Property For Industry Limited · NZX:PFI
Property For Industry — H1 2015 Earnings Presentation
38 slides from Property For Industry's earnings presentation, Aug 11, 2015
Slide 1: 2015 Interim Results Briefing
WEL- TO THE 2015 INTERIM RESULTS BRIEFING
Slide 2: Agenda
AGENDA 1. Highlights 2. 2015 Interim Results 3. Portfolio 4. Market & Strategy 5. Recent Acquisitions & Developments 6. Renounceable Rights Offer 7. Questions 8. Appendices Please note: this presentation should be read in conjunction with the announcement, interim financial statements and Offer Docu
Slide 3: Highlights
LIGHTS.
Slide 4: Highlights – Financial & Portfolio
HIGHLIGHTS – FINANCIAL & PORTFOLIO • Financial: • Profit after tax for the six months to 30 June 2015 of $36.4m or 8.85 cents per share • Distributable profit for the six months to 30 June 2015 of 3.64 cents per share • Second quarter cash dividend of 1.75 cents per share, total cash dividends for t
Slide 5: Highlights – Acquisitions, Developments & Rights Offer
HIGHLIGHTS – ACQUISTIONS, DEVELOPMENTS & RIGHTS OFFER • Recent acquisitions and developments: • PFI has committed to a series of value enhancing acquisitions and developments to drive growth • $18.4m acquisition of 232 Cavendish Drive, Manukau, completed Q2 2015 • $28.5m acquisition of a portfolio o
Slide 6: Highlights – Rights Offer (continued)
HIGHLIGHTS – RIGHTS OFFER (CONTINUED) • Post acquisition, development and completion of the Rights Offer, PFI is expecting: • pro forma FYE 2015 gearing of ~35% • full year EPS of at least 7.35 cps post issue • full year DPS of 7.30 cps post issue • an enhanced earnings growth profile post FY15 driv
Slide 7: Results
LTS.
Slide 8: Comprehensive Income
COMPREHENSIVE INCOME For the six months ended (unaudited, $000) Jun 2015 Jun 2014 Change • Operating revenues in line Total operating revenue 32,122 32,070 52 with H1 2014, refer slide 16: Interest expense and bank fees (9,642) (9,003) (639) Operating Revenue Management fees (4,109) (2,446) (1,663)
Slide 9: Distributable Profit (Cents per Share)
DISTRIBUTABLE PROFIT (CENTS PER SHARE) • Distributable profit per share down 0.16 cps or 4.2% • 2015 H1 dividends of 3.50 cps, in line with the previous corresponding period • FY15 earnings guidance of at least 7.35 cps post issue • FY15 dividend guidance of 7.30 cps post issue reiterated • Proceeds
Slide 10: Net Tangible Assets (Cents per Share)
NET TANGIBLE ASSETS (CENTS PER SHARE) • Net tangible assets (NTA) per share up 5.2 cps or 4.0% to 135.4 cents per share • Increase in fair value of investment properties (refer slide 17: Investment Properties) partially offset by reduction in the fair value of derivatives of $3.5m or 0.9 cps Refer:
Slide 11: Treasury
TREASURY • Facilities refinanced Q2 2015, limit increased by $25m, average term extended, cost reduced • $25m stand-by facility from ANZ obtained after half-year, to be cancelled after Rights Offer June 2015 December 2014 Facilities Drawn (excluding overdraft) $342.3m $313.5m Facilities limit $375.0
Slide 12: Treasury
TREASURY $300m 5.5% Cover Interest Rate $250m 5.0% $200m $150m 4.5% $100m 4.0% $50m $0m 3.5% Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 • Interest rate hedging profile extended, average duration increased to 3.6 years from 2.9 years PROPE
Slide 13: Portfolio
FOLIO.
Slide 14: Portfolio Snapshot
PORTFOLIO SNAPSHOT • PFI portfolio is diversified across 80 properties and 142 tenants, with 100% occupancy and a WALT of 5.26 years 30 June 2015 31 December 2014 30 June 2014 Number of properties 80 79 79 Number of tenants 142 134 136 Contract rent $69.7m $65.8m $65.6m Occupancy 100.0% 98.5% 99.0%
Slide 15: Lease Expiry Profile
LEASE EXPIRY PROFILE 2015 Expiries Tenant % Rent Roll • Portfolio 100% occupied as at 30 June 2015 124 Hewletts Road Carter Holt Harvey 0.8% • Largest single 2015 expiry less than 1% of rent roll, with 212 Cavendish Drive NZ Wine Cellars 0.6% the property to be demolished for development post 2-6 Ni
Slide 16: Operating Revenue
OPERATING REVENUE • 11 leases agreed over more than 56,000 sqm of space • 40 rent reviews conducted resulting in an average annual uplift of ~2.0% • Operating revenues of $32.1m in line with previous corresponding period • PFI expects H2 2015 operating revenues to be ~5% higher than H1 2015, as rece
Slide 17: Investment Properties
INVESTMENT PROPERTIES • Unrealised fair value gain of $25.6m or 2.8% • Full valuations of 12 properties, desktop valuations of the remainder of the portfolio • Revaluation uplift reflects leasing activities, favourable rent reviews and firming of yields • Passing yield constant at 7.5% • $18.4m acqu
Slide 18: Market & Strategy
KET & TEGY.
Slide 19: Market Update
MARKET UPDATE • Continued growth in prime industrial rents in H1 2015, following a period of stability throughout the second half of last year • Transactional activity continues to remain high following a strong 2014 • Attractive yields are being paid for secondary properties offering redevelopment
Slide 20: Strategy
STRATEGY • PFI’s strong and stable high quality industrial portfolio continues to perform well in buoyant industrial property market conditions • PFI’s strategy is to invest in quality industrial property in New Zealand’s main urban centres • The company aims to drive shareholder returns by: • Manag
Slide 21: Recent Acquisitions & Developments
NT ISITIONS & LOPMENTS.
Slide 22: Acquisitions
ACQUISITIONS 232 Cavendish Drive, Five properties at Manukau Hugo Johnston Drive and Autumn Place, Penrose1 Purchase price $18.4m $28.5m 2 Tenant Pacific Asset Leasing Sistema Plastics Property description Generic industrial Generic industrial Expansion land 3,000 sqm, neighbours PFI property N/A Yi
Slide 23: 124 Hewletts Road Developments
124 HEWLETTS ROAD DEVELOPMENTS Under construction Pre-leased, subject to consents1 Development spend $10.0m $16.5m ADM Tenant(s) RMD Bulk Storage Glencore Grain Regal Haulage Property description Industrial, bulk storage Industrial, bulk storage Yield2 10% yield on incremental cost 9% yield on incre
Slide 24: Auckland Surplus Land Developments
AUCKLAND SURPLUS LAND DEVELOPMENTS • PFI is projecting to spend $12.9m on the development of surplus Auckland land1: • Committed to spend $1.8m on a new warehouse at 54 Carbine Road & 6a Donnor Place, Mount Wellington • Planning to spend $11.1m at 212 and 232 Cavendish Drive, Manukau, and 9 Narek Pl
Slide 25: Renounceable Rights Offer
UNCEABLE TS OFFER.
Slide 26: Rights Offer Overview
RIGHTS OFFER OVERVIEW PFI to raise $49.5m through a pro rata renounceable Rights Offer • 1-for-12 pro rata renounceable Rights Offer, fully underwritten at Issue Price of $1.44 per Share • Traditional Rights Offer, with Rights trading – provides all Eligible Shareholders with the opportunity to part
Slide 27: Offer Structure
OFFER STRUCTURE • Traditional Rights Offer, with Rights trading, followed by a Bookbuild for Shares not subscribed for during the Offer period • Provides all Eligible Shareholders with the opportunity to participate pro rata Rights • Each Eligible Shareholder may choose to: Offer • take up all or so
Slide 28: Equity Raising Terms
EQUITY RAISING TERMS Entitlement ratio 1 New Share for every 12 Existing Shares held at 5.00pm on 20 August (Approximate amount to be raised under the Offer) Offer size NZ$49.5m Maximum New 34,361,996 (subject to rounding) Shares to be issued Issue Price $1.44 Offer discount 5.6% to TERP (ex-dividen
Slide 29: Shareholder Options
SHAREHOLDER OPTIONS Take up • You will be able to acquire Shares at the Issue Price of $1.44 which is at a discount Rights in to the market price immediately prior to the announcement of the Rights Offer full • You will maintain your proportional ownership of PFI after the Rights Offer Sell • If you
Slide 30: Timetable
TIMETABLE1 Announcement of the Offer 11 August 2015 Rights trading commences on the NZX Main Board 18 August 2015 Opening Date for the Offer 18 August 2015 Record Date for determining Entitlements 5.00pm, 20 August 2015 Offer Document, Entitlement and Acceptance Forms sent to Eligible Shareholders 2
Slide 31: Conclusion
CONCLUSION • Robust half year result: profit after tax of $36.4m or 8.85 cps, distributable profit of 3.64 cps and total cash dividends of 3.50 cps • Strong and stable high quality industrial portfolio continues to perform (occupancy 100%, WALT 5.26 years) • On strategy acquisition and development a
Slide 32: Questions
TIONS.
Slide 33: Appendices
NDICES.
Slide 34: Appendix 1: Distributable Profit
APPENDIX 1: DISTRIBUTABLE PROFIT For the six months ended (unaudited, $000) Jun 2015 Jun 2014 Change Profit for the period attributable to the shareholders of the Company 36,417 14,423 21,994 Adjusted for: Fair value gain on investment properties (25,577) - (25,577) Material damage insurance income
Slide 35: Appendix 2: Financial Position
APPENDIX 2: FINANCIAL POSITION As at ($000) Jun 2015 (unaudited) Dec 2014 (audited) Change Investment properties (including property prepayments) 930,300 876,005 54,295 Goodwill 29,086 29,086 - Other assets 2,573 1,788 785 Total assets 961,959 906,879 55,080 Borrowings 341,377 312,797 28,580 Deferre
Slide 36: Appendix 3: Leasing Transactions
APPENDIX 3: LEASING TRANSACTIONS Tenant Address Area % Rent Roll DHL Supply Chain 7-9 Niall Burgess Road, Mt. Wellington 23,565 sqm 2.9% RMD Bulk Storage 124 Hewletts Road, Mt. Maunganui 10,780 sqm 1.4% Massey University 229 Dairy Flat Highway, North Shore 4,429 sqm 1.3% New Zealand Crane 122 Captai
Slide 37: Disclaimer
DISCLAIMER IMPORTANT NOTICE The information included in this presentation is provided by Property For Industry Limited (PFI) as at 11 August 2015 and is provided in relation to a pro rata renounceable Rights Offer of New Shares in PFI to be made to Eligible Shareholders under clause 19 of Schedule 1
Slide 38: Disclaimer
DISCLAIMER Past Performance Past performance is not a reliable indicator of future performance. Future Performance The presentation includes a number of forward looking statements. Forward looking statements, by their nature, involve inherent risks and uncertainties. Many of those risks and uncertai
Property For Industry — H1 2015 Earnings Presentation on 6ix