Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — FY2012 Earnings Presentation
42 slides from Kiwi Property's earnings presentation, May 16, 2012
Slide 1: Annual Result for the year ended 31 March 2012
ANNUAL RESULT For the year ended 31 March 2012 KIWI INCOME PROPERTY TRUST 16 May 2012 Chris Gudgeon Chief Executive, Kiwi Income Properties Limited Gavin Parker Chief Financial Officer, Kiwi Income Properties Limited
Slide 2: Our vision is to be New Zealand's leading property investment vehicle
Our vision is to be New Zealand’s leading property investment vehicle with a diversified portfolio of high-quality assets providing superior returns Today we are New Zealand’s largest listed diversified 2 property entity, with over $2.0 billion invested in a portfolio of prime office and dominant re
Slide 3: Annual result overview
The Plaza Shopping Centre, Palmerston North Annual result overview Annual result presentation for the year ended 31 March 2012 3
Slide 4: Annual result overview: creditable result in challenging year
Annual result overview Creditable result delivered in challenging year 4 Creditable – Operating profit before tax of $81.3 million, up $4.9 million (+6.4%) financial result delivered – Profit after tax of $89.2 million, up $115.6 million – Distributable income of $71.7 million, up $2.9 million (+4.2
Slide 5: Other highlights of the year
Annual result overview Other highlights of the year 5 Retail recovery – Total sales for the year of $1.4 billion, up 8.4% emerging – Specialty shop rents more affordable as GOC ratio reduces from 14.1% to 13.4% – Sylvia Park value reached $500 million, +$27.5 million (+5.8%) Capital recycled – Two n
Slide 6: Financial review
6 North City Shopping Centre, Porirua Financial review Annual result presentation for the year ended 31 March 2012 6
Slide 7: Financial performance
Financial performance Increase in operating profit driven by income growth 7 Financial performance 31-Mar-12 31-Mar-11 Variance Key movements in net rental For the year ended $m $m $m $m % income Gross rental income 204.1 191.6 +12.5 +6.5 Sylvia Park +1.0 Property operating expenditure -60.1 -53.8 -
Slide 8: Distributions
Distributions Distribution in line with guidance 8 Distributable income 31-Mar-12 31-Mar-11 Variance In respect of the For the year ended $m $m $m % 31 March 2012 distribution: Operating profit before tax 81.3 76.4 +4.9 +6.4 – Eligible for reinvestment Non-cash rental adjustments1 -0.5 1.0 -1.5 -150
Slide 9: Financial position
Financial position Sound financial position maintained 9 Financial position 31-Mar-12 31-Mar-11 Movement As at $m $m $m % Key NTA movements $m $/unit Assets Fair value changes Property assets Appendix 3 2,008.9 1,984.7 +24.2 +1.2 - Centre Place -20.0 -0.02 Cash on deposit 62.8 107.3 -44.5 -41.5 - Th
Slide 10: Bank debt profile
Bank debt profile Bank debt profile extended through early refinancing 10 – 1.1 years added to weighted term to maturity through Bank facilities 31-Mar-12 31-Mar-11 renewal and extension of $592.5 million of facilities Bilateral facilities $850.0m $800.0m – $297.5 million expiring in March and April
Slide 11: Portfolio performance
Vero Centre, Auckland Portfolio performance Annual result presentation for the year ended 31 March 2012 11
Slide 12: Net rental income
Net rental income Retail rents driving income growth 12 Net rental income 31-Mar-12 31-Mar-11 Variance Retail NRI For the year ended $000 $000 $000 % – Growth driven by: – Continued strong performance at Sylvia Park 30,830 29,835 +995 +3.3 Sylvia Park and The Plaza LynnMall 15,306 3,662 +11,644 +318
Slide 13: Property valuations
Property valuations Valuation recovery for non-earthquake impacted properties 13 Components of revaluation gain/loss 2% – FY12’s negative portfolio revaluation result is primarily due 1.0% 0% to the direct and indirect impacts of -1.5% -1.1% the Canterbury earthquakes Portfolio revaluation gain/loss
Slide 14: Portfolio value and capitalisation rates
Portfolio value and capitalisation rates Portfolio value exceeds $2 billion 14 Property / portfolio Capitalisation rate Adopted value Net change in value $000 Mar-11 Mar-12 Var. Mar-11 Mar-12 FY 2012 1 Excludes Centre Place due to a Sylvia Park Shopping Centre 6.75% 6.88% 13 474,000 500,000 27,547 5
Slide 15: Sales by centre
Sales by centre Total sales increased 8.4% to $1.4 billion 15 Specialty ‒ Strong contributions were made by: Centre Moving annual turnover sales ̶ Northlands as it continues to benefit $m % $/sqm from earthquake redistribution effects Sylvia Park 445.7 +7.1 8,914 ̶ Sylvia Park as it continues to gro
Slide 16: Sales by category
Sales by category Sales increased across all categories 16 Total sales1 Unaffected sales2 Category $m % $m % Supermarkets 392.9 +5.2 223.6 +3.7 Department and discount department stores 188.3 +12.1 127.3 +5.3 Cinemas 21.2 +11.0 14.6 +2.4 Mini-majors 169.4 +21.1 139.9 +18.1 Specialty 571.7 +5.5 404.6
Slide 17: New leasing and rent reviews
New leasing and rent reviews Retail rent reviews support portfolio rental growth 17 NLA Uplift over prior passing rent – Average 4.6% growth from Portfolio No. sqm $000 % CAGR % fixed and CPI-related retail rent reviews contributes to RENT REVIEWS overall rental growth from portfolio activity Retail
Slide 18: Occupancy and WALT
Occupancy and WALT Portfolio fundamentals remain healthy 18 NLA Occupancy (%) WALT (Years) Portfolio / Property sqm FY12 FY11 FY12 FY11 Sylvia Park 71,242 100.0% 100.0 3.2 3.7 LynnMall 31,508 100.0% 100.0 3.2 2.9 Centre Place 21,130 72.0% 83.5 4.8 2.1 The Plaza 32,453 99.7% 100.0 4.5 5.3 North City
Slide 19: Lease expiry profile
Lease expiry profile Opportunity to capitalise on improving retail sector 19 Lease expiry profile (by gross income) Key forthcoming office expiries (>2,500 sqm) NLA 45% FY Property Tenant sqm 40% 13 Unisys House Crown Law 4,806 38.9% 38.5% 38.3% 14 Unisys House Department of Labour 9,345 35% 14 Natl
Slide 20: External influences: portfolio seismic review completed
External influences Portfolio seismic review completed 20 The Majestic Centre Balance of the portfolio – Strengthening works to be undertaken to bring building – Seismic review completed to a ‘low risk’ classification1 – Potential opportunities to strengthen older buildings – Concept design complete
Slide 21: Development update
Centre Place Shopping Centre, Hamilton Development update Annual result presentation for the year ended 31 March 2012 21
Slide 22: ASB North Wharf development update
ASB North Wharf development update Building topped off, project on time and on budget 22 – The project remains on program and on budget Key project metrics Development budget $132.1m Target initial yield ~8.5% August 2011 ASB net lettable area 19,465 sqm (93% of building NLA) ASB initial lease term
Slide 23: Centre Place development update
Centre Place development update Farmers committed, construction commenced 23 Key project metrics Project leasing status Development budget $39.9m Net lettable area leased 68% Target initial incremental yield ~8.4% Budgeted base rent achieved 42% Projected value on completion $140.0m Target delivery
Slide 24: Conclusion and outlook
The Majestic Centre, Wellington Conclusion and outlook Annual result presentation for the year ended 31 March 2012 24
Slide 25: Market outlook
Market outlook 85% of portfolio located in recovering markets 25 Portfolio Short term Medium term Sector Key points weighting1 outlook outlook Retail KIP retail - Continuing retail sales growth, >2% for 2012 Occupancy (%) 97.2 65% - Medium term sales growth of 2-4% in line with GDP WALT (years)
Slide 26: Priorities for FY13
Priorities for FY13 An active year ahead 26 Intensive asset management Balance sheet protection ̶ Actively manage the expiring leases at Sylvia Park ̶ Further improve the Trust’s debt maturity profile by refinancing and extending upcoming bank debt ̶ Pro-actively focus on office tenant retention and
Slide 27: Summary and outlook
Summary and outlook Projected FY13 cash distribution of 6.60 cents per unit 27 Robust – Strong financial position underlying – Solid portfolio metrics with high investment fundamentals occupancy rates – Active asset management approach with sound investment strategy – Property portfolio performance
Slide 28: Appendices
28 National Bank Centre, Auckland Appendices Annual result presentation for the year ended 31 March 2012 28
Slide 29: Appendices Index
Appendices Index 29 Contents Appendix Page No. Financial review Interest expense 1 30 Movement in OPBT and NPAT 2 31 Movement in investment properties and net bank debt 3 32 Interest rate hedging profile 4 33 Property portfolio Capitalisation rate history 5 34 performance Yield compression 6 35 Sect
Slide 30: Interest expense
Appendix 1 Interest expense 30 31-Mar-12 31-Mar-11 Variance Component $m $m $m % Interest income 3.5 4.8 -1.3 -27.1 Interest on bank debt -50.6 -42.1 -8.5 -20.2 Interest on 2005 MCNs - -2.8 +2.8 +100.0 Interest on 2009 MCNs -10.8 -10.7 -0.1 -0.9 Net interest expense incurred -57.9 -50.8 -7.1 -14.0 I
Slide 31: Movement in OPBT and NPAT
Appendix 2 Movement in OPBT and NPAT 31 95 FY11 to FY12 movement in operating profit before tax [$m] +$11.6 85 +$3.1 -$4.5 -$0.5 -$0.8 -$4.0 75 +$6.2m from Net Rental Income (NRI) change =$81.3 65 $76.4 55 2011 operating profit NRI from LynnMall NRI loss from asset NRI loss from Centre NRI rental gr
Slide 32: Movement in investment properties and net bank debt
Appendix 3 Mvmt in investment properties and net bank debt 32 FY11 to FY12 movement in investment properties [$m] 2,100 +$30.0 +$9.3 -$6.8 +$36.5 -$9.6 -$8.3 2,000 -$26.9 1,900 =$2,008.9 $1,984.7 1,800 As at March 2011 Development Development Capitalised interest Amortisation of Fair value change Di
Slide 33: Interest rate hedging profile
Appendix 4 Interest rate hedging profile 33 Hedging profile 31-Mar-12 31-Mar-11 Percentage of drawn debt hedged [fixed rate] 83% 84% Weighted average interest rate on hedged debt [excl margin and fees] 6.39% 6.20% Weighted average term to maturity of interest rate hedges 2.4 years 3.1 years Hedge ma
Slide 34: Capitalisation rate history
Appendix 5 Capitalisation rate history 34 – The trend of stabilising cap rates, Capitalisation rate history excluding earthquake affected 8.75% Christchurch properties, has 8.48% continued across the portfolio 8.37% 8.35% 8.35% 8.34% 8.30% 8.29% 8.25% 8.16% – Portfolio cap rates softened 118 bps 7.9
Slide 35: Yield compression
Appendix 6 Yield compression 35 Yield trends in Europe & USA Yield trends in Asia-Pacific including KIP Chicago Auckland San Francisco Wellington KIP Boston Melbourne Manhattan Sydney London City Seoul Madrid Singapore Paris CBD Tokyo Frankfurt Hong Kong 2% 4% 6% 8% 2% 4% 6% 8% 10% Yield softening Y
Slide 36: Sector and geographic diversification
Appendix 7 Sector and geographic diversification 36 Palmerston Total by sector By value Auckland Wellington Christchurch Hamilton North FY12 FY11 Retail 35% 5% 11% 10% 4% 65% 64% Office 20% 8% - - 0% 28% 32% Other 6% 0% 0% - 1% 7% 4% Total by region FY12 61% 13% 11% 10% 5% 100% Total by region FY11
Slide 37: Tenant diversification
Appendix 8 Tenant diversification 37 Analysis of property portfolio Tenant diversification (by gross income) Total no. tenants: 890 NZ Chains 27% Portfolio No. tenants NLA Gross income Retail 87% 62% 66% Australian & International Other 3% Chains 22% Office 13% 38% 34% IT / Comms 1% Top 20 tenants 2
Slide 38: Auckland office market
Appendix 9 Auckland office market 38 Statistic As at / YE As at / YE Forecast Grade Dec-10 Mvmt Dec-11 Mvmt Dec-12 Comments Premium 110,000 110,000 110,000 Completion of East building at Britomart increased A- grade stock Stock (sqm) Minor increase in A-grade expected next year but no A-grad
Slide 39: Wellington office market
Appendix 10 Wellington office market 39 Statistic As at / YE As at / YE Forecast Grade Dec-10 Mvmt Dec-11 Mvmt Dec-12 Comments Completion of Telecom Central represents supply A-grade 267,000 317,000 336,000 growth over 2011 Stock (sqm) New stock for 2012 represents refurbished buildings comi
Slide 40: New Zealand economic overview
Appendix 11 New Zealand economic overview 40 Market analysis – Economic recovery gradual with GDP growth of 1.4% for 2011, underpinned by positive agricultural export performance – Economy to gain momentum during 2012, lifting to 3.5%1 by 2014 (20-year average 2.8%) driven by export incomes and Cant
Slide 41: New Zealand economic overview charts
Appendix 11 New Zealand economic overview 41 New Zealand annual GDP growth New Zealand unemployment rate 8% Forecast to 12% Forecast Dec-14 to Dec 14 10% Annual GDP growth % 6% Unemployment rate % 4% 8% 2% 6% 0% 4% -2% 2% -4% 0% 1990 1993 1996 1999 2002 2005 2008 2011 2014 1986 1989 1992 1995 1998 2
Slide 42: Disclaimer
Disclaimer 42 Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust ('KIP'). The Manager is a subsidiary of Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way
Kiwi Income Property Trust — FY2012 Earnings Presentation on 6ix