ABACUS GROUP — Interim / Quarterly Report 2016

Feb 17, 2016

710 Collins Street, Melbourne VIC

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HY16
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Presentation
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Abacus Property Group – HY16 Results Presentation Appendices: 18 February 2016

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Appendix A ABP balance sheet

Abacus Balance Sheet	31 December 2015	30 June 2015
Investment property portfolio1	976.2	847.7
Storage portfolio	514.3	457.2
Funds management	149.6	140.9
Property ventures	449.6	418.9
Other investments	11.5	12.2
Cash	22.8	28.2
Other assets	22.2	18.7
Goodwill and intangibles	32.5	33.3
Total Assets	2,178.7	1,957.1
Interest bearing liabilities	577.6	388.9
Other liabilities including derivatives	117.1	128.8
Total liabilities	694.7	517.7
Net assets	1,484.0	1,439.4

1. Includes those assets held in joint venture

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	Appendix B
	Net tangible asset reconciliation
	31	December 2015	30 June 2015
	Consolidated Group net assets	1,486.2	1,438.1
	Less
	Total external non–controlling interest	(42.9)	(31.0)
	Total stapled security holders’ interest in equity	1,443.3	1,407.1
	Less
	Intangible assets and goodwill	(32.5)	(33.3)
	Deferred tax assets/liabilities (net)	(2.2)	3.9
	Total net tangible assets	1,408.6	1,377.7
	Securities on issue	553.8	553.2
	Net tangible assets per security	2.54	2.49

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Appendix C Segment earnings (underlying profit)

		Property	Storage	Funds	Property Ventures	HY16 Total	HY15 Total
Rental, Storage and Hotel income		33.4	30.0			63.4	66.4
Finance income1					29.5	29.5	12.6
Funds management income				6.5		6.5	4.9
Share of profit from equity accounted investments2		6.3 ~~3~~		0.2	3.6	10.1	12.8
Sale of inventory4		0.4			1.0	1.4	7.2
Net change in fair value of investments derecognised4		0.5				0.5	25.1
Interest income						0.2	0.3
Total Underlying Revenue		40.6	30.0	6.7	34.1	111.6	129.3
Expenses		(7.3)	(11.3)			(18.6)	(20.8)
Cost of inventory sales4		(0.3)			(1.0)	(1.3)	(5.0)
Net loss on sale of property, plant & equipment / impairment charges		(0.1)				(0.1)	(2.1)
Segment result before corporate overheads5		32.9	18.7	6.7	33.1	91.6	101.4
Corporate and other costs6		(5.0)	(2.8)	(1.1)	(2.3)	(11.2)	(14.3)
Underlying EBITDA		27.9	15.9	5.6	30.8	80.4	87.1
Finance costs6						(14.6)	(15.8)
Depreciation, amortisation and impairment expense		(1.0)	(0.2)			(1.2)	(1.3)
Tax expense						(7.1)	(0.2)
Non-controlling interests						(0.4)	(0.7)
Underlying Profit		26.9	15.7	5.6	30.8	57.1	69.1
Change in fair value of investments		42.7	6.0	0.0	(4.3)	44.4	17.6
Change in fair value of derivatives						(2.1)	(11.9)
Impairment of land development					(40.6)	(40.6)	-
Tax benefit on significant items						12.1	-
Statutory Profit		69.6	21.7	5.6	(14.1)	70.9	74.8
1. Interest on loans	3. Excludes fair value gain of $11.8 million			5. Excludes depreciation
2. Distributions from joint ventures	4. Transactional activities			6. Associated holding costs	are allocated to transactional activities

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Appendix D Segment balance sheet

Appendix D Segment balance sheet	Appendix D Segment balance sheet
Abacus balance sheet total assets Dec 2015 Property Storage Funds PV OP Other
($m) ($m) ($m) ($m) ($m) ($m) ($m)
Property, plant and equipment 4.3	0.7 3.6
Inventory 66.3	0.0 66.3
Investment properties 1,335.2	824.5 510.7
Property loans and other financial assets
Loans and interest 480.2	140.6 339.6
Other investments and financial assets 61.6	22.5 9.0 27.8 2.3
Equity accounted investments 155.9	128.5 15.9 11.5
Cash and cash equivalents 22.8	22.8
Other assets 19.9	19.9
Goodwill and intangibles 32.5	32.5
Total assets 2,178.7	976.2 514.3 149.6 449.6 11.5 77.5
Allocation of otherproperty -	11.5 (11.5)
Total segment assets 2,178.7	987.7 514.3 149.6 449.6 - 77.5

Notes:

PV – Property Ventures and includes Investments (minorities) OP – Other Property

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Appendix E Abacus cashflow analysis[1]

Appendix E Abacus cashflow analysis1
	$'000
CASHFLOWS FROM OPERATING ACTIVITIES
Income receipts	98,026
Interest received	741
Distributions received	207
Income tax paid	(4,993)
Borrowing costs paid	(13,278)
Operating payments	(39,917)
Payment for land acquisition	(2,468)
NET CASHFLOWS FROM OPERATING ACTIVITIES2	38,318
CASHFLOWS FROM INVESTING ACTIVITIES
Payments for investments and funds advanced	(105,324)
Proceeds from sale / settlement of investments and funds repaid	25,063
Purchase and disposal of property, plant and equipment	3,222
Purchase of investment properties	(119,770)
Disposal of investment properties	16,275
Payment for other investments	(2,034)
NET CASHFLOWS FROM INVESTING ACTIVITIES	(182,568)
CASHFLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of stapled securities and return of capital	7,264
Payment of finance and issue costs	(3,255)
Repayment of borrowings	(3,107)
Proceeds from borrowings	183,032
Distributionspaid	(45,071)
NET CASHFLOWS USED IN FINANCING ACTIVITIES	138,863
NET (DECREASE) IN CASH AND CASH EQUIVALENTS	(5,387)
Net foreign exchange differences	42
Cash and cash equivalents at beginningofperiod	28,175
CASH AND CASH EQUIVALENTS AT END OF PERIOD	22,830

1. 31 December 2015 cashflow statement for ABP excluding the consolidation of funds under AASB10

2. Cashflow from operations of $40.6 million deducts sale of transactional inventory ($0.2m) and adds back the purchase of non–current inventory and development costs $2.47m

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Appendix F Debt facilities

Capital management metrics	December 2015	June 2015
Total debt facilities	$786m	$770m
Total debt drawn	$574m	$388m
Term to maturity	3.7 yrs	4.3 yrs
% hedged	55%	88%
Weighted average hedge maturity	2.7 yrs	2.9 yrs
Average cost of debt – drawn	5.5%	6.1%
Group gearing1	25.1%	18.2%
Look through gearing2	30.1%	22.6%
Covenant gearing	29.0%	22.8%
Covenant gearing limit	50.0%	50.0%
Interest Coverage Ratio	4.3x	5.1x
Interest Coverage Ratio covenant	2.0x	2.0x

1. Abacus max target group gearing of up to 35%

2. Includes joint venture and fund assets and debt consolidated proportionately with Abacus’ equity interest

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Appendix G Debt maturity profile as at 31 December 2015

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($’m)
12
400
Available bank facility Drawn bank debt
300
200
385
100
189
150
50
0
FY16 FY17 FY18 FY19 FY20+
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Appendix H Portfolio revaluations

Revaluation process for Abacus resulted in a net increase in the investment properties values for HY16 of approximately 2.8% or $36.8 million

• $30.8 million across the wholly owned commercial properties

• $6.0 million across the storage portfolio

• Revaluation of assets owned across our third party capital platform resulted in a net increase of $11.8 million

Average cap rate across the Abacus commercial portfolio has decreased to 7.77%

Market transactions illustrative of a tightening cap rate environment across all commercial sectors. Abacus’ storage portfolio increase in value largely due to improved occupancy rates over the period. The WACR for the storage portfolio remained constant at 8.6%.

	Valuation 31 December 2015	Weighted average cap rate
Abacus investment portfolio by sector	$’000	31 December 2015
Retail	374,611	6.93%
Office	490,304	7.52%
Industrial & Other	111,252	8.27%
Total commercial portfolio	976,167	7.29%
Storage	514,259	8.56%
Total investment portfolio	1,490,426	7.77%

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Appendix I Summary portfolio metrics

Key portfolio metrics	Dec 15	Jun 15
Investment portfolio value1 ($m)	1,490	1,305
Commercial portfolio1 ($m)	976	848
Storage portfolio ($m)	514	457
No. of commercial assets1	34	37
NLA (sqm)2	303,884	297,874
WACR1,2,3, 4 (%)	7.77	8.05
Occupancy2,3 (% by area)	93.5	93.4
WALE2,3 (yrs by income)	4.1	4.1
Like for like rental growth2 (%)	3.0	2.2

1. Includes assets acquired under our third party capital platform, inventory and PP&E

2. Excludes storage assets

3. Excludes development assets

4. Weighted Average Cap Rate

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Industrial and
Other
7% Office
33%
Retail
25%
Storage
35%
VIC
NSW
28%
30%
ACT
10%
NZ
7%
QLD
20%
SA
5%
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Appendix I Summary portfolio metrics

Portfolio metrics	Office	Retail	Industrial	Storage
	Dec 15 Jun 15	Dec 15 Jun 15	Dec 15 Jun 15	Dec 15 Jun 15
Portfolio ($m)	490 440	375 275	111 133	514 457
No. of assets	17 16	8 7	9 14	59 54
Lettable area (sqm)1	89,273 81,167	83,799 66,575	130,812 150,132	272,000 254,000
WACR (%)	7.52 7.71	6.93 7.35	8.27 8.65	8.56 8.62
Occupancy1 (% by area)	94.4 93.7	89.4 88.4	95.6 95.5	86.0%3 84.9%3
Average rent psqm	$457 $453	$439 $420	$89 $84	A$2573 A$2543,4
WALE1 (yrs by income)	3.5 4.0	5.0 4.6	3.4 3.7	– –
Rental growth1,2 (%)	2.1 1.0	5.2 2.9	1.4 3.5	– –
RevPAM (per available sqm)	– –	– –	– –	A$2213 A$2153,4

1. Excludes development assets

2. Like for like rent growth

3. Average over last 6 months (by area) of all trading assets

4. Adjusted to HY16 FX rate of $1.0667 for comparison purposes

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Appendix I Summary portfolio metrics - lease expiry profile

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48.0%
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17.2%
12.8%
11.1% 10.9%
FY16 FY17 FY18 FY19 FY20+
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Appendix J Property ventures

	Appendix J Property ventures
	Projects Type Equity Loans Total Interest rate Security Returns RCL Portfolio, NSW JV/Loan $59.1m $84.9m $144.0m 1st Mortgagee 50% profit share Merivale, QLD JV - $38.8m $38.8m 1st Mortgagee 50% profit share Campsie, NSW Loan - $35.2m $35.2m 1st Mortgagee 50% profit share Bouquet St, QLD Loan - $33.7m $33.7m 2nd Mortgagee 50% profit share Erskineville, NSW JV $4.9m $14.8m $19.7m 2nd Mortgagee 50% profit share Grand Ave, Camellia, NSW Loan - $17.0m $17.0m 1st Mortgagee 50% profit share Werrington, NSW Loan - $15.5m $15.5m 2nd Mortgagee 25% profit share Queensberry St, VIC JV - $12.6m $12.6m 2nd Mortgagee 50% profit share Tuggeranong, ACT JV $0.3m $12.0m $12.3m 1st Mortgagee 50% profit share Doncaster, VIC JV - $11.8m $11.8m 1st Mortgagee 50% profit share Belmore, NSW Loan - $11.7m $11.7m 1st Mortgagee 50% profit share Bosch, Bentleigh East, VIC Inventory $11.3m - $11.3m Equity 100% ownership Settlers Estate, NSW Loan - $10.2m $10.2m 1st Mortgagee 50% profit share Quay St, QLD JV - $8.8m $8.8m 2nd Mortgagee 50% profit share 107 George St, NSW Loan - $8.8m $8.8m 1st Mortgagee 50% profit share Ashfield Central, NSW Inventory $8.4m - $8.4m Equity 100% ownership Lane Cove, NSW Loan - $7.4m $7.4m 1st Mortgagee 50% profit share 55 Aird St, NSW Loan - $6.7m $6.7m 1st Mortgagee 50% profit share The Prince, ACT JV $0.3m $2.7m $3.0m 2nd Mortgagee 50% profit share Hawthorn, VIC JV - $2.8m $2.8m 2nd Mortgagee 50% profit share
	Abacus Property Group–HY16 Results Presentation Appendices: 18 February 2016 9 small projects and investments - $25.7m $4.2m $29.9m Total $110.0m $339.6m $449.6m 10.7% 13

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Appendix J Residential pipeline - developments

Schedule of major projects due for development

• Targeted profit on cost of c.20%

• Average interest rate on ABP loans c.10.7%

Project name	Settlement	Units/Sold	Status	ETR1	Ave. Unit Price	ABP Profit share	Comments
Quay Street, QLD	FY16	78/70	Completed	~$32m	$436k	50%	Settlements Feb-May 2016
Bouquet Street,	FY17	274/270	Under construction	~$132m	$534k	Structured with	Completion in Oct 2016
QLD						minimum 50%
The Prince, ACT	FY17	153/144	Under construction	~$75m	$550k	50%	Completion in Oct 2016
Queensberry, VIC	FY18	193/193	Under construction	~$112m	$640k	50%	Completion in June 2017
Ashfield Central,	FY18	101/66	Planning: DA approved	~$88m	$820k	100%	Construction to commence Mar16
NSW							with completion in Aug17
Erskineville, NSW	FY18	174/96	Planning: DA submitted	~$152m	$950k	50%	Construction to commence Mar 16
							with completion in Oct 2017
Merivale, QLD	FY18	IVY:252/228	Planning: DA approved	~$242m	$515k	49%	Early works started. Construction to
		EVE:220/152					commence in early 2016 with
							completion in 2018
Hawthorn, VIC	FY18/19	28/0	Planning: DA submitted	~$36m	$1.4m	50%	Construction to commence FY17
							with completion in FY18/19
Tuggeranong, ACT	TBD	-	Planning: DA to be	-	-	50%	Planning stage
			submitted for townhouses

1. ETR: Estimated Total Revenue (net of sales costs and GST)

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Appendix J Residential pipeline - approvals

Schedule of major projects awaiting sale to third parties upon rezoning approval

 Average interest rate on ABP loans c.10.7%	 Average interest rate on ABP loans c.10.7%	 Average interest rate on ABP loans c.10.7%	 Average interest rate on ABP loans c.10.7%
Project name	Timeline	Units	Status	Est. Unit/Lot Price1	ABP Profit share	Comments
Doncaster, VIC	FY16	296	SOLD for $21.6m	N/A	50%	$19.4m to settle ABP loan and JV
						partner loan of c.$4.2m in Feb16
Campsie, NSW	FY16/17	Site 1: 270+83	Site 1+2: DA approved. New	~$160k	50%	Site 1: exchanges in H216
		Site 2: 86+21	DA submitted for extra units			Site 2: settles in H117
Camellia, NSW	FY17	14,000m2 of	Awaiting final approval post	~$100+k	50%	Abacus is reviewing strategic options for the sale
		retail + 3,250	exhibition			and/or development of the site following strong joint venture interest
Belmore, NSW	FY17/18	211 +	DA lodged but looking to	~$175k	50%	Stage payment for site up to $24m. Trying to
		additional 89	increase height			achieve additional floors from DA height extension
Lane Cove, NSW	FY18	700+	High density – DA to be		50%	Planning Proposal prepared in
			submitted in late 2016			consultation with Council
Parramatta: George St,	FY18	125+	Planning: seeking rezoning		50%	Apartment/Retail building in
NSW			to residential			Parramatta CBD
Parramatta: Aird St,	FY18	100+	Planning: seeking rezoning		50%	Apartment/Retail building in
NSW			to residential			Parramatta CBD
Grand Ave, Camellia,	FY19		Long term rezoning to		50%	Seeking rezoning inline with area
NSW			residential			regeneration

1. Estimated Unit/Lot Price based on market evidence

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Appendix J Residential pipeline – land sub-divisions

Schedule of land sub-divisions due for development

	Project name	Timeline	Land lots/Sold	Status	Price per lot	Cost to prepare lot	ABP share	Comments
	Werrington (Stage 1),	FY16	108/108	Sold Out	$270k	$100k	25%	DA approved. Settlements to begin in Mar 2016 and
	NSW							will repay debt, capital and accrued interest
	Werrington (Stage 2),	FY16	30/30	Sold Out	$280k	$100k	25%	DA submitted. Settlements to begin in Mar 2016 and
	NSW							will repay debt, capital and accrued interest
	Werrington (Stage 3),	FY17	111/0	Rezoning	$270k	$100k	25%	DA submitted: rezoning of 111 small lots has been
	NSW			approved				approved
	Werrington (Stage 4),	FY17/18	121/0	Awaiting	$270k	$100k	25%	DA to be submitted upon gazettal approval
	NSW			gazettal
	Riverlands, NSW	FY17/18	495/0	Progressing	~$500k	$120k	50%	Council have adopted the planning proposal (PP) for a
				rezoning				residential sub-division. Rezoning can be approved by
								council following public exhibition of PP. NSW
								gazettal of PP to follow final council approval.
								Development application can then be progressed.
	Settler’s Estate, NSW	FY18	152/0	Seeking	~$330k	$100k	50%	Development application anticipated soon for 152
				rezoning				blocks averaging 220m2. Abacus anticipated to fund
								lot preparation with additional $15m of equity
								required.

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Appendix K Consolidated funds under management

Funds	ADIF II	AHF	AWLF
Assets	11	3	1
Assets Under Management	$171.0m	$135.9m	N/A
WAV cap rate	8.66%	7.98%	N/A
Occupancy	77%	79%	N/A
Bank debt	$66m	$51m	N/A
WAV bank debt maturity	1.5 yrs	1.3 yrs	N/A
Covenant gearing1	40%	43%	N/A
NAV per unit2	65c	51c	Nil

1. Secured loans as a percentage of bank approved security

2. Assumes that the Abacus Working Capital Facilities are treated as equity on a fund wind up

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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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