Gpt Group · ASX:GPT
Gpt — The GPT Group — FY2011 Earnings Presentation
43 slides from Gpt's earnings presentation, Feb 20, 2012
Slide 1: GPT Annual Result 2011
GPT Annual Result 201 1 20 FEBRUARY 2012 The GPT Group
Slide 2: Agenda
Agenda Strategy Business Performance Michael Cameron CEO Financial Result Capital Management Michael O’Brien CFO Note: All information included in this presentation includes GPT owned assets and GPT’s interest in the Wholesale Funds (GWSCF and GWOF) unless otherwise stated. All retail data e
Slide 3: 2011 annual result: Delivering on our promises
Strategy 2011 annual result Delivering on our promises Strong operating performance Active capital management Well positioned for growth 3
Slide 4: Strong operating performance
Strategy Strong operating performance Increased operating earnings in 2011 Operating profit of $438.8m(1), up 7.0% Growth in Realised Operating Income ($m) Statutory profit of $246.2m 438.8 EPS growth of 8.1%(2) DPS growth of 9.2% 410.0 Comparable income growth of 3.6% 375.8 Expansion th
Slide 5: 2011 performance: Strong returns for investors
Strategy 2011 performance Strong returns for investors For investors, GPT offers a secure, reliable investment targeting superior risk-adjusted returns over time Above market returns Targets 2011 Total securityholder returns 12 months to 31 Dec 2011 EPS growth > CPI+1% 8.1%(1) - well ahead of 10.5
Slide 6: Capital management: Active management of capital levers
Strategy Capital management Active management of capital levers Cost of debt reduced by 80bps(1) Effective debt Low gearing at 22.9% and average manage- ment term of debt 5.3 years Activated on-market buy-back Active Capital Completed $517 million sell-down portfolio Security in wholesale fu
Slide 7: Well positioned for growth: High quality core portfolio
Strategy Well positioned for growth High quality core portfolio generating stable returns Total portfolio average occupancy Retail: 95% regional 99.1% 98.8% 98.8% 5% 95% 98.5% 98.4% 5 yr average: Other Regional 98.7% Office: 100% prime 2007 2008 2009 2010 2011 43% 57% A grade Premium Comparable inco
Slide 8: Well positioned for growth: Platforms to accelerate performance
Strategy Well positioned for growth Platforms to accelerate performance + OPTIMISE EXPAND To achieve targets To accelerate performance Rental growth Development Expense discipline Funds growth Capital management Other revenue sources Portfolio management Asset acquisitions 8
Slide 9: 2011 annual result summary
2011 annual result summary Financial Result Operating earnings per security up 8.1% and distribution up 9.2% GPT Financial Summary Year to 31 December ($m) 2011 2010 Total Realised Operating Income (ROI) 438.8 410.0 Changes in fair value of assets – Core 84.7 102.8 Changes in fair value of assets –
Slide 10: Segment performance
Financial Result Segment performance Strong contributions from all business units Realised Operating Income by segment Year to 31 December ($m) 2011 2010 Comment Comparable income growth of 3.6% Retail 310.1 267.3 plus Charlestown impact Office 118.7 114.8 Comparable income growth of 4.0% Industrial
Slide 11: Management expenses
Financial Result Management expenses Income growth continues to exceed expense growth Comparable income growth of 3.6% outpacing comparable management expense growth of 1.5% Expenses ‘Jaws’ for year to Year to 31 December ($m) 2011 2010 31 December 2011 Corporate Overheads 30.8 28.7 Portfolio Expe
Slide 12: Balance sheet
Financial Result Balance sheet Well positioned balance sheet GPT Balance Sheet As at 31 December 2011 2010 Total assets ($m) 9,279 9,752 Total borrowings ($m) 2,144 2,453 Net tangible assets per security ($) 3.59 3.60 Gearing (%)(1) 22.9 24.9 Look through gearing (%)(1) 24.4 29.9 Interest cover rati
Slide 13: Capital management: Progressive reduction in cost of debt
Capital Management Capital management Progressive reduction in cost of debt Average cost of debt reduced Average cost of debt through: - Tight liquidity management 8% 7.4% 7% 6.6% - Cancellation of expensive 6.2% loans 6% Fees - Renegotiation of existing 5% loans 4% Margin - Termination of expensi
Slide 14: Capital management: Flat maturity profile with long tenor
Capital Management Capital management Flat maturity profile with long tenor Debt maturity profile(1) Drawn Facility 500 466 A$ million 375 325 325 275 266 236 236 225 225 212 211 150 150 105 105 85 85 75 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 2H 2012 2013 2014 2015 2016 2017 2018 20192019 2
Slide 15: Capital management: Progress on security buy-back
Capital Management Capital management Progress on security buy-back Buy-back commenced On-market security buy-back 25 May 2011 As at 20 January 2012 Completed half of current target Securities acquired 46.1m % of securities on issue(1) 2.5% Disciplined approach to deliver accretion to Cost $14
Slide 16: Earnings drivers
Capital Management Earnings drivers Progress in removing earnings drags Yield on NTA(1) Initiatives Update 6.6% Efficiency gains Target exceeded, more opportunities 6.1% Capital management Significant gains 5.8% Reduced stake in wholesale funds Completed 2009 2010 2011 Sale of non income produ
Slide 17: Investment Management: 3.6% comparable income growth
Investment Management Investment Management 3.6% comparable income growth Retail Office Industrial $5.3bn $2.6bn $0.8bn GWSCF interest GWOF $0.4bn interest GPT $0.7bn owned GPT GPT $0.8bn owned owned $4.9bn $1.9bn Comparable income Comparable income Comparable income growth of 3.6% growth of 4
Slide 18: Investment Management – Retail
Investment Management Investment Management – Retail High occupancy with low arrears Key operating metrics Year to 31 December 2011 2010 Comparable income growth 3.6% 4.7% Comparable total centre sales growth(1) 0.3% 0.7% Comparable specialty sales growth(1) 1.2% 0.5% Specialty sales psm(1) $8,958 $
Slide 19: Investment Management – Retail: Resilient income
Investment Management Investment Management – Retail Resilient income despite sales slowdown 1.2% specialty sales growth reflected more subdued trading conditions in the second half of 2011 Continuing to add value through active tenancy re-mixing In 2012, 86% of specialty stores have structure
Slide 20: Investment Management – Retailer health
Investment Management Investment Management – Retailer health Active re-mixing strategies in place Re-leasing spreads positive 2% in 2011 ‘Retail barometer’ used to anticipate and pre-empt retailer issues Active retail mixing strategies to minimise exposure to at-risk categories Case study – R
Slide 21: Investment Management – Office
Investment Management Investment Management – Office Strong income growth of 4% achieved in 2011 Key operating metrics Year to 31 December 2011 2010 Comparable income growth 4.0% 1.6% Occupancy 94.2% 93.5% Occupancy (including terms agreed)(1) 96.5% 97.8% Weighted average lease expiry 4.7 years 5.2
Slide 22: Investment Management – Office: Quality portfolio
Investment Management Investment Management – Office Quality portfolio reflected in performance 57% of GPT’s Office portfolio is premium grade – the largest proportion of any Australian REIT Consistently high occupancy, well ahead of market average 83% of GPT’s portfolio is subject to fixed in
Slide 23: Investment Management – Office environment
Investment Management Investment Management – Office environment Conditions mixed across the CBD markets Rising rents and positive net absorption in major CBD office markets in 2011 Prime assets continue to perform well Sydney market supported by below average supply over next three years GP
Slide 24: Investment Management – Industrial
Investment Management Investment Management – Industrial High occupancy driving income growth Income growth driven by structured rental increases, low vacancy and limited downtime periods 78% of portfolio subject to fixed increases averaging 3.3% 9% of leases expire in 2012 Key operating metri
Slide 25: Investment Management – Industrial environment
Investment Management Investment Management – Industrial environment Limited supply and low vacancy support performance Container throughput growth indicates future positive demand Soft pre-lease market although more enquiries emerging Rents and high occupancy levels supported by below average
Slide 26: Investment Management strategy
Investment Management Investment Management strategy Portfolio management approach Capital allocation framework used to actively manage the portfolio GPT Portfolio Diversity as at 31 December 2011 Analysis of historic returns and future forecast investment performance Industrial 9% Informed by
Slide 27: Funds Management: Solid performance for 2011
Funds Management Funds Management Solid performance for 2011 GWOF as at 31 Dec 2011 Returns to GPT ($m) 2011 Total assets $3.3 bn GWOF distribution 53.6 Gearing(1) 12.9% GWSCF distribution 22.8 Occupancy 98.3% Total distributions received 76.4 WACR 7.24% One year total return 8.8% GWOF fees 14.5 (po
Slide 28: Funds Management: Significant capital raised
Funds Management Funds Management Significant capital raised in past 18 months New issue and GPT sell down Equity Raised since June 2010 ($m) completed at NTA New Issue – GWOF 414 Other secondaries at a 1% discount to NTA GPT sell-down: GWOF 275 New and existing investors GWSCF 242 participate
Slide 29: Funds Management: Enhanced returns from sell-down
Funds Management Funds Management Enhanced returns from sell-down GPT has received an enhanced return of 80 basis points from the completion of its sell-down in the funds GPT holding at 30 June 2010 GPT holding at 31 December 2011 (Office and Retail: 33%) (Office: 23%, Retail: 20%) 3.8% (1.6%) 2.5
Slide 30: Development: $3.2bn pipeline
Development Development $3.2bn pipeline with significant projects underway Highpoint and Wollongong Central developments commenced in 2011(1) Agreement to lease reached with Lion Group for 100% of 5 Murray Rose New development opportunities actively investigated GPT Funds Total Underway 113 55
Slide 31: Development: Projects underway
Development Development Projects underway Total Cost Forecast to Complete ($m) Target As at Dec 2011 Portfolio ($m) Yield GPT Funds Highpoint Retail 200(2) 34 102 10.0%(3) Wollongong Central Retail 224 0 193 7.0% 111 Eagle St Office 464(2) 60 61 7.0% 161 Castlereagh St (1) Office 380 0 202 6.7% 5 Mu
Slide 32: Development: One One One Eagle Street update
Development Development One One One Eagle Street update 53% of floor space committed vs Leasing previous forecast of 40% by PC(1) One One One Eagle St 64,000 sqm Target yield of 7% fully leased Signed and/or committed 33,835 sqm Norton Rose, Gadens, Ernst & Young Fully committed target date Ju
Slide 33: Development: Highpoint update
Development Development Highpoint update Construction activity commenced in Leasing Total GLA March 2011 Highpoint 31,200 sqm Completion on track for early 2013 Signed and/or committed 18,200 sqm Target yield of 10% to GPT(1) Cost (GPT share) ($m) Approximately 100 new specialty Spent to 31
Slide 34: Sustainability: Achievements in 2011
Business Performance Sustainability Achievements in 2011 Environment Awards In 2011 GPT avoided $15.9 million in costs(1): 1. $1.4m of waste 3. $10.2m electricity • DJSI “Gold Class” 2. $3.8m of water 4. $0.5m gas Sustainability Leaders • Global RE Sustainability On target to achieve an average NABE
Slide 35: 2012 strategic priorities
Outlook 2012 strategic priorities Optimising the business, building sustainable growth 1 Streamlining key business processes Optimise GPT Minimising cost of funding 2 Actively managing the portfolio Strategically allocate capital Increasing investment in quality Industrial 3 Equip employees
Slide 36: Well positioned for growth: Platforms to accelerate performance
Outlook Well positioned for growth Platforms to accelerate performance Funds Other Develop- ment + manage- ment + revenue sources + Asset acquisitions Appointment of new resources for each growth platform Strategic plans in place and feasibility studies underway Exciting sources of additional
Slide 37: Senior team
Senior team Outlook Focused on high performance and shaping the future Leadership Team Michael Mark Fookes Nicholas Harris Anthony Matthew Faddy O’Brien Investment Funds McNulty Property & Asset CFO Management Management Development Management Judy James Coyne Rosemary Phil Taylor Barraclough Legal
Slide 38: Outlook for 2012: Headwinds and tailwinds
Outlook Outlook for 2012 External environment: headwinds and tailwinds Headwinds Tailwinds Global economic slowdown, Relatively strong domestic European debt crisis economy – potential for fast turnaround Low consumer confidence Limited supply pipeline of Subdued retail sales quality prope
Slide 39: Outlook for 2012: Earnings and value drivers
Outlook Outlook for 2012 Earnings and value drivers Portfolio Core income growth based on structured rental income increases and high occupancy Impacted by phased lease-up of One One One Eagle St Growth Upside from implementation of growth strategies Capacity for accretive asset acquisitions
Slide 40: Outlook for 2012
Outlook Outlook for 2012 Targeting EPS(1) growth of at least CPI + 1% for 2012 Payout ratio of no less than 80% of ROI (1) EPS defined as Realised Operating Income (ROI) per ordinary security. Assumes CPI is 3%. 40
Slide 41: 2011 annual result: Delivering on our promises
Strategy 2011 annual result Delivering on our promises Strong operating performance Active capital management Well positioned for growth 41
Slide 42: 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 43: 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