Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — FY2020 Earnings Presentation
39 slides from Dexus Industria Reit's earnings presentation, Aug 19, 2020
Slide 1: FY2020 Results Presentation
FY2020 RESULTS PRESENTATION 19 AUGUST 2020 www.apngroup.com.au ASX Code: ADI
Slide 2: Agenda
Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio positioning and market dynamics 04 Portfolio Performance 05 Outlook Appendices 2
Slide 3: 01 Highlights and Outcomes
01 HIGHLIGHTS AND OUTCOMES | Property Group
Slide 4: FY20: Solid outcome and well positioned for growth
FY20: Solid outcome and well positioned for growth FFO 19.3 cents per Strong balance sheet Record leasing Committing to security; 1.6% – 28.8% gearing; volume – with carbon neutrality growth capacity to deploy ~28,900 square from FY21 and unlock further metres completed growth Resilient outcome in A
Slide 5: 30 June 2020 financials
30 June 2020 financials ▪ Statutory net profit increased $25.6m to $54.8m, driven by Income Statement FY20 FY19 Change growing rental revenue and revaluation gains of $24.4m; Statutory net profit ($m) $54.8 $29.2 p 87.7% 28.8 cents per security, up 11 cents ▪ Net Property Income up 15.1% to $46.6 mi
Slide 6: Strong balance sheet, consistently outperforming peers
Strong balance sheet, consistently outperforming peers ▪ Maintaining a staggered debt maturity profile, reducing Debt maturity profile – limited refinance risk concentration risk over any given period: $300m - Three financiers with no more than ~50% exposure to $250m a single bank $200m - Refinanced
Slide 7: Resilient income profile from high quality tenants
Resilient income profile from high quality tenants Tenant composition by income Tenants across the portfolio 95% 5% 5% ASX Listed 7% National Listed Multinational 10% Government 55% Multinational Private 18% Tenant composition by industry – office assets Tenant composition by industry – industrial a
Slide 8: 02 Investment Proposition
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Slide 9: The APN Industria REIT opportunity
The APN Industria REIT opportunity Strategy to grow through The opportunity investing in office and ▪ Low-risk portfolio benefiting from a growing rent profile – average rent reviews of industrial assets ~3%, no potential volatility from “active earnings” (e.g. funds management or development) ▪ Pro
Slide 10: At a glance
At a glance $826 ~$482m S&P/ASX 300 INDEX MILLION MILLION MARKET PORTFOLIO CAPITALISATION MEMBER 7.0% 29% 5.7 3% CASH DISTRIBUTION GEARING YEAR WALE AVG RENT REVIEWS YIELD HIGH QUALITY OFFICE AND INDUSTRIAL ASSETS DELIVERING A STRONG INCOME PROFILE COMBINED WITH A CONSERVATIVE BALANCE SHEET PROVIDIN
Slide 11: Diversified portfolio generating consistent and growing income
Diversified portfolio generating consistent and growing income 21% 29% WesTrac Newcastle Industrial Melbourne, Located adjacent to Adelaide and Brisbane M1 motorway Key industrial precincts 44% 56% ~$222 million valuation ~$243 million valuation 14.2 year WALE 16 buildings; 4.7 year WALE 23% 27% Loc
Slide 12: APN Property Group – aligned and experienced manager
APN Property Group – aligned and experienced manager Strong investor Focused and Governance Manager with long alignment dedicated overseen by an track record and ▪ APN is strongly aligned to management team Independent Board deep relationships delivering investor returns – owning a co-investment sta
Slide 13: 03 Portfolio Positioning and Market Dynamics
03 PORTFOLIO POSITIONING AND MARKET DYNAMICS 13
Slide 14: Actively managing Industria's real estate
Actively managing Industria’s real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 97% 84% 126,500 96% 96%1 95% 95% 97,600 92% 83,900 70,300 45,900 9% 18,800 7% Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 CPI 2 - <3% ≥ 3% Jun15 Jun16 Jun17
Slide 15: Committing to carbon neutrality in FY21
Committing to carbon neutrality in FY21 ▪ In FY21, APN Industria REIT is anticipated to be the first A- Efficiency achievements and carbon neutral timeline REIT to be carbon neutral, in accordance with the Climate Active Standard, across the portfolio and operations Rooftop solar PV installations ▪
Slide 16: COVID-19 impact on markets
COVID-19 impact on markets Industrial and logistics Business parks Opportunities Challenges Opportunities Challenges Higher levels of inventory being The weaker economy will result The pandemic has accelerated Economic weakness, business held locally; warehouses natural in business failures and caus
Slide 17: Growth pipeline and diligence
Growth pipeline and diligence ▪ APN has been highly selective when acquiring assets – largely focusing on opportunities in the warehousing and logistics sector: - Assessed over $1.4 billion on and off-market opportunities - Submitted offers on ~$380 million ▪ Long weighted average lease expiry oppor
Slide 18: 04 Portfolio Performance
04 PORTFOLIO PERFORMANCE 18
Slide 19: Continued discipline and active management across industrial assets
Continued discipline and active management across industrial assets ▪ Industrial warehouse portfolio (excluding Westrac) 94% leased with 4.7 year WALE, average cap rate of 6.5% ▪ 5 year renewal of tenant at 81 Rushdale St, Knoxfield (May 2019 acquisition) – delivering 7.0% yield on cost ▪ Early rene
Slide 20: Westrac Newcastle – world leading real estate
Westrac Newcastle – world leading real estate ▪ Increased in value by $25 million to $222 million – driven by rising rents and cap rate compression (25bps to 5.75%): - ~$5.5 million expansion starting Sept; 6.75% yield on cost ▪ Leased to Westrac until 2034, with the higher of CPI or 3% annual rent
Slide 21: Rhodes Corporate Park
Rhodes Corporate Park ▪ Focus remains on September 2021 expiry of Link Market Services: Building A Building C - 6 floors, 1800 – 2,250sqm floor plates with quality fit-out; central core provides opportunities to split floors efficiently - Upgrade of End of Trip underway; existing on-site complimenta
Slide 22: Rhodes Corporate Park
Rhodes Corporate Park Rhodes offers outstanding transport linkages in all directions, close proximity to growing population, and affordable rent profiles1 Parramatta ($645/sqm) ~30mins to Sydney CBD using existing infrastructure (road & rail) Rhodes ($550/sqm) Corridor forecast to grow by Sydney 420
Slide 23: Brisbane Technology Park
Brisbane Technology Park ▪ Activity continues: Brisbane Technology Park | APN Industria REIT ownership - 49 leases across ~11,100sqm (including 14 since March BRISBANE CBD 2020); retention very strong at 85%; average incentive 17% 15 mins to CBD 25 mins to - New ~2,500sqm childcare completed – fit o
Slide 24: Brisbane Technology Park
Brisbane Technology Park ▪ APN’s on-site management platform is providing unique Innovation at Brisbane Technology Park opportunities to: - Engage with genuine innovators such as Lyro Robotics – who are commercialising world-leading picking and packing technology for deployment in supply chains - Bu
Slide 25: 05 Outlook
APN | Property Group
Slide 26: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) - High quality portfolio with annual fixed growth from rent reviews - No potential volatility from active earnings that may rely FY21 6% on development or fun
Slide 27: Appendices
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Slide 28: Appendix A: Property portfolio
Appendix A Property portfolio 28
Slide 29: Independent Valuations
Independent Valuations Independent valuation outcomes Book-Value Cap Rate 1H Change in 2H Change in 1H2020 2H2020 FY2020 Asset ($m) (%) Cap Rate Cap Rate Gain / (Loss) Gain / (Loss) Gain / (Loss) 1-3 Westrac Dr 222.0 5.75% (0.25%) 0.00% 21.0 4.0 25.0 140 Sharps Road 13.7 8.00% (0.25%) n/a 0.2 - 0.2
Slide 30: APN Industria REIT portfolio as at 30 June 2020
APN Industria REIT portfolio as at 30 June 2020 Age Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector (years) ($m) (%) (sqm) (by area) (by income) APN Industria REIT Portfolio Industrial Portfolio 465.5 6.14% 210,485 95% 8.7 Office Portfolio 361.0 6.69% 60,537 89% 2.4 Portfolio
Slide 31: APN Industria REIT portfolio as at 30 June 2020
APN Industria REIT portfolio as at 30 June 2020 WALE Age Book Value Cap Rate NLA Occupancy (by Property State Ownership Sector (years) ($m) (%) (sqm) (by area) income) Office Portfolio Building A, 1 Homebush Bay Drive, Rhodes NSW 100% Office 12.8 103.0 5.88% 14,642 100% 1.4 Building C, 1 Homebush Ba
Slide 32: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 24% Link Market Services 13% AAE Retail 4% Frasers Property 4% Mitre 10 4% Interactive 3% Autopact Victoria 3% RFS 3% Vesco 3% Queensland Health 3% Top 10 Tenants 64% Other 36% Total 100% 32
Slide 33: Appendix B: Financial information
Appendix B Financial information 33
Slide 34: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position As at June 2020 Jun 2019 $’000 $’000 Assets Cash and cash equivalents 4,928 2,435 Trade and other receivables 377 1,007 Other assets 733 764 Total current assets 6,038 4,206 Investment properties 826,481 739,378 Investment properties - Right-of-use assets
Slide 35: Consolidated Statement of Profit or Loss and other comprehensive income
Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended Jun 2020 Jun 2020 $’000 $’000 Income Net rental income 59,554 52,153 Straight line rental income recognition 2,323 3,149 Total revenue 61,877 55,302 Expenses Property costs (12,921) (11,700) Trust manageme
Slide 36: Reconciliation to FFO
Reconciliation to FFO Financial period ended Jun 2020 Jun 2019 $’000 $’000 Net profit after tax 54,836 29,243 Adjusted for: Reverse straight lining adjustments included in net rental income (2,323) (3,149) Reverse fair value gain (loss) on investment properties (20,650) (5,934) Reverse fair value ga
Slide 37: Interest rate hedging profile
Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate (lhs) 5% $138m $127m 4% 3% Average Fixed Rate $80m $67m 2% 1% $15m 0% FY21 FY22 FY23 FY24 FY25 37
Slide 38: Disclaimer
Disclaimer This presentation has been prepared by APN Funds Management Limited (ACN 080 647 479, AFSL No. 237500) (the "Responsible Entity") as the responsible entity and issuer of the financial products in respect of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491)
Slide 39: Contact
Contact Alex Abell Fund Manager – APN Industria REIT Ph: (03) 8656 1070 aabell@apngroup.com.au ASX Code: ADI Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, APN Property Group Limited Melbourne, Vic 3000 apnpropertygroup apngroup.com.au http://blog.apngroup.com.au apnp