Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — FY2017 Earnings Presentation
50 slides from Growthpoint Properties Australia's earnings presentation, Aug 21, 2017
Slide 1: Consistent business model and strategy
Consistent business model and strategy Annual Results Presentation For the year ended 30 June 2017 21 August 2017 Growthpoint Properties Australia Growthpoint Properties Australia Trust ARSN 120 121 002 Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL 316409 www.growthpoint.com.au
Slide 2: Agenda
Agenda Executive Management Team – FY17 Highlights – Property Portfolio – Financial Management – Strategy, Performance and Sustainability Timothy Collyer Michael Green Managing Director Head of Property – Outlook and Guidance – Q&A Dion Andrews Aaron Hockly Chief Financial Officer Chief Operating Of
Slide 3: FY17 Highlights
2017 Annual Results Presentation FY17 Highlights 255 London Circuit, Canberra, ACT
Slide 4: Disciplined growth continues in FY17
Disciplined growth continues in FY171 10.3% Increased NSW Increased office 4.9% exposure to exposure to increase in net tangible assets increase in 26% 66% distributions from 20% from 56% (NTA) Returns Property Capital Management Sustainability Increased Increased improved Gearing average debt avera
Slide 5: Consistent business model delivering for Securityholders
Consistent business model delivering for Securityholders Funds From Operations (FFO) (¢) Distributions (¢) Total Securityholder return comparison per stapled security FY13-FY17 per stapled security over 1, 3 and 5 years (%, p.a.)2 CAGR1 7.1% FY13-FY17 25.5 CAGR1 4.1% 15.9 16.4 22.9 21.8 21.5 14.2 20
Slide 6: Economic outlook and property outlook
Economic outlook Property outlook Office Industrial Retail –– Stable domestic economy –– Declining vacancy, growing population, –– Largely stable across all States –– Significant structural –– Near term cash rate outlook significant infrastructure spending and headwinds remain, –– Tenancy demand bet
Slide 7: Property Portfolio
2017 Annual Results Presentation Property Portfolio 75 Dorcas Street, South Melbourne, VIC
Slide 8: Significant portfolio reweighting undertaken in FY17
Significant portfolio reweighting undertaken in FY17 Buy/develop – $469.9 million1 assets purchased Sell – $259.1 million strategic asset sales Property Reason for purchase Property Purchaser type 109 Burwood Road, 28 Bilston Drive, Hawthorn, VIC Wodonga, VIC 15 Green Square Close, 101-103 William A
Slide 9: 94,921 sqm of office and industrial leasing completed in FY17
94,921 sqm of office and industrial leasing completed in FY17 • 9.0% of Total Portfolio Lettable Area1 • 9.8% of Total Portfolio Rent2 NLA (sqm) NLA (sqm) NLA (sqm) 23,156 26,517 4,358 New national head offices for Lease to The Workwear Group, a wholly New lease to existing tenant David Jones and Co
Slide 10: 89% of property concentrated on Australia's Eastern Seaboard
89% of property concentrated on Geographic diversity by property value as at 30 June 2017 Australia’s Eastern Seaboard1 VIC 29% 89% QLD 28% located on NSW 26% Australia’s SA 6% Eastern Seaboard ACT 5% Office properties WA 5% Industrial properties Brisbane, QLD TAS 1% Sector diversity $935.0m by prop
Slide 11: Key Portfolio Metrics
Key Portfolio Metrics Top ten tenants Annual rent review type (%) Net property income per State Portfolio lease expiry profile (%) by passing rent as at 30 June 2017 as at 30 June 2017 / Territory for FY17 ($m) per financial year, by income 47 % WALE (yrs) Woolworths 17 5.3 NSW Police 8 6.9 71.9 Com
Slide 12: New generation office development proposed for Richmond, Victoria
New generation office development proposed for Richmond, Victoria The new Richmond office development will offer the Melbourne metro office market a new benchmark in quality and amenity. Located in a prominent and commanding position at the front of the Botanicca Corporate Park, this new generation
Slide 13: Property portfolio: Summary
Property portfolio: Summary nnSignificant portfolio re-weighting undertaken in FY17: –– Increased exposure to NSW (20% to 26%) and office sector (56% to 66%) –– De-risked portfolio via $259.1 million strategic asset sales nnMaintained high levels of occupancy with low lease expiries in FY18 and FY19
Slide 14: Financial Management
2017 Annual Results Presentation Financial Management 15 Green Square Close, Fortitude Valley, QLD
Slide 15: Strategic execution
Strategic execution Growthpoint Maintain gearing Extend average $245.7 million continued to within 35%-45% range debt maturity new equity in FY17 strengthen its capital position over the 45% 5.5 2H16 DRP course of FY17, 43.1% 5.0 5.0 yrs ($42.2m) whilst supporting the Group’s transaction 39.0% 4.5 4
Slide 16: FY17 year in review
FY17 year in review Funds From Distributable Distributions Payout ratio Operation income 21.5cps to FFO 25.5cps 24.0cps +4.9% on FY16 84.3% +11.4% on FY16 +9.6% on FY16 Capex to average Opex to average Average property portfolio value gross assets cost of debt 0.31% 0.39% 4.3% Expected range Expect
Slide 17: FY16-FY18 growth
FY16-FY18 growth • FFO increasing overtime; FY18 impacted by reduction in NPI primarily due to the timing of the sale of high yielding industrial assets in FY17 and the temporary use of higher gearing at cheaper cost of debt in FY17 • Distributions and payout ratio on target Funds From Operations (¢
Slide 18: Items influencing balance sheet gearing over FY17
Items influencing balance sheet gearing over FY17 50% 49% 48% 47% 46% 45% 44% 43.10% 43% +3.47% -3.53% 42% -0.35% 41.96% 41% -0.73% -0.31% 40% 39% -1.83% 39.04% 39.07% 38% -0.78% -0.07% +0.88% 37% 36% -2.04% +1.26% 35% 30 Jun 16 GMF Sell industrial Revaluations Underwritten 31 Dec 16 Sell Revaluatio
Slide 19: Sources of debt funding further diversified following USPP
Sources of debt funding further diversified following USPP; ICR and LVR well positioned Summary of debt facilities Weighted average Balance sheet All-in cost Secured Limit Drawn debt term of gearing of of debt of 5.0yrs 39.0% 4.3% bank loans ($’000) ($’000) Maturity Syndicated Facility - Facility B
Slide 20: Movements in net tangible assets
Movements in net tangible assets Movements in NTA ($) per stapled security 2.90 $2.88 2.85 2.80 2.75 +0.4¢ +8.9¢ 10.3% 2.70 increase 2.65 $2.61 2.60 +17.7¢ 2.55 2.50 30 June 16 Property revaluations Swap revaluations Equity raising & retained 30 June 17 and loss on property sale earnings Growthpoint
Slide 21: Financial Management: Summary
Financial Management: Summary nnContinued growth in Funds From Operations and distributions nnGearing reduced by 410 basis points over FY17 nnDebt maturity profile extended Building C, 219-247 Pacific Highway, Artarmon, NSW nnSources of debt funding further diversified; fixed debt percentage >75% Gr
Slide 22: Strategy, Performance and Sustainability
2017 Annual Results Presentation Strategy, Performance and Sustainability 3 Murray Rose Avenue, Sydney Olympic Park, NSW
Slide 23: 100% real property investment
100% real property investment An investment in Growthpoint is a 100% real property investment underpinned by four core principles: 1. 100% investment 2. Limited development risk 3. 100% of income 4. Internalised management in Australia from property All of the Group’s properties are The Group does n
Slide 24: Our transparent business model
Our transparent business model Income Asset from leases Management Acquire real estate Pay costs Raise Distributions FOR SALE Capital Maintain and Lease vacant space improve assets. Sell Acquire well and collect rent from assets that no longer Pay management built, well located tenants meet investme
Slide 25: Listed M&A experience
Listed M&A experience Since 2009, Growthpoint has completed two takeovers of other listed trusts adding $624.3 million in real property to the portfolio. Growthpoint continues to evaluate a number of M&A opportunities. Rabinov Property Trust GPT Metro Office Fund Completed August 2011 with over Comp
Slide 26: Sustainability
Sustainability In FY17, Growthpoint continued to develop its sustainability framework. Highlights are included on this slide and NABERS average energy rating Gender diversity of employees Investor communications improved 4.5 43% further information can be Winner – Private Sector found in Growthpoint
Slide 27: Outlook & Guidance
2017 Annual Results Presentation Outlook & Guidance Building B, 211 Wellington Road, Mulgrave, VIC
Slide 28: Strategy and FY18 objectives
Strategy and FY18 objectives Primary objective: Increase distributions for Securityholders Other objectives: –– Achieve FFO and distribution guidance: Disciplined Financial Growth Returns –– FFO: at least 23.6 cps –– Distributions: 22.0 cps –– Continue to evaluate investment opportunities, focus on
Slide 29: Appendices
2017 Annual Results Presentation Appendices Building 2, 572-576 Swan Street Richmond, VIC
Slide 30: Appendix 1: state of key office markets
Appendix 1: 4% of 15% of Growthpoint Growthpoint Portfolio Brisbane - CBD Brisbane - Fringe Portfolio state of key office markets Vacancy 15.5% Prime Secondary Vacancy 17.7% Prime Secondary R $700 gross $550 gross R $534 gross $425 gross R Average face rent per sqm per annum I 37% 38% I 37% 38% I In
Slide 31: Appendix 2: state of key industrial markets
Appendix 2: state of key industrial markets R Average face rent per sqm per annum I Indicative incentives Y Average core market yield 7% of Brisbane Growthpoint Rents Rents Portfolio decreasing increasing 565,905 sqm* / incentives / incentives decreasing Prime Secondary increasing Stable R $111 net
Slide 32: Appendix 3: Summary Financials
Appendix 3: Summary Financials Restated FY17 FY16 Change % Change Net property income $’000 223,318 181,169 42,149 23.3 Like-for-like property income $’000 157,539 155,634 1,905 1.2 Funds From Operations (FFO) $’000 166,098 132,114 33,984 25.7 Distributable income per security ¢ 24.0 21.9 2.1 9.6 Di
Slide 33: Appendix 4: Reconciliation from statutory profit to Funds From Operations
Appendix 4: Reconciliation from statutory profit to Funds From Operations Restated FY17 FY16 Change Change $’000 $’000 $’000 % Profit after tax 278,090 219,377 58,713 26.8 Less non-distributable items: – Straight line adjustment to property revenue (2,522) (7,426) 4,904 – Net changes in fair value o
Slide 34: Appendix 5: Financial position
Appendix 5: Financial position as at 30 June 2017 as at 30 June 2016 $’000 $’000 Assets Cash and cash equivalents 31,459 70,661 Investment properties 3,180,2751 2,651,145 Other assets 116,638 157,799 Total assets 3,328,372 2,879,605 Liabilities Borrowings 1,299,380 1,242,226 Distributions payable 72
Slide 35: Appendix 6: Lease incentives
Appendix 6: Lease incentives Lease incentives for leasing completed in FY17 averaged 24% (25% office and 18% industrial). This includes fit-out, rent free, rental abatement and cash payments. Average lease incentives Financial impact of incentives and leasing costs¹ 35% 30% 29% The impact of tenant
Slide 36: Appendix 7: Operating and capital expenses
Appendix 7: Operating and capital expenses Operating expenses FY17 FY16 FY15 Total operating expenses $’000 12,385 10,407 9,123 Average gross asset value $’000 3,204,716 2,588,089 2,211,504 Expected to remain around Operating expenses to average gross assets % 0.39 0.40 0.41 0.4% based on current po
Slide 37: Appendix 8: Fixed and hedged debt
Appendix 8: Target fixed/hedged debt 65% to 100% Weighted average fixed debt Weighted average fixed debt (term) Time Fixed Face value 6.4yrs Maturity date to maturity rate of Swap Interest Rate Swaps (IRS) Jun-2020 3.0yrs 2.36% $25m (FY16: 5.7 years) Jun-2020 3.0yrs 2.20% $75m Jun-2020 3.0yrs 2.36%
Slide 38: Appendix 9: Portfolio overview – Five year performance summary
Appendix 9: Portfolio overview – Five year performance summary As at 30 June 2017 2016 2015 2014 2013 Number of properties no. 58 58 53 51 44 Total value $m 3283.8 2,832.60 2,372.50 2,093.70 1,694.50 Occupancy % 99 99 97 98 98 Like-for-like value change $m / % of asset value 138.6 / 5.2 130.2 / 5.5
Slide 39: Appendix 10: Leasing
Appendix 10: Leasing Leases completed in FY17 Term Annual rent NLA Car At 30 June 2017 Address Sector Tenant Start date (yrs) increases (%) (sqm) Parks 333 Ann Street Brisbane QLD Office St Hilliers Property Q2, FY17 5.0 Fixed 3.75% 503 - 15 Green Square Close Fortitude Valley QLD Office Duy Khuong
Slide 40: Appendix 10: Leasing (cont.)
Appendix 10: Leasing (cont.) Term Annual rent NLA Car Address Sector Tenant Start date (yrs) increases (%) (sqm) Parks Greater of CPI 81 Derby Street Silverwater NSW Industrial IVE Group Australia Q1, FY18 5.0 & 3.00% 7,984 83 33-39 Richmond Road Keswick SA Office Funk Leasing Q1, FY18 5.0 Fixed 3.5
Slide 41: Appendix 11: Top five office properties/property groups by value
Appendix 11: Top five office properties/property groups by value 56% of office portfolio $1,222.2m total value of top five properties / property groups 6.8yrs SW1 Complex, 1 Charles St, Sydney Olympic Park, 75 Dorcas St, Bldgs 1, 2, & 3, 572-576 weighted average South Brisbane, QLD Parramatta, NSW N
Slide 42: Appendix 12: Top five industrial properties/property groups by value
Appendix 12: Top five industrial properties/property groups by value 83% of industrial portfolio $913.1m total value of top five properties / property groups 5.4yrs Woolworths Linfox properties, Melbourne Airport Knoxfield Industrial 9-11 Drake Boulevard, weighted average Distribution Centres Erskin
Slide 43: Appendix 13: Sydney Olympic Park, NSW
Appendix 13: Sydney Olympic Park, NSW Sydney Olympic Park Growthpoint’s Sydney Olympic highlights Park assets, key statistics (as at 30 June 2017) • Located 16 kilometres west of Sydney’s CBD, Sydney Olympic Park was —— $252.3 million total property value redeveloped for the 2000 Sydney —— 6.3% aver
Slide 44: Appendix 14: Equity capital overview
Appendix 14: Equity capital overview Location of Growthpoint Securityholders* (%) Growthpoint Securityholders* (%) Market capitalisation and free float ($m) as at 30 June 2017 as at 30 June 2017 as at 30 June South Africa 72% GRT 65.1% Market Capitalisation 2,076.6 Australia 15% Institutional 26.2%
Slide 45: Appendix 15: Growthpoint Properties Limited - South Africa (GRT)
Appendix 15: Growthpoint Properties Limited - South Africa (GRT) Growthpoint Properties Limited of South Africa (“GRT”) owns 65.1% of the Key Facts (as at 31 December 2016)1 securities of Growthpoint (at 30 June 2017) and is its major Securityholder. Listing Other information about • Good corporate
Slide 46: Appendix 16: Board of Directors
Appendix 16: Board of Directors 1 Geoffrey Tomlinson (69) 4 Estienne de Klerk (48) 7 Norbert Sasse (52) Independent Chairman (since 1 July Director2 (since 5 August 2009) Director3 (since 5 August 2009) 2014) and Director (since 1 September BCom (Industrial Psych), BCom (Hons) BCom (Hons) (Acc), CA
Slide 47: Appendix 17: 2017 Securityholder calendar
Appendix 17: 2017 Securityholder calendar* 21 August • Results for the year ended 30 June 2017 announced to ASX 31 August • Distribution paid for the half year ended 30 June 2017 • Annual Tax Statement for year ended 30 June 2017 mailed • FY17 Annual Report sent to Securityholders 22 November • Annu
Slide 48: Glossary
Glossary A-REIT Australian Real Estate Investment Trust fund-through a mechanism under which an entity (in this report sqm square metres typically Growthpoint) funds development as completion of ASX Australian Securities Exchange works occur Trust Growthpoint Properties Australia Trust b billion Gea
Slide 49: Important information
Important information Disclaimer pro forma historical financial information included in this Presentation Forward-looking statements including projections, indications or This presentation and its appendices (“Presentation”) is dated 21 August does not purport to be in compliance with Article 11 of
Slide 50: Thank you
Contact details: Retail Investors: Computershare Investor Services Pty Limited, GPO Box 2975, Melbourne VIC 3001 Australia Phone (within Australia): 1300 850 505 Phone (outside Australia): +61(0)3 9415 4000 Fax: +61(0)3 9473 2500 Email: webqueries@computershare.com.au Institutional Investors: Aaron
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