Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — H1 FY2016 Earnings Presentation
43 slides from Kiwi Property's earnings presentation, Nov 18, 2015
Slide 1: Interim result presentation
Kiwi Property Interim result presentation 30 September 2015
Slide 2: Contents
Contents 03 Result and strategy overview 05 Financial review 11 Portfolio performance 16 Development activity 23 Outlook and dividend guidance 27 Appendices This interim result presentation should be read in conjunction with the NZX announcement and online interim report also released on 18 November
Slide 3: We're in good shape
We’re in good shape Successful half-year result ▲ ▲ ▲ from ▼from +$9.5m +$12.2m 3.25 cps 33.5% $51.6m $36.0m 3.30cps 30.3% INTERIM OPERATING PROFIT AFTER GEARING CASH PROFIT TAX RATIO DIVIDEND Robust portfolio metrics $2.39b 98.5% 4.7years 4.6% PORTFOLIO SALES OCCUPANCY WALT VALUE GROWTH ▲ ▲ from ▲
Slide 4: We're delivering on strategy
We’re delivering on strategy Our major government We’ve strengthened our presence in the office accommodation Auckland retail sector project remains on track > Delivered a new > Secured three new 12-year lease $39 million agreements for 8,000 sqm at entertainment 44 The Terrace. This, together with
Slide 5: Financial review
Financial review Kiwi Property > September 2015 interim result presentation > 18 November 2015 5
Slide 6: Rental income
Rental income Solid like-for-like increases 30-Sep-15 30-Sep-14 Variance Like-for-like var. For the six months ended $m $m $m % $m % > Positive contributions Sylvia Park 17.8 17.1 +0.7 +4.1 +0.7 +4.1 provided by: Sylvia Park Lifestyle 2.2 - +2.2 +100.0 • a full six-month contribution LynnMall 7.1 7.
Slide 7: Successful operating result
Successful operating result Driven by active capital management Financial performance 30-Sep-15 30-Sep-14 Variance For the six months ended $m $m $m % > Improved operating profit assisted by a lower net Gross rental income 101.3 102.3 -1.0 -1.0 interest expense due to: Property operating expenditure
Slide 8: Dividend targets met
Dividend targets met Shareholders to receive interim dividend of 3.30 cents per share Distributable income 30-Sep-15 30-Sep-14 Variance For the six months ended $m $m $m % Operating profit 51.6 42.1 +9.5 +22.6 > Improved distributable income driven by Fixed rental income adjustments -1.2 -1.5 +0.3 +
Slide 9: Balance sheet strength maintained
Balance sheet strength maintained Positively positioned to fund future investment priorities Financial position 30-Sep-15 31-Mar-15 Movement As at $m $m $m % > Investment properties Investment properties (Appendix 3) 2,390.4 2,275.8 +114.6 +5.0 increased due to: Cash (Appendix 4) 6.2 6.2 - - • acqui
Slide 10: Cost of debt reduced
Cost of debt reduced Driven by falling interest rates and reduced funding costs Finance debt facilities As at 30 September 2015 Total facilities (Appendix 5) 900.0 Facilities drawn 732.0 Undrawn facilities 168.0 30-Sep-15 31-Mar-15 Weighted average term to maturity 3.1 years 3.6 years Weighted avera
Slide 11: Portfolio performance
Portfolio performance Kiwi Property > September 2015 interim result presentation > 18 November 2015 11
Slide 12: Active leasing period
Active leasing period Delivered ongoing rental uplift and extended lease terms NLA Uplift over prior passing rent % all leases subject to Static portfolio leasing No. of % of total WALT fixed/CPI By portfolio tenancies sqm portfolio $000 % CAGR years rent reviews Rent reviews 288 56,776 16 +1,392 +3
Slide 13: Expiries and WALT
Expiries and WALT Leasing activity extends office WALT Weighted average lease term (years) Lease expiry profile ● Retail portfolio By gross income By gross income ● Office portfolio ● Total portfolio As at 30-Sep-15 31-Mar-15 1% Vacant / Retail 3.5 3.4 holdover 1% 1% Office 8.0 7.6 Primarily relates
Slide 14: Retail sales growth continues
Retail sales growth continues Dining, leisure and entertainment strong performers MAT $m Specialty sales % var. from Centre Sep-15 Sep-14 $/sqm GOC > Positive growth in sales on both a Sylvia Park 438.8 +8.1 9,000 total and unaffected basis. Sylvia Park Lifestyle Tenants do not report sales - > Grow
Slide 15: Sustainability achievements
Sustainability achievements Long-term strategy rewarded > Only New Zealand > Finalist in the ‘Impact Renewables’ company category of the 2015 NZI Sustainable 1st included on the 2015 Climate A List Business Network Awards IN NEW ZEALAND • Only 113 companies out of 2,000 globally > Sylvia Park solar
Slide 16: Development activity
Development NorthWest Shopping Centre activity Westgate Zone 7 (As at 27 October 2015) 16
Slide 17: Westgate Zone 7
Westgate Zone 7 Development: In progress Centre details Financial metrics Leasing to date Programme NLA 25,500 sqm Cost and valuation1 $82.5m Occupancy (by area) 90% Commenced May-15 Tenants 28 Yield on passing rent 7.0% WALT (years) 8.1 First stage opening Mar to Jun-16 Carparks 622 10-year IRR 9.0
Slide 18: LynnMall
LynnMall Development: Opened on time, on budget and fully leased Development Financial metrics complete achieved > An eight-screen Reading Pre-development value $206m Cinemas multiplex on a Development cost $39m 15-year lease (opening late November 2015) Total investment $245m > ‘The Brickworks’ din
Slide 19: 56 The Terrace
56 The Terrace 24,000 sqm government office project on programme and budget Programme status > Approximately 75% complete and on target for July 2016 completion: - tower floor refurbishment works complete to level 15, with remaining three levels substantially progressed - structural works are signif
Slide 20: 44 The Terrace
44 The Terrace Together with 56 The Terrace, creates a 35,000 sqm government office precinct Project status > Works commenced June 2015 > Refurbishment work progressing to programme and due for completion Nov-16 Cost status > The forecast cost of $12.6 million1 remains on track Leasing status > 8,00
Slide 21: The Majestic Centre
The Majestic Centre Seismic strengthening: Further milestones achieved Project status > Further project milestones reached: • on-floor strengthening works now complete • all tenants are relocated to their final tenancies > Works relating to the tower are programmed to be complete by the end of 2015
Slide 22: Our continuing success story
Our continuing success story Sylvia Park remains a standout performer Positioning the centre as New Zealand’s most attractive retail destination We’ve secured leading fashion giant H&M > H&M will open its first New Zealand store in late 2016 > $7.7 million committed to accommodate H&M and upgrade ad
Slide 23: Outlook and dividend guidance
Outlook and dividend guidance Kiwi Property > September 2015 interim result presentation > 18 November 2015 23
Slide 24: Outlook and focus for our retail portfolio
Outlook and focus for our retail portfolio Our exposure Mixed drivers for sales growth Portfolio weighting Market analysis (by value) > GDP is forecast to grow at 2% for 2015, then 2.5% over the following two years > Retail sales growth has been strongest in the Auckland and Canterbury regions, unde
Slide 25: Outlook and focus for our office portfolio
Outlook and focus for our office portfolio Auckland CBD office Wellington office Expected to deliver rental growth and yield firming Our leasing strategy has limited exposure to the variable market Market analysis Market analysis > Vacancy is falling to historical lows > Higher level of sales activi
Slide 26: Outlook and dividend guidance
Outlook and dividend guidance Kiwi Property today Cash dividend guidance for FY16 > New Zealand’s largest listed property vehicle > Clear objective, goals and investment strategy 6.60 > High-quality portfolio, vacancy of <2% and a long weighted average lease term providing secure income streams cent
Slide 27: Appendices
Appendix Page Financial review Net interest expense 1 28 Operating profit movement (1H FY15 to 1H FY16) 2 29 Investment properties movement (Mar-15 to Sep-15) 3 30 Net finance debt movement (Mar-15 to Sep-15) 4 31 Finance debt maturity profile as at 30-Sep-15 5 32 Finance debt maturity profile post
Slide 28: Net interest expense
Appendix 1 Net interest expense 30-Sep-15 30-Sep-14 Variance For the six months ended $m $m $m % Interest income 0.1 0.3 -0.2 -66.7 Interest on bank debt -15.3 -22.5 +7.2 +32.0 Interest on bonds -4.0 -1.4 -2.6 -185.7 Interest on MCNs - -5.4 +5.4 +100.0 Net interest expense incurred -19.2 -29.0 +9.8
Slide 29: Operating profit movement
Appendix 2 Operating profit movement (for the six months ended 30-Sep-15 versus the six months ended 30-Sep-14 ($m)) 60 +$10.7 50 -$0.5 +$2.2 +$1.8 +$0.6 40 -$0.3 -$0.7 -$4.3 30 =$51.6 -$0.4 million from NOI change 20 $42.1 -$0.7 million from NRI change 10 0 Sep-14 NOI: asset NOI: asset NOI: centres
Slide 30: Investment properties movement
Appendix 3 Investment properties movement (for the six months ended 30-Sep-15 ($m)) 2,500 2,400 +$23.3 +$9.7 +$24.7 +$2.1 +$19.2 +$35.6 2,300 2,200 =$2,390.4 +$2,275.8 2,100 2,000 As at Mar-15 Acquisition of Dev't costs: The Dev't costs: Dev't costs: Dev't costs: Other As at Sep-15 Westgate Majestic
Slide 31: Net finance debt movement
Appendix 4 Net finance debt1 movement (for the six months ended 30-Sep-15 ($m)) 900 850 +$11.1 +$75.8 800 -$1.6 +$33.9 750 +$9.2 +$8.9 +$37.0 +$18.0 700 650 -$80.1 -$148.1 $760.2 =$724.3 600 550 500 Net finance Net rental Net interest Management Acquisition of Investment Settlement of Litigation Pro
Slide 32: Finance debt facilities as at September 2015
Appendix 5 Finance debt facilities as at 30 September 2015 Finance debt facilities Facilities expiring As at 30 September 2015 $m % FY16 - - FY17 WBC $57.5 57.5 6.4 FY18 ANZ $52.5 BNZ $65.0 CBA $100.0 217.5 24.2 FY19 ANZ $52.5 BNZ $65.0 CBA $65.0 WBC $100.0 282.5 31.3 FY20 ANZ $52.5 BNZ $65.0 CBA $1
Slide 33: Finance debt facilities post refinancing
Appendix 6 Finance debt facilities post refinancing (completed Nov-15) Finance debt facilities Facilities expiring Post refinancing $m % > All bank debt FY16 - - extended • Extends the weighted FY17 - - average term to maturity by 1.3 years FY18 • Reduces fees and margins by around FY19 ANZ $52.5 BN
Slide 34: Fixed-rate debt profile
Appendix 7 Fixed-rate debt profile Fixed rate profile (inclusive of $125m bond issuance) 30-Sep-15 31-Mar-15 Percentage of drawn finance debt at fixed rates 72% 81% Weighted average interest rate of fixed-rate debt (excl. fees and margin) 4.02% 4.68% Weighted average term to maturity of fixed-rate d
Slide 35: Key portfolio metrics
Appendix 8 Key portfolio metrics As at 30-Sep-15 As at 31-Mar-15 Core portfolio metrics1 Retail Office Total Total Number of assets 7 5 12 12 Value2 (Appendix 9) $1,562.5 $720.5 $2,283.0 $2,204.8m ▲ Proportion of total portfolio by value (Appendix 11) 65% 30% 95% 97% Weighted average capitalisation
Slide 36: Portfolio values and capitalisation rates
Appendix 9 Portfolio values and capitalisation rates1 Portfolio / property Capitalisation rates %1 Adopted value $m Fair value mvmt 1. Property assets were not independently valued at As at Sep-15 Mar-15 Var. bps Sep-15 Mar-15 $m % 30-Sep-15. Property assets are held at their Sylvia Park 6.25 6.25 -
Slide 37: Portfolio statistics
Appendix 10 Portfolio statistics Portfolio / property NLA sqm Occupancy %1 WALT years As at Sep-15 Mar-15 Sep-15 Mar-15 Sep-15 Mar-15 Sylvia Park, Auckland 72,130 72,165 100.0 99.6 3.5 3.1 Sylvia Park Lifestyle, Auckland 16,182 16,182 97.5 100.0 4.0 4.9 LynnMall, Auckland 31,853 32,054 98.2 100.0 3.
Slide 38: Diversification
Appendix 11 Diversification Sector Geographic diversification diversification (by portfolio value) (by portfolio value) Retail Office Other 65 % 30 % 5% 63 % (64%) Auckland 5 % (5%) Hamilton 9% (9%) Palmerston North 13 % (13%) Wellington 10 % (9%) Christchurch On completion of Westgate Zone 7 the
Slide 39: Our tenants
Appendix 12 Our tenants 30% ● ASB Bank 7.4% Total New Zealand chains Australian and international chains 25% Top ● Farmers 3.8% portfolio Department stores 6% 20 ● Progressive Enterprises ● Vero Insurance 3.2% 2.4% (% of core Supermarkets 5% (% of core portfolio gross portfolio gross ● Bell Gully 2.
Slide 40: Auckland CBD office market
Appendix 13 Auckland CBD office market Outlook Key points (Premium and A-grade accommodation) Portfolio weighting (by value) ► Supply > No major changes in Premium-grade until 2019 when two buildings are planned to come on stream, although only one is likely to proceed > Increase in A-grade stock fr
Slide 41: Wellington CBD office market
Appendix 14 Wellington CBD office market Outlook Key points (A-grade and B-grade accommodation) Portfolio weighting (by value) ▲ Supply > Stable supply in the A-grade market in the short term, but a large amount of space will re-enter the market in 2016/17 (largely pre-committed) 9% > The B-grade en
Slide 42: Glossary of terms
Appendix 15 Glossary of terms Comparable sales Comparable sales provides a more normalised picture of sales trends by excluding centres that have undergone redevelopment in either year of comparison Department stores Includes both full line and discount department stores (i.e. Farmers, Kmart and The
Slide 43: Disclaimer
Disclaimer Kiwi Property Group Limited (‘KPG’) has prepared this presentation (the ‘Presentation’) and the information contained in it is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. It is not intended as invest
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