Argosy Property Limited · NZX:ARG
Argosy Property — Argosy Property Trust — FY2011 Earnings Presentation
25 slides from Argosy Property's earnings presentation, May 31, 2011
Slide 1: Argosy Property Trust Full Year Results Presentation 31 May 2011
WWW.ARGOSYPROPERTYTRUST.CO.NZ ARGOSY PROPERTY TRUST FULL YEAR RESULTS PRESENTATION 31 MAY 2011
Slide 2: Highlights
HIGHLIGHTS Successful rebranding to Argosy Property Trust, a new brand and identity that is independent from that of the owner of the Manager Distribution of 7.0 cents per unit for the 12 months to 31 March 2011 Total portfolio value of $961 million Portfolio occupancy at 31 March 2011 at 97% Weight
Slide 3: Trust Basics
Argosy TRUST BASICS
Slide 4: Summary Statistics
SUMMARY STATISTICS As at 31 March 2011 Book value of properties $948,687,000 Number of properties 74 Average value of properties $12,820,000 Vacancy by rental 3.25% Vacancy by area 3.30% Weighted average lease term 4.92 years Number of tenants 294
Slide 5: Unit Price Performance
Gross Prices Indexed to 100 85 90 95 100 105 110 115 Mar-10 Apr-10 May-10 Jun-10 Argosy Property Trust Jul-10 Aug-10 Sep-10 UNIT PRICE PERFORMANCE NZ Property Gross Index Oct-10 Nov-10 Dec-10 NZX 50 Index Jan-11 Feb-11 Mar-11
Slide 6: Financial Overview
Argosy FINANCIAL OVERVIEW
Slide 7: Financial Performance
FINANCIAL PERFORMANCE FY11 FY10 Change Net rental income $ 72.3m $ 77.9m (7.2%) Interest expense $ 29.8m $ 26.9m 10.8% Loss on derivatives $ 7.6m $ 15.5m Revaluation gains/(losses) on investment property $ 2.1m $ (82.8m) Operating surplus (pre disposals, revaluations & tax) $ 63.2m $ 67.7m (6.6%) Pr
Slide 8: Interest Rate Management
INTEREST RATE MANAGEMENT The Trust current interest rate hedge is 56% of its debt. The interest rate paid (including margins and fees) in FY11 was 7.49% (compared with 6.28% in FY10). The duration of the hedge portfolio is 5.84 years Hedge expiry by year Average swap rate 8.00% 7.00% 65.20% 6.00% 5.
Slide 9: Distributable Income
DISTRIBUTABLE INCOME FY11 FY10 Profit/(loss) before finance income tax $ 28.7m $ (56.3m) Adjust for: Revaluation (gains)/losses on investment $ (2.1m) $ 82.8m property Investment disposal gains $ (0.6m) $ (0.5m) Derivatives fair value adjustment $ 7.6m $ 15.5m Amortisation of management contract $ 1
Slide 10: Financial Position
FINANCIAL POSITION FY11 FY10 Change Securities on issue 549.2m 539.3m 1.8% Unitholders’ funds (includes minority $ 511.7m $ 526.6m (2.7%) interest) Net asset backing per unit (cents) 93.3c 97.6c Investment properties $ 948.7m $ 925.9m Property held for sale $ 11.9m $ 6.7m Total assets $ 975.2m $ 950
Slide 11: Covenants
COVENANTS FY11 FY10 Trust Deed – borrowings not to exceed 50% of GAV Total money borrowed $ 412.4m $ 381.1m Gross asset value of Trust $ 975.2m $ 950.0m Not to exceed 50% 42.3% 40.1% Bank loan facility Syndicate Loan to valuation ratio – based on: Fair market value of properties (incl. held for sale
Slide 12: Covenants continued
COVENANTS continued FY11 FY10 Interest cover ratio – based on: Net interest expense (FY11 – 9 mths) $ 22.1m $ 26.2m Operating surplus $ 47.5m $ 69.2m Equal or exceed 2.0 (2010: 2.25) times 2.15 x 2.64 x On 17 May 2010, Argosy Property Trust entered into a new $400m bank loan facility agreement. The
Slide 13: Portfolio Overview
Argosy PORTFOLIO OVERVIEW
Slide 14: Commercial/Office
COMMERCIAL/OFFICE • Reduction in proposed new supply in Auckland • Net absorption is positive but remains weak • Activity is typically “shifting the deck chairs” • Fringe demand remains relatively soft • Tenants remain conservative • Beginning to see increase in demand for increased areas
Slide 15: Retail
RETAIL Enquiry levels improved Tenant rental expectations soft Tenant quality focus Waitakere MegaCentre now fully let Albany MegaCentre demand exceeds supply Investor demand has improved Turnover levels remain challenging
Slide 16: Industrial
INDUSTRIAL Solid net absorption in Auckland market Owner occupier activity increasing Investor demand for well leased property is strong Manufacturing enquiry remains light New supply proposals in the market
Slide 17: Issues for Focus
ISSUES FOR FOCUS Occupancy remains a key focus as values are fundamentally affected by weighted average lease term and projected incentive levels Rental reviews – ensuring that the Trust is well positioned to gain rental increases when these become available. Stock selection - increased focus on new
Slide 18: Diversification
DIVERSIFICATION 11% 30% 36% 15% Office Auckland Industrial Wellington Retail Regional 74% 34%
Slide 19: Lease Maturity
LEASE MATURITY 40 16% 15% 14% 13% Percentage of portfolio (by income) 25 12% 85 11% 10% 13 9% 22 12 8% 35 16.0% 12 7% 35 6% 11.9% 11.1% 6 5% 9.6% 8.7% 8.5% 7.7% 4% 7.8% 6 6.8% 3% 5.3% 2% 3.5% 1% 0% Vacant Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Year ending The nu
Slide 20: Manawatu Business Park
MANAWATU BUSINESS PARK Asset remains sound Joint venture partner has been removed in swap of debt and obligations for equity $25.9m under contract for sale ($7.4m settles 2012 with the remainder progressively over three years) Subdivision to be complete February 2012 Amalgamated into portfolio
Slide 21: Portfolio Positioning for the Future
PORTFOLIO POSITIONING FOR THE FUTURE 59 new leases 25 lease renewals or extensions 92 rent reviews completed Sales of vacant property Sale of higher risk property
Slide 22: Valuations
VALUATIONS Increase in property valuations of $2.1 million Portfolio valuation $961 million Industrial sector shown some growth off-setting declines in other sectors Modest growth shown in properties with longer lease terms Passing yield after revaluations 8.28%
Slide 23: Valuations continued
VALUATIONS continued Book value 31/3/11 pre Valuation 31/3/11 Difference ($) Revaluation % revaluation ($) ($) Industrial 344,815,137 353,136,765 8,321,628 2.41% Commercial 265,760,429 262,640,000 -3,120,429 -1.17% Retail 347,905,525 344,830,000 -3,075,525 -0.88% Total * 958,481,091 960,606,765 2,12
Slide 24: Thank You
Argosy THANK YOU
Slide 25: Disclaimer
DISCLAIMER This presentation has been prepared by Argosy Property Management Limited on behalf of Argosy Property Trust. 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 inde