Challenger Limited · ASX:CGF
Challenger — Challenger Kenedix Japan Trust — Investor Presentation (March 2008)
23 slides from Challenger's investor presentation, Mar 31, 2008
Slide 1: Challenger Kenedix Japan Trust Investor briefing
Challenger Kenedix Japan Trust (ASX: CKT) Investor briefing 31 March 2008 Brett McCarthy – CKT Fund Manager Taiji Yoshikawa – Kenedix CFO Akihiro Asano – Kenedix Head of Acquisitions
Slide 2: Important notice
Important notice Information contained in this publication is current as at 31 March 2008 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN 94 055 293 644) (AFSL 236887) (“Challenger”), as Responsible Entity of the Challenger Kenedix Japan Trust (“Trust”). This
Slide 3: CKT update
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Slide 4: CKT snapshot
CKT snapshot • Listed April 2007 (ASX: CKT) • Total assets $666 million1 • NTA $1.93 per unit1 • 19 properties valued at ¥59.7 billion1 ($652 million2) • 100% occupancy (by income) • Long weighted average specified lease term (by income) of 16.7 yrs1,3 • Well diversified by tenant type and location
Slide 5: CKT snapshot
CKT snapshot • Borrowings ¥31.0 billion1 ($338 million2), 92% hedged • Weighted average debt duration 4.4 years1 • No refinancing risk - 1st expiry April 2012 • Gearing 49% with forecast 54% on finalisation of additions to portfolio from 2nd instalment1 • Equity capital hedging policy up to 50% of n
Slide 6: Unique management platform
Unique management platform • Kenedix representatives: Taiji Yoshikawa and Akihiro Asano • Challenger Kenedix – a unique management platform – Alignment of interest between Challenger, Kenedix and CKT unitholders – Complementary skill set Kenedix: TSE listed, leading provider Challenger: of real esta
Slide 7: Kenedix overview
Kenedix overview
Slide 8: Kenedix overview
Kenedix overview • Kenedix is a leading provider of real estate advisory, asset and property and investment management services in Japan • Established in 1995 as Kennedy-Wilson Japan (a subsidiary of Kennedy-Wilson USA) • Listed on Tokyo Stock Exchange 1st Section – Listed since 2002 – Market cap ¥7
Slide 9: Kenedix overview (cont.)
Kenedix overview (cont.) • Kenedix has diversified AUM of over Growth in AUM ¥735 billion ($7.4 bn) (JP Y in billio n) – In FY2007, ¥257.2 billion ($2.6 bn) of gross 1,000 870.0 property acquisitions and ¥66.7 billion Net Increase per year 800 734.9 ($0.7 bn) of property sales to buyers outside 190.
Slide 10: Kenedix overview (cont.)
Kenedix overview (cont.) Development credentials Development track record (JPY in billion) 110 104.7 • Kenedix has a large development 100 program with a successful track record 90 – total developments (including retail) 80 completed during 2007 of ¥65.5 billion ($6.6 70 65.5 billion) 62.4 60 • Kene
Slide 11: Asset assessment process
Asset assessment process
Slide 12: Asset acquisition assessment process
Asset acquisition assessment process • Characterised by stringent legal, commercial and physical due diligence • CKT review includes independent consultant’s report – catchment demographic and total turnover analysis – catchment competition and market share analysis – tenant review and estimate of c
Slide 13: Japanese economy
Japanese economy
Slide 14: Japanese economy
Japanese economy Real GDP - percent change year-on-year (CY) 3.0 Economic environment 2.5 • 2007 actual GDP and private consumption 2.0 remained healthy. GDP in Q4 07 was 3.5% percent 1.5 annualised – ahead of expectations 1.0 • 2008 and 2009 GDP estimates down on 2007 0.5 • Private consumption expe
Slide 15: Japanese economy (cont.)
Japanese economy (cont.) CPI - percent change year-on-year (CY) 1.2 • CPI forecast to increase – off a low base 1.0 • Consumer confidence fallen since mid 2007 0.8 • Unemployment rate expected to remain low – 0.6 below 4% in CY08. Demand for labour remains percent 0.4 strong 0.2 • Private consumptio
Slide 16: Japanese economy – retail spending
Japanese economy – retail spending Retail sales performance Retail sales 140,000 • Overall FY07 retail sales were steady Retail Sales (JPY bn) 130,000 • Number and size of large-scale retail stores 120,000 increased nationwide in 2007 – up 2.9% in number and 3.9% in floor space 110,000 (Source: HIRO
Slide 17: Japanese retail real estate market (cont)
Japanese retail real estate market (cont) Retail land price index Retail land values (HoH%) 12% • Situation with retail land prices nationwide continues to improve, and 10% was relatively flat at HoH at September 8% 2007 6% • Despite a fall in Six Large City Areas in HY Sept 07, overall the recovery
Slide 18: Impact from Sub-prime crisis
Impact from Sub-prime crisis Lending attitude of financial J-REIT yield spread institutions to real estate companies 6% 35 30 Diffusion index of "Accommodative" minus "Severe" 5% 25 20 4% 15 3% 10 5 2% 0 Jun04 Dec04 Jun05 Dec05 Jun06 Dec06 Jun07 Dec07 Sep04 Sep05 Sep06 Sep07 Mar04 Mar05 Mar06 Mar07
Slide 19: Operating and regulatory environment
Operating and regulatory environment • Operating environment – Low risk, non-discretionary focus, neighbourhood shopping centres, high sales turnover • Regulatory environment – Japanese urban planning framework – changes have favourably impacted operating environment by reducing supply of shopping c
Slide 20: Summary
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Slide 21: Summary
Summary • CKT is well positioned to continue its objective of providing secure and sustainable income returns with potential for capital growth – Unique platform with Kenedix – Quality properties – Long-term leases to well-regarded tenants – Retail focus - non-discretionary goods to local consumers
Slide 22: CKT contacts
CKT contacts Brett McCarthy Fund Manager Tel: + 61 (0)2 9994 7219 Email: [email protected] Luke Keighery Investor Relations Tel: + 61 (0)2 9994 7633 Email: [email protected] 22
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Challenger Kenedix Japan Trust — Investor Presentation (March 2008) on 6ix