Argosy Property Limited · NZX:ARG
Argosy Property — FY2020 Earnings Presentation
42 slides from Argosy Property's earnings presentation, May 20, 2020
Slide 1: FY20 Annual Results: Looking through
FY20 Annual Results Looking through 20.05.2020
Slide 2: Agenda
Agenda PRESENTED BY Covid-19 Update 4 Highlights 7 Strategy/Portfolio 9 Peter Mence Financials 21 CEO Leasing Update 30 Focus and Outlook 34 Dave Fraser Appendices 36 CFO Note: This results presentation should be read in conjunction with the NZX release dated 20 May 2020. Due to rounding, numbers pr
Slide 3: 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 3—
Slide 4: Covid-19 Update
Covid-19 Update 4—
Slide 5: Covid-19 Update
Covid-19 Update WORKING CLOSELY WITH ALL STAKEHOLDERS Staff Ensuring safe working conditions at work and at home. Greater use of technology. Tenants Working together to find short term solutions. Those tenants that need assistance are receiving it primarily via deferral and rental abatem
Slide 6: Post Covid-19
Post Covid-19 WHAT DOES A POST COVID-19 ENVIRONMENT LOOK LIKE? SECTOR OUTLOOK Economic Environment - Sharp recession less likely. Negative - Some sectors significantly more exposed than others. - Argosy’s has limited direct exposure to the most affected sectors but will not be immune. Political Envi
Slide 7: Highlights
Highlights 7—
Slide 8: FY20 Annual Result
FY20 Annual Result 3.8% Net distributable income 2.7% Annualised rent increase on rents increase reviewed $1.30 A 6.5% increase driven by a $60m 100m 2nd successful 7 year green bond revaluation gain 6.35¢ Full year FY20 dividend, an increase of 1.2% on the prior year 8—
Slide 9: Strategy / Portfolio
i Strategy / Portfolio 9— Argosy
Slide 10: Create. Manage. Own.
Create. Manage. Own. Proactive delivery of sustainable growth Manage all elements of the business to deliver the right outcomes for all our stakeholders. Own the right assets, with the right attributes in the right New Zealand locations. 10 —
Slide 11: 2020 Results
2020 Results STRONG DELIVERY OF STRATEGY Create Successfully transitioned Value Add properties to drive earnings and capital growth Proactive delivery of (180 Hutt Road, 107 Carlton Gore Road). sustainable growth. Current organic value add development pipeline of over $200m will add more quality
Slide 12: $1.87B Portfolio Snapshot
$1.87B Portfolio Snapshot 12 —
Slide 13: Portfolio highlights
Portfolio highlights 98.8% 6.1 yrs Weighted average lease term Occupancy (WALT) 71% 45% Auckland portfolio weighting Industrial portfolio weighting 2.7% Annualised rent increase on rents 60m Annual revaluation gain, 3.5% reviewed above 31 March book values 13 —
Slide 14: Portfolio at a glance
Portfolio at a glance $1.87 BILLION1 @ 31 MARCH 2020 TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE BY SECTOR BY REGION BY ASSET MIX 2% 8% 15% 12% 27% 45% 40% 71% 80% Bands Bands Bands Industrial 45-55% (was 40-50%) Auckland 65-75% 75-90% Core Office Wellington 30-40% 20-30% Value
Slide 15: Sector Summary
Sector Summary INDUSTRIAL OFFICE RETAIL LARGE FORMAT Number of buildings Number of buildings Number of buildings 38 16 5 Market value of assets ($m) Market value of assets ($m) Market value of assets ($m) $842.8 $754.2 $270.0 Occupancy (by income) Occupancy (by income) Occupancy (by income) 97.8% 99
Slide 16: Value Add
Value Add OPPORTUNITIES TO DRIVE CAPITAL GROWTH AND EARNINGS Value Add properties total 12% of the Valuation1 portfolio. Property Sector Location $m Several major development projects 5 Unity Drive, Albany Industrial Auckland 7.4 underway within the group to 960 Great South Road, Penrose Industr
Slide 17: Development Pipeline
Development Pipeline GREEN DEVELOPMENTS REMAIN THE KEY FOCUS 107 Carlton Gore Road: Cost to Forecast completed December-19. Development Major Tenant Type Location complete $m 1 completion FY 2021 FY 2022 Sep-20 Mar-21 Sep-21 Mar-22 180-202 Hutt Road: Underway / commenced completed March-20. 7WQ
Slide 18: Green Projects Underway
Green Projects Underway 8-14 Willis Street/360 Lambton Quay, Target completion: August 2021 Wellington Anchor tenant: Statistics New Zealand / 15 years Green Star rating: Targeting 6 Star Built NABERSNZ rating: Targeting 5 Star Value1: $138.0 million The development will create both a su
Slide 19: 7WQ Reinstatement & Insurance Claim
7WQ Reinstatement & Insurance Claim PROGRESS BEING MADE Reinstatement / Seismic Works The reinstatement and seismic works to the building are largely complete. Final works under the reinstatement project are required for toilets, floor coverings and in ceiling services in Level 12. The seismic works
Slide 20: Revaluations
Revaluations PORTFOLIO RELATIVELY RESILIENT THROUGH COVID-19 IMPACT Revaluation gain 3.5% above 31 Mar 20 31 Mar 20 Market Yield2 book value. Portfolio market yield Book Value Valuation Δ Δ 1 31 Mar 20 31 Mar 19 firmed 24bps. ($m) ($m) $m % Auckland 1,188.8 1,238.5 49.7 4.2% 6.22% 6.43% Regional
Slide 21: Financials
Financials 21 —
Slide 22: Income Reconciliation
Income Reconciliation STEADY RENTAL GROWTH OFFSET BY DEVELOPMENTS AND DISPOSALS 22 —
Slide 23: Financial Performance
Financial Performance RESILIENT OPERATIONAL PERFORMANCE FY20 FY19 Like-for-like rental growth of 2.4% $m $m during the period. Net property income 99.7 102.5 Net property income was down Administration expenses (11.4) (10.9) due to a combination of prior year Profit before financial income/(expenses
Slide 24: Distributable Income
Distributable Income INCREASE IN NET DISTRIBUTABLE INCOME PER SHARE FY20 FY19 $m $m After non-cash adjustments and Profit before income tax 123.9 143.3 current tax, net distributable Adjusted for: income increased $2.2 million or Revaluations gains (59.9) (70.5) 3.8%. Impairment (loss) on held for s
Slide 25: Investment Properties
Investment Properties GROWTH DRIVEN BY DEVELOPMENTS AND REVALUATION GAINS Capitalised costs: Driven by large developments including 7WQ, 8-14 Willis Street/360 Lambton Quay, 107 Carlton Gore Road and 180-202 Hutt Road, Wellington. Acquisitions: 54 Jamaica Drive Wellington, 244 Puhinui Road, Auckland
Slide 26: NTA per share reconciliation
NTA per share reconciliation GROWTH UNDERPINNED BY REVALUATION GAIN 26 —
Slide 27: Gearing
Gearing CAPITAL STRUCTURE SOUND, WITHIN BANDS AND WELL BELOW COVENANT Albany Lifestyle Centre remains held for sale and plans are in FY20 FY19 place to divest in FY21. Argosy is $m $m currently fielding interest from a Investment properties 1,782.3 1,667.0 range of parties. Asset held for sale 84.
Slide 28: Funding & Interest Rate Management
Funding & Interest Rate Management EXTENDED TENOR & DIVERSIFIED DEBT During FY20, Argosy extended FY20 FY19 its bank facilities, refinanced Weighted average duration of bank facility 3.6 years 2.7 years three tranches of existing debt and expanded its syndicate. Weighted average interest rate1 3.9
Slide 29: Dividends
Dividends RESILIENT AND SUSTAINABLE DIVIDENDS The FY20 dividend was increased 1.2% on the prior year. A 4th quarter cash dividend of 1.5875 cents per share has been declared, with nil imputation credits attached, and will be paid on 24 June 2020. The Dividend Reinvestment Plan has been reopene
Slide 30: Leasing Update
Leasing Update 30 —
Slide 31: Leasing Success
Leasing Success STRONG LEASING OUTCOMES OVER FY20 Argosy leased 107,617m2 across the portfolio, or 18% of the portfolios total net lettable area. 36 transactions over the period, with 17 renewals, 4 extensions and 15 new leases. Notable leases over the year include: 7WQ, Wellington DIA1 9yrs f
Slide 32: Lease Expiry
Lease Expiry STABLE PROFILE OVER THE MEDIUM TERM 5yr average income percentage expiring in any year ~9%. Largest single expiry over next 5 years is 5.5% in March-25 being General Distributors at 80-120 Favona Road, Mangere. Key lease expiries being focused on over the first six months of FY21
Slide 33: Sector Summary
Sector Summary INDUSTRIAL OFFICE RETAIL LARGE FORMAT ► Net absorption continues to drive ► Flexible working environments ► Equilibrium with on-line retailing is additional supply. continue to drive a disconnect yet to show full effect. between employment growth and ► Limited land supply in Auckland
Slide 34: Focus and Outlook
Focus and Outlook 34 —
Slide 35: 2021 Focus
2021 Focus Create Proactive delivery of Maintain our green / sustainable focus on all acquisition and development sustainable growth. opportunities. Continue transitioning $200 million worth of Value Add opportunities to drive earnings and capital growth. Make appropriate risk / reward decisions, wi
Slide 36: Appendices
Appendices 36 —
Slide 37: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) FY20 FY19 $m $m Profit before income tax 123.9 143.3 Revaluation gains (59.9) (70.5) Impairment loss on held for sale 3.0 - Realised losses/(gains) on disposal 0.1 (6.1) Derivative fair value (gain)/loss (2.1) 7.4 Earthquake expense net of recoveries 0.5 (6.8) G
Slide 38: Rent Reviews by Type, Sector & Location
Rent Reviews by Type, Sector & Location % of Total Type # Previous Rent % of rent New Rent $ Increase Annualised $ Annualised Annualised % ($000's) reviewed ($000's) (000's) % Increase Increase (000's) Increase Increase Total 100 43,453 100% 44,896 1,443 3.3% 1,163 100% 2.7% By review type Fixed 66
Slide 39: Rent Reviews – Auckland, Wellington & Regional
Rent Reviews – Auckland, Wellington & Regional % of Total Location # Previous Rent % of rent New Rent $ Increase Annualised $ Annualised Annualised % ($000's) reviewed ($000's) (000's) % Increase Increase (000's) Increase Increase Auckland Industrial 22 17,681 47% 18,288 607 3.4% 516 44.3% 2.9% Offi
Slide 40: Portfolio Metrics
Portfolio Metrics DEFENSIVE AND RESILIENT TENANTS, HIGH ESSENTIAL SERVICE EXPOSURE 40 —
Slide 41: Portfolio Snapshot
Portfolio Snapshot HIGH PORTFOLIO QUALITY IS BEING REFLECTED IN OUR 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 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Net Tangible Assets Debt-to-total-assets $1.40 40.0% $1.20 35.0% 30.0% $1.0
Slide 42: 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