contents
Aventus Annual Report 2017
2 | AVENTUS RETAIL PROPERTY FUND
FROM THE
CHAIRMAN
AND CEO
DARREN HOLLAND
CEO of Aventus
Property Group (APG)
and Executive Director
BRUCE CARTER
Chairman
On behalf of the Directors of Aventus Capital
Limited (ACL), the responsible entity of Aventus
Retail Property Fund (AVN or the Fund), we are
pleased to present AVN’s annual report, including
the audited financial statements, for the year ended
30 June 2017.
The Fund has produced solid results for unitholders
in FY17:
yFFO earnings of 17.7 cpu which is in line with
the Fund’s guidance of 17.5 cpu
yDistributions of 15.9 cpu or 90% of the Fund’s
FFO for the year
yGrowth in Net Tangible Assets (NTA) per unit
to $2.22 from $2.02 per unit, up 9.9% from
30 June 2016 (post settlement of acquisitions
on 3 July 2017)
yTotal unitholder return (distributions plus unit
price growth since IPO) of 31.9% and 6.2%
during the year ended 30 June 2017
Acquisitions
During FY17, the Fund entered into contracts to
acquire two LFR centres valued at $436 million
located in Castle Hill and Marsden Park, two
metropolitan Sydney locations. The acquisition
was completed on 3 July 2017 (Acquisition).
The Acquisition is consistent with the Fund’s
strategy to consolidate ownership in the highly
fragmented LFR sector and to be the leading
pure-play LFR owner in Australia.
Value Adding Developments
Key highlights include:
yRedevelopment of the former Bunnings tenancy
at Sunshine Coast Home in Queensland is on
budget and programmed for completion during
the first quarter of FY18. The project is 100%
pre-committed to Amart Furniture, Sheridan
and World Gym
yConstruction of the first child care facility in the
portfolio commenced at Cranbourne Home in
Victoria and is on budget and programmed for
completion during the first quarter of FY18
yThe expansion of the Belrose Super Centre
in New South Wales to add 2,263 sqm of
retail GLA to the existing rooftop car park was
completed and opened for trade in March 2017
yThe Fund has also obtained 11 planning
approvals allowing for further expansion in
eight AVN centres
ANNUAL REPORT 2017 | 3
FFO cents per unit
17. 7
Distributions
cents per unit
15.9
NTA per unit
$2.22
Pro forma NTA per unit post Acquisition
Funds from
operations (FFO)
$70.5m
FINANCIAL HIGHLIGHTS
CAPITAL MANAGEMENT
In FY17 and with the Acquisition, the Fund
increased its land bank (total site area) to
1.3 million sqm.
Disciplined Capital Management
The Fund also initiated a number of capital
management initiatives to maintain balance
sheet flexibility during the year.
Key highlights include:
yA well supported entitlement offer which
raised $214.7 million
y$300 million of new tranches under the
existing debt facility, expiring in 2021 and 2022
yActivated a Distribution Reinvestment
Plan (DRP) as a component of long term
capital management. The DRP provides
a measured and efficient means of raising
additional equity from existing unitholders
The pro forma gearing of the Fund post
settlement of the Acquisition is 38.9% which
is within target range of 30%–40%.
Optimising the Portfolio
The AVN portfolio continue to perform well with
high occupancy, positive leasing spreads and
low incentives.
Key highlights include:
yExpanding the portfolio which now
consists of 22 LFR centres and is now
valued at $1.8 billion post settlement of
the Acquisition
y98.3% occupied with a Lease Expiry (WALE)
of 4.2 years
y84% of portfolio leased to national retailers
y34% leased to non-household category uses
y87% of all leases have annual fixed or
CPI increases
y133 leases over GLA of 107,000 sqm
were signed during the financial year which
reduced the FY18 lease expiries to 11%
or 7% on a like-for-like basis excluding
the Acquisition
yFY17 like-for-like Net Property Income (NPI)
growth 3.0% (excluding Acquisition and
development impacted centres)
The Fund also achieved strong property
revaluations of $91.4 million, equal to a 7.2%
increase across the portfolio during the year.
The increase in valuations is the result of
annual rental growth, completion of a number
of asset management and development
initiatives, together with a reduction in
capitalisation rate. The Weighted Average
Capitalisation Rate (WACR) of the portfolio
tightened to 6.85% as at 30 June 2017,
representing a 68 basis point compression.
The Fund is delivering on its four key growth
initiatives to drive long term value creation and
sustainable earnings growth.
Changes to the Board
We would like to acknowledge changes to the
Board of ACL as the responsible entity of the
Fund. Brett Blundy will be appointed to the
Board of ACL in August 2017. Nico van der
Merwe will, however, remain as an alternate
Director for Brett Blundy.
Delivering on Strategy
The Board is committed to its core strategy
of active portfolio management, overseeing
value adding development projects, capturing
benefits from changes to zoning reforms and
participating in sector consolidation to enhance
unitholder returns.
In light of the successful execution of
our strategy, we are pleased to forecast
FY18 FFO guidance of 2%–4% higher than
FY17 FFO per Unit.
On behalf of the Board and management,
we would like to thank our loyal unitholders for
their investment in the Fund, and our retailers
and shoppers who visit our centres for their
continued support.
Bruce Carter
Chairman
Darren Holland
CEO of APG and Executive Director
2 |  AVENTUS RETAIL PROPERTY FUND FROM THE CHAIRMAN AND CEO On behalf of the Directors of Aventus Capital Limited (ACL), the responsible entity of Aventus Retail Property Fund (AVN or the Fund), we are pleased to present AVN’s annual report, including the audited financial statements, for the year ended 30 June 2017. The Fund has produced solid results for unitholders in FY17: yy FFO earnings of 17.7 cpu which is in line with the Fund’s guidance of 17.5 cpu yy Distributions of 15.9 cpu or 90% of the Fund’s FFO for the year yy Growth in Net Tangible Assets (NTA) per unit to $2.22 from $2.02 per unit, up 9.9% from 30 June 2016 (post settlement of acquisitions on 3 July 2017) yy Total unitholder return (distributions plus unit price growth since IPO) of 31.9% and 6.2% during the year ended 30 June 2017 Acquisitions During FY17, the Fund entered into contracts to acquire two LFR centres valued at $436 million located in Castle Hill and Marsden Park, two metropolitan Sydney locations. The acquisition was completed on 3 July 2017 (Acquisition). The Acquisition is consistent with the Fund’s strategy to consolidate ownership in the highly fragmented LFR sector and to be the leading pure-play LFR owner in Australia. Value Adding Developments BRUCE CARTER Chairman DARREN HOLLAND CEO of Aventus Property Group (APG) and Executive Director Key highlights include: yy Redevelopment of the former Bunnings tenancy at Sunshine Coast Home in Queensland is on budget and programmed for completion during the first quarter of FY18. The project is 100% pre-committed to Amart Furniture, Sheridan and World Gym yy Construction of the first child care facility in the portfolio commenced at Cranbourne Home in Victoria and is on budget and programmed for completion during the first quarter of FY18 yy The expansion of the Belrose Super Centre in New South Wales to add 2,263 sqm of retail GLA to the existing rooftop car park was completed and opened for trade in March 2017 yy The Fund has also obtained 11 planning approvals allowing for further expansion in eight AVN centres ANNUAL REPORT 2017 | 3 In FY17 and with the Acquisition, the Fund increased its land bank (total site area) to 1.3 million sqm. Disciplined Capital Management The Fund also initiated a number of capital management initiatives to maintain balance sheet flexibility during the year. Key highlights include: yy A well supported entitlement offer which raised $214.7 million yy $300 million of new tranches under the existing debt facility, expiring in 2021 and 2022 yy Activated a Distribution Reinvestment Plan (DRP) as a component of long term capital management. The DRP provides a measured and efficient means of raising additional equity from existing unitholders The Fund also achieved strong property revaluations of $91.4 million, equal to a 7.2% increase across the portfolio during the year. The increase in valuations is the result of annual rental growth, completion of a number of asset management and development initiatives, together with a reduction in capitalisation rate. The Weighted Average Capitalisation Rate (WACR) of the portfolio tightened to 6.85% as at 30 June 2017, representing a 68 basis point compression. The Fund is delivering on its four key growth initiatives to drive long term value creation and sustainable earnings growth. Changes to the Board The pro forma gearing of the Fund post settlement of the Acquisition is 38.9% which is within target range of 30%–40%. We would like to acknowledge changes to the Board of ACL as the responsible entity of the Fund. Brett Blundy will be appointed to the Board of ACL in August 2017. Nico van der Merwe will, however, remain as an alternate Director for Brett Blundy. Optimising the Portfolio Delivering on Strategy The AVN portfolio continue to perform well with high occupancy, positive leasing spreads and low incentives. The Board is committed to its core strategy of active portfolio management, overseeing value adding development projects, capturing benefits from changes to zoning reforms and participating in sector consolidation to enhance unitholder returns. Key highlights include: yy Expanding the portfolio which now consists of 22 LFR centres and is now valued at $1.8 billion post settlement of the Acquisition yy 98.3% occupied with a Lease Expiry (WALE) of 4.2 years yy 84% of portfolio leased to national retailers yy 34% leased to non-household category uses yy 87% of all leases have annual fixed or CPI increases yy 133 leases over GLA of 107,000 sqm were signed during the financial year which reduced the FY18 lease expiries to 11% or 7% on a like-for-like basis excluding the Acquisition yy FY17 like-for-like Net Property Income (NPI) growth 3.0% (excluding Acquisition and development impacted centres) In light of the successful execution of our strategy, we are pleased to forecast FY18 FFO guidance of 2%–4% higher than FY17 FFO per Unit. On behalf of the Board and management, we would like to thank our loyal unitholders for their investment in the Fund, and our retailers and shoppers who visit our centres for their continued support. Bruce Carter Chairman Darren Holland CEO of APG and Executive Director FINANCIAL HIGHLIGHTS Funds from operations (FFO) $70.5m FFO cents per unit 17.7 Distributions cents per unit 15.9 CAPITAL MANAGEMENT NTA per unit $2.22 Pro forma NTA per unit post Acquisition