A specialist real estate investment manager
APN Property Group Limited (APN) is a specialist real estate investment manager. The company actively manages commercial real estate funds on behalf of institutional and retail investors.
Established in 1996, APN is listed on the ASX (code ASX:APD) and at 31 December 2019 manages $3.1 billion of real estate investments. APN’s head office is based in Melbourne, Australia and it has a team of 50.
APN’s approach to real estate investment is based on a ‘property for income’ philosophy and the company is driven by a commitment to investment performance and outstanding service. APN takes an active approach to investing with a strong focus on fundamental value and sustainable cash flow.
APN’s competitive advantage comprises the company’s:
- Track record;
- Co-investment and alignment with investors; and
- Strong governance.
APN has in excess of $125 million of its own capital invested alongside its clients in the investment funds it manages. In addition, the Board and management team have substantial personal investments in the company, providing strong alignment between APN’s people, the company’s shareholders and APN’s client investors in the pursuit of long term value creation.
APN views sustainability as inextricably linked to investment performance and incorporates environmental social and governance considerations in its investment processes.
Through its independently governed responsible entity APN Funds Management Limited, a wholly owned subsidiary of APN Property Group Limited, APN actively manages 12 funds including: domestic and international property securities, direct property and listed commercial real estate funds. APN’s funds include the $1.5 billion APN AREIT Fund strategy, APN Industria REIT (and ASX listed industrial and office property trust with $760 million of assets) and APN Convenience Retail REIT with a $390 million portfolio of non-discretionary retail properties.
APN recently reported its HY2020 results which included a 33% increase in operating earnings to $6.4 million and an interim distribution of 7.60 cents per security. Since December 2014 (approximately 5 years ago) APN has delivered a total shareholder return of 22.3% per annum, increased its Funds Under Management by over 70% and more than doubled its annual distribution.
APN is currently working on a series of new investment funds based on its ‘commercial property for income’ value proposition which it expects will deliver strong and reliable cash income yields to investors looking for sustainable cash generating investments.
APN is also considering converting itself to a stapled structure which the board believes will deliver a series of advantages to shareholders including lowering the group’s cost of capital and enabling it to further improve its growth potential.
Competitive positioning and outlook
APN’s four strategic competitive advantages (expertise, track record, co-investment capability and governance) have successfully driven the substantial growth in the company over the past five years, and continue to deliver APN an attractive point of difference in the market. APN’s ‘property for income’ proposition seeks to match investors’ requirements with attractive commercial property investment opportunities and APN believes in the current very low interest rate environment commercial property remains well positioned. While naturally each different investment class has risks and opportunities, commercial property currently offer investors yields of 4-5% higher than cash, backed by real assets ‘bricks and mortar’. For Australia and the developed world’s aging populations whether via large pension funds or direct investment, APN believes strong income yields will continue to be relevant and in demand to a broad group of investors.
Commercial real estate which is well located, leased to quality businesses and organisations on strong lease terms and financed with appropriate levels of debt compares well, in APN’s general view, to other asset classes. In part this is because rental income, via the lease contract, remains critical for businesses to continue to operate, even where economic conditions and trading conditions may soften.
APN’s track record of investment performance, the experience of its team and board, and its commitment to best in class governance continue to position the company for further growth. APN’s strategy is designed to deliver growth in the company’s funds under management, with the increase in scale over a largely fixed cost based having successfully driven strong and continuing growth in APN’s earnings per share over a sustained period.
Key Financial Information
|Total Net Income||17,404|
|Operating Earnings Before Tax||7,568|
|Earnings Per Share||5.61 cents|
|Operating Earnings Per Share||2.03 cents|
|Full Year Dividend||1.60 cents|
|Total Liabilities (excluding Debt)||9,951|
|Net Tangible Assets||138,127|
|Net Tangible Assets Per Share||43.4 cents|
|Funds Under Management||2.067 billion|