Australian Unity Ltd · ASX:AYUPA
Australian Unity — Australian Unity Childcare Property Fund — Investor Presentation (March 2022)
51 slides from Australian Unity's investor presentation, March 2022
Slide 1: Childcare Property Fund
Australian Unity Childcare Property Fund March 2022 | Strictly confidential Mark Delaney Fletcher Bubb Images above are real estate assets owned by the Fund, due for settlement or currently under exclusive due diligence (including artistic impressions of assets in, and proposed for, development). Im
Slide 2: Contents
Contents 1 Executive Summary 2 About Australian Unity 3 Childcare Sector Investment Thematic 4 Fund Attributes & Forecast Financials 5 Opportunity for Investment 6 Appendix 2
Slide 3: Executive Summary
Executive Summary 156 Aberdeen Street, Northbridge, Perth WA 3
Slide 4: Fund Snapshot
Fund Snapshot A fund focused on low risk with strong returns, stable secure income, capital growth and social impact through investment into childcare real estate. Purpose Financial: To provide investors with stable and secure income with capital growth predominantly through direct investment into c
Slide 5: Geography
Geography Assets settled, exchanged, and in exclusive due diligence. Portfolio parameters WALE 14.9 years Total value ($m)1 $102.9 Forecast Weighted Average Cap. Rate 5.65% NT Number of centres 18 Number of operators 10 QLD Number of child places 1,686 WA 2 Noosa Portfolio status Toowoomba Brisbane
Slide 6: Why Invest?
Why Invest? Childcare is a defensive investment supported by the Government, providing stable social infrastructure returns Stable, Strong Quality Strong predictable Government diversified geographies and underlying real estate value tenant covenants returns support through economic cycles Long WALE
Slide 7: Key Fund Details
Key Fund Details Purpose Financial: To provide investors with stable and secure income with capital growth predominantly through direct investment into childcare real estate of established centres and delivery of new assets Non-financial: To enhance the wellbeing of Australians through contribution
Slide 8: Key Fund Details
Key Fund Details Distributions Quarterly Australian Unity Co-investment $20 million has been directly invested from Australian Unity Portfolio WALE 14.9 years Debt CBA has approved a $20.0 million facility with the ability to grow Target equity raise (fully paid units) $40.0 million Investment type
Slide 9: Forecast Financials
Forecast Financials Projected financial returns on Current Portfolio and Opportunities* Maintaining conservative gearing and debt levels Projected cash and distribution yields Projected portfolio gearing 7.0% 60% $160m $140m 6.0% 50% $120m 5.0% 40% $100m 4.0% 30% $80m 3.0% $60m 20% 2.0% $40m 10% 1.0
Slide 10: Portfolio Growth Approach
Portfolio Growth Approach Investor Value Creation through • Optimal Capital Efficiency Preliminary Asset Procurement • Reduced Investor Dilution • Active Portfolio Curation Secure Pipeline of Actively Manage Investment Grade Portfolio and Assets Under Grow Earnings Exclusivity Raise Equity and Perfo
Slide 11: Portfolio Growth Approach: Forward Pipeline of Properties Under Review
Portfolio Growth Approach Forward Pipeline of Properties Under Review $350 million Properties in Exclusive Due Diligence 11 properties $68.9 million Current Portfolio 7 properties $34.0 million Notes: • Dollar values reflect the sum of the estimated as if complete valuation of assets • Current Portf
Slide 12: About Australian Unity
About Australian Unity 260 Margaret Street, Toowoomba City QLD 12
Slide 13: Australian Unity
Australian Unity 260,000 members We are a trusted mutual organisation dedicated 700,000 customers to empowering people and communities 180+ years of history As a mutual we invest our profits directly back into our business to help us continuously 100+ properties across Australia improve services and
Slide 14: Australian Unity Real Estate Investment
Australian Unity Real Estate Investment Select Income Fund A deeper perspective, delivered straight. AREIT Fund $255.6 $101.7 Social Infrastructure • A comprehensive real estate platform, established 1998. $203.3 • $5.0 billion of real estate funds under management (FUM) Property Income Fund as at 3
Slide 15: Childcare Sector Investment Thematic
Childcare Sector Investment Thematic 156 Aberdeen Street, Northbridge, Perth WA 15
Slide 16: Childcare Industry Overview
Childcare Industry Overview Core social infrastructure, with stable growth. 8,500 total national long day $13.8 billion p.a. 3.4% p.a. care centres3 providing industry revenue (average growth forecast annual revenue 25.3 million of 2.2% p.a. FY17 to FY22)1 growth 2020-252 child hours of care per wee
Slide 17: Early Learning Demand Drivers Summarised
Early Learning Demand Drivers Summarised Core social infrastructure, with stable growth. Family Population growth participation Childcare usage of 0-5 year olds is forecast to continues to increase, continues to grow continue even through the pandemic but we are still behind our OECD Peers. Australi
Slide 18: Early Learning Demand Drivers: Population Growth
Early Learning Demand Drivers Stable socio-economic fundamentals support long-term growth. Actual and forecast population 0-4 year olds (2001-2038) 0–4 child population (M) 2.0 • By 2030 it is forecast there will be 220,000 more pre-school 1.8 children (0–4 year olds) growing at a rate of ~1.0% annu
Slide 19: Early Learning Demand Drivers: Government Support
Early Learning Demand Drivers Government support for economic and social dividends • The benefits of quality early learning are well documented with Government expenditure – childcare subsidy 12.0 the Federal Government recognising this and progressively 11.0 Actual Budget Forward Estimate contribut
Slide 20: Early Learning Demand Drivers: Government Spending
Early Learning Demand Drivers Government spending on early childhood education and care % of GDP (2017) Australia is improving its 2 1.8 1.6 standing in the OECD context. 1.4 Childcare Pre-primary Total Source: % GDP 1.2 1 OECD Social 0.8 Expenditure 0.6 Database • Australian Government expenditure
Slide 21: Operator and Asset Owner Market Share
Operator and Asset Owner Market Share Highly fragmented sub-sector of social infrastructure. Childcare operators Operator share of approved services • 34% of approved services are operated by large providers, while 66% of services are operated by small-to-medium providers1 • The industry is split ~5
Slide 22: Property Investment Drivers
Property Investment Drivers Growing sector of Social Infrastructure. Long WALE, typically triple net leases to high quality tenants, low income volatility Sustainable, industry standard lease terms to ensure operator success and flexibility High yielding landbank, low terminal risk, liquid asset typ
Slide 23: Fund Attributes & Forecast Financials
Fund Attributes & Forecast Financials 18 & 20 Pine Street, Runcorn Brisbane QLD 23
Slide 24: Key Attributes
Key Attributes Australian Unity is uniquely positioned to lever its institutional social infrastructure platform and be a leading participant in childcare. Childcare attributes Property attributes Stable, Minimal Institutional predictable Increasing participation rates ongoing Platform returns capex
Slide 25: Investment in the Australian Unity Childcare Property Fund
Investment in the Australian Unity Childcare Property Fund Providing opportunity for potential comparative advantage over ASX listed childcare REITs Direct property Stable income Lower relative Stakeholder exposure with no distribution: volatility: relationships listed market from one of Australia’s
Slide 26: Defensive investment
Defensive investment Childcare is a defensive investment supported by the Government, providing stable social infrastructure returns Downside Childcare market factor Economic • Childcare sector is relatively less volatile than other property sectors, such as office downturn • Childcare rental paymen
Slide 27: Current Portfolio
Current Portfolio Robust portfolio, all immediately income producing properties. Rent per Initial WALE of 14.9 YEARS Acq price 1 Places Total rent Location place yield with 10yr + 10yr options $m No. $ $ % Northbridge, Perth WA 4.68 68 272,000 4,000 5.81 Runcorn, Brisbane QLD 5.75 FIXED 3% ANNUAL re
Slide 28: Opportunities in Review
Opportunities in Review Properties in exclusive due diligence subject to acquisition criteria. Location Acq Places Total rent Rent per Initial valuation1 No. $ place yield2 $m $ % New centres, leases to 8 different tenant groups Athelstone, Adelaide SA 5.95 82 318,160 3,880 5.35 Redwood Park, Adelai
Slide 29: Forecast Financials
Forecast Financials Projected financial returns on current portfolio and opportunities* Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast FY222 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Cash on cash return Distributions paid1 $'000 840 2,654 2,918 3,158 3,2
Slide 30: Opportunity for Investment
Opportunity for Investment 255 Herries Street, Newtown, Toowoomba QLD 30
Slide 31: Opportunity for Investment
Opportunity for Investment Investment commitments are now being filled. Equity raise $40.0 million (fully paid units) Investment type and amount Wholesale investors $50,000 minimum investment amount Estimated Application Price $1.01 per one unit in the Fund (including buy spread) Capital raise perio
Slide 32: Appendix
Appendix 156 Aberdeen Street, Northbridge, Perth WA 32
Slide 33: Childcare Investment and Social Impact
Childcare Investment and Social Impact Investing Credentials 18 & 20 Pine Street, Runcorn Brisbane WA 33
Slide 34: Childcare Impact Investing Credentials
Childcare Impact Investing Credentials Investment into childcare has high social and impact investing credentials. Increased economic activity Early childhood through female education Environmentally workforce during the most friendly Sustainable participation influential design Promotion design, bu
Slide 35: Fund ESG Roadmap and Actions
Fund ESG Roadmap and Actions We are investing in better environmental outcomes for the Fund, addressing climate change adaptation and resilience, health and well-being, and governance. Deliver Positive property Establish best-practice environmental outcomes Sustainable materials and Tenant engagemen
Slide 36: Asset Acquisition Process
Asset Acquisition Process 10 Evans 156 Street, Aberdeen Pittsworth Street, QLD Perth WA Northbridge, 36
Slide 37: Asset Acquisition Process
Asset Acquisition Process Extensive analytical due diligence used in our acquisition process. Catchment analysis - Supply : Demand Forecast ratio of 0–4 year olds to licensed childcare places generally > 3:1 Location amenity analysis SEIFA rating > 4+, demand generators, geographical assessment Targ
Slide 38: Industry - Operator Overview & Lease Terms
Industry - Operator Overview & Lease Terms 156 Aberdeen Street, Northbridge, Perth WA 38
Slide 39: Industry Operator Overview
Industry Operator Overview The childcare industry is highly Segment Market Major players Rent as a Occupancy fragmented. share (Market share, centres) % of for revenue breakeven • According to ACECQA data, as at Sep-2021, small approved providers (managing one • G8 Education (6.4%, ~500) service) pr
Slide 40: Industry Lease Terms
Industry Lease Terms Providing for sustainable operator performance and returns on real estate. • It is essential to provide market rents to enable Line item Broad industry terms operators to be successful in the face of new competition and to enable leasing to alternative Long term leases 15 years
Slide 41: Key Personnel
Key Personnel 18 & 20 Pine Street, Runcorn Brisbane QLD 41
Slide 42: Key Personnel: Mark Delaney
Key Personnel Mark Delaney, Fund Manager – Childcare Property Fund Mark has recently joined Australian Unity as Fund Manager within the Social Infrastructure team to oversee the growth of the recently launched Childcare Property Fund. Prior to joining Australian Unity, Mark was a director of a prope
Slide 43: Key Personnel: Fletcher Bubb
Key Personnel Fletcher Bubb, Portfolio Analyst – Childcare Property Fund Fletcher's experience covers institutional and corporate structured property investment, banking and funds management, working across the full debt – equity spectrum in connection with asset acquisition, development and constru
Slide 44: Key Personnel: Ryan Banting
Key Personnel Ryan Banting, General Manager Social Infrastructure Ryan joined Australian Unity in 2011. As the Head of Social Infrastructure, Ryan is responsible for the growth of Australian Unity’s investment activities across assets including disability accommodation, student accommodation, retire
Slide 45: Key Personnel: Esther Kerr Smith
Key Personnel Esther-Kerr Smith, Chief Executive Officer – Wealth & Capital Markets Esther joined Australian Unity in September 2017. Esther is Chief Executive Officer for Wealth & Capital Markets for the Australian Unity Group. Esther is responsible for all of Australian Unity’s financial services
Slide 46: Key Personnel: Mark Pratt
Key Personnel Mark Pratt, Executive General Manager – Property Mark joined Australian Unity in 2004. As Executive General Manager – Real Estate Investment, he is responsible for the commercial management and growth of Australian Unity’s property funds management and development businesses across Hea
Slide 47: Important Information
Important Information 156 Aberdeen Street, Northbridge, Perth WA 47
Slide 48: Forecast Financials Assumptions
Forecast Financials Category Assumption Assumptions Portfolio • Property valuations assume moderate yield compression in comparison to market indicators The distribution return assets forecasts are made on the Pipeline • Consists of 11 childcare centres with over 1,073 licensed • Fund-through arrang
Slide 49: Summary of Fees and Costs
Summary of Fees and Costs Fees and costs of managing your investment Fee Fee (%) Note Base management fee 0.75% p.a. of the Funds month end GAV The base management fee is generally calculated at the end of each month, based on the month end GAV for that month, and paid monthly in arrears from the as
Slide 50: Important Information
Important Information Units in the Fund are issued by Australian Unity Funds Management Limited ABN 60 071 497 115, AFSL 234454 (AUFM) General Advice Forward-looking statements No Reliance Illustrative information only Trademarks The information in this presentation is of Certain statements in this
Slide 51: Australian Unity
Australian > Real Wellbeing
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