Slide 1: GPT Interim Result 2012
The GPT Group 13 AUGUST 2012 GPT Interim Result 201 2 AjUO SSN [euOSsJed JOS
Slide 2: Agenda
Agenda For personal use only Strategy Business Performance Outlook Michael Cameron CEO Financial Result Capital Management Michael O’Brien CFO Note: All information included in this presentation includes GPT owned assets and GPT’s interest in the Wholesale Funds (GWSCF and GWOF) unless otherwise sta
Slide 3: Highlights: 2012 Interim Result
HIGHLIGHTS 2012 Interim Result For personal use only Solid business model delivering strong results Long term investment value Active portfolio management Deep capability Effective capital management 3
Slide 4: 2012 Interim Result – key highlights
HIGHLIGHTS 2012 Interim Result – key highlights For personal use only EPS growth of 6.2% in first half EPS growth of 6.2%(1) DPS growth of 11.8% Comparable income growth of 4.3% 111 Eagle Street and 5 Murray Rose developments complete Sold 50% interest in Casuarina and Woden to GWSCF Sold two thirds
Slide 5: Strategy: key indicators
STRATEGY 2012 Interim Result – key indicators For personal use only Long term value proposition For investors, GPT offers a secure, reliable investment targeting superior risk-adjusted returns over time - Quality assets - Strong stable earnings - Growth potential Six months to Targets Outcome 30 Jun
Slide 6: Strategic focus
STRATEGY Strategic focus For personal use only Platforms to accelerate performance OPTIMISE GROW To achieve targets + To accelerate performance Rental growth Funds growth Expense discipline Development Capital management Other profit sources Portfolio management Asset acquisitions 6
Slide 7: Optimisation: Fit for Growth
STRATEGY Optimisation For personal use only Fit for Growth Review of cost base and structure Impact of ‘Fit for Growth’ program to reflect Estimated impact - Process and system Effective date completed 10 August improvements Reduction in people 70 - Simpler business model Net reduction in roles 60 -
Slide 8: Growth: good progress in growth strategies
STRATEGY Growth For personal use only Good progress in growth strategies Funds Growth of $890 million, or 16% in GPT’s funds since the management start of 2012 + Development Business plan and resources in place to implement new logistics and business parks development strategy + New profit Eight add
Slide 9: GPT people: changes to leadership team
STRATEGY GPT people For personal use only Changes to Leadership Team in line with strategy Establishing capability for Effective October 2012 growth focus Michael O’Brien to head up a new Corporate Development function Bringing in additional Judy Barraclough moves to Head of experience Strategy Acti
Slide 10: 2012 Interim Result summary
FINANCIAL RESULT 2012 Interim Result summary For personal use only Distribution per security up 11.8% GPT Financial Summary Six months to 30 June ($m) 2012 2011 Total Realised Operating Income (ROI) 227.2 221.5 Changes in fair value of assets 122.4 54.1 (Loss)/profit on disposals (2.5) 1.5 Financial
Slide 11: Segment performance
FINANCIAL RESULT Segment performance For personal use only Strong contributions from all business units Six months to 30 June ($m) 2012 2011 Comment Retail 161.0 152.3 Comparable income growth of 3.9% Office 64.4 60.3 Comparable income growth of 5.6% Logistics & Business Parks 31.6 27.8 Comparable i
Slide 12: Earnings attribution
FINANCIAL RESULT 2012 Interim Result – earnings attribution For personal use only Multiple performance drivers EPS attribution 0.3c 0.1c -0.1c -0.1c 12.0c 0.6c 1.0% -1.2% 2.4% -1.1% 6.2% 11.3c 5.2% EPS 30 Income Interest Buy-back Disposals Lower Tax EPS 30 June 2011 Growth Rates Benefit June 2012 12
Slide 13: Management expenses
FINANCIAL RESULT Management expenses For personal use only Income growth continues to exceed expense growth Comparable income growth of 4.3% outpacing comparable management expense growth of 1.3% Expenses ‘Jaws’ for six months to Six months to 30 June ($m) 2012 2011 30 June 2012 Corporate Overheads
Slide 14: Management expenses: Fit for growth
FINANCIAL RESULT Management expenses For personal use only Fit for growth Review of cost structure Impact of ‘Fit for Growth’ program Significant restructure resulting in Estimated impact ($m) 2012 2013 removal of roles, creation of new roles, Reduction in (4.6) (17.6) overall reduction in headcount
Slide 15: Balance sheet
FINANCIAL RESULT Balance sheet For personal use only Well positioned balance sheet GPT Balance Sheet 30 Jun 31 Dec 2012 2011 Total assets ($m) 9,001 9,288 Total borrowings ($m) 1,912 2,144 Net tangible assets per security ($) 3.65 3.59 Gearing (%)(1) 20.2 22.9 Look through gearing (%)(1) 23.1 24.4 I
Slide 16: Capital management: active management of levers
CAPITAL MANAGEMENT Capital management For personal use only Active management of capital levers Effective debt manage- ment Active Capital portfolio Security manage- management buy-back ment levers Leverage via funds 16
Slide 17: Continued reduction in cost of debt
CAPITAL MANAGEMENT Capital management For personal use only Continued reduction in cost of debt Forecast cost of debt reduced Average cost of debt by 50bps from previous 2012 7.4% forecast to 5.7% 6.6% 6.2% - Renegotiation of existing 5.7% loans Fees - Termination of Margin expensive hedges as asset
Slide 18: Flat maturity profile with long tenor
CAPITAL MANAGEMENT Capital management For personal use only Flat maturity profile with long tenor Weighted average term to maturity of 5 years versus target of 4 years $100m bond issue in July 2012 – increased tenor and diversification Sources of debt Debt maturity profile Facility CPI A$ million 37
Slide 19: Improving returns
FINANCIAL RESULT Improving returns For personal use only Focus on increasing return on equity Reducing cost base Reduced average cost of debt Increased return on capital invested in the wholesale funds Sale of low income producing assets Earnings per security(1) Total return(2) 24.0c 9.3% 22.4c 9.2%
Slide 20: Portfolio weighting
PORTFOLIO Portfolio weighting For personal use only Moving towards target portfolio weighting Portfolio weighting Portfolio weighting Target portfolio weighting As at 31 December 2011 As at 30 June 2012 9% 11% 15% 61% 30% 57% 32% 50% 35% Retail Office Logistics & Business Parks Structural changes in
Slide 21: Investment Management: strong portfolio performance
PORTFOLIO Investment Management For personal use only Strong portfolio performance Portfolio Comparable WALE Occupancy WACR Size(1) Income Growth(2) Retail $4.8bn 3.9% 4.4 years 99.1% 6.10% Office $2.7bn 5.6% 4.8 years 93.6% 7.01% Logistics & $0.9bn 2.5% 6.1 years 99.0% 8.36% Business Parks Total $8
Slide 22: Retail: solid operating performance
PORTFOLIO Retail For personal use only Continues to deliver solid operating performance Key operating metrics Six months to 30 June 2012 2011 Comparable income growth 3.9% 4.1% Comparable total centre sales growth(1) 0.4% 1.2% Comparable specialty sales growth(1) 0.4% 2.1% Specialty sales psm(1) $8,
Slide 23: Retail: resilient despite headwinds
PORTFOLIO Retail For personal use only Resilient despite headwinds Comparable income growth of Six months to 30 June 2012 2011 3.9% underpinned by high proportion of structured rental Vacancies(1,2) 40 30 increases Arrears: % annual billings 0.7% 0.5% Customer traffic and average $3.9m $2.9m $ value
Slide 24: Retail: sales impacted by cyclical factors
PORTFOLIO Retail For personal use only Sales impacted by cyclical factors Retail sales growth at cyclical low due to economic uncertainty and subdued consumer sentiment Retailer margins have increased over past decade despite volatile sales GPT monthly specialty sales growth Retailer margins vs reta
Slide 25: Retail: actively addressing structural changes
PORTFOLIO Retail For personal use only Actively addressing structural changes Retail structural changes Opportunities for GPT Online retail growth Continued enhancement of quality, regional centres Price harmonisation Digital strategy focused on driving Changing physical traffic consumption patterns
Slide 26: Highpoint update
PORTFOLIO Retail Development For personal use only Highpoint update Development is progressing well with 70% of specialty shops leased to high quality domestic and international brands Stage one Stage Two Stores Woolworths David Jones and 35 and 65 specialties specialties Leasing Fully leased 35 sto
Slide 27: Office: income growth of 5.6%
PORTFOLIO Office For personal use only Income growth of 5.6% achieved in first half Key operating metrics Six months to 30 June 2012 2011 Comparable income growth 5.6% 3.4% Occupancy 90.6% 96.9% Occupancy (including terms agreed)(1) 93.6% 97.5% Weighted average lease expiry 4.8 years 4.9 years Lease
Slide 28: Office: portfolio quality underpins performance
PORTFOLIO Office For personal use only Portfolio quality underpins performance Strong income growth driven by high average occupancy and rental growth Reduced occupancy due to a number of lease expiries at 30 June and inclusion of 111 Eagle Street Managing risk of key upcoming expiries with Citigrou
Slide 29: Office: mixed outlook across primary CBD markets
PORTFOLIO Office For personal use only Mixed outlook across primary CBD markets Actively targeting to expand portfolio from 30% to 35% - Focus on prime assets with preference for GPT to have control - Long term investment timeframe Proactively managing capital expenditure Market Outlook(1) (arrows r
Slide 30: Office Development: One One One Eagle Street
PORTFOLIO Office Development For personal use only One One One Eagle Street Leasing Completed in June 2012 Total NLA 64,000 sqm 82% of floor space committed Signed and/or committed 52,500 sqm GPT development profit of $44m Average lease $820/sqm Stabilised project development yield Average incentive
Slide 31: Logistics & Business Parks: high occupancy and long WALE
PORTFOLIO Logistics & Business Parks For personal use only High occupancy and long WALE maintained Renamed to better describe our portfolio Low vacancy and limited downtime underpins solid income performance Weighted average capitalisation rate firmed 11 basis points Key operating metrics Six months
Slide 32: Logistics & Business Parks: moving towards target weighting
PORTFOLIO Logistics & Business Parks For personal use only Moving towards target weighting of 15% Addition of $178 million to Logistics & Business Parks portfolio in 2012 demonstrates progress in growth strategy - Completion of 5 Murray Rose Avenue valued at $64 million - $115 million in acquisition
Slide 33: Logistics & Business Parks: fundamentals remain positive
PORTFOLIO Logistics & Business Parks For personal use only Underlying fundamentals remain positive Limited supply and speculative development Low vacancy in Sydney and Melbourne Strong tenant demand for existing stock evidenced by low downtime in vacancies Increased import levels support demand for
Slide 34: Murray Rose
PORTFOLIO Logistics & Business Park Development For personal use only 5 Murray Rose Completed in April 2012 100% leased to Lion Group for 12 years Stabilised development yield of 8.5% Development profit of $5 million Achieved 6 Star Green Star design rating 34
Slide 35: Growth strategies: four growth platforms
STRATEGY Growth strategies For personal use only Four growth platforms, consistent with risk profile Funds management + Development + New profit sources + Asset acquisitions Potential to generate meaningful profit from growth platforms Aligned with strategy and risk appetite Relatively low impact on
Slide 36: Growth platform 1: Funds management
STRATEGY Growth platform 1: Funds management For personal use only Strategy to grow via two pathways Focus on growing existing funds in the short term First Pathway: Grow the Acquisitions and developments existing funds Logistics wholesale fund – after target weighting is Second achieved on balance
Slide 37: Increasing size and quality of existing funds
STRATEGY Growth platform 1: Funds management For personal use only Increasing size and quality of existing funds Acquired $586m assets in 1H 2012 Continues to improve quality of funds GPT Funds Growth in FUM ($ million) GWOF: Acquired 150 Collins Street 586 6,407 593 7,000 5,517 304 Completed 111 Ea
Slide 38: Growth platform 2: Development
STRATEGY Growth platform 2: Development For personal use only A dual approach Focus on value enhancement of existing assets Portfolio enhancement Mainly retail and major office projects Building further capability in logistics and business park Logistics and development business park projects Will h
Slide 39: Growth platform 3: New profit sources
STRATEGY Growth platform 3: New profit sources For personal use only Opportunities across assets and customers GPT Extracting value from intangible real estate expertise Examples: assets Exploiting information value Digital strategy, including tailored Source digital advertising Monetising the of va
Slide 40: GPT people: culture and capability
STRATEGY GPT people For personal use only Focus on culture and capability aligned with strategy Renewal program underway Culture of achievement and accountability Adopted seven cultural values – being embedded throughout the business 40
Slide 41: Outlook for second half of 2012
OUTLOOK Outlook for second half of 2012 For personal use only Earnings and value drivers Portfolio Steady income growth based on structured rental income increases and high occupancy Improved outcome from leasing success at One One One Eagle Street, and sale of Newcastle CBD Growth Increased fees fr
Slide 42: Outlook for full year 2012
OUTLOOK Outlook for full year 2012 For personal use only Targeting EPS(1) growth of at least 7% for 2012 Payout ratio of no less than 80% of ROI (1) EPS defined as Realised Operating Income (ROI) per ordinary security 42
Slide 43: GPT Interim Result highlights
HIGHLIGHTS GPT Interim Result For personal use only Solid business model delivering strong results Long term investment value Active portfolio management Deep capability Effective capital management 43
Slide 44: Contact Information
Contact Information For personal use only Michael Cameron Michael O’Brien Judy Barraclough Chief Executive Officer and Chief Financial Officer Head of Strategy and Managing Director Corporate Affairs Tel: +61 2 8239 3565 Tel: +61 2 8239 3544 Tel: +61 2 8239 3752 Mob: +61 410 437 597 Mob: +61 417 691
Slide 45: 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