Australian Unity Office Fund · ASX:AOF
Australian Unity Office Fund — FY2017 Earnings Presentation
28 slides from Australian Unity Office Fund's earnings presentation, Aug 8, 2017
Slide 1: Australian Unity Office Fund 2017 Full Year Results Presentation
Australian Unity Office Fund (ASX: AOF) 2017 Full Year Results Presentation – 8 August 2017 Webcast: http://webcasting.boardroom.media/broadcast/596c3b833882f04c84d63ac5 Teleconference details: Australia Toll Free: 1800 558 698 International: +612 9007 3187 Conference ID: 494546
Slide 2: Important notice and disclaimer
Important notice and disclaimer The information provided in this presentation has been prepared by Australian Unity Investment Real Estate Limited ABN 86 606 414 368 AFS Licence 477434 (AUIRE), as responsible entity of the Australian Unity Office Fund ARSN 113 369 627 (Fund). The information provide
Slide 3: Australian Unity
Australian Unity With its origins dating back to the 1840s, Australian Unity today, is a national health, wealth and living mutual company providing services to approximately one million Australians. Australian Unity’s Real Estate Investment Established in 1998. Diverse offering of listed and un
Slide 4: Full Year 2017 result highlights
Full Year 2017 result highlights Exceeding financial forecasts and delivering capital growth Fund objective 1 Funds From Operations (FFO) 17.1 cpu1 (PDS2 16.4 cpu) 2 NTA per unit $2.233 (PDS2 $1.964) To provide Unitholders with sustainable income Long term renewal of largest near term lease expiry 3
Slide 5: Financial results
Financial results 30 Pirie St, Adelaide, SA
Slide 6: Full Year 2017 – key financial metrics
Financial results Full Year 2017 – key financial metrics PDS1 Key metric Actual Change Net profit up $42.6 million, forecast largely due to increase in asset Statutory Net Profit2 $60.6m $18.0m $42.6m valuations. FFO2,3 $24.0m $23.1m $0.9m FFO up $0.9 million primarily due to better than forecas
Slide 7: Full Year 2017 – capital management
Financial results Full Year 2017 – capital management 30 June 30 June Change Capital management objective 2017 2016 Total borrowings1 $123.5m $119.0m +$4.5m Maintain a robust capital Gearing 27.0% 27.5% -0.5% structure that can withstand Weighted average cost of cycles and enable growth 3.6% 3.6% -
Slide 8: Portfolio management
Portfolio management 2 Eden Park Drive, North Ryde, NSW
Slide 9: FY17 Portfolio highlights
FY17 Portfolio highlights Significant leasing completed with solid valuation outcomes Portfolio objective 1 ~17,400 sqm of new leases completed (26 transactions) 2 Represents ~18% of portfolio by area Construct an Australian metropolitan and CBD ~2,000 sqm relates to previously vacant space 3 (9 tra
Slide 10: Leasing summary
Leasing summary AOF has a strong track record of renewing key tenants • Eight year lease renewal of CPSA at 5 Eden Park Drive, North Ryde from current 30 June 2018 lease expiry. • 18% of portfolio by area leased during FY17. • ~3,400 sqm of executed leases or signed HOA not included in 30 June 2017
Slide 11: Valuation summary
Valuation summary Uplift due to market parameters and leasing success • Portfolio value increased to $441.1 million, with an average rate per sqm of ~$4,500. • Four properties externally revalued as at 30 June 2017 resulting in a 8.0% increase over the preceding book value for those properties reval
Slide 12: Potential development opportunity
Potential development opportunity 10 Valentine Avenue, Parramatta • Freestanding car park adjacent to existing office tower represents a development opportunity. • Parramatta CBD Planning Proposal seeks to increase the floor space ratio to 10:1, permitting a ~25,000 sqm office tower. • A mandatory d
Slide 13: Market overview
Market overview 5 Eden Park Drive, North Ryde, NSW
Slide 14: Market overview
Market overview Leasing conditions are solid, with investment demand strong • Most major markets have incurred a Vacancy 12 12 Month Net reduction in vacancy rates. Market month Absorption June 17 change (sqm) • Both Brisbane and Canberra continue Adelaide 16.0% 3,665 to demonstrate improved tenant
Slide 15: Market overview: rental cost-effectiveness
Market overview The majority of AOF’s markets look comparatively cost-effective on a rental basis • The Sydney CBD achieved a significant Prime Gross 25.3% growth in effective rents during Discount to Market Effective Sydney CBD FY17. Rent1($/sqm) Sydney CBD $901 - • Parramatta now more than half an
Slide 16: Summary
Summary 10 Valentine Avenue, Parramatta, NSW
Slide 17: Outlook
Outlook AOF is well positioned to deliver on its objectives Guidance • FY18 FFO guidance of 17.1 – 17.3 cpu1 • FY18 distribution guidance of 15.6 cpu1 Immediate focus • Address current vacancy and pending lease expiries. • Seek to capture rental growth occurring in Sydney and Melbourne and their ass
Slide 18: Appendices
Appendices 10 Valentine Avenue, Parramatta, NSW
Slide 19: Income statement
Income statement Actual PDS1 forecast 12 months to 30 June 2017 Variance ($’000) ($’000) Income Statement Rental income 44,009 42,100 1,909 Property expenses (15,753) (16,000) 247 Interest income 14 - 14 Net gain on financial assets 1,176 - 1,176 Net fair value increment of investment properties 38,
Slide 20: Reconciliation of statutory profit to Property Council FFO
Reconciliation of statutory profit to Property Council FFO Actual PDS1 forecast 12 months to 30 June 2017 Variance ($’000) ($’000) Statutory Net Profit 60,637 18,000 42,637 Adjusted for: Straight lining of rental income and amortisation of 3,529 5,100 (1,571) leasing commissions and tenant incentive
Slide 21: Balance sheet
Balance sheet $’000 30 June 2017 30 June 2016 Movement Assets Cash and cash equivalents 4,118 10,589 (6,471) Receivables 432 1,553 (1,121) Financial assets 232 - 232 Other assets 361 314 47 Investment properties 441,0671 392,772 48,295 Total Assets 446,210 405,228 40,982 Liabilities Distributions pa
Slide 22: Capital management
Capital management Debt facility expiry profile $80 m $60 m $40 m $20 m $0 m Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Interest rate hedging & average hedged interest rate $120 m 3.00% $100 m 2.50% $80 m 2.00% $60 m 1.50% $40 m 1.00% $20 m 0.50% $0 m 0.00% Jun-17 Dec-17 Jun-18 Dec-18 J
Slide 23: Key portfolio metrics
Key portfolio metrics As at 30 June 2017 Geographic diversification3 Key portfolio metrics 64 Northbourne Ave 4% NSW Number of properties 8 241 Adelaide St (49%) 10 Valentine Ave Occupancy1 93.5% 8% 20% SA Portfolio Value $441.1m 468 St Kilda Rd (27%) 12% Weighted Average Capitalisation Rate 7.5% VI
Slide 24: Investment portfolio
Investment portfolio As at 30 June 2017 June 17 NLA WALE1 Occupancy Property State Cap rate book value (sqm) (years) (by NLA) Single or 30 Pirie Street, Adelaide SA $119.0m 7.50% 24,781 5.7 91.7% Dominant Tenant 10 Valentine Avenue, NSW $86.0m 7.75% 15,995 4.8 100.0% Assets Parramatta 5 Eden Park Dr
Slide 25: Operational performance
Operational performance Greenhouse Emissions 800 • Daily monitoring across 750 all properties to 700 improve operational 650 efficiency and Tonnes (T) 600 consumption. 550 500 • Yearly variation due to 450 seasonality. 400 APR JUL OCT JAN 13/14 14/15 15/16 16/17 Water Consumption 7000 6000 Kilolitre
Slide 26: Board of Directors
Australian Unity Office Fund Board of Directors – Australian Unity Investment Real Estate Limited Centre: (William) Peter Day, Independent Director and Chairman, Member of the Fund's Audit & Risk Committee From left: Don Marples, Independent Director, Chairman of the Fund's Audit & Risk Committee; E
Slide 27: Management Team
Australian Unity Office Fund Management Team From left: Mark Pratt, General Manager, AUREI; Simon Beake, Portfolio Manager; Grant Nichols, Fund Manager; Giovanna Reale, Asset Manager 27
Slide 28: Australian Unity
Australian 7 Health | Wealth | Living
Australian Unity Office Fund — FY2017 Earnings Presentation on 6ix