Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — H1 2023 Earnings Presentation
56 slides from Growthpoint Properties Australia's earnings presentation, Feb 16, 2023
Slide 1: 1H23 half year results
Growthpoint Properties Australia 1H23 half year results. 16 February 2023 space to thrive.
Slide 2: Agenda
Agenda. Overview Portfolio Funds & strategy update management 3 9 17 Financial Outlook Supplementary results information 21 26 31 Timothy Collyer Michael Green Managing Director Chief Investment Officer Sam Sproats Dion Andrews Executive Director – Chief Financial Officer Funds Management SW1 Precin
Slide 3: Performance overview & strategy
Performance overview & strategy. 100 Skyring Terrace, Newstead, QLD
Slide 4: 1H23 overview
1H23 overview. FFO Distribution Loss after tax • Positive FFO growth for Securityholders driven 15.3cps 10.7cps -$109.6m by net property income growth of 19% 1H22: 13.6cps, +12.5% 1H22: 10.4cps, +2.9% 1H22: profit after tax $374.3m • Entered funds management, completing the acquisition of Fortius on
Slide 5: Performance against strategy in 1H23
Performance Performance against Our goal is to provide Securityholders with sustainable income returns and strategy in 1H23. capital appreciation over the long term. Invest in high- Maximise value Maintain high- Enter Funds quality assets Contracted for the sale of fully occupancy management Long tr
Slide 6: Performance over long term
Growthpoint trading at Performance over long term. 23% discount to NTA3 Total securityholder return2 Return on equity Growthpoint to 31 December 2022 to 31 December 2022 (per annum) Properties Australia Growthpoint S&P/ASX 200 A-REIT Accumulation Index $6.9b AUM at 31 December 20221 16.2% 9.8% 8.1%
Slide 7: Current market expectations
Current market expectations. Market anticipates 5.0 8.0 RBA expect 7.0 lowering of cash 4.0 inflation returns 6.0 rate in 2024 to near target 5.0 3.0 range 2024 4.0 3.0 RBA target 2.0-3.0% 2.0 2.0 RBA cash rate, Interbank CPI annual, RBA cash rate futures implied CPI inflation 1.0 yield curve (%) 1.
Slide 8: Well-placed in changing market, economic cycle
Physical office 80% occupancy Well-placed in changing increasing 60% market, economic cycle. National office 40% occupancy (%, average) 20% PCA national occupancy rate (average) PCA national occupancy rate - peak (average) 0% Resilience in Group’s office markets Source: Property Nov-21 Jan-22 Feb-22
Slide 9: Portfolio update
Portfolio update. 141 Camberwell Road, Hawthorn East, VIC
Slide 10: Portfolio snapshot
95% of portfolio leased to government, Portfolio snapshot. 1 listed or large organisations2 Industrial Office Total Portfolio 34% 66% assets occupancy Property 58 94% 30 June 2022: 58 30 June 2022: 97% portfolio value $5.0b 30 June 2022: WALE WACR $5.1b, -2.0% 6.3yrs 5.2% 30 June 2022: 6.3yrs 30 Jun
Slide 11: Portfolio key metrics
Portfolio key metrics. 1 Office portfolio Industrial portfolio Portfolio Office WALE WACR Portfolio Industrial WALE WACR occupancy portfolio value occupancy portfolio value 91% $3.3b 6.6yrs 5.4% 100% $1.7b 5.6yrs 5.0% 30 June 2022: 95% 30 June 2022: $3.4b 30 June 2022: 6.7yrs 30 June 2022: 5.1% 30 J
Slide 12: Continuing positive trends
Office market update CY22 CBD and metro office net Continuing positive trends. absorption both 0.5% of total market Office net absorption Office face rent growth 12 months to 31 Dec 2022 12 months to 31 Dec 2022 Net absorption (sqm) % total market (sqm) Relative change (%) 100,000 10.0% 5.0% 80,000
Slide 13: Record low vacancy and rental growth continue
Industrial market update Record low vacancy and rental growth continue. Industrial vacancy rates (%) Industrial net face rent growth (%) Sydney Melbourne Brisbane Perth Adelaide Prime net face rent growth 1H CY22 2H CY22 10% 16% 9% 0.6% market vacancy 14% 14% 8% across five markets at 13% 31 Dec 202
Slide 14: Consistently strong WALE maintained
Portfolio leasing update Consistently strong WALE maintained. 1 Portfolio lease expiry1 WALE per financial year, by income, as at 31 December 2022 BOQ 3.1% 6.3 yrs 30-Jun-22: Federal Govt. 2.4% 6.3 yrs Samsung 2.2% 14% 1H23 Office Industrial Jacobs 1.6% ANZ 2.2% FY22 Office Industrial 8% Woolworths
Slide 15: Positive leasing activity
Portfolio leasing update Total leasing completed in 1H23 89,148 sqm or Positive leasing activity. 1 5.2% of portfolio income QLD Government Bayer 101 Warehousing Automotive imports Unipart Group Australia McConnell Dowell 2,200 sqm Progressive Green 31,109 sqm 7,677 sqm 10,310 sqm 4,445 sqm 100 Skyr
Slide 16: Continued progress on ESG and net zero by 2025 target
ESG strategy Continued progress on ESG and net zero by 2025 target. 1 Energy procurement Solar in 1H23 5.2 star strategy • Solar PV systems commissioned NABERS Confirmed gas and electricity at three office assets in Energy rating contracts with GreenPower Queensland (259kW in total) for operationall
Slide 17: Funds management
Funds management. 307 Queen Street, Brisbane, QLD
Slide 18: Successful integration and progress post completion
Funds management Successful integration and progress post completion. Funds under management • Successful integration ongoing and positive feedback from fund Movement over six months ended 31 December 2022 ($m) investors 2,000 • $55 million property divestments includes sale of 99 Gawler Place Adela
Slide 19: 99 Gawler Place, Adelaide, South Australia
Funds management: Investment case study Equity Equity 99 Gawler Place, Adelaide, South Australia. IRR 19.8% 1 multiple 1.83x 1 B grade office tower over Investment rationale 14 levels located in Adelaide • Acquire core located Adelaide CBD office tower CBD Core identifying value in an ‘out of favour
Slide 20: Moving forward
Funds management Moving forward. Growthpoint Opportunity Properties Australia Targeting 10% to 20% of Group EBIT over medium term $6.9b AUM at 31 December 20221 Observationally, significant domestic and international capital to invest in commercial real estate in Australia Opportunity within disrupt
Slide 21: Financial results
Financial results. 12-16 Butler Boulevard, Adelaide Airport, SA
Slide 22: 1H23 financial results
Financial summary Increase predominantly due to FY22 acquisitions and 1H23 financial results. one-off early surrender fees received at 5 Murray Rose Avenue, Sydney Olympic Park, NSW and 100 Skyring Terrace, Newstead, QLD which have skewed % the expected full year NPI to the first half Components of
Slide 23: Financial performance
Financial summary Financial performance. FFO per security movement NTA per security movement1 (cents per security) (cents per security) 18.0 4.70 17.5 +12.5% 4.60 -6.8% 0.4 vs 4.56 since 17.0 1H22 30 June 2022 2.9 4.50 16.5 16.0 0.6 4.40 0.05 15.5 15.3 0.01 -0.4 4.30 -0.02 15.0 -1.8 -0.26 -0.01 4.25
Slide 24: Pro forma gearing below target range
Capital management First half skew on revenue means payout ratio below target range. Expected to return Pro forma gearing below target range. to 82% at midpoint of FY23 FFO guidance. Gearing1 as at 31 December 2022 Distribution payout ratio % of FFO Target payout ratio Target 94.0% 65% gearing range
Slide 25: Well positioned going into 2H23
Capital management 1 66.7% fixed debt at 31 December 2022 Well positioned going into 2H23. (30 June 2022: 60.9%) Metrics Fixed rate debt profile Group debt maturity profile1 at 31 December 2022 at 31 December 2022 ($ million) at 31 December 2022 ($ million) Fixed debt Weighted average rate Bank debt
Slide 26: Outlook
Outlook. Building 3, 570 Swan Street, Richmond, VIC (Botanicca 3)
Slide 27: Investment proposition
Investment $3.3b AUM $1.7b AUM $1.9b Third-party FUM proposition. Office Largest ASX-listed owner Industrial Growth market with rising Funds management of modern A-grade rents and historic low Growth opportunity for the metropolitan office national vacancy rate Group, recently acquiring Leading ASX-
Slide 28: Our focus over 2H23
Building 3, 570 Swan Street, Richmond, VIC (Botanicca 3) Outlook Our focus over 2H23. • Maximising value by leasing current office vacancy and active management of near-term lease expiries • Sourcing high quality assets to launch new product opportunities for fund investors • Supporting growth and s
Slide 29: FY23 guidance
SW1 Precinct, South Brisbane, QLD Outlook FY23 guidance. FY23 FFO FY23 guidance distribution guidance 25.5 – 26.5 cps A key assumption to guidance 21.4 cps is in respect of rising interest rates, with the Group assuming an average FY23 floating cash Forecast rate of 3.0%1 distribution yield2 6.6% 1.
Slide 30: Questions
Thank you for joining us. Questions. 100 Skyring Terrace, Newstead, QLD
Slide 31: Supplementary information
Supplementary information. Financial Property Key market Additional information portfolio metrics information 32 43 50 53 599 Main North Road, Gepps Cross, SA
Slide 32: Financial information
75 Dorcas Street, South Melbourne, VIC Financial information.
Slide 33: Summary financials
Financial information Summary financials. 1H23 1H22 Change % Change NPI $m 144.0 121.0 23.0 19.0 Like-for-like NPI $m 132.0 119.2 12.8 10.8 Fund management revenue $m 2.8 – 2.8 Statutory accounting (loss) / profit $m (109.6) 374.3 (483.9) (129.3) Statutory accounting (loss) / profit per security ¢ (
Slide 34: Reconciliation from statutory profit to FFO
Financial information Reconciliation from statutory profit to FFO. 1H23 1H22 Change Change $m $m $m % (Loss) / profit after tax (109.6) 374.3 (483.9) (129.3) Less FFO items: – Straight line adjustment to property revenue (5.4) (5.9) 0.5 – Net loss / (gain) in fair value of investment properties 206.
Slide 35: Financial position
Financial information Financial position. 1 31 December 2022 30 June 2022 $m $m Assets Cash and cash equivalents 51.5 49.2 Investment in securities 146.8 132.4 Investment properties 5,083.4 5,233.1 Intangible assets 51.6 – Other assets 74.0 85.1 Total assets 5,407.3 5,499.8 Liabilities Borrowings 1,
Slide 36: Additional financial information
Financial information Additional financial information. Reconciliation of operating cashflow to FFO 1H23 $m Operating cashflow 97.7 Lease incentives and leasing costs 13.7 Net (prepaid)/accrued operating activities 3.7 COVID deferrals (net) 0.5 Provision for income tax 1.7 Lease liability repayments
Slide 37: Lease incentives
Financial information Lease incentives. Consolidated Statement of Profit and Loss 1H23 $m 1H22 $m Lease incentives includes fit out, rent free, rental Property revenue (excluding incentives) 194.2 163.2 abatement and cash payments. The tables on this page Amortisation of tenant incentives (20.0) (15
Slide 38: Capital expenses
Financial information Capital expenses. Capital expenditure CY22 CY21 Portfolio maintenance capex $m 19.2 14.1 Expected to Average property asset value $m 5,282.3 4,593.6 average Capital expenditure to average property portfolio value % 0.36 0.31 0.3%-0.5% over medium-term based on current portfolio
Slide 39: Capital management
Financial information Capital management. Maturity date Time to maturity Fixed rate Principal Amount Interest rate swaps Dec-2023 1.0yrs 0.22% $20m Dec-2023 Jun-2025 1.0yrs 2.5yrs 0.21% 0.60% $15m $100m 3.03% Jun-2025 2.5yrs 1.29% $100m Weighted average Sep-2024 1.7yrs 0.50% $75m fixed debt rate Sep
Slide 40: Key debt metrics and changes during 1H23
Financial information Key debt metrics and changes during 1H23. 31 December 2022 30 June 2022 Change Gross assets1 $m 5,407.3 5,499.8 (92.5) Interest bearing liabilities1 $m 1,849.1 1,740.0 109.1 Total debt facilities $m 2,215.3 2,101.5 113.8 Undrawn debt1 $m 357.4 353.5 3.9 Gearing1 % 34.5 31.6 2.9
Slide 41: Capital management
Financial information Stress testing ICR >1.6x covenants GOZ: 4.4x Capital management. To breach this covenant, NPI would need to fall LVR <60% by 63%4 Gearing movement1 GOZ: 36.4%2 for the six months ended 31 December 2022 To breach this 37% covenant, GOZ cap Secured rate would need to rise by 339
Slide 42: Group debt maturity profile
Financial information Sources of debt at 31 December 2022 ($ million) Group debt maturity profile. 1 Bank debt As at 31 December 2022 ($ million) 68% Bank debt Undrawn bank debt Institutional term loan USPP Debt capital markets 1000 32% 900 50 147 800 $1,215m – AU floating rate $300m – Foreign bank
Slide 43: Property portfolio
330kW solar PV installation at 120-132 Atlantic Drive, Keysborough, VIC Property portfolio.
Slide 44: Geographic diversity – by property value
84% of properties Property portfolio located on Eastern seaboard Geographic diversity 20% – by property value Queensland $1,018.0 million As at 31 December 2022 $5.0b Office Industrial $721.0m $297.0m Office metropolitan properties (25 assets) Property Office CBD properties (2 assets) portfolio valu
Slide 45: Portfolio summary
Property portfolio Sector diversity Geographic diversity Occupancy Portfolio by value by value by income WA 8% Vacant 6% summary. Industrial 34% VIC 35% SA 8% ACT 5% As at 31 December 20221 QLD 20% Office 66% NSW 24% Occupied 94% Tenant type Tenant use Lease type Annual rent review type by income by
Slide 46: Portfolio metrics
Property portfolio Portfolio metrics. Key metrics Like-for-like NPI growth (1H22 to 1H23) 31 December 30 June Distributions 20221 2022 from equity Office Industrial investments Total Number of assets 58 58 Property portfolio value $5.0b $5.1b NPI growth 18.7% (3.3%) (5.2%) 10.8% Number of tenants 15
Slide 47: Top ten tenants – by income
Property portfolio Top ten tenants – by income. Total portfolio % Office tenants % Industrial tenants % as at 31 December 2022 portfolio WALE as of 31 December 2022 portfolio WALE as at 31 December 2022 portfolio WALE income (yrs) income (yrs) income (yrs) Woolworths 12 7.2 NSW Government (Police) 1
Slide 48: Leasing – office leases executed in 1H23
1H23 leases completed – % Average Property portfolio office portfolio lease term income 4.5 yrs Leasing – office leases executed in 1H23. 3.5% Location Tenant Start date Term (yrs) NLA (sqm) Car parks (no.) 333 Ann Street Brisbane QLD Australian Commonwealth Government Jul-22 2.0 1,369 – 15 Green Sq
Slide 49: Leasing – industrial leases executed in 1H23
1H23 leases completed – % Average Property portfolio industrial lease term portfolio income 4.4 yrs Leasing – industrial leases executed in 1H23. 9.0% Location Tenant Start date Term (yrs) NLA (sqm) 6 Kingston Park Court Knoxfield VIC Automotive Imports Aug-22 5.0 7,677 3 Maker Place Truganina VIC 1
Slide 50: Key market metrics
11 Murray Rose Avenue, Sydney Olympic Park, NSW Key market metrics.
Slide 51: Office markets
0% 14% Key market metrics of GOZ Brisbane - CBD of GOZ Brisbane - Fringe Portfolio Portfolio Vacancy 13.9% Vacancy 17.2% Office markets. R Prime Secondary $821 Gross $635 Gross Prime R $619 Gross $492 Gross Secondary I 43% 44% I 44% 43% Y 5.25-6.50% 6.00-7.25% Y 5.50-7.25% 6.25-8.00% R – Average fac
Slide 52: Industrial markets
Key market metrics Industrial markets. Brisbane 6% of GOZ Portfolio Vacancy 0.5% Prime Secondary R $127-147 $110-120 R – Average face rent per sqm per annum I 5-12% 5-8% I – Average incentives Y 4.63-5.38% 5.25-6.88% Y – Average core market yield 6% Sydney of GOZ Brisbane Portfolio Vacancy 0.2% Prim
Slide 53: Additional information
120 Link Road, Melbourne Airport, VIC Additional information.
Slide 54: Glossary
Additional information Glossary. Term Definition Term Definition Term Definition ABS Australian Bureau of Statistics gearing Interest bearing liabilities less cash divided by total assets NPI Net property income plus distributions from ACT Australian Capital Territory, Australia less ground leasehol
Slide 55: Important information
Additional information Important information. This presentation has been prepared by Growthpoint Properties Australia Limited (ACN 124 093 901) in its personal capacity and as responsibility entity of Growthpoint Properties Australia Trust (ARSN 120 121 002) (together, with its controlled entities)
Slide 56: Contact us
Contact us. Retail investors Computershare 1300 665 792 (within Australia) +61 (3) 9415 4366 (outside Australia) webqueries@computershare.com.au Institutional investors Investor Relations +61 (3) 8681 2933 investor.relations@growthpoint.com.au 2023 calendar. • 27 April – 3Q23 update • 17 August – FY
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