Infratil Limited · NZX:IFT
Infratil — Merger or Acquisition (December 2014)
22 slides from Infratil's merger presentation, Dec 24, 2014
Slide 1: Proposed acquisition of RetireAustralia: Investor briefing pack
INFRATIL LIMITED Proposed acquisition of RetireAustralia Investor briefing pack 24 December 2014
Slide 2: Why invest in RetireAustralia?
Why invest in RetireAustralia? Strong platform in an attractive sector with favourable trends • High quality access point into an attractive sector - Strong management team with capability and strategy to deliver growth - Platform of scale with the opportunity to become the market leader in integrat
Slide 3: Investment rationale: Opportunity for market leadership in Australia
Investment rationale Opportunity for market leadership in Australia 1 • Australia’s 85+ population forecast to grow at 4.7% pa to 2044 vs total population at ~1% Favourable • Equates to an extra 20,000 - 65,000 85+ year olds per annum over that period demographic • Australian retirement village pene
Slide 4: Investment rationale: Opportunity for market leadership in Australia
Investment rationale Opportunity for market leadership in Australia 4 • Potential for strong equity IRRs with modest leverage on investment case Attractive • Upside delivered via development and expansion of services returns with • Returns are relatively robust to Australian house pricing movements
Slide 5: RetireAustralia is the 4th largest retirement village operator in Australia
RetireAustralia is the 4th largest retirement village operator in Australia ~3,700 independent living units and apartments Fourth largest player in the AU market 28 villages across SA, NSW and QLD Top 5 retirement operators, by number of units 12,700 X N villages 9,739 Brisbane 8,298 3,700 2,483 5 C
Slide 6: Strong presence in metro hubs with robust metrics
Strong presence in metro hubs with robust metrics Properties by location 28 3,213 484 QLD 18% 25% 19% 55% 26% SA 43% 30% 56% NSW 39% 45% 45% Villages Independent Living Units Serviced Apartments Fair value of (number) (ILU number) (SA number) investment properties Average tenure of existing resident
Slide 7: Ageing population - an Australasian megatrend
Ageing population - an Australasian megatrend Very strong growth in target demographic Number of persons 85 yrs + 4-5x Australia NZ 2x 2,153 843 420 329 147 73 2011 2031 2051 Infratil 2014 7
Slide 8: The Australian and NZ markets are highly fragmented
The Australian and NZ markets are highly fragmented Comparisons between Australian and NZ retirement living Similarities Contrasts • Both markets are highly fragmented with a long tail of • RetireAustralia (4th largest in AU) is comparable in size to small operators and not-for-profit players Metlif
Slide 9: The lifetime accommodation cycle
The lifetime accommodation cycle RETIREAUSTRALIA Current focus Expansion opportunity Home & Residential Retirement Residential Acute hospital community family home village living aged care care care Lifetime accommodation cycle • Independent living in • Independent living • Living assistance • Resid
Slide 10: Key drivers of investor returns in retirement living
Key drivers of investor returns in retirement living Four key determinants of future returns and risk Driver How it impacts value Key risks 1 • HPI is a major variable in the capital value of • Extended correction in house prices will House Price investment properties flow through fair value adjustm
Slide 11: Management team
Management team Experienced and capable team Tim Russell – Managing Director Glen Brown - Head of Development Acquisitions • Founded RetireAustralia (formerly Meridien • Joined RetireAustralia in 2006 (formerly Meridien) Retirement Living) in 2005 • 26 years experience in finance, commercial and • H
Slide 12: Transaction overview
Transaction overview 50% equity ownership in consortium with NZ Super • 50/50 JV between Infratil and New Zealand June 2014 June 2015 Super Fund $A ACTUAL FORECAST - Acquired from J.P. Morgan Global Special Opportunities Group and Morgan Stanley Real Underlying EBIT2 $34.3m $35.0m - $40m Estate Inve
Slide 13: Proposed transaction structure
Proposed transaction structure Structure to hold RetireAustralia equity and debt • Each investor to fund A$214.8m into A$214.8m A$214.8m Acquisition Co • Estimated A$23.5m transaction 50% 50% costs (majority stamp duty and W&I insurance) • Net proceeds to vendors of Acquisition A$406.0m Co • Existin
Slide 14: RetireAustralia valuation metrics
RetireAustralia valuation metrics High-teen post-tax equity returns available from base case • Existing assets to be acquired at ~1.0x NTA: - NTA assessed as DCF of existing assets and brownfield development pipeline - Incorporates conservative assumptions on discount rates, house price inflation, a
Slide 15: Infratil portfolio in transition
Infratil portfolio in transition RetireAustralia would increase allocation to growth infrastructure • Infratil portfolio is being re-set for the next generation of long-term returns: - IPO of Z Energy and sale of IEA/Lumo capitalised on investor appetite for high quality, lower-risk assets with pred
Slide 16: Infratil asset mix and capital structure post RetireAustralia
Infratil asset mix and capital structure post RetireAustralia Retirement living sector will comprise 14.3% of total assets IFT Asset Mix IFT Parent Capital Structure NZ Bus, 9.0% Perth Energy, 2.8% Pro-forma Wellington NZ$m 30 Sep 2014 Airport, Z Energy, 31 Dec 2014 17.8% 11.0% Net (cash)/debt (640.
Slide 17: RetireAustralia contribution to Infratil
RetireAustralia contribution to Infratil Underlying EBIT is the key financial measure • The 50/50 equity structure would result in a financial reporting outcome similar to the UNDERLYING EBIT DEFINITION: original Z Energy structure pre-IPO; - IFT will treat its investment as an investment in an asso
Slide 18: RetireAustralia financials
RetireAustralia financials Strong underlying historical financial performance Underlying performance1 Balance sheet1 Year ended 30 June (A$m) 2012 2013 2014 As at 30 June (A$m) 2012 2013 2014 DMF revenue 16.8 23.3 23.6 Cash 30.9 25.4 6.2 Realised gain on re-sales 8.3 11.4 11.7 Investment properties
Slide 19: Infratil group outlook for 31 March 2015
Infratil group outlook for 31 March 2015 No material change to near-term guidance PREVIOUS REVISED NZ$ Millions March 2015 March 2015 Outlook Outlook(1) EBITDAF – continuing operations1 475-500 475-500 Net interest 165-175 170-180 Operating cash flow 250-280 250-280 Depreciation and amortisation 155
Slide 20: RetireAustralia – high quality asset in an attractive industry
RetireAustralia – high quality asset in an attractive industry Summary of opportunity • RetireAustralia provides a high quality access point into an attractive sector - Strong management team with capability and strategy to deliver growth - Opportunity to become the market leader in integrated retir
Slide 21: Appendix
Appendix Infratil 2014 21
Slide 22: Comparable Company Analysis
Comparable Company Analysis Implied transaction multiples are comparable to Metlifecare on an NTA basis and represent a discount to peers on an earnings basis $M Last reporting date 30 Jun 2014 (A$) 30 Sep 2014 (NZ$) 30 Jun 2014 (NZ$) 30 Jun 2014 (NZ$) 30 Jun 2014 (A$) EV 1,368.8m 4,525.4m 748.5m 1,