Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — FY2018 Earnings Presentation
33 slides from Dexus Industria Reit's earnings presentation, Aug 22, 2018
Slide 1: FY18 Results Presentation
FY18 RESULTS PRESENTATION 22 August 2018 www.industriareit.com.au ASX: IDR
Slide 2: Agenda
Agenda 01 Highlights and outcomes 02 Investment Proposition 03 Portfolio performance 04 Outlook Appendices 2
Slide 3: FY18 Highlights and outcomes
FY18 Highlights and 01 outcomes WesTrac Newcastle 3
Slide 4: Highlights and outcomes
Highlights and outcomes Result in-line with NTA ▲ 5% ~13,600 square Only 2% of income guidance – Balance sheet well- metres of leasing – expiring in FY19 - FFO 18.5 cents per positioned active asset strong income security, 2.2% following $71 management visibility growth million refinance generating
Slide 5: 30 June 2018 financials
30 June 2018 financials ▪ Statutory net profit $48.2 million - contracted FY18 FY17 Change leases with fixed growth boosted by valuation Statutory net profit ($m) $48.2 $101.6 ▼ 52.6% uplifts of $20.2 million: FFO ($m) $30.1 $27.9 ▲ 7.9% - $53.4 million lower than pcp – largely due to higher valuati
Slide 6: Strong balance sheet post refinance and valuation gains
Strong balance sheet post refinance and valuation gains ▪ Weighted average interest rate of 3.4% and Debt maturity profile – limited refinance risk 5.8x interest cover $140m ▪ Refinanced to club structure with a Common Terms Deed and bi-lateral Facility Agreements: $120m Small maturity exposures lim
Slide 7: Investment Proposition
02 Investment Proposition Rhodes Building C, Rhodes NSW 7
Slide 8: The Industria REIT opportunity
The Industria REIT opportunity Strategy to grow through The opportunity investing in office and ▪ Benefit from a growing rent profile from low-risk portfolio – no industrial assets potential volatility from “active earnings” ▪ Providing businesses with ▪ Leveraging APN’s market knowledge and experie
Slide 9: At a glance
At a glance $676 $428 S&P/ASX 300 MILLION MILLION INDEX TOTAL MARKET MEMBER ASSETS CAPITALISATION 6.5% 31.0% 6.9 3% CASH YEAR AVG RENT GEARING DISTRIBUTION WALE REVIEWS YIELD HIGH QUALITY ASSETS DELIVERING STRONG INCOME PROFILE ALIGNED MANAGEMENT WITH ~$71 MILLION CO-INVESTED CONSERVATIVE BALANCE SH
Slide 10: Diversified portfolio
Diversified portfolio WesTrac Newcastle Industrial Melbourne Located adjacent to and Adelaide M1 motorway Key industrial precincts ~$197 million invested ~$135 million invested 16.2 year WALE 8 buildings; 4.9 year WALE Locations Portfolio by type Rhodes Brisbane Industrial WesTrac Office Corporate P
Slide 11: APN Property Group – aligned and experienced manager
APN Property Group – aligned and experienced manager Strong investor Focused and Governance Manager with long alignment dedicated overseen by track record and ▪ APN is strongly aligned management team majority deep relationships to delivering investor ▪ Dedicated Fund independent Board across capita
Slide 12: Qld and Vic set to benefit from infrastructure investment growth
Qld and Vic set to benefit from infrastructure investment growth Investment improving across the economy ▪ Infrastructure pipeline growing – particularly in Melbourne: 18 Committed construction (ABS) – work yet to be done (excluding mining) - West Gate Tunnel - $5.5bn 16 15 minutes NSW 14 to CBD VIC
Slide 13: Melbourne industrial – positioned for long-term growth
Melbourne industrial – positioned for long-term growth ▪ Melbourne industrial underpinned by strong Rent and supply spreads for Sydney and Melbourne1 fundamentals and is supported by: $psm Supply Rents (sqm) - Lowest rents – 36% lower than Sydney 120 500,000 500,000 - Lowest supply pipeline – 65% lo
Slide 14: Portfolio performance
03 Portfolio performance StarTrack Express, 140 Sharps Rd, Tullamarine 14
Slide 15: Actively managing the real estate
Actively managing the real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 96% 82% 83,900 95% 95% 70,300 92% 45,900 18,800 9% 9% Jun-15 Jun-16 Jun-17 Jun-18 CPI 2 - <3% ≥ 3% Jun-15 Jun-16 Jun-17 Jun-18 Strong income visibility - expiry pr
Slide 16: Rhodes – fully leased
Rhodes – fully leased ▪ Fully leased following implementation of spec suite Leasing deals strategy – with demand from smaller businesses ahead Building Area (sqm) of expectations Rhodes C 780 ▪ Deals completed during period: Rhodes C 245 - Rhodes C – leased 1,660 sqm of vacancy Rhodes C 200 - Rhodes
Slide 17: BTP – engagement with business driving leasing
BTP – engagement with business driving leasing ▪ Leasing activity continues with 21 deals Leasing deals completed over 6,800 sqm Building Area (sqm) ▪ Variety of product appealing to broad range of 8 Clunies Ross Court 1,600 occupiers: 37 Brandl Street 1,200 - Terms agreed over 900 sqm since June 18
Slide 18: BTP – driving value through innovation
BTP – driving value through innovation 43% energy met $1.0m investment Lowers volatility of Equivalent of planting by solar PV delivering 15% energy costs for 1,600 trees p.a. return on cost1 Industria’s tenants ACTING SWIFTLY TO CAPITALISE ON OPPORTUNITIES TO ADD VALUE 1 Additional ~220 Kilowatt in
Slide 19: WesTrac Newcastle – world leading real estate
WesTrac Newcastle – world leading real estate ▪ Leased to WesTrac until 2034 with annual 3% fixed rental uplifts ▪ Property completed in 2012 – and is regarded as best-in-class by Caterpillar dealers globally: - Very high quality facility catering for all aspects of WesTrac business – although focus
Slide 20: Industrial portfolio – well positioned and capturing value
Industrial portfolio – well positioned and capturing value ▪ Leasing at Adelaide Airport continued, completed Leasing completed and forthcoming expiries 4,300 sqm of activity: - Location and quality of product underpinned 20,000 leasing outcomes ▪ One vacancy (1,400 sqm) across entire portfolio 15,0
Slide 21: Outlook
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Slide 22: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) - Desirable and well leased portfolio with potential for further income and value upside - Passive income stream with organic rental FY2019 2% increases provi
Slide 23: Appendices
Appendices Se iNDUSTRIAP-EIT S
Slide 24: Appendix A: Property portfolio
Appendix A Property portfolio 24
Slide 25: Portfolio details as at 30 June 2018
Portfolio details as at 30 June 2018 Book Value NLA Occupancy WALE Property State Ownership Sector Cap Rate ($m) (sqm) (by area) (by area) Building A, Rhodes NSW 100% Office 110.0 6.25% 14,641 100% 3.2 Building C, Rhodes NSW 100% Office 82.6 6.00% 10,544 100% 4.5 18 Brandl Street, BTP QLD 100% Offic
Slide 26: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 27% Link Market Services 14% Interactive 4% AAE Retail 4% Mitre 10 4% Frasers Property 4% QLD Health 4% RFS 3% Dempsey Group 3% Edlyn Foods 3% Top 10 Tenants 70% Other 30% Total 100% 26
Slide 27: Appendix B: Financial information
Appendix B Financial information 27
Slide 28: Balance Sheet
Balance Sheet Financial year ended 30 June 2018 30 June 2017 $’000 $’000 Assets Cash and cash equivalents 1,659 1,037 Trade and other receivables 1,134 510 Other assets 462 389 Total current assets 3,255 1,936 Investment properties 660,732 638,000 Total non-current assets 660,732 638,000 Assets 663,
Slide 29: Profit and Loss Statement
Profit and Loss Statement Financial year ended 30 June 2018 30 June 2017 $’000 $’000 Income Net rental income (including straight lining adjustments) 51,677 48,483 Total revenue 51,677 48,483 Expenses Property costs (9,919) (10,445) Trust management fees (3,542) (2,875) Other expenses (710) (872) To
Slide 30: Reconciliation to FFO
Reconciliation to FFO Financial year ended 30 June 2018 30 June 2017 $’000 $’000 Net profit after tax 47,896 101,643 Adjusted for: Reverse straight lining adjustments included in net rental income (3,906) (3,221) Add back deferred tax expense 309 3,334 Add back amortised borrowing costs 334 324 Add
Slide 31: Interest rate hedging profile
Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate (lhs) 6% $95m 5% $81m 4% $50m 3% 2% $20m 1% 0% FY19 FY20 FY21 FY22 31
Slide 32: Disclaimer
Disclaimer This presentation has been prepared by APN Funds Management Limited (ACN 080 647 479, AFSL No. 237500) (the "Responsible Entity") as the responsible entity and issuer of the financial products in respect of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491)
Slide 33: Contact
Contact Alex Abell Fund Manager Ph: (03) 8656 1070 aabell@industriareit.com.au Industria REIT Level 30,101 Collins Street, Melbourne, Vic 3000 industriareit.com.au 33