Argosy Property Limited · NZX:ARG
Argosy Property — Argosy Property Trust — HY12 Earnings Presentation
24 slides from Argosy Property's earnings presentation, Nov 23, 2011
Slide 1: Half Year Results
HALF YEAR RESULTS 23 NOVEMBER 2011
Slide 2: The Last Six Months
THE LAST SIX MONTHS A time of significant change for the Trust Setting a platform for significant cost savings and other unitholder benefits. We continued to deliver on our promises To be a low-risk investment with a portfolio of New Zealand properties diversified by location, sector and t tenantst
Slide 3: Highlights
HIGHLIGHTS 6 cpu – Guidance to annual distribution which is less than forecast distributable income Internalisation achieved, with immediate cost savings to follow Corporatisation proposal to be presented to unitholders in early 2012 Bank facility restructured on improved terms Net property income m
Slide 4: Performance
PERFORMANCE Argosy Property Trust - 6 months to 30 September 2011 Gross Prices Indexed to 100 120 115 110 105 100 95 90 Mar-11 Apr-11 May-11 — Argosy Property Trust June11 NZ Property Gross Index Jul-11 NZX 50 Index Aug-11 Sep-11
Slide 5: Financial Overview
Argosy Financial Overview mW ee % iB xe
Slide 6: Financial Performance
FINANCIAL PERFORMANCE HY12 HY11 Change Net income $35.6m $35.6m - Finance income $0.1m $0.4m ($0.3m) Interest expense ($15.9m) ($13.4m) ($2.5m) Loss on derivatives ($11.4m) ($9.7m) ($1.7m) Other expenses ($4.1m) ($3.5m) ($0.6m) Profit f before b f income tax from f normall operating activities $ $4.
Slide 7: Distributable Income
DISTRIBUTABLE INCOME HY12 HY11 (Loss)/profit before income tax ($23.8m) $8.7m Add back/(deduct): ( ) Investment disposal gains ($0.1m) - Loss on derivatives $11.4m $9.7m Amortisation of management contract $6.0m $ 0.6m Management rights buyout $20.0m - Management rights buyout – associated costs $1.
Slide 8: Financial Position
FINANCIAL POSITION September 2011 March 2011 Change Securities on issue 554 5m 554.5m 549 2m 549.2m (5 3m) (5.3m) Unitholders’ funds $478.7m $511.7m ($33m) Net asset backing per unit (cents) 86.3c 93.2c (6.9c) Investment properties $924.9m $948.7m ($23.8m) Properties held for sale $6 9m $6.9m $11 9m
Slide 9: Interest Rate Management
INTEREST RATE MANAGEMENT The Trust current interest rate hedge is 90% of debt Margin and line fee savings of 30bps under new facility from 31 August. Three blend and extend transactions saving $1.09 million from prior rates. 130 million in new swaps from December roll at between 2 2.89% 89% and 2.95
Slide 10: Bank Covenants
BANK COVENANTS HY12 FY11 Loan to valuation ratio Fair market value of properties (incl. held for sale) $ 931.8m $ 960.6m T lb Total borrowings i $ 413.5m 413 5 $ 412.4m 412 4 Not to exceed 50% 44.4% 42.9% Interest cover ratio - equal or exceed 1.80 times 2.01x 2.15 x (March 2011: 2.00 times) Weighte
Slide 11: Net Tangible Assets
NET TANGIBLE ASSETS 95.0 92.1 ‐2.8 ‐0.1 ‐1.9 90.0 ‐0.8 86.3 ‐0.2 85.0 80.0 75.0 70.0 65.0 60.0 NTA at 31 March 2011 excludes opening management fee buyout intangible.
Slide 12: Portfolio Overview
Argosy Portfolio Overview ~ L ™ Vy ban % iB xe
Slide 13: Summary Statistics
SUMMARY STATISTICS As at 30 September 2011 Book value of properties $931.8m Number of properties 72 Average value of properties $12.94m y by Vacancy y area (occupancy ( p y 93.9%)) 6.12% Vacancy by rental 5.37% Weighted average lease term 4 84% 4.84% Number of tenants 250
Slide 14: Diversification by Sector and Location
DIVERSIFICATION BY SECTOR AND LOCATION 10% 28% 38% 15% Office Auckland Industrial Wellington Retail Regional 75% 34%
Slide 15: Industrial
INDUSTRIAL Sector continues to exhibit solid enquiry levels Tenant incentive expectations remain relatively high Solid net absorption levels are expected to make good q g quality y industrial space p more limited in the next 12 months Full control over the Manawatu Business Park Development with the
Slide 16: Commercial
COMMERCIAL Commercial office continues to be dominate by increased vacancy levels Tenants remain aware of excess capacity Encouraging enquiries for space in the last few months ARG exposure is primarily fringe offices Two major refurbishments in Wellington CBD in buildings with new leases to primary
Slide 17: Retail
RETAIL Retail environment remains extremely challenging CBRE report predicts improved activity and rental rates in 2012 and the market may turn quickly Worked with some tenants to restructure leases but this p position is with a lower base for future performance Strong risk to any recovery as a resu
Slide 18: Strategy
St t Strategy
Slide 19: Strategy
STRATEGY Risk mitigation Debt reduction (medium term target of under 40% debt to total assets ratio) Portfolio positioning for the future
Slide 20: Valuations
VALUATIONS No evidence of significant movement in values Following assessment of markets and property details no interim valuations were commissioned Revaluations will be completed by 31 March 2012 for y year-end results as normal Capitalisation rate and rate of return largely flat Management consid
Slide 21: Positioning the Portfolio for the Future
POSITIONING THE PORTFOLIO FOR THE FUTURE 38 lease transactions 14 lease renewals and extensions 24 new leases Sales of vacant property Sale of higher risk property New 6-year leases for both of the Trust’s major e gto Office Wellington O ce towers to e s from o Te e Puni u Kokiri o and a d the Depar
Slide 22: Internalisation – Progress Update
INTERNALISATION – PROGRESS UPDATE Transaction completed on 30 August 15 staff transferred on 31 August. 2 new staff hired since including CFO/Company Secretary Move to 39 Market Place in December (Trust building) IT systems outsourced sa ings achieved Significant savings achie ed through th o gh int
Slide 23: Thank You
Argosy Thank You LY ee
Slide 24: Disclaimer
DISCLAIMER This presentation has been prepared by Argosy Property Management Limited on behalf of Argosy Property Trust. The d t il in details i thi this presentation t ti provide id generall information i f ti only. l It is not intended as investment or financial advice and must not be relied upon