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

APN ASIAN REIT FUND: AN UNDISCOVERED WORLD OF OPPORTUNITY May 2018

APN Property Group A specialist Asia Pacific real estate investment manager since 1996 …with an income focused, lower risk philosophy 2

3 things to remember… Why you should not ignore the world’s fastest growing 1 commercial property market 2 How Asian listed real estate can provide attractive diversification benefits 3 APN’s record of delivering strong, regular income and growth 3

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% pa 1 ▪ Attractive total return: 14.02% pa 2 since inception 3 ▪ 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 di stributions 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 4

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 5

The growth engine – GDP and middle class Regional GDP Forecasts 6% 5% 2018 2019 2020 4% 3% 2% 1% 0% Asia Pacific North America Eurozone G-20 Source: World Data Lab Source: Bloomberg ▪ 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 6

Asian REITs – a growing piece of the pie 2001 2018 14% 34% 66% 86% Asia Australia Source: Bloomberg 2018 7

APN Asian REIT Fund – where are we invested? Prime Office Rent ($USD per square metre) APN Asian REIT Fund $300 $250 1.5% 8% $200 Japan $150 Singapore 21% 39% $100 Hong Kong/ $50 China Malaysia $- 29% Other Source: Savills 2017 As at 30 Apr 2018 Exposure to key gateway cities in Asia 8

Asian REITs own properties equal to the world’s best Vivocity (Mapletree Commercial REIT, Singapore) vs Westfield Sydney (Scentre Group, Sydney) 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% Source: Company Filings, 2018 year 9

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 10

3 things to remember… Why you should not ignore the world’s fastest growing 1 commercial property market How Asian listed real estate can provide attractive 2 diversification benefits 3 APN’s record of delivering strong, regular income and growth 11

Diversification: Asia has deeper pools of assets and capital 6000 181 287 68% 2500 120 31 14% Number of stocks Number of properties Market capitalisation Market concentration – (approx) (A$ Billions) market cap outside top 10 stocks Australia Asia Sources: ASX300 AREIT Index, Bloomberg Asian REIT Index both at April 2018 12

Asian REITs offer low return correlations… …particularly versus Aussie equities which investors are commonly overweight Asian REITs vs other asset classes – over 5 years 0.60 0.47 0.41 0.36 0.40 0.22 0.20 0.08 0.00 Global REITs Global Equities Asian Equities Australia Equities Australian REITs Australia Govt (0.20) Bond (0.40) (0.60) (0.57) (0.80) Source: Bloomberg, to Apr 30 2018 13

Lower volatility than other asset classes Standard deviation by asset classes – 5 years to 30 Apr 2018 14% 12.32% 12.14% 12.05% 12% 9.92% 10% 8.95% 8% 6% 4% 2% 0% APN Asian REIT Fund Asian REIT Index Global REITs Australia Equities Australian REITs Source: Bloomberg, to 30 April 2018 14

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% 15

Diversification across property types Australia: Sector Exposure Asia: Sector Exposure Other Hotel Other Residential Industrial Retail Industrial Retail Office Office Source: Bloomberg, to March 31 2018 16

INVESTMENT CASE STUDY 17

Investment case study : Mapletree Commercial Trust ▪ 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 years 2 – 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 18

3 things to remember… Why you should not ignore the world’s fastest growing commercial 1 property market How Asian listed real estate can provide attractive diversification benefits 2 APN’s record of delivering strong, regular income and 3 growth 19

Strong risk adjusted returns 5 years annualised to 30 April 2018 10.50% 10.30% APN Asian REIT Fund 10.10% Australian REIT Index 9.90% Asian REIT Index Return 9.70% APN AREIT Fund 9.50% 9.30% 9.10% Australian Equities 8.90% 8.70% 8.50% 8.50% 9.00% 9.50% 10.00% 10.50% 11.00% 11.50% 12.00% 12.50% 13.00% Risk Source: Bloomberg. Past performance is not necessarily an indicator of future performance 20

Asian REITs – income and diversification Income Performance Growth Diversification ▪ 6.13% p.a . ▪ 14.02% p.a. total Inflation proofing ▪ ▪ 180 REITs current return since ▪ Strong regional Relatively lower ▪ distribution yield 1 inception 2 GDP growth volatility ▪ Paid monthly ▪ Ahead of index 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. 21