Property for Industry Limited · NZX:PFI
Property for Industry — Shareholder Meeting (June 2013)
24 slides from Property for Industry's shareholder meeting presentation, Jun 24, 2013
Slide 1: Welcome to the PFI Special and Annual Meetings
BETTER TOGETHER PROPERTY FOR INDUSTRY WELCOME TO THE PFI SPECIAL AND ANNUAL MEETINGS P | 24 Fune 2013
Slide 2: Special Meeting Agenda
Special Meeting Agenda 1. Board addresses 2. Shareholder questions and answers 3. Resolutions: - Merger - Management agreement - Director remuneration 4. Close of meeting (Annual Meeting follows) 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 2
Slide 3: PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 3
24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 3
Slide 4: Introduction: Better together
Introduction Better together • PFI reviewing portfolio age and future earnings profile • DPF reviewing alternatives including listing • Strategic merger better than individual initiatives • Merger structured as a Scheme of Arrangement • Deloitte review of merger, PWC review of management agreement •
Slide 5: Merger ratio
Merger ratio 109% of adjusted NTA for PFI, 104% for DPF • Merger ratio reflects historic trading multiples, earnings profiles, portfolio characteristics, costs of alternatives, indexation and liquidity benefits • 5% tilt in merger ratio in favour of PFI • DPF share = 123.2180084 PFI shares • PFI sha
Slide 6: Rationale
Rationale Strong strategic rationale = attractive results • Two successful, complementary companies • Consistent with key strategic objectives of PFI • Compelling growth opportunity • Attractive point in the property cycle • Results in a larger and more diverse portfolio, enhanced portfolio characte
Slide 7: Strategy
Strategy Core strategic focus on industrial property • Manage vacancy and upcoming lease expiries • Acquisition of industrial property in the main centres • Disposal of selected assets, reinvest capital into industrial properties • Development of existing expansion land and repositioning of properti
Slide 8: Gearing
Gearing Gearing in line with market, interest rate reduced • $350m facility, average duration of 3 years • Gearing 38.6%, policy < 40%, covenant < 50% • Weighed average cost of funds reduced to ~5.6% 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 8
Slide 9: Management agreement
Management agreement Base management fees amended, drafting changes • Base management fees amended (next slide) • Gearing policy • Professional indemnity insurance • Accounting terminology • Redundant provisions / schedules • Statutory reference changes 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND
Slide 10: Management fees
Management fees Changes to management agreement are “fair” • Base fees: simple blend • Performance fee: existing PFI structure retained • Other services: no ability for manager to charge • PWC compared new fees arrangements to market: Management expense ratio below market average Lowest fees in the
Slide 11: Board
Board Board retained and expanded • Current PFI independent directors joined by two DPF directors, along with manager representation 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 11
Slide 12: Enhanced and diversified portfolio
Enhanced and diversified portfolio Reduced risks = reduced cash flow volatility • Properties: from 50 to 83 • Tenants: from 84 to 137 • Reduced concentration of top 10 tenants 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 12
Slide 13: Enhanced and diversified portfolio: more stable dividends
Enhanced and diversified portfolio Reduced cash flow volatility = more stable dividends • Smoothing of PFI and DPF’s lease expiry profiles • Peak of expiries reduced from 22.0% to 13.0% • Smoothed expiry profile = more stable dividends 24 JUNE 2013 PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 1
Slide 14: Financial and scale benefits
Financial and scale benefits Increases distributable profit and NTA per share • Distributable profit per share: • Forecast FY13: 7.04 cps (+6.7%) • Pro Forma FY13: 7.31 cps (+10.7%) • NTA per share: • Forecast FY13: $1.18 (+1.2%) • Pro Forma FY13: $1.19 (+2.2%) • 5th largest LPV (was 7th), 29th on N
Slide 15: Better together
Better together Merger of PFI and DPF: a platform for the future • Enhanced and diversified portfolio, improved competitive advantage • Increased distributable profit and NTA, improved index position • Board and management retained and expanded • Deloitte and PWC independent opinions support directo
Slide 16: PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 16
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Slide 17: PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 17
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Slide 18: Board recommendation: Vote Yes
Board recommendation Vote “Yes” • The directors of both PFI and DPF believe that the merger is compelling and is in the best interests of their shareholders • The directors of both PFI and DPF unanimously recommend that their respective shareholders vote to approve the merger • PFI and DPF directors
Slide 19: Proxies received
Proxies received Feedback to date has been supportive PROXY RESULTS TO DATE * 1: Merger 99.7% of votes 2: Management agreement 97.9% of votes 3: Director remuneration 93.8% of votes 24 JUNE 2013 * For and Discretionary votes, divided by the total of PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS
Slide 20: Resolution 1: Merger
Resolution 1: Merger Conditional upon Resolution 2 also being approved, it is resolved as a special resolution that: “The scheme of arrangement to merge Property For Industry Limited and Direct Property Fund Limited, as described in the scheme plan and other information contained in the Information
Slide 21: Resolution 2: Management agreement
Resolution 2: Management agreement Conditional upon Resolution 1 also being approved, it is resolved as an ordinary resolution that: “The amendment and restatement of the Management Agreement between Property For Industry Limited and PFIM Limited, in the manner described in the Information Memorandu
Slide 22: Resolution 3: Director remuneration
Resolution 3: Director remuneration Conditional on Resolutions 1 and 2 also being approved, it is resolved as an ordinary resolution that: “The total director remuneration is increased from $180,000 per annum to $280,000 per annum, being an increase of $100,000 per annum, with effect for the financi
Slide 23: PROPERTY FOR INDUSTRY SPECIAL AND ANNUAL MEETINGS 23
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Slide 24: Disclaimer
Disclaimer This information in this presentation is provided as at 24 June 2013 and includes information extracted from an Information Memorandum in relation to the proposed merger which is dated 22 May 2013. Please refer to the Information Memorandum for further detail. Terms used in this presentat
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