Gpt Group · ASX:GPT
Gpt — The GPT Group — Investor Presentation (October 2013)
57 slides from Gpt's investor presentation, Oct 28, 2013
Slide 1: Property to Prosperity: 2013 Strategy Update
Property to Prosperity For personal use only 2013 Strategy Update
Slide 2: The journey since 2009
The GPT Group 2013 Investor Presentation The journey since 2009 For personal use only →→ Funds management grow →→ Development →→ New profit sources 2013 →→ Accretive acquisitions Strategy review Optimise →→ Enhanced capital allocation framework →→ Reduced debt costs →→ Improved productivity →→ Align
Slide 3: The journey ahead
The GPT Group 2013 Investor Presentation The journey ahead Embedded Premium →→ FUM value included in NAV →→ Demonstrated organic growth For personal use only →→ Further growth platforms identified →→ Price premium →→ Maintain low cost of capital Benefits Harvest →→ Increased active earnings →→ Signi
Slide 4: Capability: sector specialists
The GPT Group 2013 Investor Presentation capability Sector specialists For personal use only Asset base group portfolio retail portfolio office portfolio logistics portfolio No. assets 65 assets 16 shopping centres 20 assets 29 assets GLA 2,630,000 sqm 980,000 sqm GLA 1,010,000 sqm NLA 640,000 sqm G
Slide 5: Business model and capability
The GPT Group 2013 Investor Presentation business model & capability For personal use only Development Asset Anthony McNulty Management John Thomas Matthew Faddy Investment Management Carmel Hourigan Capital Allocation Funds Management Nicholas Harris Business Optimisation Corporate Mark Fookes Deve
Slide 6: GPT's principles for driving success
The GPT Group 2013 Investor Presentation Gpt’s Principles for driving success Factor Gpt approach For personal use only Capital Strong NAV growth beyond capital growth allocation Ability to allocate the right amount of capital to the right assets at the right time Taking advantage of differences bet
Slide 7: Implications for GPT
The GPT Group 2013 Investor Presentation implications for gpt For personal use only Driven by → Sector specialists in a diversified framework with flexible approach Total Return → Capital allocation is fundamental to everything we do $10 billion → Earnings: 90% passive, 10% active increase → Active
Slide 8: Driven by total return
The GPT Group 2013 Investor Presentation driven Title of section by total For personal use only return Section Name 08 / 57 59
Slide 9: Core sector strategy
The GPT Group 2013 Investor Presentation portfolio Core sector strategy For personal use only To own and actively manage a Key drivers of total return diversified portfolio of quality performance within GPT assets delivering a secure, reliable business model: investment targeting superior risk → Fle
Slide 10: Investment snapshot
The GPT Group 2013 Investor Presentation portfolio Investment Snapshot For personal use only GPT balance sheet weightings ($bn) 2011 to 2013 weighting and portfolio strategies: → Rationalise the retail portfolio $0.8 to have dominant retail centres, $1.0 evolve retail mix and ensure scale and synerg
Slide 11: Benefits of diversification
The GPT Group 2013 Investor Presentation portfolio Benefits of diversification For personal use only Total Return Correlations – From 1986 (27 YRS) (%) Prime Secondary Prime Secondary Prime Secondary Office Office Retail Retail Industrial Industrial Prime office 100 Secondary Office 97 100 Total ret
Slide 12: Prime property sectors weightings and returns
The GPT Group 2013 Investor Presentation portfolio Weightings For personal use only Prime Property Sectors Total Return & Volatility of Returns (%) Over a shorter time period, 15.3 13.2 Total Return (CAGR %) there has been a convergence 10.6 10.9 10.4 10.2 in return performance 9.7 9.3 9.6 8.9 5.2 4
Slide 13: Capital allocation framework delivers superior decisions
The GPT Group 2013 Investor Presentation capital allocation Framework delivers superior decisions For personal use only TOP- DOWN APPROACH RESEARCH INPUTS Portfolio strategy Outputs → Macroeconomic → Sector tilts position Office Retail Logistics → Hold/buy/sell → Market data recommendation → GPT Hou
Slide 14: Analysis of opportunities
The GPT Group 2013 Investor Presentation capital allocation Analysis of opportunities For personal use only Theoretical example of pricing matrix Focus on long term real estate High risk? High risk? Too optimistic in the second Good purchase? performance as measured by half of cash flow? 10 year IRR
Slide 15: Acquisitions and developments vs buyback
The GPT Group 2013 Investor Presentation capital allocation Acquisitions and developments are measured against the buyback For personal use only acquisition or development security buy back Potential →→ Strong return potential →→ Increased shareholder value when conducted at Benefits →→ Additional d
Slide 16: Retail: trends and response
The GPT Group 2013 Investor Presentation retail Trends and response For personal use only Online Retail →→Decrease weighting from apparel and increase exposure to food, Penetration service and experience based retail →→Evolve the retail mix towards successful formats; and ensure that development pla
Slide 17: Evolving the retail mix
The GPT Group 2013 Investor Presentation retail Evolving the retail mix For personal use only Active remixing to decrease weighting towards apparel and increasing exposure to food, service, and experience based retail Rouse Hill Retail Specialties Composition 41.1% 39.0% Proportion of Specialty Lett
Slide 18: Integrated capabilities to drive returns
The GPT Group 2013 Investor Presentation Retail Integrated capabilities to drive returns For personal use only The $300m expansion of Highpoint has delivered strong returns across the group Revaluation Uplift GWSCF benefits $210M →→ Significant development profit achieved →→ #1 performing wholesale
Slide 19: Incrementally develop when time is right
The GPT Group 2013 Investor Presentation retail Incrementally develop when time is right For personal use only Casuarina – mixed use elements and staged approach to development Stage 1 Stage 2 Stage 3 Mixed use Leisure & Entertainment Myer Expansion Retail 19 / 57
Slide 20: Office: leading capability with proven track record
The GPT Group 2013 Investor Presentation office Leading capability with proven track record For personal use only → Market leading leasing success GPT Performance driving capital value upside % Cap rate -15 Compression → Outperformance in GWOF and balance Reduction in expiry profile Present to Peer
Slide 21: Office: trends and response
The GPT Group 2013 Investor Presentation office Trends and response For personal use only Densification →→Embrace densification and assist clients in providing solutions →→Focus on assets with capability to deliver denser workspaces with enhanced amenities →→Focus on assets with a ‘point of differen
Slide 22: Implications for GPT office portfolio
The GPT Group 2013 Investor Presentation office Implications for GPT Office Portfolio For personal use only Diversity →→ Improve diversity without sacrificing quality →→ Historical risk/return performance supports increasing A Grade exposure Maintain Quality →→ Maintain strategy to focus on prime of
Slide 23: Logistics: trends and response
The GPT Group 2013 Investor Presentation Logistics Trends and response For personal use only Supply Chain →→Continued focus on prime locations in proximity to major Efficiencies infrastructure nodes →→Provide facilities that are adaptable to changes in technology →→Location for skilled labour Consol
Slide 24: Logistics: value added since 2012
The GPT Group 2013 Investor Presentation Logistics Value added since 2012 For personal use only Capital Value Average wale yield STrategy Part 1: Growth via high quality investment Product Existing Investments $222m 3.3 years 9.1%(1) 6 Assets acquired since January 2012 Value identified in prime qua
Slide 25: Logistics: next steps
The GPT Group 2013 Investor Presentation logistics Next steps For personal use only 2012 2013 2014 outlook objective objective objective Establish logistics platform Establish delivery capacity Continue expansion with end to end capability Deliver existing pipeline of platform Activate existing proj
Slide 26: $10 billion increase in FUM
The GPT Group increase 2013 Investor Presentation in fum For personal use only 26 / 57
Slide 27: Earnings composition target
The GPT Group 2013 Investor Presentation earnings composition target 10% from Funds Management fees Secure, stable earnings For personal use only Development profits will not be distributed Development will be used to enhance asset returns and grow FUM Earnings Earnings composition composition gpt t
Slide 28: Why 10%?
The GPT Group 2013 Investor Presentation earnings composition target Why 10%? For personal use only WACC (capm) The ‘Actives’ vs. Risk Rating % Inv Prop vs. WACC (CAPM) 9.0 8.9 8.7 8.5 8.5 wacc (%) wacc (%) 8.0 8.3 8.1 7.5 7.9 7.7 R 2 = 0.8112 7.0 7.5 6.5 7.3 0.90 1.10 1.30 1.50 1.70 50 60 70 80 90
Slide 29: Development: enhance and grow
The GPT Group 2013 Investor Presentation development Enhance and grow For personal use only Retail & Major Projects Logistics Development Development Objectives: Objectives: → Respond to demand for growth → Deliver committed pipeline and outperformance → Increase asset production for → Sourcing and
Slide 30: Funds management growth strategy
The GPT Group 2013 Investor Presentation funds management Growth strategy For personal use only $7.2 billion in funds under management Focus on investor returns End to end capability in all sectors invest, develop, manage GPT has raised 15% of $10.4 billion raised in the unlisted wholesale core sect
Slide 31: Funds management growth strategy: fund mandates
The GPT Group 2013 Investor Presentation funds management Growth strategy For personal use only Focus on core space, potentially extend to core plus/value add in core sectors Clearly defined mandates between funds, targeting different investor segments Institutional Non Institutional Fund Style inve
Slide 32: Target additional $10bn of FUM
The GPT Group 2013 Investor Presentation funds management Target additional $10bn of FUM For personal use only Funds Management Growth Pathway Sep 13 FUM Growth in Metropolitan Logistics New Funds Target FUM Existing Funds Office Fund Fund Growth will be achieved from existing funds and the establis
Slide 33: Frugal approach and fortress balance sheet
The GPT Group 2013 Investor Presentation frugal Title of section approach For personal use only and fortress balance sheet Section Name 33 / 57 59
Slide 34: Frugal approach: low management expense ratio
The GPT Group 2013 Investor Presentation Frugal approach Low Management Expense Ratio For personal use only WHY MER Peer Comparison (%) INCREASE 0.89 REDUCE COSTS PRODUCTIVITY 0.71 Minimise waste Focus on Invest in Invest in the and maximise activities that capabilities future and be 0.53 0.50 0.47
Slide 35: Fortress balance sheet
The GPT Group 2013 Investor Presentation fortress balance sheet Significant capacity For personal use only A- / A3 / stable credit ratings Sep 2013 Bank Covenant Key credit measures 21.2% 50% balance sheet gearing (%) 25% 30% 35% Bank Sep 2013 Covenant 2.0x 5.6x interest cover ratio (x) >2.5x Fortre
Slide 36: Summary and actions
The GPT Group 2013 Investor Presentation For personal use only Summary 36 / 57 and actions
Slide 37: Key messages
The GPT Group 2013 Investor Presentation key messages For personal use only Driven by Non-negotiables for GPT’s strategy Total Return → Our business will be property-related → Our property asset investments will be in Australia $10 billion → Diversified but sector specialists increase in FUM → We wi
Slide 38: The journey ahead
The GPT Group 2013 Investor Presentation The journey ahead Embedded Premium →→ FUM value included in NAV →→ Demonstrated organic growth For personal use only →→ Further growth platforms identified →→ Price premium →→ Maintain low cost of capital Benefits Harvest →→ Increased active earnings →→ Signi
Slide 39: Purpose statement: Property to Prosperity
The GPT Group 2013 Investor Presentation Title of section Purpose StatEment Property to Prosperity For personal use only We maximise the financial potential of Australian property with solutions that fulfil the aspirations of our investors, tenants and communities PurposeName Section statement 39 /
Slide 40: Appendices
The GPT Group 2013 Investor Presentation Appendices Title of section For personal use only Capability Key Market Trends Shopping Centre Evolution Retail Development Pipeline Logistics Growth Strategy Actions Return Benchmarks GPT’s Team Section Name 40 / 57 59
Slide 41: Capability: three pillar approach
The GPT Group 2013 Investor Presentation capability Three pillar approach For personal use only focus deliverables customer →→ Insights/intelligence →→ Guest Experience Project centric →→ Experience →→ People First Program approach →→ Engagement →→ 5 Star Concierge Program →→ Communication →→ Struct
Slide 42: Key market trends: capital sources
The GPT Group 2013 Investor Presentation Key market trends: capital sources Growing Domestic Trends Offshore Trends For personal use only → Superannuation assets continue to → Strong demand from offshore grow at more than 10% per annum investors continues for direct → The default allocation to unlis
Slide 43: Key market trends: retail
The GPT Group 2013 Investor Presentation Key market trends: retail Leakage of retail For personal use only consumption to online The increasing retailers via accelerated popularity of the online shopping growth Australian market Online retail penetration for overseas retailers e.g. Apple, Zara A nar
Slide 44: Key market trends: office
The GPT Group 2013 Investor Presentation Key market trends: office For personal use only Adoption of denser work space ratios Provision of alternative through fit-out or working arrangements Densification move to ABW to accommodate a diverse and changing workforce Migration of work to lower cost mar
Slide 45: Key market trends: logistics
The GPT Group 2013 Investor Presentation Key market trends: Logistics For personal use only Greater focus on Specialisation of location attributes facilities to and cost efficiencies accommodate fast Supply chain moving goods efficiencies Increased specialisation Potential conversion of inner and mi
Slide 46: Australian retail: shopping centre evolution
The GPT Group 2013 Investor Presentation Australian retail Shopping Centre Evolution For personal use only Retail 46 / 57
Slide 47: $1.4 billion development pipeline
The GPT Group 2013 Investor Presentation retail $1.4 billion development pipeline For personal use only % underway master planning Wollongong 100 $200m Chirnside 100 $65m Woden 50 $100m GWSCF Macarthur 50 $120m Casuarina 50 $150m Parkmore 100 $125m Casuarina 50 $150m gpt Rouse Hill 100 $250m Sunshin
Slide 48: Logistics: successful growth strategy
The GPT Group 2013 Investor Presentation Logistics Successful growth strategy For personal use only GPT has been growing and strengthening its capability with great success Eastern Creek, Silverwater Completion of 5 Murray Rose acquisitions SOP 3 Figtree Drive acquisition, Commence developments SOP,
Slide 49: Actions: driven by total return
The GPT Group 2013 Investor Presentation actions Driven by Total Return For personal use only From to Actions →→Focus on creating →→Focus on maximising →→Refined capital and sustaining financial potential allocation process →→Tight constraint on →→More opportunities →→New business intelligence weigh
Slide 50: Actions: $10 billion increase in FUM
The GPT Group 2013 Investor Presentation actions $10 billion increase in FUM For personal use only From to Actions →→3% of earnings →→10% of earnings →→Grow FUM by $10 billion →→Launch logistics fund →→Launch metropolitan office fund →→Increase growth capacity through acquisitions →→Review niche sec
Slide 51: Actions: frugal approach and fortress balance sheet
The GPT Group 2013 Investor Presentation actions Frugal approach and fortress balance sheet For personal use only From to Actions →→Cost reduction programs →→Frugal approach with →→Further reduction in →→Driven by MER < 45 bps discretionary spend to earnings growth →→Driven by achieve MER targets →→
Slide 52: Return benchmarks
The GPT Group 2013 Investor Presentation Return benchmarks Area Metric Target For personal use only Group – primary goal Total Return 9.0% measured over 1, 3 and 5 years Group – other Total Security holder Return Leading relative TSR (1, 3 and 5 years) Property Total Property Return 9.0% Top quartil
Slide 53: GPT's Team: Investment Management
The GPT Group 2013 Investor Presentation GPT’s Team A highly capable team with a wealth of experience For personal use only Investment Management Carmel Hourigan, CIO Brett Williams, Head of David Burgess, Head of Investment – Retail and Investment – Office & Deputy Head of IM Logistics More than 20
Slide 54: GPT's Team: Asset Management
The GPT Group 2013 Investor Presentation GPT’s Team A highly capable team with a wealth of experience For personal use only Asset Management Matthew Faddy, Head Vanessa Orth, Deputy Luke Briscoe, National Bruce Sedgwick, of Asset Management Head of Asset Director – Leasing Office National Director M
Slide 55: GPT's Team: Funds Management
The GPT Group 2013 Investor Presentation GPT’s Team A highly capable team with a wealth of experience For personal use only Funds Management Nicholas Harris, Head of Hamish Roth, Head of Martin Ritchie, Fund Michelle Tierney, Fund Funds Management Private Capital, Funds Manager – GWOF Manager – GWSC
Slide 56: GPT's Team: Development
The GPT Group 2013 Investor Presentation GPT’s Team A highly capable team with a wealth of experience For personal use only Development Anthony McNulty, Head John Thomas, Head of Development – Retail of Development & Major Projects – Logistics & Business Park Development 25 years of experience 28 ye
Slide 57: GPT's Team: Business Optimisation and Corporate Development
The GPT Group 2013 Investor Presentation GPT’s Team A highly capable team with a wealth of experience For personal use only Business Optimisation and Corporate Development Mark Fookes, CFO Anastasia Clarke, Michael O’Brien, Group Phil Taylor, Head of James Coyne, General Deputy CFO Executive Corpora