Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — Precinct Properties New Zealand — H1 FY2016 Earnings Presentation
29 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, Feb 17, 2016
Slide 1: Precinct Properties New Zealand Interim Results
Precinct Properties New Zealand Interim Results 17 February 2016 www.precinct.co.nz
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 – Strategy Page 4 Section 2 – Interim results and capital management Page 7 Section 3 – Market and portfolio overview Page 12 Section 4 – Development update Page 17 Section 5 – Fee review Page 24 Conclusion Page 26 Precinct Properties New Zealand Limited Scott Prit
Slide 3: Highlights
Transformation Highlights of Precinct now underway Financial performance $34.8m H1 FY16 net profit after tax +1.1% increase in net operating income1 $860m refinance secured in the period 12.8% Gearing Ratio Portfolio performance 52% pre-commitment achieved for the PWC Tower at Commercial Bay Stage 1
Slide 4: Section 1 – Strategy
Section 1 Strategy
Slide 5: Strategy Recap
Strategy Recap ■ Concentrated ownership of strategic assets in prime locations ■ Bias to Auckland ■ Reduce average age of portfolio assets ■ In order to execute the strategy, Precinct will: – Dispose non-core assets – Undertake development – Drive value growth from investment portfolio ■ Strategy wi
Slide 6: Progress to date
Progress to date ■ Acquired strategic assets Bowen Campus, HSBC House and Downtown with a bias to Auckland ■ Sold $274 million of non core assets increasing weighting to Auckland ■ Average age of assets reduced and quality improved ■ Funding achieved ahead of guidance ■ FY16 earnings consistent with
Slide 7: Section 2 – Interim Results and Capital Management
Wynyard Quarter Section 2 Interim Results and Capital Management
Slide 8: Financial performance
Financial performance six months ended Dec-2015 Dec-2014 EPS reconciliation to comparative period ($m) Unaudited Unaudited Movement Net property income $53.7 m $62.1 m ($8.4 m) Indirect expenses ($1.0 m) ($0.8 m) + $0.2 m 4.00 c Performance fee Base fees ($4.1 m) ($4.3 m) ($0.2 m) 3.50 c EBIT $48.6
Slide 9: Net property income
Net property income FY16 FY15 $ AMP Centre $4.6 $4.5 + $0.1 ■ Allowing for asset sales net property income PwC Tower $8.2 $8.0 + $0.2 was consistent with FY15 ANZ Centre $8.9 $8.4 + $0.5 ■ Improved Auckland occupancy offset by HSBC House $4.1 $4.0 + $0.1 vacancy in Wellington Downtown Shopping Centr
Slide 10: Taxation reconciliation
Taxation reconciliation ■ Tax expense increased by $2.1 Tax expense reconciliation million to $6.9 million H1 FY16 H1 FY15 ■ Higher tax charge: Net profit before taxation $34.2 m $35.0 m – Higher pre-tax profit Less non operating income – Lower depreciation Depreciation recovered on sale $10.0 m ded
Slide 11: Capital management
Capital management ■ Borrowings reduced to $178 million following asset sales Key metrics Dec 2015 June 2015 ■ Gearing reduced to 12.8% from 20.1% (Dec 14 34%) Debt drawn $178m $323m ■ Committed gearing around 35% in 2019 Gearing - Banking Covenant 12.8% 20.1% ■ New 5 year $680 bank facility providi
Slide 12: Section 3 – Market and Portfolio Overview
Section 3 Market and Portfolio Overview Wynyard – Mason Brothers
Slide 13: Portfolio activity
Portfolio activity Leasing Events ■ 11 Leasing transactions totalling New Leases Number Area 4,100 square metres secured at a Auckland 2 1,041 m² 1.5% premium to June 2015 Wellington 6 555 m² valuations. Sub Total 8 1,596 m² ■ New office leases in Auckland were secured at a 4% premium to RoR and Ext
Slide 14: Portfolio metrics
Portfolio metrics Lease expiry profile by Income (ex pre-commit) 5.8 years Weighted average lease term (including development pre-leasing) 97% Occupancy 26% of Auckland portfolio has a market event in FY16 67% weighting to Auckland Occupancy FY16 INTERIM RESULTS www.commercialbay.co.nz Page 14
Slide 15: Auckland market
Auckland market Forecast vacancy (CBRE, Nov 2015) Vacancy reduced and Occupier Demand ▲ absorption increased due to growing employee base Increase in pipeline of office space mainly in fringe Supply ▲ markets. Committed supply expected to be absorbed Growth as face rents Forecast net effective rent
Slide 16: Wellington market
Wellington market Forecast vacancy (CBRE, Nov 2015) CBD based employment Occupier remains static. Crown Demand ► growth limited due to ongoing RFP New supply emerging in the Supply ▲ CBD. Impact likely for corporate market Rental growth remains limited Rental due to increasing supply Forecast net ef
Slide 17: Section 4 – Development Update
Section 4 Development Update
Slide 18: Commercial Bay Highlights
Commercial Bay Highlights ■ Commercial Bay will restore the waterfront as the heart of Auckland city ■ Major Queen Street retail development and landmark office tower ■ Retail centre comprises: – Unique laneway environment over three levels – 130m of Queen Street retail with around 100 new stores* ■
Slide 19: Project description
Project description Retail ■ 3 levels of retail which includes HSBC Building & Zurich House ■ 18,000sqm of NLA* ■ Around 100 retail stores ■ Retail frontages to Queen St, Albert St, Quay St & Customs St Office ■ 30 levels of office above sky lobby ■ Sky lobby positioned above retail ■ Floor plates r
Slide 20: Commercial Bay leasing update
Commercial Bay leasing update Retail ■ Negotiations progressing with mini major retailers ■ Strong demand for food & beverage operators ■ Unsolicited enquiry from specialty retailers further supports development opportunity ■ Resurgence of CBD retail is generating significant growth in prime CBD ret
Slide 21: Wynyard Stage 1
Wynyard Stage 1 ■ During the period Key Metrics – Committed to stage 1 Net Lettable Area (NLA) 13,400sqm Total project cost $84m – Entered into 125 year prepaid ground Grid AKL lease term 12 years lease Pre-commit % achieved (by area) 70% – Appointed Hawkins and NZ Strong Expected valuation on compl
Slide 22: Wynyard Stage 1 – leasing update
Wynyard Stage 1 – leasing update ■ Exclusive negotiation for additional space in Mason Brothers which will take total pre-commitment to 87% across stage 1 ■ Further enquiry on remaining vacant space attracting good enquiry given characteristics of the space ■ Initial discussions underway for future
Slide 23: Government RFP update
Government RFP update ■ Received Cabinet approval to enter the final phase of the Governments Wellington Accommodation Project – Pastoral House – Mayfair House – No 3 The Terrace – Bowen Campus ■ 1 The Terrace remains under consideration ■ Final phase progressing well – Agreeing final development ag
Slide 24: Section 5 – Fee Review
Section 5 Fee Review
Slide 25: Fee review
Fee review ■ In Accordance with clause 7.5 of the Management Services Agreement, the additional fees are reviewed to market every two years. Following advice from an independent expert, the latest review has been completed with the following changes: Fee Amendment Pre Post Comment 12%-20% (of gross
Slide 26: Conclusion
Conclusion
Slide 27: Conclusion and outlook
Conclusion and outlook ■ Global uncertainty remains driven by concerns over China, commodity prices and banking sector confidence ■ NZ outlook remains positive underpinned by: – strong net migration – tourism and construction sectors – significant forthcoming infrastructure projects ■ Precinct well
Slide 28: Appendices
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Slide 29: Balance sheet
Balance sheet Financial Position as at Dec-2015 30 June 2015 $m Unaudited Audited Movement Assets Property Assets $1,569.7 m $1,611.8 m ($42.1 m) Deferred tax asset $3.1 m $4.3 m ($1.2 m) Fair value of swaps $17.7 m $15.4 m $2.3 m Assets held for sale $76.0 m ($76.0 m) Property sale proceeds to be s
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