Centuria Metropolitan REIT Centuria Metropolitan REIT (ASX:CMA) proposed merger with Centuria Urban REIT (ASX:CUA) 3 March 2017 60 Marcus Clarke Street, Canberra, ACT 3 MAR 2017 PAGE 1
Disclaimer This presentation has been prepared by Centuria Property Funds Limited (ABN 11 086 553 639) (' CPFL ') as responsible entity of Centuria Metropolitan REIT (' CMA '). CMA comprises Centuria Metropolitan REIT No. 1 (‘ CMR1 ’) and Centuria Metropolitan REIT No. 2 (‘ CMR2’ ). CMA announced on 15 February 2017 its simplification proposal, which if effected will de-staple CMR1 from CMR2, and have CMR2 become a wholly-owned subsidiary of CMR1. References in this document to ‘CMA Securities’ are made on the basis that this simplification proposal has been implemented. All information and statistics in this presentation are current as at 31 December 2016 unless otherwise specified. It contains selected summary information and does not purport to be all-inclusive, comprehensive or to contain all of the information that may be relevant, or which a prospective investor may require in evaluations for a possible investment in CMA. It should be read in conjunction with CMA and CUA’s periodic and continuous disclosure announcements which are available at www.centuria.com.au and with the ASX, which are available at www.asx.com.au. The recipient acknowledges that circumstances may change and that this presentation may become outdated as a result. This presentation and the information in it are subject to change without notice. CPFL is not obliged to update this presentation. This presentation is provided for general information purposes only. It is not a product disclosure statement, pathfinder document or any other disclosure document for the purposes of the Corporations Act 2001 (Cth) and has not been, and is not required to be, lodged with the Australian Securities and Investments Commission. It should not be relied upon by the recipient in considering the merits of CMA or CUA or the acquisition of securities in CMA or CUA. Nothing in this presentation constitutes investment, legal, tax, accounting or other advice and it is not to be relied upon in substitution for the recipient's own exercise of independent judgment with regard to the operations, financial condition and prospects of CMA or CUA. The information contained in this presentation does not constitute financial product advice nor any recommendation. Before making an investment decision, the recipient should consider its own financial situation, objectives and needs, and conduct its own independent investigation and assessment of the contents of this presentation, including obtaining investment, legal, tax, accounting and such other advice as it considers necessary or appropriate. This presentation has been prepared without taking account of any person's individual investment objectives, financial situation or particular needs. It is not an invitation or offer to buy or sell, or a solicitation to invest in or refrain from investing in, securities in CMA or CUA or any other investment product. The information in this presentation has been obtained from and based on sources believed by CPFL to be reliable. To the maximum extent permitted by law, CPFL, and its officers, directors, employees, advisers and its related bodies corporate, make no representation or warranty, express or implied, as to the accuracy, completeness, timeliness or reliability of the contents of this presentation. To the maximum extent permitted by law, CPFL, and its respective officers, directors, employees, advisers and its related bodies corporate do not accept any liability (including, without limitation, any liability arising from fault or negligence) for any loss whatsoever arising from the use of this presentation or its contents or otherwise arising in connection with it. This presentation may contain forward-looking statements, guidance, forecasts, estimates, prospects, projections or statements in relation to future matters (' Forward Statements '). Forward Statements can generally be identified by the use of forward looking words such as "anticipate", "estimates", "will", "should", "could", "may", "expects", "plans", "forecast", "target" or similar expressions. Forward Statements including indications, guidance or outlook on future revenues, distributions or financial position and performance or return or growth in underlying investments are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. No independent third party has reviewed the reasonableness of any such statements or assumptions. No member of CPFL represents or warrants that such Forward Statements will be achieved or will prove to be correct or gives any warranty, express or implied, as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forward Statement contained in this presentation. Except as required by law or regulation, CPFL assumes no obligation to release updates or revisions to Forward Statements to reflect any changes. The recipient should note that this presentation may also contain pro- forma financial information. All dollar values are in Australian dollars ($ or A$) unless stated otherwise. 3 MAR 2017 PAGE 2
Contents Section Description Page no. 1 Overview 4 2 Key Benefits 6 3 Profile of Merged Group 11 4 Summary of SIA 14 4 Appendices 17 3 MAR 2017 PAGE 3
SECTION 1: Overview 3 MAR 2017 PAGE 4
Executive summary ˃ On 3 March 2017, Centuria Property Funds Limited ( CPFL ) as Responsible Entity for Centuria Metropolitan REIT ( CMA ) announced that it has entered into a scheme implementation agreement ( SIA ) with Centuria Property Funds No. 2 Limited ( CPF2L ) as Responsible Entity for Centuria Urban REIT ( CUA ) to undertake an “NTA-for-NTA” merger of equals transaction between CMA and CUA via a trust scheme (the Merger ) ˃ The Merger is consistent with CMA’s strategy to invest in metropolitan office markets in Australia and combines two highly complementary property portfolios to provide CMA securityholders with an enhanced investment proposition relative to CMA on a standalone basis including: Material increase in scale with CMA’s investment property portfolio increasing 54% to over $602 million 1 ; Generation of accretion to CMA’s FY17 distributable earnings per security 2 ; Enhanced portfolio and tenant diversification; Cost efficient acquisition structure minimises net tangible asset dilution compared to acquiring assets in the direct market; and Improved trading liquidity and increased market capitalisation with the potential for ASX / S&P 300 index inclusion. ˃ CPFL has established an independent Board committee ( IBC ), comprising directors Matthew Hardy and Darren Collins, to consider the relative merits of the Merger ˃ Additionally, CPF2L has established an independent Board committee ( CUA IBC ) to consider the merits of the Merger on behalf of CUA unitholders. The CUA IBC believes that the Merger has merit, offers a number of potential benefits to CUA unitholders and it is in the best interests of CUA's unitholders that the Merger Proposal be put forward for CUA unitholders’ consideration Subject to the satisfaction of certain conditions precedent regarding satisfactory due diligence and an independent expert finding the Merger is in the best interests of CUA's unitholders, the CUA IBC intends to recommend that CUA’s unitholders vote in favour of the Merger in the absence of a superior proposal 1. As at 31 December 2016 with pro forma adjustments to reflect the sale of 14 Mars Road announced on 21 December 2016 2. See page 19 for assumptions 3 MAR 2017 PAGE 5
SECTION 2: KEY BENEFITS 3 MAR 2017 PAGE 6
Compelling Proposal for CMA securityholders Material increase in scale with CMA’s investment property portfolio increasing 54% to over $602 million Will generate accretion to CMA’s FY17 distributable earnings per security Enhanced portfolio and tenant diversification Cost efficient acquisition structure minimises net tangible asset dilution compared to acquiring assets in the direct market Improved trading liquidity and increased market capitalisation with the potential for ASX / S&P 300 index inclusion 3 MAR 2017 PAGE 7
Summary of Financial Impact FY17 Distributable Earnings Investment Properties 1 Market Capitalisation 2 Gearing 3 NTA per security 1,3 Accretion per security 4 $602m $417m 30-30.5% $2.32 per security 19.0-19.1 cents per security $210m $140m (0.5%) - +0.5 - +1.0- +54% +51% (1.0%) 1.0% 1.5% $392m $277m 29.5% $2.30-$2.31 per security 18.85 cents per security 1. As at 31 December 2016 with pro forma adjustments to reflect the sale of 14 Mars Road announced on 21 December 2016 2. Market capitalisation of merged entity based on the total anticipated CMA securities on issue upon completion of the Merger, if successful, multiplied by the closing price of CMA securities of $2.34 on 2 March 2017 (being the last trading day prior to the date of announcement) 3. Based on the unaudited balance sheet as at 31 December 2016 with pro forma adjustments to reflect the sale of 14 Mars Road announced on 21 December 2016. See page 18 for assumptions 4. Mid-point of FY17 distributable earnings guidance of 18.7-19.0 cps as listed on page 25 of CMA’s 1H17 Results Presentation released on the ASX on 9 February 2017. See page 19 for assumptions 3 MAR 2017 PAGE 8
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