Dexus Convenience Retail Reit · ASX:DXC
Dexus Convenience Retail Reit — APN Property Group — HY21 Earnings Presentation
36 slides from Dexus Convenience Retail Reit's earnings presentation, Feb 18, 2021
Slide 1: HY21 Results Presentation
HY21 RESULTS PRESENTATION 18 FEBRUARY 2021 www.apngroup.com.au ASX Code: APD
Slide 2: HY21 financial highlights
HY21 financial highlights Strong performance across the business $6.7 million ▲5% on pcp (2.05 cents per security (cps)) OPERATING EARNINGS1 97% operating income from recurring sources Statutory NPAT: $22.9 million (7.13 cps) ▲32% on pcp FUM $2.9 billion ▲$242 million or 9.0% on June 20202 FY21 dist
Slide 3: Strong operating earnings growth
Strong operating earnings growth Income Statement ($000s) HY21 HY20 Change Reflects lower average FUM in Real Estate Securities funds due to Funds management fees 7,277 7,991 ▼ 9% market movements, offset by impact of acquisitions by AQR and ADI Performance & transaction fees 375 223 ▲ 68% Leasing a
Slide 4: Well capitalised for continuing growth
Well capitalised for continuing growth Balance Sheet ($000s) Dec 2020 June 2020 Change Cash1 21,070 16,299 ▲ 29% Mainly comprises: Co-investments 133,592 114,507 ▲ 17% ▪ $82.4 m ADI at $2.87 per security (NTA $2.88, weighted average cap rate of 6.2%) ▪ $43.9 m AQR at $3.54 per security (NTA $3.35, w
Slide 5: Track record of sustainable income and securityholder returns
Track record of sustainable income and securityholder returns Recurring Income ($m) Total Securityholder Return $3,000 $2,243 $2,000 25.0 26.2 26.1 22.1 $1,000 17.4 13.9 12.9 $0 FY15 FY16 FY17 FY18 FY19 FY20 HY21 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Funds Under Management ($bn) Distributions (c
Slide 6: Real Estate Securities
Real Estate Securities Continued strong income focused returns as a result of our active management approach ▪ APN AREIT Fund has consistently delivered on income return objective RES Division FUM since inception and remains well positioned to deliver relatively high, consistent levels of income $1,
Slide 7: APN AREIT Fund consistently delivering income
APN AREIT Fund consistently delivering income Regular monthly cash distributions in low rate, low growth environment Consistently delivering distributions in excess of the AREIT index1 11.9% APN AREIT Fund Yield² ASX 200 AREIT Div Yield³ Aust. 10 yr Govt. Bond 9.3% 8.9% 8.8% 8.5% 8.0% 7.7% 6.8% 6.8%
Slide 8: APN Asian REIT Fund
APN Asian REIT Fund Continued strong performance throughout CY20 ▪ A distinct universe of Asian REITs (no developers) delivers APN’s “Property for Income” investment process and philosophy by investing into key Asian commercial property markets – Singapore, Japan and Hong Kong ▪ Underpinned by multi
Slide 9: APN Global REIT Income Fund
APN Global REIT Income Fund Significant growth opportunity for APN – launched September 2020 Global commercial property: reliable and growing source Defensive: real assets investment underpins value and 1 3 of income provides inflation hedge ▪ Contracted rent: relatively low risk cash flow ▪ Opportu
Slide 10: APN Industria REIT (ASX: ADI)
APN Industria REIT (ASX: ADI) Strong cash collections and delivering accretive growth ▪ Attractively positioned office and industrial portfolio that continues to attract new capital and grow ▪ >99% of gross rent collected ▪ Demonstrated ability to find value in a competitive market – acquired $108 m
Slide 11: ADI: Track record of disciplined growth and delivering securityholder value
ADI: Track record of disciplined growth and delivering securityholder value Over the last three years - $230 million of acquisitions | average WALE 4.8 years | average cap rate 6.6% TSR1: 51% / 13% p.a. 13 Ricky Way and 10 Jersey Drive Knoxfield and Kilsyth portfolio 350-356 Cooper St, Epping Butler
Slide 12: ADI: Diversified portfolio generating consistent and growing income
ADI: Diversified portfolio generating consistent and growing income Industrial properties now comprise >60% of the ADI portfolio 61% industrial and logistics 39% business parks 19% 38% 39% Industrial Melbourne, Brisbane Adelaide and Brisbane Technology Park Key industrial precincts 15 minutes south
Slide 13: ADI: Resilient income profile from high quality tenants
ADI: Resilient income profile from high quality tenants Tenant composition by income Tenants across the portfolio 7% 93% 7% 5% ASX Listed 7% National Listed Multinational 48% Government 15% Multinational Private 18% Tenant composition by industry – office assets Tenant composition by industry – indu
Slide 14: ADI: Actively managing Industria's real estate
ADI: Actively managing Industria’s real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 97% 97% 96% 96% 78% 95% 95% 151,600 126,500 97,600 83,900 70,300 45,900 11% 10% 18,800 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Dec-20 CPI 2 - <3% ≥ 3% Jun1
Slide 15: APN Convenience Retail REIT (ASX: AQR)
APN Convenience Retail REIT (ASX: AQR) Long lease term, non-discretionary retail focus delivering reliable and growing income ▪ HY21 earnings (FFO) of $12.3m up 36.7% ▪ NTA per security increased by 8 cents to $3.35, up 2.4% ▪ Raised $41.6 million of new equity, and a further $5.8 million post balan
Slide 16: AQR: Acquisitions enhancing portfolio scale and diversity
AQR: Acquisitions enhancing portfolio scale and diversity HY21 acquisitions1 ▪ Brisbane Airport Link, QLD ▪ Berrinba, QLD ($8m – settled ▪ Lonsdale, SA ($4.5m) ($10.5m) Jan 2021) ▪ Paradise, SA ($5.7m) ▪ Moorooka, QLD ($10.2m) ▪ Southern River, WA ($5.9m – settled Jan 2021) $44.5m WACR 6.14% ▪ Cairn
Slide 17: AQR: Diversified portfolio
AQR: Diversified portfolio Major tenants 79% of the portfolio is located in 52.6% Australia’s eastern seaboard states 13.5% 12.3% 7.9% 3.0% Major tenants account for 2.5% 94% of portfolio income 1.6% 58 sites $313m value 1.2% 11 sites 6.6% WACR $64m value 10.3 WALE Complementary 6.9% WACR 5.5% retai
Slide 18: AQR: Sustainable and secure income through long dated leases
AQR: Sustainable and secure income through long dated leases Rent review type by income ▪ 78% of lease income expiring FY30 and beyond ▪ New long term lease deals completed in HY2021 CPI 16% – 7-Eleven Raceview – 12 year lease extension from Oct 2021 (FY22) to Oct 2033 (FY34) – 7-Eleven Maroochydore
Slide 19: Direct Property – Unlisted Funds
Direct Property – Unlisted Funds Strong performance across leasing and capital transaction activity over the year Fund Key achievements and performance FUM – Unlisted Direct Property Funds ▪ 2,670 sqm of leasing completed APN Regional ▪ Independent valuation increased by 22% to $66m (adopted cap rat
Slide 20: Direct property platform with scale and multiple capabilities
Direct property platform with scale and multiple capabilities APN’s position remains well placed to continue to deliver strong and growing income returns Attractive commercial property sectors Weighted towards East Coast capital city locations $433m $550m $586m Convenience retail Industrial Business
Slide 21: Direct property portfolio activity
Direct property portfolio activity Active start to FY21 $2.2 billion 18 $215 million Value of property Transactions Transaction value opportunities assessed Butler Boulevard, Adelaide, SA Brisbane Airport Link Service Centre, QLD 78 Henderson Rd, Rowville, VIC APN Industria REIT APN Convenience Reta
Slide 22: Key growth opportunities – existing
Key growth opportunities – existing Strong income-orientated performance, portfolio management track record and investor support provides significant growth potential – commercial property attractive in low rate environment Current FUM APN Industria REIT $979 million ✓ Highly attractive and resilien
Slide 23: Key growth opportunities – new initiatives
Key growth opportunities – new initiatives Additional new funds launched and in progress – selected sector opportunities to deliver investors strong risk-adjusted real estate returns and achieve scale Childcare ✓ Established evidence of sector’s resilience – financial crisis and COVID ✓ $50 million+
Slide 24: Distribution guidance
Distribution guidance FY21 distribution guidance upgraded to 3.20 to 3.50 cents per security1 3.20 – 3.50 cps 1.50 – 1.80 cps 2.50 – 2.80 cps 1.70 cps 0.93 cps Fully franked dividend 0.77 cps Trust distribution (~64% tax deferred) Original Current First Half Second Half Guidance Guidance 2021 Actual
Slide 25: Capital management
Capital management APN is actively considering capital management initiatives ▪ Several attractive opportunities to allocate capital to existing and new growth opportunities which will add value for securityholders ▪ Also actively considering capital management initiatives including an on-market buy
Slide 26: Market Implied Funds Management platform valuation
Market Implied Funds Management platform valuation1 Implied value of funds management platform of: 70 • $54.8m (1.9% of FUM) (31 Dec 20 close price of $0.590) • $40.0m (1.4% of FUM) (12 Feb 21 close price of $0.545) 60 Total co-investments of $133.6m 50 16.6 Cents per security 40 2.2 6.4 (4.6) 13.4
Slide 27: Outlook
Outlook Active start to FY2021 – well placed for continued growth in current market Market ▪ Commercial real estate well placed with spread between property yields and interest rates remaining attractive ▪ Commercial property sector’s recovery from COVID19 has further to go ▪ Specific sector opportu
Slide 28: Appendices
PPENDICES APN | Property Group
Slide 29: APN Property Group Overview
APN Property Group Overview Specialist real estate investment manager – ‘Property for income’ focus As at 31 December 2020 APN PROPERTY GROUP FUNDS UNDER MANAGEMENT CO-INVESTMENTS & CASH $2,926 MILLION2 $155 MILLION APN CONVENIENCE REAL ESTATE APN INDUSTRIA REIT RETAIL REIT DIRECT PROPERTY CASH CO-I
Slide 30: Overview: Security price and volume
Overview Summary Security Price and Volume ▪ Listed on ASX (Code: APD) $0.850 Volume (RHS) Price (LHS) 5,000k Volume (daily shares traded) ▪ Melbourne-based specialist real estate investment manager $0.750 4,000k ▪ Established 1996, listed 2005 Security price $0.650 3,000k ▪ $2.9 billion in Funds un
Slide 31: Funds Under Management summary (as at 31 December 2020)
Funds Under Management summary (as at 31 December 2020) Pro APN APN Fee Basis FUM Forma Co-investment Relevant Interest1 Funds Sector Investors $m FUM Manage- Perfor- $m Other $m % $m % ment mance Property Retail & APN AREIT Strategy 1,124 ✓ - - Securities Institutional Property Retail & APN Propert
Slide 32: Profit to Operating Cash Flow reconciliation
Profit to Operating Cash Flow reconciliation $’000s 25,000 22,936 20,000 15,000 10,000 435 398 5,592 (16,577) 5,000 (1,600) 0 Statutory profit Mark to market Non-cash Change in Other net working capital Operating Cash after tax revaluations expense items deferred tax assets movement Flow 32
Slide 33: Operating Earnings After Tax Reconciliation
Operating Earnings After Tax Reconciliation $‘000s 8,000 7,000 672 (60) 6,709 6,418 (714) (33) (71) 345 6,000 152 5,000 4,000 3,000 2,000 1,000 - Operating earnings Decrease in funds Increase in Increase in leasing Decrease in Decrease in co- Decrease in Increase in tax Operating earnings after tax
Slide 34: Debt facility summary
Debt facility summary Facility Limit $9.0 million Drawn at 31 December 2020 $9.0 million Loan to Value Ratio (LVR) 12.5% LVR Covenant < 35.0% Distribution Cover Ratio (DCR) 12.9x DCR Covenant > 2.0x Cost of debt 3.8% pa Expiry September 2021 Security Mortgage over specified assets 34
Slide 35: Important notice
Important notice This investor presentation (Presentation) has been prepared by APN Property Group (ASX:APD) comprising APN Property Group Limited (ACN 109 846 068) and APN RE Limited (ACN 627 612 202, AFSL No. 510685 ) as responsible entity for APD Trust (ARSN 629 330 007), (APN). This Presentation
Slide 36: Contact details
Contact details Tim Slattery Joseph De Rango Chief Executive Officer Chief Financial Officer +613 8656 1000 +613 8656 1000 +61400 444 864 +61403 966 574 tim.slattery@apngroup.com.au jderango@apngroup.com.au Follow us… @apngroup APN Property Group Limited APN Property Group apnpropertygroup Level