Dexus Convenience Retail Reit · ASX:DXC
Dexus Convenience Retail Reit — APN Industria REIT — H1 2020 Earnings Presentation
35 slides from Dexus Convenience Retail Reit's earnings presentation, Feb 19, 2020
Slide 1: HY2020 Results Presentation
HY2020 RESULTS PRESENTATION 19 FEBRUARY 2020 www.apngroup.com.au ASX Code: ADI
Slide 2: Agenda
Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio Performance 04 Outlook Appendices 2
Slide 3: 01 Highlights and Outcomes
01 HIGHLIGHTS AND OUTCOMES 3
Slide 4: 1H20: Active period of growth
1H20: Active period of growth FFO 10.2 cents per Raised $47 million of ~7,000 square Committing to security; 8.5% equity; reduced metres of leasing – carbon neutrality growth gearing to 29% strong occupancy of from FY21 98% On track to deliver Below target 30 – 40% Ongoing active Reducing risk, bein
Slide 5: 31 December 2019 financials
31 December 2019 financials ▪ Statutory net profit increased $24.7m to $39.3 million, 1H20 1H19 Change driven by growing rental revenue and revaluation gains of $25.5 million Statutory net profit ($m) $39.3 $14.6 p 169.2% ▪ FFO $18.7 million, up from $15.3 million: FFO ($m) $18.7 $15.3 p 22.2% - Inc
Slide 6: Strong balance sheet, consistently outperforming peers
Strong balance sheet, consistently outperforming peers ▪ Continuing to execute on strategy of maintaining a Debt maturity profile – limited refinance risk staggered debt maturity profile, reducing concentration $300m risk over any given period: $250m - Three financiers with no more than ~50% exposur
Slide 7: 02 Investment Proposition
02 INVESTMENT PROPOSITION 7
Slide 8: 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 9: At a glance
At a glance $824 ~$614m S&P/ASX 300 INDEX MILLION MILLION MARKET PORTFOLIO CAPITALISATION MEMBER 5.6% 29% 5.8 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 10: 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 45% 55% ~$218 million invested ~$241 million invested 14.7 year WALE 16 buildings; 4.4 year WALE 24% 26% Locat
Slide 11: 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 12: 03 Portfolio Performance
03 PORTFOLIO PERFORMANCE 12
Slide 13: 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 98% 83% 104,600 96% 96% 97,600 95% 95% 93% 83,900 70,300 45,900 18,800 9% 8% Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 CPI 2 - <3% ≥ 3% Jun15 Jun16 Jun17 J
Slide 14: Committing to carbon neutrality
Committing to carbon neutrality ▪ Extending our ESG commitment: Efficiency achievements and carbon neutral timeline - APN Industria REIT will be carbon neutral, in accordance with the Climate Active Standard, for FY21 – anticipated to Rooftop solar PV installations be the first A-REIT to achieve thi
Slide 15: Active year of acquisitions to improve portfolio diversity and scale
Active year of acquisitions to improve portfolio diversity and scale ▪ Acquired 7 properties for $95.4 million in 12 months, improving portfolio diversity and scale: ▪ 3 acquisitions were completed in 1H20 – $57.1 million deployed at average cap rate of 7.0% ▪ Continue to pursue: ▪ Value-add opportu
Slide 16: Portfolio fully occupied with 4.4 year WALE
Portfolio fully occupied with 4.4 year WALE ▪ Fully leased industrial warehouse portfolio (excluding Westrac) with 4.4 year WALE, carried at an average cap rate of 6.6% ▪ Agreed terms to renew tenant at 81 Rushdale St, Knoxfield (May 2019 acquisition) – delivering on the business plan ▪ Average 7% v
Slide 17: Westrac Newcastle – world leading real estate
Westrac Newcastle – world leading real estate ▪ Increased in value by $21 million to $218 million – driven by rising rents and cap rate compression (25bps to 5.75%) ▪ Leased to Westrac until 2034, with the higher of CPI or 3% annual rent reviews ▪ Property completed in 2012 – and is regarded as best
Slide 18: Rhodes Corporate Park
Rhodes Corporate Park ▪ September 2021 expiry of Link Market Services provides an opportunity to drive rents: Building A Building C - Existing fit-out is well presented and carries value for future users - Ongoing discussions with potential occupiers ▪ New occupiers to the area have moved from acros
Slide 19: 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 ($550/sqm) Corridor forecast to grow by Sydney 420
Slide 20: Brisbane Technology Park
Brisbane Technology Park ▪ Activity continues: Brisbane Technology Park | APN Industria REIT ownership - 28 leases across ~6,900sqm - 75% retention BRISBANE CBD 15 mins to CBD 25 mins to - Pre-leased new ~2,500sqm childcare, under construction Airport and opening mid-2020 (forecast ~8% yield on cost
Slide 21: Brisbane Technology Park
Brisbane Technology Park ▪ APN’s on-site management platform is providing unique Innovation at Brisbane Technology Park opportunities to: - Engage with genuine innovators such as Lyro Robotics – who are commercialising world-leading picking and packing technology for deployment in supply chains - Bu
Slide 22: 04 Outlook
04 OUTLOOK 22
Slide 23: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) - High quality portfolio with annual fixed growth from rent reviews - No potential volatility from active earnings that may rely FY20 5% on development or fun
Slide 24: Appendices
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Slide 25: Appendix A: Property portfolio
Appendix A Property portfolio 25
Slide 26: APN Industria REIT portfolio as at December 2019
APN Industria REIT portfolio as at 31 December 2019 Age Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector (years) ($m) (%) (sqm) (by area) (by income) APN Industria REIT Portfolio Industrial Portfolio 459.1 6.17% 210,485 100% 8.7 Office Portfolio 364.6 6.68% 60,649 89% 2.6 Portf
Slide 27: APN Industria REIT portfolio as at December 2019
APN Industria REIT portfolio as at 31 December 2019 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 12.3 108.0 5.88% 14,642 100% 1.9 Building C, 1 Homebus
Slide 28: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 23% Link Market Services 12% AAE Retail 3% Frasers Property 3% Mitre 10 3% Interactive 3% Queensland Health 3% Autopact 3% Vesco 3% RFS 3% Top 10 Tenants 59% Other 41% Total 100% 28
Slide 29: Appendix B: Financial information
Appendix B Financial information 29
Slide 30: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position As at Dec 2019 Jun 2019 $’000 $’000 Assets Cash and cash equivalents 22,283 2,435 Trade and other receivables 1,136 1,007 Other assets 1,016 764 Total current assets 24,435 4,206 Investment properties 823,651 739,378 Investment properties - Right-of-use a
Slide 31: Consolidated Statement of Profit or Loss and other comprehensive income
Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended Dec 2019 Dec 2019 $’000 $’000 Income Net rental income 29,117 25,463 Straight line rental income recognition 1,277 1,699 Total revenue 30,394 27,162 Expenses Property costs (6,048) (5,675) Trust management
Slide 32: Reconciliation to FFO
Reconciliation to FFO Financial period ended Dec 2019 Dec 2019 $’000 $’000 Net profit after tax 39,271 14,581 Adjusted for: Reverse straight lining adjustments included in net rental income (1,277) (1,699) Add back / (deduct) income tax expense / (benefit) 223 827 Add back amortised borrowing costs
Slide 33: Interest rate hedging profile
Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate (lhs) 5% $152m $138m $127m 4% 3% Average Fixed Rate $80m $67m 2% 1% $15m 0% FY20 FY21 FY22 FY23 FY24 FY25 33
Slide 34: 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 35: 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