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. 2 A Liquid and Transparent Way to Invest in Mongolia’s Growth... 3 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 4 $Trillions In Resources / = 3 Million People Explosive Property Price Appreciation Astana - Kazakhstan “With the second highest per capita GDP in the former Soviet Union, Kazakhstan is the obvious franchising leader in Central Asia and is poised to replicate the retail and franchising boom that Russia has experienced over the last decade.” ~ USA.gov 1991 BEFORE 2015 AFTER 6 Doha - Qatar “Consumers in Qatar have the highest disposable income in the world, driving consumption and demand for retail space.” ~ DTZ 2015 1980 BEFORE AFTER 7 Abu Dhabi - UAE “The amount of retail space in Abu Dhabi will double to 1.8 million sq. meters by 2015” ~ Cushman & Wakefield 1960s 2015 2011 1954 BEFORE AFTER 8 Kuwait City - Kuwait “International brands are popular in Kuwait. Unlike other GCC countries, fashion sales are not driven by expatriates, but by locals with a lot of disposable income” ~ AT Kearny 2015 1961 BEFORE AFTER 9 Ulaanbaatar - Mongolia A Unique Opportunity The majority of all commercial activity is centered on 3km of Peace Avenue 10 World’s Most Expensive High Street Retail Hong Kong New York Paris Tokyo Sydney London Zurich Seoul Beverly Hills Brisbane Chicago San Francisco Sao Paulo Moscow Beijing Singapore Kuala Lumpur Toronto Tel Aviv Kiev Bogota Istanbul Taipei Ho Chi Minh City Beirut Luxemburg Jenusalem Warsaw Almaty Jakarta Bangkok Ulaanbaatar 0 Source: Cushman & Wakefield 500 1000 1500 US$/Sq.ft/year 2000 2500 3000 11 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" 13 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 14 International Brands Continue to Enter the Market Market Entrants Since 2013 15 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 17 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% 18 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 19 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 20 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 22 Experienced Board of Directors Harris Kupperman Chairman & CEO Nick Cousyn Director Brad Farquhar Director Robert Scott Director Jim Dwyer Director Byambaa Losolsuren Director 23 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 24 Some of Our Valued Tenants PERMASTEELISA MONGOLIA LLC 25 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 27 TUGULDUR SHOPPING CENTER Stage 1 BEFORE 28 TUGULDUR SHOPPING CENTER Stage 1 AFTER 29 TUGULDUR SHOPPING CENTER Stage 2 Will Add Approximately 7,000 Square Meters Of Space Construction Start Date Targeted For Summer 2015 30 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 32 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 33 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 34 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? 35 Thank You For more information please visit: www.MongoliaGrowthGroup.com or contact: [email protected] 36