Argosy Property Limited · NZX:ARG
Argosy Property — Non-Deal Roadshow (July 2021)
36 slides from Argosy Property's roadshow presentation, July 2021
Slide 1: 2021 Retail Roadshow: Building a better future
2021 Retail Roadshow Building a better future 2nd July – 22nd July 2021
Slide 2: CEO quote on portfolio diversity
“Our strength lies in the diversity of our portfolio by sector, location and tenant mix, providing flexibility to support our tenants changing needs, ensuring a resilient business through various economic cycles.” Peter Mence CEO 82 Wyndham Street, Auckland 2—
Slide 3: Agenda
AGENDA PRESENTED BY Highlights 4 Vision & Strategy 6 Portfolio 10 Peter Mence Financials 19 CEO Leasing Update 29 Focus and Outlook 33 Dave Fraser CFO Note: This results presentation should be read in conjunction with the NZX release dated 19 May 2021. Due to rounding, numbers presented in this pres
Slide 4: 2021 Annual Result Highlights
2021 ANNUAL RESULT HIGHLIGHTS 4— 54-56 Jaimaca Drive, Wellington
Slide 5: Key Highlights
KEY HIGHLIGHTS 13.7% 3.3% Net distributable income Annualised rent increase on rents increase reviewed $1.53 NTA up 17.7% from $1.30 driven by a $125m A 3rd successful 7 year green bond $157.7m revaluation gain issue 6.45ps Full year FY21 dividend increased by 1.6% 5—
Slide 6: Vision & Strategy
VISION & STRATEGY Argosy
Slide 7: Vision - Building a Better Future
VISION - BUILDING A BETTER FUTURE
Slide 8: Big Corporate Goals - 2031
BIG CORPORATE GOALS - 2031 >50% Of the portfolio to be green CO2 Target carbon neutral assets >50% >$3bn Portfolio activity will result in Of total debt finance being green increased scale through non-bank funding acquisitions and green developments -30% Greater engagement and bigger Reduction in ca
Slide 9: FY21 Achievements
FY21 ACHIEVEMENTS Carefully managed our way through Covid-19, minimising the financial impact on Argosy Resilient operating results reflecting a high quality portfolio of diversified real estate Continued to progress green developments despite the Covid-19 impact on construction Strong leasing
Slide 10: Portfolio Snapshot
$2.01B Portfolio Snapshot Note: Portfolio value excludes assets held for sale. 10 —
Slide 11: Portfolio Highlights
PORTFOLIO HIGHLIGHTS 99.0% 5.5yrs Weighted average lease term Occupancy (WALT) 6.3% $157.7m Annual revaluation gain 8.5% above Like for like rental growth 31 March book values 11 —
Slide 12: Portfolio at a Glance
PORTFOLIO AT A GLANCE $2.01 BILLION1 @ 31 MARCH 2021 TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE BY SECTOR BY REGION BY ASSET MIX 0% 11% 17% 2% 26% 49% 40% 72% 83% Target Target Target Bands Bands Band Industrial 45-55% Auckland 65-75% 75-90% Core Office Wellington 20-30% - 30-
Slide 13: Value Add Properties
VALUE ADD PROPERTIES GREEN OPPORTUNITIES WILL DRIVE EARNINGS AND CAPITAL GROWTH Value Add properties total ~17% of the Valuation 1 Property - Value Add Sector Location portfolio. $m Some Covid-19 deferred projects are 5 Allens Road, East Tamaki Industrial Auckland 5.6 likely to be re-initiated i
Slide 14: Current Development Project
CURRENT DEVELOPMENT PROJECT FOCUS ON COMPLETING 6 STAR GREEN DEVELOPMENT Cost to Forecast Development Major Tenant Type Location complete completion FY 2021 FY 2022 Sep-20 Mar-21 Sep-21 Mar-22 Underway 8-14 Willis Street Statistics New Zealand OFF/RET WTN 37.9 Feb-22 TOTAL 37.9 8-14 Willis Street/
Slide 15: 7WQ Update
7WQ UPDATE STRONG LEASING PROGRESS AND INSURANCE CLAIM SETTLED Leasing The building is now 89% leased with a WALT of 8.8 years. Argosy is in advanced discussions with the Crown for the remaining 2,436m2 of space on Levels 9 and 12. Insurance Claim Argosy settled its insurance claim with its insurers
Slide 16: Annual Revaluations
ANNUAL REVALUATIONS CAP RATE FIRMING AND RENTAL GROWTH KEY DRIVERS OF INCREASE For the year to 31 March, the Market Yield 1 31 Mar 21 31 Mar 21 portfolio recorded a revaluation Book Value Valuation gain of $157.7m or 8.5%. The ($m) ($m) $m % 31 Mar 21 31 Mar 20 portfolio market yield firmed 63bp
Slide 17: Portfolio Metrics
PORTFOLIO METRICS DEFENSIVE AND RESILIENT TENANTS, HIGH ESSENTIAL SERVICE EXPOSURE 17 —
Slide 18: Portfolio Snapshot
PORTFOLIO SNAPSHOT PORTFOLIO QUALITY AND RESILIENCE REFLECTED IN METRICS Occupancy WALT (years) 100.0% 7.00 6.00 80.0% 5.00 60.0% 4.00 40.0% 3.00 2.00 20.0% 1.00 0.0% 0.00 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Net Tangible Assets Debt-to-total-assets $1.80 40.0% $1.60 35.0% $1.40 30.0% $
Slide 19: Financials
FINANCIALS 19 —
Slide 20: Gross Property Income Waterfall
GROSS PROPERTY INCOME WATERFALL VERY STRONG OPERATIONAL RESULTS DESPITE COVID-19 IMPACTS 20 —
Slide 21: Financial Performance
FINANCIAL PERFORMANCE RESILIENT OPERATIONAL PERFORMANCE Like-for-like gross rental growth of FY21 FY20 6.3% for the financial year. $m $m Net property income 107.7 99.7 Additional income from 7WQ, Administration expenses (12.1) (11.4) acquisitions & recently completed developments were partially off
Slide 22: Distributable Income
DISTRIBUTABLE INCOME STRONG PERFORMANCE ON PER SHARE BASIS FY21 FY20 $m $m After non-cash adjustments and Profit before income tax 248.4 123.9 current tax, net distributable income increased by $8.2 million Adjusted for: or 13.7%. Revaluations gains (157.7) (59.9) Impairment loss on held for sale -
Slide 23: Adjusted Funds From Operations (AFFO)
ADJUSTED FUNDS FROM OPERATIONS (AFFO) A FOCUS ON SUSTAINABLE DISTRIBUTIONS FY21 FY20 $m $m Higher capitalised incentives Net distributable income 67.7 59.6 reflects large leasing deals with Amortisation of tenant incentives and leasing costs 5.1 3.5 government departments ($3.6m Funds from operation
Slide 24: Investment Properties
INVESTMENT PROPERTIES FY21 GROWTH UNDERPINNED BY A COMBINATION OF FACTORS Acquisitions: Mt Richmond Properties for $76m in October. Capitalised costs: Driven by large developments including 8-14 Willis Street/360 Lambton Quay, 7WQ and completion of 54 Jamaica Drive development. Disposals: Corner of
Slide 25: NTA per Share Waterfall
NTA PER SHARE WATERFALL REVALUATION GAIN KEY DRIVER OF ~18% NTA INCREASE 25 —
Slide 26: Balance Sheet Management
BALANCE SHEET MANAGEMENT CAPITAL MANAGEMENT INITIATIVES ENHANCE YEAR END POSITION FY21 FY20 The balance sheet position is $m $m sound. Investment properties 2,010.8 1,782.3 During the period Argosy Asset held for sale 87.5 84.6 recycled $73.5 million of non Core assets which no longer met Right
Slide 27: Debt Profile
DEBT PROFILE GREEN FINANCING ATTRACTIVE DIVERSIFICATION TOOL, INCREASES TENOR Issued $125m of senior secured fixed rate 7-year green bonds in October 2020 at a coupon of 2.20% (1.95% margin). Green bonds support Argosy’s overall debt capital funding programme, diversifying its bond-to- bank debt
Slide 28: FY22 & New Dividend Policy
FY22 & NEW DIVIDEND POLICY TRANSITIONING INTO AFFO DIVIDEND POLICY FRAMEWORK FROM FY23 Argosy Div idend New Policy In 2017, Argosy’s Board advised of its Transition Period Commences intention to move (in the medium term) to 7.50 an amended dividend policy, based on AFFO earnings. 7.00 Commensura
Slide 29: Leasing & Expiry Profile
LEASING & EXPIRY PROFILE 29 —
Slide 30: Leasing Success
LEASING SUCCESS STRONG LEASING OUTCOMES OVER FY21 Argosy leased 97,391m2 across the portfolio in FY21, or 15% of the portfolios total net lettable area. There were 38 transactions over the period, with 17 renewals, 10 extensions and 11 new leases. Notable transactions over the financial year inclu
Slide 31: Lease Expiry Profile
LEASE EXPIRY PROFILE RELATIVELY STABLE PROFILE OVER THE MEDIUM TERM Low year end portfolio vacancy. 5yr average income percentage expiring in any year ~10%. Largest single expiry over the next 10 years is Ministry for Business, Innovation and Employment, in 15-21 Stout Street (9.4% in Mar-27).
Slide 32: Market Update
MARKET UPDATE INDUSTRIAL OFFICE RETAIL LARGE FORMAT ► Net absorption continues to drive ► Flexible working environments ► Many retailers’ systems have been additional supply. continue to drive a disconnect shown to be inadequate to cope between employment growth and with higher online sales volumes.
Slide 33: Focus & Outlook
ye FOCUS & OUTLOOK ATSOSY
Slide 34: 2022 Outlook
2022 OUTLOOK The current domestic and global economic outlook still remains challenging. Vaccination rollouts globally are accelerating. Countries will open up again for tourism in the near term. However, central banks globally are dealing with the conflicting forces of transitory inflationary press
Slide 35: Thank You
THANK YOU 35 —
Slide 36: Disclaimer
DISCLAIMER This presentation has been prepared by Argosy Property Limited. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to making an