Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — FY2013 Earnings Presentation
34 slides from Kiwi Property's earnings presentation, May 13, 2013
Slide 1: Annual Results Presentation 2013: Building for the Future
KIWI INCOME PROPERTY TRUST ANNUAL RESULTS PRESENTATION 2013 BUILDING FOR THE FUTURE KIWI INCOME PROPERTY TRUST IS MANAGED WITHIN Global Asset Management
Slide 2: Contents
CONTENTS 02 Annual results overview 03 Financial review 08 Portfolio performance 14 Development update 17 Summary and outlook 20 Appendices Our vision is to be New Zealand’s leading property investment entity with a diversified portfolio of This annual results presentation should high-quality assets
Slide 3: Results Overview
RESULTS OVERVIEW FINANCIAL OPERATING DEVELOPMENT While operating profit reduced, Portfolio activity undertaken during Solid progress has been made on the profit after tax increased following the year has improved key property Trust’s value-adding and defensive property valuation gains metrics at yea
Slide 4: Operating Income
OPERATING INCOME Reduced by asset sales and developments 31-Mar-13 31-Mar-12 Variance Net operating income1 For the year ended $m $m $m % - Continued strong Sylvia Park 32.5 31.3 +1.2 +3.8 performance from LynnMall 15.1 15.3 -0.2 -1.3 Sylvia Park Centre Place 3.7 5.1 -1.4 -27.5 The Plaza 13.6 13.7 -
Slide 5: Financial Performance
FINANCIAL PERFORMANCE Profit after tax assisted by revaluations 31-Mar-13 31-Mar-12 Variance Financial performance For the year ended $m $m $m % Gross rental income 197.1 204.1 -7.0 -3.4 Property operating expenditure -61.6 -60.1 -1.5 -2.5 Net rental income 135.5 144.0 -8.5 -5.9 Net interest expense
Slide 6: Distributions
DISTRIBUTIONS In line with guidance 31-Mar-13 31-Mar-12 Variance Distributable income For the year ended $m $m $m % Operating profit before tax1 69.4 81.3 -11.9 -14.6 Business interruption insurance proceeds2 - 4.0 -4.0 -100.0 Depreciation recovery offset3 3.4 - +3.4 +100.0 Non-cash rental adjustmen
Slide 7: Financial Position
FINANCIAL POSITION Unit Holder funds increased 31-Mar-13 31-Mar-12 Movement Financial position As at $m $m $m % Assets Property assets Appendix 3 2,076.5 2,008.9 +67.6 +3.4 Cash on deposit 12.0 62.8 -50.8 -80.9 Insurance proceeds receivable 16.6 63.0 -46.4 -73.7 Other assets 21.4 25.0 -3.6 -14.4 Tot
Slide 8: Bank Debt Profile
BANK DEBT PROFILE Treasury management extends term Bank facilities Facilities expiring Post period refinancing completed 3-May-13 $m % - Weighted term to maturity FY14 - - extended to 4.1 years through FY15 - - the renewal and extension of: $227.5 million of facilities in FY16 ANZ $60.0 Westpac $6
Slide 9: Portfolio Metrics
PORTFOLIO METRICS Sound portfolio metrics maintained 31-Mar-13 31-Mar-12 Core portfolio metrics1 Retail Office Total Total A concerted Number of assets 6 5 11 12 management and leasing effort yielded Value ($000) 1,349.9 525.0 1,874.9 1,865.0 positive improvements in key portfolio metrics Percentage
Slide 10: Portfolio Value
PORTFOLIO VALUE Positive revaluation result Fair value Portfolio / property Cap rates % Adopted value $m increase/(decrease) As at Mar-13 Mar-12 Var. bps Mar-13 Mar-12 $m % Sylvia Park 6.63 6.88 25 540.0 500.0 +36.9 +7.3 The valuation result has been LynnMall 7.38 7.63 25 204.0 184.5 +12.1 +6.3 unde
Slide 11: Portfolio Cap Rates
PORTFOLIO CAP RATES Firming trend continues March 2008 March 2011 March 2013 Valuation peak Valuation trough Current valuation 8.75% 8.48% 8.25% 8.07% 7.99% 7.75% 7.74% 7.52% 7.28% 7.25% Stabilisation in 7.31% capitalisation rates 6.95% interrupted by earthquake related uncertainty 6.75% 6.70% We ha
Slide 12: Leasing and Rent Reviews
LEASING AND RENT REVIEWS An active year for portfolio leasing NLA Uplift over prior passing rent Static portfolio leasing No. of % of CAGR WALT CPI and fixed rent reviews By portfolio tenancies sqm portfolio $000 % % years underpin retail growth Rent reviews 575 106,926 49% 2,045 +3.2 +2.8 - - Fixed
Slide 13: Expiries and WALT
EXPIRIES AND WALT Active leasing extends WALT - The active leasing undertaken during Weighted average lease term (by gross income) the year has: 4.0 years extended the WALT 4.8 years improved the expiry profile meaning the Trust’s rental stream is 4.3 years secured for a longer period 3.0 3.2 3.
Slide 14: Sales
SALES Price deflation impacts sales performance Total sales Specialty stores Centre $m % Sales $/sqm GOC % - Categories representing over 60% of centre Sylvia Park 453.7 +1.8 9,138 sales experienced price deflation during the LynnMall 220.2 -1.4 7,972 year, including the key categories of: Centre Pl
Slide 15: ASB North Wharf
ASB NORTH WHARF On time and on budget CONSTRUCTION AND FITOUT LEASING FINANCIALS Construction on time for 31-May-13 Leasing completed for nine out of 10 Project will be completed on budget practical completion and ASB fitout ground floor retail tenancies with a and deliver the projected 8.5% target
Slide 16: Centre Place
CENTRE PLACE Repositioning nearing completion CONSTRUCTION LEASING FINANCIALS Construction progressing on While a challenging leasing Initial yield on total investment 6.8% program for Oct-13 opening of all environment is being experienced remaining stages leasing is progressing well - Milestones ac
Slide 17: The Majestic Centre
THE MAJESTIC CENTRE Strengthening project underway Project status - On-site work commenced Jul-12 - Increased target rating from 70% to 100% of New Building Standards - Budget increased by $19 million to $54 million Tower floors reflecting scope changes and an increase in the Strengthen Lift core wa
Slide 18: Market Outlook
MARKET OUTLOOK Markets continue to show recovery Portfolio Short-term Medium-term Sector weighting1 market outlook market outlook Key points Retail - Positive drivers for retail sales include: an expectation of improving economic growth KIP retail 65% continuing low interest rates falling
Slide 19: 2014 Priorities
2014 PRIORITIES Continue to build for the future PROTECT THE INTENSIVE ASSET ADD VALUE THROUGH BALANCE SHEET MANAGEMENT INVESTMENT DECISIONS Actively manage treasury position Maintain active portfolio leasing ASB North Wharf - manage the weighted average term to - actively manage expiring leases to
Slide 20: Summary and Outlook
SUMMARY AND OUTLOOK Projected cash distribution of 6.40cpu OUTLOOK FY14 DISTRIBUTION GUIDANCE Economy showing improvement - We see the need to remain cautious due to: - economy showing signs of improvement the moderate pace of economic recovery; - property markets are recovering and and capitalisa
Slide 21: Appendices Index
APPENDICES Index Contents Appendix Page No. Financial review Interest expense 1 21 Operating profit before tax (FY12 to FY13) 2 22 Investment properties (FY12 to FY13) 3 23 Net bank debt (FY12 to FY13) 4 24 Interest rate hedging profile 5 25 Property portfolio Net lettable area, occupancy and weight
Slide 22: Interest Expense
APPENDIX 1 Interest expense 31-Mar-13 31-Mar-12 Variance For the year ended $m $m $m % Interest income 1.6 3.5 -1.9 -54.3 Interest on bank debt -52.3 -50.6 -1.7 -3.4 Interest on MCNs -10.7 -10.8 +0.1 +0.9 Net interest expense incurred -61.4 -57.9 -3.5 -6.0 Interest capitalised to: ASB North Wharf 10
Slide 23: Operating Profit Before Tax
APPENDIX 2 Operating profit before tax (FY12 to FY13, $m) 90 80 -5.5 +0.6 +0.4 +0.7 -2.6 +0.6 70 -2.1 -1.0 -3.0 $81.3 -$9.2m from NOI change 60 =$69.4 -$8.5m from NRI change 50 Mar-12 NOI: asset NOI: centres NOI: balance NOI: balance NOI: other NZ IFRS Net interest Manager's Other Mar-13 operating s
Slide 24: Investment Properties
APPENDIX 3 Investment properties (FY12 to FY13, $m) 2,200 2,100 +19.9 +21.0 +6.3 +8.8 +13.2 +57.9 2,000 -59.5 =$2,076.5 1,900 $2,008.9 1,800 As at Mar-12 Disposals Capitalised costs: Capitalised costs: Capitalised costs: Capitalised costs: Fair value change Other As at Mar-13 ASB North Centre Place
Slide 25: Net Bank Debt
APPENDIX 4 Net bank debt (FY12 to FY13, $m) 1,000 +53.3 +1.0 900 +104.3 +6.7 800 +11.9 +50.5 -143.2 700 -63.0 -59.2 600 $706.7 =$669.0 500 Net bank debt Net interest Manager's fees Investment & Tax Distributions Other Net rental Insurance Disposal Net bank debt Mar-12 expense development (net of DRP
Slide 26: Interest Rate Hedging Profile
APPENDIX 5 Interest rate hedging profile Hedging profile 31-Mar-13 31-Mar-12 Percentage of drawn debt hedged [fixed rate] 80% 83% Weighted average interest rate on hedged debt [excl margin and fees] 5.85% 6.39% Weighted average term to maturity of interest rate hedges 2.4 years 2.4 years Hedge matur
Slide 27: NLA, Occupancy and WALT
APPENDIX 6 NLA, occupancy and WALT NLA sqm Occupancy % WALT years Property / portfolio As at Mar-13 Mar-13 Mar-12 Mar-13 Mar-12 Sylvia Park 71,267 100.0 100.0 3.9 3.2 LynnMall 32,129 100.0 100.0 4.0 3.2 Centre Place 15,854 97.8 72.0 5.8 4.8 The Plaza 32,440 100.0 99.7 3.7 4.5 North City 25,542 99.1
Slide 28: Sector and Geographic Diversification
APPENDIX 7 Sector and geographic diversification (by value) Total by sector Palmerston By value Auckland Wellington Christchurch North Hamilton Mar-13 Mar-12 Retail 36% 5% 10% 9% 5% 65% 65% Office 18% 7% - - - 25% 28% Other 10% - - - - 10% 7% Total by region Mar-13 64% 12% 10% 9% 5% 100% Total by re
Slide 29: Tenant Diversification
APPENDIX 8 Tenant diversification (by gross income) 13 12 01. New Zealand chains 28% 11 02. Australian and international chains 23% 10 01 03. Department and discount department stores 6% 09 04. Supermarkets 5% Office Retail 05. Independent retailers 5% 31% income 69% income 06. Cinemas 2% 08 112 ten
Slide 30: Top Tenants
APPENDIX 9 Top 20 tenants (by gross income) Progressive Enterprises 3.3% Farmers 2.9% Russell McVeagh 2.9% ANZ Bank 2.8% Vero Insurance 2.6% Bell Gully 2.4% Foodstuffs 2.0% Dept of Labour 2.0% Just Group 1.9% Hallenstein/Glassons 1.6% Kmart 1.6% The Warehouse 1.4% The top 20 tenants represent Cotton
Slide 31: Auckland Office Market
APPENDIX 10 Auckland office market As at / YE As at / YE Forecast Statistic Grade Dec-11 Mvmt Dec-12 Mvmt Dec-13 Comments - ANZ Centre returns to Premium stock post redevelopment Premium 110,000 110,000 141,575 - No additional supply forecast over next 3 years Stock (sqm) - Minimal movement in s
Slide 32: Wellington Office Market
APPENDIX 11 Wellington office market As at / YE As at / YE Forecast Statistic Grade Dec-11 Mvmt Dec-12 Mvmt Dec-13 Comments - No significant addition to stock until 2015 / 2016 A-grade 248,640 251,640 251,640 Stock (sqm) - Fluctuating stock levels due to new stock and refurbishment B-grade 360,7
Slide 33: New Zealand Economy
APPENDIX 12 New Zealand economy Medium-term Indicator outlook Economic growth - Economic recovery has been underpinned by export incomes and reconstruction activity - Economic growth forecast to lift to 3.2%1 by the end of 2013, compared to the 20-year average of 2.9% underpinned by export incomes
Slide 34: Disclaimer
DISCLAIMER Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust (KIP). The Manager is a subsidiary of Commonwealth Bank of Australia (the Bank) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way stands
Kiwi Income Property Trust — FY2013 Earnings Presentation on 6ix