Gpt Group · ASX:GPT
Gpt — The GPT Group — H1 2013 Earnings Presentation
46 slides from Gpt's earnings presentation, Aug 12, 2013
Slide 1: GPT 2013 Interim Result
For personal use only GPT 2013 INTERIM RESULT
Slide 2: Agenda
AGENDA For personal use only Business Performance Michael Cameron CEO Outlook Mark Fookes Financial Performance CFO Capital Management Carmel Hourigan Portfolio Performance Head of Investment Management Investment Management 2
Slide 3: Driving total returns
2013 INTERIM RESULT Driving total returns For personal use only Disciplined capital allocation Flexible and Hyper- opportunistic efficient team organisation 3
Slide 4: A total return business
GPT A total return business For personal use only Rigorous capital allocation Dynamic portfolio management NTA Change Disciplined balance sheet with capacity Development and FM to enhance returns Total Return > 9% High occupancy and fixed rental increases Distribution 100% of Growth plat
Slide 5: Acquisition strategy
ACQUISITION STRATEGY Security buy-back is our investment benchmark For personal use only Disciplined consideration of market fundamentals Office Prime assets with robust total return Fund-throughs only with strong pre-leasing Prime assets with robust total return Industrial Fully activate
Slide 6: Five year strategy update
STRATEGY Five year strategy update For personal use only The strategy will embrace: - Evolution not revolution - Capital allocation as the driver of total returns - Maximising the financial potential of Australian ‘core’ property - An organisation that’s flexible, opportunistic and not bound by in
Slide 7: Interim result highlights: an active start to 2013
INTERIM RESULT HIGHLIGHTS An active start to 2013 For personal use only Sale of Homemaker $300m Fortitude Valley A$100m Highpoint Acquisition of Sale of Erina completed for HKD issue expansion 3 Figtree Drive Fair completed $100m completed completed for $19m for $397m GWSCF raises $230m in new equit
Slide 8: Performance against key targets
2013 INTERIM RESULT SUMMARY Performance against key targets For personal use only 2013 Target 30 June 2013 Outcome EPS(1) growth > 5% 6.0% On track 12 Month Total Return(2) > 9% 8.6% Below target Leading relative Total Securityholder Return(3) 10.2% Below target 8 (1) EPS defined as ROI (less distri
Slide 9: 6.0% increase in earnings per security
2013 INTERIM RESULT SUMMARY 6.0% increase in earnings per security For personal use only 6 months to 30 June ($m) 2013 2012 Change Total Realised Operating Income (ROI) 236.5 227.2 4.1% Valuation movements 31.6 122.2 Financial instruments marked to market and FX 8.3 (55.1) movements Other(1) (19.4
Slide 10: Segment performance
SEGMENT PERFORMANCE Management company moving to profitability For personal use only 6 months to 30 June ($m) 2013 2012 Change Impact of asset sales offset by comparable income growth of 1.5% Retail NOI 139.6 160.4 13.0% Contribution from 111 Eagle St offset Office NOI 73.1 68.0 7.5% by comparab
Slide 11: Management expenses
MANAGEMENT EXPENSES 30% reduction in expenses For personal use only $42.3m 6 months to 30 June ($m) 2013 2012 Corporate Corporate Overheads 13.1 13.3 Costs $13.3m Investment Management 3.2 4.1 $29.5m Asset Management 4.7 10.4 Corporate Costs $13.1m Development Management 3.7 9.3 Portfolio Expenses $
Slide 12: Buy-back and distribution update
CAPITAL MANAGEMENT Buy-back and distribution update For personal use only GPT acquired an additional 25.2 Buy-back as at 30 June 2013 million securities in the buy-back in 2013 Securities acquired 113.9m Buy-back to continue at levels % of securities on issue 6.1% accretive to earnings and NTA C
Slide 13: Balance sheet demonstrates disciplined approach
CAPITAL MANAGEMENT Balance sheet demonstrates disciplined approach For personal use only 30 Jun 31 Dec Change 2013 2012 Net tangible assets per security $3.76 $3.73 0.8% Proceeds from asset Total borrowings $2,046m $2,144m 4.6% sales offset by security buy-back Gearing(1) 19.9% 21.7% 180bps We
Slide 14: Significant progress on diversification and tenor
CAPITAL MANAGEMENT Significant progress on diversification and tenor For personal use only Bank debt down to 49%, bonds increased to 51% of total facilities Tenor lengthened from 5.4 to 6.6 years as a result of issuing 12 and 15 year bonds in Hong Kong and USA Sources of debt Debt maturity profi
Slide 15: High occupancy and long WALE
INVESTMENT MANAGEMENT High occupancy and long WALE For personal use only PORTFOLIO SUMMARY GPT Portfolio Diversity Portfolio Comparable WALE Occupancy WACR LBP Size(1) Income 13% Growth(2) Retail $4.5 bn 1.5% 4.3 yrs 99.5% 6.03% Office $2.8 bn (0.7%) 5.6 yrs 95.2% 6.78% Office 34% LBP $1.0 bn 3.2% 5
Slide 16: 12 month portfolio total return of 8%
INVESTMENT MANAGEMENT 12 month portfolio total return of 8% For personal use only Portfolio Total Return Short term market fundamentals weak 12 Months to 30 June 2013 across most sectors Retail Office LBP Investment Strong capital return (Inc. GWSCF Stake) (Inc. GWOF Stake) Portfolio Total Portf
Slide 17: Strong total return linked to WALE
INVESTMENT MANAGEMENT Strong total return linked to WALE For personal use only 18.0% Office Total Return vs WALE(1) 818 Bourke 16.0% (5.2 yrs, 15.9%) Melbourne Central Tower 14.0% (5.1 yrs, 15.2%) Total Return 12.0% 2 Park St (5.3 yrs, 10.5%) 10.0% Australia Square (5.5 yrs, 11.1%) Portfolio Farrer
Slide 18: Retail: active management reflected in high occupancy
RETAIL Active management reflected in high occupancy For personal use only Six months to 30 June 2013 2012 Comparable income growth 1.5% 3.9% Comparable total centre sales growth(1) 1.0% 0.4% Comparable specialty sales growth(1) 1.1% 0.4% Specialty sales psm(1) $8,984 $8,981 Specialty occupancy cost
Slide 19: Positioning the portfolio for long term performance
RETAIL Positioning the portfolio for long term performance For personal use only 330 leasing deals completed in first six months 6 months to 30 June 2013 2012 Leasing spreads of -5.8% Vacancies(1) 43 40 On average 4.8% structured rental increases achieved on new deals ‘Critical’ retailers(2) 3
Slide 20: Retailers and GPT are responding to challenges
RETAIL Retailers and GPT are responding to challenges For personal use only Retail Spending Retailer Focus GPT Focus Subdued Competing with Improving gross profit Growing market share of • Category price deflation margins sales • Overseas travel • Supply chain • Evolving the retail mix • Increased s
Slide 21: GPT focus: active asset management
RETAIL GPT focus: Active asset management For personal use only Growing Market Share of Efficiencies Risk Minimisation Sales Evolving the retail mix Reducing recoverable Critical retailer • Moving towards growth expenses management categories • Management efficiencies • Categorisation of every • Foc
Slide 22: Erina delivers strong historical returns
RETAIL Erina delivers strong historical returns For personal use only $200 million expansion of Erina Fair in 2003 Sold in June 2013 for $397 million Delivered a 10 Year IRR of 9.37% $m 450 Erina Fair Capital Growth Composition 400 350 300 250 200 150 100 50 - Purchased Purchased Development D
Slide 23: Highpoint on track to deliver significant profit
RETAIL Highpoint on track to deliver significant profit For personal use only $300 million expansion of Highpoint successfully completed in March 2013 On track to deliver target yield and significant profit Highpoint (100% Interest) $m Capital Growth Composition 1,800 1,600 1,400 1,200 1,000 800
Slide 24: Market outlook subdued, growth drivers improving
RETAIL Market outlook subdued, growth drivers improving For personal use only Supportive monetary policy and weakening dollar Stable economic growth anticipated Cash Rate and Exchange Rate(1) 5% IMF Forecast: Australian GDP Growth(2) 20% 1.5 Cash Rate (LHS) $A-$US (RHS) Forecast 4% Annual Growth Exc
Slide 25: Office: de-risking the portfolio
OFFICE De-risking the portfolio For personal use only 6 months to 30 June 2013 2012 Comparable income growth (0.7%) 5.6% Occupancy (including terms agreed) 95.2% 93.6% Weighted average lease expiry 5.6 years 4.8 years Leases signed 46,731 sqm 35,026 sqm Terms agreed at period end 27,555 sqm 27,484 s
Slide 26: Continued leasing success and future proofing
OFFICE Continued leasing success and future proofing For personal use only 74,286 sqm leased or at HoA over 49 deals Building Tenant Area Start Income Status Date (%) Solid total activity for the 6 months with GPT 43,100 sqm secured over 34 deals 2 Park Street Chubb 1,738 Feb-14 0.4% HOA 2014
Slide 27: Focused asset management
OFFICE Focused asset management For personal use only Australia Square Case Study Melbourne Central Tower Case Study 11.1% total return 15.2% total return WALE increased to 5.5 years 58% or 37,784 sqm of area re-leased 54% of asset leased over past 2 years over last 3 years 3 largest ten
Slide 28: Existing vacancies and future leasing focus
OFFICE Existing vacancies and future leasing focus For personal use only Area % of Asset Tenant Expiry Floors (sqm) Portfolio Current Vacancies Melbourne Central Tower 3,817 1.2% Part Floors 2,9,10,46,49, 50,51 One One One Eagle St 10,427 1.1% Full Floors 30, 41-45 plus suites Australia Square 4,447
Slide 29: Knowledge based response
OFFICE Knowledge based response For personal use only 11 assets internally managed post internalisation of GWOF assets Market Knowledge Ownership exposure to 46% of premium market Leaseabilty audit ensures minimum standards in place Asset Peer set analysis to best value position our assets a
Slide 30: MLC Centre repositioning
OFFICE MLC Centre Repositioning For personal use only Opportunity: To holistically reposition the asset to be Sydney’s premier business precinct Outcome: Enhanced IRR, repositioned office tower, revitalised retail and activated precinct Deliverables: - Immediate activation & refurbishment - Sh
Slide 31: Employment growth constraining short term recovery
OFFICE Employment growth constraining short term recovery For personal use only CBD Office: White Collar Growth(1) 15,000 Key themes: Annual Change in White FY13 FY14(f) - Contraction in public sector collar Headcount 10,000 employment in most markets 5,000 - Pull back in mining sector 0 - Continu
Slide 32: Lead indicators implying a recovery
OFFICE Lead indicators implying a recovery For personal use only Australian CBD Annual Net Absorption(1) Australian CBD Net Absorption v ASX200(2) ‘000sqm % change 700,000 Annual p.a 600,000 600,000 50% Annual Net Absorption (sqm) 500,000 500,000 40% 400,000 30% 400,000 20% 300,000 300,000 10% 200,0
Slide 33: Logistics & Business Parks: solid performance in first half
LOGISTICS & BUSINESS PARKS Solid performance in first half For personal use only 6 months to 30 June 2013 2012 Comparable income growth 3.2% 2.5% Occupancy 98.5% 99.0% Weighted average lease expiry 5.4 years 6.1 years Leases signed 38,744 sqm 44,711 sqm Net valuation movement $6.2m $1.8m Weighted av
Slide 34: Dedicated management and development teams
LOGISTICS & BUSINESS PARKS Dedicated Management and Development teams For personal use only Investment Management Office and Logistics Portfolio Manager Logistics & Business Parks David Burgess Development Asset & Property Management Head of Development – Head of Asset & Property Logistics Analyst M
Slide 35: Executing on growth strategy
LOGISTICS & BUSINESS PARKS Executing on growth strategy For personal use only $288m of product acquired or developed $306m of investment and development product in preferred position Eastern Creek, Commence Silverwater 3 Figtree Drive, developments Industrial acquisitions SOP acquisition, $306m
Slide 36: GPT capitalising on increased enquiry
LOGISTICS & BUSINESS PARKS GPT capitalising on increased enquiry For personal use only Material improvement in enquiry in Western Sydney industrial pre lease market Conversion to actual deals remains slow GPT capitalising on enquiry ‘000s Western Sydney Leasing Enquiry 600 500 400 300 200 100
Slide 37: Progress continues on all four platforms
GROWTH PLATFORM UPDATE Progress continues on all four platforms For personal use only Funds Development Management New Profit Acquisitions Sources 37
Slide 38: Platform 1: Funds management
PLATFORM 1: FUNDS MANAGEMENT Top two performing core wholesale funds For personal use only GWOF Equity Raised – Year to June 2013 $M Delivered 10.6% return to investors New equity 666 Number one performing office wholesale fund DRP participation 102 Acquired 50% interest in 8 Exhibition Street
Slide 39: Platform 2: Development
PLATFORM 2: DEVELOPMENT Delivering on both pathways For personal use only Retail & Major Projects Logistics and Business Parks Achievements Achievements Delivered $300 million Highpoint Increased committed pipeline by $234m expansion with >7.25% yield and of pre-leased developments $140 million
Slide 40: Platform 3: New profit sources
PLATFORM 3: NEW PROFIT SOURCES Progress continues on all three platforms For personal use only Charlestown Square operational and four others underway LiquidSpace Australia rollout commenced Parcel locker trial underway at MLC Centre and Melbourne Central 40
Slide 41: Platform 4: Acquisitions
PLATFORM 4: ACQUISITIONS $1.7 billion of transactions in past 18 months For personal use only Acquisitions Divestments Citiport Business Park Casuarina Square 83 Derby Street Westfield Woden 10 Interchange Drive Erina Fair Toll NQX Homemaker Portfolio 150 Collins Street (GWOF) 10
Slide 42: Outlook for 2013
OUTLOOK FOR 2013 Earnings and value drivers For personal use only Portfolio income High occupancy and fixed rental increases underpin stable income growth Focus is on retail remixing and near term office expiries Growth Increased fees from FUM growth Significant progress in activation of lan
Slide 43: Guidance for 2013
GUIDANCE FOR 2013 On track to achieve target For personal use only Targeting EPS(1) growth of at least 5% for 2013 Payout ratio of 80% of ROI (100% of AFFO) 43 (1) EPS defined as Realised Operating Income (ROI) per ordinary security
Slide 44: Driving total returns
2013 INTERIM RESULT Driving total returns For personal use only Disciplined capital allocation Flexible and Hyper- opportunistic efficient team organisation 44
Slide 45: Contact information
CONTACT INFORMATION For personal use only Michael Cameron Wendy Jenkins Mark Fookes Chief Executive Officer and Group Investor Relations Chief Financial Officer Managing Director Manager Tel: +61 2 8239 3518 Tel: +61 2 8239 3565 Tel: +61 2 8239 3732 Mob: +61 412 279 833 Mob: +61 410 437 597 Mob: +61
Slide 46: Disclaimer
DISCLAIMER For personal use only 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 pro