Dexus Convenience Retail REIT · ASX:DXC
Dexus Convenience Retail REIT — APN Property Group — Investor Presentation (September 2019)
37 slides from Dexus Convenience Retail REIT's investor presentation, September 2019
Slide 1: An Undiscovered World of Income and Growth Opportunities
AN UNDISCOVERED WORLD OF INCOME AND GROWTH OPPORTUNITIES APN ASIAN REIT FUND September 2019
Slide 2: Agenda
Agenda 1 The Asian growth opportunity 2 APN Asian REIT Fund: portfolio and performance 3 Market outlook 4 Investment team, Board and Key contacts 2
Slide 3: The Asian Century and Commercial Property
THE ASIAN CENTURY AND COMMERCIAL PROPERTY 3
Slide 4: Asia commercial property: a compelling story
Asia commercial property: a compelling story… There are more people living inside this circle than outside of it Source: Map created by reddit user valeriepieris, 2013 4
Slide 5: The Growth Engine – GDP
The Growth Engine – GDP ▪ Asia has been the growth engine of global growth in the 21st century far outstripping the mature Europe/North American regions. ▪ IMF projections have Asia remaining at the forefront of global growth. This expansion underpins the positive outlook for Asian real estate. 5
Slide 6: Asia – growing piece of the global pie
Asia – growing piece of the global pie Economic growth drives demand for all types of commercial property Middle class consumer spending Daily growth in investable real estate value $6,000 $5,000 $4,000 US$m $3,000 $2,000 $1,000 $- Rest of the Europe North America Asia World Notes: Inner ring: 2009
Slide 7: Asian REITs – growing piece of the global REIT market
Asian REITs – growing piece of the global REIT market 2001 2019 69% 79% 4% 7% 1% 16% 13% 11% ▪ Asia share of global REIT market was 1% in 2001, now 13% ▪ Asia is the second largest REIT market in the world ▪ Significant Asian markets slated to launch REITs ensures Asia’s share will continue to grow
Slide 8: Exponential growth: now a A$350 billion+ listed sector
Exponential growth: now a A$350 billion+ listed sector Asian listed property sector growing nearly twice as fast as the rest of the world ▪ Over A$350 Billion and counting ▪ Over double the size of the Australian market 400 Market Capitalisation 350 300 250 200 A$ billions 150 100 50 0 Jun-02 Jun-03
Slide 9: Diversification: Asia has deeper pools of assets and capital
Diversification: Asia has deeper pools of assets and capital Australia Asia 195 29 Number of REIT stocks 291 Market capitalisation 131 (A$ billions) 6000 2500 Number of properties (approx.) 69% Market concentration (market 33% cap outside of top 10 stocks) Source: ASX300 AREIT Index and Bloomberg As
Slide 10: Asian Real Estate – comparable to the world's best retail assets
Asian Real Estate – comparable to the world’s best retail assets Asian REITs own commercial property which is as high quality as anywhere in the world VivoCity, Singapore Westfield Sydney Owner Mapletree Commercial Trust Scentre Group Size (sqm) 100,074 166,340 Shopper Traffic (pa) 55.0 Million 45.5
Slide 11: Asian Real Estate – comparable to the world's best office assets
Asian Real Estate – comparable to the world’s best office assets Asian REITs own commercial property which is as high quality as anywhere in the world CapitaGreen, Singapore 1 Bligh St, Sydney Owner Capitaland Commercial Trust Dexus Property Group Size (NLA sqm) 65,129 42,900 Latest valuation (AUD p
Slide 12: Governance: world leading regulatory regimes for Asian REITs
Governance: world leading regulatory regimes for Asian REITs • Stringent framework governing REITs in key Asian markets • Asian REITs are separate and distinct to the Asian real estate developers (non REIT) REITs in: Singapore Hong Kong Japan Payout requirement >90% of taxable income >90% of net inc
Slide 13: Asia-Pac REITs vs Asia-Pac Real Estate Equities
Asia-Pac REITs vs Asia-Pac Real Estate Equities Total Return & Volatility Mapping: Nine Years to 31/12/17 (USD) Asia-Pac REITs are consistently less volatile than Asia-Pac Real Estate equities whose earnings are far more volatile (less income). Returns are better too. 13
Slide 14: Lend Lease vs Dexus vs Capitaland Commercial Trust
Lend Lease vs Dexus vs Capitaland Commercial Trust Lend Lease % Ebitda Dexus % of Income CCT % of Income Investments Development Investments Construction Development/Funds management Investments Source: Company Filings, 2019 14
Slide 15: Sustainability of Income
— SUSTAINABILITY OF. INCOME APN | Propert
Slide 16: Sustainability of income
Sustainability of income ▪ REITs are mandated to pay out a minimum percentage of income (~90%), cannot retain earnings ▪ Advantage of distributed income : every dollar that gets paid out to you is a dollar that you can invest in the best way possible ▪ Transparency, liquidity, and strong corporate g
Slide 17: APN Asian Fund – Income focus drives consistency
APN Asian Fund – Income focus drives consistency APN’s income focus reflected in the consistency of income returns and the larger contribution they make to Total Returns
Slide 18: APN Asian REIT Fund
stip. — APN | Property Group
Slide 19: Philosophy
APN’s investment approach PROPERTY FOR INCOME Philosophy ▪ Property as investment in an income stream ▪ Long term leases provide protection ▪ Predictable and sustainable growth in income streams Bottom up value style – based on fundamental research ▪ Hands on approach including asset level due dilig
Slide 20: Diversified portfolio – Global gateway cities in Asia
Diversified portfolio – Global gateway cities in Asia ▪ Invest mainly in developed markets of Hong Kong, Singapore and Japan ▪ Focus on quality markets that display stable rental growth, low vacancy rates and well established governance systems Geographic exposure Hong Kong / China 21.10% Japan Sing
Slide 21: APN Asian REIT Fund: stable income, lower risk
APN Asian REIT Fund: stable income, lower risk5 1. High level of recurring income Regular monthly income1 4.87% ✓ 4.87%3 pa current distribution yield 4.30% 3.91% ✓ Aim to deliver distributions of 110% of the Asian REIT Index ✓ Monthly distributions 2. Lower risk Index yield Benchmark Fund current (
Slide 22: APN Asian REIT Fund: performance history
APN Asian REIT Fund: performance history 30 September 2019 Fund’s active approach and income focus is benchmark unaware yet Fund has still outperformed index since inception APN Asian APN Asian APN Asian APN Asian BBAREIT Index Out/(under) BBAREIT Index REIT Fund REIT Fund REIT Fund REIT Fund Total
Slide 23: APN Asian REIT Fund: superior risk adjusted returns
APN Asian REIT Fund: superior risk adjusted returns Since inception to 30 June 2019 Total return 16.00% APN Asian REIT Fund Global Equities 15.00% Australian REIT Index Asian REIT Index 14.00% Global REITs 13.00% 12.00% Australian Equities 11.00% Asian Equities 10.00% 9.00% 8.50% 9.00% 9.50% 10.00%
Slide 24: Portfolio diversification: lower volatility and correlation
Portfolio diversification: lower volatility and correlation Volatility – Asian REITs lowest risk1 15.5% 14.1% 11.6% 12.2% 10.2% 10.5% 8.93% APN Asian REIT Global Equities Asian Equities Australian Equities Global REITs US REITs Asian Developers Correlation vs other asset classes 0.50 0.44 0.40 0.36
Slide 25: APN Asian REIT Fund - Leading research house ratings
APN Asian REIT Fund - Leading research house ratings SQM Research rates the APN AREIT Fund ‘4.25-stars’ on the belief that “The Fund offers retail investors a channel to gain exposure to a portfolio of Asia-focussed REITs, which is not commonly available in the Australian market… SQM Research believ
Slide 26: An actively managed Asian property securities fund
mFund code: APF02 An actively managed Asian property securities fund ▪ Income focused Superior running yield and risk adjusted returns compared to the Index ▪ Monthly distributions ▪ Lower than market APN Asian Metric REIT Fund¹ Index2 volatility Current running yield 4.87%³ 3.91% ▪ Highly rated: SQ
Slide 27: Market Outlook
APN | Property Group
Slide 28: Trade Wars
Trade Wars ▪ Trade War fears have not impacted real estate transaction values ▪ Listed REIT markets largely shrugged off the latest round of tariff announcements- - Globally, REITs have benefited from the Trade War uncertainty as the sector seen as a safe haven - Market is up 5% this month predomina
Slide 29: Market outlook - Singapore
Market outlook - Singapore ▪ Singapore’s economic growth in 2019 likely to be weighed down by moderating global demand for electronics and the impact of the ongoing trade war. The Ministry of Trade and Industry (MTI) projection is for 1.5-3.5% growth in 2019, vs Economic 3.3% (est) recorded for 2018
Slide 30: Market outlook - Japan
Market outlook - Japan ▪ Real GDP growth expected at similar rate to 2018, around 1%. ▪ Scheduled consumption tax hike in October 2019 may stall growth. Economic ▪ Yen has been strengthening due to market’s risk off stance and Japanese long-term interest rates have fallen over the outlook last 12 mo
Slide 31: Market outlook – Hong Kong
Market outlook – Hong Kong ▪ Similar to Singapore, expect GDP growth to slow slightly in 2019 (to around mid 2% range) after a strong Economic performance in 2017/18 (~3.3%). Expected headwinds from prolonged trade tensions, cooling residential market and outlook slowdown in China will take toll on
Slide 32: Appendices
APPENDICES Pa APN | Property Group
Slide 33: Investment team
Investment team Corrine Ng Matthew Coleman Fund Manager, Asian Real Estate Securities Analyst, Real Estate Securities Corrine joined APN Property Group in February Matthew joined the Real Estate Securities Team 2015 and is responsible for managing the Asian at APN in June 2016 and covers a number of
Slide 34: Investment team (continued)
Investment team (continued) APN Board and Executive Team Independent Responsible Entity Board Real Estate Securities Investment Team Asian REITs Corrine Ng Matthew Coleman Fund Manager Analyst 16 years experience 8 years experience Michael Doble Pete Morrissey Mark Mazzarella Steven Tjia CIO Real Es
Slide 35: Boards and Management team
Boards and Management team Experienced real estate team, Independent Boards Board of Directors – APN Property Group Limited Independent Responsible Entity – APN Funds Management Limited Chris Aylward ▪ Over 30 years experience in property and construction Geoff ▪ Chairman since April 2012 and a Dire
Slide 36: Disclaimer
Disclaimer This presentation has been prepared by APN Property Group Limited (ACN 109 846 068 APD.ASX) (APN) and APN Funds Management Limited (APNFM) (ACN 080 674 479, AFSL No. 237500). APNFM is a wholly owned subsidiary of APN Property Group Limited and the responsible entity and issuer of the APN
Slide 37: Contact details
Contact details Investor Services 1800 996 456 (toll free) Check out our Blog for the latest articles and insights at: apngroup.blog Adviser Services 1300 027 636 Operating hours: 8.30am – 5.30pm (AEST) weekdays Follow us… @apngroup APN Property Group Limited APN Property Group Limited apnpropertygr
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