APN ASIAN REIT FUND: AN UNDISCOVERED WORLD OF OPPORTUNITY May 2018 - - PowerPoint PPT Presentation

May 2018

APN ASIAN REIT FUND:

AN UNDISCOVERED WORLD OF OPPORTUNITY

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APN Property Group

A specialist Asia Pacific real estate investment manager since 1996

…with an income focused, lower risk philosophy

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Why you should not ignore the world’s fastest growing commercial property market 3 things to remember…

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How Asian listed real estate can provide attractive diversification benefits APN’s record of delivering strong, regular income and growth

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An overview of the APN Asian REIT Fund…

▪ Institutional investment grade Asian commercial property (all listed on major Asian stock markets) ▪ Income focus: monthly distributions – currently 6.13% pa1 ▪ Attractive total return: 14.02% pa2 since inception3 ▪ Diversification

1. As at 30 April 2018. Current running yield is calculated daily by dividing the annualised distribution rate by the latest entry unit price. Distributions may include a capital gains component. Distributions are not guaranteed and past performance is not an indicator of future returns. 2. As at 30 April 2018. Returns shown are net of fees and expenses and are annualised for periods greater than one year. Assumes distributions are reinvested. Investors’ tax rates are not taken into account when calculating returns. Past performance is not an indicator of future performance. 3. Inception date 19 July 2011

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Asian commercial property: a compelling story…

The rise and rise of a globally relevant asset class can no longer be ignored ▪ Over 20 times Australia’s middle class population by 2020 (400 million people: Nielson) ▪ Rising wealth levels akin to the Industrial revolution (intergenerational change)

There are more people living inside this circle than outside of it

Source: IMF

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The growth engine – GDP and middle class

Source: World Data Lab

▪ 87% of the next billion middle class entrants will be Asians ▪ Asia is at the forefront of global wealth expansion with positive implications for real estate

0% 1% 2% 3% 4% 5% 6% Asia Pacific North America Eurozone G-20

Regional GDP Forecasts

2018 2019 2020

Source: Bloomberg

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Source: Bloomberg 2018

2001 2018

Asian REITs – a growing piece of the pie

Australia Asia

66% 34% 14% 86%

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39% 29% 21% 1.5% 8%

APN Asian REIT Fund

Exposure to key gateway cities in Asia

Source: Savills 2017 As at 30 Apr 2018

APN Asian REIT Fund – where are we invested?

Japan Singapore Hong Kong/ China Malaysia Other

$- $50 $100 $150 $200 $250 $300

Prime Office Rent ($USD per square metre)

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Asian REITs own properties equal to the world’s best

VivoCity Westfield Sydney Size (sqm) 97,286 165,965 Shopper Traffic (pa) 55.8 Million 45.5 Million Sales (pa) A$951 Million A$1,184 Million Sales ($ per sqm pa) $9,775 $7,134 Cap rate 4.75% 4.12% Latest valuation (AUD psm) 30,881 27,794 Occupancy 99.8% 99.5%

Vivocity (Mapletree Commercial REIT, Singapore) vs Westfield Sydney (Scentre Group, Sydney)

Source: Company Filings, 2018 year

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Governance: world leading regulatory regimes

More recently developed REIT legislation has adopted modern, market-leading regulatory regime ▪ Restrictions on gearing ▪ Restrictions on development activities ▪ Restrictions on funds management activities – focus on ‘pure’ rent collection

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3 things to remember…

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APN’s record of delivering strong, regular income and growth Why you should not ignore the world’s fastest growing commercial property market

How Asian listed real estate can provide attractive diversification benefits

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Diversification: Asia has deeper pools of assets and capital

Number of stocks Number of properties (approx) Market capitalisation (A$ Billions) Market concentration – market cap outside top 10 stocks 2500 6000 120 287 14% 68% 31 181 Australia Asia

Sources: ASX300 AREIT Index, Bloomberg Asian REIT Index both at April 2018

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0.41 0.22 0.36 0.08 0.47 (0.57) (0.80) (0.60) (0.40) (0.20) 0.00 0.20 0.40 0.60 Global REITs Global Equities Asian Equities Australia Equities Australian REITs Australia Govt Bond

…particularly versus Aussie equities which investors are commonly overweight

Asian REITs vs other asset classes – over 5 years

Source: Bloomberg, to Apr 30 2018

Asian REITs offer low return correlations…

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8.95% 9.92% 12.05% 12.14% 12.32% 0% 2% 4% 6% 8% 10% 12% 14%

APN Asian REIT Fund Asian REIT Index Global REITs Australia Equities Australian REITs

Lower volatility than other asset classes

Standard deviation by asset classes – 5 years to 30 Apr 2018

Source: Bloomberg, to 30 April 2018

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Portfolio focussed on highest quality REITs across the region

We construct a benchmark agnostic, concentrated portfolio, based on the view that listed property securities will perform in line with their underlying property market over a market cycle We look for:

• Well located and established properties
• Stable rental profiles back by leases to credit quality tenants
• Management teams that have displayed a history of maximising value of their portfolios

Our largest holdings:

Market Cap Name ($B AUD) Country Sector % of Fund Ascendas REIT 7.9 Singapore Industrial 5.10% Link REIT 24.2 Hong Kong Retail 4.75% GLP J-REIT 4.8 Japan Industrial 4.46% Japan Retail Fund Investment Corporation 6.5 Japan Retail 4.19% Mapletree Greater China Commercial Trust 3.2 Hong Kong / China Office / Retail 4.00% Keppel DC REIT 1.6 Singapore Data Centres 3.70% Mapletree Commercial Trust 4.6 Singapore Retail 3.53% Mcubs Midcity Investment Corporation 1.6 Japan Office 3.53% Capitaland Commercial Trust 6.5 Singapore Office 3.37% Frasers Centrepoint Trust 2.0 Singapore Retail 3.34% Mapletree Logistics Trust 3.8 Singapore Logistics 3.28%

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Diversification across property types

Source: Bloomberg, to March 31 2018

Retail Office Industrial Residential Other Hotel

Asia: Sector Exposure

Retail Office Industrial Other

Australia: Sector Exposure

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INVESTMENT CASE STUDY

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▪ Core overweight position in the Asian REIT Fund ▪ Portfolio includes largest shopping mall in Singapore (~1mil sqft NLA) Vivo City. Also owns 4 other commercial properties ▪ Another major asset is MBC I, one of the largest integrated office and business park complexes in Singapore with Grade A office spec (1.7mil sqft NLA) ▪ Portfolio vacancy rate 0.5%1 ▪ Dividend yield 5.4%2. 5 year DPU growth – 13.1% ▪ Total return over 5 years2 – 14.9% p.a vs Index 9.5% p.a ($A)

Source: Bloomberg, company filings 1. As of 31 Mar 2018 2. As of 31 Mar 2018

Investment case study : Mapletree Commercial Trust

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3 things to remember…

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APN’s record of delivering strong, regular income and growth

Why you should not ignore the world’s fastest growing commercial property market How Asian listed real estate can provide attractive diversification benefits

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APN Asian REIT Fund

Asian REIT Index APN AREIT Fund Australian REIT Index Australian Equities

8.50% 8.70% 8.90% 9.10% 9.30% 9.50% 9.70% 9.90% 10.10% 10.30% 10.50% 8.50% 9.00% 9.50% 10.00% 10.50% 11.00% 11.50% 12.00% 12.50% 13.00%

Source: Bloomberg. Past performance is not necessarily an indicator of future performance

Return

Strong risk adjusted returns

5 years annualised to 30 April 2018

Risk

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Asian REITs – income and diversification

1.Current running yield (annualised) divided by the latest entry unit price as at 30 Apr 2018. Distributions may include a capital gains component. 2.Inception Date 19 Jul 2011. As at 30 Apr 2018 net of management fees and expenses. Past performance is not necessarily an indicator of future performance. Assumes distributions are reinvested. Investors’ tax rates are not taken into account when calculating returns.

▪ 6.13% p.a. current distribution yield1 ▪ Paid monthly

Income

▪ 14.02% p.a. total return since inception2 ▪ Ahead of index

Performance Growth

▪ Inflation proofing ▪ Strong regional GDP growth

Diversification

▪ 180 REITs ▪ Relatively lower volatility

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Disclaimer

This investor presentation (Presentation) has been prepared by APN Property Group Limited (ACN 109 846 068) (APN). Summary information This Presentation contains summary information about APN and its funds. The information in this Presentation is of general background and does not purport to summarise all information that an investor should consider when making an investment decision. It should be read in conjunction with other information on APN’s website www.apngroup.com.au and the relevant Information Memorandum. Not all assets depicted are necessarily owned by APN or any entity managed by APN. Figures may not sum due to rounding. Currencies are generally presented in Australian dollars and times are references to Melbourne times except where the context requires otherwise. Securities Funds distributions may include a capital gains component. Not investment advice This Presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire entitlements or shares. This Presentation is not a prospectus or a product disclosure statement under the Corporations Act 2001 (Cth) (Corporations Act) nor is it an offering document under any other law, and has not been lodged with ASIC. The information in this Presentation has been prepared without taking into account the investment objectives, financial circumstances, taxation position or particular needs of investors. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate legal, financial and taxation advice appropriate to their jurisdiction. Disclaimer No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation. To the maximum extent permitted by law, none

• f APN nor any of its related bodies corporate, shareholders or respective directors, officers, employees, agents or advisors (collectively, Related Parties), nor any other person accepts any liability, including, without limitation, any liability

arising out of fault or negligence for any loss arising from the use of information contained in this Presentation. To the fullest extent permitted by law, APN and its Related Parties: a.do not accept any responsibility for any interpretation that any recipient or any other person may place on this Presentation or for any opinion or conclusion that any recipient or any other person may form as a result of examining the information contained in this Presentation; and b.do not accept any liability, whether direct or indirect or consequential, for any loss, damage, cost, expense, outgoing, interest, loss of profits or loss of any kind (Losses) suffered or incurred by any person (whether foreseeable or not) as a result of or by reason of or in connection with the provision or use of information contained (or not contained) in this Presentation, or of any recipient or its representatives or advisers acting on or relying on any information provided or referred to in or omitted from this Presentation or any other written or oral opinions, whether the Losses arise in connection with any negligence, default or lack of care on the part of APN and its Related Parties or any other cause. Any recipient of this presentation acknowledges and agrees that: a.they will rely entirely upon their own assessment and advice in relation to the business, assets, financial position and affairs of APN, including conducting independent inquiries, due diligence or analysis with appropriate legal, financial, taxation and other advice, as required; and b.any opinions expressed in this presentation are based on the knowledge and approach of the persons forming the opinion at the date that the opinion was formed and may have ceased or may in the future cease to be appropriate in the light

• f subsequent knowledge or attitudes.

Forward looking statements This Presentation contains “forward‐looking” statements. Forward looking words such as, “expect”, “anticipate”, “should”, “could”, “may”, “predict”, “plan”, “will”, “believe”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward‐looking statements. Forward‐looking statements, opinions and estimates provided in this Presentation are based on estimates and assumptions related to future business, economic, market, political, social and other conditions that, while considered reasonable by APN, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward‐looking statements. Such factors include, but are not limited to: operating and development risks, economic risks and a number of other risks and also include unanticipated and unusual events, many of which are beyond APN's ability to control or predict. The forward‐looking statements only speak as at the date of this Presentation and, other than as required by laws, APN and its Related Parties disclaim any duty to update forward looking statements to reflect new developments. To the maximum extent permitted by applicable laws, APN and its Related Parties make no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no responsibility and assume no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information, statement or opinion contained in this Presentation.