Abacus Group · ASX:ABG
Abacus — Abacus Property Group — H1 FY2018 Earnings Presentation
44 slides from Abacus's earnings presentation, February 2018
Slide 1: HY18 Results Presentation
187 Todd Road, Port Melbourne VIC ‘It’s all about the property’ HY18 Results Presentation Abacus Property Group – 2018 Half Year Results Presentation
Slide 2: HY18 financial summary
HY18 financial summary 14 Martin Place, Sydney NSW Statutory profit Underlying profit Net tangible asset $117.5 million $77.3 million $3.13 per security Down 39% Up 11% Up 4% 710 Collins Street, Melbourne VIC Underlying EPS Underlying DPS Payout ratio 13.4 cps 9.0 cps 67.2% Up 10% Up 3% Total assets
Slide 3: HY18 highlights
HY18 highlights IVY &EVE apartments, Brisbane QLD Record underlying profit of $77.3 million, up 11% from HY17 Benefits of a diversified business continuing to be displayed Continuing to invest available capital to enhance investment portfolio Acquired 4 commercial properties totalling over $200
Slide 4: Financial results and capital management
324 Queen Street, Brisbane QLD Financial results and capital management Abacus Property Group – 2018 Half Year Results Presentation
Slide 5: Diversified business delivers strong results
Diversified business delivers strong results Key financial metrics Dec 17 Dec 16 Underlying earnings per security growth of 10% to 13.4cps Consolidated Group1 AIFRS $117.5m $191.7m Increased underlying results from all business units contributed to the statutory profit first half record result with
Slide 6: NTA growth and low gearing
NTA growth and low gearing Balance sheet strength maintained Balance sheet metrics Dec 17 Jun 17 NTA per security $3.13 $3.02 Balance sheet gearing increased slightly to 21.3% on the back of acquisitions and on balance sheet residential developments NTA per security less distribution1 $3.04 $2.93
Slide 7: Investment portfolio overview
Investment portfolio overview Abacus Property Group – 2018 Half Year Results Presentation 710 Collins Street. Melbourne VIC
Slide 8: Diverse investment portfolio
It’s all about the property Diverse investment portfolio Key portfolio metrics Dec 17 Jun 17 Investment portfolio remixing continues with increases across the self-storage and office portfolios during the period Investment portfolio value1 ($m) 1,931 1,831 Investment portfolio delivered $41.6 millio
Slide 9: Building long term returns – Third Party Capital
It’s all about the property Building long term returns – Third Party Capital $1.4 billion current AUM ($437m Abacus share) 324 Queen Street since acquisition Now Acquisition Abacus ‘high conviction’ manager and investor Occupancy (by area) 89.1% 79.5% Added further partnerships during HY18 Vacant
Slide 10: Creating value for tomorrow (Office)
Creating value for tomorrow Key focus is acquiring assets that will create value over the long term Office: Yield spread between CBD and metropolitan/fringe assets remains meaningful Greater tenant stability in city fringe markets than in the CBD which can fluctuate wildly with economic cycles W
Slide 11: Creating value for tomorrow (Self-storage)
Creating value for tomorrow Self-storage: Self-storage industry has performed strongly over the last 5 years driven by increased demand from Australian consumers Key external drivers suggest continued growth in demand for storage space over the medium term Increased levels of urbanisation Gree
Slide 12: Creating value for tomorrow (Retail)
Creating value for tomorrow Retail: The retail landscape is in a state of flux Physical retail will remain robust – irrelevant and unremarkable retail is dead Retail thematic focused on Buying vs Shopping Buying is focussed on task orientated, seeking value and convenience – drives our super
Slide 13: Office city fringe value thematic – Melbourne
Office city fringe value thematic – Melbourne Gentrifying fringe markets offer fundamental value when compared to more mature fringe office locations 187 Todd Road 452 Johnston Street 110 Church Street 658 Church Street 312 St Kilda Road, Port Melbourne Abbotsford Richmond Richmond St Kilda Sale Pri
Slide 14: Office city fringe value thematic – Sydney
Office city fringe value thematic – Sydney Gentrifying fringe markets offer fundamental value when compared to Sydney CBD and traditional fringe office markets 11 Bowden Street 299 Elizabeth Street 1 Castlereagh Street 130 Pitt Street Alexandria Sydney CBD Sydney CBD Sydney CBD Sale Price ($m) $48,8
Slide 15: Self-storage: active asset management
It’s all about the property Self-storage: active asset management Self-storage portfolio: $656 million Key metrics AUS NZ Dec 17 Jun 17 7.4% increase in underlying EBITDA to $23.4 million in HY18 driven Portfolio value ($m) 527.8 128.4 656.2 629.5 by stronger trading No. of self-storage assets 55 12
Slide 16: Self-storage: active asset management
It’s all about the property Self-storage: active asset management Portfolio consists of: Portfolio value compound growth of 13.5% pa since HY14 53 established self-storage facilities and 700 70 7 converted self-storage facilities with further 650 Portfolio size ($m-lhs) 65 expansion potential –
Slide 17: Self-storage: active asset management
It’s all about the property Self-storage: active asset management Brookvale was acquired in FY16 for $7.3 million Hoppers Crossing in Melbourne has been part of the portfolio for many years and provides c.3,600sqm of NLA, facility occupancy has been consistently c.90%+ Site provides c.4300sqm of lan
Slide 18: Super convenience retail: Ashfield Mall – Sydney
It’s all about the property Super convenience retail: Ashfield Mall – Sydney Ashfield Mall, acquired in 1997 for $64 million, is a unique sub–regional Key metrics shopping centre located 10 kilometres south–west of Sydney CBD next to bus and train interchanges Rate per square metre at acquisition $2
Slide 19: Super convenience retail: Lutwyche City – Brisbane
It’s all about the property Super convenience retail: Lutwyche City – Brisbane Abacus acquired Lutwyche City Shopping Centre in October 2015 Key metrics Rate per square metre at acquisition $3,450 The centre is the dominant neighbourhood convenience centre providing four levels servicing local resid
Slide 20: Developments overview
The Eminence residential development, Carlton, Melbourne VIC Developments overview Abacus Property Group – 2018 Half Year Results Presentation
Slide 21: Developments – delivering on strategy
It’s all about the property Developments – delivering on strategy $28.1 million underlying EBITDA contribution Key metrics Dec 17 Jun 17 14.9% increase on prior period due to increased returns from Residential exposure 98.9% 95.8% delivered development projects $10 million of fee income Sydney e
Slide 22: Residential pipeline – developments
It’s all about the property Residential pipeline – developments $145 million of invested capital across 7 major residential development projects completing, under construction or planning for c.1400 units Completed and committed projects of 752 units are 98% sold down IVY project completed with ov
Slide 23: Residential pipeline – land approvals
It’s all about the property Residential pipeline – land approvals $241 million of capital invested largely across 12 residential land projects actively progressing through the local and state government approvals process 100% exposure to the Sydney metropolitan market Majority of our development s
Slide 24: Summary
Summary Abacus Property Group – 2018 Half Year Results Presentation Artist’s impression of Ashfield Central residential development, Sydney NSW
Slide 25: Summary – strong value proposition
Summary – strong value proposition Artist’s impression of residential development Hawthorn, VIC The strength of the business is underpinned by our investment philosophy and our commitment to acquiring assets that will yield rental income and superior capital value growth through our active managemen
Slide 26: Important information
Important information The information provided in this document is general, and may not be suitable for the specific purposes of any user of this document. It is not financial advice or a recommendation to acquire Abacus Property Group securities (ASX: ABP). Abacus Property Group believes that the i
Slide 27: HY18 Results Presentation Appendices
187 Todd Road, Port Melbourne VIC HY18 Results Presentation Appendices Abacus Property Group – 2018 Half Year Results Presentation Appendices
Slide 28: Segment balance sheet
Appendix A Segment balance sheet Property Abacus balance sheet Property Investment Development Unallocated HY18 FY17 ($m) ($m) ($m) ($m) ($m) Commercial investment properties 1,037.8 1,037.8 946.3 Self-storage investment properties 652.0 652.0 625.2 Inventory 2.8 121.4 124.2 93.1 Loans 83.8 282.2 36
Slide 29: Segment earnings (underlying profit)
Appendix B Segment earnings (underlying profit) Commercial Self-storage Development HY18 Total HY17 Total Rental income 37.2 36.9 74.1 70.1 Finance income1 24.9 24.9 18.8 Fee income2 4.3 4.3 6.7 Share of profit from equity accounted investments3 26.6 4, 5 6.7 33.3 14.8 Net change in fair value of in
Slide 30: Funds from operations (FFO)
Appendix C Funds from operations (FFO) Underlying profit to FFO reconciliation HY18 HY17 Underlying Profit 77.3 69.5 Adjust for: Net change in fair value of investment properties derecognised 0.1 (10.9) Depreciation on owner occupied property, plant and equipment 0.3 0.3 Amortisation of rent abateme
Slide 31: Net tangible asset reconciliation
Appendix D Net tangible asset reconciliation HY18 HY17 Consolidated Group net assets 1,877.1 1,814.6 Less Total external non–controlling interest (41.4) (48.5) Total stapled security holders’ interest in equity 1,835.7 1,766.1 Less Intangible assets and goodwill (32.4) (32.4) Deferred tax assets/lia
Slide 32: Abacus cashflow analysis
Appendix E Abacus cashflow analysis1 $'000 CASHFLOWS FROM OPERATING ACTIVITIES Income receipts 154,057 Interest received 162 Distributions received 291 Income tax paid (3,002) Borrowing costs paid (13,375) Operating payments (46,768) Payment for land acquisition (27,332) NET CASHFLOWS FROM OPERATING
Slide 33: Debt facilities
Appendix F Debt facilities Capital management metrics HY18 FY17 Total bank debt facilities $973m $873m Total bank debt drawn $568m $514m Term to maturity 2.9 yrs 3.4 yrs % hedged 55% 49% Weighted average hedge maturity 2.5 yrs 2.5 yrs Average cost of debt – drawn 4.8% 5.2% Group gearing1 21.3% 20.5%
Slide 34: Debt maturity profile as at 31 December 2017
Appendix G Debt maturity profile as at 31 December 2017 ($’m) 700.0 600.0 Available bank facility Drawn bank debt 185.2 500.0 400.0 300.0 494.8 200.0 100.0 50.0 150.0 20.1 39.0 33.9 0.0 FY18 FY19 FY20 FY21 FY22+ Abacus Property Group – 2018 Half Year Results Presentation Appendices 8
Slide 35: Portfolio revaluations
Appendix H Portfolio revaluations Revaluation process for Abacus resulted in a net increase in the investment properties values for HY18 of approximately 2.2% or $34.0 million $13.4 million across the wholly owned commercial properties $20.6 million across the self-storage portfolio Revaluatio
Slide 36: Summary portfolio metrics
Appendix I Summary portfolio metrics Industrial and Key portfolio metrics HY18 FY17 Other 9% Investment portfolio value1 ($m) 1,931 1,831 Office 35% Commercial portfolio1 ($m) 1,275 1,202 Retail Self-storage portfolio ($m) 656 629 22% WACR1,4 (%) 6.95 7.08 No. of commercial assets1 34 34 Self-storag
Slide 37: Summary self-storage portfolio metrics
Appendix I Summary self-storage portfolio metrics State geographic diversity by NLA Regional geographic diversity by NLA Regional NZ Canberra ACT 6% 12% 12% VIC 25% Auckland 14% NZ Sydney 20% Regional QLD 21% 7% Regional VIC 3% NSW QLD 21% Brisbane Melbourne 22% 15% 22% Asset net lettable area (m2)
Slide 38: Summary portfolio metrics
Appendix J Summary portfolio metrics Portfolio metrics Office Retail Industrial & Other Self-storage HY18 FY17 HY18 FY17 HY18 FY17 HY18 FY17 Portfolio ($m) 671 623 419 402 185 177 656 629 No. of assets 18 19 5 5 11 10 67 65 Lettable area (sqm)1 91,272 91,732 56,464 56,250 79,759 78,829 310,000 302,0
Slide 39: Summary portfolio metrics - lease expiry profile
Appendix K Summary portfolio metrics - lease expiry profile 41.6% 17.9% 14.0% 11.0% 7.7% 7.8% Month to month FY18 FY19 FY20 FY21 FY22+ Abacus Property Group – 2018 Half Year Results Presentation Appendices 13
Slide 40: Developments
Appendix L Developments Projects Type Equity Loans Total Interest rate Security Returns RCL Portfolio, NSW JV/Loan $40.8m $108.9m $149.7m 1st Mortgagee 50% profit share Ashfield Central, NSW Inventory $43.7m - $43.7m Equity 100% ownership One A, Erskineville, NSW JV - $38.9m $38.9m Unsecured 50% pro
Slide 41: Residential pipeline – residential construction projects
Appendix L Residential pipeline – residential construction projects Schedule of major projects due for development Targeted profit on cost of c.20% Average interest rate on ABP loans c.10% Ave. Unit ABP Profit Project name Settlement Units/Sold Status ETR1 Comments Price share IVY & EVE, Merival
Slide 42: Residential pipeline – residential approval projects
Appendix L Residential pipeline – residential approval projects Schedule of major projects awaiting sale to third parties upon rezoning approval Average interest rate on ABP loans c.10% Est. Unit/Lot ABP Profit Project name Timeline Units Status Comments Price1 share Camellia, NSW FY19 15,000m2 of
Slide 43: Residential pipeline – residential land sub-divisions
Appendix L Residential pipeline – residential land sub-divisions Schedule of land sub-divisions due for development Land Price Cost to ABP Project name Timeline Status Comments lots/Sold per lot prepare lot share French Street FY19 111/14 Site $270k $100k 25% Approvals received. Marketing commenced
Slide 44: Important information
Important information The information provided in this document is general, and may not be suitable for the specific purposes of any user of this document. It is not financial advice or a recommendation to acquire Abacus Property Group securities (ASX: ABP). Abacus Property Group believes that the i
Abacus Property Group — H1 FY2018 Earnings Presentation on 6ix