FKP Property Group - Aveo · Residential: Apartments – Outlook • Sales levels continue to...
Transcript of FKP Property Group - Aveo · Residential: Apartments – Outlook • Sales levels continue to...
FKP Property Group Full Year Results Presentation
25 August 2011
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Contents 1. Overview 2. Divisional commentary 3. Capital management 4. Strategy and outlook 5. Appendices
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Overview
• Earnings in line with guidance – Underlying Profit of $121.0m up 11%, with record contributions from Residential Communities and Retirement
• FY11 distributions of 3.0cps up 100% on FY10 distributions
Assets Delivering Earnings Potential
• Investment continuing to realise extensive development pipeline
• Settlements in The Rochedale Estates and Aerial expected to add to FY12 earnings
Benefits From Extensive Pipeline Set to Continue
• Strong financial position from operating and capital initiatives in FY11, including issuance of $125m Convertible Bond, refinancing of retirement syndicate, and restructuring of interest rate hedges
• This has resulted in stable debt levels and lower cost of debt across the Group
Capital Metrics Remain Sound
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Outcome FY11 FY10 Comment
Statutory profit after tax $82.3m $50.8m • Mainly impacted by changes in fair value
Underlying profit after tax $121.0m $108.6m • 11% growth in line with guidance
Underlying EPS 10.3cps 9.7cps • 6% growth from FY10
Recurring income percentage 60% 62% • In line with 50:50 split over cycle
Distribution 3.0cps 1.5cps • 100% increase on FY10
NTA per unit $1.25 $1.23 • Further increase in net asset backing
Gearing 28.9% 28.5% • Capital metrics stabilised
Key Outcomes
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FY11 $m
FY10
$m Change
Residential Communities and Apartments 36.4 33.6 8%
Retirement operations 46.3 40.3 15%
Retirement valuation 79.6 76.4 4%
Commercial and Industrial 29.5 36.7 (20%)
Funds and Investments 15.8 25.2 (37%)
Corporate overheads (17.3) (24.7) 30%
EBITDA 190.3 187.5 1%
Depreciation and amortisation (3.0) (6.9) 57%
EBIT 187.3 180.6 4%
Interest (26.5) (37.9) 30%
Profit Before Tax 160.8 142.7 13%
Income tax (34.1) (31.6) (8%)
Profit After Tax 126.7 111.1 14%
Minority interests (5.7) (2.5) (128%)
Net Underlying Profit 121.0 108.6 11%
Divisional Contributions: Residential Delivers Profit Target
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Contents 1. Overview 2. Divisional commentary 3. Capital management 4. Strategy and outlook 5. Appendices
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Residential: Communities and Apartments – Drivers of Growth
• Record contribution of $36.4m up 8% on FY10 driven largely by:
• A record 294 settlements at Saltwater Coast combined with improved margins on the project generating a 53% increase in profit contribution
• Remaining lots at A2 settled
• Works completed for initial stages at The Rochedale Estates with presales of over 100 lots made to date
• Secured presale target at Luxe
• Continued focus on achieving the pre-approval targets at Albion Mill and The Milton
Key Performance Indicators FY11 FY10 Change
Divisional profit contribution $36.4m $33.6m 8%
Sales revenue $141.0m $118.9m 19%
Land lot sales 443 433 2%
Built product sales 69 60 15%
Average margin (incl interest) 31% 27% 4%
Average margin (excl interest) 40% 35% 5%
Residential Communities and Apartment Deposit Flow
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Residential: Delivery of Pipeline Has Only Just Begun
• Quality asset base has delivered strong profit growth over the past three years
• The continuing contribution from the long term roll out of communities projects will be supplemented by the delivery of apartment projects in Melbourne (Aerial) and Sydney (Luxe)
• The earnings contribution from these apartment projects will be replaced by more apartment developments in Brisbane, as the south east Queensland property market recovers
Note: Based on illustrative project contribution dates
Major Project Profit Contribution
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14+
Peregian Springs / Ridges
Saltwater Coast
Peregian Springs / Ridges
Peregian Springs / Ridges
Peregian Springs / Ridges
Peregian Springs / Ridges
Peregian Springs / Ridges
Saltwater Coast Saltwater Coast Saltwater Coast Saltwater Coast
A2
Mulgoa Rise Mulgoa Rise Mulgoa Rise
The Rochedale Estates
The Rochedale Estates
Aerial Luxe The Gasworks
The Rochedale Estates
The Milton
Albion Mill
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Residential: Communities – Outlook
• Volume of lots at Saltwater Coast expected to normalise as The Rochedale Estates begins to contribute to profit
• FY12 focus on completing construction of future stages of The Rochedale Estates, which will include construction of the biggest display village in QLD
• Continued focus on Peregian Springs and Ridges with target of 100-150 lot sales
• Construction commencing at Mulgoa Rise, the premium sustainable village development undertaken through Mulpha FKP, with first settlements expected to occur during the later half of FY12
Land projects State Remaining lots
approx. Estimated remaining value $m
Target annual lot sales
Remaining project life
Saltwater Coast, Point Cook VIC 1,700 535 250-300 5+ years
Peregian Springs & Ridges, Peregian Springs QLD 1,000 320 100-150 6+ years
The Rochedale Estates, Rochedale QLD 950 285 100-150 5+ years
Mulgoa Rise, Mulgoa NSW 600 220 100-150 6+ years
Other 900 390 100-150 <5 years
Total 5,150 1,750
Note: Excludes approximately 3,000 lots controlled by Port Bouvard
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Residential: Apartments – Outlook
• Sales levels continue to progress at Luxe, Aerial and The Milton
• Construction is on schedule at Aerial for second half delivery
• Early works have commenced at Luxe
• Registration and enquiry levels at Albion Mill are positive with the launch of the initial stage imminent
Apartment projects Location Status
Total Residential
Units
Available for Sale Percentage Sold
Current Projects
Aerial, Camberwell VIC Under Construction 144 25 83%
Luxe, Woolloomooloo NSW Awaiting Construction 77 33 57%
The Milton, Milton QLD Currently Selling 298 201 33%
Subtotal 519 259 50%
Future Projects
Albion Mill, Albion QLD Pre-launch 350
The Gasworks Residential, Newstead QLD Sales Launch 2nd half FY12 900
Subtotal 1,250
Total 1,769
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Retirement: Strong Results in a Challenging Market
• Record contribution of $46.3m up 15% on FY10
• Fair value of Retirement investment property assessed
using the following assumptions:
– Discount rate (12.5%), long term price growth (5%)
and long term turnover (9 years ILU’s and 4 years SAs) remain unchanged
• Fair value supported by an independent valuation by Deloitte (see Appendix 2)
• Strong result achieved through a mix of margin improvements and strict cost control
• Average margin on resident resales increased from $79,000 in FY10 to $91,000 in FY11 as the benefits from improved contract terms implemented in prior
periods continue to flow through
• Resulted in a 9% lift in DMF / CG generated from
$45.4m to $49.7m
• Resale levels were down reflecting the general
slowdown in the residential market
• Overall portfolio indicators such as average DMF / CG
share of existing contracts and resident age continue to incrementally improve
Key Performance Indicators FY11 FY10 Change
Divisional profit contribution $46.3m $40.3m 15%
Revaluation contribution $79.6m $76.4m 4%
Total contribution $125.9m $116.7m 8%
Gross DMF / CG generated $49.7m $45.4m 9%
Avg DMF/CG transaction price point $251k $252k -
Avg DMF/CG per transaction $91k $79k 15%
Average DMF rate of existing contracts 30% 29% 1%
Average capital gain share of existing contracts 50% 50% -
Resales 481 561 (14%)
New sales 37 67 (45%)
Total Sales 518 628 (18%)
Portfolio turnover (based on sales) 8% 10% (2%)
Net buyback purchases/(sales) 62 12 416%
Average age of residents 82.4 82.0 -
Underlying property value $1.9b $1.8b 5%
Note: FY10 operating statistics restated to reflect impact of the Clayfield and Cleveland syndicates
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Retirement: Underlying Cash Drivers Continue to Improve
• Although fluctuating market conditions have impacted headline divisional results numbers since the GFC, management has continued to focus on the key underlying drivers of cash flow growth
• As the impact of improved contract terms and higher priced units continue to flow through into transactions, the value of DMF generated per transaction should continue to increase
• In FY11 the average DMF / CG per transaction of $91,000 at an average DMF / CG transaction price point of $251,000 resulted in an average transaction margin of 36%
Average DMF/CG per Transaction and Transaction Margin
23%
27%30% 31%
36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
20,000
40,000
60,000
80,000
100,000
FY07 FY08 FY09 FY10 FY11
Margin (%)Avg DMF / CG ($)
Avg DMF / CG ($) CAGR - 22%
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Retirement: Outlook
Aveo Units Existing Pipeline Total
FKP Balance Sheet1 6,259 720 6,979
Managed for RVG2 3,527 515 4,042
Total 9,786 1,235 11,021
1 Includes 51 units not offered for accommodation purposes eg manager’s units 2 RVG also has 3,149 units in NZ which are not managed by FKP
FKP Retirement Development
Pipeline1
• Resale volumes expected to rebound from subdued FY11 levels
• Key villages in South East Queensland have noticed a substantial increase in onsite activity for the year to date relative to the same period last year
• Expected increases in resale transaction levels and margins will also assist in generating cash and profit growth
• Further roll out of development pipeline to contribute development margin plus add to pool of long term DMF cash flows being generated
• Expecting approximately 60 new units to be delivered during FY12
• Continuation of existing unit buyback and refurbishment program provides a similar development margin while also increasing the value of future DMF cash flows
Development Type Geographic Location
23%
77%
Greenfield Brownfield
60%34%
6%
QLD NSW VIC1 By unit
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Commercial and Industrial
Key Performance Indicators FY11 FY10 Change
Divisional profit contribution $29.5m $36.7m (20%)
Comprised of: Trading $11.8m $18.3m (36%)
Recurring $17.7m $18.4m (4%)
Trading sales revenue $62.0m $69.7m (11%)
Properties held 7 10 (30%)
The Gasworks Stage 2 Overview
• 8,100m2 retail NLA including a full line supermarket
• 8,800m2 of office NLA (targeting 5 star Greenstar office)
• Construction early works have commenced targeting completion in FY13 with estimated end value of $130m
• Approximately 25% of commercial NLA and 65% of retail NLA already allocated to identified tenants
Trading
• The trading contribution mainly comprises the completion of additional contracts associated with the Energex development
• Nearing completion of sell down of existing industrial and commercial stock
• Near term focus on commencement of The Gasworks Stage 2, Brisbane (see overview to right)
Recurring
• Contribution from the Property Trust assets of $17.7m reflected the full year impact of the Browns Plains assets offset by disposal of Bridge St, Illawong and Indooroopilly
• Continuing focus on capital efficiency and maximising asset value
• Recently commenced redevelopment of 465 Victoria Avenue Vero Tower, Chatswood
• Will continue to examine strategic opportunities to dispose of selected assets over the medium term, including Spring St and Lonsdale St
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Funds Management and Investments
Portfolio Investments Sector Holding Book Value $m
Retirement Villages Group Retirement 20.7% 135.1
US Senior Living Group Retirement 50.0% 8.4
FKP Core Plus Fund Commercial 14.7% 7.1
FKP Core Plus Fund Two Commercial 27.9% 7.0
Port Bouvard Ltd Residential 29.5% 24.8
Total 182.4
Underlying Profit Contribution FY11 $m
FY10 $m Change
Funds Management (1.0) 0.7 (243%)
Retirement Villages Group 13.0 22.1 (41%)
FKP Core Plus Funds 0.8 1.9 (58%)
US Senior Living Group 0.1 0.5 (80%)
Port Bouvard 3.3 - 100%
Other JV’s (0.4) - -
Total 15.8 25.2 (37%)
Core Plus Funds
• Reduced funds management contribution reflects strategy to wind up Core Plus funds
• Divestment program and targeted timing of returns to investors remains on track
RVG
• The RVG contribution was impacted by a lower volume of resales across the Australian and New Zealand portfolios and the impact of the disposal of four villages during the period
• Asset sale program has reduced RVG gearing and continuing to discuss options with RVG investors around fund capital structure
Port Bouvard
• Port Bouvard progressing sell down of Oceanique premium apartment development
• Focus now shifting to 3,000 lot Point Grey project with first settlements expected in FY13
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Contents 1. Overview 2. Divisional commentary 3. Capital management 4. Strategy and outlook 5. Appendices
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Near Term Funding Requirements
• Capital requirements for the next financial year are expected to be funded by a mix of existing debt available and surplus operating cash flow
• Any sale of surplus property trust assets or additional project finance facilities would add to the funding capacity shown below
1 Current capacity is dependent upon having sufficient security
Indicative FY12 Sources & Uses
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Capital Management: Metrics
• Reported gearing, measured as net debt divided by cash adjusted asset (net of resident loans) is steady at 29%
• All covenants met
• Undrawn lines and available security consistent with previous year
• Entered into an additional $250m of new interest rate swaps and restructured $275m of pre-GFC interest rate swaps during FY11 which reduced the Group’s weighted average borrowing cost to 5.38% 1 (6.30% FY101)
• Weighted average debt maturity extended to 2.2 years post the refinance of Retirement facility
• Currently hedged at 85% of drawn debt with a weighted average time to maturity of 3.9 years
1 Exclude margins and line fees 2 Undrawn facilities are dependent upon having sufficient security 3 Includes available cash
Metrics FY11 FY10
Statutory balance sheet gearing 19% 21%
Reported gearing 29% 29%
Covenant gearing (limit 55%) 40% 41%
ICR (minimum 1.75x) 4.3x 3.2x
Total interest bearing liabilities $803m $792m
Undrawn committed lines2,3 $207m $234m
Available facilities3 $89m $88m
Weighted average borrowing cost1 5.38% 6.30%
Weighted average debt maturity 2.2 years 1.6 years
Hedged % on drawn debt 85% 73%
Hedged % on facility limit 69% 56%
Weighted average hedge maturity 3.9 years 1.6 years
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Contents 1. Overview 2. Divisional commentary 3. Capital management 4. Strategy and outlook 5. Appendices
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Continuing to Execute on Strategy
Growth generated from the roll out of the development pipeline supported by strong recurring earnings
Active management of retirement portfolio to maximise asset values, contract terms and resident satisfaction
Continued roll out of the retirement unit development pipeline Increase focus on the retirement unit refurbishment program
Strong base of recurring
earnings streams
Continued roll out of further stages at existing successful residential projects New projects at The Rochedale Estates, Aerial and Mulgoa Rise to generate profit Commencement of construction at both Luxe and The Gasworks Stage 2 Progressing apartment projects The Gasworks Stage 3, The Milton and Albion Mill
Development pipeline to
provide complementary
earnings
Continued streamlining of operations Optimising the retirement platform Maximising value through continued asset recycling in the Property Trust
Efficient use of capital and
assets
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• Although there continues to be uncertainty in the financial and property markets, the cautiously optimistic outlook for FY12 is reflected in an underlying profit guidance of an increase on FY11 levels
• Distribution of 3.3cps targeted in FY12
Cautiously optimistic on future performance
• First contributions from The Rochedale Estates, Aerial and Mulgoa Rise projects expected in FY12 • Significant pre sale levels at the projects underwrites a large portion of the expected profit delivery
Delivery of new development projects in FY12
• Existing high quality assets set to drive growth into the medium term • Diversity of assets provides mix of recurring and non recurring income
Asset base continues to perform
Cautiously Optimistic Outlook
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Contents 1. Overview 2. Divisional commentary 3. Capital management 4. Strategy and outlook 5. Appendices
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Appendices
Appendix 1 Detailed Financial Information
Appendix 2 Retirement Annuity Stream Valuation
Appendix 3 Property Trust Valuation
Appendix 4 Capital Management
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FY11 FY10 Gross
$m Tax $m
Net $m
Gross $m
Tax $m
Net $m
Statutory Profit After Tax 82.3 50.8
Change in fair value of interest rate swaps (6.7) 2.0 (4.7) (4.1) 1.2 (2.9)
Change in fair value of derivative on convertible bond (3.5) 1.1 (2.5) - - -
Change in fair value of retirement investment property portfolio 1.5 (0.5) 1.1 6.6 (1.8) 4.8
Share of net gain/(loss) from fair value adjustment of investment properties in associates 29.6 (7.0) 22.6 37.7 (8.3) 29.4
Non-cash share-based payments - - - 4.4 - 4.4
Change in fair value of property trust portfolio 12.6 - 12.6 22.4 - 22.4
Doubtful debt provision / (reversal) 1.5 - 1.5 (3.1) 0.9 (2.2)
Development impairments 1.3 (0.4) 0.9 2.3 (0.7) 1.6
Mackay Turf Farm acquisition of 50% joint venture partner 1.4 - 1.4 - - -
FPG Syndicate consolidation 2.1 - 2.1 - - -
Redundancies 2.4 (0.7) 1.7 0.4 (0.1) 0.3
Intangible impairment 2.0 - 2.0 - - -
Underlying Profit After Tax 121.0 108.6
Reconciliation of Statutory Profit to Underlying Profit
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Reconciliation of Underlying Profit to Segment Notes
Underlying Profit
Share of Equity
Accounted Investments
Market to Market of
Swaps
Property Trust Fair
Value
US Senior Living
Portfolio Fair Value
Retirement Portfolio
Fair Value
Consolidation of FPG
Syndicates Other
Statutory Segment
Note
Retirement Operations 46.3 - - - - - (2.3) 0.2 44.2
Retirement Valuation 79.6 - - - - (1.5) - - 78.1
Residential Communities and Apartments 36.4 (4.1) - - - - - (0.5) 31.8
Commercial and Industrial 29.5 (1.7) - (12.6) - - - (5.8) 9.5
Funds Management and Investments 15.8 (9.2) - - (6.6) - - (0.6) (0.7)
Equity Investments - (8.3) - - - - - - (8.3)
Corporate (17.3) - 10.3 - 0.1 - 0.8 (4.3) (10.4)
EBITDA 190.3 (23.3) 10.3 (12.6) (6.5) (1.5) (1.5) (10.9) 144.2
Depreciation and Amortisation (3.0) - - - - - - 3.0 -
Interest Expense (26.5) - - - - - - 0.4 (26.0)
Income Tax (34.1) 7.0 (3.1) - - - 2.6 (0.5) (28.1)
Minority Interest (5.7) - - - - - - 5.7 -
NPAT 121.0 (16.3) 7.2 (12.6) (6.5) (1.5) 1.1 (2.3) 90.1
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FY11 $m
FY10 $m Change
Assets
Cash / receivables / other 154.5 200.2 (23%)
Investment properties 2,857.5 2,671.9 7%
Inventories 712.8 596.5 19%
Investments 297.9 357.3 (17%)
PP& E 30.7 31.5 (3%)
Intangibles 2.8 3.4 (18%)
Total Assets 4,056.2 3,860.8 5%
Liabilities
Payables / provisions / deferred revenue / other 198.4 214.3 (7%)
Resident loans 1,314.2 1,194.2 10%
Bank debt 669.9 764.8 (12%)
Other borrowings 132.9 21.9 507%
Deferred tax 199.6 174.3 15%
Hedge liability 9.8 17.1 (43%)
Total Liabilities 2,524.8 2,386.6 6%
Net Assets 1,531.4 1,474.2 4%
Summary Balance Sheet
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FY11 $m
FY10 $m Change
Retirement
NPV of annuity streams (See Appendix 2) 1,165.5 1,049.31 11%
Resident loans 1,314.2 1,194.2 10%
Deferred Income net of Accrued DMF 79.6 67.2 18%
Investment properties under construction – Retirement 44.1 19.9 122%
New units available for first occupancy 95.7 65.5 46%
Subtotal 2,699.1 2,396.1 13%
Property Trust
Investment properties – FKP Property Trust 234.4 301.1 (22%)
Investment properties under construction – FKP Property Trust 2.2 2.2 -
Total Investment Properties (see Appendix 3) 236.6 303.3 (22%)
Assets Reclassified as available for sale (73.5) (20.5) 259%
Straight-lining adjustment (4.7) (7.0) (33%)
Subtotal 158.4 275.8 (43%)
Total Investment Properties per Balance Sheet 2,857.5 2671.9 7%
Reconciliation of Investment Property Figures in Statutory Accounts
1 Excludes consolidation of FPG Syndicates
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Retirement Assets FY11 $m
FY10 $m Change
Hard Assets
New units available for first occupancy (Investment Properties) 95.7 65.5 46%
Retirement properties under construction (Investment Properties) 44.1 19.9 122%
Residential aged care facilities (Property, Plant and Equipment) 12.7 12.9 (2%)
Investment in syndicates (Equity-Accounted Investment) - 33.7 (100%)
Bed licences (Intangibles) 0.5 0.5 0%
Subtotal 153.0 132.4 16%
NPV of annuity streams (See Appendix 2) 1,165.5 1,049.3 11%
Retirement Assets1 1,318.5 1,181.8 12%
Retirement Division Assets
1 Includes FPG but excludes RVG
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Inventories and Investment Summary
FY11 $m
FY10 $m Change
Inventories
Residential Communities 441.5 404.7 9%
Residential Apartments 133.7 85.7 56%
Commercial and Industrial 137.6 106.0 30%
Total Inventories 712.8 596.5 20%
Investments
RVG 135.1 136.8 (1%)
FPG Syndicates - 33.7 (100%)
FKP Core Plus Funds 14.1 24.5 (42%)
Mulpha FKP 107.9 120.9 (11%)
Port Bouvard 24.8 22.8 9%
US Senior Living 8.4 18.2 (54%)
Brookvale1 7.6 - -
Other - 0.4 (100)
Total Investments 297.9 357.3 (17%)
1 Previously the Consolidated Group recognised its share of contributed assets and liabilities, together with its share of profits from the joint venture. Effective 1 July 2010, the joint venture was recognised as an equity-accounted investment giving rise to an asset reclassification and nil impact on the profit or loss
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Interest Expense Reconciliation
FY11 $m
FY10 $m
Interest paid 80.8 86.6
Less Capitalised interest
Residential Communities (34.4) (32.8)
Residential Apartments (8.5) (6.3)
Commercial and Industrial – Trading (9.7) (7.4)
Commercial and Industrial – Recurring - (1.1)
Other (1.7) (1.1)
Total (54.3) (48.7)
Net finance costs 26.5 37.9
Add Capitalised interest expenses in COGS
Residential Communities 10.1 7.3
Residential Apartments 3.0 1.1
Commercial and Industrial – Trading 6.1 3.0
Commercial and Industrial – Recurring - -
Other - 0.2
Total 19.2 11.6
Finance costs including capitalised interest expensed in COGS 45.7 49.5
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Appendices
Appendix 1 Detailed Financial Information
Appendix 2 Retirement Annuity Stream Valuation
Appendix 3 Property Trust Valuation
Appendix 4 Capital Management
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Retirement: Investment property valuation
• As with previous reporting periods, the fair value of the retirement assets has been determined by a FKP Directors’ valuation
• Key assumptions that have been used in determining the retirement valuation are consistent with those used in the prior period
• FKP Directors’ also engaged Deloitte to produce an independent external valuation to validate the Directors’ valuation
Key Valuation Assumptions FY11 FY10
NPV of annuity streams $1,165m $1,049m1
Discount rate 12.5% 12.5%
Future property price growth 5% 5%
Subsequent resident tenure (years)
Independent living units 9 9
Serviced apartments 4 4
• Deloitte’s valuation analysis focussed on a DCF approach as the most appropriate methodology to value retirement assets
• The DCF was supported by a number of broad cross checks eg: comparable transaction/company implied values per unit
• The Deloitte DCF analysis arrived at an independent view on each of the key variables (discount rate, turnover, property price growth) driving the retirement valuation
• The adopted FKP Directors’ valuation is supported by the valuation determined by Deloitte
1 Excludes consolidation of FPG Syndicates
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Retirement Investment Property Annuity Streams ($m)
Long Term Property Price Growth 7% 6% 5% 4% 3%
Net Present Value of Annuity Streams 1,546 1,337 1,165 1,011 879
Subsequent Turnover – ILUs/SAs (years) 7/3 8/4 9/4 10/4 11/5
Net Present Value of Annuity Streams 1,329 1,229 1,165 1,108 1,036
Discount Rate 11.5% 12.0% 12.5% 13.0% 13.5%
Net Present Value of Annuity Streams 1,351 1,251 1,165 1,090 1,023
Retirement: Investment property sensitivities
Assumption adopted for accounting purposes
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Appendices
Appendix 1 Detailed Financial Information
Appendix 2 Retirement Annuity Stream Valuation
Appendix 3 Property Trust Valuation
Appendix 4 Capital Management
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Asset State Sector Directors’ valuation $m Cap. Rate
399 Lonsdale St VIC Office 37.5 8.50%
Browns Plains QLD Bulky goods 27.3 8.00%
Peregian Springs QLD Retail 22.5 8.00%
Browns Plains JV QLD Retail 22.8 9.25%
Browns Plains TC QLD Retail 34.5 8.50%
465 Victoria Avenue (Vero Tower) NSW Office 56.0 8.75%
8 Spring St NSW Office 36.0 7.75%
Total / Weighted Average 236.6 8.41%
Summary of Property Trust Assets
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Appendices
Appendix 1 Detailed Financial Information
Appendix 2 Retirement Annuity Stream Valuation
Appendix 3 Property Trust Valuation
Appendix 4 Capital Management
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Distributions
Distribution Policy
• Target distribution of 40%-60% of Realised Underlying Profits (‘RUP’)
• Excludes non-cash component of the retirement investment property revaluation
• FY11 distribution is 3.0 cents per security
• DRP is active for 30 June 2011 distribution
FY11 $m
Net underlying profit 121.0
Retirement revaluation (excluding minority interest) (78.0)
Tax impact of retirement revaluation 23.4
Realised underlying profit 66.3
Adjustments:
Profit from equity accounted investments (21.2)
Dividends from equity accounted investments 20.2
Capitalised interest (54.3)
Capitalised interest included in COGS 19.2 Leasing commissions, tenant incentives and maintenance capital expenditure (2.6)
Amortisation of leasing incentives 2.2
Tax effect of above adjustments 10.5
Application of prior period tax losses 0.1
Actual Funds From Operations (AFFO) 40.4
Distribution declared 35.4
DRP 16.4
Net distribution 19.0
Distribution as a % of RUP (within range 40%-60%) 53%
Distribution as a % of AFFO 88%
Net distribution as a % of AFFO 47%
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Summary of Debt Facilities
FY11 $m
FY10 $m
Interest bearing liabilities1 803 792
Add: Convertible bond adjustments 11 -
Less: Vendor finance and leases (4) (3)
Total debt facilities drawn 810 789 Less: Bank Overdraft - (5)
Less: Mulpha FKP (15) (19)
Less: Convertible bond (125) -
Gross Bank Debt Drawn 670 765 Available Cash (12) (17)
Net Bank Debt Drawn 658 748
Limit $m
Drawn $m
Undrawn
$m
Major Facilities 860 740 120
Project Finance 80 19 61 Minor Facilities 65 51 14 Available Cash - - 12 Total 1,005 8101 2072
Facility Limit $m Maturity
Major Facilities: Property Trust 90 Jun 12
Development MOF 2403 Jul 12
Wilbow 130 Jun 13
Retirement Syndicate 275 Mar 14
Convertible Bond 125 Jan 16
Total Major Facilities 860 Drawn 740 % Drawn 86%
Project Finance: Aerial Project Finance 80 Dec12
Amount Drawn 19
% Drawn 24% Minor Facilities (< $25m):
Peregian Springs Shopping Centre 13 Dec 11
Currumbin 15 Feb 12
Mulpha FKP 15 Jul 12
Forest Place Group 22 Mar 20
Total Minor Facilities 65
Amount Drawn 51 % Drawn 78%
Net Bank Debt Drawn
Summary of Undrawn Debt Facilities
1 Excludes Bank Guarantees
2 Undrawn facilities are dependent upon having sufficient security 3 Reduces to $225m at Dec 11
Summary of Debt Facilities1
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Covenant FY11 Required Status
Development MOF / Retirement
(Total Liabilities - Resident Obligations - Deferred Tax Liability) / (Total Tangible Assets - Resident Obligations - Deferred Tax Liability)
Gearing 40% <55% ✔
(Underlying EBITDA - Net non-cash component of retirement revaluation) / Net Finance Costs - Loan Establishment Fees
Interest Cover 4.3x >1.75 ✔
The amount by which total tangible assets exceeds total liabilities NTA $1.5b >$1.0b ✔
Retirement Syndicate
Cash receipts (as defined) / Net Finance Costs - Loan Establishment Fees Interest Cover 2.4x >1.75x ✔
Loan amount outstanding / Mortgaged Property Valuation1 LVR 44% <50% ✔
Property Trust
Net Rent / Interest Expense Interest Cover 2.1x 1.5x ✔
Loan amount outstanding / Mortgaged Property Valuation LVR 46% <60% ✔
1 Based on terms agreed in respect of the refinance of the retirement syndicate
All Key Covenants Met
40
Drawn Debt Type1 $m1 % Avg Base Rate Weighted Avg Maturity
Floating Rate Debt 119 15% 4.96%2 NA
Fixed Rate Debt 691 85% 5.46% 3.9 years
Total / Weighted Av. 810 100% 5.38% NA
1 Gross bank debt drawn as at 30 June 2011, includes advance from Mulpha FKP 2 30 day BBSY rate as at 30 June 2011
Fixed Rate Debt Profile
Base Funding Cost Summary
Jun11 Jun12 Jun13 Jun14 Jun15 Jun16
Face Value of Fixed Rate Debt ($m) 691 575 615 565 525 300
Weighted Average Interest Rate on Fixed Rate Debt 5.46% 5.62% 5.54% 5.58% 5.69% 5.87%
Weighted Average Time to Maturity (Years) 3.9 3.5 2.5 1.7 0.8 0.2
Interest Rates
41
Current Debt Maturity
• Next material debt maturities are the Property Trust facilities in June 2012 and Development MOF in July 2012
Development MOF
Property Trust
42
Current Interest Rate Hedging Profile
555m 558m
691m 703m
575m 615m 615m
565m 565m 525m 525m
425m
300m
5.00%
5.25%
5.50%
5.75%
6.00%
6.25%
6.50%
6.75%
7.00%
--
100m
200m
300m
400m
500m
600m
700m
800m
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Fixed Rate Fixed Debt
Senior Bank Debt Convertible Bond Project Finance Debt Weighted Av Fixed Rate
43
Gearing History
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
FY06 HY07 FY07 HY08 FY08 HY09 FY09 HY10 FY10 HY11 FY11
Gearing History
Impact of capital raising
• Gearing has been below 30% since 31 December 2009
44
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