Gpt Group · ASX:GPT
Gpt — The GPT Group — H1 2011 Earnings Presentation
40 slides from Gpt's earnings presentation, Aug 26, 2011
Slide 1: 2011 Interim Result - The GPT Group
GPT20 1 1 WE CREATE AND SUSTAIN ee ENVIRONMENTS THAT 26 August 2011 ENRICH PEOPLE'S LIVES. quspr The GPT Group
Slide 2: Agenda
Agenda Strategy Michael Cameron Financial Results & Capital Management Michael O’Brien Business Performance Michael Cameron - Investment Management - Funds Management - Development - Outlook Questions Note: All information included in this presentation includes GPT owned assets and GPT’s int
Slide 3: First half 2011 highlights: Delivering on our promises
Strategy First half 2011 highlights Delivering on our promises Operating profit of $221.5m, up 8% on 1H 2010 Statutory profit of $243.1m, up 67% EPS growth of 8%(1) and DPS growth of 12% Total return of 7.4%(2) Total securityholder return of 10.6% (1) EPS defined as Realised Operating Inco
Slide 4: First half 2011 highlights: Delivering on our promises
Strategy First half 2011 highlights Delivering on our promises Forecast cost of debt reduced by 20bps(1) Activated on-market buy-back Closed sale of Ayers Rock Resort and US Seniors Completed a further $212m sell-down in wholesale funds Commenced $300m Highpoint expansion (1) Compared with
Slide 5: Initiatives to grow GPT's earnings
Strategy Initiatives to grow GPT’s earnings Good progress on initiatives GPT’s strategic journey Short-term initiatives: Debt cost reductions Sell down of wholesale funds Efficiency gains Sale of non-income producing assets On-market buy-back 5
Slide 6: Optimising the business
Strategy Optimising the business Building blocks in place for further lift in earnings GPT’s strategic journey Building blocks for the future: Capital allocation framework Organisational structure aligned with strategy Streamlining processes New work environment 6
Slide 7: Our strategy: Delivering sustainable returns
Strategy Our strategy Delivering sustainable returns Our Purpose We create and sustain environments that enrich people’s lives Our Strategy We own and actively manage a diversified portfolio of quality Australian property assets, delivering long term benefits For our Investors… For our Customers… We
Slide 8: Sustainable earnings
Strategy Sustainable earnings Business model delivers earnings leverage Operational leverage (hypothetical example) Annual earnings growth > CPI + 1% Components of earnings % change Net Property Income +3.0% Core property income Funds Mgt Income +3.0% enhanced by other New revenue +0.0% earnings l
Slide 9: Sustainable returns
Strategy Sustainable returns Total returns of >9% Total Returns of > 9% Total returns equation (hypothetical example) per annum 5% 3% 9.0% Influence on capital growth: 1% Distributions Focus on quality assets Retained Net Earnings Asset Asset enhancement Growth NTA at beginning Total Return Po
Slide 10: 2011 Interim Result summary
Financial Results 2011 Interim Result summary Operating performance ahead of last year GPT Financial Summary 6 months to 30 Jun 1H 2011 1H 2010 Change Total Realised Operating Income (ROI) ($m) 221.5 205.8 8% Changes in fair value of assets 54.1 54.7 Profit/loss on disposals 1.5 (5.3) Financial in
Slide 11: Balance sheet summary
Financial Results Balance sheet summary Balance sheet is in great shape Gearing remains low at 21% Interest cover is strong at 4.0x GPT Balance Sheet Balance sheet asset mix(2) As at 30 Jun 2011 As at 30 Jun 31 Dec 2011 2010 3% 9% Total assets ($m) 9,347 9,752 Total borrowings ($m) 1,991 2,453 N
Slide 12: Segment performance
Financial Results Segment performance All business units are performing Realised Operating Income by segment 6 months to 30 Jun ($m) 1H 2011 1H 2010 Comment Retail 155.1 134.7 Comparable income up 4.1% Office 59.1 58.0 Comparable income up 3.4% Industrial 28.1 27.1 Comparable income up 2.8% Equity s
Slide 13: Management expenses
Financial Results Management expenses Disciplined approach to expense management Comparable NOI growth of 3.6% outpacing comparable management expense growth of 2.7% Expenses ‘Jaws’ for six months to 6 months to 30 Jun ($m) 1H 2011 1H 2010 30 June 2011 Corporate Overheads 15.7 15.0 ‘Jaws’ = 0.9% P
Slide 14: Capital management: Debt cost forecast to be 20 basis points lower
Capital Management Capital management Debt cost forecast to be 20 basis points lower Average cost of debt Sale proceeds enabled cancellation of highest margin 8% 7.4% 6.9% 6.7% loans and higher rate hedges 7% 6% Fees Margins renegotiated lower on 5% $525m of existing loans Margin 4% Forecast a
Slide 15: Capital management: Flat maturity profile with long tenor
Capital Management Capital management Flat maturity profile with long tenor Debt maturity profile(1) Drawn Facility A$ million 500 375 325 320 300 265 225 225 212 211 200 200 160 160 140 140 85 85 76 76 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 2H 2011 2012 2013 2014 2015 2016 2017 2018 2029
Slide 16: Capital management: Selling at a premium, buying at a discount
Capital Management Capital management Selling at a premium, buying at a discount $1.4bn assets sold at average 14% premium to combined book value Buy-back accretive to operating earnings and NTA Will continue to purchase stock opportunistically, up to 5% of market capitalisation(1) GPT Securit
Slide 17: Investment Management: 3.6% comparable income growth
Investment Management Investment Management 3.6% comparable income growth Retail Office Industrial Comparable income Comparable income Comparable income growth of 4.1% growth of 3.4% growth of 2.8% WACR of 6.19% WACR of 7.11% WACR of 8.47% Occupancy of 99.9% Occupancy of 97.5% Occu
Slide 18: Investment Management - Retail
Investment Management Investment Management - Retail Portfolio is well positioned Solid income growth achieved despite subdued retail sales conditions High occupancy levels and low level of arrears reflect portfolio quality Approximately 88% of leases subject to structured increases of 4.5% in
Slide 19: Investment Management - Retail sales
Investment Management Investment Management - Retail sales Resilient portfolio despite difficult market conditions 2.7% specialty sales growth January to June 2011 Forecast sales growth of 2-3% Customer traffic and average spend per customer maintained 2012 retail sales anticipated to move b
Slide 20: Investment Management – Retailer health
Investment Management Investment Management – Retailer health Continued demand for retail space Impact of RED Group and Colorado : - 20 store closures, with 13 stores already re-leased - All Borders stores now re-leased to key retailers - Store closures allowed for retail mix to be invigorated Ret
Slide 21: Investment Management – Retail environment
Investment Management Investment Management – Retail environment Actively responding to market conditions Retail environment GPT’s response Low consumer confidence Evolve and adapt retail mix High household savings rate Leverage quality assets Uncertainty – global Provide places that eng
Slide 22: Investment Management - Office
Investment Management Investment Management - Office Strong occupancy and leasing outcomes Comparable income growth of 3.4% Strong leasing outcomes achieved in first half Sustainability NABERS energy rating of 4.6 stars highest in the sector(1) Key operating metrics 6 months to 30 Jun 1H 2011
Slide 23: Investment Management - Office: Highest quality portfolio
Investment Management Investment Management - Office Highest quality portfolio 56% of GPT’s Office portfolio is premium grade – the largest proportion of any Australian REIT Occupancy(1) increased to 97.5% well ahead of market average of 92.0% Average capitalisation rate firmed from 7.14% to 7
Slide 24: Investment Management – Office environment
Investment Management Investment Management – Office environment Improved market conditions for 2011 / 2012 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 2
Slide 25: Investment Management - Industrial
Investment Management Investment Management - Industrial High occupancy and long WALE Industrial portfolio maintains high occupancy and long WALE Income growth of 2.8% continues positive trend Leasing momentum continued Key operating metrics 6 months to 30 Jun 1H 2011 1H 2010 Comparable income
Slide 26: Investment Management – Industrial environment
Investment Management Investment Management – Industrial environment Limited supply supporting rental income Rental growth underpinned by limited new supply relative to historical levels 89% of portfolio(1) subject to fixed increases averaging 3.3% in 2011 Increased focus on $790 million devel
Slide 27: Funds Management: Enhanced returns through fee income
Funds Management Funds Management Enhanced returns through fee income Funds management provides GPT: Case study: Highpoint development Enhanced return on capital Development yield: 7.6% to 10.1% through funds, property and Project IRR(1): 13.5% to 15.0% development management fees Leverage t
Slide 28: Funds Management: Solid performance in six months to June 2011
Funds Management Funds Management Solid performance in six months to June 2011 Office Fund (GWOF) Shopping Centre Fund (GWSCF) Fund as at 30 Jun 2011 Fund as at 30 Jun 2011 Total assets $3.2b Total assets $2.1b Gearing 11.6% Gearing 10.0% Occupancy 97.6% Occupancy 99.4% WACR 7.24% WACR 6.65% GPT Inv
Slide 29: Funds Management: Enhanced returns from fund sell down
Funds Management Funds Management Enhanced returns from fund sell down Completed $212 million ($428 million in total) sell down of fund investments from January to June 2011, enhancing returns by 30bps (60bps in total) GPT holding at 30 June 2010 GPT holding at 30 June 2011 (33%) (Office: 26%, Ret
Slide 30: Development: Value created by development activity
Development Development Value created by development activity GPT portfolio that has been Approximately 36% of GPT’s portfolio developed as at 30 June 2011(1) has been developed(1) Average historical development margin in excess of 15% Developed Assets Every $1 billion of development spend 36%
Slide 31: Development: $3.3 billion pipeline on balance sheet and in funds
Development Development $3.3 billion pipeline on balance sheet and in funds We have $1.8 billion of developments underway and planned with an additional $1.5 billion of opportunities in the pipeline Underway Planned F/cast to complete Ownership As at Aug 2011 ($m) GPT Funds As at Aug 2011 ($m) GPT
Slide 32: Development: One One One Eagle Street update
Development Development One One One Eagle Street update Completion on track for March 2012 Leasing 49% of floor space committed vs One One One Eagle St 64,000 sqm previous forecast of 40% by PC(1) Signed and/or committed 49% Target yield of 7% fully leased Fully committed target date Jul 2014
Slide 33: Development: Highpoint update
Development Development Highpoint update Construction activity commenced in Cost (GPT share) ($m) March 2011 Spent to 30 Jun 2011 4 Completion on track for early 2013 Remaining to be spent 46 Target yield of 10% to GPT(1) Total 50 100 new specialty stores, David Jones, Woolworths and 1,000 n
Slide 34: Sustainability: Achievements in six months to June 2011
Business Performance Sustainability Achievements in six months to June 2011 GPT scored 99 out of 100 in the 2011 FTSE4Good Index Avoided costs in 2010 relative to base year Awarded the 2011 Business Sustainability award at the NSW Green 1. $871k of recycling Globes Awards(1) 2. $3.8m of water
Slide 35: Strategic journey: Moving to best performance
Outlook Strategic journey Moving to best performance Strategic priorities: 1. Building earnings to close the gap to NTA 2. Optimising capital allocation processes 3. Enhancing growth potential across the business 4. Equipping employees for high performance 35
Slide 36: Outlook: Growth equation
Outlook Outlook Growth equation + OPTIMISE EXPANSION To achieve targets To accelerate performance Rental growth Development Expense discipline Funds growth Capital management Other revenue sources Portfolio management Asset acquisitions 36
Slide 37: Outlook for 2011
Outlook Outlook for 2011 EPS growth of approximately 7% for full year Retail Subdued market conditions in second half 2-3% sales growth expected for 2011 Office Market conditions improving, with increasing prime rents Recent transaction activity expected to deliver positive valuation outcomes ov
Slide 38: First half 2011 highlights: Delivering on our promises
Outlook First half 2011 highlights Delivering on our promises Strong performance - Operating profit of $221.5m, up 8% - EPS growth of 8%(1) and DPS growth of 12% - Annualised total return of 7.4% - Total securityholder return of 10.6% Focus on capital management Delivery on key initiatives (1) EP
Slide 39: 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 40: 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