Centuria Capital Group · ASX:CNI
Centuria Capital — Merger or Acquisition (November 2016)
57 slides from Centuria Capital's merger presentation, Nov 23, 2016
Slide 1: Acquisition and Capital Raising
Centuria Capital Group For personal use only Centuria Capital Group Acquisition and Capital Raising 23 November 2016 www.centuria.com.au Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1
Slide 2: Disclaimer
Centuria Capital Group Disclaimer For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES This Presentation has been prepared by Centuria Capital Limited ACN 095 454 336 (Company) and Centuria Funds Management Limited ACN 607 153 588 as responsible entity of the Centuria Capital F
Slide 3: Disclaimer
Centuria Capital Group Disclaimer For personal use only NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performa
Slide 4: Contents
Centuria Capital Group Contents For personal use only Table of Contents Page 1 Executive Summary 5 2 Centuria to Date 9 3 The Transaction 14 4 The Expanded Centuria 18 5 Transitioning to the Expanded Centuria 24 6 Financial Impact 26 7 Equity Raising Summary 29 8 Appendices 34 In this document “Cent
Slide 5: Executive Summary
Centuria Capital Group For personal use only Section 1 Executive Summary Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5
Slide 6: Executive Summary
Centuria Capital Group Executive Summary For personal use only • Centuria to acquire the majority of 360 Capital Group’s (ASX:TGP) real estate platform for $217m (“Transaction”) comprising: o the manager of 360 Capital Industrial Fund (ASX:TIX), 360 Capital Office Fund (ASX:TOF) and four unlisted fu
Slide 7: Transaction Rationale
Centuria Capital Group Transaction Rationale For personal use only Creating one of the leading property funds management platforms Increases listed property FUM ~four-fold to $1.55bn including exposure to a dedicated industrial REIT (TIX) and the potential to create the largest metro focused offic
Slide 8: Transformational change in scale
Centuria Capital Group Transformational change in scale For personal use only Centuria Pre Centuria Post Change Funds Under Management 2,2071 3,603 63% Portfolio No of listed property funds 1 3 2 No of unlisted property funds 14 18 4 FY17 Forecast Underlying EPS (cents) 9.3 9.9 6.0% Income metrics2
Slide 9: Centuria to Date
Centuria Capital Group For personal use only Section 2 Centuria to Date Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 9
Slide 10: Profile
Centuria Capital Group Centuria Profile For personal use only • Founded in 1998, Centuria is an ASX listed investment manager currently managing $2.2bn of investments1 o Property Funds Management Division: Manages a portfolio of 14 unlisted funds and the ASX listed Centuria Metropolitan REIT (ASX:CM
Slide 11: Vertically Integrated Property Model
Centuria Capital Group Vertically Integrated Property Model For personal use only • Centuria has a fully integrated property management platform that seeks to add value to the origination and ownership process through a hands on approach to all aspects of asset ownership • Centuria has 39 employees
Slide 12: Achieving Strategic Milestones
Centuria Capital Group Achieving Strategic Milestones For personal use only • Centuria has a disciplined approach to its strategy delivering on its milestone initiatives, including recent examples: 175 Castlereagh St. Sydney, NSW Delivering attractive returns to • ~30% IRR on sale of 175 Castlereagh
Slide 13: Select Portfolio Acquisitions Over Last Years
Centuria Capital Group Select Portfolio Acquisitions Over Last 5 Years For personal use only • Centuria’s growth story is underpinned by its continued acquisition of higher value property through both its listed and unlisted funds 200 Creek Street, 441 St. Kilda Rd 175 Castlereagh St. 8 Central Ave.
Slide 14: The Transaction
Centuria Capital Group For personal use only Section 3 The Transaction Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 14
Slide 15: Transaction Overview
Centuria Capital Group Transaction Overview For personal use only • Centuria has agreed to acquire TGP’s real estate funds management platform under 360 Capital Investment Management Limited (“CIML”) and TGP’s co-investment holdings • Centuria will examine options for the transfer of the majority of
Slide 16: Acquisition Metrics – Funds Management Platform
Centuria Capital Group Acquisition Metrics – Funds Management Platform For personal use only • Acquiring funds management platform for $91.5m (+ additional $10m in cash and net assets) which represents a 10.0x multiple to forecast FY17 annualised EBIT expected to be generated by the platform • Fees
Slide 17: Overview of the Capital Funds
Centuria Capital Group Overview of the 360 Capital Funds1 For personal use only 360 Capital 111 St. 360 Capital Retail Fund 360 Capital Havelock 360 Capital 441 Murray TIX TOF George's Terrace No 1 House Property Trust Street Property Trust Property Trust Fund Type Listed Listed Unlisted Unlisted Un
Slide 18: The Expanded Centuria
Centuria Capital Group For personal use only Section 4 The Expanded Centuria Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 18
Slide 19: Overview of the Expanded Centuria
Centuria Capital Group Overview of the Expanded Centuria For personal use only • Centuria provides security holders with an exposure to a substantial funds management platform with established access to deep listed and unlisted investor bases covering real estate and investment bonds • Centuria has
Slide 20: Transformational change in scale to over $3.6bn in FUM
Centuria Capital Group Transformational change in scale to over $3.6bn in FUM For personal use only • An approximately four-fold increase in listed property funds under management business transforms Centuria into the fourth largest pure play ASX listed property funds management business Comparable
Slide 21: Enhanced earnings quality as recurring revenue grows
Centuria Capital Group Enhanced earnings quality as recurring revenue grows For personal use only Revenue Centuria pre1 Revenue Centuria post1,2 • Centuria’s earnings quality is materially improved with recurring revenues expected to increase from 65% to 77% of total revenue post Transaction1,2 10%
Slide 22: Creating a diversified property funds management platform
Centuria Capital Group Creating a diversified property funds management platform For personal use only • Centuria real estate platform significantly rebalanced to listed Centuria pre Centuria post REITs and the industrial asset class 19% 20% o TIX is a dedicated industrial REIT included in the 33% S
Slide 23: Leverages Centuria's existing capabilities
Centuria Capital Group Leverages Centuria’s existing capabilities For personal use only • Significant incremental income generation resulting from additional FUM added to the platform1 Listed Funds Unlisted Funds Advantages Considerations Advantages Considerations • Ability to leverage equity capita
Slide 24: Transitioning to the Expanded Centuria
Centuria Capital Group For personal use only Section 5 Transitioning to the Expanded Centuria Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 24
Slide 25: Benefits for Property Fund Investors
Centuria Capital Group Benefits for Property Fund Investors For personal use only • Centuria’s property funds management business has been serving Australian investors since 1998 with 33 completed funds totalling $1.3 billion • Vertically Integrated property management model with depth and experienc
Slide 26: Financial Impact
Centuria Capital Group For personal use only Section 6 Financial Impact Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 26
Slide 27: Financial Impact: Proforma Forecast FY17 Profit and Loss Statement
Centuria Capital Group Financial Impact: Proforma Forecast FY17 Profit and Loss Statement For personal use only • Assumes the Transaction is implemented on 1 Jan 2017 and the Equity Raising Proforma forecast FY17 Underlying Profit and Loss Statement1,2,3,4,5 (A$m) completes in full1,2 Centuria Centu
Slide 28: Financial Impact: Proforma Balance Sheet
Centuria Capital Group Financial Impact: Proforma Balance Sheet For personal use only 30 Jun 2016: Proforma Balance Sheet2,3,4 (A$m) • Proforma adjustments to 30 June 2016 Balance Sheet reflect: Centuria Centuria Adjustments Transaction pre post o Payment of accrued fees from the sale of Macquarie P
Slide 29: Equity Raising Summary
Centuria Capital Group For personal use only Section 7 Equity Raising Summary Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 29
Slide 30: Equity Raising Overview
Centuria Capital Group Equity Raising Overview For personal use only • The $150m fully underwritten equity raising at an Offer Price of $1.00 per New Security Key Offer Information1 comprises a: o 1 for 1 accelerated pro-rata non-renounceable entitlement offer to raise Offer Price per security ($) $
Slide 31: Details of the Equity Raising
Centuria Capital Group Details of the Equity Raising For personal use only Equity Raising Details • An Equity Raising of up to 150 million New Securities to raise approximately $150 million • 1-for-1 accelerated non-renounceable entitlement offer to raise approximately $77 million • Record date is 2
Slide 32: Sources and Uses of the Proceeds
Centuria Capital Group Sources and Uses of the Proceeds For personal use only • The equity raising will partly fund the acquisition of CIML, the co-investments in TIX and TOF and fund the Transaction and associated transaction costs • TGP has agreed to provide Centuria with $50m in vendor financing
Slide 33: Equity Raising Indicative Timetable
Centuria Capital Group Equity Raising Indicative Timetable For personal use only Indicative Offer Timetable Trading Halt and announcement of the Transaction and Equity Raising Wednesday, 23 November 2016 Placement, Conditional Placement & Institutional Entitlement Offer opens Wednesday, 23 November
Slide 34: Appendices
Centuria Capital Group For personal use only Section 8 Appendices Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 34
Slide 35: 360 Capital Industrial Fund (TIX)
Centuria Capital Group 360 Capital Industrial Fund (ASX: TIX) For personal use only Financial Metrics (30 June 2016) TIX Overview NTA per Unit ($) 2.32 • Largest ASX listed pure rent collecting industrial AREIT with a market capitalisation of Gearing (%) 42.6% $517.2m as at 22 November 2016 Property
Slide 36: 360 Capital Office Fund (TOF)
Centuria Capital Group 360 Capital Office Fund (ASX:TOF) For personal use only Financial Metrics (30 June 2016) TOF Overview NTA per Unit ($) 2.25 • Listed in April 2014 with a strategic focus on acquiring suburban A and CBD B grade office Gearing (%) 17.8% properties Property Metrics (30 June 2016)
Slide 37: Metropolitan REIT (CMA)
Centuria Capital Group Centuria Metropolitan REIT (ASX: CMA) For personal use only Financial Metrics (30 June 2016) CMA Overview NTA per Stapled Security ($) 2.18 • ASX listed REIT with a market capitalisation of $248.4m as at 22 November 2016 Gearing (%) 33.2% • Conservatively managed REIT with a r
Slide 38: Board of Directors
Centuria Capital Group Board of Directors For personal use only Garry Charny, Chairman Nicholas Collishaw, Executive Director & CEO Listed Property Funds • Garry Charny was appointed Chairman of the Centuria Board in March 2016; He is • Nicholas Collishaw was appointed Chief Executive Officer of Cen
Slide 39: Key management biographies
Centuria Capital Group Key management biographies For personal use only John McBain, Executive Director & Group CEO Neil Rogan, General Manager, Investment Bonds Division • Please refer to “Board of Directors” above • Neil was appointed GM – Investment Bonds Division at Centuria Life in October 2014
Slide 40: CIML Fee Structures
Centuria Capital Group CIML Fee Structures For personal use only Listed TIX TOF Management Property Management Property Base management fee: 0.60% of gross Base management fee: 0.60% of gross Nil Nil asset value asset value Custodian fee: 0.05% of gross asset value Custodian fee: 0.05% of gross asse
Slide 41: Risks
Centuria Capital Group Risks For personal use only General Risks: Economic Environment • General economic factors such as interest rates, exchange rates, inflation, business and consumer confidence and general market factors may have an adverse impact on Centuria’s earnings. Aspects of the business
Slide 42: Risks
Centuria Capital Group Risks For personal use only Liquidity and realisation risk • The ongoing value of properties held by funds managed by Centuria may fluctuate due to a number of factors including rental levels, occupancy assumptions, vacancy periods, rental incomes and capitalisation rates, all
Slide 43: Risks
Centuria Capital Group Risks For personal use only Funding • Centuria and funds managed by the Centuria Funds Management business relies on access to various sources of capital, along with the refinancing and/or variation of existing debt facilities. An inability to obtain the necessary funding or r
Slide 44: Risks Specific To the Transaction
Centuria Capital Group Risks For personal use only Risks Specific To the Transaction Conditional Placement Backstop Arrangements • The Conditional Placement is conditional on the approval by ordinary resolution of non-participating security holders at a extraordinary general meeting scheduled for 3
Slide 45: Material Contracts: Share Sale Agreement
Centuria Capital Group Material Contracts: Share Sale Agreement For personal use only 1.0 Share Sale Agreement: 1.1 Sale and Consideration • 360 Capital Group Limited (Seller), Centuria Capital Limited (Buyer) and Centuria Funds Management Limited as responsible entity of the Centuria Capital Fund (
Slide 46: Material Contracts: Share Sale Agreement cont.
Centuria Capital Group Material Contracts: Share Sale Agreement cont. For personal use only • For up to 18 months following Completion in relation to TIX and TOF and otherwise for up to 2 years following Completion and subject to the Buyer not defaulting under the Loan, the Seller will not take acti
Slide 47: Material Contracts: TIX & TOF Unit Sale Agreement
Centuria Capital Group Material Contracts: TIX & TOF Unit Sale Agreement For personal use only 2.0 TIX Unit Sale Agreement • The Seller, the Company as trustee of the 360 Capital Diversified Property Fund, the Company as trustee of the 360 Capital Diversified Property Industrial Sub Trust, the Compa
Slide 48: Material Contracts: Call, Put and Retail Options
Centuria Capital Group Material Contracts: Call, Put and Retail Options For personal use only 4.0 Call Option • The Seller, the Company as trustee of the 360 Capital Diversified Property Fund, the Company as trustee of the 360 Capital Trust, Incoming Trustee Centuria Funds Management Limited as trus
Slide 49: Material Contracts: Loan Agreement & Underwriting Agreement
Centuria Capital Group Material Contracts: Loan Agreement & Underwriting Agreement For personal use only 7.0 Loan Agreement • It is proposed that the Seller will provide an interest only vendor loan to Centuria Funds Management Limited as responsible entity for the Centuria Capital Fund (Borrower) f
Slide 50: Material Contracts: Underwriting Agreement (cont.) & Backstop Underwriting Agreement
Centuria Capital Group Material Contracts: Underwriting Agreement (cont.) & Backstop Underwriting Agreement For personal use only ASIC issues, or threatens in writing to issue, proceedings or notifies Centuria in writing that it has commenced any investigation in relation to the Equity Raising, wh
Slide 51: Financial Assumptions – General Transaction
Centuria Capital Group Financial Assumptions – General Transaction For personal use only The Directors’ best estimate assumptions in relation to the forecast financial information are based on the following general assumptions Implementation Date • The Transaction is implemented on 1 January 2017 Of
Slide 52: Financial Assumptions – P&L
Centuria Capital Group Financial Assumptions – P&L For personal use only • Investment Bonds and funds management fees have been calculated in accordance with expanded Centuria’s agreements with the Investment Bond Fees and Funds respective Funds. Refer to page 23 for illustrative example of fees ass
Slide 53: Foreign Jurisdictions
Centuria Capital Group Foreign Jurisdictions For personal use only International Offer Restrictions: This document does not constitute an offer of new stapled securities ("New Securities") of Centuria in any jurisdiction in which it would be unlawful. In particular, this document may not be distribu
Slide 54: Director sub-underwriting commitments
Centuria Capital Group Director sub-underwriting commitments For personal use only The Directors of CNI are supportive of the Transaction and the Entitlement Offer Certain Directors and members of senior management (or entities associated with these Directors or members of senior management) of CNI,
Slide 55: Glossary
Centuria Capital Group Glossary For personal use only ASIC Australian Securities and Investment Commission ASX ASX Limited (ABN 98 008 624 691) AUM Assets under Management Balance Sheet Gearing Gearing calculated as total borrowings - cash divided by total assets le Centuria The ASX listed stapled e
Slide 56: Glossary
Centuria Capital Group Glossary For personal use only FY17 Financial Year ended 30 June 2017 GLA Gross lettable area, the total lettable floor area in square metres IFRS International Financial Reporting Standards as developed and maintained by the International Accounting Standards Board IRR Intern
Slide 57: www.centuria.com.au
Centuria Capital Group For personal use only www.centuria.com.au Copyright © Centuria Capital Group NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 57
Centuria Capital Group — Merger or Acquisition (November 2016) on 6ix