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For further information please contact: SHARE REGISTRY
GEO Property Group Computershare Investor Services Pty Limited
Ground Floor, 9 Ouyan Street Level 19, 307 Queen Street
Bundall QLD 4217 Brisbane QLD 4000
Website: www.geopg.com.au Telephone: 1300 651 684
Securityholder Queries:
Email: [email protected]
Telephone: 1300 552 434
1
GEO Property Group
Comprising:
GEO Property Trust (“Trust”)
ARSN 104 482 206
(Responsible Entity: GEO Management Limited)
ABN 77 116 506 882, AFSL 304866)
GEO Property Group Limited (“Company”)
ABN 38 117 546 326
ASX Code: GPM
ASX ANNOUNCEMENT/MEDIA RELEASE
_________________________________________________________________________________________________
GEO PROPERTY GROUP SIGNS AGREEMENT FOR MANAGEMENT
INTERNALISATION AND PROVIDES BUSINESS UPDATE
INTERNALISATION AND RELATED ISSUES
GEO Property Group (GEO/Group) has exchanged binding agreements to acquire all of the shares in the
responsible entity of the GEO Property Trust, as part of its transition to internal management. Completion of the
acquisition is subject to typical conditions precedent.
The responsible entity is to be acquired from Octaviar Financial Services Limited (OFSL) for $2.5 million,
representing approximately 0.3% of assets under management (as at 31 December 2007) plus the net asset
value of the responsible entity as at the date of completion. The net assets will be in cash. Given termination of
the external management fee arrangement, the acquisition is expected to be earnings accretive over the
medium to longer term. The acquisition will be paid for from existing debt facilities. Related to the
internalisation 4,329,472 GEO stapled securities held by Mr. Farrands under his previous employee incentive
arrangements will transfer back to a subsidiary of Octaviar Limited.
The Group will also, as part of internalisation, take back full ownership of a Communities Development project
that was acquired by Octaviar Land Fund and that was to be developed under a development management
arrangement with GEO. This requires no additional immediate payments by GEO, but GEO will write back the
$2m nomination fee due from Octaviar Land Fund that was recognised as revenue in 2007. The next payment
of $3m to the vendor is due in January 2009, and there are further annual payments over five years. GEO
currently intends to offer this project for sale.
GEO Managing Director and CEO Guy Farrands said the internalisation of the management of the Trust and
the acquisition of the Communities Development project formalised the Group’s complete separation from
Octaviar.
“The completion of internalisation of the management function for the Trust will complete our separation from
Octaviar and we will be well positioned to push ahead with our strategic plan for the Group,” he said.
Under the agreement all staff currently employed by the responsible entity will transfer to the Group at an
additional cost per annum of approximately $7m. Under the Octaviar management arrangement the total
potential management fee expense was up to $12m for 2008 financial year, including performance fees and
transaction fees, if they were to become payable.
The Group has also accepted the resignation of Craig White as a Non-executive Director. Mr White is the
former Chief Executive Officer of Octaviar, former Managing Director of the Group and has been a Director
For further information please contact: SHARE REGISTRY
GEO Property Group Computershare Investor Services Pty Limited
Ground Floor, 9 Ouyan Street Level 19, 307 Queen Street
Bundall QLD 4217 Brisbane QLD 4000
Website: www.geopg.com.au Telephone: 1300 651 684
Securityholder Queries:
Email: [email protected]
Telephone: 1300 552 434
2
since August 2005. The Board thanked Mr White for his valuable contribution to the Group, including his key
role in the acquisition of Villa World Limited in 2006.
GEO has made a request to the ASX to lift the voluntary suspension of GEO Property Group stapled securities.
If ASX grants this, it is expected that GEO stapled securities will recommence trading on 15 May 2008. GEO’s
ASX code is now GPM.
BUSINESS UPDATE
Net tangible asset backing per security
GEO has recently undertaken and concluded a review of the carrying value of its investment assets. Following
this review GEO advises that its unaudited NTA backing per security as at 30 April 2008 is approximately $0.73
(31 December: $0.78). This does not include the unaudited positive mark-to-market value of Communities
Development stock held as inventory, estimated at approximately $0.12 per security as at 29 February 2008.
The decline in NTA is attributable to reductions in the carrying value and loss on sale of some investment
assets of the Trust, the material items being:
• Write downs or losses on sale relating to the property investment portfolio of $15.9m. This assumes
that GEO’s legal action relating to the $3m owed by the defaulting original purchaser of Gympie is
eventually successful;
• Write down and loss on sale relating to securities held in Hedley Leisure and Gaming Property Fund
and National Leisure and Gaming Limited of approximately $5.3m; and
• Write down of an investment in Octaviar Blue Sky Trust of $3.6m. This investment has been written
down to zero.
Operating earnings guidance for Year Ended 30 June 2008
We remain confident of achieving operating EPS1 of 8.1 cps for FY08, before one off non-recurring items. We
expect one off non-recurring items to at least include:
• Cost relating to Octaviar (MFS) / internalisation and including the write back of the nomination fee due from
Octaviar Land Fund that was recognised in 2007;
• Costs relating to re-negotiation of debt facilities;
• Write downs / losses on sale of investment property; and
• Loss on sale of securities in both Hedley Leisure and Gaming Property Fund and National Leisure and
Gaming Limited of $8.0m. $3.6m had been partially written down in previous periods against equity value in
the balance sheet. That treatment has been reversed and the full loss will now be realised through the
income statement.
Capital realisation program
GEO is pleased to advise it has further progressed its capital realisation program, having finalised the sale of a
further $28m worth of real estate, taking the total sales finalised to approximately $68m.
Negotiations are advanced or terms have been agreed and are subject to due diligence / documentation on the
realisation of a further $100m of investment real estate and Communities Development projects through sales
and joint ventures, bringing the total sold calculated on this basis to approximately $168m, representing 70% of
the total realisation target.
1 After fair value adjustments
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GEO Property Group Computershare Investor Services Pty Limited
Ground Floor, 9 Ouyan Street Level 19, 307 Queen Street
Bundall QLD 4217 Brisbane QLD 4000
Website: www.geopg.com.au Telephone: 1300 651 684
Securityholder Queries:
Email: [email protected]
Telephone: 1300 552 434
3
Further details are provided below:
Property Sale Price ($m) Book value 31
Dec 07 ($m)
Trust settled / unconditional
Previously announced 39.71 44.9
294 Woodville Road, Villawood 15.2 17.5
172 Moreland Road, Brunswick 13.0 13.3
Sub Total 67.9 75.7
Trust terms agreed in Due Diligence /
documentation
40.1
Sub Total 108.0
In advanced negotiation 41.0
Communities Development JVs terms agreed in DD
/ documentation 2
18.7
TOTAL 167.7
1 Does not include recovery of the $3m owed by the defaulting original purchaser of Gympie.
2 Represents sale proceeds net of re-investment into joint venture. Explanation provided below.
Communities Development Joint Ventures
GEO has agreed terms subject to various conditions precedent for two joint ventures on existing Communities
Development projects with a total value of approximately $25m (100% interest). The joint ventures comprise a
portion of GEO’s Mt Cotton project for $14.0m (the land only component with GEO retaining the house and land
and commercial part of the project) and the entire Cornells Hill project for $10.6m.
Under the joint venture arrangements GEO will receive acquisition, development management and sales and
marketing management fees, as well as profit participation from its 50% equity interest. GEO can also earn
performance fees should the projects deliver returns above agreed thresholds.
Should these two transactions be finalised net proceeds of approximately $18.7m (net of GEO’s reinvestment
into the joint ventures) will be applied to reducing the Group’s multi option facility. It should be noted however
that given GEO’s continuing involvement in the joint ventures the net debt of the Group on look through basis
will only reduce marginally.
The joint ventures are in line with the Group’s focus on capital management and strategy to leverage its
expertise using third party capital to enhance return on equity.
ENDS
Guy Farrands
Managing Director and CEO
GEO Property Group
(02) 8259 7251
Date: 14 May 2008
For further information please contact: SHARE REGISTRY
GEO Property Group Computershare Investor Services Pty Limited
Ground Floor, 9 Ouyan Street Level 19, 307 Queen Street
Bundall QLD 4217 Brisbane QLD 4000
Website: www.geopg.com.au Telephone: 1300 651 684
Securityholder Queries:
Email: [email protected]
Telephone: 1300 552 434
4
Sydney Gold Coast Melbourne Share Registry
Level 13
167 Macquarie St
Sydney NSW 2000
Tel 02 8259 7251
Ground Level
9 Ouyan Street
Bundall Qld 4217
Tel 07 5588 8888
Level 2
600 Victoria Street
Richmond Vic 3121
Tel 03 8412 3333
Computershare Investor
Services Pty Ltd
Level 19, 307 Queen Street
Brisbane QLD 4000
Tel: 1300 651 684