ABACUS GROUP — AGM Information 2009

Nov 11, 2009

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AGM Presentation

Agenda

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1. Abacus Property Group

2. Overview of the sector 3. Financial results highlights

4. Review of businesses

5. Capital management

6. Summary and outlook Items of Business for the Group

Abacus Property Group

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Established in 1996 as a specialist property syndicator

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Between 1996-2001 took advantage of market conditions to built a portfolio of assets which were supported by 4000 retail investors

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In 2001 these assets were merged to form the Abacus Trust which was later stapled to the management company to create the Abacus Property Group, and listed in 2002

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Abacus finds itself in market conditions similar to those in the mid 1990’s

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Abacus is perfectly suited through its experience and skill set to take advantage of these market conditions to take the Group forward

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Abacus’ fundamental approach to property acquisitions has served our business well and

Investment philosophy

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Emphasis on fundamental analysis

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• Ensure that several underpinnings to valuation exist, such as underlying returns and location, prior to committing capital Concentrate on opportunities where we understand the underlying real estate fundamentals

• Follow our proven track record of considered acquisition, taking advantage of the core plus expertise in the Abacus team

Focus on Catalysts

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• Seek assets with short-term imperfections in their underlying real estate fundamentals resulting in inefficient pricing by the market

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• Pursue opportunities with prospective transformational events that will drive asset value realisation

Consistently seek compelling opportunities

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• Identify mispriced assets with temporary flaws in leasing, management or capital structures or assets that lend themselves to NLA expansion, change of use or strata sub-division

Apply our asset management skills to rectify the imperfections and crystallise the value created

Agenda

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1. Abacus Property Group

2. Overview of the sector

3. Financial results highlights

4. Review of businesses

5. Capital management

6. Summary and outlook Items of Business for the Group

Overview of the REIT sector

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Global property has gone through an extremely challenging time as a result of the GFC

Credit markets have remained in turmoil and property values have fallen dramatically placing significant pressure on balance sheets

A-REIT security prices have fallen dramatically in concert with global peers

A-REIT’s have subsequently recapitalized by raising over $19 billion of new equity largely through deeply discounted rights issues

More than double any previous year

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S&P/ASX 200 A-REIT Index
2500
2250
2000
1750
1500
1250
1000
750
500
Nov 07 Feb 08 May 08 Aug 08 Nov 08 Feb 09 May 09 Aug 09 Nov 09
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Source: IRESS as at 10 November 2009
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Resulting in significant dilution to existing securityholder equity

Security price performance

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Over the last 12 months the Abacus security price has held up well Abacus has significantly outperformed its peer group, S&P/ASX 200 A-REIT Index by 95%

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$0.50
Abacus Property Group S&P/ASX 200 A-REIT Index
$0.45
$0.40
$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
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Total securityholder return

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On a total return basis, securityholders over the last five years have outperformed the benchmark index, the S&P/ASX 200 A-REIT Accumulation Index, by almost 6% Abacus continues to trade at significant discount to NTA of 29.0%

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S&P/ASX 200 A-REIT Index discount to NTA currently 2.4%

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100%
89.1%
80%
Abacus Property Group
60%
S&P/ASX 200 A-REIT Accumulation Index
40%
20%
5.0%
3.3%
0%
(5.6)%
(20)%
(25.0)%
(30.8)%
(40)%
1 Year 5 Years Since listing
Total Return
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Agenda

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1. Abacus Property Group

2. Overview of the sector

3. Financial results highlights

4. Review of businesses

5. Capital management

6. Summary and outlook Items of Business for the Group

FY09 highlights

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Abacus has delivered a strong result in difficult market conditions

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– Underlying Profit of $72.0 million[1 ] a 20% reduction on prior corresponding period Underlying earnings per security of 8.30 cps[1]

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Abacus completed a number of positive capital management initiatives to strengthen its Balance Sheet

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• Raised $211 million of new equity and introduced cornerstone investor Kirsh Group Externalised $123 million of assets during the year

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• Restructured distributions to better reflect underlying cash operating profit

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Group gearing remains among the lowest in the sector at 26.6%

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Property portfolio positioned to deliver as markets return

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• $29 million assets sold at book value post 30 June

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Currently trading at a discount to NTA per security of 29%[2]

Financial results overview

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	Profit and (loss) summary		Jun 09		Jun 08
	Total income		$138.4m		$161.1m
	Underlying profit1		$72.0m		$91.0m
	Underlying earnings per security1		8.30c		13.98c
	AIFRS statutory profit or (loss)		$(102.4)m		$71.5m
	Distributions per security		7.75c		13.50c
	Interest cover ratio2		2.5x		3.3x
	Balance sheet summary		Jun 09		Jun 08
	Total assets		$1,446m		$1,636m
	NTA per security		$0.62		$1.37
	Group gearing3		26.6%		37.5%
	Covenant gearing4 1. Underlying Profit and earnings per security have been calculated in accordance with the AICD 2. Calculated as underlying EBITDA divided by interest expense 3. Group gearing calculated as net debt divided by total assets minus cash. If joint venture asse through” gearing would be 31.0% at 30 June 2009 4. Covenant gearing calculated as Total Liabilities/ Total Tangible Assets	/ t	32.7% Finsia principles s and debt are consolidated pr		44.6% portionately with Abacus’, “loo	k

Agenda

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1. Abacus Property Group

2. Overview of the sector

3. Financial results highlights

4. Group review

5. Capital management

6. Summary and outlook Items of Business for the Group

Group review Principal property investment

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Overview

Portfolio contributed $62 million or 57% to Group FY09 EBITDA

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Down on prior corresponding period (pcp) mainly due to asset sales

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Abacus is a domestic REIT with exposure to Australia and New Zealand

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Australian assets are primarily situated in core eastern seaboard locations

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Focus on targeted strategies to unlock value through active management

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Ashfield Mall and Liverpool Plaza development applications

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	Key portfolio metrics
	Total asset value1	$798.0m
	Number of assets1 NLA (sqm)2	55 358,724
	Cap rate1,2	8.53%
	Occupancy1	90%
	Like for like rent growth	3.5%
	WALE2	4.76 years

1. Includes Virginia Park

2. Excludes development assets

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Abacus will seek to extract capital through the sale of more liquid smaller assets

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Further $29 million sold post balance date

Group review

Principal property investment

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Portfolio valuations

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Abacus maintains a strict valuation policy where by 100% assets are independently valued every year

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68% in June 2009 and 32% in December 2008

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Revaluation process resulted in a fall in portfolio value of approximately 12% or $108 million

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Valuation impact of cap rate expansion softened by value add strategies

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Average cap rate across portfolio of 8.53%

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Through the worst of the cap rate expansion cycle

Group review

Principal property investment

Asset management

Portfolio currently 90% leased to a diverse collection of quality tenants Top 10 tenants deliver 38% of rental income Income secured largely by governments and non-discretionary retailers Largest non-government or discretionary retailer contributes 2.4% of rental income

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Focus remains on maintaining occupancy and securing earnings through specialised active management

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	Leasing metrics FY09
	New leases signed	12,295 m2
	Retained leases Tenant retention rate1	31,336 m2 79%
	Subject to fixed and CPI reviews1 86%
	Average fixed review increase	3.8%

1. Excluding those leases on a month by month lease

Group review

Principal property investment – 343 George case study

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Abacus acquired 343 George St, Sydney from DEXUS Property Group in July 2009 for $55m

• High quality landmark building in central CBD Low rate per m[2] of $5,200 Attractive holding income

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Income enhance options through significant under-renting and lease up of vacant space Future strata sub-division potential

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	Key metrics
	Value	$55m
	NLA (sqm)	10,584
	Valuation cap rate	8.25%
	Occupancy	89%
	WALE	2.9 years

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Asset positions Abacus to capture future rebound in property markets

Asset is strata-approved

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• Abacus has significant experience in delivering enhanced returns through office strata subdivisions

109 Pitt Street strata sub-division[1]

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Acquisition and costs $58 million

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Group review Funds management

Overview

External AUM of over $1.0 billion

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Independent valuations completed on all assets in core Funds on a rolling annual basis

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• Impact of asset falls due to cap rate expansion have been partially offset by rental growth

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• Restructuring work on ADIF II and AHF has commenced to

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Attract new equity

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Effect capital management initiatives including renewing a new 3yr $54m ADIF II facility

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Proactively addressing fund de-gearing via targeted asset sales

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Rydges Gladstone and Townsville hotels

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Fund breakdown

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Small Single
Asset Funds
21%
Storage
32%
ADIF II
17%
Hospitality
30%
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Group review

Property finance and joint ventures

Property finance

$146m of loans with majority secured with first mortgages

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Impairment tests performed every six months – total of $5m provided for in FY09

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Abacus will continue to work with our clients to recoup invested capital and reduce exposure to third parties as markets allow

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Joint ventures and projects

Abacus has $78.3 million invested in 10 joint venture projects and investments

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Mix of preferred equity, mezzanine loans and ordinary equity

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Held in JV at the lower of cost and fair value

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	Property finance book	Jun 09
	Loan book	$146.2m
	Number of loans Average interest rate	15 10-14%

	Summary of projects
	Number of projects	10
	Abacus investment1	$78.3m
	Average JV gearing2	48%

Agenda

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1. Abacus Property Group

2. Overview of the sector

3. Financial results highlights

4. Review of businesses

5. Capital management

6. Summary and outlook Items of Business for the Group

Capital management

Abacus has been committed to pro-active capital management initiatives to deliver a strong balance sheet and financial flexibility

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Raised $211 million via rights issue and placement to new and existing securityholders Externalised $123 million of assets with a further $29 million sold since 30 June

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Abacus sits well within its covenant limits

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Low covenant gearing of 32.7% provides significant headroom

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Withstand a further 27.4% fall in asset values

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No significant debt expiry until 2H FY11

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Since 30 June 2009 the Group has:

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Secured a new $30.25m 3 year facility for 343 George Street

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Extended Club Working Capital facility to Feb 2011 and documenting a new 3 year $70m

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	Capital management Term to maturity	Jun 09 1.7 yrs
	Group gearing	26.6%
	Covenant gearing	32.7%
	Covenant limit	45.0%
	Covenant headroom1	27.4%
	ICR	2.5x
	ICR covenant	2.0x

1. Calculated as the % fall in asset values required to breach covenant.

Agenda

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1. Abacus Property Group

2. Overview of the sector

3. Financial results highlights

4. Review of businesses

5. Capital management

6. Summary and outlook Items of Business for the Group

Summary and outlook

• Strong financial result in difficult market conditions

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• Expect conditions to remain challenging through FY10

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• Conditions have created acquisition opportunities

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• Abacus is working hard to close gap to NTA

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Confirm DPS of 3cps in FY10 assuming no material adverse change to market conditions

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Discount to NTA

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Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
08 08 09 09 09 09 09 09 09 09 09 09 09
0.0%
Sector NTA discount: 2.4%
(10.0)%
(20.0)%
ABP NTA discount: 29.0%
(30.0)%
(40.0)%
(50.0)%
(60.0)%
(70.0)%
(80.0)%
(90.0)%
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Source: Company information and IRESS as at 10 November 2009