% Vacant Short Term Year 1 Year 2 Year 3 Year 4 Year 5+ NSW QLD SA VIC ACT 1. Excludes development affected assets. Abacus Group | HY23 results presentation 25
Slide 26: Commercial: Office Leasing Strategy
COMMERCIAL: OFFICE LEASING STRATEGY Supporting customers as their businesses evolve “Leveraging our various space offerings is increasing our customer pool and broadening our exposure to different industries.” Current Flex by Abacus portfolio 2 Flex workspace of total 1,149 sqm: • L7, 14 Martin Plac
Slide 27: Commercial: Developments
COMMERCIAL: DEVELOPMENTS Recently completed Office developments delivering high quality income streams Manufacturing 36% 459 Church Street, Richmond VIC Education 15% Construction 12% Occupancy 31 Dec 82.7% Professional Services 11% Tenant Avg. net face rent $537 Media & Communications 8% Industry1
Slide 28: Commercial: Retail Snapshot
COMMERCIAL: RETAIL SNAPSHOT Portfolio of 4 Retail asset (3 centres and 1 CBD asset) valued at $484 million (9% of total assets1) OCCUPANCY WALE LEASING DEALS 95.7% 5.9yrs 30 FY22: 95.6% FY22: 6.2yrs HY22: 22 YTD LFL INCOME WACR TENANT CUSTOMERS GROWTH 0.2% 6.02% 212 HY22: (0.9%) FY22: 5.99% FY22: 21
Slide 29: Proposed De-Stapling
ABACUS PROPOSED DE-STAPLING
Slide 30: Proposed De-Stapling
PROPOSED DE-STAPLING To create a $3.0bn1 ASX listed Self Storage REIT Overview Proposed post de-staple structure • Abacus Storage King REIT (ASK) to be established by de-stapling Abacus’ Self Storage assets, operations and investments1 Existing Abacus Stapled securities in ASK securityholders • ASK
Slide 31: Two Separately Listed REITs
TWO SEPARATELY LISTED REITS With dedicated strategies and capital structures Abacus Storage King REIT Abacus Group • Material transformation of Self Storage now valued at $3.0bn, with over • High quality $2.6bn eastern seaboard portfolio, with excellent exposure $1.2bn deployed into Self Storage ass
Slide 32: Outlook and Guidance
OUTLOOK AND GUIDANCE
Slide 33: Outlook and Guidance
OUTLOOK AND GUIDANCE Focused on the ownership and management of Self Storage and Commercial real estate and operation of Self Storage locations Owning and developing Self Storage Outlook Guidance an Australia and New Our multi-pronged growth strategy is We remain confident that the Group is FY23 dis
Slide 34: Data Pack
ABACUS DATA PACK /
Slide 35: Contents
CONTENTS FINANCIAL PERFORMANCE SLIDE 36 INVESTMENT PORTFOLIO SLIDE 40 GLOSSARY SLIDE 43 IMPORTANT INFORMATION SLIDE 44
Slide 36: Segment Earnings
SEGMENT EARNINGS $ millions Self Storage Commercial HY23 HY22 Comments Increase in Self Storage by $19.6m ($8.7m from acquisitions & stabilising assets) Rental income 93.2 76.3 169.5 138.9 Increase in Commercial Property by $11.0m Wind down of legacy residential mortgage business partially offset by
Slide 37: Segment Balance Sheet
SEGMENT BALANCE SHEET $ millions Property Investment Other HY23 FY22 Self Storage investment properties 2,447.1 2,447.1 2,239.9 Commercial investment properties 2,320.9 2,320.9 2,260.6 PP&E, equity and other investments, financial and other assets 525.6 81.7 607.3 571.4 Loans 53.4 53.4 53.1 Cash and
Slide 38: Net Tangible Asset Reconciliation
NET TANGIBLE ASSET RECONCILIATION $ millions HY23 FY22 Net assets 3,511.6 3,501.1 Less Intangible assets and goodwill (105.2) (105.6) Deferred tax assets/liabilities (net) 39.3 36.9 Total net tangible assets 3,445.7 3,432.4 Securities on issue 893.7 892.4 Net tangible assets per security 3.86 3.85 A
Slide 39: Debt Facilities
DEBT FACILITIES Capital management metrics HY23 FY22 Total bank debt facilities $2,058m $2,058m Total bank debt drawn $1,900m $1,677m Term to maturity 4.0yrs 4.7yrs Interest rate hedging – drawn debt 71% 76% Interest rate hedging – fully drawn 66% 62% Weighted average hedge maturity 2.3yrs 2.9yrs Av
Slide 40: Investment Portfolio Metrics
INVESTMENT PORTFOLIO METRICS Investment portfolio sector diversification Retail & Self Storage 52% Portfolio metrics HY23 Self Storage Office Total Other Office 36% Retail & Other 12% Value1 ($m) 2,843 1,978 599 5,420 No. of assets 1272 18 6 151 NLA (sqm)3,4 568,6475 129,900 62,2946 760,841 Investme
Slide 41: Self Storage Metrics
SELF STORAGE METRICS Performance metrics Aus NZ HY23 FY22 Performance metrics ($m)* HY23 HY22 Storage revenue 81.9 64.1 No. of assets 112 15 1271 119 Ancillary revenue 7.8 7.6 NLA (sqm) 490,800 77,847 568,647 547,278 Other revenue (net)3 3.9 3.0 Occupancy (%)2 91.6 92.2 91.7 92.9 Total revenue 93.6
Slide 42: Self Storage Development Pipeline
SELF STORAGE DEVELOPMENT PIPELINE • 96,900 sqm of NLA over 17 new development sites1 to be developed across the short-to-medium term, with over 16,000 sqm delivered during HY23 • Over 18,000 sqm of additional NLA to be generated from expansions across the existing portfolio • Anticipated stabilised
Slide 43: Glossary
GLOSSARY TERM DEFINITION TERM DEFINITION AIFRS Australian International Financial Repointing Standards NABERS National Australian Built Environment Rating System A-REIT Australian Real Estate Investment Trust NLA Net lettable area CBD Central business district NTA Net tangible assets CPI Consumer pr
Slide 44: Important Information
IMPORTANT INFORMATION The information provided in this document is general, and may not be suitable for the specific purpose of any user of this document. It is not financial advice or a recommendation to acquire Abacus Group securities (ASX: ABP). Abacus Group believes that the information in this