Propertylink Group Goldman Sachs Small & Mid Cap Conference 27 April 2017 Presented by Stuart Dawes Managing Director & CEO
Contents 1 2 3 4 Propertylink Overview Value Drivers Outlook Appendices 2
Propertylink Overview 163 Viking Drive Wacol 3
Propertylink today Propertylink is a leading ASX-listed property owner and manager, specialising in Australian industrial and commercial office investments with assets under management of $1.7 billion Assets under management $1.7b Balance sheet $687m 31 Industrial Assets Mandates & Funds $1b 9 Funds Propertylink targets assets the in core, core-plus and value-add sectors with a bias to Australia s east coast. The key focus is to generate stable and recurring rental income and capital growth potential from a quality portfolio of assets. 16 Industrial Assets 13 Office Assets 4
Our operating segments Property Portfolio Co-investments Investment Management Optimise portfolio, actively manage, improve returns Alignment with investors 9 external Funds, 29 assets, global investors c.$687m (1), 31 assets c.$40 invested in funds c.$1.0b AUM c.77% Group revenue (2) c.5% Group revenue (2) c.18% Group revenue (2) (1) Excludes $6.5m interest directly held in 73 Miller Street, North Sydney included in co-investments (2) FY2017 forecast revenue as per Product Disclosure Statement 5
A diverse portfolio of industrial assets Heavily exposed to east coast strong infill locations with limited land supply and strong demand A number of assets are also exposed to upside through medium/long term alternate use Asset type Asset quality Asset geography Logistics 31% Development 8% Prime 71% QLD 14% WA 4% NSW 48% Industrial 25% Business Park 18% Multi-Let Unit Estate 18% Active 7% Secondary 22% VIC 34% Statistics at 31 December 2016 adjusted for divested assets settled during 2H17 Diverse asset composition providing stable cash flow Predominantly prime asset base combined with assets that have good repositioning / capital recycling capacity 82% of assets are located in the strong Sydney and Melbourne markets 6
Strong tenant diversification across the portfolio 164 tenants in the property portfolio with no single tenant contributing more than 5% of total annual rental income Manufacturing 9% Tenant breakdown by industry Warehouse / Logistics 16% Retail 10% Other 3% Automotive 8% Health/Pharmaceutical/IT 20% Construction 15% Consumer Staple 21% Top ten tenants (by income) Walkinshaw Automotive Waco Kwikform Limited Virgin Active Australia Pty Ltd VIP Plastic Packaging Pty Ltd Pacific Brands Clothing Pty Ltd Cotton On Clothing Pty Ltd Unicharm Australasia P/L The Trust Company Sheldon & Hammond Pty Ltd (1) Tigers International Solutions 0% 1% 2% 3% 4% 5% Rent review composition 1% 20% 12% 37% 30% CPI 2.5-3% 3-3.5% 3.5-4% >4% Statistics at 31 December 2016 adjusted for divested assets settled during 2H17 Portfolio well diversified by industry group with largest group being 21% of the portfolio The top 10 tenants constitute 35% of the portfolio annual rental income with a WALE of 6.0 years 88% of all rent reviews in the next 12 months are fixed increases of 2.5% or more (1) Waco Kwikform Limited is at tenant at Pike Street, Rydalmere for which a contract for sale has been exchanged with settlement expected in June 2017 7
Propertylink Group funds under management c.$1.0bn AUM 9 external funds 29 assets 7.3% average co-investment Industrial / logistics Commercial office Diversified c.$371m AUM 4 funds and mandates 15 assets c.$484m AUM 4 funds 6 assets c.$148m AUM 1 fund 8 assets 55 Sky Rd, Tullamarine VIC 73 Miller St, North Sydney NSW 171-179 Queen St, Campbelltown NSW 71% of asset in funds and mandates are in the strong Sydney market 8
Strong global capital partners 9
Value Drivers 15 Talavera Road Macquarie Park 10
Propertylink value drivers Strong active management capability providing unique opportunities to drive value from real estate investment Active Asset Management Enhancing portfolio through active asset management delivered via a vertically integrated model by a strong and experienced inhouse team including acquisition, leasing, asset repositioning, targeted capital expenditure, development and divestment Focus on key strategic themes to drive medium to long term value Last mile logistics Urbanisation Aging population Focused on in-fill locations with easy access to CBD and key residential areas to facilitate final stage of e-commerce supply chain Long-term view to reposition existing commercial or industrial sites for alternate use, based on urbanisation trends and requirements Ongoing demand for medical-related facilities & services, occupying office & industrial space, providing treatment and care for increased aging population 11
Active asset management delivering value Acquisitions Leasing 205-231 Fairfield Road Yennora Acquired for PAIP II for $46.2m acquisition, 7.4% yield, 6.6 year WALE Artist impression of upgraded warehouse, 71-93 Whiteside Road Clayton 15 year lease starting 1 September 2017 26% of portfolio leasing completed since IPO with 81% tenant retention Development Asset Realisations Artist impression of new warehouse, 122 Newton Road Wetherill Park Construction of new facility (8,646 sqm) and refurbishment of existing facility (9,376 sqm) where a new 10 year lease has been secured Potential sale of 320 Pitt Street Sydney due to strong capital interest and the ability to deliver superior returns to institutional partners 12
$b Last mile logistics Propertylink has an established footprint in logistics real estate in infill locations We maintain a competitive advantage for continued opportunities given the requirements of e-commerce tenants for in-fill, last mile locations Total value of e-commerce in Australia Amazon s warehouse leasing mix in USA $30 First Mile & Regional Warehouses Last Mile Warehouses $25 $20 $15 100% 80% 60% $10 40% $5 20% $0 2012 2013 2014 2015 2016 Source: NAB Online Sales Index 0% Pre-2009 2010-13 2014-16 Source: Morgan Stanley Research Strong growth in the Australian e-commerce market is expected to continue Growing demand for last mile warehousing fuelled by the consumer s need for expedited delivery Amazon s entrance to the Australian market is expected to have a significant impact on logistics real estate in infill locations 13
Millions Urbanisation Significant population growth forecast across Australia s major capital cities driving urban renewal strategies to bring housing closer to jobs, public transport and social infrastructure Medium to long term alternative use opportunities for industrial real estate 40 35 30 25 20 15 10 5 0 Australian population projection (by State) 36.5 32.8 28.9 22.7 24.8 2012 2017 2027 2037 2047 NSW VIC QLD SA WA TAS NT ACT Source: ABS East coast bias in population growth NSW, Victoria and Queensland growing faster than other States For example in NSW the population mix is forecast to change from 59% in cities in 2012 to 65% in 2037 14
Age range Aging population Aging population driving a trend towards higher spending on healthcare as demands for medical services increases Strategic location of assets in proximity to developing and future medical infrastructure leveraging tenant demand for associated logistics services OECD global population pyramid % of total global population 100+ 95-99 90-94 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 Over 65 yrs 50-64 yrs 35-49 yrs 20-34 yrs 12%11%10%9%8%7%6%5%4%3%2%1%0%1%2%3%4%5%6%7%8%9%10%11%12% 10% 10% Male Female 1950 2015 2045 8% 16% 25% 14% 20% 22% continues Under 20 yrs 37% 24% to shrink 21% 19% 21% 20% 18% 18% 17% largest age group 10% 5% 0% 5% 10% 10% 5% 0% 5% 10% Source: United Nations, Grosvenor 100+ 95-99 90-94 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 15
Propertylink value proposition 1 2 3 4 One of the largest Australian-focussed, internally managed industrial & commercial real estate groups with integrated investment, asset and property management platforms Diversified, quality industrial & logistics balance sheet portfolio with opportunity to add further value through active asset management Established and rapidly growing investment and asset management platform with a track record of performance backed by leading global investors Attractive FY17 pro forma forecast distribution yield of 8.4% (1) with a conservative capital structure and strong growth prospects 5 Highly experienced management team and majority independent Board Propertylink aims to provide superior risk-adjusted returns through active asset management and by growing its investment and asset management business (1) FY17 pro forma forecast distribution yield has been calculated based on a payout ratio of 95% of pro forma forecast FY17 distributable earnings, excluding one-off items such as property revaluations and performance fees ($43.4m) and the PLG share price at 24 April 2017 ($0.815) 16
Outlook 9-10 John Morphett Place Erskine Park 17
Outlook The business is positioned well to continue strong property portfolio and investment management performance which is expected to deliver further value upside Enhance property portfolio Strong leasing results expected to continue driving further asset value growth New development at Wetherill Park provides both new core stock and value upside Further non-core assets sales once value optimised providing capital to continue investment into new assets for improvement in portfolio quality Grow investment management Strong pipeline of additional assets in due diligence for the continued growth in AUM Well positioned to add new investors to the investment management business Opportunity to deliver outsized returns and performance fees through asset sales Deliver financial targets FY17 guidance: Distributable Earnings per Security of 6.67 cents (1) Distribution per Security of 6.32 cents (1,2) Opportunity to further improve balance sheet position over the remainder of FY17 through active asset management driving asset values and above book value disposals (1) Pro-rata from the completion of the offer until 30 June 2017 (2) Includes the 2.7 cents interim distribution 18
Contact us Stuart Dawes Managing Director & CEO Carrie Barrack Investor Relations Manager T +612 9186 4720 E sdawes@propertylink.com.au T +612 9186 4747 E cbarrack@propertylink.com.au 19
Appendices 20
Property portfolio: direct property valuation movements (1) No. Property Address Value ($m) Value ($m) Cap Rate (%) Cap Rate (%) Movement (%) 30-Jun-16 31-Dec-16 30-Jun-16 31-Dec-16 Area (sqm) Occupancy (%) 1 15 Talavera Road, Macquarie Park NSW (2) 62.00 66.00 6.50% 7.25% 6.75% 12,579 100% 3.35 2 7-15 Gundah Road, Mount Kuring-Gai NSW (2) 52.25 54.95 4.80% 7.25% 7.00% 32,980 100% 3.78 3 16 Rodborough Road, Frenchs Forest, NSW 29.70 29.70 0.00% 7.00% 7.00% 8,410 100% 5.96 4 50-52 Airds Road, Minto NSW 27.20 27.20 0.00% 8.00% 8.00% 23,452 100% 4.05 5 122 Newton Road, Wetherill Park NSW 16.30 22.49 38.00% 7.00% 7.00% 9,614 100% 0.00 6 10-12 Pike Street, Rydalmere NSW 21.90 21.90 0.00% 8.50% 8.50% 20,022 100% 1.50 7 44 Mandarin Street, Villawood, NSW (2) 18.00 20.20 12.20% 9.75% 8.50% 20,294 100% 2.93 8 150-156 McCredie Road, Smithfield NSW 19.70 20.00 1.50% 8.50% 8.25% 19,765 100% 0.50 9 164-166 Newton Road, Wetherill Park NSW 17.30 17.40 0.60% 7.50% 7.25% 11,854 100% 1.59 10 4 Brunker Road, Chullora NSW 2190 11.00 11.00 0.00% 7.25% 7.25% 6,428 100% 2.14 11 13 Boundary Road, Northmead NSW 2152 10.50 10.40-1.00% 7.00% 7.00% 5,660 100% 4.27 12 22 Rodborough Road, Frenchs Forest, NSW 10.20 10.10-1.00% 7.50% 7.50% 4,035 100% 4.60 13 8 Sylvania Way, Lisarow NSW (2) 7.40 8.50 14.90% 10.00% 9.25% 9,933 100% 6.00 14 1 Orielton Road, Smeaton Grange NSW 8.15 8.15 0.00% 7.50% 7.50% 7,689 100% 3.60 15 163-183 Viking Drive, Wacol QLD 46.80 47.25 1.00% 6.50% 6.50% 25,869 100% 5.70 16 57-101 Balham Road, Archerfield QLD 27.70 27.60-0.40% 8.50% 8.50% 24,335 68% 2.48 17 848 Boundary Road, Richlands QLD 13.70 13.15-4.00% 8.25% 8.25% 9,818 60% 2.13 18 37-53 Eurora Street, Kingston QLD 7.20 6.80-5.60% 8.00% 8.00% 6,096 100% 1.58 19 Melbourne Markets, 315 Cooper Street Epping (2) 92.00 96.80 5.20% 7.50% 7.25% 74,968 100% 5.44 20 71-93 Whiteside Road & 74-84 Main Road, Clayton, VIC (2) 24.00 26.80 11.70% 8.50% 6.25% 28,195 100% 15.68 21 144-168 National Boulevard, Campbellfield VIC 22.75 22.75 0.00% 6.50% 6.50% 16,620 100% 8.01 22 18-24 Ricketts Road, Mount Waverley VIC 3149 16.90 17.10 1.20% 7.45% 7.50% 8,916 100% 2.03 23 1-5 Lake Drive, Dingley VIC 16.40 15.80-3.70% 7.50% 7.50% 17,431 100% 1.50 24 127-161 Cherry Lane, Laverton North, VIC 14.00 13.60-2.90% 10.00% 10.50% 25,639 100% 5.82 25 82 Taryn Drive, Epping VIC 12.25 12.15-0.80% 7.00% 7.00% 10,590 100% 1.33 26 25 Strezlecki Avenue, Sunshine West VIC 10.70 10.40-2.80% 7.50% 7.50% 10,467 100% 3.00 27 63-73 Woodlands Drive, Braeside VIC 9.85 10.00 1.50% 6.50% 6.50% 7,598 100% 7.40 28 571 Mount Derrimut Road, Derrimut VIC 7.65 7.90 3.30% 7.25% 7.25% 8,321 100% 4.92 29 7 Modal Crescent, Canning Vale WA (2) 16.40 14.25-13.10% 8.00% 8.00% 15,251 14% 0.00 30 39 McDowell Street, Welshpool WA (2) 8.00 8.60 7.50% 8.00% 7.75% 6,925 100% 3.16 31 17-19 Leadership Way, Wangara WA (2) 6.95 7.75 11.50% 8.25% 8.25% 5,415 100% 3.08 WALE (yrs by income) Total 664.85 686.69 3.30% 7.65% 7.38%(1) 495,169 94.99% 4.38 (1) Data at 31 December 2016 adjusted for divested assets settled during 2H17 (2) Excludes 122 Newton Road, Wetherill Park development project (3) Externally valued 21
Propertylink Group funds under management Investment Management c.$1.0bn AUM 9 External Funds 29 assets 7.3% average co-investment Industrial $371m AUM 11 assets PAIP II AUM: $215m 4.0% co-investment Investors: Townsend Group, Norinchukin Bank Ongoing fundraising SEDCO Mandate 1 asset AUM: $29m 7.5% co-investment Investor: SEDCO Capital Open ended mandate Confidential Mandate 1 asset AUM: $43m 10.0% co-investment Investor: Australian based alternative investment manager M&G Mandate 2 assets AUM: $85m Management only mandate Propertylink Enhanced Partnership (PEP) 8 assets AUM: $148m Investor: Goldman Sachs Investor Commercial and Industrial assets POP I POP II POP III The Gantry Investment Trust Commercial Office $484m AUM 1 asset Gross assets: $130m 5.0% co-investment Investor: Fosun 1 asset Gross assets: $245m 5.0% co-investment Investors: Goldman Sachs, Grosvenor 3 assets Gross assets: $95m 11.0% co-investment Investor: Grosvenor Ongoing fundraising 1 asset AUM: $14m Investors: Small wholesale investors 22
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS Disclaimer This presentation is for information purposes only. The presentation is subject to the conditions outlined below. Your receipt or viewing of the presentation evidences your acceptance of those conditions and that you agree to be bound by them, including any modifications to them notified to you. Important Notice and Disclaimer This document has been prepared by Propertylink (Holdings) Limited (ACN 092 684 798) ( PHL ) and Propertylink Investment Management Limited (ACN 136 865 417) (in its capacity as responsible entity for Propertylink Trust ARSN 613 032 750 and Propertylink Australian Industrial Partnership ARSN 613 032 812) ( PIML ) for the sole purpose of providing an overview of PHL, Propertylink Trust and Propertylink Australian Industrial Partnership (together Propertylink ) ( Purpose ). Statements in this presentation are made only as at February 2017 and the information in this presentation remains subject to change without notice. Confidentiality This presentation is provided on a confidential basis may not be copied or disclosed to any third party, in whole or in part, without Propertylink s prior written consent. If you are not the intended recipient of this document, please notify PHL immediately and destroy all copies of this document, whether held in electronic or printed form or otherwise. Not an offer or financial product advice This document is provided by PHL and PIML for general information purposes only, without taking into account any person s objectives, financial situation or needs, and does not purport to be complete. It is not a prospectus, product disclosure statement, pathfinder document for the purposes of section 734(9) of the Corporations Act 2001 (Cth) ( Corporations Act ) or other offer document under Australian law or the law of any other jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or elsewhere where such offer or sale is not permitted. Securities may not be offered, sold, resold, pledged, delivered, distributed or transferred, directly or indirectly, into or within the United States absent registration under the U.S. Securities Act of 1933, as amended (the Securities Act ), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The securities of Propertylink have not been and will not be registered under the Securities Act. This presentation should not be relied on by the recipient in considering the merits of any particular transaction. It is not an offer, invitation, solicitation, advice or recommendation to buy or sell or to refrain from buying or selling any securities or other investment product or entering into any other transaction. This presentation does not constitute an advertisement for an offer or proposed offer of securities. Neither this document nor anything in it will form the basis of any contract or commitment. Nothing in this document constitutes investment, legal, tax, accounting or other advice. The recipient should consider its own financial situation, objectives and needs and conduct its own independent investigation and assessment of the contents of this document, including obtaining investment, legal, tax, accounting and other such other advice as it considers necessary or appropriate. Financial data All dollar values are in Australian dollars ($ or A$). Any financial data in this presentation is unaudited. Past performance The operating and historical financial information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of PHL or PIML s views on Propertylink s future performance or condition. You should note that past performance of Propertylink is not and cannot be relied upon as an indicator of (and provides no guidance as to) future Propertylink performance. Future performance This document may contain forward-looking statements, forecasts, estimates and projections ( Forward Statements ). Forward Statements can be identified by the use of forward-looking terminology, including, without limitation, the terms believes, estimates, anticipates, expects, predicts, intends, plans, goals, targets, aims, outlook, guidance, forecasts, may, will, would, could or should or, in each case, their negative or other variations or comparable terminology. These Forward Statements include all matters that are not historical facts, including statements about Propertylink s growth strategy, statements about industry and regulatory trends and prospective financial information. Forward Statements, including projections, guidance on future operations, earnings and estimates (if any), are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains statements that are subject to risk factors associated with Propertylink s industry. Many factors, including developments and risks beyond Propertylink s control, could cause Propertylink s actual results to differ materially from those expressed or implied by these forward looking statements. Propertylink disclaims all responsibility and liability for these forward-looking statements (including, without limitation, liability for negligence). No member of Propertylink, its related bodies corporate and other affiliates, and its, officers, employees, consultants and agents ( Entities ) or any independent third party has reviewed the reasonableness of any Forward Statements. No member of Propertylink or the Entities represents, warrants or assures that any Forward Statements will be achieved or will prove to be correct. In particular, but without limitation, no representation, warranty or assurance (express or implied) is given that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. Actual operations, results, performance or achievement may vary materially from any projections and Forward Statements and the assumptions on which those statements are based. Any Forward Statements in this presentation speak only as of the date of this presentation. Subject to any continuing obligations under applicable law, Propertylink disclaims any obligation or undertaking to provide any updates or revisions to any Forward Statements in this presentation to reflect any change in expectations in relation to any Forward Statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation will under any circumstances create an implication that there has been no change in the affairs of Propertylink, or the Entities since the date of this presentation. No liability This document has been prepared on the basis of information available to PHL. PHL has not verified that information and has relied upon and assumed its accuracy and completeness. This document contains selected information and does not purport to contain all of the information that may be relevant to the Purpose. The recipient acknowledges that circumstances may change and this document may become outdated as a result. PHL accepts no obligation to update or correct this document. Except as required by law, Propertylink does not make any representation or warranty as to the accuracy, completeness, timeliness, fairness or reliability of this document. To the maximum extent permitted by law, no member of Propertylink accepts any liability (including without limitation, any liability arising from fault or negligence on the part of any of them) for any loss whatsoever arising from any use of this document or otherwise arising in connection with it. Acknowledgement and representation and warranty By reviewing the information contained in the presentation, you are deemed to have represented and agreed that (i) you understand the contents of this notice and that you agree to abide by its terms and conditions; and (ii) if you are in Australia, are a person to whom an offer of securities may be made without a disclosure document (as defined in the Corporations Act) on the basis that you are exempt from the disclosure requirements of Part 6D.2 and Part 7.9 in accordance with Sections 708(8) 708(11) or 761G(4) of the Corporations Act; and (iii) that (A) (x) you are located outside the United States, you are not, and are not acting for the account or benefit of, a U.S. person within the definition set out in Regulation S under the Securities Act and you are permitted under the laws of your jurisdiction to receive this presentation or (y) you are located in the United States and are a qualified institutional buyer (as defined in Rule 144A under the Securities Act) and a qualified purchaser (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940, as amended) and (B) you are not, and you are not acting on behalf of, a Benefit Plan Investor as defined in the Employee Retirement Income Security Act of 1974, as amended. and, in each case, acknowledge and agree that you will not keep this document after the presentation ends (and correspondingly, will not forward or deliver the presentation, electronically or otherwise, to any other person which would be a breach of this agreement and, potentially, the securities laws of certain jurisdictions, including those of the United States). If you are not a person that meets the foregoing descriptions, you may not read or consider this document or attend the presentation. Please return the presentation immediately to Propertylink and excuse yourself from this presentation. The distribution of this presentation outside Australia may be restricted by law. Persons who come into possession of this presentation who are not in Australia should seek professional advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. 23