Burstone Group Limited · JSE:BTN
Burstone — Merger or Acquisition (September 2024)
26 slides from Burstone's merger presentation, September 2024
Slide 1: Investor Presentation
Transform potential Investor Presentation SEPTEMBER 2024
Slide 2: Contents
Transform potential Contents 01 Strategic partnership with Blackstone 02 Capital allocation and growth 03 Closing
Slide 3: Agenda
Agenda Introduction This presentation will highlight the progress the Group has made on several of its key strategic objectives: • The introduction of a strategic partner in Europe through a partnership with Blackstone, the biggest buyer and owner of logistics assets in Europe • Significant delevera
Slide 4: We have a clear strategic focus in the short and medium term
We have a clear strategic focus in the short and medium term Integration Optimise current Maintain a robust Growth Holistic portfolios balance sheet sustainability • Unlock distribution • Maintain stability • Clear path to • Funds and investment • Further embed ESG synergies and capability reducing
Slide 5: Strategic partnership with Blackstone
01 Strategic partnership with Blackstone Transform potential
Slide 6: Burstone (PEL) strategic partnership with Blackstone
Burstone (PEL) strategic partnership with Blackstone Transaction overview Burstone’s rationale €1,022m Introduces strategic partner in Europe Headline price for PEL 80%:20% Catalyst for value-unlock, launching European funds management strategy with a blue-chip partner Blackstone and Burstone partne
Slide 7: Transaction summary
Transaction summary Headline value €1,022m Headline price 3.1% discount to reported GAV of €1,055m as of 31 March 2024 €409m Implied NAV (at 100%) 11.7% discount to BTN share of reported NAV at 31 March 2024 80% total Stake acquired by Blackstone 63% from Burstone; the balance from EDT a
Slide 8: Indicative transaction financial effects
Indicative transaction financial effects FY24 distributable earnings evolution post transaction •A Net loss of earnings from reduction in stake held in PEL at In R’m Earnings Accretion: Greater impact 1.3% expected in net selling yield of 5.6%, partially future years as offset by management fee pick
Slide 9: Looking forward
Looking forward JV partnership and growth strategy Significant strategic benefits to Burstone • Blackstone is the world’s largest alternative asset manager • Aligns best-in-class capital to our strategic direction with more than $1 trillion in AUM • Scalability: opportunity to add scale and growth t
Slide 10: Looking forward
Looking forward JV partnership and growth strategy Burstone and Blackstone will look to build the platform over time Investment criteria Type: • Logistics or industrial properties Locations: • Germany, France, Belgium, Netherlands, Italy, Spain Marseille Park, Marseille • Expansion into new markets
Slide 11: Capital allocation and growth
02 Capital allocation and growth Transform potential
Slide 12: Burstone's capital allocation framework
Burstone’s capital allocation framework Our model allows us to: • Invest across all risk and return profiles across the full lifecycle of real estate • Staple management in terms of fund management, investment management, asset management and development management to enhance return and decrease bal
Slide 13: Our funds and investment management strategy
Our funds and investment management strategy Growth of the funds and investment management model • Strong progress made on the funds and investment management strategy: I. Strategic partnership with Blackstone II. New industrial platform in Australia backed by a leading global alternative asset mana
Slide 14: The funds and investment management opportunity
The funds and investment management opportunity Illustrative return build-up Aim to grow our funds and investment management platform as we continue Plus upside from 1 to build our capabilities as an asset and investment manager performance fees Integrated real estate and investment managers Alignme
Slide 15: Irongate Group JV
Irongate Group JV New opportunity • Agreement to establish a new industrial platform backed by a leading global alternative asset management firm • An initial soft commitment of A$200m of equity has been earmarked with the aim to upsize upon successful deployment • Burstone (alongside Irongate manag
Slide 16: Light industrial portfolio in Germany
Light industrial portfolio in Germany • Asset management mandate for c.€170m of a light industrial portfolio in Germany • Contributed R10m to earnings in FY24 • Currently in negotiations on a 25% co-invest and ongoing management; undergoing due diligence • Strategic rationale: o Strategic alignment
Slide 17: South Africa
South Africa • The Group has built the foundation for a third-party fund management platform in which institutional capital can invest • Currently in exclusive discussions with cornerstone investors to build a core+ fund: o Will utilize a portion of existing SA assets as seed portfolio with Burstone
Slide 18: Overview of our business post proposed transactions
Overview of our business post proposed transactions Integrated real estate investor, acting as manager across all platforms c..€1bn third party AUM EUROPE • €1.1bn (GAV) PEL portfolio: 20% ownership (partner Blackstone) • €170m (GAV) German light industrial c. A$600m equity platform**: 25% ownership
Slide 19: Group portfolio snapshot post proposed transactions
Group portfolio snapshot post proposed transactions Third party AUM* (Rbn) Fund and asset management fees Driving increased returns on capital deployed R23.0bn 2.5 Fund and asset management fees: An increase of c.5x • R61m at FY24 comprising c.7% of earnings • Fund and asset management fees are 16.9
Slide 20: Deployment of capital
Deployment of capital The net proceeds of c.€250m (c.R5bn) arising from the Proposed Blackstone Transaction will be used to: • Reduce gearing by c.R4bn • Capitalise on potential future growth opportunities across our core regions and strategies (with c.R860m for near term commitments into Australian
Slide 21: LTV flightpath over the next 12 to 18 months
LTV flightpath over the next 12 to 18 months Clear deleveraging path through reduction of stake in PEL and execution of South African asset sales. Near term capital requirements to grow the funds and investment management business to support enhanced returns. •1 Acquisition of TNS completed in July
Slide 22: Closing
03 Closing Transform potential
Slide 23: Burstone investment proposition
Burstone investment proposition Fully integrated, international real estate business • Traditional South African REIT delivering stable returns • Globally diversified with capability to invest across all aspects of the real estate life cycle Ability to generate enhanced returns on capital deployed •
Slide 24: Key take aways
Key take aways The Group is well positioned to execute on its funds and investment strategy which underpins the Group’s ability to deliver enhanced returns on capital deployed and maximize operational leverage from its scalable platform STRATEGIC PARTNERSHIP WITH BLACKSTONE OTHER TRANSACTIONS LTV
Slide 25: Q&A
Q&A Burstone REAL ESTATE PARTNERS,
Slide 26: Disclaimer
Disclaimer The information contained herein is for information purposes only and readers should not rely on such information as advice in relation to a specific issue without taking financial, banking, investment or professional advice. Although information has been obtained from sources believed to
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