Slide 1: Welcome to the 2016 Annual Results Briefing
PF Aaah. Eee ts WELCOME TO THE 2016 ANNUAL RESULTS BRIEFING
Slide 2: Agenda
AGENDA 01. HIGHLIGHTS 02. PORTFOLIO 03. MARKET & STRATEGY 04. 2016 ANNUAL RESULTS 05. CAPITAL MANAGEMENT 06. REVIEW & QUESTIONS 07. APPENDICES
Slide 3: Highlights
_ as Bee. HIGHLIGHTS |
Slide 4: Highlights
HIGHLIGHTS • Record profit after tax for the year of $123.4 million or 27.42 cents per share • Distributable profit for the year of 7.58 cents per share • Fourth quarter cash dividend of 2.05 cents per share, total cash dividends for the year of 7.35 cents per share, an increase of 0.05 cents per sh
Slide 5: Portfolio
02 PORTFOLIO™
Slide 6: Portfolio Snapshot
PORTFOLIO SNAPSHOT • PFI’s portfolio is diversified across 83 properties and 143 tenants, with 99.6% occupancy and a weighted average lease term of 4.79 years, weighted towards Auckland industrial property 31 December 2016 31 December 2015 Valuation $1,083.3m $986.6m Number of properties 83 84 Numbe
Slide 7: Portfolio Performance
PORTFOLIO PERFORMANCE • Valuations: • $88.2 million of 8.9% portfolio revaluation uplift to $1,083.3 million • Passing yield firmed from 7.33% to 6.69% • Leasing: • 32 leases agreed over ~123,000 sqm of space for an average term of 4.9 years • Lease renewals accounted for more than 82% of the contra
Slide 8: Lease Events
LEASE EVENTS 2017 Lease Expiry Profile: • Balance spread of 2017 lease events, ~23% of events market related, provides opportunity to access projected market rental growth: 2017 Expiries: Tenant % Rent Roll Penrose Portfolio (4 Properties) Sistema Plastics 2.5% 124a Hewletts Road Fonterra 1.3% 2 Pac
Slide 9: Health & Safety, Earthquake
HEALTH & SAFETY, EARTHQUAKE • Health & Safety (H&S): • H&S a key area of focus for PFI • H&S also high on tenant’s agenda • Following initial reviews, all properties now reviewed for H&S on a triennial basis • Contractor management processes in place for works on site • Earthquake (EQ): • 4.4% of PF
Slide 10: Market & Strategy
03. MARKET & STRATEGY a
Slide 11: Market Update
MARKET UPDATE • Strong economic growth in 2016, expected to continue in 2017, industrial property market highly correlated with overall GDP trends, strong demand for industrial space expected in 2017 • Colliers International: Commercial Property Investor Confidence Survey • Industrial property score
Slide 12: Strategy
STRATEGY • PFI’s strategy is to invest in quality industrial property in New Zealand’s main urban centres • The company aims to drive shareholder returns by: • Managing the vacancy and upcoming lease expiries • Opportunistically pursuing both core and value-add industrial acquisitions • Maximising u
Slide 13: Divestments
DIVESTMENTS Year Ended December 2016 Year Ended December 2015 Address 27 Zelanian Drive, East Tamaki 85 Cavendish Drive, Manukau Net sales proceeds $8.3m $9.5m Carrying value $7.8m $9.0m Gain on sale $0.5m $0.5m • ~$45 million of property divested over the last three years • $8.3 million sale of 27
Slide 14: Acquisitions
ACQUISITIONS 11 Turin Place, East Tamaki Purchase price $14.2m Tenant Thermakraft Property description Generic industrial Purchase yield 6.5% Lease term on settlement 15 years Fixed rent reviews, Rent reviews 4.55% every two years • ~$65 million of acquisitions over the last three years • No acquisi
Slide 15: Developments
DEVELOPMENTS • ~$30 million of developments over the last three years: • $1.9 million on generic industrial at 54 Carbine Road & 6a Donnor Place, Mount Wellington in 2015; • $25.9 million on bulk store facilities at 124 Hewletts Road, Mount Maunganui during 2015 – 2016; • $3.6 million on bio-fuel fa
Slide 16: 2016 Annual Results
a 04. 2016 ANNUAL RESULTS
Slide 17: Operating Revenue
OPERATING REVENUE • Operating revenues of $71.1 million up $4.2 million or 6.2% • Around half of the increase due to FY 2015 acquisitions ($2.0 million) • Remainder of the increase from positive leasing activity that was broad based in nature, offset by loss of income from disposals PROPERTY FOR IND
Slide 18: Comprehensive Income
COMPREHENSIVE INCOME For the year ended (audited, $000) Dec 16 Dec 15 Change Total operating revenue 71,108 66,927 4,181 • Operating revenues up $4.2 million or 6.2%, refer slide Non-recoverable property costs (1,646) (2,183) 537 17: operating revenue Interest expense and bank fees (17,839) (19,398)
Slide 19: Distributable Profit (Cents per Share)
DISTRIBUTABLE PROFIT (CENTS PER SHARE, CPS) • Distributable profit per share up 0.57 cps or 8.1% • 2016 dividends of 7.35 cps, 0.05 cps ahead of 2015 dividend and guidance • FY17 earnings guidance of between 7.50 and 7.70 cents per share, dividend guidance of at least 7.35cps 1. Distributable profit
Slide 20: Funds / Adjusted Funds from Operations
FUNDS / ADJUSTED FUNDS FROM OPERATIONS For year ended (unaudited, $000, unless noted) Dec 2016 Profit and total comprehensive income after income tax attributable to the shareholders of the Company 123,412 • Funds From Operations (FFO) earnings of 7.99 cps Adjusted for: and Adjusted Funds From Fair
Slide 21: Investment Properties
INVESTMENT PROPERTIES • Portfolio value now in excess of $1 billion • $17.2 million of capital spent on portfolio, including $15.8 million on the finalisation of the development at 124 Hewletts Road • Fair value gain of $88.2 million or 8.9% refer slide 7: portfolio performance PROPERTY FOR INDUSTRY
Slide 22: Net Tangible Assets (Cents per Share)
NET TANGIBLE ASSETS (CENTS PER SHARE, CPS) • Net tangible assets (NTA) per share up 20.2 cps or 14.4% to 160.7 cps • Fair value gain of $88.2 million or 19.5 cps key driver of the increase • Other minor items accounted for the remaining increase of 0.7 cps 1. Refer: Appendix 2: Financial Position fo
Slide 23: Capital Management
05. CAPITAL MANAGEMENT
Slide 24: Capital Management
CAPITAL MANAGEMENT • Capital management initiatives helped to ensure a strong balance sheet: • Equity: $7.5 million raised from dividend reinvestment • Loan facilities: refinance of facilities in February 2016 and active management of hedging • Disposal of non-core property: $9.5 million sale settle
Slide 25: Loan Facilities
LOAN FACILITIES • Facilities refinanced February 2016, average term extended, cost reduced • Hedging rate for 2017 will reduce to ~4.46% Dec 2016 Dec 2015 Facilities Drawn (excluding overdraft) $333.7m $331.7m Facilities limit $375.0m $375.0m Facilities headroom $41.3m $43.3m Facilities term (averag
Slide 26: Review & Questions
REVIEW & QUESTIONS
Slide 27: Review & Questions
REVIEW & QUESTIONS • PFI’s strategy is to invest in quality industrial property in New Zealand’s main urban centres and the company aims to deliver strong, stable shareholder returns • 2016: record financial result, quality industrial portfolio continuing to perform • 2014 - 2016: growth in values,
Slide 28: Appendices
07. APPENDICES
Slide 29: Appendix 1: Distributable Profit
APPENDIX 1: DISTRIBUTABLE PROFIT For year ended (audited, $000, unless noted) Dec 2016 Dec 2015 Profit and total comprehensive income after income tax attributable to the shareholders of the Company 123,412 72,825 Adjusted for: Fair value gain on investment properties (88,214) (46,471) Material dama
Slide 30: Appendix 2: Financial Position
APPENDIX 2: FINANCIAL POSITION As at (audited, $000, unless noted) Dec 2016 Dec 2015 Change Investment properties 1,083,300 986,565 96,735 Goodwill 29,086 29,086 - Other assets 9,413 11,593 (2,180) Total assets 1,121,799 1,027,244 94,555 Borrowings 332,924 330,920 2,004 Deferred tax liabilities 11,0
Slide 31: Appendix 3: Hedging
APPENDIX 3: HEDGING PROPERTY FOR INDUSTRY 2016 ANNUAL RESULTS BRIEFING 31
Slide 32: Disclaimer
DISCLAIMER The information included in this presentation is provided as at 13 February 2017. Neither Property for Industry Limited (PFI) nor PFIM Limited (PFIM), the manager of PFI, guarantee the repayment of capital or the performance referred to in this presentation. Past performance is not a reli