Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — H1 FY2012 Earnings Presentation
40 slides from Kiwi Property's earnings presentation, Nov 16, 2011
Slide 1: Interim Result
INTERIM RESULT For the six months ended 30 September 2011 KIWI INCOME PROPERTY TRUST 16 November 2011 Chris Gudgeon Chief Executive, Kiwi Income Properties Limited Gavin Parker Chief Financial Officer, Kiwi Income Properties Limited
Slide 2: Agenda
Agenda 2 4 11 18 Interim result overview Financial review Property portfolio performance 23 30 34 Development 10 External environment Outlook 10 Appendices: Appendix 1: Financial review – Interest expense Appendix 2: Property portfolio performance • Occupancy and WALT • Regional and sector diversifi
Slide 3: Interim result overview
Interim result overview Interim result presentation for the six months ended 30 September 2011
Slide 4: Highlights
Interim result overview Highlights 4 ‒ Distributable profit before tax of $43.8 million, up $6.8 million Operating performance ‒ Distributable profit after tax of $36.0 million, up $3.0 million ‒ Interim distribution of 3.50 cents per unit, in line with guidance ‒ Total assets sit at $2.1 billion Ba
Slide 5: Retail portfolio activity
Interim result overview Retail portfolio activity 5 Foodcourt and dining lane Centre Place Key project metrics – Completed the foodcourt and dining lane in September 2011 Total development cost $10.0m – Completed on time, on budget, fully leased and positively received Initial yield 8.5% – Asset dev
Slide 6: Office portfolio activity
Interim result overview Office portfolio activity 6 PricewaterhouseCoopers Centre – $94.9 million insurance claim submitted for material Treatment in the financial statements damage and business interruption – $71.2 million of insurance proceeds recognised as income and $67.5 million – Agreement rea
Slide 7: Office portfolio activity
Interim result overview Office portfolio activity 7 The Majestic Centre – Seismic evaluation undertaken for office assets – Strengthening works to be undertaken at Majestic Centre – Current building performance 34-40% of New Building Standard (NBS) – Categorised as ‘moderate risk’ according to the N
Slide 8: Office portfolio EQ performance
Interim result overview Office portfolio EQ performance 8 – The New Zealand Society for Earthquake Engineering (NZSEE) has produced a risk classification scale for property based on a building’s structural performance relative to a ‘New Building Standard’ (%NBS score) – The minimum standard is 34% a
Slide 9: Insurance premiums
Interim result overview Insurance premiums 9 – The Trust’s insurance policy is due for renewal on 30 November 2011 – The Christchurch earthquake events have created a challenging insurance market characterised by: – A significant increase in premiums – A change in excess for Natural Disaster events
Slide 10: Financial review
Financial review Interim result presentation for the six months ended 30 September 2011
Slide 11: Financial performance
Financial review Financial performance 11 Restated1 Financial performance Variance Key movements in net 30-Sep-11 30-Sep-10 $m For the six months ended rental income $m $m $m % Gross rental income 100.7 93.2 +7.5 +8.0 Sylvia Park +0.7 Property operating expenditure -28.7 -25.8 -2.9 -11.2 LynnMall +7
Slide 12: Distributable profit
Financial review Distributable profit 12 30-Sep-11 30-Sep-10 Variance In respect of the Distributable profit For the six months ended 30 September $m $m $m % 2011 Operating profit before tax 41.2 36.1 +5.1 +14.1 distribution: Business interruption insurance proceeds received 2.1 - +2.1 +100.0 ‒ elig
Slide 13: Financial position
Financial review Financial position 13 Financial position 30-Sep-11 31-Mar-11 Movement Key NTA movements $m $/unit As at $m $m $m % Assets Fair value movements Property assets 1,923.3 1,984.7 -61.4 -3.1 Centre Place -30 -0.03 Cash on deposit 89.5 107.3 -17.8 -16.6 The Majestic Centre -35 -0.04 Insur
Slide 14: Bank debt
Financial review Bank debt 14 Bank Debt Maturities as at 30-Sep-11 Bank facilities 30-Sep-11 31-Mar-11 350 Bilateral facilities $850.0m $800.0m 300 35.0% Balance drawn $760.5m $759.0m 250 Balance undrawn $89.5m $41.0m $135.0 Cash on deposit $89.5m $107.3m 200 Weighted cost of debt $m 6.43% 6.71% [in
Slide 15: Post period bank debt refinancing
Financial review Post period bank debt refinancing 15 Bank Debt Maturities - Post Refinancing – Bank debt refinancing: 350 – $297.5 million due to expire in March/April 2012 has been renewed 300 34.3% and extended with new maturity dates between April 2016 and 250 April 2017 27.4% $100.0 $135. – A f
Slide 16: Interest rate hedging profile
Financial review Interest rate hedging profile 16 Hedging profile 30-Sep-11 31-Mar-11 Percentage of drawn debt hedged [fixed rate] 74% 84% Weighted average interest rate on hedged debt [excl margin and fees] 6.21% 6.20% Weighted average term to maturity of interest rate hedges 2.9 years 3.1 years He
Slide 17: Property portfolio performance
Property portfolio performance Interim result presentation for the six months ended 30 September 2011
Slide 18: Leasing activity
Property portfolio performance Leasing activity 18 Rental movement over prior NLA Portfolio No. passing rental sqm $000 % CAGR % Details of new retail leases and renewals NEW LEASES AND RENEWALS Sylvia Park 9 +10% Retail 80 10,533 -1,055 -11.2 N/A Centre Place 12 -41% Office 12 3,913 -45 -3.5 N/A Ot
Slide 19: Sales performance by centre
Property portfolio performance Sales performance by centre 19 Moving Annual Turnover Specialty ‒ Generally positive sales growth Category sales [All statistics to 30-Sep-11 and incl. GST] $m % $/sqm ‒ Northlands benefitting from earthquake redistribution Sylvia Park 428.5 +4.5 8,489 effects LynnMall
Slide 20: Sales performance by category
Property portfolio performance Sales performance by category 20 Total sales1 Comparable2 Unaffected3 Category $m % $m % $m % Supermarkets 389.4 +4.5 353.2 +5.5 184.0 +1.5 Dept stores & DDS 181.2 +18.2 138.2 +12.3 80.8 +2.0 Cinemas 19.5 -8.3 16.5 -9.6 13.9 -12.5 Mini-majors 153.7 +20.4 133.3 +16.3 11
Slide 21: Lease expiry
Property portfolio performance Lease expiry 21 Lease Expiry Profile (by gross income) 60% Office Portfolio NLA 50% FY Property Tenant [sqm] 13 Vero Centre Russell McVeagh 7,452 Gross Income Expiring [%] 40% 13 Unisys House Crown Law 4,806 30% 14 Unisys House Dept. of Labour 9,345 Nat. Bank 14 ANZ Na
Slide 22: Development
Development Interim result presentation for the six months ended 30 September 2011
Slide 23: Redevelopment overview
Development | Centre Place redevelopment Redevelopment overview 23 $39.9 million redevelopment of Centre Place Shopping Centre The redevelopment incorporates: A new 7,000 sqm full-line Farmers department store anchoring the Centre on a 15-year lease New relocated Rebel Sport store New covered
Slide 24: Composition on completion
Development | Centre Place redevelopment Composition on completion 24 On completion Tenancy type No. NLA [sqm] Farmers 1 7,000 Farmers department store NEW SPECIALTY Cinemas 2 4,195 Ward Street retail pods Rebel Sport relocation Mini-majors 2 1,690 Dining Lane 6 1,010 Foodcourt 10 481 Specialty 90 1
Slide 25: Competitive environment
Development | Centre Place redevelopment Competitive environment 25 Hamilton Hamiltonretail retail space supplybyby space supply NLA NLA 100% – The supply of retail space in Hamilton has grown Rest of Te significantly over the past six years: 90% Rapa – The former Air Force base at Te Rapa (5km driv
Slide 26: Centre Place performance
Development | Centre Place redevelopment Centre Place performance 26 – Over the period from Mar-08 to Centre Place Shopping Centre Sep-11: Moving Annual Turnover and Asset Value History 180 $ millions – Moving annual turnover (MAT) has reduced 41% from $107 million to 160 $63 million 140 – Asset val
Slide 27: Investment rationale
Development | Centre Place redevelopment Investment rationale 27 – Post development, Urbis Research project that Key metrics MAT should increase to $116.0 million driven by: – New Farmers department store September 2011 valuation $86.5m – A broader specialty range – Enhanced dining and entertainment
Slide 28: ASB Bank North Wharf
Development ASB Bank North Wharf 28 ASB North Wharf Key project metrics – Design and construction progressing well and remain on program Total development cost $132.1m to meet ASB lease commencement Target initial yield ~8.5% – Detailed design complete ASB net lettable area 19,466 sqm – Level 4 now
Slide 29: External environment
External environment Interim result presentation for the six months ended 30 September 2011
Slide 30: General economy
External environment General economy 30 Growth in Real GDP, Retail Sales and House Prices 8% 25% – Domestic activity continues to improve, but only at modest and 20% patchy pace 6% – Supported by improved export incomes 15% – Impacted by weaker global economies and 4% slowdown in domestic consumptio
Slide 31: Auckland office market outlook
External environment Auckland office 31 12 month outlook for Key indicator Auckland CBD Office Premium Net Rent and Vacancy Prime CBD office space Auckland CBD Premium Office Rent and Vacancy 600 25% No uncommitted Supply major developments in the next five years 500 20% Increasing with improvement
Slide 32: Wellington office market outlook
External environment Wellington office 32 12 month outlook for Key indicator Wellington CBD Office Premium Gross Rent and Vacancy Prime CBD office space Wellington CBD Premium Office Rent and Vacancy ~42,000 sqm coming to market in late 2011 550 30% Supply but limited supply 500 pipeline thereafter
Slide 33: Outlook
Outlook Interim result presentation for the six months ended 30 September 2011
Slide 34: Outlook
Outlook 34 – Solid trading partner performance continues to support high export prices Economic and demand for New Zealand exports recovery – Retail sector still cautious and will benefit as domestic consumption underway recovers – Economists continue to forecast an improvement during 2012 – Office
Slide 35: Appendices
Appendices Interim result presentation for the six months ended 30 September 2011 Appendix 1: Financial review – Interest expense Appendix 2: Property portfolio performance • Occupancy and WALT • Regional and sector diversification • Tenant diversification
Slide 36: Interest expense
Appendix 1 – Financial review Interest expense 36 30-Sep-11 30-Sep-10 Variance Component $m $m $m % Interest income 2.1 2.4 -0.3 -12.5 Interest on bank debt -24.8 -19.7 -5.1 -25.9 Interest on 2005 MCNs - -2.8 +2.8 +100.0 Interest on 2009 MCNs -5.4 -5.4 - - Net interest expense incurred -28.1 -25.5 -
Slide 37: Occupancy and WALT
Appendix 2 – Property portfolio performance Occupancy and WALT 37 NLA Occupancy [%] WALT [Years] Portfolio / Property [sqm] Sep-11 Mar-11 Sep-11 Mar-11 Sylvia Park 71,242 100.0% 100.0% 3.3 3.7 LynnMall 31,480 100.0% 100.0% 3.2 2.9 Centre Place 21,074 83.6% 83.5% 2.7 2.1 The Plaza 32,453 100.0% 100.0
Slide 38: Regional and sector diversification
Appendix 2 – Property portfolio performance Regional and sector diversification 38 TOTAL Palmerston % Total by Sector By value Auckland Wellington Christchurch Hamilton North Sep-11 Mar-11 Retail 34% 5% 11% 10% 4% 64% 64% Office 21% 9% - - - 30% 32% Other 5% - 1% - - 6% 4% TOTAL % Total by Region Se
Slide 39: Tenant diversification
Appendix 2 – Property portfolio performance Tenant diversification 39 Tenant Diversification (by gross income) Analysis of Property Portfolio [Total Tenants: ~900] NZ Chains, 27% Portfolio No. Tenants NLA Gross income Retail 87% 62% 66% Other, 3% Office 13% 38% 34% IT / Comms, 1% Aust. & Intern'l Ch
Slide 40: Disclaimer
Disclaimer 40 Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust ('KIP'). The Manager is a subsidiary of Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way
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