Argosy Property Limited · NZX:ARG
Argosy Property — FY2023 Earnings Presentation
39 slides from Argosy Property's earnings presentation, May 17, 2023
Slide 1: FY23 Annual Result: Building a Better Future
FY23 Annual Result: Building a Better Future 17.05.23 Argosy Property Limited
Slide 2: CEO quote on portfolio diversity
“Our strength lies in the diversity of our portfolio by sector, location and tenant mix, providing flexibility to support our tenants changing needs, ensuring a resilient business through various economic cycles.” Peter Mence CEO .2
Slide 3: Agenda
Agenda Vision & Strategy 4 Results Summary 6 Portfolio Highlights 7 Peter Mence CEO Financials 14 Leasing Update 25 Focus and Outlook 29 Appendices 31 Dave Fraser Note: This results presentation should be read in conjunction with the NZX release dated 17 May 2023. Due to rounding, numbers presented
Slide 4: Vision and Strategy
Vision and Strategy Argosy
Slide 5: Vision: Building a Better Future
VISION — Proactive deli B e | d e of sustainable growth, U | l n g a A business culture that i i tally focused Better Future ee Executing green Value Add portfolio opportunities to drive earnings and capital growth Acommitment to funding for green assets Owning the right assets with the right attrib
Slide 6: Results Summary
Results Summary $112.8m $64.2m 35.1% Net property income Net distributable income Gearing in the mid-point of target range $1.58 ($146.6)m Unrealised revaluation loss to 31 March NTA per share .6
Slide 7: Portfolio highlights
Portfolio highlights 99.3% Occupancy 5.4yrs 3.6% Weighted average lease term Annualised rent review increase on rents reviewed Note: Portfolio value excludes right of use asset at 39 Market Place of $40.1 million .7
Slide 8: Sector Summary
Sector Summary INDUSTRIAL OFFICE LARGE FORMAT RETAIL Number of buildings 35 Number of buildings 15 Number of buildings 4 Market value of assets ($m) $1,127.8 Market value of assets ($m) $811.1 Market value of assets ($m) $206.0 Occupancy (by income) 100% Occupancy (by income) 98.5% Occupancy (by inc
Slide 9: Portfolio at a glance @ 31 March
Portfolio at a glance @ 31 March Sector by value % Region by value % Asset Mix by value % 2 1 1. Large Format Retail. 2. Regional North Island and South Island. This weighting also includes up to 5% allocation to the Golden Triangle area between Auckland, Tauranga and Hamilton. .9
Slide 10: Revaluations
Revaluations Cap rate headwinds but rental growth delivers 31 Mar 23 31 Mar 23 Book Value Valuation ($m) $m % ($m) Independent valuations undertaken at 31 March. Auckland 1,617.6 1,507.6 (110.0) (6.8%) Wellington 607.8 577.4 (30.5) (5.0%) $146.6m decline reported, or 6.4% revaluation to book
Slide 11: Value Add Properties
Value Add Properties Green assets delivering Status & Project Sector Location Conversion and transformation of Value Add properties remains a key strategic Underway driver over the next decade. 12-20 Bell Avenue, Mt Wellington (near completion) Industrial Auckland Green project at 105 Carlton Go
Slide 12: Value Add case study: 8-14 Willis Street
Value Add case study: 8-14 Willis Street 6 Star 5 Star 15yr Lease commitment to Statistics Green Built rating being targeted NABERSNZ energy rating being targeted New Zealand $150m Book Value @ 31 March 4.8% Final yield on cost .12
Slide 13: Value Add case study: Carlton Gore Road
Value Add case study: 105 Carlton Gore Road 6 Star 5 Star 5.3% Forecast yield on cost Green Built rating being targeted NABERSNZ energy rating being targeted 50% Leased by net lettable area .13
Slide 14: Financials
Financials Argosy
Slide 15: Gross Property Income Waterfall
Gross Property Income Waterfall All areas of business contributing to rental growth .15
Slide 16: Financial Performance
Financial Performance Top line growth maintained The net property income increase was FY23 FY22 driven by a range of factors including $m $m strong like-for-like rental growth, leasing up activity, the acquisition of Maui St and Net property income 112.8 105.1 developments. Administration expenses
Slide 17: Distributable Income
Distributable Income Stability key in a FY23 FY22 challenging market $m $m Profit before income tax (70.9) 241.2 Net distributable income for the year was $64.2m compared to $64.7m in the prior Adjustments: comparable period. Revaluation (gains)/losses on investment property 146.6 (163.7) Curren
Slide 18: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) FY23 FY22 AFFO covered dividends key $m $m Net distributable income 64.2 64.7 7WQ façade works completed in FY22 Amortisation of tenant incentives and leasing costs 2.7 4.6 AFFO payout ratio was 97% for the Funds from operations (FFO) 66.9 69.4 period. Capit
Slide 19: Investment Properties
Investment Properties Portfolio value down slightly over the period 1 2 .19 Note: Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may not reflect exactly absolute figures. 1. Including NZ IFRS16 adjustment. 2. Excluding NZ IFRS16
Slide 20: NTA Per Share
NTA Per Share NTA movement driven by unrealised revaluations Note: Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may not reflect exactly absolute figures. .20
Slide 21: Balance Sheet Management
Balance Sheet Management Balance sheet sound, green Value Add developments FY23 FY22 $m $m and acquisition drives debt Investment properties 2,184.9 2,247.7 movement Asset held for sale 22.0 Acquisition of Maui St and completion of developments pushes debt higher Other assets 27.7 21.8 Argosy ha
Slide 22: Interest Rate Management
Interest Rate Management Floating rate exposure reduced to minimise near term headwinds FY23 FY22 Weighted average interest rate has Weighted average interest rate1 5.39% 4.14% increased over the period driven by floating rate increases. Interest Cover Ratio 2.8x 3.1x % of fixed rate borrowings 71
Slide 23: Debt Profile
Debt Profile Green bonds provide diversification and tenor During the year Argosy extended its 450 existing syndicated bank facilities with its 400 banking group. 350 100 Industrial and Commercial Bank of China Limited (ICBC) has joined the syndicate. 300 285 100 The total amount of the bank f
Slide 24: Dividends
Dividends Steady and sustainable 6.80 A 4th quarter dividend of 1.6625cps has 6.60 6.65 6.65 been declared with 0.01801 cents per share imputation credits attached. 6.55 6.40 6.45 Overseas investors will receive an 6.35 additional supplementary dividend of 6.20 6.28 0.008171 cents per share to o
Slide 25: Leasing
| PEE Leasing > ae Let mr Argosy i
Slide 26: Leasing; Value Add Case Study: Mt Richmond Estate
Value Add Case Study: Mt Richmond Estate Leasing 97,500 ~15% Of NLA leased over the year, Equivalent of total portfolio by NLA 36 Leasing transactions including 16 new leases, 16 renewals and 4 extensions Green 46,828 15km from CBD Prime industrial location development Of NLA renewed by G
Slide 27: Lease Expiry & Rent Review Profile
Lease Expiry & Rent Review Profile Expiry profile remains well managed The largest single expiry remains the 9.4% expiry in Mar-27 to Ministry for Business, Innovation and Employment, at 15-21 Stout Street. FY24 sees $91.5m of portfolio income subject to rent reviews. Of these, $61.8m is subject
Slide 28: Market Insights
MARKET INSIGHTS INDUSTRIAL OFFICE LARGE FORMAT RETAIL Strong demand continues to drive Flexible working environments continue Online proportion of total sales has additional supply but quieter period in but full-time remote work is declining. reduced post pandemic. 2024 is projected. Changes
Slide 29: Focus & Outlook
Focus & Outlook Argosy
Slide 30: FY24 brings fresh challenges, but we're well placed
FY24 brings fresh challenges, but we’re well placed Strategy delivery is our key focus New Zealand domestic economy continues to experience significant headwinds from high interest rates and inflation. Argosy’s diversified portfolio exposure to attractive sectors provides resilience in turbulent
Slide 31: Appendices
Appendices y Argosy
Slide 32: Balance Sheet Management
Balance Sheet Management Gearing at the mid-point of target range Target Range 30-40% .32
Slide 33: Hedges, Interest Rates & Debt Maturity Profile
Hedges, Interest Rates & Debt Maturity Profile Hedges & Weighted Average Debt Maturity Profile (drawn) & Interest Rates Weighted Average Margin and Line fee Bank Facilities (drawn) Green Bonds Note: All payer data as at 31 March year end .33
Slide 34: Rent Review Summary
Rent Review Summary % of Total Type # Previous Rent % of rent New Rent $ Increase Annualised $ Annualised Annualised % ($000's) reviewed ($000's) (000's) % Increase Increase (000's) Increase Increase Total 106 73,036 100% 76,852 3,816 5.2% 2,634 100% 3.6% By review type Fixed 78 47,326 65% 48,567 1,
Slide 35: Rent Review Summary – Auckland & Wellington
Rent Review Summary – Auckland & Wellington Location # % of Total Previous Rent % of rent $ Increase Annualised $ Annualised Annualised % ($000's) reviewed New Rent ($000's) (000's) % Increase Increase (000's) Increase Increase Auckland Industrial 28 34,135 59% 35,990 1,855 5.4% 1,211 46.0% 3.5% Off
Slide 36: Portfolio Metrics
Portfolio Metrics Defensive & resilient tenant, high essential service exposure .36
Slide 37: Portfolio Snapshot
Portfolio Snapshot Portfolio quality and resilience reflected in key metrics Occupancy (%) WALT (years) 100 7.0 97.7 98.8 99.0 98.7 99.3 6.0 80 6.1 6.1 5.5 5.7 5.0 5.4 60 4.0 40 3.0 2.0 20 1.0 0 0.0 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Net Tangible Assets ($ per share) Debt-to-total-ass
Slide 38: Portfolio Valuations – Cap Rate Summary
Portfolio Valuations – Cap Rate Summary Mar 2023 cap Mar 2022 cap cap rate rate wgt % rate wgt % change Auckland 5.66% 4.99% 0.67% Wellington 6.25% 5.57% 0.68% Regional 6.25% 5.75% 0.50% Total 5.84% 5.16% 0.68% Industrial 5.48% 4.75% 0.73% Office 6.23% 5.61% 0.62% Large Format Retail 6.25% 5.49% 0.7
Slide 39: Disclaimer
Disclaimer This presentation has been prepared by Argosy Property Limited. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to making an