Dexus Convenience Retail Reit · ASX:DXC
Dexus Convenience Retail Reit — Merger or Acquisition (December 2020)
39 slides from Dexus Convenience Retail Reit's merger presentation, Dec 8, 2020
Slide 1: Acquisitions and Equity Raising
ACQUISITIONS AND EQUITY RAISING 8 DECEMBER 2020 www.apngroup.com.au ASX Code: AQR Not for release to US wire services or distribution in the United States
Slide 2: Important notice and disclaimer
Important notice and disclaimer IMPORTANT: You are advised to read the following carefully before making any use of the information contained in this presentation. This presentation has been prepared by APN Funds Management Limited (ACN 080 674 479) (“Responsible Entity”) as responsible entity of ea
Slide 3: Important notice and disclaimer
Important notice and disclaimer Any such forward-looking statements involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies and other factors, including the risks described in this presentation under “Key risks”. Such risks may be outside the co
Slide 4: Contents
Contents 01 Executive summary 02 Asset acquisitions 03 Trading update 04 Equity raising Appendices 4
Slide 5: Executive summary
01 EXECUTIVE SUMMARY Brisbane Airport Link Service Centre, QLD 5
Slide 6: Executive summary
Executive summary ▪ APN Convenience Retail REIT (“AQR” or the “Fund”) has entered into sale contracts to acquire 3 service station and convenience retail properties and is in advanced exclusive due diligence on a further 9 assets in South Australia, New South Wales, Queensland and Western Australia
Slide 7: Executive summary
Executive summary ▪ AQR intends to undertake an equity raising including an institutional placement to raise approximately $30 million (“Placement”) and a security purchase plan to eligible securityholders in Australia and New Zealand to raise up to $5 million1 (“SPP”) to partially fund the Acquisit
Slide 8: Investment highlights
Investment highlights Acquisitions complement existing stable, passive income stream with contracted rental increases providing sustainable income growth Portfolio has been resilient through the challenging conditions created by COVID-19 Strong balance sheet with capacity to deploy capital to furthe
Slide 9: Key metrics post Acquisitions and Placement
Key metrics post Acquisitions and Placement 6.2% 100% $597m 31.4% FY2021 DPS YIELD1 OCCUPANCY PORTFOLIO VALUE2 PRO FORMA GEARING3 101 6.4% 11.7 $444m PROPERTIES2 WACR2,4 WALE (YEARS)2,5 MARKET CAP6 DIVERSIFIED AND DEFENSIVE LONG LEASE PORTFOLIO SUSTAINABLE AND GROWING INCOME ALIGNED MANAGER WITH $45
Slide 10: Asset acquisitions
02 ASSET ACQUISITIONS Shell Acacia Ridge, QLD 10
Slide 11: Acquisition portfolio overview
Acquisition portfolio overview Attractive convenience retail portfolio with long leases to high quality tenants Purchase Capitalisation WALE Rent Estimated Property State Site type Major tenant Status price ($m)1 rate (years)2 reviews settlement Contracted Berrinba QLD Metro United $8.0 6.3% 13.5 Fi
Slide 12: Enhanced portfolio scale and lease expiry profile
Enhanced portfolio scale and lease expiry profile June-20 pro forma1 Acquisitions Post-Acquisitions Number of assets 89 12 101 Portfolio value $521.7m $75.3m $596.9m Weighted average cap rate 6.5% 6.1% 6.4% Occupancy 100% 100% 100% United Berrinba, QLD WALE (years)2 11.1 16.4 11.7 80% of lease incom
Slide 13: Improved geographic diversification
Improved geographic diversification Pre-Acquisitions 2% 10% 12% $521.7m 59% 18% Post-Acquisitions 2% 17% QLD NSW Existing assets 12% $596.9m WA 53% New assets SA 17% VIC 13
Slide 14: Trading update
03 TRADING UPDATE Woolworths Caltex Mitchelton, QLD 14
Slide 15: Trading update
Trading update ▪ Minimal impact of COVID-19 on portfolio, with all sites remaining open and trading ▪ FY2021 cash collections remain strong – no rent relief currently being provided Resilient ▪ Asset class proven to be one of the most resilient, outperforming other property sectors during COVID-19 p
Slide 16: Balance sheet well capitalised for growth
Balance sheet well capitalised for growth Healthy balance sheet position Pro Forma ▪ AQR's pro forma gearing is expected to be approximately 31.4%2 Post-Acquisitions following the Acquisitions and Placement, within the Fund’s target Key metric June 2020 and Placement1 gearing range of 25 – 40% – Pro
Slide 17: Increasing portfolio growth and scale
Increasing portfolio growth and scale APN has a proven 18 year track record in the service station and convenience retail sector FY21 transactions1 $148.8m $75.3m $7.0m $22.4m $73.5m $6.2m $10.5m $27.5m Brisbane 3x Coles Shell Chevron DevelopmentFY21 to date Proposed Post Airport Link Express Bellev
Slide 18: Equity raising
04 EQUITY RAISING Mobil X Convenience Gepps Cross, SA 18
Slide 19: Sources and uses of proceeds
Sources and uses of proceeds Sources of proceeds $m ▪ Fully underwritten Placement of approximately $30 million ▪ Securities issued under the Placement will be issued at a fixed Placement proceeds 30.0 price of $3.55 per security, representing a: Incremental debt 47.8 – 2.7% discount to the last clo
Slide 20: Equity raising details
Equity raising details ▪ Fully underwritten Placement to raise approximately $30 million Structure ▪ Non-underwritten SPP to eligible securityholders in Australia and New Zealand to raise $5 million1 – Eligible securityholders will be invited to apply for up to a maximum of $30,000 of securities und
Slide 21: Indicative timetable
Indicative timetable Event Date Record date for SPP 7.00pm, Monday, 7 December 2020 Trading halt and announcement of Placement Tuesday, 8 December 2020 Placement bookbuild Tuesday, 8 December 2020 Settlement of new securities issued under the Placement Friday, 11 December 2020 Allotment and normal t
Slide 22: The APN Convenience Retail REIT opportunity
The APN Convenience Retail REIT opportunity Exposure to AQR’s $597 million1 and Secure and growing income profile growing portfolio of strongly performing underpinned by a 11.7 year WALE2 and service station assets weighted average rental growth of 2.8%3 Attractive expected FY2021 DPS yield of Incre
Slide 23: Appendices
APPENDICES Kempsey South, NSW 23
Slide 24: Appendix A: Pro forma balance sheet
Appendix A Pro forma balance sheet 24
Slide 25: Pro forma balance sheet
Pro forma balance sheet Pro forma Pro forma 30 June 2020 pre Acquisitions Acquisitions and post Acquisitions $m (Audited) Movements and Placement1 Placement and Placement2 Cash and cash equivalents 2.3 2.3 2.3 Investment properties 448.2 73.5 521.7 75.3 596.9 Other assets 1.1 1.1 1.1 Total assets 45
Slide 26: Appendix B: Key risks
Appendix B Key risks | Property Group
Slide 27: Key risks
Key risks This section discusses some of the risks associated with an investment in AQR. AQR's business is subject to a number of risk factors both specific to its business and of a general nature which may impact its future performance and forecasts. Before subscribing for New Securities, prospecti
Slide 28: Key risks
Key risks Re-leasing, market rent reviews and vacancy The portfolio’s leases come up for renewal on a periodic basis, and there is a risk that expiring leases may not be renewed in accordance with AQR’s assumptions including in relation to vacancy periods, rents and lease terms, particularly in the
Slide 29: Key risks
Key risks Interest rate risk Adverse fluctuations in interest rates, to the extent that they are not hedged, may impact AQR's funding costs adversely, resulting in a decrease in distributable income. Where interest rates are hedged by way of financial instruments, the value of those instruments can
Slide 30: Key risks
Key risks Environmental risk Certain asset classes to which AQR is exposed, in particular service station assets, typically have a higher rate of environmental contamination than other commercial property asset classes. There is a risk that a property may be contaminated now or in the future. Govern
Slide 31: Key risks
Key risks Share market conditions There are general risks associated with an investment in the share market. As such, the value of New Securities may rise above or fall below the offer price, depending on the financial position and operating performance of AQR and other factors. In addition, the mar
Slide 32: Key risks
Key risks Accounting standards and impairment AQR prepares its general purpose financial statements in accordance with IFRS and with the Corporations Act. Australian Accounting Standards are not within the control of AQR or its boards and are subject to amendment from time to time, and any such chan
Slide 33: Key risks
Key risks Underwriting risk (continued) l) a regulatory body: i. makes an adverse declaration or order; ii. issues, or publicly announces or indicates to AQR its intention to issue, proceedings; or iii. commences, or publicly announces or indicates to AQR its intention to commence, any inquiry or in
Slide 34: Key risks
Key risks Forward-looking statements There can be no guarantee that the assumptions and contingencies on which the forward-looking statements, opinions and estimates (including guidance on future FFO and distributions) are based will ultimately prove to be valid or accurate. The forward-looking stat
Slide 35: Key risks
Key risks Change in capital structure Changes in the capital structure of AQR, for example from the raising of further debt or the issue of further equity to repay or refinance debt facilities or to fund the acquisition of additional properties, may affect the value or returns from an investment in
Slide 36: Appendix C: Foreign selling restrictions
Appendix C Foreign selling restrictions 36
Slide 37: Foreign selling restrictions
Foreign selling restrictions International Offer Restrictions This document does not constitute an offer of new stapled securities ("New Securities") of AQR in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Securities ma
Slide 38: Foreign selling restrictions
Foreign selling restrictions United States This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The New Securities have not been, and will not be, registered under the US Securities Act of 1933 or the securities laws of any state
Slide 39: Contact
Contact Chris Brockett Fund Manager, APN Convenience Retail REIT Ph: (03) 8656 1000 : cbrockett@apngroup.com.au ASX Code: AQR Follow us… @apngroup APN Property Group Limited APN Property Group apnpropertygroup Level 30,101 Collins Street, apngroup.blog Melbourne, Vic 3000 apngroup.com.au apnpropert
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