Argosy Property Limited · NZX:ARG
Argosy Property — Non-Deal Roadshow (February 2014)
35 slides from Argosy Property's roadshow presentation, February 2014
Slide 1: Investor Presentation
Investor Presentation Argosy Property Limited February 2014
Slide 2: Highlights
Highlights
Slide 3: Highlights of the year so far
Highlights of the year so far 1H14 Net Property Income increased to $40.3 million (increase of 13.7%) 1H14 Distributable Income increased to $23.7 million (increase of 17.8%) Weighted average lease term increased to 5.88 years¹ Occupancy (by rental) increased to 98.1%¹ Successful completio
Slide 4: Analyst Reaction to the half-year result
Analyst Reaction to the half-year result “Solid and boring – just what we want from an LPV!... ARG has continued to perform well in leasing up its vacant space.” Chris Byrne – Craigs Investment Partners “1H14 – On a slow and steady track towards new strategy….Portfolio metrics continue to improv
Slide 5: Summary Statistics
Summary Statistics As at 30 September 2013 Book value of properties $1,130.9m Number of properties 66 Average value of properties $17.1m Vacancy by rental 2.7% Vacancy by area 2.2% Weighted average lease term 5.91 years Number of tenants 222
Slide 6: Financial Overview
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Slide 7: Income Reconciliation
Income Reconciliation 50 45 0.9 43.3 5.5 (0.2) 0.4 40 36.7 35 30 25 20 15 10 5 0 Gross Property Income Acquisitions Sales Rent reviews Other Gross Property Income $m 30 September 2012 30 September 2013
Slide 8: Financial Performance
Financial Performance HY14 HY13 Net property income $40.3m $35.4m Interest expense $(12.9m) $(12.4m) Gain/(loss) on derivatives $16.0m $(13.0m) Administration expenses $(3.7m) $(2.9m) Abnormals $(0.0m) $(0.9m) Realised losses on disposal $(0.1m) $(0.8m) Finance income $0.1m $0.1m Profit before tax $
Slide 9: Distributable Income
Distributable Income HY14 HY13 Profit before income tax $39.7m $5.5m Adjusted for: Investment disposal losses $0.1 $0.8m Derivative fair value adjustment $(16.1m) $13.0m Corporatisation costs - $0.1m Acquisition investigation costs - $0.8m Gross distributable income $23.7m $20.2m Tax paid - - Net di
Slide 10: Investment Properties
Investment Properties 1,200 1,130.9 1,150 18.4 3.4 132.2 1,100 1,050 1,000 976.9 950 900 850 800 Investment Acquisitions Capex Tenant Investment $m Properties Incentives Properties 31 March 2013 30 September 2013
Slide 11: Movement in NTA per share
Movement in NTA per share 92 (1.2) 2.3 90 (0.3) 0.2 89.3 88.3 88 86 84 82 80 NTA Gain on Deferred Tax Issue Costs Residual Earnings NTA cps 31 March 2013 Derivatives Movement in Profit less Dividends Paid 30 September & Loss 2013
Slide 12: Financial Position
Financial Position HY14 FY13 HY13 Shares on issue 783.9m 680.9m 563.6m Shareholders’ funds $700.2m $601.3m $481.8m Net tangible asset backing per share (cents) 89.3c 88.3c 85.5c HY14 FY13 HY13 Investment properties $1,130.9m $976.9m $905.7m Other assets $13.0m $15.8m $15.5m Total assets $1,143.9m $9
Slide 13: Portfolio Overview
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Slide 14: Leasing Environment
Leasing Environment The New Zealand economy showing strong signs of improvement, despite continuing challenges overseas. Improving consumer and business confidence point to solid GDP growth and a corresponding improvement in underlying property market performance. Increased expectation of grow
Slide 15: Leasing
Leasing Occupancy, tenant retention and lease expiries remain key focus areas for the asset management team. Occupancy (by rental) has improved to 98.1% (31 December 2013) from 96.2% at March 2013. Outstanding lease expiries for the period to 31 March 2014 have reduced to 2.4% (at 31 December
Slide 16: Lease Maturity
Lease Maturity 25% 24% 23% 22% 21% 20% Percentage of portfolio (by income) 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 10 + Vacant Year At 31 December 2013 At 31 March 2013
Slide 17: Weighted Average Lease Term as at December 2013
Weighted Average Lease Term as at 31 December 2013 8.0 6.70 7.0 5.88 6.0 5.53 5.31 5.0 YEARS 4.0 3.0 2.0 1.0 0.0 TOTAL Industrial Commercial Retail
Slide 18: Acquisitions: Favona Rd, Mangere, Auckland
Acquisitions 80 Favona Rd, Mangere, Auckland The property comprises a large integrated distribution centre and head office complex on a large level industrial lot in the Auckland suburb of Mangere. Property type Industrial Net lettable area 65,273 sqm PHOTOS Acquisition date June 2013 Lease term at
Slide 19: Acquisitions: Carlton Gore Rd, Newmarket, Auckland
Acquisitions 101 Carlton Gore Rd, Newmarket, Auckland A single tenanted, modern office building located in Newmarket, surrounded by quality commercial office blocks with great views of the Auckland Domain. The property has five levels of office space with carparking over two levels. Property type Co
Slide 20: Acquisitions: Nesdale Ave, Wiri, Auckland
Acquisitions 19 Nesdale Ave, Wiri, Auckland The property is a modern, purpose-built warehouse storage facility located approximately 3 kilometres west of Manukau CBD and has good access to the South Western motorway, allowing direct connection to Auckland International Airport. Property type Industr
Slide 21: Development: 15-21 Stout Street, Wellington
Development 15-21 Stout Street, Wellington The redevelopment is progressing well, is on budget and is expected to be completed by mid-2014. Net lettable area 19,630 sqm Lease commencement July 2014 Lease term 12 years Passing yield on end cost 8.11% Purchase price $33.2 million Upgrade cost $46.6 mi
Slide 22: Upgrade: NZ Post House, Wellington
Upgrade NZ Post House, Wellington The contract to complete the NZ Post House upgrade was awarded at the end of 2013 with development now commenced. Net lettable area 24,977 sqm Lease commencement March 2013 Lease term 7 years Passing yield on end cost 8.50% Purchase price $60.0 million Upgrade cost
Slide 23: Strategy
Strategy > Www.argosy.co.nz
Slide 24: We have a clear investment strategy
We have a clear investment strategy marked by a diversified portfolio of desirable properties that attract high- quality, long-term tenants.
Slide 25: Portfolio Investment Strategy
Portfolio Investment Strategy Argosy is and will remain invested in a portfolio that is diversified by primary sector, grade, location and tenant mix. The portfolio will be in the primary Auckland and Wellington markets with modest tenant- driven exposure to provincial markets. Argosy’s portfolio co
Slide 26: Portfolio Mix as at December 2013
Portfolio Mix as at 31 December 2013 TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION 4% 5% 13% 29% 5% 36% 21% 70% 82% 35% Target Target Target Retail 15 – 25% Auckland 65 – 75% Core 75 – 85% Commercial 35 – 45% Wellington 20 – 30% Value Add properties Industrial 35 – 45
Slide 27: Capital Management
Capital Management The Board’s policy is for debt to total assets to be between 35 to 40% in the medium term. Divestment of vacant land and under-yielding assets will continue to be a key strategy for the company. The sale of vacant land at Manawatu Business Park remains a focus. 4 high qualit
Slide 28: Bank Covenants
Bank Covenants Loan to valuation ratio (LVR) – HY14 FY13 HY13 based on: Total borrowings $391.3m $328.7m $375.0m Fair market value of properties $1,119.5m¹ $983.6m $895.4m² Not to exceed 50% 35.0% 33.4% 41.9% Interest cover ratio – based on HY14 FY13 HY13 EBIT/Interest and Financing Costs: Must exce
Slide 29: Performance
Argosy — SS S™"=wea- == rmance- Wwww.argosy.co.nz
Slide 30: 5 Year Return Performance
Gross Prices Indexed to 100 110 130 150 170 190 210 250 70 90 230 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Argosy Property Limited Mar-11 Jun-11 5 Year Return Performance Sep-11 Dec-11 Mar-12 NZ Property Gross Index Jun-12 Sep-12 Dec-12 Mar-13 NZX 50 Index Jun-13 Sep-13 Dec-13
Slide 31: Interest rate changes
-5.00% 10.00% 20.00% 15.00% -15.00% -10.00% 0.00% 5.00% Mar 1999 Aug 1999 Jan 2000 Jun 2000 Nov 2000 Apr 2001 Sep 2001 Feb 2002 Jul 2002 Dec 2002 May 2003 Oct 2003 Mar 2004 Interest rate changes Aug 2004 Capital Return Jan 2005 Jun 2005 Nov 2005 Apr 2006 Sep 2006 Feb 2007 Income Return Jul 2007 Dec
Slide 32: Concluding comments
Concluding comments » www.argosy.co.nz
Slide 33: Concluding comments
Concluding comments The first nine months of the year have been a busy and exciting time for Argosy. Our focus strongly remains on improving the portfolio’s occupancy, lease expiry and tenant retention rates. We will also continue to look for opportunities to develop the portfolio in line with
Slide 34: Thank you
Thank you
Slide 35: 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