Dexus Convenience Retail Reit · ASX:DXC
Dexus Convenience Retail Reit — FY2021 Earnings Presentation
53 slides from Dexus Convenience Retail Reit's earnings presentation, Aug 17, 2021
Slide 1: FY21 Results, Acquisitions & Equity Raising
APN Convenience Retail REIT rebranding Current ASX Code: AQR Current logo FY21 RESULTS, ACQUISITIONS & EQUITY RAISING New ASX Code: DXC 17 AUGUST 2021 New logos Not for release to US wire services or distribution in the United States 1
Slide 2: Important notice and disclaimer
Important notice and disclaimer IMPORTANT: You are advised to read the following carefully before making any use of the information contained in this presentation. This presentation has been prepared by APN Funds Management Limited (ACN 080 674 479) (“Responsible Entity”) as responsible entity of ea
Slide 3: Important notice and disclaimer (cont’d)
Important notice and disclaimer (cont’d) Any such forward-looking statements involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies and other factors, including the risks described in this presentation under “Key risks”. Such risks may be outsi
Slide 4: Agenda
Agenda 01 FY21 snapshot 02 Financial performance 03 Portfolio overview 04 Acquisitions & Equity Raising 05 Outlook & Guidance Appendices 4
Slide 5: 01 FY21 Snapshot
01 FY21 SNAPSHOT Raceview Convenience Centre, QLD 5
Slide 6: APN Convenience Retail REIT
APN Convenience Retail REIT Investing in strategically located service stations and convenience retail assets to provide investors with an attractive, defensive and growing income stream WALE1 High level High level of of income income security 11.9 years MAJOR TENANTS Tenant quality 94% ANNUAL RENT
Slide 7: FY21 snapshot
FY21 snapshot Financial performance Portfolio performance Capital management 21.9c $185m $47.4m FFO PER SECURITY TOTAL CONTRACTED NEW EQUITY RAISED3 1.4% on FY201 ACQUISITIONS $3.67 $53.9m $90m NTA PER SECURITY2 12.1% LIKE FOR LIKE INCREASED DEBT FACILITIES 12.2% from JUNE 2020 VALUATION UPLIFT 80.2
Slide 8: Delivering on growth strategy
Delivering on growth strategy Portfolio growth since IPO Comprises: ▪ Portfolio comprising Griffin, Holmview, North Lakes, Upper Coomera, Greenbank and Highfields (collectively $59m) – previously announced ▪ OTR Gepps Cross ($7.5m) – previously announced ▪ Mt Gambier ($6.6m) – previously announced ▪
Slide 9: Enhanced tenant diversification
Enhanced tenant diversification Six new fuel tenants introduced since IPO IPO (July 2017) June 2019 Pro forma June 2021 1 $287 million $358 million $738 million 4 109 70 properties2 63 properties properties 2, 3 ▪ 7.2% WACR ▪ 7.0% WACR ▪ 6.0% WACR 1, 2 ▪ 13.6 year WALE ▪ 11.7 year WALE ▪ 11.7 year W
Slide 10: Dexus acquires APN Property Group
Dexus acquires APN Property Group ▪ The Dexus acquisition of APN Property Group was ▪ Existing governance arrangements will remain, implemented on 13 August 2021. As a result, Dexus is including the independent Responsible Entity Board now the manager of APN Convenience Retail REIT ▪ As a result of
Slide 11: Dexus – Leading manager with a focus on real estate fundamentals
Dexus – Leading manager with a focus on real estate fundamentals Strong investor alignment Specialist leading manager Leading ESG credentials Leveraging platform scale of Australian real estate › Dexus is strongly aligned to › $42.5 billion total funds under › Delivering long-term value by › Broad A
Slide 12: 02 Financial Performance
02 FINANCIAL PERFORMANCE Brisbane Airport Link Service Centre, QLD 12
Slide 13: FY21 financial performance
FY21 financial performance A$m FY21 FY20 Change Transparent income streams and capital structure Net property income 33.2 26.4 26.1% ▪ FFO of 21.9 cents per security, up 1.4% on FY20 Straight lining of rental income 4.5 4.2 7.6% ▪ Distributions of 21.9 cents per security, up 0.5% on Other income 0.5
Slide 14: Balance sheet
Balance sheet June June ▪ NTA per security increased by 40 cents (+12.2%) during the A$m 2021 2020 Change year Assets ▪ $184.5 million increase in investment properties primarily due to: Cash and cash equivalents 0.8 2.3 nm – $111.9m of completed property acquisitions 1 Investment properties 632.7 4
Slide 15: Capital management
Capital management Active capital management to support growth strategy Key metric June 2021 ▪ New equity raised of $47.4m during the period1 Facility limit2 $255.0m – DRP operated for the June 2021 quarter raising a further $0.8 Drawn debt $181.5m million post balance date Undrawn debt $73.6m ▪ Lau
Slide 16: 03 Portfolio Overview
03 PORTFOLIO OVERVIEW Woolworths Caltex Capalaba, QLD 16
Slide 17: Diversified portfolio
Diversified portfolio 75% of the portfolio is located in Portfolio by site classification Australia’s eastern seaboard states 18.3% 15.4% 66.3% 59 sites $345m value 12 sites 6.2% WACR 10.9yr WALE Metropolitan Highway Regional $75m value 6.3% WACR 55% 12.0yr WALE 15 sites $84m value 12% 6.0% WACR 16.
Slide 18: Sustainable and secure income through long dated leases
Sustainable and secure income through long dated leases Rent review type by income ▪ 15 new long term lease deals with major fuel tenants completed CPI in FY21 11% – 7-Eleven Raceview – 12 year lease extension out to FY34 – 7-Eleven Maroochydore – new 12 year lease expiring FY33 WARR – EG lease (13
Slide 19: Development projects
Development projects $18.7 million of development expenditure in FY21 ▪ 3 developments completed in FY21 ▪ Hillcrest, SA – remaining $3.7 million committed to complete ▪ A further 3 projects valued at $24.5 million currently under due diligence Mobil X & KFC Sheidow Park, SA Total Spend Site Site ty
Slide 20: Acquisitions enhancing portfolio scale and diversity
Acquisitions enhancing portfolio scale and diversity $185 million of contracted acquisitions in FY21 Chevron Mobil X 4% 6% NSW 5% WA Regional United 10% 25% 8% 7-Eleven 2 35% 24 4 Ampol 7 Fuel 10% Assets SA States QLD tenants 28% 57% Metro Viva Energy 75% 18% OTR 19% $28.6m $73.1m WACR 5.94% WALE 12
Slide 21: 04 Acquisitions & Equity Raising
04 ACQUISITIONS & EQUITY RAISING Brisbane Airport Link Service Centre, QLD 21
Slide 22: Acquisitions and equity raising overview
Acquisitions and equity raising overview ▪ The Fund has entered into sale contracts to acquire two service station and convenience retail properties in Queensland (the “Acquisitions”) – One property has settled while the other is expected to settle in September 2021 Acquisitions ▪ Total consideratio
Slide 23: Acquisitions and equity raising overview (cont’d)
Acquisitions and equity raising overview (cont’d) ▪ New securities issued under the Placement and the SPP will rank equally with existing AQR securities from the date Ranking of issue ▪ New securities issued under the Placement and the SPP will be entitled to AQR’s expected September 2021 distributi
Slide 24: Acquisitions overview
Acquisitions overview Purchase WALE Expected Property State Site type Major tenant Initial yield WARR3 price ($m)1 (years)2 settlement United, Gordonvale QLD Highway McDonald’s, $18.4m 5.77% 9.4 2.5% Sept 2021 Subway 7-Eleven, Kingston QLD Metro $10.2m 5.75% 7.5 4.0% Aug 2021 Zambrero Total Acquisit
Slide 25: Key metrics post Acquisitions and Offer
Key metrics post Acquisitions and Offer 109 99.6% $738m 6.0% PROPERTIES OCCUPANCY PORTFOLIO VALUE WACR 6.4% 31.2% $510m 11.7 FY22 DPS YIELD1 PRO FORMA GEARING2 MARKET CAP3 WALE4 1. Distribution Per Security (DPS), based on the issue price of $3.60 per security and FY22 DPS guidance of 22.9 cps. 2. P
Slide 26: Pro forma balance sheet
Pro forma balance sheet Contracted Pro forma transactions at Acquisitions and post Acquisitions and $m 30 June 2021 balance date1 Offer Offer2 Cash and cash equivalents 0.8 0.8 Investment properties 632.7 76.8 28.6 738.1 Other assets 13.4 (7.9) 5.5 Total assets 646.8 69.0 28.6 744.3 Interest bearing
Slide 27: Indicative timetable
Indicative timetable Event Date Record date for SPP 7.00pm, Monday 16 August 2021 Trading halt and announcement of Placement Tuesday, 17 August 2021 Placement bookbuild Tuesday, 17 August 2021 Settlement of new securities issued under the Placement Friday, 20 August 2021 Allotment and normal trading
Slide 28: 05 Outlook & Guidance
05 OUTLOOK & GUIDANCE Woolworths Caltex Mitchelton, QLD 28
Slide 29: Outlook and guidance
Outlook and guidance Capacity to pursue accretive acquisition opportunities ▪ AQR is well positioned – Passive income stream with contracted rental increases providing sustainable income growth – Clear and focused acquisition growth strategy backed by a strong balance sheet with pro forma gearing of
Slide 30: Appendices
APPENDICES ▪ Appendix A – Profit and Loss statement ▪ Appendix B – Reconciliation to FFO ▪ Appendix C – Portfolio revaluations ▪ Appendix D – Property portfolio ▪ Appendix E – Sector update ▪ Appendix F – Key risks ▪ Appendix G – Foreign selling restrictions Liberty Pooraka, SA 30
Slide 31: Appendix A – Profit and Loss statement
Appendix A – Profit and Loss statement Financial year ended FY21 FY20 $’000 $’000 Income Net property income 33,232 26,352 Straight lining of rental income 4,492 4,175 Other income 350 111 Interest income 136 25 Total income 38,210 30,663 Expenses Management fees (3,457) (2,526) Finance costs (538)
Slide 32: Appendix B – Reconciliation to FFO
Appendix B – Reconciliation to FFO Financial year ended FY21 FY20 $’000 $’000 Statutory net profit 73,818 45,799 Adjusted for: Straight line lease revenue recognition (4,492) (4,175) Fair value (gain) on investment properties (42,218) (23,902) Fair value (gain) on derivatives (1,603) 952 Amortisatio
Slide 33: Appendix C – Portfolio revaluations
Appendix C – Portfolio revaluations 12.1% portfolio revaluation uplift ▪ Valuation uplift of $53.9 million driven by a combination No. of Valuation Cap Valuation change Site type of annual rental increases and cap rate compression properties ($m) rate ($m) % ─ Portfolio weighted average cap rate tig
Slide 34: Appendix D – Property portfolio – 30 June 2021
Appendix D – Property portfolio – 30 June 2021 Major Site Book value Cap rate WALE Occupancy Land Area Property State Tenant Type ($m) (%) (years) (by income) (sqm) 440 Roadhouse WA Chevron Regional $5.4 7.75% 13.1 100% 11,372 Acacia Ridge QLD Viva Energy Metropolitan $11.5 5.75% 7.3 100% 6,098 Aero
Slide 35: Appendix D – Property portfolio (cont’d)
Appendix D – Property portfolio – 30 June 2021 (cont’d) Major Site Book value Cap rate WALE Occupancy Land Area Property State Tenant Type ($m) (%) (years) (by income) (sqm) Enoggera QLD Chevron Metropolitan $2.5 6.00% 12.1 100% 1,093 Forbes NSW Ampol Regional $8.7 6.25% 8.9 100% 3,548 Garbutt QLD C
Slide 36: Appendix D – Property portfolio (cont’d)
Appendix D – Property portfolio – 30 June 2021 (cont’d) Major Site Book value Cap rate WALE Occupancy Land Area Property State Tenant Type ($m) (%) (years) (by income) (sqm) Monto QLD Chevron Regional $1.5 7.00% 12.5 100% 1,604 Moorooka QLD Viva Energy Metropolitan $10.5 5.75% 9.9 100% 3,078 Moranba
Slide 37: Appendix D – Property portfolio (cont’d)
Appendix D – Property portfolio – 30 June 2021 (cont’d) Major Site Book value Cap rate WALE Occupancy Land Area Property State Tenant Type ($m) (%) (years) (by income) (sqm) Sheidow Park SA Mobil X Metropolitan $7.1 5.75% 14.5 100% 2,196 Slacks Creek QLD EG Australia Metropolitan $5.4 5.50% 10.3 100
Slide 38: Appendix E – Sector update: Australian fuel sales
Appendix E – Sector update Australian fuel sales Demand for traditional fuels is expected to remain resilient in the near-to-medium term ▪ Demand for traditional fuels is expected to remain resilient in the near-to-medium term, particularly for freight transport1 – Driven by population growth, popul
Slide 39: Appendix E – Sector update: Motor vehicle statistics
Appendix E – Sector update Motor vehicle statistics Vehicles by fuel type1 Freight vehicles account for 77% of diesel consumption 2% ▪ Currently 20.1 million registered vehicles, consuming ~33 billion litres of fuel per annum – 10yr CAGR of vehicle registrations is 2.1% – Passenger vehicles account
Slide 40: Appendix E – Sector update: Australian EV forecasts
Appendix E – Sector update Australian EV forecasts CSIRO’s ‘Fast’ scenario projects EVs could likely reach 45% of all vehicles on the road by 2050 ▪ EV’s represented less than 0.6% of new car sales in 20201, lagging other markets – Key barriers to EV take up include price differential, lack of charg
Slide 41: Appendix E – Sector update: Convenience retail behaviours
Appendix E – Sector update Convenience retail behaviours Convenience retail will ultimately overtake fuel as the key driver of profit and sales Consumer behaviours1 ▪ Fuel remains the primary reason for customer visitation – only 18% of fuel buyers purchase other products when they visit a service s
Slide 42: Appendix F – Key risks
Appendix F – Key risks This section discusses some of the risks associated with an investment in AQR. AQR's business is subject to a number of risk factors both specific to its business and of a general nature which may impact its future performance and forecasts. Before subscribing for New Securiti
Slide 43: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Re-leasing, market rent reviews and vacancy The portfolio’s leases come up for renewal on a periodic basis, and there is a risk that expiring leases may not be renewed in accordance with AQR’s assumptions including in relation to vacancy periods, rents and lease terms
Slide 44: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Interest rate risk Adverse fluctuations in interest rates, to the extent that they are not hedged, may impact AQR's funding costs adversely, resulting in a decrease in distributable income. Where interest rates are hedged by way of financial instruments, the value of
Slide 45: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Environmental risk Certain asset classes to which AQR is exposed, in particular service station assets, typically have a higher rate of environmental contamination than other commercial property asset classes. There is a risk that a property may be contaminated now or
Slide 46: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Share market conditions There are general risks associated with an investment in the share market. As such, the value of New Securities may rise above or fall below the offer price, depending on the financial position and operating performance of AQR and other factors
Slide 47: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Accounting standards and impairment AQR prepares its general purpose financial statements in accordance with IFRS and with the Corporations Act. Australian Accounting Standards are not within the control of AQR or its boards and are subject to amendment from time to t
Slide 48: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Underwriting risk (continued) m) a regulatory body: i. makes an adverse declaration or order; ii. issues, or publicly announces or indicates to the Responsible Entity its intention to issue, proceedings; or iii. commences, or publicly announces or indicates to the Res
Slide 49: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) The Responsible Entity also gives certain representations, warranties and undertakings to the Underwriter and an indemnity to the Underwriter and its representatives subject to certain carve-outs. If the underwriting agreement is terminated, AQR would need to find alt
Slide 50: Appendix F – Key risks (cont’d)
Appendix F – Key risks (cont’d) Insolvency In the event of any liquidation or winding up of AQR, the claims of AQR’s creditors, will rank ahead of those of its securityholders. Under such circumstances AQR will first repay or discharge all claims of its creditors. Any surplus assets (if any) will th
Slide 51: Appendix G – Foreign selling restrictions
Appendix G – Foreign selling restrictions International Offer Restrictions This document does not constitute an offer of new stapled securities ("New Securities") of AQR in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New
Slide 52: Appendix G – Foreign selling restrictions (cont’d)
Appendix G – Foreign selling restrictions (cont’d) United States This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The New Securities have not been, and will not be, registered under the US Securities Act of 1933 or the securit
Slide 53: Contact
Contact Chris Brockett Fund Manager, APN Convenience Retail REIT Ph: (03) 8656 1000 : cbrockett@apngroup.com.au ASX Code: AQR Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, APN Property Group Limited Melbourne, Vic 3000 apnpropertygroup apngroup.com.au http://blog.apng
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