Commonwealth Managed Investments Limited...Mar 07, 2014 · Commonwealth Managed Investments...

Commonwealth Managed Investments Limited Commonwealth Managed Investments Limited ABN 33 084 098 180

7 March 2014 The Manager, Listings Australian Securities Exchange Company Announcements Office Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir

Presentation to securityholders Extraordinary General Meeting of CFS Retail Property Trust 1 and CFS Retail Property Trust 2, together CFS Retail Property Trust Group (CFX) I attach a copy of the presentation to securityholders which is to be delivered today at the Extraordinary General Meeting of CFS Retail Property Trust 1 and CFS Retail Property Trust 2. Yours sincerely

Michelle Brady Company Secretary Commonwealth Managed Investments Limited

CFX • CFS Retail Property Trust Group • Extraordinary General Meeting • 7 March 2014 • 1

CFX CFS Retail Property Trust Group

Extraordinary General Meeting CFS Retail Property Trust 1 (CFX1)

CFS Retail Property Trust 2 (CFX2)

7 March 2014

Creating one of Australia’s largest fully integrated and independently managed retail property groups

Not for release or distribution in the United States


Richard Haddock AM

Independent

non-executive Chairman

Internalisation proposal Introduction


Internalisation proposal Overview

Internalisation proposal (Proposal) agreed

– Subject to a number of approvals

– Notices of Meeting, Explanatory Memorandum and

Prospectus (Meeting Booklet) sent to CFX Securityholders

Unanimously supported by Independent Directors

– The Independent Board Committee (IBC) of CMIL

unanimously recommend that securityholders vote in favour

of the Proposal

Fair and reasonable to, and in the best interests of

securityholders

– The Independent Expert’s Report (IER) concludes the

Proposal is fair and reasonable to, and in the best interests

of, non-associated securityholders

CFX’s largest investor intends to vote in favour

– The Gandel Group (with an interest1 in CFX of 26.8%) intends

to vote in favour of the Proposal, in the absence of a superior

proposal

Internalisation is fully funded

1. Comprising a 17.3% direct stake and a further 9.5% non-voting interest in CFX pursuant to a right of

first refusal arrangement with CBA. Chatswood Chase Sydney, NSW


Internalisation proposal Benefits

1. Excludes funds in wind down and cross investments

2. On a pro forma basis for the 12 months ended 30 June 2014.

3. On a per security basis. Value accretion captures the benefit of costs of approximately $8m that are saved as part of internalisation which are not fully captured in

distributable income on consolidation but will be reflected in property valuations.

Improved structure

– Scale and diversification benefits of a $13.9b portfolio1

– Provides opportunities for incremental growth

– Internalised management is the preferred REIT structure

– Replaces fees paid to CBA with directly incurred costs

Accretive for securityholders2

– Incremental EBIT of $48.5m

– 2.1% accretive to forecast distributable income and 4.2% value accretive3

Enhanced governance

– Securityholder election of non-executive CFX Co Board members

– Avoids perceived conflicts of interest which may exist within external management models

– Management employed and incentivised directly by CFX


Internalisation proposal Independence and Board continuity

Angus McNaughton

Managing Director

Richard Haddock AM

Independent Non-executive Chairman

Nancy Milne OAM

Independent Non-executive Director

James Kropp

Independent Non-executive Director

To be appointed

1. Independent Non-executive

2. Independent Non-executive

3. The Gandel Group appointment

4. The Gandel Group appointment

New appointment Continuing Directors


• The Independent Directors unanimously

believe that the Internalisation Proposal

is in the best interests of Securityholders

Internalisation proposal Independent Director’s Recommendation

VOTE IN FAVOUR

Myer Melbourne, VIC


Angus McNaughton

Managing Director, Property

Colonial First State Global Asset Management

Strategy and business platform Introduction


Direct investments Strategic partnerships

Investment management Corporate services Asset management

1. Interests in 28 assets are directly held on the CFX balance sheet. Wholesale property funds and third party mandates have interests in 16 retail assets, of which nine are

co-owned by CFX.

2. Updated to 31 December 2013.

3. Three wholesale funds/mandates and 12 asset management partners.

4. Pro forma for FY14. Around half of this revenue is derived from assets co-owned with CFX.

5,000+ retailers

1.6m+ sqm

$9.3b retail sales p.a.

230m+ customers p.a.

$8.6b

assets

$5.3b

retail

AUM

16

retail

assets1

• Owner and manager of interests in a portfolio of

quality shopping centres, and DFO retail outlet

centres in Australia

• Provider of funds and asset management services

to wholesale property funds, property mandates

and other third parties

$13.9b AUM 29.8% pro forma gearing

35 retail assets managed1 ~850 property professionals CFX

Strategy and business platform The internalised platform

92% of revenue 8% of revenue4

15

strategic

partners3

28

retail

assets1

99.2%2

portfolio

occ.


Strategy and business platform Strategic partnerships – incremental growth opportunities

Strategy for strategic partners

– Leverage asset management expertise for

existing and new mandates

– Maintain and establish new retail sector

partnerships

– Target like-minded domestic and offshore

partners

– Provides income diversification and

incremental growth

Benefits of strategic partnerships

– Increases scale

– Diversifies earnings

– Enhances access to investment

opportunities

– Diversifies capital sources

– Provides opportunity to recycle capital and

increases return on equity

QueensPlaza, QLD


• Current strategic elements maintained

− Continue to focus on intensive asset management and disciplined investment decisions

• Enhanced focus on culture of excellence

− Attracting and retaining the best people

− Developing and maintaining efficient systems and processes

− Maintaining focus on continuous improvement

• Transition plans underway

• Key personnel retained

Strategy and business platform Strategy and transition

Chatswood Chase Sydney, NSW


Michael Gorman

Fund Manager

CFS Retail Property Trust Group

CFX operational update Introduction


Target Result

Distribution of

13.3 cps1 1H14 distribution of 6.8 cps, in line with the prior corresponding period

Intensive asset

management

660 new leases and renewals executed, albeit with pressure on re-leasing spreads

Comparable specialty MAT sales growth of 1.7% achieved, below forecast of 3%

Solid progress on Emporium Melbourne and DFO Homebush developments which

are expected to be fully leased on completion

Prudent capital

management

Maintained ‘A’ credit rating post the internalisation announcement

Proposed internalisation is fully funded

Sold Rosebud Plaza at a premium to book value

Investing responsibly

CFX ranked No.2 in Oceania and No.3 globally for listed entities, in Global Real

Estate Sustainability Benchmark for 2013

Joint No.1 for disclosure in CDP for 2013

CFX operational update 1H14 achievements – Delivering on strategy

1. Assuming approximately $450m of asset sales in FY14, performance fees are paid for the full 2014 financial year and there is no unforeseen material deterioration to

existing economic conditions. If there are no further asset sales post the sale of Rosebud Plaza, forecast distribution would be 13.6 cps. Impact of the Proposal on actual

FY14 distribution per security is expected to be neutral as the Proposal, if implemented, will only be effective for approximately three months to 30 June 2014, the

additional December 2013 distribution payable under the Placement, and the issuance of new equity in advance of implementation of the Proposal.


CFX operational update State of the market

Australia’s economic growth

remains positive

Buoyed by positive real wages

growth, rising house prices and share

market, and low interest rates

Lower Australian dollar reducing

growth in offshore travel and the

pricing advantages of offshore

(online) retailers

Challenged by a high savings rate,

soft employment growth and rising

petrol prices

DFO Homebush, NSW

Retail environment


CFX operational update State of the market (continued)

CFX outcomes

• Retailers have been reviewing their supply chains and business models to:

– reduce costs to be able to offer lower prices, and

– maintain or increase profit margins

• Actively re-mixing our centres to improve the retail mix

• International retailers continue their expansion in CFX centres due to strong demand for brand

names

• Investing in improving the in-mall experience to extend dwell time

Chadstone Shopping Centre, VIC


CFX operational update DFO Homebush – majority of stores open


CFX operational update DFO Homebush – parents’ room upgrade


CFX operational update Emporium Melbourne – progress shots

Artist’s impression Construction progress


CFX operational update Emporium Melbourne – internal voids nearing completion


CFX operational update Chadstone Shopping Centre (North Retail and office)

Artist’s impression


Extraordinary General Meeting Independence and continuity

Richard Haddock AM

Independent

non-executive Chairman

CFX • CFS Retail Property Trust Group • Extraordinary General Meeting • 7 March 2014 • 21 21

Resolutions

Chatswood Chase Sydney, NSW


Ratification of prior issue of Existing CFX Stapled Securities under the Placement

That, for the purposes of Listing Rule 7.4 and for all other purposes, the allotment and issue of 151,351,352 Existing CFX Stapled Securities at $1.85 per stapled security on 24 December 2013 pursuant to a placement to institutional investors, as described in the Explanatory Memorandum accompanying the notices of meeting, be ratified and approved.

Resolutions Placement resolution

Resolution 1

The Independent Directors unanimously recommend you VOTE IN FAVOUR

To consider and, if thought fit, pass the following resolution as an ordinary resolution of the members of CFX1 and CFX2:


496,475,617 proxy votes have been lodged for this

resolution with the following voting instructions

Resolutions Resolution 1 – proxy votes

For Against Open

119,369,374 24.04% 1,675,889 0.34% 375,430,354 75.62%

The Chairman intends to vote undirected proxies in favour of this Resolution

Resolution 1


Resolution 2

That, subject to and conditional on Resolutions 3 and 4 set out in the notice convening this meeting being passed, for the purpose of ASX Listing Rules 10.1 and for all other purposes, the Internalisation Proposal, as described in the Explanatory Memorandum accompanying the notices of meeting

with such modifications, if any, as are approved at the meeting, be approved and Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFS Retail Property Trust 1 (ARSN 090 150 280), be authorised to do all things which it considers necessary, desirable or reasonably incidental to give effect to the Internalisation Proposal.

Resolutions Internalisation resolution

CFX1 member approval of Internalisation Proposal

under ASX Listing Rule 10.1 and for all other purposes

To consider and, if thought fit, pass the following resolution as an ordinary resolution of the members of CFX1:





Resolution 2

2,176,517,687 proxy votes have been lodged for this


For Against Open

2,131,402,775 97.93% 36,975,092 1.70% 8,139,820 0.37%


That, subject to and conditional on Resolutions 2 and 4 set out in the notice convening this meeting being passed, for the purposes of Listing Rule 10.1 and for all other purposes, the Internalisation Proposal, as described in the Explanatory Memorandum accompanying the notices of meeting with such

modifications, if any, as are approved at the meeting, be approved and Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFS Retail Property Trust 2 (ARSN 156 647 853), be authorised to do all things which it considers necessary, desirable or reasonably incidental to give effect to the Internalisation Proposal.

Resolution 3


CFX2 member approval of Internalisation Proposal under

Listing Rule 10.1 and for all other purposes






Resolution 3



For Against Open

2,131,371,650 97.93% 36,998,976 1.70% 8,139,820 0.37%


That, subject to and conditional on Resolutions 2 and 3 set out in the notice convening this meeting being passed:

a) the constitution of CFS Retail Property Trust 1 (ARSN 090 150 280) (CFX1) be modified as set out in the CFS Retail Property Trust 1 Supplemental Deed tabled at this meeting and initialled by the Chairman for the purposes of identification (CFX1 Supplemental Deed), with effect from the date on which the CFX1 Supplemental Deed is lodged with the Australian Securities and Investment Commission (ASIC) in accordance with section 601GC(2) of the Corporations Act 2001 (Cth), and

b) Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFX1, be authorised to execute, and lodge with ASIC,

the CFX1 Supplemental Deed.

Resolution 4


Modification of CFX1's constitution

To consider and, if thought fit, pass the following resolution as a special resolution of the members of CFX1:





Resolution 4



For Against Open

2,131,747,358 97.93% 36,960,980 1.70% 8,172,291 0.38%


That, subject to and conditional on Resolution 6 set out in the notice convening this meeting being passed, for the purposes of section 208(2) of the Corporations Act 2001(Cth) and for all other purposes, approval be given to the making by Commonwealth Managed Investments Limited (ABN 33 084 098 180) (CMIL), as Responsible Entity of CFS Retail Property Trust 1 (ARSN 090 150 280) (CFX1), of the contract between it and CMIL as Responsible Entity of CFS Retail Property Trust 2 (ARSN 156 647 853) (CFX2) and CFX Co Limited (ACN 167 087 363], that is set out in the deed titled 'Intra-Group Transactions Deed' tabled at this meeting and initialled by the Chairman for the purposes of identification, with such modifications, if any, as are approved at the meeting.

Resolution 5 CFX1 member approval of Intra-Group Transactions

Deed under Chapter 2E of the Corporations Act


Resolutions Intra-Group Transactions Deed Resolution





Resolution 5



For Against Open

2,131,687,541 97.93% 36,961,833 1.70% 8,198,164 0.38%


Resolution 6 CFX2 member approval of Intra-Group Transactions

Deed under Chapter 2E of the Corporations Act


That, subject to and conditional on Resolution 5 set out in the notice convening this meeting being passed, for the purposes of section 208(2) of the Corporations Act 2001 (Cth) and for all other purposes, approval be given to the making by Commonwealth Managed Investments Limited (ABN 33 084 098 180) (CMIL), as Responsible Entity of CFS Retail Property Trust 2 (ARSN 156 647 853) (CFX2), of the contract between it and CMIL as Responsible Entity of CFS Retail Property Trust 1 (ARSN 090 150 280) (CFX1) and CFX Co Limited (ACN 167 087 363), that is set out in the deed titled 'Intra-Group Transactions Deed' tabled at this meeting and initialled by the Chairman for the purposes of identification, with such modifications, if any, as are approved at the meeting.

Resolutions Intra-Group Transactions Deed Resolution





Resolution 6



For Against Open

2,131,688,682 97.93% 36,961,833 1.70% 8,190,692 0.38%


Resolution 7 De-stapling of CFX1 from CFX2


That, subject to and conditional on Resolutions 2, 3, 4, 8, 9 and 10 set out in the notice convening this meeting being passed for the purposes of clause 33B.5.1 of the constitution of CFS Retail Property Trust 1 (ARSN 090 150 280) (CFX1):

a) the units in CFX1 cease to be stapled to units in CFS Retail Property Trust 2 (ARSN 156 647 853), and

b) Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFX1, be authorised to determine that the stapling provisions of the constitution of CFX1 will cease to apply and that a particular date is to be the unstapling date.

Resolutions De-stapling resolution





Resolution 7



For Against Open

2,131,521,035 97.92% 37,078,039 1.70% 8,192,976 0.38%


That, subject to and conditional on Resolutions 2, 3, 4, 7, 9 and 10 set out in the notice convening this meeting being passed for the purposes of clause 19.5 of the constitution of CFS Retail Property Trust 2 (ARSN 156 647 853) (CFX2):

a) the units in CFX2 cease to be stapled to units in CFS Retail Property Trust 1 (ARSN 090 150 280), and

b) Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFX2, be authorised to determine that the Stapling provisions of the constitution of CFX2 will cease to apply and that a particular date is to be the unstapling date.

Resolution 8 De-stapling of CFX2 from CFX1







Resolution 8



For Against Open

2,131,519,751 97.92% 37,078,470 1.70% 8,230,686 0.38%


That, subject to and conditional on Resolutions 2, 3, 4, 7, 8 and 10 set out in the notice convening this meeting being passed, for the purposes of item 7 of section 611 of the Corporations Act 2001 (Cth), the acquisition of all of the units on issue in CFS Retail Property Trust 2 (ARSN 156 647 853) (CFX2) by CFX Co Limited (ACN 167 087 363] (CFX2 Acquisition), as described in the Explanatory Memorandum accompanying the notices of meeting with such modifications, if any, as are approved at the meeting, be approved and Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFX2, be authorised to do all things which it considers necessary, desirable or reasonably incidental to give effect to the CFX2 Acquisition.

Resolution 9 CFX2 member approval of CFX Co's acquisition of CFX2







Resolution 9



For Against Open

2,131,562,671 97.92% 37,027,420 1.70% 8,221,211 0.38%


That, subject to and conditional on Resolutions 2, 3, 4, 5, 7, 8 and 9 set out in the notice convening this meeting being passed:

a) the constitution of CFS Retail Property Trust 2 (ARSN 156 647 853) (CFX2) be modified as set out in the CFS Retail Property Trust 2 Supplemental Deed tabled at this meeting and initialled by the Chairman for the purposes of identification (CFX2 Supplemental Deed), with effect from the date on which the CFX2 Supplemental Deed is lodged with the Australian Securities and Investment Commission (ASIC) in accordance with section 601GC(2) of the Corporations Act 2001 (Cth), and

b) Commonwealth Managed Investments Limited (ABN 33 084 098 180), as the Responsible Entity of CFX2, be authorised to execute, and lodge with ASIC, the CFX2 Supplemental Deed.

Resolution 10 Modification of CFX2's constitution





CFX internalisation Resolution 10 – proxy votes


Resolution 10



For Against Open

2,131,585,927 97.92% 37,035,081 1.70% 8,232,184 0.38%


CLOSE OF MEETING

The Myer Centre Brisbane, QLD Chadstone Shopping Centre, VIC


Disclaimer

Disclaimer This presentation ('Presentation') has been prepared by Commonwealth Managed Investments Limited ABN 33 084 098 180 (the 'Responsible Entity') as responsible entity of CFS Retail Property Trust 1 ARSN 090 150 280 and CFS Retail Property Trust 2 ARSN 156 647 853 (together CFS Retail Property Trust Group or 'CFX'). Neither Commonwealth Bank of Australia (the 'Bank') ABN 48 123 123 124 nor any of its subsidiaries guarantees or in any way stands behind the performance of CFX or the repayment of capital by CFX Investments in CFX are not deposits or other liabilities of the Bank or its subsidiaries, and investment type products are subject to investment risk including possible delays in repayment and loss of income and principal invested. Summary information This Presentation contains summary information only in relation to CFX and the Proposal as at the date of this Presentation and should be read in conjunction with the Notices of Meeting and Explanatory Memorandum released to ASX on 7 February 2014. The information in the Presentation is of a general nature and is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person, and you should consult your financial, legal, taxation or other professional adviser before making any such investment decision. Future performance This Presentation contains certain statements which relate to the future. These forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual results, performance or achievements of CFX to be materially different from future results, performance or achievements expressed or implied by such statements. Such forward looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which CFX will operate in the future. Certain important factors that could cause actual results, performance or achievements to differ materially from those in the forward looking statements include, among other things, the risk factors described in the Notices of Meeting and Explanatory Memorandum released to ASX on 7 February 2014, and other unknown risks and uncertainties. Forward looking statements should therefore, be construed in light of such risk factors and reliance should not be placed on forward looking statements.


Disclaimer

Past performance Past performance information in this Presentation is provided for illustrative purposes only and should not be relied upon and is not an indication

of future performance including future security price performance.

Disclaimer The Responsible Entity, the Bank, Colonial First State Property Retail Pty Limited ABN 19 101 384 294 and each other member of the Bank’s group

of companies, and their respective affiliates, officers, employees, agents and advisers to the maximum extent permitted by law, expressly disclaim all liabilities, including, without limitation, liability for negligence in respect of, make no representations regarding, and take no

responsibility for, any part of this Presentation and make no representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of information in this Presentation.

Neither the Bank, nor any member of the Bank’s group (excluding the Responsible Entity) has authorised the issue of this presentation or the

content included in it.

Statements made in this Presentation are made only as at the date of this Presentation. The information in this Presentation remains subject to change without notice.

Copyright and confidentiality

The copyright of this Presentation and the information contained therein is vested in the Responsible Entity, the Bank and the Bank’s group of companies. This Presentation should not be copied, reproduced or redistributed without prior consent.

Note on metrics in this presentation

For clarity, all figures relating to the Proposal in this presentation assume the continued management of QV Retail. CMIL has agreed with the Bank that the property management agreement relating to QV Retail may be terminated, assigned or novated before or within 12 months of the

date of completion for consideration to CMIL of $7.7m. The impact this may have on various metrics relating to the Proposal is included in Appendix 12 of the CFX investor presentation lodged with the ASX on 18 December 2013. All figures quoted in this Presentation relating to the

Proposal are sourced from the Meeting Booklet dated 7 February 2014.


Angus McNaughton Michael Gorman

Managing Director, Property Fund Manager

Colonial First State Global Asset Management CFS Retail Property Trust Group

Phone: +61 2 9303 3765 Phone: +61 2 9303 3448

Email: [email protected] Email: [email protected]

Penny Berger Troy Dahms

Head of Investor Relations and Communications Investor Relations and Communications Manager

Colonial First State Global Asset Management Colonial First State Global Asset Management

Phone: +61 2 9303 3516 Phone: +61 2 9303 3491

Mobile: +61 402 079 955 Mobile: +61 412 055 996

Email: [email protected] Email: [email protected]

Investor and media contacts

Further information

For further information please contact

Commonwealth Managed Investments Limited...Mar 07, 2014 · Commonwealth Managed Investments...

Documents

Transcript of Commonwealth Managed Investments Limited...Mar 07, 2014 · Commonwealth Managed Investments...