Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — FY2021 Earnings Presentation
42 slides from Dexus Industria Reit's earnings presentation, Aug 18, 2021
Slide 1: FY21 Results Presentation
FY21 RESULTS PRESENTATION 18 AUGUST 2021 www.apngroup.com.au ASX Code: ADI 1
Slide 2: Agenda
Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio Performance and Market Dynamics 04 Outlook Appendices 2
Slide 3: Highlights and Outcomes
HIGHLIGHTS AND OUTCOMES === ——||1 APN | Property Group
Slide 4: Net zero portfolio delivering record FFO and valuation growth
Net zero portfolio delivering record FFO and valuation growth $41.2m $85m ~42,100 Accountable FFO up 12.0% on pcp; Valuation growth (+10%), Square metres of leasing First A-REIT to be certified 99.9% gross rent collected $182m of acquisitions, completed, active across carbon neutral for FY21 31.6% g
Slide 5: Strong statutory profit and operating result
Strong statutory profit and operating result ▪ Statutory net profit $119.2 million: Income Statement FY21 FY20 Change – Valuation gains of $85.2 million (pcp $24.4 million) – Net Property Income up 10.9% to $49.9 million – Statutory net profit ($m) $119.2 $54.8 p 117.5% like for like growth 2.1%1 FF
Slide 6: Active period of capital management
Active period of capital management ▪ Negotiated ~$300 million of new debt facilities with Debt maturity profile – limited refinance risk average maturity of 3.9 years, adding $134 million $400m of new lines of credit $350m ▪ Maintaining a staggered debt maturity profile, $300m Limited maturity expo
Slide 7: Net zero emissions in FY21
Net zero emissions in FY21 ▪ ADI is the first A-REIT to be certified carbon neutral Voluntarily reducing emissions and taking accountability where our emissions boundary was assessed based on both our property portfolio and associated corporate Climate Active is the Australian Government's operation
Slide 8: Creating value through portfolio positioning and asset management
Creating value through portfolio positioning and asset management ▪ Increased portfolio weighting to industrial sector from Repositioning portfolio to industrial & improving return profile 24% to 67% through actively acquiring assets with the Business Park Industrial $1,089m most attractive risk / r
Slide 9: Track record of disciplined growth and delivering securityholder value
Track record of disciplined growth and delivering securityholder value IRR 15.0% IRR 17.6% IRR 11.5% IRR 9.4% Recent acquisition Recent acquisition Recent acquisition Sep 16 Jul 18 May 19 Dec 19 Mar 21 Apr 21 Jul 21 1 Westrac Dr, Tomago 13 Ricky Way & Knoxfield and Kilsyth 350-356 Cooper St, Butler
Slide 10: Resilient income profile from high quality tenants
Resilient income profile from high quality tenants ASX Listed Listed Multinational National Multinational Government 13% Private 6% 39% 7% 17% 18% Note: Composition provided by income 10
Slide 11: Investment Proposition
INVESTMENT PROPOSITION Wy yi inka ponnnnnns | Property Group
Slide 12: The APN Industria REIT opportunity
The APN Industria REIT opportunity The Strategy The opportunity To grow through investing in ▪ Low-risk portfolio benefiting from a growing rent profile – average rent industrial and business park assets reviews of ~3%, no potential volatility from “active earnings” ▪ Providing businesses with ▪ Lev
Slide 13: At a glance
At a glance ~$725m S&P/ $1.1bn MARKET ASX 300 PORTFOLIO CAPITALISATION INDEX MEMBER 5.2% 31.6% 5.4 3% YEAR CASH GEARING AVG RENT WALE DISTRIBUTION YIELD REVIEWS (by income) High quality industrial and business park assets delivering a strong income profile combined with a conservative balance sheet
Slide 14: Diversified portfolio generating consistent and growing income
Diversified portfolio generating consistent and growing income 67% INDUSTRIAL AND LOGISTICS 33% BUSINESS PARKS 33% 16% 44% Industrial Melbourne, Brisbane 17% Adelaide and Brisbane Technology Park Key industrial precincts 15 minutes south of CBD ~$476 million valuation ~$170 million valuation 67% 24
Slide 15: Dexus acquisition of APN Property Group
Dexus acquisition of APN Property Group ▪ The Dexus acquisition of APN Property Group was – Access to a deeper pool of acquisition opportunities implemented on 13 August 2021. As a result, Dexus is across all markets now the manager of APN Industria REIT (ADI) ▪ Existing governance arrangements will
Slide 16: Dexus – Leading manager with a focus on real estate fundamentals
Dexus – Leading manager with a focus on real estate fundamentals Strong investor Specialist leading manager Leading Leveraging alignment of Australian real estate ESG credentials platform scale Dexus is strongly aligned $42.5 billion total funds Delivering long-term value Broad Australian real estat
Slide 17: Portfolio Performance and Market Dynamics
PORTFOLIO PERFORMANCE AND MARKET DYNAMICS 17
Slide 18: Actively managing Industria's real estate
Actively managing Industria’s real estate Consistent high occupancy Generating organic growth Cumulative leasing outcomes (sqm) 97% 98% 96% 77% 168,600 95% 95% 96% 126,500 97,600 83,900 70,300 45,900 14% 9% 18,800 Jun16 Jun17 Jun18 Jun19 Jun20 Jun21 CPI 2 - <3% ≥ 3% Jun15 Jun16 Jun17 Jun18 Jun19 Jun
Slide 19: Asset management continues to add value across industrial portfolio
Asset management continues to add value across industrial portfolio ▪ $728 million valuation, 100% leased, 7.6 year WALE Leasing completed and forthcoming expiries (by area) ▪ Average cap rate 5.50% 100,000 ▪ Asset management capability and de-risking cash 90,000 80,000 flow through leasing continue
Slide 20: Expanding best-in-class real estate – Westrac Newcastle
Expanding best-in-class real estate – Westrac Newcastle ▪ Completed $5.5 million expansion July 2021 – generating 6.75% yield on cost ▪ Valuation increased $25.6 million to $252.0 million, reflecting a 5.25% cap rate ▪ Leased to Westrac until 2034, with the higher of CPI or 3% annual rent reviews ▪
Slide 21: Industrial take up and rents are strong – especially in markets relevant for ADI
Industrial take up and rents are strong – especially in markets relevant for ADI ▪ Take-up increased to record levels over the past Take-up by city (millions sqm) two quarters and ecommerce continues to drive total demand Sydney Melbourne Brisbane Perth Adelaide 3.0 ▪ National take-up rate YTD is 75
Slide 22: Brisbane Technology Park
Brisbane Technology Park ▪ 47 leases across ~3,300 sqm; ~5% rental spreads; Brisbane Technology Park | APN Industria REIT ownership 13% average incentive; 71% retention 15 mins ▪ 80% occupancy1; generating ~6% yield at current to CBD 25 mins to Airport occupancy, with meaningful scope for upside ▪ L
Slide 23: Brisbane Technology Park
Brisbane Technology Park ▪ Precinct continues to attract technology and life science Lifesciences at BTP occupiers – including AnteoTech – manufacturers of COVID-19 Rapid Antigen Diagnostic Testing kits used globally ▪ APN’s on-site management platform is providing unique opportunities to: – Grow an
Slide 24: Rhodes Corporate Park
Rhodes Corporate Park ▪ Building C Rhodes Corporate Park and amenity FY21 leasing opportunities have been limited to small suites – ~1,300 square metres leased, with ~6% rental Building A Building C spreads to prior passing rents ▪ Building A Good progress on de-risking September 2021 13,900 square
Slide 25: Rhodes and surrounding markets
Rhodes and surrounding markets ▪ Rhodes is highly accessible to a deep base of employees: Population within 20 minutes drive of metro office locations3 - ~30mins to Sydney CBD using existing road and rail infrastructure - 78,662 people live within a 20 minute drive – a denser population than Parrama
Slide 26: Asset management delivery
Asset management delivery Thornton – 45-65 O'Briens Rd, Corio New Childcare Facility – Brisbane Technology Park WesTrac expansion Radio Frequency Systems warehouse, 32 - 40 Garden St, Kilsyth 26
Slide 27: Outlook
APN | Property Group
Slide 28: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) – High quality carbon neutral portfolio with ~3% annual fixed growth from contracted rent reviews FY22 15% – Transition to Dexus with continuing management te
Slide 29: Appendices
€xchange ityFi @ te), wy BTP Workspaces esas APN | Property Group 29
Slide 30: Appendix A: Property portfolio
Appendix A Property portfolio 30
Slide 31: Independent Valuations
Total boxes to be normalised Independent Valuations 1H Change in 2H Change in 1H2021 2H2021 FY2021 Asset Book Value ($m) Cap Rate (%) Cap Rate (%) Cap Rate (%) Gain / (Loss) ($m) Gain / (Loss) ($m) Gain / (Loss) ($m) 1 West Park Drive 13.8 5.25% (1.00%) (0.25%) 1.8 0.7 2.5 1-3 Westrac Drive 252.0 5.
Slide 32: APN Industria REIT portfolio as at 30 June 2021
APN Industria REIT portfolio as at 30 June 2021 Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector ($m) (%) (sqm) (by area) (by income) APN Industria REIT Portfolio Industrial Portfolio 728.1 5.50 337,914 100% 7.6 Business Park Portfolio 360.5 6.36 58,037 86% 1.9 1,088.6 5.78 395
Slide 33: APN Industria REIT portfolio as at 30 June 2021
APN Industria REIT portfolio as at 30 June 2021 Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector ($m) (%) (sqm) (by area) (by income) Industrial Portfolio (cont) 57-67 Mark Anthony Drive, Dandenong VIC 100% Industrial 13.5 5.00 7,830 100% 10.0 137-147 Fitzgerald Road, Laverton
Slide 34: APN Industria REIT portfolio as at 30 June 2021
APN Industria REIT portfolio as at 30 June 2021 Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector ($m) (%) (sqm) (by area) (by income) Business Park Portfolio Building A, 1 Homebush Bay Drive, Rhodes NSW 100% Business Park 103.4 5.88 14,642 100% 0.4 Building C, 1 Homebush Bay Dr
Slide 35: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 19% Link Market Services 10% Woolworths Group 3% AAE Retail 3% Thornton Engineering Australia 3% Frasers Property 3% Mitre 10 3% Interactive 3% Vesco 2% Autopact Victoria 2% Top 10 Tenants 51% Other 49% Total 100% 35
Slide 36: Appendix B: Financial information
Appendix B Financial information 36
Slide 37: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position As at 2021 2020 $’000 $’000 Assets Cash and cash equivalents 7,053 4,928 Trade and other receivables 764 377 Investment property held for sale 12,550 - Other assets 2,799 733 Total current assets 23,166 6,038 Investment properties 1,051,008 826,481 Invest
Slide 38: Consolidated Statement of Profit or Loss and other comprehensive income
Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended 2021 2020 $’000 $’000 Income Net rental income 64,514 59,554 Straight line rental income recognition 2,880 2,323 Total revenue 67,394 61,877 Expenses Property costs (13,021) (12,921) Trust management fees
Slide 39: Reconciliation to FFO
Reconciliation to FFO Financial period ended 2021 2020 $’000 $’000 Statutory net profit after tax for the period 119,197 54,836 Adjusted for: Reversal of straight-line lease revenue recognition (2,880) (2,323) Reversal of fair value (gain) on investment properties (78,340) (20,650) Reversal of fair
Slide 40: Interest rate hedging profile
Interest rate hedging profile 4% $264m 3% Average Fixed Rate (including caps) $166m $161m 2% $72m 1% 0% FY22 FY23 FY24 FY25 Weighted Hedged Amount Average Fixed Rate 40
Slide 41: 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 42: Contact
Contact Alex Abell Fund Manager – APN Industria REIT Ph: (03) 8656 1070 alex.abell@dexus.com Louise Murray Senior Manager, Communications & Government Relations Ph: (02) 9017 1446 louise.murray@dexus.com ASX Code: ADI Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, A