April 20, 2015 Corporate Presentation

Transcription

April 20, 2015 Corporate Presentation
MGG Corporate Update
April 20, 2015
Forward Looking Statement
Caution Regarding Forward-Looking Information
This presentation contains statements that, to the extent that they are not historical fact, may
constitute "forward-looking information" within the meaning of applicable securities legislation.
Forward-looking statements or information may include financial and other projections and are
statements which reflect the current reasonable expectations and assumptions of Management
regarding the future growth, results of operations, performance and business prospects and
opportunities of the Corporation.
Wherever possible, words such as "may", ''would", "could", "should", "will", "anticipate", "believe",
"plan", "expect", "intend", "estimate", "aim", "endeavour" and similar expressions have been used to
identify these forward-looking statements. These statements reflect Management's current beliefs
based on its experience and expertise with respect to future events and are based on information
currently available to Management. Management uses forward-looking statements because it
believes they provide useful information with respect to the Corporation, and cautions readers that
the information may not be appropriate for other purposes and should not be read as guarantees of
future performance or results. In particular, this presentation contains forward-looking statements
pertaining to the following: the future growth of Mongolia, resources located in Mongolia, the
development of such resources, growth due to the possible extraction of said resources, the future
growth of the GDP of Mongolia, rental rate increases, capitalization rate decreases, property
valuation growth, historical growth of other cities being contiguous with the growth of Ulaanbaatar,
Management’s expectations of existing leases and revenue, future developmental plans, future
rental rates, and the expansion of available property on a per person basis.
There are uncertainties inherent in forward-looking information, including factors beyond the
Corporation's control. The Corporation undertakes no obligation to update forward-looking
information if circumstances or Management's estimates or opinions should change except as
required by law. The reader is cautioned not to place undue reliance on forward-looking statements.
Although the Corporation believes that the expectations reflected by the forward-looking statements
presented in this presentation, these forward-looking statements have been based on assumptions
and factors concerning future events that may prove to be inaccurate. Those assumptions and
factors are based on information currently available to the Corporation about itself and the
businesses in which it operates. Information used in developing forward-looking statements has
been acquired from various sources including third party consultants, suppliers, regulators and other
sources. In some instances, material assumptions are disclosed elsewhere in this presentation in
respect of forward looking statements. The material factors and assumptions used to develop the
forward-looking statements include but are not limited to: information provided by third party data
sources and a reliance on assumptions behind that information, reserve data from mining firms,
plans to extract resources as publicized by mining firms, GDP growth, governmental tax revenue
and a growing consumer economy, rental rate and capitalization rate changes in Mongolia and other
commercial property markets and assumptions on their patterns of development, existing leases
and existing development and a continued focus of commercial activity on Peace Avenue, and its
vicinity.
Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors
could cause actual results, performance or achievements of the Corporation to be materially
different from any future results, performance or uncertainty regarding achievements that may be
expressed or implied by such forward-looking statements.
Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global
marketplace associated with current economic conditions, occupancy levels, access to debt and
equity capital, interest rates, the relative illiquidity of real property, new entrants, unexpected costs
or liabilities related to acquisitions or dispositions, construction, environmental matters, legal
matters, the single importance on the Oyu Tolgoi project and the risk it doesn’t development as
expected; reliance on third party information to assess opportunities, reliance on key personnel,
taxes, the trading price of the securities of the Corporation, lack of availability of acquisition or
disposition opportunities for the Corporation and exposure to economic, real estate and capital
market conditions in Mongolia. Mongolia by its nature is an emerging economy and subject to
certain risks inherent in an emerging economy including less mature laws, higher risks of inflation,
changing business conditions or erratic interpretations of law and regulatory and sovereignty risk.
The included material is provided for informational purposes only as of the date hereof, is not
complete, and may not contain certain material information about the Corporation, including
important disclosures and risk factors associated with an investment in the Corporation.
More
complete disclosures and risk factors can be found in the Corporation’s continuous disclosure filings
available on SEDAR.
In addition, new factors and risks emerge from time to time and it is not possible for the
Management to predict all of such factors and to assess in advance the impact of each such factor
on the Corporation or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking statements. Should one or
more of these risks or uncertainties materialize, or should assumptions underlying the forwardlooking statements prove incorrect, actual results, performance or achievements may vary
materially from those expressed or implied by the forward-looking statements contained in this
presentation. These factors should be considered carefully and readers should not place undue
reliance on forward-looking statements.
Although forward-looking statements contained in this presentation are based upon what
Management currently believes to be reasonable assumptions, the Corporation cannot assure
prospective investors that actual results, performance or achievements will be consistent with these
forward-looking statements. Forward-looking statements herein are made as of the date of this
presentation and the Corporation does not assume any obligation to update or revise these forwardlooking statements except as required by applicable securities laws.
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A Liquid and Transparent Way to Invest
in Mongolia’s Growth...
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Real Estate
Two Major Trends in a
Growing Economy
Rents Up
Cap Rates Down
Rents Increase
(GDP Drives Rents)
Cap Rates Decrease
(Increased Capital
Availability)
LEADS TO PRICE APPRECIATION
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$Trillions In
Resources
/
=
3 Million
People
Explosive Property Price
Appreciation
Astana - Kazakhstan
“With the second highest per capita GDP in the former Soviet
Union, Kazakhstan is the obvious franchising leader in Central Asia
and is poised to replicate the retail and franchising boom that
Russia has experienced over the last decade.” ~ USA.gov
1991
BEFORE
2015
AFTER
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Doha - Qatar
“Consumers in Qatar have the highest disposable income in
the world, driving consumption and demand for retail
space.” ~ DTZ
2015
1980
BEFORE
AFTER
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Abu Dhabi - UAE
“The amount of retail space in Abu Dhabi will double to
1.8 million sq. meters by 2015” ~ Cushman & Wakefield
1960s
2015
2011
1954
BEFORE
AFTER
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Kuwait City - Kuwait
“International brands are popular in Kuwait. Unlike other GCC
countries, fashion sales are not driven by expatriates, but by locals
with a lot of disposable income” ~ AT Kearny
2015
1961
BEFORE
AFTER
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Ulaanbaatar - Mongolia
A Unique Opportunity
The majority of all
commercial activity is
centered on 3km of
Peace Avenue
10
World’s Most Expensive
High Street Retail
Hong Kong
New York
Paris
Tokyo
Sydney
London
Zurich
Seoul
Beverly Hills
Brisbane
Chicago
San Francisco
Sao Paulo
Moscow
Beijing
Singapore
Kuala Lumpur
Toronto
Tel Aviv
Kiev
Bogota
Istanbul
Taipei
Ho Chi Minh City
Beirut
Luxemburg
Jenusalem
Warsaw
Almaty
Jakarta
Bangkok
Ulaanbaatar
0
Source: Cushman & Wakefield
500
1000
1500
US$/Sq.ft/year
2000
2500
3000
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KEY ECONOMIC STATISTICS
One of the Fastest Growing Economies*
20"
17.5"
18"
16"
14"
12.2"
US$ bln
12"
10"
12.4"
12.8"
10.6"
8.9"
8.8"
8"
6.4"
6"
4"
12.0"
7.8"
6.9"
5.3"
3.9"
2"
3.9"
3.0"
0.2"
0"
2008"
2009"
2010"
2011"
2012"
*Data from the National Statistical Office Of Mongolia. 2015 is estimated GDP growth.
2013"
2014"
2015"
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Business Conditions Improving
The World Bank Ease Of Doing Business Survey 2011 – 2015*
160
140
Improve
120
100
89
d 17 Ra
nkings
86
76
80
70
72
60
40
20
Outperforming Popular Emerging Markets In 2014
Annual Doing Business Rankings For Mongolia
160
142
140
120
120
100
80
90
95
78
60
40
20
0
0
2011
2012
2013
2014
2015
Vietnam
China
Philippines
Brazil
*Rankings Are By Country. A Lower Number Indicates A Better Business Environment Compared To Other Countries
India
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International Brands
Continue to Enter the Market
Market Entrants Since 2013
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PORTFOLIO HIGHLIGHTS
Property Portfolio
Property Portfolio At Cost*^
6%
25%
Retail
Office
Development Pipeline
Held For Sale
48%
21%
*Measured as a percentage of historical Canadian Dollar cost as of year-end 2014
^Management notes that the development pipeline produces negligible revenue and is held for
appreciation and future development
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Strong Comparable* Rental Growth
50%
45%
40%
30%
25%
20%
15%
New Foreign Investment
Law Passed
10%
*Change in comparable rents is calculated based on the year over year change in billed revenue net of VAT in Mongolian Togrog and excludes apartments, development
assets, properties held for sale, under renovation or not part of the portfolio during the prior year. Billed revenue does not take into account bad debt expense, late payment
penalties, interest income or management fee revenue.
Feb 2015
Jan 2015
Dec 2014
Nov 2014
Oct 2014
Sep 2014
Aug 2014
Jul 2014
Jun 2014
May 2014
Apr 2014
Mar 2014
Feb 2014
Jan 2014
Dec 2013
Nov 2013
Oct 2013
Sept 2013
Aug 2013
July 2013
Jun 2013
May 2013
Apr 2013
Mar 2013
0%
Feb 2013
5%
Jan 2013
Comp Revenue
35%
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Continued Rental Growth
Average Portfolio Rents Per Meter*
45,000
40,000
35,000
25,000
20,000
15,000
10,000
High Street Retail
Secondary
*Calculated by dividing billed revenue by available meters in the core portfolio.
Office Space
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
13-May
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
12-May
Apr-12
Mar-12
-
Feb-12
5,000
Jan-12
MNT Per Month
30,000
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0%
Primary Street Retail
*Calculated by dividing occupied meters by available meters in the core portfolio.
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Occupancy Rate
Occupancy* Has Remained High
120%
100%
80%
60%
40%
20%
Office Space
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OUR INSTITUTIONAL
PROPERTY MANAGEMENT PLATFORM
Professional Team in Mongolia
Tsolmon Davaadorj
Director of Acquisitions
Talha Siddiqui
Financial Controller
Stanson Dobbs
Senior Manager of Internal Controls and Analysis
Bayar Zorigt
Director of Development
Anar Asai
Head of Sales and Leasing
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Experienced Board of Directors
Harris Kupperman
Chairman & CEO
Nick Cousyn
Director
Brad Farquhar
Director
Robert Scott
Director
Jim Dwyer
Director
Byambaa Losolsuren
Director
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The Core Team Has Been Hired
Total Employees
50
45
40
Employees
35
30
25
20
15
10
5
0
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Corporate
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Property Management
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Facilities Support Personnel
Excludes Former Employees From Mandal Daatgal, The Company’s Former Insurance Subsidiary
MGG outsourced security services in Q4 of 2014
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Some of Our Valued Tenants
PERMASTEELISA MONGOLIA LLC
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FUTURE GROWTH PLANS
Where We Want To Be
Current
Future
Leverage Existing Capability Into
Higher Returns On Capital
MGG
MGG
Utilize Outside Capital On Our
Projects To Increase Returns To
MGG
Earn Stable Fee Based Revenue
Property Assets
High Return On
Capital Fee-ForServices
Business
Asset
Management &
Development
Company
Property
Developer
Increase Revenue And Earnings
Without A Sizable Increase In
Total Shares Outstanding
High Yield
Property
Portfolio
Manager Of In-House
Property Funds Where
MGG Co-Invests
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TUGULDUR SHOPPING CENTER
Stage 1
BEFORE
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TUGULDUR SHOPPING CENTER
Stage 1
AFTER
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TUGULDUR SHOPPING CENTER
Stage 2
Will Add Approximately 7,000 Square Meters Of Space
Construction Start Date Targeted For Summer 2015
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Why Invest Now?
Current Valuation is Attractive
1.43
1.50
1.03
$CDN
1.00
0.50
0.00
April 14 2015 Closing
Price
3rd Quarter 2014
Tangible Book Value
Per Share
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Uniquely Positioned For Future Growth
§  Publicly Traded In North America (YAK-Canada &
MNGGF-USA)
§  Built The Only Institutional Property Management
Platform In Mongolia
§  Acquired One Of The Most Attractive Development
Pipelines In Ulaanbaatar
§  Conservative Balance Sheet With Zero Debt And CDN
$1.5m Of Cash As Of April 1, 2015
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Goals For 2015
§ 
Dramatically Reduce Costs As Part Of Management
Overhaul
§ 
Advance 3rd Party Initiatives
§ 
Secure Funding And Begin Tuguldur Stage 2 Construction
§ 
Run-Rate Cash Flow Positive By Year-End 2015
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Final Thought
On July 16, 2009,
Parliament
authorized the
government to
finalize the Oyu
Tolgoi Investment
Agreement
Over the next 19
months, the MSE
Top 20 appreciated
by over 6-fold
What Will Happen When Oyu Tolgoi Stage 2
Is Approved?
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Thank You
For more information please visit:
www.MongoliaGrowthGroup.com
or contact:
[email protected]
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