Goodman New Zealand Limited & Goodman Property Services Limited Units · NZX:GNZ
Goodman New Zealand Limited & Goodman Property Services Limited Units — Goodman Property Trust — FY2015 Earnings Presentation
39 slides from Goodman New Zealand Limited & Goodman Property Services Limited Units's earnings presentation, May 20, 2015
Slide 1: Annual Result
Goodman Property Trust Annual Result building excellence+ A strong balance sheet that features high quality assets leased to the very best customers is the foundation of our business. It’s a business that is focused on building excellence.
Slide 2: Contents
contents 01 overview 02 business focus 03 financial overview 04 investment portfolio 05 development portfolio 06 outlook appendices
Slide 3: Overview
01 overview 3
Slide 4: Overview
01 overview + strong financial result + positive operating environment + focus on development led growth + asset recycling is funding development and investment activity + new fee and governance changes improve underlying cash earnings + new debt initiatives increasing funding diversity 4
Slide 5: Business focus
02 business focus 5
Slide 6: Reinforcing our strategic focus
02 reinforcing our strategic focus high + high quality investment portfolio with strategic land holdings situated in prime quality industrial and office park locations portfolio + accelerated development programme improving asset quality and growth profile of the Trust + assets actively managed to m
Slide 7: FY15 review
02 FY15 review sustainable + asset recycling enhancing the quality of the portfolio growth + asset sales of $148.8 million + accelerated development programme with $112.1 million of new projects + lower land weighting target will improve cash earnings new capital + introduction of GIC, the sovereign
Slide 8: Financial overview
03 financial overview 8
Slide 9: FY15 summary
03 FY15 summary earnings and + $170.9 million before tax profit compared to $146.8 million in pcp profit + $179.7 million after tax profit compared to $134.1 million in pcp + distributable earnings before tax of $112.3 million or 9.16 cpu + distributable earnings after tax of $97.9 million or 7.99 c
Slide 10: Financial performance
03 financial performance 2015 2014 Change $ million $ million % Net rental and related income 134.7 127.8 5.4 Net finance costs (24.4) (22.5) (8.4) Other administrative expenses (10.0) (9.6) (4.2) Gain on disposal of property investments 4.5 2.3 95.7 Movement in fair value of property investments 75
Slide 11: Financial position
03 financial position 2015 2014 Change as at $ million $ million % Total assets 2,177.6 2,118.3 2.8 Property assets 2,095.7 2,039.8 2.7 Net borrowings 694.2 734.2 (5.4) Total liabilities 800.9 852.7 (6.1) Equity 1,376.6 1,265.6 8.8 Net borrowings to property assets (%) 33.1 36.0 (8.0) Look through l
Slide 12: Investment income
03 investment income + $8.0 million of additional income from new developments has offset loss of income from asset disposals + moderate rental growth in the underlying portfolio Look through net property income bridge1 FY14 to FY15 150 8.0 1.6 141.2 140 133.8 6.4 0.4 130 6.0 134.8 (2.7) 127.8 120 1
Slide 13: Capital management
03 capital management + FY15 initiatives + asset sales totalling $148.8 million1 + introduction of a joint investment partner + refinancing of the Trust’s main bank facility + suspension of the distribution reinvestment plan + strong balance sheet + look through loan to value ratio of just 34.2%2 +
Slide 14: New debt initiatives
03 new debt initiatives post balance date + USPP offer secured US$120 million of debt funding + strong demand from US debt investors + competitive pricing with margins of 1.99%-2.20% over BKBM + tranches of US$40 million for terms of 10, 12, and 15 years + swapped into NZ$156.8 million + drawn 15 Ju
Slide 15: Capital management
03 capital management + around 40% of debt facilities will be non-bank following new debt initiatives + WATE1 of 2.8 years at 31 March 2015, expected to rise to 4.9 years at 30 June 2015 + WACD of 6.6% in FY15, 6.2% forecast for FY16 GMT expected debt profile - 30 June 2015 ($million) 250 200 45 150
Slide 16: Investment portfolio
04 investment portfolio 16
Slide 17: Portfolio leasing
04 portfolio leasing space leased - NLA1 sqm portfolio leasing FY15 170,000 NLA1 term property customer sqm years 150,000 155,875 151,712 Central Park Youi 4,623 9 144,068 130,000 136,724 Viaduct Quarter Microsoft 2,862 6 110,000 Penrose Turners 15,199 6 90,000 100,321 Yellow HQ Chevron 1,887 9 70,0
Slide 18: Portfolio occupancy
04 portfolio occupancy portfolio occupancy - portfolio income (%) leasing priority 100% NLA1 99% property tenancy sqm 98% 97% M20 Business Park warehouse 11,009 96% 97% 97% Millennium office 7,291 95% 96% 96% 96% 94% Central Park office 3,168 93% Glassworks warehouse 2,225 92% 91% various warehouse/
Slide 19: Portfolio expiries
04 portfolio expiries lease expiry profile - portfolio income (%) key expiries in FY16 16% NLA1 property expiry 14% 15.0% sqm 12% Central Park 1,300 Apr-15 12.4% 12.4% 10% 11.4% Savill Link Industrial Estate 6,500 May-15 8% 9.1% 9.5% 7.8% 8.0% M20 Business Park 5,400 Jul-15 6% 6.2% 4% Connect Busine
Slide 20: Valuation result
04 valuation result + buoyant investment market + valuation gain of $75.3m ($23.8m in FY14) + investment portfolio1 recorded a gain of $83.7m or 4.8% + $20.5m attributable to new developments, reflecting a 12.6% gain + weighted average cap rate firmed 40bps to 7.5% + market rentals increased 3% + gr
Slide 21: Asset sales programme
04 asset sales programme + $148.8 million of disposals in FY15 + consistent with range identified at the beginning of the year + funding heightened level of development activity + contributed $4.5 million to the Trust’s profit + targeting $100 to $150 million of asset sales in FY16 FY15 disposals pr
Slide 22: Viaduct joint venture update
05 Viaduct joint venture update + strategy to invest in the rapidly growing Viaduct Quarter + two key acquisitions will enhance the quality of the portfolio Fonterra Datacom Price Yield Completion Price Yield Completion $93.2m 8.00% Feb 2016 $86.2m 8.50% Apr 2017 22
Slide 23: Development portfolio
1) i , Fi ~ | nnn ll im A i i ll a | ou... $ pe | | ee SR ee f 4a yi : Tat y ie a ) 4 , — : <se y. BL gS a = = 2 Ap A) lh ae Ait, = a Sy oe . Se ——
Slide 24: Development programme
05 development programme + completed 13 projects in FY15 totalling $163 million, yielding 8.0% + new development projects totalling $112.1 million + over 50,000sqm of net lettable area + yield on cost of around 7.75% + expected to provide development margin of 10-15% development activity ($ millions
Slide 25: Completed projects
05 completed projects Metro Performance Glass One Central Park value NLA completion value NLA completion $31.0m 16,723 sqm Dec 2014 $26.4m 5,802 sqm Feb 2015 25
Slide 26: Completed projects
05 completed projects Ford, Highbrook Steel and Tube, Highbrook value value $17.7m $14.6m NLA NLA 10,150 sqm 7,770 sqm completion completion Mar 2015 Mar 2015 Steel and Tube, Savill Link Halswell Junction Units value value $20.0m $10.9m NLA NLA 10,510 sqm 5,372 sqm completion completion Nov 2014 Nov
Slide 27: Current projects
05 current projects Southern Car Park, Central Park 31 & 33 Business Parade North cost cost $19.6m $18.3m car parks NLA 600 spaces 3,400 & 6,950 sqm completion completion Feb 2016 Nov 2015 Office Building 5, Highbrook Machineryhouse, Highbrook cost cost $13.7m $7.8m NLA NLA 3,140 sqm 4,600 sqm compl
Slide 28: Development at Highbrook
05 development at Highbrook + 9 active developments encompassing 62,000sqm of net lettable area + utilises 10.5ha of development land + total project cost of $107 million, yielding around 8.0% 28
Slide 29: Outlook
06 outlook 29
Slide 30: Building excellence
06 building excellence operating + positive economic outlook with low interest rates facilitating business growth outlook + property markets reflecting increased occupier demand with high occupancy levels and greater rental growth + investor demand will continue to support asset recycling programme
Slide 31: Thank you
thank you 31
Slide 32: Appendices
appendices 32
Slide 33: Financial performance
appendix financial performance+ 2015 2014 2013 2012 2011 $ million Restated1 Profit Net rental income 134.7 127.8 102.2 111.3 108.7 Administrative expenses (10.0) (9.6) (11.9) (8.5) (7.6) Share of profit arising from joint ventures 6.1 5.9 5.6 - - Gain resulting from business combination - - 5.5 - 0
Slide 34: Financial position
appendix financial position+ 2015 2014 2013 2012 2011 $ million Restated1 Balance sheet Property assets 2,095.7 2,039.80 1,931.30 1,629.50 1,576.10 Total assets 2,177.6 2,118.3 2,019.2 1,674.3 1,618.0 Net borrowings 694.2 734.2 672.3 581.2 578.4 Total liabilities 800.9 852.7 833.3 739.2 725.9 Equity
Slide 35: Investment portfolio
appendix investment portfolio+ GMT NLA1 Valuation2 Market Occupancy WALT 3 ownership cap rate Property % sqm $M % % years Key Customers PaperLinX, Panasonic, DHL, Big Chill, Highbrook Business Park, East Tamaki 100 316,686 671.2 6.4 – 7.8 100 6.4 BMW, NZ Post M20 Business Park, Manukau 100 93,585 14
Slide 36: FY15 developments
appendix FY15 developments+ Net Total Lettable Completion Development Projects FY15 Estate Location Project Area Date Cost ($m) (sqm) Warehouse Development for Steel and Tube Holdings Limited Savill Link Otahuhu 10,510 17.8 Nov-14 East Warehouse Development for Steel and Tube Holdings Limited Highbr
Slide 37: Property metrics
appendix property metrics+ as at March 15 March 14 March 13 March 12 March 11 1 NLA (sqm) 983,182 1,034,996 1,000,418 987,569 928,420 Weighted average capitalisation rate (%) 7.5 7.9 8.1 8.5 8.6 Portfolio occupancy (%) 96 97 96 96 97 2 WALT (years) 5.1 5.5 5.3 5.4 5.6 Customers 251 254 256 246 225 t
Slide 38: Property investments
appendix property investments+ Look through portfolio value ($ million) FY14 to FY15 2,400 2,300 28.7 125.6 75.3 2,209.4 2,200 113.7 2,117.9 35.6 2,100 78.1 (173.6) (0.4) 2,095.6 2,000 2,039.8 1,900 1,800 1,700 1,600 1,500 31 March 2014 capital capitalised disposals amortised joint ventures revaluat
Slide 39: Viaduct joint venture
appendix Viaduct joint venture+ property NLA (sqm) value1 ($m) GMT share ($m) Air New Zealand House 15,588 64.7 33.0 Vodafone 14,332 72.0 36.7 Microsoft & HP 8,704 46.2 23.6 KPMG 8,255 40.0 20.4 total existing portfolio 46,879 222.9 113.7 Fonterra acquisition 16,000 93.2 47.5 Datacom acquisition 16,
Goodman Property Trust — FY2015 Earnings Presentation on 6ix