Dexus Convenience Retail REIT · ASX:DXC
Dexus Convenience Retail REIT — APN Property Group — Investor Presentation (November 2020)
48 slides from Dexus Convenience Retail REIT's investor presentation, November 2020
Slide 1: APN Global REIT Income Fund
A WORLD OF PROPERTY FOR INCOME APN GLOBAL REIT INCOME FUND NOVEMBER 2020
Slide 2: Contents
Contents ▪ A world of opportunity for income 3 ▪ Why we’re launching the APN Global REIT Income Fund 5 ▪ An income investor’s case for global commercial property 6 ▪ Access to high quality real estate with specialist managers 14 ▪ Transparent regulatory frameworks 15 ▪ Fund details 16 ▪ APN’s approa
Slide 3: A world of opportunity for income
APN Global REIT Income Fund – a world of opportunity for income 1 Global commercial property: reliable and growing source of income ▪ Contracted rental income streams: relatively low risk cash flow from high quality global real estate portfolios ▪ Global listed property total return 14.1% pa over la
Slide 4: A world of opportunity for income
APN Global REIT Income Fund – a world of opportunity for income 4 APN Global REIT Income Fund aims to provide regular income and lower than market volatility while maintaining the real value of underlying investments ▪ Implements an established investment philosophy built on “property for income” ▪
Slide 5: Why we're launching the Global REIT Income Fund now?
Why we’re launching the Global REIT Income Fund now? Current market conditions suit our active, income focused approach and present an attractive opportunity for long term investors • Currently a range of opportunities to invest into select global real estate sectors likely to benefit from accelerat
Slide 6: An income investor's case for global commercial property
AN INCOME INVESTOR’S CASE FOR GLOBAL COMMERCIAL PROPERTY 6
Slide 7: High relative annual income yield
High relative annual income yield as at 9th November Investment Yield Comparison 4.41% 4.08% 2.20% 2.05% 1.55% 0.78% 0.64% 0.10% RBA Cash Rate Big 4 Term AU 10-yr Gov. Global Corporate Global Equities EM Equities Global REITs Index APN Global REIT Deposit* Bond Bonds Income Fund# #Current running yi
Slide 8: Earnings yield spread to government bonds is elevated
Earnings yield spread to government bonds is elevated Current Spread by Market 10Yr. Time Series 7.00% 7.00% 6.00% 6.00% 5.00% 4.00% 5.00% 3.00% 4.00% 2.00% 1.00% 3.00% 0.00% 2.00% -1.00% 10Y Bond Earnings Yield Spread GREIT Earnings Yield Spread 10Y Average Source: UBS Research, APN Funds Managemen
Slide 9: Maintaining purchasing power
Maintaining purchasing power Income: commercial property leases are usually indexed annually to CPI or a fixed % Capital: asset replacement cost moves with materials and labour, anchoring value = Land and Buildings are real assets which can provide an inflation hedge Source: APN FM 9
Slide 10: Extensive global commercial property universe
Extensive global commercial property universe The global commercial property investible universe is US$30.3 trillion $US billion 9,600 8,900 8,800 Offices Medical Centres 1,200 1,200 600 Child Care Shopping Centres North Europe Asia MEA Latin ANZ America America Industrial Single-Family 4% 2% 4% Mul
Slide 11: Global REITs offer a deep and diverse opportunity set
Global REITs offer a deep and diverse opportunity set Australia Asia Global 547 188 Number of REITs 33 2,920,000 Market cap. 210,000 290,000 (A$ millions) CapitaGreen, Singapore 875,500 NO. of properties 41,000 50,000 (approx.) 68% 76% Concentration (market cap outside of 19% top 10 stocks) Prologis
Slide 12: Global REITs provide growing access to commercial property
Global REITs provide growing access to commercial property Over the last 10 years, growth of the REIT model has been strong and is likely to continue 1,600 Global REIT Equity Issuance US$bn 1,400 1,200 1,000 800 600 400 200 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Slide 13: Access to high quality real estate with specialist managers
Access to high quality real estate with specialist managers Digital Realty Trust Alexandria Real Estate Equities Crown Castle International Corp. Data Centre Mkt. Cap. $A57.0 Office / Life Sciences $A38.3b Mobile Tower $A95.4b North America Supermarket Income REIT Tritax Big Box REIT Gecina Non-disc
Slide 14: Access to high quality real estate with specialist managers
Access to high quality real estate with specialist managers Keppel DC REIT Ascendas REIT Mapletree Logistics Trust Data Centre $A4.7b Logistics/Business $A12.0b Logistics $A7.9b Asia Waypoint REIT Charter Hall Retail REIT Centuria Industrial REIT Fuel/Convenience $A2.1b Non-discretionary $A1.9b Indu
Slide 15: Transparent regulatory frameworks
Transparent regulatory frameworks REITs in: Payout requirement Gearing limits Development limits United States >90% of taxable income Nil Nil Canada 100% of net income Nil Prohibited France >95% tax-exempt profits Nil <20% gross book value United Kingdom >90% rental profits >1.25x interest cover Dev
Slide 16: Fund Details
Fund Details Fund Name APN Global REIT Income Fund Investment Manager APN Property Group Limited Responsible Entity APN Funds Management Limited (AFSL 237500) Fund Structure Open ended, unlisted unit trust, denominated in $A (unhedged) and established as a Managed Investment Scheme Investment Mandat
Slide 17: Portfolio Metrics
Fund attributes The Fund aims to provide a high relative income yield with lower relative volatility while preserving the real value of investment over the investment period North America Asia Portfolio* Portfolio Metrics* ~68% Singapore, Japan, USA, Canada ~18% Hong Kong Stocks 49 Region Oceania Eu
Slide 18: REIT Preferred Securities – Delivering attractive income
REIT Preferred Securities – Delivering attractive income REIT Preferred Securities offer investors a higher level of income return stability than common equity dividends, capital growth potential and with priority of claim Percentage that did not cut or suspend • Preferred Securities have a higher d
Slide 19: APN approach to Global REITs
APN APPROACH TO GLOBAL REITS 19
Slide 20: Established investment philosophy and approach
Established investment philosophy and approach PROPERTY FOR INCOME ▪ Property as investment in income stream Philosophy ▪ Long term leases provide protection ▪ Predictable and sustainable growth in income streams Bottom up style – based on fundamental research ▪ Hands on approach including asset lev
Slide 21: What we look for in a REIT
What we look for in a REIT Distribution focus Growth for its own sake Conservative balance sheets Over-leveraged Diversified assets Highly concentrated Rental earnings Operating earnings Defensive with upside potential Fixed income ex-growth 21
Slide 22: Investment Process Manages for Lower Risk
Investment Process Manages for Lower Risk Property Universe Allowable Investments (i.e. excludes developers, real estate Target Market Screening companies) 1 Economic / Macro / Total Global REIT universe ~500+ Governance 2 Liquidity & Market Cap Screen Research and stock selection 3 Income / distrib
Slide 23: Investment Insights – Global REITs
Investment Insights – Global REITs Industrial Logistics Properties Trust Owner of industrial and logistics properties located North across the U.S. mainland and Hawaii. What we like: America ▪ High quality portfolio including “built-to-suit” assets fit for tenant use and with a low average age ▪ Clo
Slide 24: Investment Insights – Global REITs
Investment Insights – Global REITs Keppel DC REIT Owner of data centres located in ten cities within eight countries across the Asia Pacific and Europe regions. Asia What we like: ▪ Specialised portfolio exposed to growing global trends and demand in data storage ▪ Alignment to established sponsor w
Slide 25: Investment Insights – REIT Preferred Securities
Investment Insights – REIT Preferred Securities UMH Properties Series D Preferred securities issued by UMH US Equity. North What we like: ▪ UMH US Equity is the only US MH REIT preferred America securities issuance ▪ Trades at an attractive level relative to par value, offers a premium yield to comm
Slide 26: High quality, defensive focus on accelerating structural trends
High quality, defensive focus on accelerating structural trends • Global e-commerce growth Industrial REITs • Supply chain resilience • Improved position in capital stack REIT Preferred • Asset, earnings coverage Securities • Management track record • Non-discretionary, grocery Retail REITs • Fuel b
Slide 27: The APN Global REIT Income Fund will be un-hedged
The APN Global REIT Income Fund will be un-hedged ▪ Lower associated costs ▪ Better diversification and lower volatility from multiple currency exposures ▪ Offers true exposure to respective local economies and returns ▪ Avoid liquidity risk hedging contracts ▪ Our focus is on generating long term s
Slide 28: Proven track record of delivering strong, regular income and capital growth
PROVEN TRACK RECORD OF DELIVERING STRONG, REGULAR INCOME AND CAPITAL GROWTH 28
Slide 29: APN Property Group
APN Property Group Specialist commercial real estate Listed on the ASX Established 1996 $2.7b (code: ‘APD’) Funds under investment manager management 12 50 staff Capital light, co-investment ‘Property for income’ investment philosophy Funds Melbourne based model As at 30 June 2020 Past performance i
Slide 30: In-house Experience and Capability in Global Property Securities
In-house Experience and Capability in Global Property Securities Europe and North America Asia Australia ▪ Regional Adviser David Kruth (30yrs exp.) ▪ Since 2011 ▪ Since 1998 ▪ Same income focused investment approach ▪ APN Asian REIT Fund (est 2011), total ▪ APN AREIT Fund (est 2009), total return ▪
Slide 31: APN Global REIT Fund - Leading research house rating
APN Global REIT Fund - Leading research house rating ““The Fund’s focus on relatively high income with lower volatility, combined with an active management approach and emphasis on property fundamentals underlies the Fund’s investment philosophy”. (SQM Research, October 2020) Further information reg
Slide 32: Defensive, diversified and income focused
Defensive, diversified and income focused Current running yield ▪ Income focused 4.39 As at 30 October 2020 % pa 1 ▪ Monthly distributions ▪ Lower than market volatility2 ▪ SQM Research ‘Superior’ 4 Star rating3 1. As at 30 October 2020. Current running yield is calculated daily by dividing the annu
Slide 33: APN Global REIT Income Fund: a whole world of property for income
APN GLOBAL REIT INCOME FUND: A WHOLE WORLD OF PROPERTY FOR INCOME 33
Slide 34: Key contacts
Key contacts Investment management Advisers Investors Mark Mazzarella CFA Simone Newman Investor Services Portfolio Manager, Real Estate Head of Distribution and Marketing Securities [email protected] 1800 996 456 [email protected] 0416 166033 [email protected] 03 8656 1000 8:30a
Slide 35: Appendices
APPENDICES | Property Group
Slide 36: Covid-19 and Global Real Estate
Covid-19 and Global Real Estate ▪ Societies globally have been progressively subjected to varying degrees of restrictions on physical movement and Realities of interaction in response to the COVID-19 health crisis Lockdown ▪ Within weeks populations across both developed and emerging markets were fa
Slide 37: Market outlook – North America
Market outlook – North America ▪ COVID-19 is forecast to see a significant decline in real GDP growth from the ~2.6% averaged pace achieved over 2018- 19 to -8.0% through 2020, before rebounding ~4.5% in 2021 Economic ▪ Existing macro-political risks concerning the imposition of trade restrictions a
Slide 38: Market outlook – Europe / UK
Market outlook – Europe / UK ▪ Due to COVID-19 Eurozone real GDP growth is anticipated to decline by -10.2% through 2020 before rebounding by ~6.0% into 2021, illustrating the severe impact on this region Economic ▪ Eurozone inflation is likely to remain low as a widening output gap and labour marke
Slide 39: Market outlook - Asia
Market outlook - Asia ▪ BOJ expanded monetary policy in response to the Covid pandemic, including increasing their buying limits of ETFs and JREITs. Substantial economic stimulus in place, including specific package to stimulate domestic travel. ▪ As Covid-19 starts to put the brakes on global growt
Slide 40: Market outlook – Australia
Market outlook – Australia ▪ Against a backdrop of COVID-19 the Federal Government anticipate real GDP to contract by ~3.75% in 2020 before rebounding to growth of ~2.50% in 2021 ▪ Although Australia has outperformed most advanced economies on health and economic outcomes, the virus has seen Economi
Slide 41: REIT Preferred Securities
REIT Preferred Securities ▪ Securities that are generally considered fixed income but which exhibit equity-like characteristics, including potential for capital growth. ▪ Ranking in the Capital Structure: Preferred securities rank lower than senior debt and higher than common equity. ▪ Perpetual and
Slide 42: Boards and Management team
Boards and Management team Experienced real estate team, Independent Boards Board of Directors – APN Property Group Limited Independent Responsible Entity – APN Funds Management Limited Chris Aylward ▪ 30+ years experience in property and construction Geoff ▪ Chairman since April 2012 and a Director
Slide 43: Investment team – Real Estate Securities
Investment team – Real Estate Securities APN Board and Executive Team Independent Responsible Entity Board Real Estate Securities Investment Team Portfolio Management Global REITs Pete Morrissey Corrine Ng Mark Mazzarella, CFA David Kruth, CFA CEO RES Portfolio Manager Portfolio Manager Regional Adv
Slide 44: Investment team – Real Estate Securities
Investment team – Real Estate Securities Pete Morrissey Corrine Ng Chief Executive Officer, Real Estate Securities Portfolio Manager, Real Estate Securities Pete joined APN in 2006 and is responsible for the Corrine joined APN Property Group in February management of APN’s suite of real estate secur
Slide 45: Investment team – Real Estate Securities
Investment team – Real Estate Securities Mark Mazzarella CFA David Kruth, CFA Portfolio Manager, Real Estate Securities Regional Adviser, Real Estate Securities Mark joined APN in June 2014 and is responsible for David joined APN in 2019 as Regional Adviser and has Australian and Global REIT analysi
Slide 46: Investment team – Real Estate Securities
Investment team – Real Estate Securities Matthew Coleman Steven Tjia Senior Investment Analyst, Real Estate Securities Investment Analyst, Real Estate Securities Matthew joined APN in 2016 is responsible for Steven joined APN in 2019 and is responsible for the Australian and Asian REIT analysis, mar
Slide 47: Investment team – Real Estate Securities
Investment team – Real Estate Securities Erik Borean Investment Analyst, Real Estate Securities Erik joined the Real Estate Securities team at APN on a part-time basis in 2019 and has recently been appointed as a full-time Investment Analyst. He is responsible for assisting with market and securitie
Slide 48: Disclaimer
Disclaimer This presentation has been prepared by APN Property Group (ASX:APD) comprising APN Property Group Limited (ACN 109 846 068) and APN RE Limited (ACN 627 612 202, AFSL No. 510685) as responsible entity for APD Trust (ARSN 629 330 007) (APN) and APN Funds Management Limited (APNFM) (ACN 080
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