Stride Property Group · NZX:SPG
Stride Property — DNZ Property Fund — FY2011 Earnings Presentation
33 slides from Stride Property's earnings presentation, May 23, 2011
Slide 1: FY11 Results – Annual Results for year ended 31 March 2011
FY11 RESULTS DNZ PROPERTY FUND LIMITED ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011 23 MAY 2011
Slide 2: Agenda & Contents
2 Agenda & Contents Page Introduction Tim Storey Chairman Highlights 3 Paul Duffy Chief Executive Financial Performance 6 Jennifer Whooley Chief Financial Officer Capital Management 11 Jennifer Whooley Chief Financial Officer Property Portfolio 17 Paul Duffy Chief Executive Outlook 30 Paul Duffy Chi
Slide 3: DNZ PROPERTY FUND LIMITED ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
3 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 4: Highlights
4 Highlights A successful IPO and $45 million capital raising SHARE PRICE 28% An NZX listing on 16 August 2010 Positive share price growth ($0.97 at listing to $1.24 as at 31 March 2011) DISTRIBUTABLE 14% Solid financial performance with distributable profit PROFIT ahead of 2010 prospectus forecast
Slide 5: Total Returns
5 Total Returns Total Returns Since Listing 31/03/11 18/05/11 DNZ (from IPO issue price of $0.97) 32.2% 39.6% NZX 50 Gross Index 13.8% 17.7% NZX Property Gross Index 10.9% 16.4% Source: Goldman Sachs & Partners DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
Slide 6: DNZ PROPERTY FUND LIMITED ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
6 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 7: Financial Performance
7 Financial Performance Distributable profit $21.9m 13.8% ahead of PFI driven primarily by lower finance expenses plus tax benefit following the recent IRD ruling Strong underlying performance from property operating activities Net profit before one off items and tax $19.7m (PFI $19.7m) Net loss aft
Slide 8: Distributable Profit
8 Distributable Profit Actual PFI Actual 31 March 11 31 March 11 Variance 31 March 10 ($ millions) ($ millions) ($ millions) ($ millions) Net loss before tax (25.5) (15.6) (9.9) (15.5) NZ IFRS and other adjustments - Termination payment for manager 31.8 31.8 - - - Amortisation and impairment of fixe
Slide 9: Financial Performance
9 Financial Performance Actual PFI Actual 31 March 11 31 March 11 Variance 31 March 10 ($ millions) ($ millions) ($ millions) ($ millions) Net rental income 52.0 52.8 (0.8) 54.8 Management fee income 1.0 1.2 (0.2) - Loss on disposal of investment properties (1.4) (1.3) (0.1) (0.1) Corporate expenses
Slide 10: Financial Summary
10 Financial Summary As at As at 31 March 11 31 March 10 ($ millions) ($ millions) Property values1 637.7 700.1 Bank loan 257.9 322.0 Bank loan to value ratio2 40.4% 46.9% Equity 382.3 378.4 Shares on issue 246.6 188.5 NTA per share3 $1.54 $1.99 IFRS adjusted NTA per share4 $1.55 $2.02 1 The asset s
Slide 11: DNZ PROPERTY FUND LIMITED ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
11 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 12: Capital Management
12 Capital Management $45 million capital raise Renegotiated debt facilities to 30 September 2013 $150m of swaps entered into during the period Asset sales programme completed $72.2m gross 7-19 Croftfield Lane, Auckland ($7.9m) Cnr Cambridge Terrace & Hollands Crescent, Lower Hutt ($8.4m) 266 High S
Slide 13: Banking
13 Banking Banking partners ANZ, ASB and BNZ Loan to value ratio 40.4% Interest times cover ratio 2.14x $150m of swaps entered into during the period New swaps terms of 3-4 years New swaps hedged at an average rate of 4.22% (excluding margin and line fee) Drawn debt hedged at 83% Good liquidity with
Slide 14: Banking Covenants
14 Banking Covenants As at Covenant Covenant 31 March 11 Gearing Ratio (Bank Debt / Property Values) < 50% 40.4% Interest Cover Ratio > 1.75 x 2.14x (EBIT / Interest and Financing Costs) Fully Leased Unexpired Term* > 3.5 years 4.18 years * The unexpired leased term in a property or portfolio, assum
Slide 15: Debt Facility Summary
15 Debt Facility Summary As at As at Bank Facility 31 March 11 31 March 10 Facility limit (ANZ, ASB, BNZ) $350m $500m Balance drawn $253m $322m Balance undrawn $97m $178m Weighted average cost of debt (incl. margins & fees) 7.34% 6.23% Maturity of facility 2.5 years 1.5 years Percentage of drawn deb
Slide 16: Valuation Summary
16 Valuation Summary Gain/(Loss) in Value1 Capitalisation Rate 31 March Portfolio 2011 Market Market +/- Valuation $ $ % Cap Rate Cap Rate bps 2010 2011 OFFICE TOTAL 253,950,000 (11,683,708) (4.43%) 8.80% 8.88% -8 INDUSTRIAL TOTAL 173,790,000 1,738,117 1.15% 8.82% 8.65% 17 RETAIL TOTAL 74,900,000 (8
Slide 17: DNZ PROPERTY FUND LIMITED ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
17 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 18: Portfolio Summary
18 Portfolio Summary 31 March PFI 31 March Overview 2011 31 May 2010 2010 Properties 50 55 58 Tenants 283 265 272 Net Lettable Area (m2) 371,481 379,779 397,696 WALT (years) 4.3 4.5 4.7 Occupancy Rate (by area) 97.9% 95.4% 95.6% Asset Valuation $638m $671m $700m DNZ PROPERTY FUND LIMITED :: ANNUAL R
Slide 19: Portfolio Overview
19 Portfolio Overview Portfolio occupancy 97.9% Portfolio underpinned by WALT of 4.3 years 188 Lease transactions completed over 218,205m2 of net lettable area Annualised rental growth of 3.8% pa across all rent reviews The 188 lease transactions management completed during the period include: 100 r
Slide 20: Portfolio Occupancy
20 Portfolio Occupancy Occupancy Occupancy Vacancy Net Lettable Property (%) 2010 (%) 2011 (sqm) 2011 Area (sqm) 2011 129 Hurstmere Road, Takapuna 85% 100% - 7,246 8 Rockridge Avenue, Penrose 51% 74% 811 3,112 650 Great South Road, Greenlane 93% 93% 601 8,390 80 Greys Avenue 100% 87% 731 5,500 7 - 9
Slide 21: Diversified Portfolio
21 Diversified Portfolio DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 22: Top 10 Tenants
22 Top 10 Tenants Top 10 tenants comprise 44% by contract rental for the total portfolio As at 31 March 2011 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 23: WALT at 4.3 years
23 WALT at 4.3 years As at 31 March 2011 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 24: Lease Expiry Profile
24 Lease Expiry Profile Renewed for 6 years. Represents 0.94% of the expiry profile for 2012 (reduces to 12.6%) As at 31 March 2011 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 25: Major Lease Expiries
25 Major Lease Expiries FY Property Tenant NLA 2012* Columbia Avenue, Christchurch Woolworths Distribution Centre* 12,665 2012 15 Ride Way, Albany NZ Post 6,027 2012 Johnsonville Shopping Centre & Adjoining Properties, Wellington Various Tenancies 4,233 2012 80 Greys Avenue, Auckland DDB New Zealand
Slide 26: Major Lease Transactions Completed
26 Major Lease Transactions Completed Contract Tenant Commencement Area m2 Term Rental $ Laminex Group (Fletcher Building) 22 November 2010 18,836 12 years 2,011,517 Lion Nathan Wines & Spirits 1 October 2011 21,349 3 years 1,786,150 Beca 1 April 2010 5,938 3 years 1,300,000 Pacific Coilcoaters (Fle
Slide 27: Development Update
27 Development Update Development activity is only undertaken with appropriate levels of risk mitigation Tenant pre-commitment Appropriate investment returns Less than 2% of the total portfolio value is represented by development land Office/warehouse design/build opportunities for the residual 2.28
Slide 28: Fletcher Building Laminex Group
28 Fletcher Building Laminex Group The new 12,000m² warehouse and 1,800m² office building completed at O’Rorke Rd in Penrose consolidating Laminex Group’s operations Practical completion 19 November 2010 New 12 year lease commenced on 22 November 2010 Built by Fletcher Construction DNZ PROPERTY FUND
Slide 29: Property Market Overview
29 Property Market Overview The office market remains the most challenging of the property sectors Auckland - reduced new supply risk with ANZ being retained at ANZ Centre Wellington – further focus on office space utilisation by Government sector tenants in short/medium term Despite the challenging
Slide 30: DNZ PROPERTY FUND LIMITED ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011
30 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT PRESENTATION FOR THE YEAR ENDED 31 MARCH 2011 :: 23 MAY 2011
Slide 31: Outlook
31 Outlook Active Portfolio Management Maintain high occupancy levels with focus on FY12 & FY13 expiries Tenant relationships paramount Prudent Capital Management Bank loan facilities renegotiated to 30 September 2013 Consideration of securing longer term facility $150m of swaps entered – next expir
Slide 32: Appendix 1 – Valuation Summary
32 Appendix 1 – Valuation Summary Market Market Market Market March 2011 Gain/(Loss)1 Gain/(Loss) March 2011 Gain/(Loss)1 Gain/(Loss)1 Address Cap Rate Cap Rate Address Cap Rate Cap Rate Valuation $ Value $ 1 Value % Valuation $ Value $ Value % 2011 2010 2011 2010 129 Hurstmere Road, Takapuna 18,000
Slide 33: Thank You
33 THANK YOU DNZ Property Fund Limited Important Notice: This presentation has been prepared by DNZ Property Fund Limited. The details in this presentation provide general information only. It is not Level 4, 80 Greys Avenue intended as investment or financial advice and must not be relied upon as s