Property For Industry Limited · NZX:PFI
Property For Industry — FY2019 Earnings Presentation
34 slides from Property For Industry's earnings presentation, Feb 17, 2020
Slide 1: Annual Results Briefing 2019
Annual Results Briefing 2019
Slide 2: Contents
Contents Annual Results Briefing 2019 HIGHLIGHTS PORTFOLIO 2019 ANNUAL RESULTS CAPITAL MANAGEMENT MARKET OUR PRIORITIES REVIEW & QUESTIONS APPENDICES
Slide 3: Highlights
Highlights Annual Results Briefing HIGHLIGHTS
Slide 4: Highlights
Highlights Annual Results Briefing 2019 RECORD ANNUAL RESULTS: profit after tax of $176.3 million, Funds From Operations (FFO)1 earnings up 2.6% to 9.07 cents per share, Adjusted Funds From Operations (AFFO) earnings up 4.4% to 7.79 cents per share DIVIDENDS AFFO COVERED: cash dividends of 7.60 cent
Slide 5: Portfolio
Porfolio Annual Results Briefing 2019 PORTFOLIO
Slide 6: Portfolio Snapshot
Portfolio Annual Snapshot Results Briefing 2019 ▪ PFI’s portfolio is diversified across 94 properties DECEMBER 2019 DECEMBER 2018 and 144 tenants, with 99.0% occupancy and a weighted average lease term of 5.38 years, BOOK VALUE $1,476.2m $1,322.0m weighted towards Auckland industrial property NUMBER
Slide 7: Historical Operational Performance
Historical Annual Operational Results Performance Briefing 2019 ▪ Since 2010 PFI has achieved 100% 6 a year end average occupancy of 98.5% and a weighted average lease term 99% 5 of 4.97 years 98% 4 97% 3 96% 2 95% 1 94% 93% 0 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Occ
Slide 8: Valuations
Valuations Annual Results Briefing 2019 ▪ Annual increase from independent valuations of $125.2 million or 9.3% to $1,476.2 million ▪ Around one-third of valuation outcome was due to rental growth ▪ Passing yield firmed from 6.21% to 5.75% ▪ Independent market rental assessment estimates portfolio i
Slide 9: Leasing
Leasing Annual Results Briefing 2019 ▪ 24 leases agreed over ~99,000 sqm of space ADDRESS TENANT TERM AREA % RENT ROLL for an average term of 6.7 years ▪ Eight new leases and 16 renewals secured 7-9 NIALL BURGESS RD DHL 7.0 years 23,525 sqm 2.8% ▪ Lease renewals accounted for more than 76% CARLAW PA
Slide 10: Rent Reviews
Rent Annual Reviews Results Briefing 2019 Vacant 1.0% ▪ 103 rent reviews delivered an average annual uplift of ~4.6% on Expiry 6.5% ~$52.7 million of contract rent ▪ 11 market rent reviews delivered an annualised increase of 4.7% Market 9.1% over an average review period of 3.6 years on $5.3 million
Slide 11: 2020 Lease Expiries
2020 Lease Annual Expiries Results Briefing 2019 ▪ Portfolio is 99.0% occupied (1.0% vacancy) and 6.5% of contract H2 2019 EXPIRIES TENANT % RENT ROLL rent is due to expire in 2020 59 DALGETY DRIVE Goodman Fielder 1.7% ▪ 2 Pacific Rise has been sold (with settlement due to take place CARLAW PARK OFF
Slide 12: 2019 Annual Results
2019 ANNUAL RESULTS
Slide 13: Net Rental Income
Net Rental Annual Income Results Briefing 2019 ▪ Net rental income of $83.3 $85m +0.2 million up $4.2 million or 5.3% +0.9 $84m ▪ Increases due to positive leasing +1.8 -0.4 83.3 $83m -0.3 -0.3 activity totalling $3.3 million and -0.2 acquisitions ($1.8 million) $82m +2.5 ▪ Partially offset by lost
Slide 14: Adjusted Funds From Operations
Adjusted Annual Funds From Results Operations Briefing (cents per share) 2019 ▪ Profit after tax up $66.2 million 8.4 +0.21 to $176.3 million ▪ FFO earnings of 9.07 cents 8.2 +0.71 per share, 0.23 cents per share or 2.6% ahead of the 8.0 prior year -0.44 ▪ AFFO earnings of 7.79 cents -0.05 7.79 per
Slide 15: Earnings, Dividends, Guidance
Earnings, Annual Dividends, Results Guidance Briefing 2019 ▪ 2019 cash dividends of 7.60 cents per EARNINGS 2019 CPS 2018 CPS CHANGE share (cps), up 0.05 cps from 2018 ▪ 2020 dividend guidance of 7.65 – 7.70 cps, FUNDS FROM OPERATIONS 9.07 8.84 +0.23 CPS or +2.6% up 0.05 – 0.10 cps ADJUSTED FUNDS FR
Slide 16: Investment Properties
Investment Annual Properties Results Briefing 2019 ▪ Portfolio value of ~$1.47 billion $1,540m ▪ Increase from annual +14.2 +0.4 independent valuations of $1,490m +45.7 $125.2 million or 9.3% 1,469.3 ▪ 25 Langley Road, Wiri, +125.2 -34.9 $1,440m purchased in December 2019 for $36.0 million2 ▪ 51-61
Slide 17: Net Tangible Assets
Net Tangible Annual Assets Results (cents per share) Briefing 2019 ▪ Net tangible assets (NTA) per 212 share increased by 27.8 cents 208 +0.8 +0.5 205.5 per share or 15.6% +1.4 204 +25.1 ▪ Change in NTA per share driven 200 by the increase in the fair value of investment properties (+25.1 196 cps),
Slide 18: Five Year Financial Summary
Five Year Annual Financial Results Summary Briefing 2019 ▪ The last five years has seen strong YEAR ENDING 31 DECEMBER ($M, UNLESS NOTED) 2015 2016 2017 2018 2019 growth in earnings and values whilst TOTAL COMPREHENSIVE INCOME AFTER TAX 72.8 123.4 51.7 110.1 176.3 keeping gearing at low levels and m
Slide 19: Capital Management
Capital Annual Management Results Briefing ‘Ve 2 Se ” CAPITAL - ay eae WAS \
Slide 20: Funding, Covenants, Interest Rates
Funding, Annual Covenants, Results Interest Briefing Rates 2019 ▪ Bank facilities refinanced in November 2019 DECEMBER 2019 DECEMBER 2018 ▪ Gearing currently 28.2%, could move up to FUNDING ~33%, allowing for divestment of remaining SYNDICATED BANK FACILITY DRAWN $215.6m $201.1m non-industrial prope
Slide 21: Debt Facility Maturity Profile, Hedging
Debt Facility Annual Maturity Results Profile, Briefing Hedging 2019 200 150 ▪ Debt facility maturity profile: average term to expiry of 4.1 100 years, $84.4 million of unutilised 150.0 150.0 bank facility capacity 50 100.0 100.0 0 FY20 FY21 FY22 FY23 FY24 FY25 Bank facilities Bonds $300m 5.0% Cover
Slide 22: Annual
Annual Results Briefing
Slide 23: Market Update: Economy
Market Annual Update: Results Economy Briefing 2019 ▪ ANZ interest rate forecasts: ✓ Monetary policy X Credit availability ✓ Housing market X Constrained business investment − Q4 2020 OCR: 1.00% ✓ Fiscal spending X Drought / floods − Q4 2020 10-year Bond Rates: 1.30% ✓ Labour market X Novel coronavi
Slide 24: Market Update: Property
Market Annual Update: Results Property Briefing 2019 ▪ CBRE December 2019 Auckland Market CBRE AUCKLAND MARKET OUTLOOK DECEMBER 2019 JUNE 2019 Outlook: − “Low interest rates combined with PRIME INDUSTRIAL RANKING 4▼ 2 property’s return profile relative to other assets… underpin further yield PRIME I
Slide 25: Our Priorities
Results Briefing 2019 Our Priorities | Annual
Slide 26: Our Priorities
Our Annual Priorities Results Briefing 2019 DISPOSALS: 2019: begin disposing PFI’s non-industrial assets ACQUISITIONS: 2019: recycle capital from disposals into quality industrial properties in sought-after areas CARLAW PARK VALUE-ADD STRATEGIES: 2019: recycle capital from disposals into value- ASSE
Slide 27: Disposals
Disposals Annual Results Briefing 2019 ▪ 2019 priority: begin disposing PFI’s non- industrial assets ▪ Progress: $40 million of divestments contracted during the year ▪ Includes the disposal of the mixed-use property at 229 Dairy Flat Highway in Albany, Auckland, for $33 million and a ~$5 million ga
Slide 28: Acquisitions
Acquisitions Annual Results Briefing 2019 (1) 51-61 SPARTAN ROAD, (2) DEVELOPMENT 1 AT TIDAL ▪ 2019 priority: replace PFI’s non-industrial TAKANINI ROAD, MANGERE properties with quality industrial properties PURCHASE PRICE $17.2m $34.2m in sought-after areas TENANT MaxiTRANS Supply Chain Solutions ▪
Slide 29: Value-add Strategies
Value-add Annual Strategies Results Briefing 2019 ▪ 2019 priority: recycle capital from disposals into value-add strategies within the existing portfolio ▪ Progress: $14.6 million spent during 2019, committed additional ~$21 million to four new significant projects ▪ 2020 focus: complete build out o
Slide 30: Review & Questions
“REVIEW & QUESTIONS
Slide 31: Review & Questions
Review & Annual Questions Results Briefing 2019 Simon Woodhams concludes: “In 2020 we will continue on our pathway to becoming a pure-play industrial listed property vehicle. In order to achieve that Highlights goal, we will remain focused on ▪ Record annual results our core asset management and val
Slide 32: Appendices
Appendices Annual Results Briefing 2019 APPENDICES
Slide 33: Appendix 1: FFO and AFFO
Appendix 1: Annual FFO and Results AFFO Briefing 2019 (Unaudited, $000, unless noted) YE December 2019 YE December 2018 Profit and total comprehensive income after income tax attributable to the shareholders of the Company 176,286 110,094 Adjusted for: Fair value gain on investment properties (125,1
Slide 34: Disclaimer
Disclaimer Annual Results Briefing 2019 The information included in this presentation is provided as at 17 February 2020 and should be read in conjunction with the NZX results announcement, NZX Form – Results Announcement, NZX Form – Distribution Notice, and Annual Report (including audited financia