2017 HA HALF LF YEA YEAR IN INVES VESTOR OR PRE PRESEN SENTATION TION AVENTUS RETAIL PROPERTY FUND 15 FEBRUARY 2017
Contents Jindalee Home, QLD Belrose Super Centre, NSW 03 Strategy 25 Outlook 04 Key Achievements 28 Appendix 1 – Portfolio Overview 06 Portfolio Highlights 31 Appendix 2 – Industry Dynamics 13 Financial Results 18 Acquisitions Speakers 20 Development Darren Holland, CEO Lawrence Wong, CFO
Delivering on Strategy The Fund is implementing its 4 key growth initiatives to drive long term value creation and sustainable earnings growth Potential Benefits from Portfolio Development Consolidation Zoning and Management Pipeline Opportunities Planning Reforms Optimise and broaden the Identify and deliver value Selective acquisitions to Take advantage of regulatory Initiative enhance the Fund’s portfolio tenancy mix through enhancing development reforms in zoning and planning proactive leasing, leveraging opportunities within the and entrench the Fund as the regimes for the existing portfolio retailer relationships and existing portfolio largest pure-play large format retail (“LFR”) landlord in delivering operational excellence Australia The portfolio continues to Completed the expansion of Acquired adjacent 55,840 sqm Actively participate and track perform well with high Belrose Super Centre, development site at Tuggerah changes to state zoning reforms Outcome occupancy, positive leasing commenced repositioning of Super Centre further through the Large Format Retail Association (“LFRA”); introduced spreads and low incentives the former Bunnings consolidating control of the retail from a diverse mix of tenancy at Sunshine Coast precinct; maintained disciplined new retailers and service providers national retailers Home and gained 4 approach to potential into the portfolio and commenced approvals to expand the acquisitions master planning of 2 centres with development pipeline flexible zoning Aventus Retail Property Fund | Half Year Results | 31 December 2016 3
Key Achievements SINGLE SECTOR FOCUS AND SUSTAINABLE INCOME GROWTH Fund Highlights Financial Management Portfolio Performance $34.6m 35.0% gearing 98.0% occupancy Funds From Operations (FFO) 1 ⇧ within target range of 30% - 40% 30 bps from 97.7% 4,7 $2.10 NTA 8.8 cents 5% FY17 lease expiries per unit FFO per unit 1,2 ⇩ from 12% 4,7 on track with guidance 3 ⇧ 4% from $2.02 per unit 4 7.8 cents 11.2% $25.1m ⇧ DPU on 90% payout ratio index outperformance 5 net valuation 6 1. For the 6 months ended 31 Dec 2016 2. Based on a weighted average number of units of 395.0m 3. Full year FY17 earnings guidance is FFO per unit of 17.5 – 18.0 cents as at 30 Jun 2016 4. As at 30 Jun 2016 5. Total unitholder return for the 6 months ended 31 Dec 2016 outperformance to S&P / ASX 200 A-REIT accumulation index on an annualised basis; Source: Bloomberg 6. Movement includes adjustments relating to straight-lining of rental income and amortisation of rental guarantees 7. By GLA Aventus Retail Property Fund | Half Year Results | 31 December 2016 4
1. PORTFOLIO HIGHLIGHTS Sunshine Coast Home, QLD
Portfolio Highlights FOCUSED ON OPERATIONAL EXCELLENCE AND INCOME OPPORTUNITIES 34% NON- Increased land holding 4.3 year WALE HOUSEHOLD USES to c. 1.2m sqm ⇧ from 4.1 years 1,4 ⇧ from 33% 1,3 ⇧ from 1.1m sqm 1 84% 85% OF PORTFOLIO VALUE NATIONAL RETAILERS 3 ALL LEASES OF $1.3bn have annual fixed or CPI increases ⇧ 3% 1 ⇧ from 80% 1,4 7.40% PORTFOLIO CAP RATE 67 LEASES NEGOTIATED OVER GLA of 55,000 SQM 2 ⇩ from 7.53% 1 with low incentives and positive leasing spreads 1. As at 30 Jun 2016 2. For the half year ended 31 Dec 2016 3. By GLA 4. By gross rent Aventus Retail Property Fund | Half Year Results | 31 December 2016 6
Diversified National and Publicly Listed Retailers National retailers remained steady at 84% of the total portfolio by GLA and the majority of retailers are publicly listed • PUBLIC % OF RANK RETAIL GROUP STORES 1 BRANDS COMPANY INCOME 1 Freedom, Snooze, Best & Less, Harris Scarfe, Fantastic 1 Steinhoff Asia Pacific 29 ( ⇧ ) 2 11% ( ⇧ ) 2 Furniture, Plush and Original Mattress Factory 2 Wesfarmers 12 ( ⇩ ). 8% ( ⇩ ). Bunnings, Officeworks, Coles and 1st Choice Liquor 3 JB Hi-Fi 16 ( ⇧ ) 2 JB Hi-Fi and The Good Guys 6% ( ⇧ ) 2 4 Super Retail Group 20 ( ⇩ ). 5% ( ⇩ ). Supercheap Auto, BCF, Amart Sports and Rebel 5 Harvey Norman 5 (-). 5% (-). Harvey Norman and Domayne 6 Spotlight Group 9 (-). 4% (-). Spotlight and Anaconda 7 Woolworths 4 (-). 3% (-). Masters, Dan Murphy’s, BWS and Woolworths Caltex 8 Beacon Lighting 12 (-). Beacon Lighting 2% (-). 9 Nick Scali 5 (-). 2% (-). Nick Scali and Sofas 2 Go 10 Adairs Retail Group 11 (-). 2% (-). Adairs and Adairs Kids TOTAL 123 . 48% . 1. Change represents movement since 30 Jun 2016 2. Increase due to Steinhoff acquisition of Fantastic Holdings and JB Hi-Fi acquisition of The Good Guys Aventus Retail Property Fund | Half Year Results | 31 December 2016 7
Expanding the Non-Household Category The largest tenant category, non-household goods and services retailers, improve centre performance by driving greater • weekday traffic, increasing visit frequency and lengthening customer visits and linger time Tenants in the non-household category include: Tenancy Mix: AVN vs. Industry (by GLA) 1,2 AVN Industry comprised of 34% 49 31 27 19 30% 30% 26% Automotive Cafés & Leisure & Fitness & 20% Restaurants Sports Stores Medical Stores 16 15 10 10 13% 11% 10% 8% 7% 5% 2% 2% 2% Offices and Supermarkets, Pet Showrooms Baby Supplies and Liquor and Government Children’s Play Centres Non-Household Furniture Hardware Homewares Electrical Coverings Vacant Convenience Stores Service Providers Goods & Garden & Services 1. As at 31 Dec 2016, non-household goods includes pet supplies, baby supplies, sporting, camping and leisure, cafes, restaurants, supermarkets, liquor, fitness centres, medical centres, offices, chemists and automotive 2. Source: Deep End Services (centres larger than 10,000 sqm) as at 30 Jun 2016 Aventus Retail Property Fund | Half Year Results | 31 December 2016 8
Consistently High Occupancy PORTFOLIO VACANCY HAS BEEN CONSISTENTLY LOWER THAN THE INDUSTRY AVERAGE 1 8.1% 7.2% 6.5% 6.1% High occupancy 5.8% 5.6% 5.0% Low incentives 5.8% 3.8% Positive leasing spreads 3.1% 2.9% 2.6% 2.3% 2.0% 2.0% 1.6% 1.2% Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Dec-16 2 AVN Portfolio National Average Number of LFR centres comprising the AVN Portfolio 4 6 7 9 11 12 14 20 20 1. Source: Deep End Services (centres larger than 10,000 sqm); By GLA 2. Historical metrics exclude centres prior to acquisition by the Fund Aventus Retail Property Fund | Half Year Results | 31 December 2016 9
Staggered Lease Expiry Profile and Structured Rent Increases Proactive leasing has resulted in 67 leases being negotiated in 1H17 resulting in FY17 expiries being reduced from 12% to 5% • Increased the number of leases with fixed increases as opposed to CPI reviews • 85% OF LEASES HAVE SIGNIFICANT PROGRESS ON FY17 EXPIRIES 1 ANNUAL FIXED OR CPI INCREASES 2 JUN 15: 18% 17% DEC 15: 15% 15% 15% (reduced from 20%) 14% MAR 16: 13% 12% 12% JUN 16: 11% 10% 10% 5% 57% 5% 28% DEC 16: (up from (reduced 50%) from 30%) 3% 2% Fixed (Predominantly 3% - 5%) CPI Market/Expiry Vacant FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Beyond 1. Holdover tenancies as at 31 Dec 2016 treated as FY17 expiries 2. By gross rent Aventus Retail Property Fund | Half Year Results | 31 December 2016 10
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