ABACUS GROUP — AGM Information 2017

Nov 13, 2017

Bacchus Marsh Village Shopping Centre, Bacchus Marsh VIC

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Abacus
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2017 Annual General Meeting

Abacus Property Group - 2017 Annual General Meeting

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2017 financial summary

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14 Martin Place, Sydney NSW
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710 Collins Street, Melbourne VIC
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World Trade Centre, Melbourne VIC
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Statutory profit Underlying profit Net tangible asset $285.1 million $186.8 million $3.02 per security per security Up 53% Up 51% Up 13.5% Underlying EPS Underlying DPS Payout ratio 32.7 cps 17.5 cps 53.5% Up 46% Up 3% Total securityholder Return on equity EPS compound return 12 months to 30/6/17 annual growth rate 12 months to 10/11/17 since FY10 57.9% 20.1% 7.7% p.a.

Net tangible asset $3.02 per security per security Up 13.5%

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FY17 highlights

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Spice apartments, Brisbane QLD
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Oasis Shopping Centre, Broadbeach QLD
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710 Collins Street, Melbourne VIC
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All aspects of the business contributed to this record result

Strong activity during the period across our investment portfolio

• Active asset management with 130 new leasing transactions

• Acquired 7 commercial properties totalling over $205 million in value during the period to date

• Added 4 self-storage assets valued at $22 million to the portfolio

Expanding our third party capital program

• Expanding relationships with global capital partners

• Strong performance fee income enhancing investment returns

Residential development platform delivers multiple projects as anticipated

• Realised over $170 million of cash from residential development projects

• Completed three residential developments during the year

• Sold one multi-site residential project following approval

The strength of the business is underpinned by our investment philosophy and our commitment to acquiring assets that will yield rental income and capital value growth through our active management

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Historic financial performance

Underlying profit ($m)

Abacus net tangible assets ($m)

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186.8
128.3 124.0
101.3
83.8
FY13 FY14 FY15 FY16 FY17
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1,737
1,480
1,378
1,225
1,049
FY13 FY14 FY15 FY16 FY17
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Earnings per security (c)

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32.7
24.5
22.4
20.8
18.8
FY13 FY14 FY15 FY16 FY17
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Distribution per security (c)

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17.5
17.0 17.00
16.8
16.5
FY13 FY14 FY15 FY16 FY17
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Impressive total securityholder returns

Abacus has delivered a strong return to securityholders

• Accelerated following our underlying profit upgrade on 28th July 2017

Abacus’ impressive 57.9% total return to securityholders has significantly outperformed the benchmark index, the S&P/ASX 200 A–REIT Accumulation Index (XPJAI), over the last 12 months

• Benchmark delivered a 14.8% total return

Abacus’ has substantially outperformed the benchmark index over one, three and five years

During a year where A-REIT stocks have been under pressure from global and domestic thematics, the Group has received recognition for its superior financial result, its consistent core plus strategy delivering significant returns and future balance sheet potential

• The Group’s adherence to its commitment to its deliver 2-3% distribution growth per annum continues to be attractive to investors

Abacus 2016/17 price chart vs S&P/ASX 200 A–REIT Index

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$4.20
$4.00 28/07/17: Underlying
ABP XPJ profit upgrade 37.0%
$3.80
$3.60
$3.40
$3.20
7.2%
$3.00
$2.80
$2.60
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2016 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017
Abacus total return vs S&P/ASX 200 A–REIT Accumulation Index
60.0%
50.0%
40.0%
30.0% 57.9%
20.0%
10.0% 18.6% 19.7%
14.8% 11.5% 13.4%
0.0%
1 yr 3 yr 5 yr
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Abacus total return vs S&P/ASX 200 A–REIT Accumulation Index

Source: IRESS as at 10 November 2017

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Delivering long

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It’s all about the property New acquisition: 187 Todd Road - Port Melbourne

Abacus acquired 187 Todd Rd in October 2017 for $43.5 million

Key metrics

Fully leased high quality commercial investment in strategic location within Fisherman's Bend Urban renewal precinct

Offers intrinsic value which will crystallise over time

The property offers an outstanding investment opportunity

• Current income underpinned by high quality cashflows

• Current rents are low expecting to deliver solid growth prospects

• Growth further enhanced from urban renewal of local industrialised precinct

• Over 1 hectare of land in emerging precinct which will benefit from infrastructure and urban spread

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	Rate per square metre at acquisition	$4,722
	Cap rate	6.25%
	NLA (sqm)	9,212
	WALE (yrs by income)	4.1
	Occupancy (by area) Average rent psqm	100% $250

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It’s all about the property Active asset management: 324 Queen Street - Brisbane

Abacus acquired a 50% interest in 324 Queen Street in December 2016 for $66 million

A strong commercial asset located in a premier position in the Brisbane CBD’s Golden Triangle

The property offers an outstanding core plus opportunity within the office sector in the current market

• Excellent corner location

• Purchased on a low capital rate per sqm reflecting vacancy compared to neighbouring property transactions

• Vacancy provides upside potential

• Long term potential to explore a retail conversion of the podium

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Key metrics

	Rate per square metre at acquisition	$6,645
	Cap rate	7.5%
	NLA (sqm)	19,864
	WALE (yrs by income)	3.2
	Occupancy (by area) Average rent psqm	80% $612

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It’s all about the property Active asset management: 444 Queen Street - Brisbane

Abacus acquired a 67% interest in 444 Queen Street in August 2016 for $23.5 million

The B Grade property is located in a prime location in the CBD adjacent to Brisbane’s newest premium grade office property, 480 Queen, and presents unimpeded views over Custom’s House to Brisbane River towards Storey Bridge

The property offers an outstanding core plus opportunity

• Excellent location

• Purchased on a low capital rate per sqm reflecting vacancy compared to neighbouring property transactions

• Vacancy provides upside to consider redevelopment options for façade upgrades, floor refurbishments and improved retail

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Key metrics

	Rate per square metre at acquisition	$2,500
	Cap rate	9.0%
	NLA (sqm) WALE (yrs by income)	14,155 -
	Occupancy (by area)	-
	Average rent psqm	-

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It’s all about the property Active asset management: 182-198 Maidstone St - Altona

Abacus acquired a 10% interest in Altona in 2017 for $3.0 million

Key metrics

Property is a functional office/warehouse facility and associated cold store on a substantial land holding of 8.3 hectares

Property was acquired on a very low rate per sqm due to a very short lease expiry profile from a single tenant that was leaving upon expiry

The property offered an outstanding core plus opportunity

• Prime location in a tightly held industrial precinct 12 kms west of the Melbourne CBD and 9 kms west of the Port of Melbourne

• Purchased on a low capital rate per sqm reflecting leasing risk

• Quality improvements with specific value drivers which many tenants will find attractive

Re-leasing strategy progressing well as property can be split into multiple smaller tenancies if required following a simple refurbishment program

	Rate per square metre at acquisition	$676
	Yield on acquisition	17%+
	GLA (sqm)	44,406
	WALE (yrs by income)	0.3
	Occupancy (by area)	100%
	Average rent psqm	-

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It’s all about the property Active development management: Lutwyche City-Brisbane

Abacus acquired Lutwyche City Shopping Centre for $65.0 million in October 2015

The centre is the dominant neighbourhood convenience centre providing four levels servicing local residents and is well located with exposure to major transport corridors 5km north of the Brisbane CBD

The property offered strong development potential to increase income

The re-development strategy commenced in 2017 focused on a major refurbishment of external and internal structures while aiming to strengthen the convenience retail offer with an additional supermarket to compliment the existing Coles and ALDI, a thorough remixing of tenancies, new food court and childcare centre and c.8,000sqm of refurbished office space

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Key metrics

	Rate per square metre at acquisition	$3,450
	Cap rate	7.25%
	GLA (sqm)	18,883
	WALE (yrs by income)	4.5
	Occupancy (by area)	75%
	Average rent psqm (specialties – gross rent)	$737

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It’s all about the property Active development management: Self-storage

Self-storage portfolio: $629 million

Established portfolio delivered 3.1% RevPAM growth in FY17 driven by occupancy and rental rate gains

High occupancy levels to dictate stronger growth in overall rental rate to drive future RevPAM growth

• Focus on adding extra NLA from organic NLA growth

Portfolio now consists of:

• 53 established self-storage facilities and

• 7 newly converted self-storage facilities with further expansion potential – average age 2 years

• 5 non storage assets with conversion potential of 16,000+m[2] of NLA

• Average length of stay approximately 40 months

Portfolio growth continues with a further 4 assets added in FY17

• $12.2 million on 2 established facilities

• $9.8 million on 2 non storage assets with conversion potential

• $4.6 million of growth capex spent during period

• RevPAM: Revenue per available square metre

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Portfolio value compound growth of 13.9% pa
since FY13
650 70
Portfolio size ($m‐lhs) Portfolio size (no. of assets‐rhs)
600
65
550
60
500
450
55
400
50
350
300 45
Jun-13 Jun-14 Jun-15 Jun-16 Jun-17
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$’000 Total rent roll [1] compound growth of 4.1% pa since
4,000 July 08
3,900
3,800
3,700
3,600
3,500
3,400
3,300
3,200
3,100
3,000
2,900
2,800
2,700
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It’s all about the property Active asset management: Sydney Brookvale

Brookvale was acquired in FY16 for $7.3 million

Site provides c.4300sqm of land in a prime Sydney northern beaches established location

Site located on main northern beaches arterial thoroughfare, Pittwater Road, opposite Westfield Warringah Mall

Site acquired for new purpose built 4 level facility providing over c.6700sqm of NLA

Development approval achieved and construction to commence imminently

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It’s all about the property Active asset management: Hoppers Crossing

Hoppers Crossing in Melbourne has been part of the portfolio for many years and provides c.3600sqm of NLA

Facility occupancy has been consistently c.90%+

Opportunity to capitalise on strong demand in local market

Limited surplus land available on site so staged build over next viable option

Stage 1 of the build over project will deliver an additional 1350sqm of NLA

Allows retention of existing customer base and cash flow

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It’s all about the property Residential pipeline – developments

$118 million of invested capital across 8 residential development projects completing, under construction or planning for c1,400 units

Completed and committed projects of 945 units are 98% sold down

• 1 completed project is 100% sold and 80% settled

• 4 projects under construction are 97% pre-sold

FY18 pipeline on track to complete as expected

92% of Eminence (Melbourne) units have settled – Working with purchasers, providing assistance and extended settlement timeframes where necessary

97% of Erskineville (Sydney) units have sold – on track for settlements due in May/June 2018

100% of Ashfield (Sydney) units have sold – on track for settlements due in May/June 2018

IVY and EVE (Brisbane) have 12 units left for sale. IVY anticipated completion in December 2017 and EVE in April 2018

• IVY Settlements on track to commence in mid December

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The Eminence, Carlton, Melbourne VICDoncaster, Melbourne VIC
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Spice, Brisbane QLD
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IVY and EVE residential developments, South Brisbane QLD
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It’s all about the property Residential pipeline – Camellia

Project site is located at 181 James Ruse Drive Camellia, Parramatta NSW

• 6.7 hectares located 23km west of Sydney CBD

• The site is close to Camellia rail station and adjacent to University of Western Sydney

• The FSR would be utilised to provide 14,000m² of retail and c.3250 units

Camellia planning status

• The Department of Planning (DOP) has requested that Council finalise submissions from government agencies and submit proposal to the department by February 2018

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The Prince, Canberra ACT
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• Councillors have now been re-elected and this should speed up approvals as councillors have supported the Proposal to date

Artist impression of possible residential development Camellia, NSW

• After a review of agency submissions and a final approval from council the planning proposal will then be sent to the DOP for gazettal

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It’s all about the property Camellia – transport infrastructure video

Transport for NSW Light Rail link: https://www.youtube.com/watch?v=-zdrj0j9h4E

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It’s all about the property Camellia – transport infrastructure

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Summary

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Artist Impression of residential development
Hawthorn VIC
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Bacchus Marsh Village Shopping Centre, Bacchus
Marsh VIC
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Lutwyche City Shopping Centre, Brisbane QLD
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Abacus has had a very successful FY17

• We have been rewarded as investors recognise our track record and future capabilities

Strength of business underpinned by investment philosophy to acquire fundamental value in assets that provide income and prospects for long term capital growth

When interest rates are low, it desensitises the investment decision

• We recognise that the uncertainties in the world are unusual in terms of number, scale and insolubility

• Prospective returns are just about the lowest they’ve ever been

• Asset prices are high across the board as investors turn to hard assets

There is a global glut of liquidity

For Abacus, more than ever, its all about the properties we own and where you can take them, rather than an increased appetite to grow assets under management for the sake of growth at this point in the cycle

Current portfolio is capable of delivering long term returns over time

Targeting an FY18 distribution per security of 18.0cps

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Business of the

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Resolutions

Resolution 1

To receive and consider the annual financial report, directors’ report and auditor’s report of Abacus Property Group and its controlled entities for the year ended 30 June 2017

Resolution 2

To adopt the Remuneration Report for the year ended 30 June 2017

Resolution 3.1

That Myra Salkinder, who retires in accordance with the Constitutions, be re-elected as a director of Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Storage Operations Limited

Resolution 3.2

That Jingmin Qian, be elected as a director of Abacus Group Holdings Limited, Abacus Group Projects Limited and Abacus Storage Operations Limited

Resolution 4

That the yearly maximum sum available to non-executive directors of Abacus Property Group as remuneration for their services be increased by $200,000 to $1,000,000 to be divided among them in a manner they may determine.

Resolution 5

That approval be given for the Company to grant 230,260 deferred security acquisition rights (SARs) to the Managing Director, Dr Frank Wolf OAM

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Proxy results

Resolutions	FOR	OPEN	AGAINST
Adoption of remuneration report	491,467,001	753,541	2,770,716
	99.29%	0.15%	0.56%
Re-election of Myra Salkinder as a Director	490,709,920	700,605	6,216,848
	98.61%	0.14%	1.25%
Election of Jingmin Qian as a director	496,674,559	700,605	210,368
	99.82%	0.14%	0.04%
Non-executive director remuneration	493,582,333	700,360	758,881
	99.71%	0.14%	0.15%
Approval of SARs to Managing Director Dr	457,126,369	690,360	38,097,153
Frank Wolf	92.18%	0.14%	7.68%

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Questions
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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 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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