Argosy Property Limited · NZX:ARG
Argosy Property — H1 FY2023 Earnings Presentation
38 slides from Argosy Property's earnings presentation, Nov 22, 2022
Slide 1: FY23 Interim Result: Building a Better Future
FY23 Interim Result: Building a Better Future 22.11.22 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 Result Highlights 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 22 November 2022. Due to rounding, numbers pre
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 enna 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 attr
Slide 6: Key result highlights
Key result highlights $55m Net property income $32.9m 32.5% Net distributable income Gearing at the bottom end of range $1.72 NTA per share .6
Slide 7: Portfolio highlights
Portfolio highlights 98.9% Occupancy 5.5yrs 2.6% Weighted average lease term Annualised rent review increase on rents reviewed 81% 6.3% Portfolio under renting $2.24b Portfolio value @ 30 September Tenant retention rate Note: Portfolio value excludes right of use asset at 39 Market Place
Slide 8: Sector Summary
Sector Summary INDUSTRIAL OFFICE LARGE FORMAT RETAIL Number of buildings 35 Number of buildings 15 Number of buildings 4 Market value of assets ($m) $1,146.4 Market value of assets ($m) $866.1 Market value of assets ($m) $230.9 Occupancy (by income) 100% Occupancy (by income) 97.8% Occupancy (by inc
Slide 9: Portfolio at a glance @ 30 September
Portfolio at a glance @ 30 September 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 30 Sep 22 30 Sep 22 Book Value Valuation $m % ($m) ($m) Internal assessment undertaken during the period, reviewed by independent Auckland 1,597.3 1,579.5 (17.9) -1.1% valuer. Wellington 603.9 598.3 (5.6) -0.9% $23.5m loss reported,
Slide 11: Value Add Properties
Value Add Properties Green assets delivering Status & Project Sector Location Transformation of Value Add properties remains key to delivering on our strategy. Underway Strong industrial sector fundamentals 12-20 Bell Avenue, Mt Wellington Industrial Auckland supportive. 105 Carlton Gore Road, N
Slide 12: Value add case study: 8-14 Willis Street
Value add case study: 8-14 Willis Street 6 Star Green Built rating being targeted 5 Star NABERSNZ energy rating being targeted 5.3% Forecast yield on cost 15yr Lease commitment to Statistics New Zealand .12
Slide 13: Value add case study: Carlton Gore Road
Value add case study: 105 Carlton Gore Road $35m Refurbishment and redevelopment 6 Star Green Built rating now being targeted 7.2% Internal rate of return $65m Forecast valuation on completion 50% Leased by net lettable area 5.3% Forecast yield on cost .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 Solid top line growth 1H23 1H22 $m $m The net property income increase was Net property income 55.0 53.1 driven by a range of factors including Administration expenses (5.2) (5.8) acquisitions, like for like rental growth, and developments. Profit before financial income/(exp
Slide 17: Distributable Income
Distributable Income 1H23 1H22 Stability critical in tough $m $m market conditions Profit before income tax 17.1 130.9 Net distributable income for the six Adjustments: months was $32.9m compared to $33.0m in the prior comparable period. Revaluations (losses)/gains 23.5 (91.7) Current tax expens
Slide 18: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) 1H23 1H22 Clean AFFO for the period $m $m Maintenance capex lower. Net distributable income 32.9 33.0 Amortisation of tenant incentives and leasing costs 1.4 3.8 AFFO payout ratio was 88% for the period as façade repairs at 7WQ concluded in Funds from operat
Slide 19: Investment Properties
Investment Properties Portfolio value stable 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 adjustm
Slide 20: NTA Per Share
NTA Per Share NTA flat over the first six months 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 Investment portfolio stable, 1H23 FY22 development pushes debt $m $m slightly higher Investment properties 2,283.6 2,247.7 The balance sheet is in good shape. Asset held for sale - 22.0 Argosy has sufficient facility headroom to Other assets 24.0 21.8 complete existing d
Slide 22: Interest Rate Management
Interest Rate Management Exposure to floating creating short term headwinds 1H23 FY22 Weighted average interest rate has Weighted average interest rate1 5.00% 4.14% increased over the period driven by floating rate increases. Interest Cover Ratio 3.1x 3.1x % of fixed rate borrowings 51% 57% The
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 The total amount of the bank facility has increased by $20m and is now $475m. 300 The nearest tranche expires in April 2025.
Slide 24: Dividends
Dividends Steady and sustainable 6.80 A 2nd quarter dividend of 1.6625cps has 6.60 6.65 been declared with 0.159398 cents per 6.55 share imputation credits attached. 6.40 6.45 6.35 Overseas investors will receive an 6.20 6.28 additional supplementary dividend of 6.20 0.072332 cents per share to
Slide 25: Leasing
Leasing .25
Slide 26: Value Add Case Study: Mt Richmond Estate
Value Add Case Study: Mt Richmond Estate Leasing 21,046 ~4% Of NLA leased over the first 6 months Equivalent of total portfolio by NLA 19 Leasing transactions including 9 new leases, 8 renewals and 2 extensions Green 5,650 15km from CBD Prime industrial location development Of NLA renewed
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. FY23 sees $83m of portfolio income subject to rent reviews. Of these, $47m is subject to
Slide 28: Market Insights
MARKET INSIGHTS INDUSTRIAL OFFICE LARGE FORMAT RETAIL Strong demand continues to drive Flexible working environments continue. Many retailers’ systems have been shown additional supply. to be inadequate to cope with higher Changes in the way space is used, online sales volumes. Limited lan
Slide 29: Focus & Outlook
Focus & Outlook Argosy
Slide 30: FY23 remains challenging, but the business is well positioned
FY23 remains challenging, but the business is well positioned We will stay focused on delivering on Strategy Local and global economy continues to experience significant volatility driven by a range of factors including rising interest rates (tightening), inflation headwinds and geopolitical risks
Slide 31: Appendices
Appendices y Argosy
Slide 32: Balance Sheet Management
Balance Sheet Management Gearing comfortably at the bottom end 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 Increase Annualised Annualised Annualised % ($000's) reviewed New Rent ($000's) ($000's) % Increase Increase ($000's) Increase Increase Total 53 26,961 100% 27,770 808 3.0% 712 100% 2.6% By review type Fixed 45 23,552 87% 24,169 616 2.6%
Slide 35: Rent Review Summary – Auckland & Wellington
Rent Review Summary – Auckland & Wellington % of Total Location # Previous Rent % of rent New Rent Increase Annualised Annualised Annualised % ($000's) reviewed ($000's) ($000's) % Increase Increase ($000's) Increase Increase Auckland Industrial 12 14,501 59% 14,861 360 2.5% 360 50.6% 2.5% Office 25
Slide 36: Portfolio Metrics
Portfolio Metrics Defensive & resilient tenant, high essential service exposure .36
Slide 37: Portfolio Snapshot
Portfolio Snapshot Portfolio quality and resilience reflected in key metrics Occupancy (%) WALT (years) 100 7.0 97.7 98.8 99.0 98.7 98.9 6.0 80 6.1 6.1 5.7 5.0 5.5 5.5 60 4.0 40 3.0 2.0 20 1.0 0 0.0 FY19 FY20 FY21 FY22 1H23 FY19 FY20 FY21 FY22 1H23 Net Tangible Assets ($ per share) Debt-to-total-ass
Slide 38: 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