Dexus · ASX:DXS
Dexus — APN Property Group — H1 2019 Earnings Presentation
33 slides from Dexus's earnings presentation, Feb 21, 2019
Slide 1: HY2019 Results Presentation
HY2019 RESULTS PRESENTATION 21 FEBRUARY 2019 www.apngroup.com.au ASX Code: APD
Slide 2: APN Property Group Profile
APN Property Group Profile Specialist real estate investment manager – ‘Property for income’ focus As at 31 December 2018 APN PROPERTY GROUP LIMITED FUNDS UNDER MANAGEMENT CO-INVESTMENTS & CASH $2,806 MILLION $121 MILLION NET TANGIBLE ASSETS APN CONVENIENCE REAL ESTATE APN INDUSTRIA REIT RETAIL REIT
Slide 3: HY2019 Results Overview
HY2019 Results Overview Earnings guidance reaffirmed and cash position materially increased $4.8 million ($5.1 million pcp) 1.55 cents per share (cps) OPERATING EARNINGS1 Statutory profit: $6.0 million FY2019 guidance reaffirmed: 2.40 – 2.90 cps FUM $2.8 billion ($2.8 billion at June 2018) Forecast
Slide 4: HY2019 Results Overview
HY2019 Results Overview Delivering growth and well positioned Strong funds 98% income from Strong cash and management fee growth recurring sources balance sheet position Performance & Rental & other Transaction Fees income 2% 5% Co-investment Income 27% 98% recurring Funds $13.1 million Management $
Slide 5: HY2019 Results Overview
HY2019 Results Overview Strong operational performance across the business Securities funds continue to generate strong income based investment performance – true to ‘property for income’ label APN Asian REIT FUM increased 63% over the past 12 months to $31 million Strong performance by APN In
Slide 6: Strong ongoing performance
Strong ongoing performance Recurring Income Growth Total Shareholder Return $5,000 $4,136 $4,000 $3,000 $2,000 $1,000 $0 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Funds Under Management Growth Dividends 1. Assumes HY19 recurring income is annualised 2. Per a
Slide 7: Direct property platform with scale and multiple capabilities
Direct property platform with scale and multiple capabilities $1.2 billion of property across platform, WALE of 8.3 years and 98% occupancy $401m $343m QLD $388m Office Industrial 53 Retail $236m 13 Office $153m $355m $45m Convenience Other Retail Retail NSW $544m 4 Office $248m 1 Industrial $197m W
Slide 8: Income statement – continuing recurring income growth
Income statement – continuing recurring income growth $000s HY2019 HY2018 Change Additional assets acquired and valuation increases in Funds management fees 7,616 7,098 ▲ 7% APN Industria REIT and APN Convenience Retail Performance & transaction fees 322 866 ▼ 63% REIT Asset & project management fee
Slide 9: Balance sheet strongly positioned for growth opportunities
Balance sheet strongly positioned for growth opportunities $000s Dec 2018 Jun 2018 Change Cash1 29,316 14,986 ▲ 96% Cash received following divestment of property to establish APN Nowra Property Fund Co-investments 106,833 102,201 ▲ 5% Includes $73.7m in APN Industria REIT at $2.73 per Investment
Slide 10: Real Estate Securities
Real Estate Securities AREIT Fund net inflows remained steady over the half (down $2 FUM Movement million) – reflecting investor sentiment (increasing allocations to cash, higher interest rate expectations) Strong income-based investment performance: AREIT Fund distribution yield of 6.41%1 pa pa
Slide 11: APN Asian REIT Fund – strong performance and FUM growth
APN Asian REIT Fund – strong performance and FUM growth Institutional investment grade Asian commercial property World Class Commercial Property Assets in Asia All listed on major Asian stock markets – Singapore, Hong Kong, Tokyo Achieved Lonsec Research ‘Investment Grade’ rating and SQM Resea
Slide 12: APN Asian REIT Fund – Opportunity Overview
APN Asian REIT Fund – Opportunity Overview Middle class consumer spending growth outlook 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 Source: OECD 2013 Source: Asia Pacific Real Estate Association 2017 Broa
Slide 13: APN Industria REIT
APN Industria REIT HY2019 FFO increased 3.3% vs pcp to 9.4 cps NTA of $2.71; gearing 33.3% Particularly strong period of leasing with ~6,600 sqm leased, including ~3,000 sqm at Brisbane Technology Park $26 million of acquisitions completed at an average yield of 7.1% and WALE of 5.7 years
Slide 14: APN Convenience Retail REIT
APN Convenience Retail REIT HY2019 Funds From Operations (FFO) 10.7 cps – 3.7% above PDS forecast NTA per security increased 2.8% to $2.95 (8.1% since IPO) Four properties acquired totalling $27.4 million post listing Branding aligned to APN (Feb 2019) Well positioned – sustainable and gro
Slide 15: Direct Property
Direct Property Achievements $ million FUM Successfully launched APN Nowra Property Fund - a new single APN Regional Property Fund $54 asset, large format retail opportunity in South Nowra NSW Forecast distribution yield of 7.80% (FY2019) APN Coburg North Retail Fund $21 WALE: 12.6 years APN N
Slide 16: APN Nowra Property Fund – new wholesale syndicate
APN Nowra Property Fund – new wholesale syndicate New Large Format Retail property investment – long term lease to Investment type Single asset 5 year close ended unlisted property fund Home Consortium Group guaranteed by Woolworths Group Limited Distributions 7.80% pa initial forecast yield (8.00
Slide 17: APN Regional Property Fund – Newcastle A-Grade Office
APN Regional Property Fund – Newcastle A-Grade Office Asset enhancement program nearing completion, which includes Commercial office property fund, listed on the National Stock Investment type Exchange (NSX) state of the art end of trip facilities and foyer upgrades to improve asset appeal and ten
Slide 18: APN Steller Development Fund
APN Steller Development Fund Established September 2015 Multi-site residential development, closed-end wholesale unlisted Investment type All six projects are located within sought after locations in property fund Melbourne’s south east Development 209 apartments over 6 medium density projects i
Slide 19: Stapling proposal – update
Stapling proposal – update A stapled structure is essentially a trust contractually linked with Listed Stapled Security a company – with each unit in the trust stapled to a share in the APN Property Group (ASX: APD) Background company and traded on ASX as a single stapled security Board has revi
Slide 20: Earnings and dividend guidance reaffirmed
Earnings and dividend guidance reaffirmed Assumes like for like basis (ie no stapling assumption for the relevant periods) Original Reaffirmed Guidance Comment Guidance (subject to continuation of current market conditions) (Full Year) 1HFY2019 (Actual) 2HFY2019 (Guidance) Full Year FY2019 Includes
Slide 21: Key industry issues
Key industry issues APN believes it is well positioned in light of key industry developments Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry Clearly highlighted importance of putting fiduciary obligations (client investors) first Illustrated import
Slide 22: Market commentary
Market commentary APN’s 'Property for income’ value proposition is alive and well Strong investor demand for high quality commercial property investments with reliable income Despite potential future economic challenges Australian remains an attractive destination for global investors (particula
Slide 23: Outlook – APN remains well positioned for future growth
Outlook – APN remains well positioned for future growth Established $2.8 billion commercial real estate investment management platform Solid earnings base with four divisions across listed and unlisted commercial property funds Funds (including Industria REIT and Convenience Retail REIT) in st
Slide 24: Appendices
APPENDICES APN | Property Group 24
Slide 25: Funds under Management Summary
Funds under Management Summary Fee Basis APN Co-investment FUM Funds Sector Investors Manage- Perfor- $m Other $m % ment mance APN AREIT Fund Property Securities Retail & Institutional 1,216 − − APN AREIT Mandates Property Securities Institutional 187 − − APN Property for Income Fund Property Se
Slide 26: Implied Funds Management platform valuation
Implied Funds Management platform valuation1 Market implied value of funds management platform of $19.1m based on $2.8bn FUM = 0.7% Total co-investments of $106.8m A$ cents per share 2 1. Analysis and APN share price as at market close 31 December 2018 2. NTA of 21.6 cents per share is net of debt –
Slide 27: Overview – Share Price and Volume
Overview Summary Share Price and Volume Listed on ASX (Code: APD) $0.50 Volume (RHS) Price (LHS) 20.0k Volume (daily shares traded) Melbourne-based specialist real estate investment $0.45 manager 15.0k Share price $0.40 Established 1996, listed 2005 10.0k $0.35 $2.8 billion in Funds Under Ma
Slide 28: Boards and Management team
Boards and Management team Experienced real estate team, Independent Boards Board of Directors – APN Property Group Limited Independent Responsible Entity – APN Funds Management Limited Chris Aylward Over 30 years experience in property and construction industry Geoff Chairman since April 2012 a
Slide 29: Profit to operating cash flow reconciliation
Profit to operating cash flow reconciliation Cashflow Reconciliation ($’000s) Dec 2018 Dec 2017 Statutory profit after tax 6,010 9,556 Add/(deduct): Mark to market revaluations (2,016) (6,595) Non-cash expense items 534 462 Working capital movement 1,886 2,556 Operating Cash Flow 6,414 5,979 29
Slide 30: Operating Profit After Tax Reconciliation
Operating Profit After Tax Reconciliation $‘000s 30
Slide 31: Debt facility summary
Debt facility summary Corporate debt facility Facility Limit $8.0 million Drawn at 31 December 2018 $6.0 million Loan to Value Ratio (LVR) 9.4% LVR Covenant < 35.0% Distribution Cover Ratio (DCR) 11.0 x DCR Covenant > 2.0 x Cost of debt (p.a.) 6.8% Expiry March 2020 Security Mortgage over specified
Slide 32: Disclaimer
Disclaimer The financial information included in this presentation is based on APN Property Group’s financial statements and results that have been prepared in accordance with the Corporations Act 2001 (Cth), applicable Accounting Standards and Interpretations and in compliance with other applicable
Slide 33: Contact details
Contact details Tim Slattery Chief Executive Officer Ph: +613 8656 1000 tim.slattery@apngroup.com.au ASX Code: APD 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.apngroup.com.a