Gpt Group · ASX:GPT
Gpt — FY2010 Earnings Presentation
42 slides from Gpt's earnings presentation, Feb 25, 2011
Slide 1: GPT Annual Result 2010
GPT ANNUAL RESULT 20 1 0 we create. and sustain environments that enrich peoples lives. 25 February 2011
Slide 2: Agenda
Agenda Strategy Michael Cameron Financial Results Michael O’Brien Capital Management Michael O’Brien Business Performance Michael Cameron - Investment Management - Funds Management - Development - Sustainability Outlook Michael Cameron 2
Slide 3: Reinvigorating GPT: Strength, Stability and Earnings Growth
Reinvigorating GPT In 2010 GPT delivered on its promise of Strength, Stability and Earnings Growth GPT has achieved realised operating income of $410m GPT has delivered on its 2010 objectives GPT is on track to being Australia’s “Best Performing” Property Group Note: All information included in
Slide 4: Our Strategy
Strategy Our Strategy Our Purpose We create and sustain environments that enrich people’s lives Our Strategy We own and actively manage a diversified portfolio of quality Australian property assets, delivering long term benefits For our Investors… For our Customers… We are a secure, reliable We prov
Slide 5: 2010 Highlights – Operational Scorecard has been delivered
Strategy 2010 Highlights – Operational Scorecard has been delivered Financial performance improved Solid operational performance 9 ROI of $410 million up 9% 9 Higher occupancy and long leases 9 Cost of debt reduced by 80bps(1) 9 Achieved 3.2% average 9 Credit ratings improved comparable income growt
Slide 6: 2010 Highlights – Strategic Scorecard has been delivered
Strategy 2010 Highlights – Strategic Scorecard has been delivered Exit of non core assets 9 Sale of Ayers Rock Resort announced October 2010 9 Sale of US Seniors announced February 2011 Portfolio management and capital allocation 9 Framework in place Closing the NTA gap 9 Good progress on all initia
Slide 7: 2010 Highlights – Closing the NTA gap
Strategy 2010 Highlights – Closing the NTA gap Substantial progress on closing the gap initiatives Gap to NTA Initiatives Update June 2010 to Feb 2011 Efficiency gains 9 Target exceeded, more opportunities 18.6% Capital management 9 Good progress 10.1% Reduced stake in wholesale funds 9 Good progres
Slide 8: Strategic Focus 2011
Strategy Strategic Focus 2011 Continuing progress towards best performance 1. Close the gap to NTA 2. Optimise capital allocation 3. Enhance growth potential 4. Equip employees for high performance 8
Slide 9: 2010 Result Summary
Financial Results 2010 Result Summary Operating performance ahead of FY 2009 9.1% increase in Realised Operating Income Return to statutory profitability Earnings per security of 20.7 cents Distribution per security of 16.3 cents – 80% payout ratio GPT Financial Summary 12 months to 31 Dec 2
Slide 10: 2010 Balance Sheet Summary
Financial Results 2010 Balance Sheet Summary Increase in NTA to $3.60 4% increase in NTA per security Gearing remains low at 24.9%(1) GPT Balance Sheet Balance sheet asset mix(3) As at 31 Dec 2010 2009 As at 31 Dec 2010 Total assets ($m) 9,752 9,163 Non-core 7% Industrial Total borrowings ($m) 2
Slide 11: 2010 Segment Performance
Financial Results 2010 Segment Performance Reflects implementation of strategy Realised Operating Income by segment 12 months to 31 Dec ($m) 2010 2009 Comment Retail 267.3 268.3 Comparable income up 4.7%(1) Office 114.8 115.4 Comparable income up 1.6%(1) Industrial 54.4 49.9 Comparable income up 2.7
Slide 12: 2010 Management Expenses
Financial Results 2010 Management Expenses Delivered corporate expense savings Achieved 15% reduction in corporate overheads against target of 10% Expenses ‘Jaws’ 12 months to 31 Dec ($m) 2010 2009 December 2010 Corporate Overheads 28.7 33.7 3.2% ‘Jaws’ = 7.8% Portfolio Expenses 39.7 30.2 Tax Bene
Slide 13: Capital Management
Capital Management Capital Management Delivering value through capital management Objectives Progress 9 $2 billion of extended and new facilities Flatten maturity profile and 9 67% of $1.3bn 2012 expiry refinanced extend tenor 9 Average debt term to maturity lengthened to 5 years Improve credit rati
Slide 14: Credit position
Capital Management Credit position Comfortably ahead on key credit measures A- / A3 / stable credit ratings Key credit measures Dec 2010 Covenant 24.9%(2) 40% Balance sheet gearing (%)(1) 9 25% 30% 35% Covenant Dec 2010 2.0x 3.7x Interest cover ratio (x)(3) >2.5x 9 (1) Debt less cash/total tangible
Slide 15: Capital Management: Debt maturity profile extended
Capital Management Capital Management Debt maturity profile extended Debt maturity profile As at 31 December 2010 Weighted average facility term to maturity of 5 years (up from 3.3 years at December 2009) v medium term target of > 4 years New debt lines have flattened and lengthened maturity pro
Slide 16: Capital Management: Debt cost reduced by 80 basis points
Capital Management Capital Management Debt cost reduced by 80 basis points in 2010 Average cost of debt Liquidity optimised 8.2% 7.4% New debt sourced at competitive 6.9% Fees margins Margin ‘Forward starts’ in place Floating Hedge restructuring undertaken rate Fixed Substantially removed
Slide 17: Core Portfolio
Business Performance Core Portfolio 3.2% income growth with high occupancy Core portfolio performance Comparable Weighted Occupancy(2) Weighted income average lease average cap As at 31 Dec 2010 growth expiry(1) rate Retail 4.7% NA 99.9% 6.21% Office 1.6% 5.2 yrs 97.8% 7.14% Industrial 2.7% 6.5 yrs
Slide 18: Retail: 4.7% comparable income growth
Business Performance Retail 4.7% comparable income growth Solid income growth achieved despite subdued sales conditions High occupancy and low level of arrears reflects quality of the portfolio Key operating metrics As at 31 Dec 2010 2009 Comparable income growth 4.7% 4.8% Comparable total centr
Slide 19: Retail: Occupancy costs remain sustainable
Business Performance Retail Occupancy costs remain sustainable High occupancy levels and low arrears indicate retail earnings growth is sustainable Retailer profitability has grown in excess of sales resulting in higher EBIT margins Quality regional centres have greater capacity to increase re
Slide 20: Retail: Improved sales outlook for 2011
Business Performance Retail Improved sales outlook for 2011 Forecast sales growth of 3% in 2011 Underpinned by economic, employment and wages growth GPT portfolio well positioned with almost full occupancy and a high proportion of structured rental increases GPT specialty MAT growth 8% Special
Slide 21: Office: Strong occupancy and leasing outcomes
Business Performance Office Strong occupancy and leasing outcomes Comparable income growth at 1.6% Strong leasing outcomes achieved in second half Significant reduction in cash paid for lease incentives Sustainability NABERS energy rating of 4.6 stars highest in the sector(1) Key operating m
Slide 22: Office: Highest quality portfolio
Business Performance Office Highest quality portfolio 56% of GPT’s Office portfolio is premium grade – the largest proportion of any Australian REIT Occupancy(1) increased to 97.8% well ahead of market average of 91.4% Average capitalisation rate firmed from 7.27% to 7.14% Occupancy(1) Quality
Slide 23: Office: Improved market conditions for 2011
Business Performance Office Improved market conditions for 2011 Constrained supply in all markets and positive net absorption Prime vacancies generally reducing, reinforcing expectations for solid rental and capital growth in 2011 and accelerating in 2012 Over 87% of leases(1) subject to fixed
Slide 24: Industrial: High occupancy and long WALE
Business Performance Industrial High occupancy and long WALE Industrial portfolio maintains high occupancy and long dated WALE Income growth of 2.7% continues positive trend Strong leasing activity achieved Key operating metrics As at 31 Dec 2010 2009 Comparable income growth 2.7% 2.5% Occupan
Slide 25: Industrial: Positive demand and limited supply in 2011
Business Performance Industrial Positive demand and limited supply in 2011 Rental growth underpinned by improving tenant demand and limited uncommitted supply 89% of portfolio(1) subject to fixed reviews of 3.3% in 2011 Increased focus on $970 million development pipeline given improved market
Slide 26: Funds Management: Strong relationships with investors
Business Performance Funds Management Strong relationships with investors The wholesale funds platform provides: - Income through funds, property and development management fees - Access to an additional source of capital - Stable earnings through GPT’s co-investment - Leverage through scale and a
Slide 27: Funds Management: Solid performance in 2010
Business Performance Funds Management Solid performance in 2010 Solid one year returns with three year performance at or near top of the market(1) GWOF acquired a 50% interest in a premium grade office development at 161 Castlereagh St and divested 179 Elizabeth St in line with strategy Low ge
Slide 28: Funds Management: Enhanced returns from fund sell down
Business Performance Funds Management Enhanced returns from fund sell down GPT completed a $216 million selldown of its fund investments, enhancing returns by 30 basis points out of a possible 100 basis points Additional returns available by reducing to a target holding of 20% Returns to GPT – 3
Slide 29: Non Core Asset Sales
Business Performance Non Core Asset Sales Exit from hotels and offshore assets Ayers Rock Resort - Sale announced October 2010 - Completes exit from the Hotel and Tourism Sector US Seniors portfolio - Exchange of binding sale contracts February 2011 - Sale price US$890 million GPT asset mix GPT
Slide 30: Development: Charlestown Square expansion completed
Business Performance Development Charlestown Square expansion completed GPT completed a $470 million redevelopment of Charlestown Square increasing the size of the centre from 47,000 sqm to 88,000 sqm Expected 40% reduction in ecological footprint, ahead of 30% target(1) Stabilised yield of 7%
Slide 31: Development: One One One Eagle Street update
Business Performance Development One One One Eagle Street update Completion date extended to March Leasing 2012 due to the Queensland floods One One One Eagle St 64,000 sqm Subdued Brisbane property market Signed leases 8% and floods have resulted in: Leasing Target by PC (Mar 12) 40% - Higher c
Slide 32: Development: $3.3 billion pipeline on balance sheet and in funds
Business Performance Development $3.3 billion pipeline on balance sheet and in funds GPT has $2.1 billion of developments underway and planned with an additional $1.25 billion of opportunities in the pipeline Underway Planned F/cast to complete Ownership As at Feb 2011 ($m) GPT Funds As at Feb 201
Slide 33: Sustainability: Achievements in 2010
Business Performance Sustainability Achievements in 2010 1. Internationally recognised for sustainability leadership in real estate sector 2. Significant gains in energy efficiency 3. GPT office portfolio has the highest weighted Water Intensity average NABERS energy rating È 36% 4. New community fa
Slide 34: Strategic Priorities 2011
Outlook Strategic Priorities 2011 1. Close the gap to NTA 2. Optimise capital allocation 3. Enhance growth potential 4. Equip employees for high performance 34
Slide 35: Strategic Priorities 2011: Close the gap to NTA
Outlook Strategic Priorities 2011 1. Close the gap to NTA Further reduction of investment in wholesale funds Efficiency gains through optimising business processes Sale of non-income producing assets Theoretical security price impact 9 of initiatives(1) 19c 15c 9 6c 9 7c 9 3c 3c 1c Sale of non
Slide 36: Strategic Priorities 2011: Optimise capital allocation
Outlook Strategic Priorities 2011 2. Optimise capital allocation Capital allocation framework Capital allocation framework IRR Improve Actively Potential divestment of earnings manage, under performing assets growth or redevelop, sell expand Assessment of investment opportunities against other
Slide 37: Strategic Priorities 2011: Enhance growth potential over time
Outlook Strategic Priorities 2011 3. Enhance growth potential over time Optimisation of core Earnings growth potential assets through customer centric approach Growth in Funds Management fees Accretive developments and acquisitions Additional revenue Structured Funds mgt fees Developments Ad
Slide 38: Strategic Priorities 2011: Equip employees for high performance
Outlook Strategic Priorities 2011 4. Equip employees for high performance Further capability building New head office work environment Upgrading technology tools Frameworks to enhance innovation and continuous improvement Development plans for all employees 38
Slide 39: Outlook for 2011
Outlook Outlook for 2011 Retail: Improved sales outlook underpinned by economic, employment and wages growth Office: Prime vacancy reducing, reinforcing expectations for solid rental and capital growth Industrial: Improving tenant demand and limited uncommitted supply supports rental growth
Slide 40: Strength, Stability and Earnings Growth
Reinvigorating GPT In 2010 GPT delivered on its promise of Strength, Stability and Earnings Growth GPT has achieved realised operating income of $410m GPT has delivered on its 2010 objectives - Optimising capital management - Delivering income growth - Reducing costs - Completing major developme
Slide 41: Contact Information
Contact Information Michael Cameron Michael O’Brien Judy Barraclough Chief Executive Officer and Chief Financial Officer Head of Strategy and Managing Director Corporate Affairs Tel: +61 2 8239 3565 Tel: +61 2 8239 3544 Tel: +61 2 8239 3752 Mob: +61 410 437 597 Mob: +61 417 691 028 Mob: +61 418 962
Slide 42: Disclaimer
Disclaimer The information provided in this presentation has been prepared by the GPT Group comprising GPT RE Limited (ACN 107 426 504) AFSL (286511), as responsible entity of the General Property Trust, and GPT Management Holdings Limited (ACN 113 510 188). The information provided in this presenta