Argosy Property Limited · NZX:ARG
Argosy Property — H1 FY2013 Earnings Presentation
27 slides from Argosy Property's earnings presentation, Nov 29, 2012
Slide 1: Argosy Property Half Year Results Presentation
ARGOSY PROPERTY HALF YEAR RESULTS PRESENTATION 29 NOVEMBER 2012
Slide 2: Our Focus Areas for FY13
Our Focus Areas for FY13 Maintain Net Property Income Net property income maintained at $35.4 million Increase Occupancy Occupancy increased to 96.3% Lower Debt to Total Assets Debt to total assets lowered to 40.7% Improve Weighted Average Lease Term (WALT) WALT increased to 5.30 years (5.45
Slide 3: Other Highlights
Other Highlights Distributable income increased to 3.60 cents per share 6 cents per share guidance to annual distribution maintained 29 lease transactions completed Bank facility restructured on improved terms including reduced margins Price performance exceeded the NZX50 and the NZX Gross Property
Slide 4: Financial Overview
Argosy Financial Overview
Slide 5: Financial performance
Financial performance HY13 HY12 Net property income $35.4m $35.6m Interest expense $(12.4m) $(15.9m) Loss on derivatives $(13.0m) $(11.4m) Administration expenses $(2.9m) $(4.1m) Abnormals $(0.9m) $(28.2m) Realised gains/(losses) on disposal $(0.8m) $0.1m Finance Income $0.1m $0.1m Profit/(loss) bef
Slide 6: Income reconciliation
Income reconciliation 60 55 50 45 38.7 (1.7) 40 (1.0) 0.7 36.7 35 30 25 20 15 10 1 April 2012 Sales Vacancy During Rent reviews 30 September 2012 $m Gross Property Period Gross Property Income Income
Slide 7: Distributable income
Distributable income HY13 HY12 Profit/(loss) before income tax $5.5m $(23.8m) Adjust for: Investment disposal losses/(gains) $0.8m $(0.1m) Derivatives fair value adjustment $13.0m $11.4m Internalisation/corporatisation/other $0.9m $22.1m Amortisation of management contract $0.0m $6.1m Gross distribu
Slide 8: Financial position
Financial position HY13 FY12 HY12 Shares on issue 563.6m 558.5m 554.5m Shareholders funds (less intangible assets) $481.8m $488.4m $478.7m Net tangible asset backing per share (cents) 85.5c 87.5c 86.3c Investment properties $905.7m $905.2m $924.9 Other assets $15.5m $24.1m $23.6m Total assets $921.2
Slide 9: Investment properties
Investment properties 960 940 920 905.2 (12.1) 12.5 0.1 905.7 900 880 860 840 820 800 1 April 2012 Disposals Capex Capitalised 30 September $m Investment Lease & Tenant 2012 Properties Incentives Investment Properties
Slide 10: Movement in NTA per share
Movement in NTA per share 90.0 89.0 88.0 (0.1) (2.3) 87.5 87.0 86.0 0.4 85.5 85.0 84.0 83.0 82.0 81.0 80.0 1 April 2012 Acquisition Investigation Interest Rate Swaps Retained Earnings less 30 September 2012 Costs Dividends & Abnormals
Slide 11: Portfolio Overview
Argosy Portfolio Overview
Slide 12: Leasing environment
Leasing environment Net absorption has been positive in the industrial and commercial sectors in Auckland, where the majority of Argosy’s portfolio is located, and vacancy rates have fallen, particularly in office space outside the CBD. Occupancy enquiry from potential tenants has been more robust d
Slide 13: Portfolio mix
Portfolio mix By Sector By Location 4% 6% 8% 35% 74% 30% 12% 2% Retail Auckland Retail Land 29% Wellington Commercial Industrial Palmerston North Industrial Land Regional / Other
Slide 14: Leasing
Leasing Occupancy remains a key focus as values are fundamentally affected by weighted average lease term and projected incentive levels. The asset management team is actively managing current leases to meet the requirements of tenants to ensure that retention rates are high. Occupancy (by rental) h
Slide 15: Lease maturity
Lease maturity Lease Maturity Expiry by Rent Total expiry Vacant Largest single expiry 30% 29% 28% 27% Percentage of portfolio (by income) 26% 25% 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 20 13% 24 12% 25 22 12.3% 11% 12 10% 11.3% 9% 38 33 10.0% 8 5 8% 18 9.2% 7% 10.2% 8.2% 6% 7.3% 6.7% 7 7.0% 5%
Slide 16: WALT
WALT WALT Holding by Sector 7 6.02 6 5.30 5.26 5 4.57 Years 4 3 2 1 0 Total Retail Industrial Commercial
Slide 17: Strategy
Strategy Argosy is and will remain invested in a quality portfolio that is diversified by sector, location and tenant mix. The bulk of the portfolio will be in the primary Auckland and Wellington markets with only modest exposure to provincial markets. In line with this strategy a reduction in expos
Slide 18: Capital management
Capital management The Board’s policy is for debt to total assets to be below 40% in the medium-term. Valuations have been stable over the last 2 years and market activity suggests there is a reduced risk of declines in the future. Following internal assessment no interim revaluation but full valuat
Slide 19: Bank Covenants
Bank Covenants HY13 FY12 Loan to valuation ratio – based on: Fair market value of properties $895.4m* $905.2m Total borrowings $375.0m $384.6m Not to exceed 50% 41.9% 42.5% Interest cover ratio – based on EBIT/Interest and Financing Costs: Must exceed 2:00x 2.24x 2.07x *Based on 31 March 2012 valuat
Slide 20: Interest rate management
Interest rate management As at 30 September 2012 Fixed rate debt comprised 94.1% of total debt as at 30 September 2012 The weighted average interest rate (including margin and line fees) as at 30 September 2012 was 6.94% (31 March 2012: 7.2%) The duration of the hedge portfolio is 5.53 years 42.78%
Slide 21: Risk mitigation
Risk mitigation The largest tenant in the portfolio remains the Department of Internal Affairs (less than 4% of gross property rental). We will continue to carefully monitor regional asset performance. Initial evaluation assessments by structural engineers have been undertaken on a number of propert
Slide 22: Portfolio positioning for the future
Portfolio positioning for the future Major refurbishment projects are nearing completion at Te Puni Kokiri (143 Lambton Quay) and TSB Tower (46 Waring Taylor Street). Works are expected to be completed by 31 March 2013 and are on budget. Two properties were sold during the interim period (221 Bush R
Slide 23: Share price performance
Share price performance Argosy Property Limited - 6 months to 30 September 2012 115 Gross Prices Indexed to 100 110 105 100 95 Mar-12 Apr-12 Jun-12 Jul-12 Sep-12 May-12 Aug-12 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 24: Share price performance
Share price performance Argosy Property Limited - 12 months to 30 September 2012 120 115 Gross Prices Indexed to 100 110 105 100 95 90 Mar-12 Oct-11 Nov-11 Dec-11 Sep-11 Jan-12 Apr-12 Jun-12 Jul-12 Sep-12 Feb-12 May-12 Aug-12 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 25: Concluding Comments
Concluding Comments Argosy has made real progress in the first-half of FY13. Occupancy has improved; The leasing expiry profile has improved; Debt-to-total assets is down; and most importantly Distributable income is up. Key continuing operational areas of focus for the asset management team
Slide 26: 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
Slide 27: Thank You
Argosy Thank You