Disclaimer The contents of this presentation are general only. The presentation does not purport to contain all the information that an investor may require to evaluate an investment in the Abacus Property Group or any funds managed by Abacus Funds Management Limited / Abacus Storage Funds Management Limited Before a person makes an investment decision on the basis of this information they should Limited. Before a person makes an investment decision on the basis of this information, they should determine for themselves or obtain professional advice as to whether any investment is appropriate for their particular needs, investment objectives and financial situation. None of Abacus Property Group, its directors, employees or advisers make any representation or warranty as to the accuracy, reliability or completeness of the information contained in this presentation presentation. Any forecasts or other forward looking statements contained in this presentation are based on assumptions concerning future events and market conditions. Actual results may vary from forecasts and any variations may be materially positive or negative. Statements made in this presentation are made as of the date of the presentation unless otherwise stated. Abacus Group Holdings Limited ABN: 31 080 604 619 Abacus Group Projects Limited ABN: 11 104 066 104 Abacus Funds Management Limited ABN: 66 007 415 590 AFSL No. 227819 Abacus Storage Funds Management Limited ACN: 109 324 834 AFSL No. 227357 Abacus Storage Operations Limited ABN: 37 112 457 075 www.abacusproperty.com.au 2
FY12 highlights so far � Statutory Net Profit attributable to securityholders for H112 of $2.4 million has been adversely impacted by unrealised fair value charges of $35 million relating to swap mark to market � For comparable purposes, If ABP had not adopted AASB10, the Group’s would have generated a statutory profit of $ 1 3 m illion - 3 2 % above HY1 1 statutory profit $ � The Group has delivered a strong $ 3 9 .8 m illion underlying profit to securityholders The Group has delivered a strong $ 3 9 .8 m illion underlying profit to securityholders � Not impacted by these non-cash swap book fair value movements � Pro-actively took advantage of market conditions to refinance over $690 million of debt facilities across the Group and its managed Funds to materially improve the Group’s capital and financial position � Accounting in accord with AASB10 has resulted in Abacus taking to account the value of all fund assets as if they were liquidated today � Obtained emphatic 98% approval from both sets of securityholders to merge the Group with the Abacus Storage Fund � Progressed our commitment to deliver a strategy to accelerate the redeployment of capital invested in the Progressed our commitment to deliver a strategy to accelerate the redeployment of capital invested in the retail unlisted funds platform 3
Building a better business and securing future returns � Abacus has a much better quality, cleaner and more transparent business which holds greater future growth opportunities than 12 months ago 12 Months ago 12 Months ago Now Now Future Future � Reduced refinance risk with split � Refinanced over $690 million maturities for new syndicated and of facilities across the Group ASF facilities � � � Debt maturity of 2 6 and Funds a d u ds Debt maturity of 2.6 � No material refinance requirements � Debt maturity of 3.3 years years until FY15 � Cost of debt 8.3% � Cost of debt 7.25% falling to � Cheaper debt with better terms 7.05% post ASF merger and provides significant flexibility and refinancing refinancing security to balance sheet � ASF merger realises 70/ 30 strategy and underpins distributions � � � Conducted strategic review � Retail funds � Retail funds � Bigger more diversified group with � Bigger more diversified group with Conducted strategic review � Resounding approval to management platform stronger recurring earnings and proving difficult cashflow bias merge the group with ASF � Orderly realisation of fund positions and redeployment of capital and redeployment of capital � Possess wholesale capability � Continue to scale our capital and � Further capacity for acquisitions and � � with relationships with a skills � Limited wholesale number of sophisticated Further capacity for acquisitions and capital partners capital partners exposure exposure joint ventures with existing and new � Acquired over $460 million of Wholesale JV partners assets in partnership 4
Substantial progress on strategic objectives � Abacus has actively pursued its operational objectives as set out at the end of FY11 � We have continued to take advantage of market conditions with our partners in pursuit of our 70/ 30 strategy 70/ 30 strategy � The strategic review and subsequent merger g q g with the Abacus Storage Fund ( ASF ) has helped consolidate this strategy � $333 million merger with ASF successfully reweights the merged group’s balance sheet � Provides a proven and strong underlying recurring cashflow that was stable during and post the GFC � Bolstered the Group’s recurring earnings and helped secure the Group’s future distributions 5
Merger with ASF � On 24 February, securityholders of both ABP and ASF voted overwhelmingly with over 98% approval to merge of the two entities � First step in the Group’s unlisted retail funds management strategic review � The Merger was implemented via a very efficient and effective issue of ABP securities at pro forma NTA � The approval also accesses new debt facilities that were reliant upon a successful vote � � Si Significantly better terms with lower ongoing costs ifi l b i h l i � Provides lower cost of capital and flexibility to access growth opportunities � The Merger exposes ABP to one of Australasia’s largest portfolio’s of self storage assets valued at over $333 million � 42 assets located throughout Australia and New Zealand, that have delivered increasing valuations through revenue growth whilst current portfolio cap rate has stabilised at 9 1% through revenue growth whilst current portfolio cap rate has stabilised at 9.1% � The portfolio provides substantial benefits to Abacus Property Group p p p y p � Dominant position in a strong growth sector � Defensive characteristics from strong recurring cashflows and a dynamic pricing model � Total return play by owning and growing the assets on our balance sheet 6
Storage – A good fit � Abacus is now one of largest owners in the sector – significant position within industry Portfolio metrics 1 Dec 11 � Capital partnered with the operating expertise Book value Book value $351m $351m and brand of Storage King, the largest self storage brand and manager in Australasia Net income $28m Cap rate 9.1% � Abacus’ portfolio now consists of 45 assets – 34 in 210,000m 2 2 NLA NLA 210 000 Australia and 11 in New Zealand � Largest owner of storage assets in New Zealand 375,000m 2 Land � Delivered an attractive 11% + annualised return Occupancy 84% on equity since inception to Fund unitholders Average gross rent $236 psm � Abacus has managed the majority of this portfolio since 2005 � Grown the portfolio from $100m of assets to its Grown the portfolio from $100m of assets to its current size � Abacus understands and likes this property class � Valuable and market leading platform � Acquiring well located and high yielding land with strong growth prospects � Strong defensive characteristics � Abacus can take the assets and the business forward Includes 3 assets already owned by Abacus at 31 December 2011 valued at $18 million 1. 7
Storage – A good fit Attractive industry fundamentals Attractive business fundamentals � � Emerging industry in growth phase Good cash flow dynamics � � 75% of rent roll typically via credit 75% of rent roll typically via credit Fragmented industry with major players Fragmented industry with major players controlling only 49% of major metropolitan card/ direct debit & monthly in advance markets � Customers pay monthly in advance � � � Australian supply levels estimated to be 0 15m 2 Australian supply levels estimated to be 0.15m 2 Dynamic pricing fundamentals of storage space per capital compared to an � Low breakeven point (~ 35% occupancy) average of 0.5m 2 across the US � High gross margin (65% plus) � Recognition of the low supply per capita levels � Low capex requirements and scalable cost in the UK has seen expansion of the US REIT’s structure into the UK market � Expansion capex generates 20-30% ROE � Favourable demand and drivers � 2/ 3 of demand comes from residential users with remaining commercial � Shift to medium/ high density living and resulting reduction in household storage space � Downsizing empty-nesters and children returning to the family home returning to the family home � Increased home renovations 8 8
HY12 financial results overview 1 4 Martin Place, Sydney NSW
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