Dexus Convenience Retail Reit · ASX:DXC
Dexus Convenience Retail Reit — APN Property Group — Investor Presentation (December 2019)
35 slides from Dexus Convenience Retail Reit's investor presentation, December 2019
Slide 1: Broaden Your Property Universe – APN AREIT Fund
BROADEN YOUR PROPERTY UNIVERSE Diversification. Income. Lower Risk. APN AREIT FUND December 2019
Slide 2: About APN Property Group
ABOUT APN PROPERTY GROUP 2
Slide 3: A specialist real estate investment manager
A specialist real estate investment manager …with an income focused, lower risk philosophy Confidential 3
Slide 4: Positively impacting people's lives through investing in real estate
Our purpose Positively impacting people’s lives through investing in real estate APN exists as a for profit company to create value for its shareholders. Our purpose is to positively impact people’s lives. From delivering a better or earlier retirement, to helping realise goals in children’s educati
Slide 5: Our 'property for income' philosophy
Our ‘property for income ’ philosophy APN’s conservative investment philosophy is focused on the underlying fundamentals of real estate. APN has a long held belief that investment in commercial property is primarily an investment in a sustainable income stream whereby the lease quality is key. Long
Slide 6: APN Property Group
APN Property Group Specialist commercial real estate Listed on the ASX Established 1996 $3.1bn (code: ‘APD’) Funds under investment manager management 12 45 staff Capital light, co-investment ‘Property for income’ investment philosophy Funds Melbourne based model As at 31 December 2019 Past performa
Slide 7: Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) ▪ Low upfront capital ▪ Liquidity ▪ Diversification ▪ Own the best quality assets in Australia 7
Slide 8: REITs explained
REITs explained AREIT sector currently yielding 4.76%*. The Exposure to a wide-ranging portfolio of High APN AREIT Fund is currently yielding 5.88%** underlying commercial property assets (retail, Diversification office, industrial & other sectors) yields Capital Growth is generally consistent Abili
Slide 9: What REITs are… and what they are not!
What REITs are… and what they are not! Distribution focus Growth for its own sake Conservative balance sheets Over-leveraged Diversified assets Highly concentrated Passive earnings Active businesses Defensive with upside potential Fixed income 9
Slide 10: Some AREITs you may be familiar with
Some AREITs you may be familiar with…. .... just to name a few 10
Slide 11: Passive AREIT earnings are contracted rent receipts
Passive AREIT earnings are contracted rent receipts 1. Rents and their cash flows give property its important defensive portfolio characteristics 2. Long contracted lease terms 3. CPI, fixed or market based increases result in growing rental streams 4. High quality tenant covenants: national, multi-
Slide 12: AREIT debt metrics are conservative
AREIT debt metrics are conservative AREIT balance sheets are robust and defensively positioned 26% gearing. Long term avg ~30%. Lowest since 1999 AREIT Sector Gearing Ave. Cost: 3.6% p.a. Fixed Debt: 75%+ Maturity: 5.5yrs Source: JP Morgan, APN FM. Figures at Dec18. 12
Slide 13: AREITs are Low-Beta (lower risk)
AREITs are Low-Beta (lower risk) Equity Beta 1.00 1.00 0.80 0.73 0.67 0.60 0.40 0.20 0.00 APN AREIT Fund S&P/ASX 300 AREIT Acc. Index S&P/ASX 300 Acc. Index Sources: IRESS, APN . *Based on monthly returns January 2009 to December 2018 ▪ Comparative analysis of Equity Betas shows AREITs are lower ris
Slide 14: REITs: superior risk adjusted returns to equities
REITs: superior risk adjusted returns to Equities 10 Years to 31 May 2019 16.00% Asian REITs 14.00% Australian REITs 12.00% Return 10.00% Australian Equities 8.00% Asian Equities 6.00% 9.00% 9.50% 10.00% 10.50% 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% Risk Assumes distributions are reinvested. Inve
Slide 15: AREITs – focus on sustainable growth
AREITs – focus on sustainable growth GFC REITS High gearing Pre-GFC AREITs High corp earnings Low gearing Post GFC REITS High offshore Low corp earnings Lower risk Low offshore Domestic focus Source: APN FM 15
Slide 16: AREIT distribution yield spreads
AREIT Distribution yield spreads Growing spread divergence as bond rates fall Source: FactSet, UBS estimates 16
Slide 17: Residential versus Commercial real estate
Residential versus Commercial real estate Residential property Commercial property Effective cash yield1 2-4% per annum Around 6-7% per annum Office, retail, industrial and others such as: healthcare, hotels and Property types Houses, apartments, flats and townhouses storage facilities Leases Short
Slide 18: Residential versus Commercial real estate
Residential versus Commercial real estate In general, commercial property is seen as a defensive, income-focused, low capital growth investment. Residential property, in contrast, is viewed as a lower yielding, higher capital growth investment. Higher Higher Yield Growth Lower Lower Growth Yield Com
Slide 19: Commercial real estate returns underpinned by stable income
Commercial real estate returns underpinned by stable income All commercial sectors have provided attractive long term returns underpinned by income. Real Estate Sector Total Returns %, annualised Retail Office lndustrial 14% Income Capital 12% 10% 6.2% 6.3% 2.7% 3.6% 3.0% 8% 3.5% 6% 4% 8.1% 6.8% 6.2
Slide 20: APN AREIT Fund
APN | Property Group 20
Slide 21: APN AREIT Fund – consistent, relatively high income with lower risk
APN AREIT Fund – Aims to provide a consistent, relatively high level of income with lower risk1 Strategy Objective Investment benefits ▪ Invests in a diversified pool ▪ Gross annual income that ▪ High certainty of return in the form of monthly of AREITs equates to 110% of the distributions ▪ Activel
Slide 22: APN AREIT Fund investment return objectives
APN AREIT Fund investment return objectives Returns - 5 Years to 30/09/2019 Returns - 7 Years to 30/09/2019 16.00% 16.00% 14.00% 14.00% 11.58% 12.00% 11.98% 12.00% 10.77% 10.46% 10.00% 10.00% 43% 61% 43% 60% 8.00% 8.00% 23% 25% 6.00% 6.00% 4.00% 4.00% 57% 77% 39% 57% 75% 40% 2.00% 2.00% 0.00% 0.00%
Slide 23: APN AREIT Fund versus the market
APN AREIT Fund versus the market APN AREIT Fund vs S&P/ASX 300 Property Trust Accumulation Index (AREIT Index) total return since inception 1. APN AREIT Fund total return based on a $1,000 investment since inception 19 January 2009 to 31 January 2020. Retail returns (net of all fees and expenses) an
Slide 24: APN AREIT Fund versus the Index
APN AREIT Fund versus the Index APN’s highly active investment style is what drives the Fund’s superior running yield and lower risk7 factors compared to the Index Metric APN AREIT Fund Index¹ Current/running yield 5.88%² 4.76%³ Number of investments 29 (cover 37) 29 Offshore exposure 8.3% 13.4% Dom
Slide 25: APN AREIT Fund performance versus the benchmark
APN AREIT Fund performance versus the benchmark The Fund aims to deliver 110% of the Index’s dividend yield and has a strong record or outperformance 3 110% of Benchmark Period¹ APN AREIT Fund Yield² Benchmark Yield Outperformance Yield Year ending Jun 2019 6.18% 4.52% 4.97% 1.21% Year ending Jun 20
Slide 26: APN AREIT Fund – Income focus drives consistency
APN AREIT Fund – Income focus drives consistency APN’s income focus reflected in the consistency of income returns and the larger contribution they make to Total Returns. 26
Slide 27: APN AREIT Fund performance to December 2019
APN AREIT Fund performance to 31 December 2019 APN AREIT APN AREIT APN AREIT Fund Index3 Relative APN AREIT Fund Index Relative Fund Growth Fund Income1 Total Return2 Performance Standard Dev4 Standard Standard Dev Dev. 1 month (3.98%) 0.45% (3.53%) (4.24%) 0.71% 6 months 0.37% 2.92% 3.29% 0.40% 2.8
Slide 28: APN AREIT Fund - Leading research house ratings
APN AREIT Fund - Leading research house ratings SQM Research rates the APN AREIT Fund ‘4.25-stars’ on the belief that “the Fund pays distributions on a monthly basis, which is a positive for income-focused investors. This is a distinct feature as compared to peer funds, which generally pay on a quar
Slide 29: An actively managed Australian property securities fund
High Morningstar Sustainability Rating™ An actively managed Australian property securities fund mFund code: APF01 Superior running yield and risk adjusted ▪ Income focused returns compared to the Index ▪ Monthly distributions APN AREIT ▪ Lower than market Metric Fund¹ Index2 volatility Current runni
Slide 30: Market Outlook and Value
MARKE! OUTLOOK AND VALUE APN | Property Group 30
Slide 31: Australian commercial property sectors
Australian commercial property sectors Retail Office Industrial Residential ▪ Highest barriers to entry ▪ Lower barriers to entry ▪ Lowest barriers to entry ▪ Avg prices improving and prices ▪ Low availability of industrial stock now only 2% below the peak, led ▪ New supply down on 2017 with ▪ AREIT
Slide 32: Australian REIT sector outlook
Australian REIT sector outlook ▪ Transparent and secure property markets - High occupancy and steady rental growth Fundamentals ▪ Further NTA growth anticipated ▪ Steady GDP growth and economy still expanding GDP growth ▪ Resource prices ▪ Forecast GDP growth: slowing ~2.75%1 is OK for property ▪ AR
Slide 33: 2019 Direct Real Estate Sector Outlook
2019 Direct Real Estate Sector Outlook Industrial Office Retail Rental growth Capital growth New supply ▪ Industrial – Rental growth underpinned by strong tenant activity and limited availability of industrial stock on market – Increased demand from offshore capital supporting current valuations ▪ O
Slide 34: Contact details
Contact details Investor Services 1800 996 456 (toll free) Check out our Blog for the latest articles and insights at: apngroup.blog Adviser Services 1300 027 636 Operating hours: 8.30am – 5.30pm (AEST) weekdays Follow us… @apngroup APN Property Group Limited APN Property Group Limited apnpropertygr
Slide 35: Disclaimer
Disclaimer This presentation has been prepared by APN Property Group Limited (ACN 109 846 068 APD.ASX) (APN) and APN Funds Management Limited (APNFM) (ACN 080 674 479, AFSL No. 237500). APNFM is a wholly owned subsidiary of APN Property Group Limited and the responsible entity and issuer of the APN
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