Slide 1: GPT Annual Result 14 February 2013
GPT ANNUAL RESULT 14 FEBRUARY 2013 The GPT Group ae ia
Slide 2: For personal use only
For personal use only Good morning and thank you for joining us for the 2012 GPT Annual Result presentation. Today I will talk about the performance of the business in 2012, as well as our strategy and outlook for 2013. Mark Fookes in his new role as CFO will provide an overview of the financi
Slide 3: For personal use only
For personal use only The team at GPT exceeded expectations again in 2012, delivering on our promises. We have also made good progress on enhancing our portfolio during the year. And to meet the challenges and opportunities ahead, we are deliberately investing in the future. 3
Slide 4: For personal use only
For personal use only Since I presented GPT’s strategy in August 2009, GPT has delivered on our three key measures. EPS, Total Return and Total Securityholder Return have all shown steady improvement. This reflects our disciplined approach, with a focus on creating value for all stakeholders.
Slide 5: For personal use only
For personal use only It has been a great year for GPT. Once again we delivered EPS growth ahead of guidance. We achieved significant progress on our reweighting strategy with the sale of stakes in Casuarina and Woden and the acquisition of a number of logistics & business park assets. We co
Slide 6: For personal use only
For personal use only 2012 was focused on an ‘optimise and grow’ strategy. This approach continues to deliver results. I will talk about our growth platforms later in the presentation. The last point on this slide makes reference to M&A activity. I won’t talk about Australand today, except
Slide 7: For personal use only
For personal use only I’ll start with the operating performance of the Group for 2012. Realised Operating Income per security, which reflects our underlying operational earnings, was up 8.0%. A strong result, ahead of guidance we gave at the half year and reflecting solid contributions from each
Slide 8: For personal use only
For personal use only Focusing now on the composition of the operating result. Retail income was up 3.0% on a like for like basis, driven by a very strong contribution by Melbourne Central. The office portfolio performed very well with comparable income growth of 3.8%. Particularly strong resu
Slide 9: For personal use only
For personal use only This chart shows the composition of the growth in EPS. The majority of the uplift was driven by income growth from the portfolio, a lower cost of debt compared to 2011, the accretion from the buyback and the expense savings from our ‘Fit for Growth’ program being realised.
Slide 10: For personal use only
For personal use only In 2012 we saw the successful implementation of our ‘Fit for Growth’ program. The program built on the work we have been doing to streamline the business over the last couple of years enabling us to realise the benefits of process improvements and new systems whilst also pr
Slide 11: For personal use only
For personal use only The balance sheet remains in great shape. Gearing as a proportion of total tangible assets sits at 21.7%. Look through gearing sits at 23.9% which reflects the gearing in the wholesale funds. The retail fund is geared at 27.6% and the office fund has very low gearing at j
Slide 12: For personal use only
For personal use only This graph illustrates how our Treasury team has worked down the average cost of debt in the last few years. The average cost of debt for 2012 was 100 basis points lower than 2011. This result was achieved by a combination of treasury initiatives to delay the commencement
Slide 13: For personal use only
For personal use only Our debt maturity profile remains relatively flat. In 2012 GPT issued $330m of domestic bonds with domestic medium term notes now representing 25% of borrowings. I’m pleased to announce that post year end we issued $HK800m worth of 15 year bonds (swapped back to A$100m) a
Slide 14: For personal use only
For personal use only Thanks Mark. In 2012, the portfolio delivered a solid result achieving a total return of 9.3%. The team has continued to drive performance, leveraging the sector specialist skills and integrated business platform of the group to unlock value. Broadly all three sectors per
Slide 15: For personal use only
For personal use only The portfolio achieved a total return of 8.6% for the year. Retail weightings decreased from 61% to 56% on the back of the divestment of Westfield Woden and a 50% interest in Casuarina for $551 million. In December we announced the exchange of contracts on the Homemaker a
Slide 16: For personal use only
For personal use only As shown the retail portfolio delivered comparable income growth of 3.0%, supported by a large proportion of fixed reviews and solid income growth at Melbourne Central. Retail sales showed modest growth with comparable specialty sales up 1.5% and centre sales up 1.3%. Thi
Slide 17: For personal use only
For personal use only By category retail sales performance remains mixed with the strongest categories continuing to be Other Retail, Retail Services and Food Catering, whilst apparel sales improved, up 2.2% in 2012 compared to 0.6% in 2011. Structural changes in retail spending have seen the Le
Slide 18: For personal use only
For personal use only Key components of this strategy include: - Active remixing to deliver the right tenant in the right location; - Securing occupancy to deliver cash flow; and - Securing earnings growth with structured rental increases. In 2012 we saw the introduction of 246 new tenants out o
Slide 19: For personal use only
For personal use only The combination of digital strategies and an increased focus on product, service and the customer experience remains an essential mix for improving sales and profitability. In November, we launched mobile applications for both Highpoint and Melbourne Central. In the first t
Slide 20: For personal use only
For personal use only The $300m Highpoint development which is nearing completion is a great example of how dominant regional centres continue to be sought after by retailers in a tough market. In October, Stage 1 of the Highpoint development was completed 100% leased and on program with Stage 2
Slide 21: For personal use only
For personal use only 2012 was a strong year for the office portfolio We completed a significant amount of leasing with 152,000sqm of leases executed across the portfolio and an additional 36,000sqm of signed Heads of Agreement, as at 31 December. As a result of our leasing success portfolio m
Slide 22: For personal use only
For personal use only The office portfolio continues to perform well despite challenging market conditions. Comparable income growth was a strong 3.8% led by 4% average fixed increases and positive leasing spreads. Occupancy remains high at 95.8%, up from 93.6% at June 2012. The portfolio we
Slide 23: For personal use only
For personal use only The quantum of leasing deals completed in the year is a reflection of our office team’s capability. Looking at gross leasing activity on a like for like basis, this reflects a result 40% higher than our historical five year average. All of these deals were completed by th
Slide 24: For personal use only
For personal use only Despite soft market conditions, our portfolio in each respective market is well positioned. On a national level the office markets are experiencing weak demand linked to a pullback in the finance, insurance and mining sectors. On the flip side net supply levels over the n
Slide 25: For personal use only
For personal use only Now to the logistics and business parks portfolio. We are delivering on strategy with the portfolio growing to $990m reflecting an increase in portfolio weighting to 12% up from 9% at the start of the year. The growth has been driven by acquisitions totalling $143m. On
Slide 26: For personal use only
For personal use only The logistics and business parks portfolio delivered strong comparable income growth of 2.7%. Occupancy levels remain high at 98.2% highlighting the strong renewal and re-leasing activity in the portfolio. The portfolio WALE is strong at 5.8 years and will increase on com
Slide 27: For personal use only
For personal use only In December we announced the acquisition of Toll NQX in Brisbane for an on completion value of $84.6m. This was the largest of the four deals we completed in 2012. The deal is structured as a development fund through and is due for completion Q1 2014. This state of the art
Slide 28: For personal use only
For personal use only Sustainability continues to be embedded as a core value of GPT. Over the year we have continued to be recognised globally as a leader in this space being awarded global leader in sustainability for the third time in the past four years by the Dow Jones Sustainability Index.
Slide 29: For personal use only
For personal use only Thanks Carmel. As you can see, we have strong foundations for the future. Mark has outlined our financial strength and effective capital management. Carmel has demonstrated the value of our high quality assets, the flexibility of being diversified, and the benefits of o
Slide 30: For personal use only
For personal use only We have a leadership team with diverse backgrounds from within and outside the property sector. A large proportion of the team are in new roles, which reflects my approach to personal development. We continue to invest in our senior team, with a focus on leadership, strat
Slide 31: For personal use only
For personal use only I have previously outlined our four growth platforms of funds management, development, new profit sources and asset acquisitions. While we have already talked about asset acquisitions, the next few slides provide an update on the other growth initiatives. 31
Slide 32: For personal use only
For personal use only As I explained at the Interim Result, we have two pathways for growing the Funds Management business. The initial focus has been on the existing funds, and in 2012 Nick Harris and his team delivered 20% growth in funds under management which is well ahead of the market aver
Slide 33: For personal use only
For personal use only Funds management is an effective growth platform for GPT as it generates enhanced returns for the Group. The base distribution yield of 6.5% translates to a total income return of 8% for GPT, when you take into account fees and costs. Increased scale will continue to impr
Slide 34: For personal use only
For personal use only Within development, we have a dual approach. Firstly, our Retail and Major Projects team led by Anthony McNulty is focused on creating and enhancing value across the portfolio. Importantly, this business will run at a profit in 2013. Our approach is that new development
Slide 35: For personal use only
For personal use only The pipeline across the two development areas includes a number of good opportunities, and as I said, a large number of the projects underway are in partnerships or are on behalf of third parties. 35
Slide 36: For personal use only
For personal use only As well as our energy business, GPT has taken on two exciting new ventures – LiquidSpace, and our parcel locker trial. LiquidSpace is an on-line market to book workplaces and meeting rooms. This business already successfully operates in the US and our opportunity is to esta
Slide 37: For personal use only
For personal use only Our growth platforms will deliver additional returns in the short term, but importantly, we are investing in developing our strategic direction for the next 5 – 10 years. We want to shape the future, and convert the threats into opportunities rather than be stuck in the pas
Slide 38: For personal use only
For personal use only We are investing in people. Examples include the establishment of a Corporate Development unit in October last year, led by Michael O’Brien. We’ve also made seven senior external appointments over the past year. In relation to learning, we are interacting with people who
Slide 39: For personal use only
For personal use only For this year, our strategy continues to be focused around the themes of optimise and grow. We will continue to optimise GPT and equip our employees for high performance. At the same time, we will enhance the core business, and continue to build robust growth platforms.
Slide 40: For personal use only
For personal use only I remain cautiously optimistic about our operating environment for this year. GPT will benefit from high levels of occupancy and structured rental increases. The success that Matt Faddy and the leasing team achieved in 2012 demonstrates our capability to meet market chall
Slide 41: For personal use only
For personal use only I am pleased to advise we are targeting at least 5% EPS growth for 2013. We will continue to have a payout ratio of 80%. 41
Slide 42: In conclusion
For personal use only In conclusion, The team at GPT exceeded expectations again in 2012, delivering on our promises. We have made good progress on enhancing our portfolio during the year. And to meet the challenges and opportunities ahead, we are deliberately investing in the future. Than
Slide 43: Contact Information
43 Contact Information Michael Camoron Chief Executive Officer and Managing Director Te 4612 #290 3565 Mob: +51 410.437 597 Email michael cameron@gpt.com 2u Mark Fookes Chief Financial Officer Tol +612 82303518 Mob: +61 412.279 833 Email: mark fookes@gpt com au Ni Wendy Jenkins Group Investor Relati
Slide 44: Disclaimer
44 Disclaimer The information provided in this presentation has been prepared by The GPT Group comprising GPT RE Limited (ACN 107 426 504) AFSL (286511), as responsible entity of the General Property Trust, and GPT Management Holdings Limited (ACN 113 510 188), The information provided in this prese