Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — Precinct Properties New Zealand — FY2022 Earnings Presentation
36 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, August 2022
Slide 1: Precinct Properties Annual Results 30 June 2022
Precinct Properties Annual Results 30 June 2022 PRECINCT PROPERTIES, ANNUAL RESULTS PRESENTATION - Page 1 Artist Impression – 124 Halsey rooftop terrace
Slide 2: Agenda
Agenda Highlights / Key themes Page 03 Section 1 – Financial results & capital management Page 07 Section 2 – Our markets Page 15 Section 3 – Operations Page 20 Section 4 – Developments Page 23 Section 5 – Outlook Page 30 Precinct Properties New Zealand Limited Scott Pritchard, CEO George Crawford,
Slide 3: Highlights
Highlights Strategic initiatives • Established investment partnership with Singapore sovereign wealth fund GIC • Partnership will initially acquire assets from Precinct’s existing portfolio and expect to grow to around $1.0b Financial performance • Net operating income of $95.3m (FY21: $83.0m) • Com
Slide 4: Our people and partners, Operational excellence, Developing the future
Our people and partners • Investment partnership with GIC secured • Further direct investment opportunities being explored • Staff retention and remuneration a priority in tight labour market Operational excellence • Location and quality driving significant demand for Precinct’s portfolio • Strong p
Slide 5: Key Themes
Key Themes
Slide 6: Key themes
Capital partners • Establishing a base of partners to invest alongside Precinct • Offers Precinct the opportunity to participate more widely in the market Key themes Interest rates • Rising inflation leading to increased interest rates • Rising interest rates expected to impact cap rates. Valuation
Slide 7: Section 1 Financial results & capital management
Section 1 Financial results & capital management
Slide 8: Financial performance
Financial performance For the 12 months ended 30 June 2022 30 June 2021 D ($m) Operating income before indirect expenses $129.4 m $127.7 m + $1.7 m $108.8m Indirect expenses ($10.2 m) ($17.5 m) + $7.3 m Total comprehensive income after tax Net interest expense ($23.9 m) ($27.2 m) + $3.3 m Operating
Slide 9: Operating income
Operating income For the 12 months ended 30 June 2022 30 June 2021 D • Adjusting for the impacts of ($m) lockdowns, NPI was up 7.0% Auckland $81.4 m $73.4 m $8.0 m Wellington $42.0 m $42.1 m ($0.1 m) • Strong outcome given the impacts from Covid on the Investment portfolio $123.4 m $115.4 m $8.0 m p
Slide 10: FFO and AFFO
FFO and AFFO For the 12 months ended 30 June 2022 30 June 2021 ($m) AFFO Operating income before indirect expenses (as per FS) $129.4 m $127.7 m Indirect expenses ($3.4 m) ($5.2 m) Employment and administration expenses ($6.8 m) ($12.3 m) 6.51 cps Net interest expense Operating profit before tax (as
Slide 11: Tax overview
Tax overview For the 12 months ended 30 June 2022 30 June 2021 $m • Tax loss in the period resulted in a tax benefit of $7.0 million Net profit before taxation $129.3 m $146.0 m Outcome due to: At the statutory income tax rate of 28.0% $36.2 m $40.9 m • Disposal of depreciable assets at Unrealised (
Slide 12: Capital management
Capital management Key metrics 30 June 2022 30 Jun 2021 Debt drawn ($m) 1,247 1,053 Balance sheet repositioned Gearing - banking covenant (%) 34.3 28.2 • Secured a new $300m bank debt facility and Weighted average term to expiry (years) 4.0 3.5 issued a $175m green bond Weighted average debt cost (i
Slide 13: ESG update
ESG update Commitment to the World Green Building ESG Progress Council Net Zero Carbon Buildings Commitment Last reported 2020 2021 TCFD Target • Maintained our GRESB score, Precinct’s key GRESB Score 83 82 ESG measure, above the global average - Global Average 70 73 • $1.7b of green assets (excl. a
Slide 14: FY23 guidance
FY23 guidance Historical AFFO and Dividend 7.00 cps 6.50 cps 6.70 cps 6.00 cps 5.50 cps 5.00 cps FY23 minimum dividend 4.50 cps 4.00 cps 2016 2017 2018 2019 2020 2021 2022 2023 AFFO (cps) Dividend (cps) Dividend Guidance FY23 dividend to be no less than 6.70 cps with higher forecast interest rates i
Slide 15: Section 2 Our markets
Section 2 Our markets
Slide 16: Our city centre markets
Our city centre markets Prime office (Auckland) • Prime-secondary spread continues to widen with prime vacancies falling to 6.6% as at Jun-22 (Jun-21: 7.3%) while secondary vacancies rose from 13.9% to 16.6% over the same period • Occupiers remain focused on progressing renewal and/or relocation pla
Slide 17: Auckland city centre office
Auckland city centre office Flight to quality contributing to further widening in Auckland prime vacancy 18% prime-secondary spread 16% Forecast • Vacancies continue to be unevenly spread 14% 12% through building grades/location with prime 10% vacancy on the CBD waterfront estimated at 8% 2.0%* as a
Slide 18: Wellington city centre office
Wellington city centre office Continued outperformance driven by demand Auckland prime vacancy 7% and supply imbalances 6% Forecast • Availability of high-quality prime grade remain 5% scarce and below long-term average. The 4% Government precinct remains fully occupied 3% • Strong demand driving +2
Slide 19: Revaluations
Revaluations • Revaluation gain of $19.4m or 0.5% • Driven primarily by development profit recognition • Auckland benefitted from increased market rentals which offset headwinds from softening capitalisation rates • NAV per share of $1.54 (Jun-21: $1.52) • Portfolio cap rates softened by 10bps to 4.
Slide 20: Section 3 Operations
Section 3 Operations
Slide 21: Portfolio activity
Portfolio activity c. 34,600m² • Portfolio continues to perform well reflecting a long weighted average lease term of 7.1 years and occupancy of 99% Total leasing (including developments) Key leasing update • Strong activity continues with circa 34,600m2 leasing completed and solid leasing spread +1
Slide 22: Earnings quality
Earnings quality Precinct’s well-located assets, high Gross revenue by asset class occupancy, quality client base, and long WALT gives confidence that our strategy will continue to deliver 8% 5% 11% Carpark • Just 5.1% of portfolio by income is subject 5% Retail to expiry over the next 12 months Foo
Slide 23: Section 4 Developments
Section 4 Developments Artist Impression – 1 Queen Street rooftop terrace
Slide 24: Key highlights
Key highlights $854m $1.0b Total project cost Total value on completion c. 20% c. 6.0% Forecast blended Forecast blended return on cost yield on cost (fully let) c. 64,000m2 54% Total NLA on Weighted to completion Auckland c. 77% c. 16 years Pre-committed Secured WALT1 Note 1 – Based on committed le
Slide 25: Development update
Development update Secured • 30 Waring Taylor successfully Development TPC NLA % pre-let Completion WALT completed and opened in FY22 with occupancy to date 40 Bowen $90 m 9,800 m² 95% 10 years Q2-FY23 ahead of expectation 44 Bowen $106 m 11,500 m² 100% 13 years Q4-FY23 • Committed developments Will
Slide 26: Bowen Campus Stage 2
Bowen Campus Stage 2 • 96% pre-committed overall with only one part floor tenancy remaining available for lease c. 32% • Construction progressing well on both sites Forecast return on cost • 40 Bowen – atrium glazing and fitouts nearing completion. Building due to open 6 October 2022 • 44 Bowen – su
Slide 27: Deloitte Centre (1 Queen Street)
Deloitte Centre (1 Queen Street) • Façade installation to hotel floors nearing completion. Works remain on track to complete in 2023 despite extended Covid disruptions during the period c. 22% Forecast return on cost • Commercial – 14,200m2 premium grade office (incl. two (stabilised) levels of priv
Slide 28: Wynyard Quarter Stage 3
Wynyard Quarter Stage 3 • Committed to 124 Halsey and the Flowers Building in Dec-21 (combined 11,400m2) c. 15% • Ground works progressing well with excavation nearing Forecast return on cost completion. Completion remains targeted for late 2024 c. 5.7% • Leasing discussions advancing well. With sig
Slide 29: Other developments
Other developments Bowen House Willis Lane Freyberg Building (committed) (committed) (uncommitted) • Refurbishment and • Entertainment anchor • Preliminary Design seismic upgrade works (71% of NLA) secured completed for ~15,000m2 advancing during the period with a NLA scheme adjacent to further 7% o
Slide 30: Section 5 Outlook
Section 5 Outlook
Slide 31: Outlook
Outlook • Economy slowing due to higher interest rates and a constrained labour market • Rising interest rates placing pressure on valuations • Extent of impact will depend on: • quality and location of portfolio • whether rental growth can be achieved to offset impact • Precinct well placed through
Slide 32: Appendices
Appendices PRECINCT PROPERTIES FY22 ANNUAL RESULTS - PAGE 32
Slide 33: App 1: Operating income
App 1: Operating income For the 12 months ended 30 June 2022 30 June 2021 D $m AON Centre - AKL $11.1 m $11.5 m ($0.4 m) HSBC Tower $18.2 m $17.8 m + $0.4 m PWC Tower $24.8 m $18.3 m + $6.5 m Commercial Bay Retail $14.4 m $13.2 m + $1.2 m Jarden House $6.0 m $5.6 m + $0.4 m Mason Brothers $2.4 m $2.
Slide 34: App 2: Balance sheet
App 2: Balance sheet Financial Position as at 30 June 2022 30 June 2021 ($m) Audited Audited D Assets Development properties $544.0 m $232.4 m + $311.6 m Investment properties $2,549.0 m $3,076.4 m ($527.4 m) Investment properties held for sale $577.2 m - + $577.2 m Deferred tax asset - $7.4 m ($7.4
Slide 35: App 3: Investment portfolio overview
App 3: Investment portfolio overview Key metrics Portfolio metrics Investment Auckland Wellington portfolio WALT 7.1 years 6.4 years 8.4 years 7.1 years Occupancy 99% 98% 100% Weighted average lease term Investment Portfolio Value ($m) $3,130 m $2,211 m $919 m Weighted Average Market Cap Rate 4.9% 4
Slide 36: Disclaimer
Disclaimer The information and opinions in this presentation were prepared by Precinct Properties New Zealand Limited or one of its subsidiaries (Precinct). Precinct makes no representation or warranty as to the accuracy or completeness of the information in this presentation. Opinions including est
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