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ABACUS GROUP — AGM Information 2015
Nov 12, 2015
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AGM Information
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ASX ANNOUNCEMENT
2015 AGM – Chairman’s Address
Ladies and gentlemen, welcome to our 2015 Annual General Meeting. My name is John Thame and I will chair today’s meeting.
We have recently released our 2015 Annual Report and you may also have seen our results presentation in late August. These provide a comprehensive summary and analysis of our performance over the 2015 financial year. I commend to you our operating and financial review that forms part of the directors’ report in our Annual report. This review provides a detailed overview of our businesses. If you want copies of these documents they are available here.
Frank will go into more detail about our results and activities for the year during his presentation but I would like to highlight some of our achievements from the last year.
We were delighted to present another strong result after a pleasing year for Abacus Property Group. The financials demonstrated strong contributions from all of Abacus’s business sectors, providing further increases to underlying profit and earnings per security. The success from recent sales transactions across our investment and development portfolios and another strong contribution from our storage portfolio have driven the improvement over the prior year.
The Group produced strong underlying profit growth of 27% from the prior year. We also delivered 17.5% growth in underlying earnings per security this year, to 24.5 cents, backed by cashflow from operations per security of 23.3 cents. These strong results underwrote our distributions to securityholders, provided the opportunity to increase distributions to 17 cents per security and provided surplus capital for re-investment.
Abacus securities performed well, delivering another year of outperformance with a 24.1% total return. This significantly outperformed the benchmark, the S&P/ASX 200 A-REIT Accumulation index which includes all the major listed property groups, and takes account of price and distribution performance. The index delivered a 20.3% total return for the year.
I would like to touch on our sustainability achievements. We are very proud of our sustainability protocol and strategies throughout the year. Our sustainability report illustrates the environmental footprint from the Group’s operations and management and key performance indicators over time to help us manage and reduce our consumption of natural resources. We encourage you to read this report.
Abacus is an active core plus manager. We acquire assets that we believe are mispriced by the market and fix that mispricing through active management. This strategy may result in mature assets that have been transformed being returned to the market. We believe this strategy has a positive impact on the environment as we extend and rejuvenate the life cycle of assets that could otherwise be on their way to becoming obsolete and ultimately end in demolition and rebuilding. This causes a negative impact on the environment and the use of additional natural resources.
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To conclude, Abacus has delivered another pleasing result, which continues a trend of strong results over the last 5 years. The year was again characterised with robust transactional activity, taking advantage of market conditions and remixing the portfolio to provide new opportunities.
Our focus in FY16 remains on the sourcing of opportunities and the delivery of core plus strategies across our asset base and residential development projects to maintain our current growth trajectory. Our growth strategies will continue to support and generate cashflows across the Group’s divisions, ensuring that securityholder distributions remain covered by sustainable recurrent earnings.
I turn now to the remuneration report which is set out at pages 45 to 59 of our 2015 Annual Report. The remuneration report explains the Board’s policy in relation to the nature and amount of remuneration paid to directors and executives and the link between remuneration and performance conditions.
While our remuneration policy and principles are the same as last year, we have received criticism this year for the disclosure relating to the variable remuneration hurdles.
The hurdle for participation in variable remuneration is achieved through satisfying the underlying profit gateway hurdle. Underlying profit takes into account recurring revenue from rent, interest income, fees etc. and also profit from transactional activities in the normal course of business. Underlying profit is the foundation of the Group’s business, paying distributions to our investors, driving the security price and supplying capital for the business to grow.
The underlying profit hurdle is subjected to detailed Board scrutiny annually via the Budget process but also recognises the difficulties in projecting revenue outcomes given the specific nature of our business.
If the underlying profit hurdle is not met, no general pool is available for distribution; however the Board does have discretion in cases of individual outperformance.
Vesting of deferred variable remuneration only takes place if the distribution is maintained at no less than previous levels.
We see this measure as important because we regard our distribution as sacrosanct and our investors largely rely on it. We have had significant cover for our distribution each year as we choose to reinvest capital to grow the business. I would also note, as we mentioned earlier, that Abacus has been one of the best performing stocks in the benchmark index, the S&P/ASX 200 A-REIT Accumulation index, delivering superior total returns over the last 3 years.
We have been criticised for failing to disclose these specific performance hurdles. We have not done so as these hurdles are commercially sensitive. However we will consider relevant metrics for disclosure in the future.
In closing, I would specifically like to mention that we have a very strong and experienced team at Abacus. They continue to do an excellent job and we have every confidence that they will continue to deliver long term securityholder returns. My board colleagues and I thank them for their commitment and engagement during the last 12 months.
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Finally, we and the other members of our Board would like to thank you, our investors, for your continued support.
13 November 2015
Investor enquiries Neil Summerfield Head of Investor Relations (+61) 2 9253 8600 www.abacusproperty.com.au
About Abacus
Abacus Property Group is a diversified property group that specialises in investing in core plus property opportunities across Australia's commercial property markets. Abacus was established in 1996 and listed on the ASX in November 2002. Abacus has achieved a successful track record of acquiring property based assets and actively managing those assets to enhance income and capital growth. Abacus has a market capitalisation of over $1.6bn.
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Oasis Shopping Centre, Broadbeach QLD
2015 Annual General Meeting
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Financial year 2015
Our Chairman has just spoken about our financial performance in the last 12 months of which we as a Group are extremely proud
But in any property company we need to consider the underlying assets to determine the likely future growth and profitability
We will discuss each component of our balance sheet in a moment but firstly I would like to recap our recent results
I’ll present several graphs in the next few pages which will illustrate the strong results and returns that the group has delivered over the last few years
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These results need to be considered in the light of Group Gearing, ICR and profitability per employee
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Low gearing at 18.2%, Strong ICR of 5.7 times and an underlying profit per employee of $2.25 million
Abacus is a high margin low volume business - we do not pursue scale for the sake of scale
Balance sheet exposure
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Residential
25%
developments
Storage facilities 25%
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Commercial
50%
portfolio
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Financial performance
Underlying profit ($m)
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128.3
101.3
83.8
72.2 76.8
FY11 FY12 FY13 FY14 FY15
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Earnings per security (c)
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24.5
20.8
19.4 19.2 18.8
FY11 FY12 FY13 FY14 FY15
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Abacus total assets ($m)
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1,913 1,957
1,866 1,843
1,602
FY11 FY12 FY13 FY14 FY15
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Distribution per security (c)
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17.0
16.75
16.5 16.5 16.5
FY11 FY12 FY13 FY14 FY15
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Total securityholder returns
Abacus delivered a strong return to securityholders during the year
Abacus outperformed its benchmark index, the S&P/ASX 200 A– REIT Accumulation Index (XPJAI), Since 30 June 2014, delivering an impressive 37.1% total return to securityholders
- Benchmark delivered a 27.2% return
This extends the Group’s strong outperformance over the index to three consecutive years
During a year where A-REIT stocks were in demand by investors, the Group received recognition for its consistent core plus strategy and future balance sheet potential which drove the price higher
Abacus FY15 price chart vs S&P/ASX 200 A–REIT Index
$3.40 $3.30 ABP XPJ $3.20 $3.10 $3.00 $2.90 $2.80 $2.70 $2.60 $2.50 $2.40 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2014 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
- The Group’s strong distribution yield continues to be attractive to investors
Abacus total return vs XPJAI
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70.0%
60.0%
50.0%
40.0%
68.2% 65.9%
30.0%
43.9%
20.0%
33.6%
10.0%
0.0%
2 yr 3 yr
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Source: IRESS as at 6 November 2015
Abacus Property Group – 2015 AGM presentation 13 November 2015
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Investment portfolio
Abacus Property Group – 2015 AGM presentation 13 November 2015 5
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Investment portfolio of $1.3 Billion
Strong transactional markets driven by demand for yield
$1.3 Billion - Investment portfolio
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- Took advantage of strong pricing of mature assets and sold properties and projects either owned wholly by Abacus or in partnership with others for c.$751 million of total value
Fundamental value harder to find
- Despite this we sourced acquisitions of over $633 million of total value (Abacus share $282 million)
Cemented our credentials as a partner with global investment firms
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Expanded third party capital platform with the development of two new investment relationships
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Added $456 million of assets to our third party capital platform to over $1 billion of total assets purchased
Continue to grow and expand our storage portfolio
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Added 7 facilities valued over $50 million since last year
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Increased NLA by 12.5%
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Delivered a total return of c.20% over FY15
Abacus Property Group – 2015 AGM presentation 13 November 2015
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Summary portfolio metrics
| Key portfolio metrics | Jun 15 |
|---|---|
| Investment portfolio value1 ($m) | 1,305 |
| Commercial portfolio1 ($m) | 848 |
| Storage portfolio ($m) | 457 |
| No. of commercial assets1 | 37 |
| NLA (sqm)2 | 297,874 |
| WACR1,2,3 (%) | 8.05 |
| Occupancy2 (% by area) | 93.4 |
| WALE2 (yrs by income) | 4.1 |
| Rental growth2 (%) | 2.2 |
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Includes Virginia Park, inventory and PP&E
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Excludes development and storage assets
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Weighted Average Cap Rate
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Industrial and
Other
10% Storage
35%
Retail
21%
Office
34%
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NZ
7%
ACT
12%
NSW
34%
QLD
17%
VIC
30%
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Office: significant portfolio changes
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Westpac House, 14 Martin Place, Sydney
Adelaide Joint venture asset
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180 Queen Street, Brisbane
Joint venture asset
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201 Pacific Highway, Sydney
Joint venture asset
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710 Collins Street, Melbourne
51 Allara Street, Canberra
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World Trade Centre, Melbourne
Joint venture asset
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Office portfolio: $440 million
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| NSW | |||
|---|---|---|---|
| 20% SA ACT 17% |
|||
| 17% | QLD | ||
| VIC 33% Key office metrics |
13% | Jun 15 | |
| No. of office assets | 16 | ||
| NLA (sqm)1 | 81,167 | ||
| WACR (%) | 7.71 | ||
| Occupancy1 (% by area) | 93.7 | ||
| Average rent psqm (gross) | $453 | ||
| WALE1 (yrs by income) | 4.0 | ||
| Like for like rental growth1 (%) | 1.0 |
- Excludes development assets
Abacus Property Group – 2015 AGM presentation 13 November 2015 8
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201 Pacific Highway, St Leonards NSW
Abacus Property Group acquired 201 Pacific Highway, St Leonards at a price of $115.0 million in a 50/50 joint venture with Goldman Sachs
- Acquisition price compares favourably when marked against recent market transactions
Suburban office located on the northern side of Pacific Highway and in prime position adjoining the St Leonards railway station. It was developed in 2000 as part of the Forum development
This A grade building comprises 13,841m[2] of office and 2,688m[2] of retail and 262 car spaces
- The retail comprises 20 tenancies in the Forum plaza adjoining the railway station
Asset presents a diversified income with 20% of the income from retail (anchored by Coles) and 10% from car parking
Opportunity to acquire a near new, well leased office building at a relatively high cap rate (8.5% on passing and 8.9% on fully leased) and to exploit over time the yield differential between the core CBD and suburban markets
Opportunity to strata subdivide the retail tenancies and sell individually
Key metrics
| Purchase price | $115.0m | |
|---|---|---|
| Rate per square metre | $6,957 | |
| Cap rate | 8.5% | |
| NLA | 16,529m2 | |
| WALE | 3.0 yrs | |
| Occupancy Average rent psqm |
97% $680 |
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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World Trade Centre, Melbourne VIC
Abacus acquired a 70% interest in Towers 2, 3 and 4 of the World Trade Centre, Melbourne (WTC) for $120 million in a 25/75 joint venture with KKR in December 2014
The vendor, Asset 1 WTC, will retain a 30% co-ownership
The property is a part of the Northbank precinct adjacent to the central business district, one of Melbourne’s largest integrated waterfront mixed-use developments, which has been transformed into a vibrant commercial, retail, and residential precinct
Towers 2, 3 and 4 provide a total of nearly 50,000sqm of net lettable area offering a mix of office and retail space including a retail arcade with restaurants/bars fronting the Yarra River
Property was acquired on a low rate per square metre and provides opportunities for refurbishment and development, including the creation of additional NLA
The property is located in an area that is undergoing strong regeneration which should underpin rental growth and occupancy
Since acquisition, occupancy has increased to 99% from 90%
Key metrics
| Purchase price for 70% | $120.4m | |
|---|---|---|
| Rate per square metre | $3,446 | |
| Cap rate | 8.00% | |
| NLA (100%) | 49,887m2 | |
| WALE | 4.4 yrs | |
| Occupancy Average rent psqm |
99% $330 |
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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710 Collins Street, Melbourne VIC
Abacus acquired 710 Collins Street for $76.5 million in December 2014
Key metrics
710 Collins Street is an iconic, boutique office building located in Melbourne’s fastest growing commercial precinct and adjoins two large commercial mixed use developments
The building consists of a four level commercial building with access to Collins Street which provides access to the two level converted historic goods shed
Property provides strong security to income with high quality tenants and long lease expiry
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83% of income leased to government tenants
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9.3 year WALE
The A grade property was recently refurbished and provides a high quality, state of the art accommodation and services
The property also provides a opportunity to explore further development opportunities via an extension of the buildings office tower or a redevelopment of retail
| Purchase price | $76.5m | |
|---|---|---|
| Rate per square metre Cap rate |
$6,800 6.25% |
|
| NLA WALE |
11,235m2 8.8 yrs |
|
| Occupancy | 100% | |
| Average rent psqm | $436 |
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Retail: portfolio performing
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Ashfield Mall, Sydney NSW
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Oasis Shopping Centre, Broadbeach QLD
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Bacchus Marsh Village Shopping Centre,
Bacchus Marsh VIC
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Liverpool Plaza, Sydney NSW
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Super IGA, North Bundaberg QLD
part of the Metcash portfolio
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Lutwyche City, Brisbane QLD
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- Includes 75% ownership in Lutwyche City Shopping Centre that settled in October 2015
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Retail portfolio: $324 million
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| VIC | ||
|---|---|---|
| NSW 60% QLD 26% 14% Key retail metrics |
Jun 15* | |
| No. of retail assets | 8 | |
| GLA (sqm)1 | 85,504 | |
| WACR (%) | 7.35 | |
| Occupancy1 (% by area) | 88.4 | |
| Average rent psqm (mixed) | $420 | |
| WALE1 (yrs by income) | 4.6 | |
| Like for like rental growth1 (%) | 2.9 |
- Excludes development affected leases
Abacus Property Group – 2015 AGM presentation 13 November 2015 12
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Oasis Shopping Centre, Broadbeach QLD
Abacus acquired Oasis Shopping Centre in Broadbeach for $103.5 million in a 40/60 joint venture with KKR in February 2015
The centre is a three-level sub-regional shopping mall at the centre of Broadbeach, on the Gold Coast, in Queensland
The property is in the heart of a popular tourist destination for Australian and international travellers and within walking distance to the beach and landmarks including the Gold Coast Convention Centre and Jupiter’s Hotel and Casino
- Oasis caters to both Broadbeach residents and visitors, experiencing approximately 6.8 million visitors a year
Centre was acquired on a strong initial yield of 7.9% and presented with strong opportunities to drive rentals through a mix of tenant re-mixing and new leasing opportunities
Centre also presented a number of re-development and refurbishment opportunities to increase GLA and upgrade the centre
Abacus has made good progress on a number of leasing and development opportunities bringing a number of national specialty retailers to the centre
Key metrics
| Purchase price | $103.5m | |
|---|---|---|
| Rate per square metre | $4,891 | |
| Cap rate | 8.00% | |
| GLA WALE |
21,160m2 3.0 yrs |
|
| Occupancy | 90.0% | |
| Average rent psqm (specialities) | $543 |
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Lutwyche City Shopping Centre, Brisbane QLD
Abacus acquired Lutwyche City Shopping Centre in Brisbane for $65.0 million in a 75/25 joint venture with Zenonos Group in October 2015
The centre is a four-level enclosed neighbourhood shopping centre 5km north of the Brisbane CBD
The centre is the dominant convenience centre servicing local residents and is well located with exposure to major transport corridors and the local public transport hub
The centre has 12,103m[2] of gross lettable area anchored by Coles and Aldi supermarkets, two mini majors and approx. 5,659m[2] of specialty GLA
- Centre also has 6,441m[2] of office space and an adjacent freestanding 384m[2] childcare facility
The property is a strong asset acquired on an attractive rate per square metre and offers a number of value add projects that will increase income over time
Abacus are considering a number of refurbishment, redevelopment and tenant expansions/re-mixing strategies
Key metrics
| Purchase price | $65.0m | |
|---|---|---|
| Rate per square metre | $3,450 | |
| Cap rate | 8.00% | |
| GLA WALE |
18,929m2 5.3 yrs |
|
| Occupancy | 90.0% | |
| Average rent psqm (specialities) | $543 |
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Storage portfolio grows to $457 million
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Cleveland, QLD
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Arcacia Ridge, QLD
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Townsville, QLD
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Ferrymead, NZ
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Hamilton, NZ
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Townsville, QLD
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Townsville, QLD
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Remuera, NZ
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Takapuna, NZ
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Belconnen, ACT
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| Key metrics | AUS | NZ | Jun 15 | |
|---|---|---|---|---|
| Portfolio value ($m) | 367.1 | 90.1 | 457.2 | |
| No. of storage assets | 431 | 11 | 54 | |
| WACR | 8.6% | 8.8% | 8.6% | |
| NLA (m2) | 200,000 | 54,000 | 254,000 | |
| Land (m2) | 330,000 | 104,000 | 434,000 | |
| Occupancy2 | 83.8% | 88.5% | 84.9% | |
| Average rental rate2 $psm | $256 | NZD261 | $250 | |
| RevPAM (per available sqm)2 | $215 | NZD231 | $212 |
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NSW
VIC 21%
26%
ACT QLD
15% 18%
NZ
20%
1. Includes commercial property at Belconnen
2. Average over last 12 months (by area) of all trading facilities
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Abacus Property Group – 2015 AGM presentation 13 November 2015 15
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Strong and stable cashflows
Portfolio has a very strong geographical spread throughout New Zealand and the Eastern seaboard of Australia
We have driven substantial NLA growth in the portfolio delivering compound annual growth of approximately 5.0% since 2011 We have added 6.8% or over 17,000 m[2] since 30 June 2015
We have total customers of over 21,500 with an average stay of approximately 35 months (excluding new facilities)
Like for like portfolio cashflow has shown solid compound annual growth of 4.0% pa since 2008
- The below chart represent 41 facilities since July 2008
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4,000
Total Revenue (monthly)
3,900
3,800
3,700
3,600
3,500
3,400
3,300
3,200
3,100
3,000
Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11 Oct‐11 Jan‐12 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Oct‐13 Jan‐14 Apr‐14 Jul‐14 Oct‐14 Jan‐15 Apr‐15 Jul‐15
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Storage total return/risk analysis
Storage facility is like a retail business without the higher risk impacts of consumer confidence and shopper apathy
Global evidence illustrates that risk is mitigated by resilient operating cashflows, especially across a large number of assets in different regions
The cash based income return is paid in advance without incentives or rent free components
Portfolio delivered a geared total return including capital growth of 19.3%
- Cap rate reduction from 8.8% to 8.6% illustrates that capital growth component is not overly reliant on cap rate compression
Cap rate compression has been substantially softer than other sectors over the last 5 years
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Abacus portfolio has tightened 50bp over 5 years from 9.1% to 8.6%
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Further cap rate compression anticipated as sector matures and wider institutional awareness
Sector has potential to deliver strong total returns of 20%+ per annum
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Wodonga storage facility, Wodonga VIC: stage one construction with
stage two site in background
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Castle Hill storage facility, Castle Hill NSW: Stage two development
completed ahead of time taking facility to a total of 3,300m [2] of NLA
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Abacus Property Group – 2015 AGM presentation 13 November 2015
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Property ventures
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Abacus Property Group – 2015 AGM presentation 13 November 2015 18
Erskineville residential projects, Sydney NSW
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Property ventures – strong projects/low cost base
Residential developments are delivering strong risk adjusted returns at this point in the cycle
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As a result we have substantially increased our exposure across FY15
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69% and 12% increased exposure to Sydney and Melbourne residential markets
| Key metrics | Jun 15 | |
|---|---|---|
| Residential exposure | 99.4% | |
| Loans Equity |
$263.0m $150.5m |
|
| Average interest rate | 12.8% |
We sourced new projects during the year and added over $110 million of investments in a number of projects
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The Prince joint venture in Kingston ACT to develop 153 units overlooking Lake Burley Griffin
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Joint venture residential project to develop 481 new residential units over two high rise 30 storey towers in South Brisbane QLD
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Increased capital committed to projects includes incremental costs associated with procuring development approvals
Pipeline has estimated potential to generate end sales revenues of c.$1.0 billion[1] between FY16 and FY19
The pipeline of projects is underpinned by over 7,500 unit and/or land sites which equates to a cost base of only $55,000 per unit/land site
Project estimated end sales revenues (in millions)[1]
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FY16
FY17
FY18
FY19
$0 $200 $400 $600 $800 $1,000
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- Estimated revenue is net of sales costs and GST
Abacus Property Group – 2015 AGM presentation 13 November 2015
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Parramatta - Camellia project
Artist impression of possible residential development Camellia, NSW
Project site is located at 181 James Ruse Drive Camellia, Parramatta NSW
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6.8 hectares located 23km west of Sydney CBD
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Cross collateralised with Riverlands project with $144 million capital invested
Prime waterfront site to Parramatta River which flows into Sydney Harbour
The NSW Planning and Environment determined the site should be rezoned via a “Gateway Determination”
EPA has determined they are able to issue an Environmental Protection License subject to conditions and formal application.
- Development consent for the remediation plan has been received from Council
Council has also finalised the master plan for Gateway Approval by NSW Department of Planning (DoP). Council to approve master plan once DoP approval received
- Master Plan provides for circa 3,250 apartments and 14,000m[2] of retail
There remains high interest from developers for large apartment sites in Sydney as “off the plan” sales remain strong
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Artist impression of possible residential development Camellia, NSW
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Canberra - The Prince apartments
Kingston ACT – The PRINCE apartments
Abacus holds a 50% interest in a joint venture to develop THE PRINCE apartments
This proposed residential development is located in the affluent Canberra mixed use Kingston ACT foreshore precinct, overlooking Lake Burley Griffin
The proposal is to develop approximately 153 residential apartments over 6 storeys in four buildings
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Mix of 1, 2 and 3 bed units
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Average prices of $550,000
The marketing and sales of this development is progressing well with 131 apartments sold
Completion is expected to be in October 2016
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Artist impression of THE PRINCE project, Kingston ACT
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Ashfield – Ashfield Central apartments
Ashfield NSW – ASHFIELD CENTRAL apartments
This proposed residential development is located in Ashfield, one of Sydney’s most desirable and sought after locations for investors and owner occupiers alike
Located above Ashfield Mall and across from the train station, Ashfield Central is in a prime position to access vibrant laneway food options, transport, prestigious schools and shopping.
The project will develop 101 residential apartments across two buildings
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Mix of 1, 2 and 3 bed units
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Average prices of $820,000
The marketing and sales of this development commenced in November 2015 with almost half of the apartments selling over the first weekend
Construction is anticipated to commence in early 2016 with completion in late 2017
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Artist impression of THE PRINCE project, Kingston ACT
Artist impression of Ashfield Central, Ashfield NSW
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Artist impression of The PRINCE projectArtist impression of Ashfield Central , Kingston ACTAshfield NSW
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Melbourne – The Eminence apartments
Queensberry Street – THE EMINENCE apartments
Abacus holds a 50% interest in a joint venture to develop 139 Queensberry Street, Carlton VIC with two partners
Located in a vibrant part of Carlton experiencing strong demand from both investor and owner occupier unit buyers
15 level, 193 unit residential tower with three levels of basement parking, ground level retail and a rooftop recreation area
- Mix of 1, 2 & 3 bed units
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Artist impression of Queensberry development site, Carlton VIC
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Achieved pre–sales of 192 units at average prices of $640,000
Construction is underway and is expected to complete in June 2017
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Artist impression of The Eminence roof top terrace, Carlton VIC
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Erskineville – One A apartments
Erskineville – One A apartments
Abacus holds a 50% interest in a joint venture to develop 1a Coulson Street, Erskineville, Sydney
Located in Erskineville, a well connected urban renewal precinct in Sydney’s inner-west
- Within walking distance of local train and bus hubs and only 5 km’s from the CBD
The project aims to redevelop an existing industrial site to accommodate approximately 172 residential apartments
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Artist impression of 1a Coulson Street project, Erskineville NSW
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Mix of 1, 2 & 3 bed units
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Average prices of $950,000
The project is targeting a mix of local and international investors in additional to local owner occupiers
The project has achieved 76 pre-sales since opening in October 2015
Construction is anticipated to commence in early 2016
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Artist impression of 1a Coulson Street project, Erskineville NSW
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View from 33 Queens Street, Brisbane QLD
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Conclusion
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Conclusion
The property market in Australia has been fuelled by the sheer weight of money looking to be deployed globally
The financial performance during the period 2009 to 2015 was artificial in the sense that it was driven by the policies of the central banks, low interest rates and pumping money into the global economy
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In total US$12 Trillion was pumped into the world economies
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This resulted in the growth of asset prices, but this growth was not based on the fact that these assets are worth more
In fact, in the domestic market there is a disconnect between the growth in capital values and the leasing performance of office assets and similarly whilst retail specialty sales has gone up by 5.8% in the last 9 months, landlords are facing pressure from retailers whose leases are to be renewed
- Ultimately the return to the landlord is dependent on the ability of the tenant to pay the rent
Abacus focuses on the fundamental value of the assets which we acquire at the point of acquisition
If from a property perspective we find the fundamentals of the asset to be expensive we will not pursue the acquisition
There is a view that the inflow of capital to Australia will continue and this will provide upward pressure on asset prices
However, ultimately it is the net cash return from the asset that defines its value as a investment and we remain disciplined and focused on the acquisition of assets which represent value to our securityholders
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QUESTIONS
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Disclaimer
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 information in this document is correct (although not complete or comprehensive) and does not make any specific representations regarding its suitability for any purpose. Users of this document should obtain independent professional advice before relying on this document as the basis for making any investment decision and should also refer to Abacus Property Group’s financial statements lodged with the ASX for the period to which this document relates. This document contains non-AIFRS financial information that Abacus Property Group uses to assess performance and distribution levels. That information is calculated in accordance with the AICD/Finsia principles and is not audited.
Any forecasts or other forward looking statements contained in this presentation are based on assumptions concerning future events and market conditions. Actual results may vary from forecasts and any variations may be materially positive or negative.
The information in this document is current only as at the date of this document, and that information may not be updated to reflect subsequent changes.
To the extent permitted by law, the members of Abacus Property Group and those officers responsible for the preparation of this document disclaim all responsibility for damages and loss incurred by users of this document as a result of the content of, or any errors or omissions in, this document.
Abacus Property Group:
Abacus Group Holdings Limited ACN: 080 604 619
Abacus Group Projects Limited ACN: 104 066 104
Abacus Funds Management Limited ACN: 007 415 590 AFSL No. 227819
Abacus Storage Funds Management Limited ACN: 109 324 834 AFSL No. 277357
Abacus Storage Operations Limited ACN: 112 457 075
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