Dexus · ASX:DXS
Dexus — APN Property Group — HY2018 Earnings Presentation
26 slides from Dexus's earnings presentation, Feb 21, 2018
Slide 1: HY2018 Results Presentation
HY2018 RESULTS PRESENTATION 21 FEBRUARY 2018 www.apngroup.com.au ASX Code: APD
Slide 2: Overview: Philosophy, Approach, Business Model
Overview APN PROPERTY GROUP IS A SPECIALIST REAL ESTATE Overview INVESTMENT MANAGER: COMMERCIAL PROPERTY Philosophy Coburg Hill Shopping Centre, Coburg North VIC PROPERTY FOR INCOME Approach INVESTMENT OUTSTANDING PERFORMANCE SERVICE Newcastle, NSW – APN Regional Property Fund Business Model MANAGEM
Slide 3: Overview
Overview As at 31 December 2017 APN PROPERTY GROUP LIMITED $2.8 BILLION FUM REAL ESTATE CONVENIENCE INDUSTRIA REIT DIRECT PROPERTY SECURITIES RETAIL REIT $646 MILLION FUM $124 MILLION FUM $1,661 MILLION FUM $327 MILLION FUM BALANCE SHEET $118 MILLION NET TANGIBLE ASSETS ► Established 1996 ► 12 Funds
Slide 4: Achievements – First Half FY2018
Achievements – First Half FY2018 $5.1 million ▲37% pcp OPERATING EARNINGS1 (to 1.67 cents per share (cps)) FUM $2.8 billion ▲11% 2 7-Eleven, QLD – Convenience Retail REIT TOTAL SHAREHOLDER 1 year: 18.7% RETURN3 3 year: 31.1% pa FY2018 interim dividend: 1.25 cps DIVIDENDS FY2018 final dividend foreca
Slide 5: Achievements – continued
Achievements – continued ✓ Strong risk adjusted returns − Securities, Industria and Direct Funds − Modest debt levels across funds ✓ Industria REIT asset and portfolio performance − Asset management and client engagement drives ~10,400 sqm of leasing completed − Portfolio well positioned – desirable
Slide 6: Income statement
Income statement $000s HY2018 HY2017 Change ▪ Funds management fees up 11% to $7.1 million Funds management fees 7,098 6,410 ▲ 11% ▪ Co-investment income (not including mark to market gains) up Performance & transaction fees 866 747 ▲ 16% 78% to $3.6 million Asset & project management fees 60 71 ▼ 1
Slide 7: Balance sheet
Balance sheet ▪ Cash of $14.8 million includes $5.0 million for AFS Licence1 $000s Dec 2017 Jun 2017 Change ▪ Co-investments $100.7 million includes $67.6m in IDR at $2.52 per security (Dec 2017 closing price) Cash1 14,791 18,640 ▼ 21% ▪ Investment properties comprises Woolworths / HCG South Nowra C
Slide 8: Real Estate Securities
Real Estate Securities ▪ $67 million in net inflows into AREIT strategy - $11 million per FuM Growth month average (more recently post balance date flows have softened but remain monthly net inflows) $1,661m $1,571m $1,534m ▪ Wholesale mandate growing, net inflows of $57 million received $1,215m HY2
Slide 9: APN Asian REIT Fund – undiscovered investment opportunity
APN Asian REIT Fund – undiscovered investment opportunity ▪ Institutional investment grade Asian commercial property (all listed on major Asian stock markets – Singapore, Hong Kong, Tokyo) ▪ Substantial, multi-generation growth potential is continuing with over 50% of the world’s entire population i
Slide 10: Industria REIT
Industria REIT HY2018 highlights ▪ FFO 9.1 cents per security and on track for guidance of 18.4-18.6 cents per security ▪ Focus on client engagement generating leasing outcomes – completed ~10,400 sqm ▪ De-risked future expiry profile – early renewals reducing FY18/19 expiries from 10% to 5% ▪ Rapid
Slide 11: Convenience Retail REIT
Convenience Retail REIT ▪ Listed on the ASX July 2017 ▪ Comprising APN Property Plus Portfolio, APN Retail Property Fund and additional properties totalling $307.6 million ▪ Acquired an additional 2 properties post IPO for $9.6 million Key metrics at 31 December 2017 ▪ Successful utilisation of APD
Slide 12: Direct
Direct Achievements $ million FuM ▪ Funds under management steady at $124 million APN Regional Property Fund $51 ▪ APN Steller Development Fund – on track to deliver its target ~18% equity IRR APN Coburg North Retail Fund $20 ▪ Active leasing and portfolio management results: Regional Fund APN Devel
Slide 13: Investment property portfolio update (on balance sheet)
Investment property portfolio update (on balance sheet) Woolworths/HCG South Nowra Property Update ▪ 13,000sqm NLA ▪ South Nowra, NSW ▪ Held on APN’s balance sheet (100% owned by APD) ▪ 15 year lease – current WALE circa 14 years ▪ Building completed; lease commenced 10 August 2016 ▪ Valued at $24.2
Slide 14: APN remains in a very strong position for further growth
APN remains in a very strong position for further growth ▪ ‘Property for income’ philosophy and active Funds Under Management management remains relevant and attractive to investors ▪ Strategy of building sustainable earnings via scale is delivering: — operating EPS up significantly with FUM and con
Slide 15: Capital structure (stapling proposal) under consideration
Capital structure (stapling proposal) under consideration ▪ APN always seeks to have optimal capital structure ▪ Currently investigating the merits of establishing a stapled structure ▪ A stapled structure is essentially a trust contractually linked with a company – with each unit in the trust stapl
Slide 16: Earnings and dividend guidance reaffirmed
Earnings and dividend guidance reaffirmed Original Updated and Reaffirmed Guidance Comment Guidance (subject to continuation of current market conditions) (Full Year) 1HFY2018 (Actual) 2HFY2018 (Guidance) Full Year FY2018 Includes recurring as well as transactional and performance based revenues, ex
Slide 17: Implied Funds Management platform valuation
Implied Funds Management platform valuation1 Market implied value of funds management platform of $31.3m based on $2.8bn FuM = 1.1% 50.0 45.0 Total co-investments of 10.0 $100.7m 40.0 A$ cents per share (1.8) 35.0 4.7 1.5 4.4 30.0 25.0 9.1 47.5 20.0 15.0 10.0 19.6 5.0 0.0 IDR CRR Other co- Investmen
Slide 18: Appendices
APPENDICES APN | Property Group 18
Slide 19: Overview, Share Price and Volume
Overview Overview Share Price and Volume ▪ Listed on ASX (Code: APD) Volume (RHS) Price (LHS) $0.50 20.0k Volume (daily shares traded) ▪ Melbourne-based specialist real estate investment manager $0.45 15.0k ▪ Established 1996, listed 2005 Share price $0.40 ▪ $2.8 billion in Funds under Management (F
Slide 20: 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 21: 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 1,264 ✓ − − APN AREIT Mandates Property Securities Institutional 179 ✓ − − APN AREIT PIE Fund Property Securities R
Slide 22: Profit to operating cash flow reconciliation
Profit to operating cash flow reconciliation $’000s Dec 2017 Dec 2016 Cashflow Reconciliation 12,000 $’000s $’000s Statutory profit after tax 9,556 3,020 10,000 9,556 (6,595) Add/(deduct): Non-controlling interests - 64 8,000 Mark to market revaluations (6,595) 280 2,556 5,979 6,000 Non-cash expense
Slide 23: Operating Profit After Tax Reconciliation
Operating Profit After Tax Reconciliation $‘000s 7,000 1,558 (356) 6,000 (931) 475 5,135 5,000 119 (11) (149) 688 4,000 3,742 3,000 2,000 1,000 - Operating Increase in funds Increase in Decrease in Decrease in Increase in co- Decrease in rent Increase in Decrease in tax Operating earnings after tax
Slide 24: Debt facility summary
Debt facility summary Corporate debt facility Asset debt facility Facility Limit $8.0 million Facility Limit $10.5 million Drawn at 31 December 2017 $6.0 million Drawn at 31 December 2017 $10.5 million Loan to Value Ratio (LVR) 10.2% Loan to Value Ratio (LVR) 43.5% LVR Covenant < 35.0% LVR Covenant
Slide 25: 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 26: Contact details
Contact details APN Property Group Limited Follow @apngroup Tim Slattery Michael Groth Chief Executive Officer Chief Financial Officer +613 8656 1000 +613 8656 1000 tim.slattery@apngroup.com.au mgroth@apngroup.com.au ASX Code: APD APN Property Group Limited Level 30,101 Collins Street, Melbourne, Vi