Dexus Convenience Retail REIT · ASX:DXC

Dexus Convenience Retail REIT — APN Property Group — FY2017 Earnings Presentation

40 slides from Dexus Convenience Retail REIT's earnings presentation, Aug 24, 2017

  1. Slide 1: FY2017 Results Presentation

    FY2017 RESULTS PRESENTATION 24 AUGUST 2017 www.apngroup.com.au ASX Code: APD

  2. Slide 2: Overview: Philosophy, Approach, Business Model

    Overview APN PROPERTY GROUP IS A SPECIALIST REAL ESTATE Overview INVESTMENT MANAGER: COMMERCIAL PROPERTY Philosophy WesTrac Tomago, Newcastle NSW – Industria REIT PROPERTY FOR INCOME Approach INVESTMENT OUTSTANDING PERFORMANCE SERVICE Puma Rutherford, NSW – Convenience Retail REIT Business Model MAN

  3. Slide 3: Overview

    Overview As at 30 June 2017 APN PROPERTY GROUP LIMITED $2.6 BILLION FUM1 REAL ESTATE CONVENIENCE INDUSTRIA REIT DIRECT PROPERTY SECURITIES RETAIL REIT $640 MILLION FUM $125 MILLION FUM2 $1,534 MILLION FUM $308 MILLION FUM1 BALANCE SHEET $110 MILLION NET TANGIBLE ASSETS ► Established 1996 ► 12 Funds,

  4. Slide 4: FY2017 Achievements

    FY2017 Achievements OPERATING EARNINGS1 $7.3 million ▲95% (2.35 cents per share (cps)2) FUM $2.6 billion3 ▲19% Puma Kempsey South, NSW – Convenience Retail REIT TOTAL SHAREHOLDER 1 year: 22.9% RETURN4 3 years: 33.3% pa 2.00 cps fully franked ▲14% DIVIDENDS Interim: 1.25 cps Final: 0.75 cps NTA: 35.1

  5. Slide 5: FY2017 Achievements – continued

    FY2017 Achievements – continued  Strong risk adjusted returns − Securities, Industria and Direct Funds − Modest debt levels across funds  Launch of $109 million1 pre-IPO APN Retail Property Fund (Direct Division)  Industria REIT asset and portfolio performance − Asset management drives over 24,00

  6. Slide 6: FY2017 Results Overview

    FY2017 Results Overview  Strong growth across funds management fees and co- Operating EPS1 investment income  Earnings growth being delivered from execution of plan and increasing platform scale  96% income from recurring sources  Significant increase in Operating EPS’ – excludes favourable mark

  7. Slide 7: Achieving sustained growth in key financial metrics

    Achieving sustained growth in key financial metrics From continuing operations only; removes Healthcare division for all time periods  Consistent growth in key metrics at attractive rates Recurring Income Growth  Demonstrable success of business model  Growth achieved with appropriate levels of r

  8. Slide 8: Income statement

    Income statement $000s FY2017 FY2016 Change  Funds management fees up 19% to $12.9 million Funds management fees 12,873 10,797 ▲ 19%  Asset & PM fees increased due to fund leasing activity Performance & transaction fees 845 931 ▼ 9%  Co-investment income (not including mark to market gains) up As

  9. Slide 9: Balance sheet

    Balance sheet  Cash of $18.6 million includes $5.0 million for AFS Licence1 $000s June 2017 June 2016 Change  Cash change reflects transaction relating to settlement of healthcare division sale, special and ordinary dividends ($36.9 Cash1 18,640 72,031 ▼ 74% million), repayment of corporate loan (

  10. Slide 10: Share price performance to 30 June 2017

    Share price performance to 30 June 2017 3 year share price performance, figures annualised $0.55 $0.50 APD $0.45 S&P/ASX Small Ordinaries (rebased) S&P/ASX 200 (rebased) 33.3% $0.40 $0.35 $0.30 3.6% $0.25 2.0% $0.20 $0.15 $0.10 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Source: I

  11. Slide 11: Real Estate Securities

    Real Estate Securities  $202 million in net inflows into AREIT strategy - $17 million FuM Growth per month average $1,571m $1,534m  Wholesale mandate strategy growing, net inflows of $57 $1,215m million received 2nd half FY2017 (included above) $1,042m  AREIT Fund distribution yield of ~6.37%1 pa

  12. Slide 12: Industria REIT

    Industria REIT Achievements  Completed $158.6 million acquisition of WesTrac Newcastle – 7.25% cap rate triple-net 18 year lease, fixed 3% increases  23.6% NTA growth  Outstanding asset management result – leased 24,000 sqm  3% FFO growth – top end of guidance  Total security holder return of 1

  13. Slide 13: Industria REIT – continued

    Industria REIT – continued Strongly aligned, incentivised and high performing management team  Substantial value added to date for all IDR investors including APD  5% stake on IPO ($12.5 million)  $42.7 million invested since listing (including above)  16.3% stake and 5.1% held by APN funds: 21.

  14. Slide 14: Direct

    Direct Achievements Adjusted $ million FuM CRR  Funds under management up 56% to $320 million FuM  Established pre-IPO fund, APN Retail Property Fund APN Retail Property Fund $109 $109 -  Convenience Retail REIT established APN Property Plus Portfolio $86 $86 -  Newmark APN Auburn Property Fund

  15. Slide 15: APN Property Plus Portfolio case study: growing and seeding listed fund

    APN Property Plus Portfolio case study: growing and seeding listed fund Opportunity Identification Active management  APN identified an opportunity in a defensive  2013 sold 2 properties above book value  Delivered 14.6% pa total return since  $210 million Puma Energy 15 year property asset clas

  16. Slide 16: Convenience Retail REIT

    Convenience Retail REIT  Listed on the ASX July 2017  Comprising APN Property Plus Portfolio, APN Retail Property Fund and additional properties totalling $307.6m  Successful utilisation of APD balance sheet to secure and execute opportunity Key metrics  Consistent with APN’s “property for incom

  17. Slide 17: Investment property portfolio update (on balance sheet)

    Investment property portfolio update (on balance sheet) Woolworths/MCG South Nowra Property Update  13,000sqm NLA  South Nowra, NSW  Held on APN’s balance sheet (100% owned by APD)  15 year lease – current WALE 14 years  Guaranteed by ASX-listed Woolworths Limited  Building completed; lease co

  18. Slide 18: Generation Healthcare case study: co-investment in listed fund

    Generation Healthcare case study: co-investment in listed fund Co-investment coupled with strong investment performance delivered exceptional outcome for GHC investors and APD shareholders Generation Healthcare REIT unit price and portfolio value APN return metrics Sale of management rights to 650m

  19. Slide 19: Established Equity Raising and Distribution Platform

    Established Equity Raising and Distribution Platform Over 20 years APN has built a broad market distribution reach  All the major vertically integrated brands Wraps and Platforms  Market leading wraps and private labels for independents and private wealth  ASX mFund availability through accredite

  20. Slide 20: Market commentary

    Market commentary  Continuing strength in Australian direct property markets – listed market offers value relative to recent transaction evidence  Return expectations have continued to moderate – ‘Risk free’ rates remain low – Unlevered annual total returns of 9-10% a few years ago are now 6-8% 

  21. Slide 21: Growth opportunities

    Growth opportunities REAL ESTATE SECURITIES NEW PRODUCTS  Continuing inflows into Securities Funds  New products under active consideration  Nascent growth of Asian Real Estate Securities  Leverage track record, equity raising platform Fund  Income orientated products remain in high demand  Ne

  22. Slide 22: Outlook for APN

    Outlook for APN  Strategy of building sustainable earnings via scale delivering results  Significant operating leverage (EPS growth) potential  Balance sheet and funds remains well positioned to capitalise on opportunities – strong NTA and cash positions  Funds also well capitalised with moderat

  23. Slide 23: Earnings and dividend guidance

    Earnings and dividend guidance Subject to continuation of current market conditions FY2017 FY2018 Original guidance Results Guidance Guidance only includes transaction / Includes recurring as well as Guidance only includes transaction / performance revenue items which transactional and performance b

  24. Slide 24: Implied Funds Management platform valuation

    Implied Funds Management platform valuation1 Market implied value of funds management platform of $11.7m 45.0 based on $2.6bn FuM = 0.45% 40.0 3.7 Total co-investments2 of 35.0 $85.3m 5.9 (0.7) A$ cents per share 30.0 4.4 25.0 5.4 20.0 40.5 15.0 10.0 21.8 5.0 0.0 2 IDR Other co-investments Investmen

  25. Slide 25: Appendices

    APPENDICES APN | Property Group 25

  26. Slide 26: Proforma operating EPS reconciliation

    Proforma operating EPS reconciliation  AIFRS requires $2.0 million deduction for the special dividend paid to calculate statutory earnings per share  Note 15 to the Financial Statements provides a detailed reconciliation  All figures below are for continuing operations and on a diluted basis – re

  27. Slide 27: Funds under Management Summary

    Funds under Management1 Summary FuM as at Fee Basis APN Co-investment FuM1 30 June Funds Sector Investors Manage- Perfor- $m 2017 Other $m % $m ment mance APN AREIT Fund Property Securities Retail & Institutional 1,203 1,203  0.2 − APN AREIT Mandates Property Securities Institutional 112 112  − −

  28. Slide 28: Pro-forma Balance sheet for post balance date events

    Pro-forma Balance sheet for post balance date events Taree Deposit Balance Sheet ($'000s) 30 Jun 2017 Loan drawdown CRR Co-investment Pro-forma refunded Cash and cash equivalents 18,640 6,000 (16,696) 3,146 11,090 Co-investment 77,820 17,358 95,178 Investment Properties 24,200 24,200 Other assets 8,

  29. Slide 29: Profit to operating cash flow reconciliation

    Profit to operating cash flow reconciliation $’000s June 2017 June 2016 Cashflow Reconciliation 12,000 $’000s $’000s 10,691 64 (4,520) Statutory profit after tax 10,691 49,670 10,000 4,350 4,349 9,161 Add/(deduct): Non-controlling interests 64 5,077 8,000 Mark to market revaluations (4,520) (52,417)

  30. Slide 30: Operating Profit After Tax Reconciliation

    Operating Profit After Tax Reconciliation $‘000s 10,000 733 (1,759) 9,000 445 8,000 1,803 7,320 7,000 400 (44) 6,000 2,076 (86) 5,000 4,000 3,752 3,000 2,000 1,000 - Operating Increase in funds Decrease in Increase in Decrease in Increase in co- Increase in rent Increase in Decrease in tax Operating

  31. Slide 31: Debt facility summary

    Debt facility summary Corporate debt facility (established post balance date) Asset debt facility Facility Limit $10.5 million Facility Limit $8.0 million Drawn at 30 June 2017 $10.5 million Loan to Value ratio Covenants and Distribution Cover Ratio Loan to Value Ratio (LVR) 43.5% ~5.15% LVR Covenan

  32. Slide 32: Overview: Share Price and Volume

    Overview Overview Share Price and Volume  Listed on ASX (Code: APD) $0.60 2.00 Volume (RHS) Price (LHS) Volume (daily shares traded)  Melbourne-based specialist real estate investment manager $0.55 $0.50 1.50  Established 1996, listed 2005 Share price $0.45  Over $2.6 billion in Funds under Mana

  33. Slide 33: Boards and Management team

    Boards and Management team Experienced real estate team, Independent Boards Board of Directors (APN Property Group Limited) Independent Responsible Entity – APN Funds Management Limited Chris Aylward  Over 30 years experience in property and construction industry Geoff  Chairman since April 2012 a

  34. Slide 34: APN Steller Development Fund

    APN Steller Development Fund Multi-site residential development, closed-end wholesale  Successfully launched September 2015 Investment type unlisted property fund  Attractive risk / return metrics - $6,400 per sqm (net Development 209 apartments over 6 medium density projects in South sellable are

  35. Slide 35: APN Development Fund No. 2

    APN Development Fund No. 2 Fund overview  Wholesale fund – institutional investors  Committed equity $58 million  Capital returned $10 million 150 Collins St – Westpac Head Office  JV development  Completed November 2014  Sold via fund through  Grocon litigation progressing 150 Collins St – W

  36. Slide 36: APN Coburg North Retail Fund

    APN Coburg North Retail Fund  Recently built (2014) shopping centre anchored by Woolworths supermarket Investment type Single asset, closed-end unlisted property fund  Located in high growth area in Melbourne’s inner North Investment objective Stable income and capital growth (10km from CBD) Prope

  37. Slide 37: APN Regional Property Fund

    APN Regional Property Fund  Net tangible assets at 30 June 2017 is $1.19 per unit, an Commercial office property fund, listed on the National Investment type Stock Exchange (NSX) increase of 7.2% from the previous year The Fund comprises two A-grade office buildings located  Assets currently under

  38. Slide 38: APN Asian REIT Fund

    APN Asian REIT Fund  FuM up 53% to $13 million Research ratings  Asian listed property trusts  Focus on Hong Kong, Singapore and Japan  13.9% pa total return since inception (2011)  ~6.5% pa current distribution yield  Distributions paid monthly and daily liquidity APN Asian REIT Fund - $1,000

  39. Slide 39: Disclaimer

    Disclaimer The financial information included in this presentation is based on APN Property Group’s financial statements and results that have been prepared in accordance with the Corporations Act 2001 (Cth), applicable Accounting Standards and Interpretations and in compliance with other applicable

  40. Slide 40: Contact details

    Contact details APN Property Group Limited Follow @apngroup Tim Slattery Michael Groth Chief Executive Officer Chief Financial Officer +613 8656 1000 +613 8656 1000 tim.slattery@apngroup.com.au mgroth@apngroup.com.au ASX Code: APD APN Property Group Limited Level 30,101 Collins Street, Melbourne, Vi

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