Property For Industry Limited · NZX:PFI
Property For Industry — H1 2017 Earnings Presentation
30 slides from Property For Industry's earnings presentation, Aug 9, 2017
Slide 1: Our Industrial Property Experts
‘OUR INDUSTRIAL ROPERTY EXPERTS,
Slide 2: Agenda
AGENDA 01. HIGHLIGHTS 02. PORTFOLIO== 03. MARKET & STRATEGY¥==== 04. 2017 INTERIM RESULTS 05. CAPITAL MANAGEMENT ~ O06. REVIEW.& QUESTIONS-—— 07. APPENDICES
Slide 3: 01. Highlights
Slide 4: Highlights
HIGHLIGHTS ▪ Internalisation of management on 30 June 2017 ▪ Increased guidance: distributable profit of between 7.70 and 7.90 cents per share, cash dividend of 7.45 cents per share ▪ Transition of the Penrose portfolio: approximately $13 million of shareholder value created equating to a property l
Slide 5: Portfolio
02 PORTFOLIO™
Slide 6: Portfolio Snapshot
PORTFOLIO SNAPSHOT ▪ PFI’s portfolio is diversified across 83 properties and 144 tenants, with 99.5% occupancy and a weighted average lease term of 4.78 years, weighted towards Auckland industrial property 30 June 2017 31 December 2016 30 June 2016 Book value $1,096.0m $1,083.3m $1,010.1m Number of
Slide 7: Portfolio Performance
PORTFOLIO PERFORMANCE ▪ Valuations: ▪ Full valuations for seven properties that were the subject of significant leasing resulted in $6.0 million or 9.8% uplift on those properties, independent desktop review of remainder of portfolio ▪ Leasing: ▪ 11 leases agreed over ~33,000 sqm of space for an ave
Slide 8: Lease Events
LEASE EVENTS ▪ Near term leasing outlook remains positive ▪ ~42% of PFI’s portfolio subject to some form of lease ▪ At 30 June 2017 just 5.5% of contract rent is due to event during H2 2017 expire during H2 2017 ▪ Balanced spread of lease events, ~13% of H2 2017 events market related ▪ Since 30 June
Slide 9: Penrose Portfolio
PENROSE PORTFOLIO ▪ Portfolio of five Penrose properties purchased in August 2015 ▪ 93% of the properties have been transitioned ▪ ~$13 million of shareholder value has been created ▪ Property level internal rate of return of around 24% PROPERTY FOR INDUSTRY 2017 INTERIM RESULTS BRIEFING 9
Slide 10: Market & Strategy
“MARKET. & STRATEGY
Slide 11: Market Update
MARKET UPDATE ▪ The New Zealand economy appears to be in good shape: ▪ ANZ: current economic cycle mature, but annual GDP growth ~3% over 2017 expected, well above developed world average ▪ Economic growth translating into high levels of occupier demand for industrial property: ▪ CBRE: Auckland indu
Slide 12: Strategy
STRATEGY ▪ PFI has always invested in quality industrial property in prime locations, believing that this investment focus has the potential to deliver attractive returns with a low level of volatility ▪ Retention of existing team as part of internalisation ensures continuity of PFI’s successful str
Slide 13: Divestments
DIVESTMENTS ▪ ~$47 million of divestments over the last three years, including: ▪ 65 Hugo Johnston Drive, Penrose sold during H1 2017 to an owner occupier for $14.3 million, $1.9 million gain on sale represented a 17.8% premium above the December 2016 book value ▪ Approximately 5% of the portfolio s
Slide 14: Acquisitions & Developments
ACQUISTIONS & DEVELOPMENTS ▪ ~$77 million of acquisitions over the last three years, including: ▪ Acquisition of 11 Turin Place, East Tamaki for $14.2 million in February 2017, 6.5% yield, 15 years, fixed rent reviews, 4.55% every two years ▪ ~$34 million of developments over the last three years, r
Slide 15: 04. 2017 Interim Results
Slide 16: Operating Revenue
OPERATING REVENUE ▪ Operating revenues of $35.7 million up $0.5 million or 1.4% ▪ Increases due to completed developments ($0.7 million), positive leasing activity ($0.8 million) and acquisitions ($0.4 million) ▪ Decreases due to increased vacancy ($0.8 million) and disposals ($0.4 million) and othe
Slide 17: Comprehensive Income
COMPREHENSIVE INCOME For the six months ended (unaudited, $000) Jun 17 Jun 16 Change ▪ Operating revenues up $0.5 Total operating revenue 35,714 35,228 486 million or 1.4%, refer slide Non-recoverable property costs (1,461) (894) (567) 16: operating revenue Interest expense and bank fees (8,388) (8,
Slide 18: Distributable Profit (Cents per Share, CPS)
DISTRIBUTABLE PROFIT (CENTS PER SHARE, CPS) ▪ Distributable profit per share up 0.09 cps or 2.4% ▪ H1 2017 dividends of 3.50 cps, in line with H1 2016 ▪ Increased earnings guidance: full year distributable profit increased from 7.50 to 7.70 cps to 7.70 to 7.90 cps. 1. Distributable profit is non-GAA
Slide 19: Funds / Adjusted Funds From Operations
FUNDS / ADJUSTED FUNDS FROM OPERATIONS (Unaudited, $000, unless noted) 6ME Jun 2017 12ME Dec 2016 ▪ Funds From Operations (Loss) / profit and total comprehensive income after income tax attributable to the shareholders of the Company (5,637) 123,412 (FFO) earnings of 4.08 cps Adjusted for: and Adjus
Slide 20: Investment Properties
INVESTMENT PROPERTIES ▪ Portfolio value of ~ $1.1 billion ▪ Acquisition of 11 Turin Place offset by divestment of 65 Hugo Johnston (refer slides 13 and 14 for details) ▪ Fair value gain of $6.0 million or 9.8% (refer slide 7 for details) PROPERTY FOR INDUSTRY 2017 INTERIM RESULTS BRIEFING 20
Slide 21: Net Tangible Assets (Cents per Share, CPS)
NET TANGIBLE ASSETS (CENTS PER SHARE, CPS) ▪ Net tangible assets (NTA) per down 5.1 cps or 3.2% to 155.6 cps ▪ Increase in NTA due to increase in the fair value of investment properties (1.3 cps) and a gain on the disposal of PFI’s property at 65 Hugo Johnston Drive (0.4 cents per share cps) ▪ Decre
Slide 22: 05. Capital Management
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Slide 23: Capital Management
CAPITAL MANAGEMENT ▪ $40m short term facility obtained for internalisation ▪ Considering options incl. senior secured bond issue to extend and diversify borrowings Jun 2017 Dec 2016 Facilities Drawn (excluding overdraft) $373.6m $333.7m Facilities limit $415.0m $375.0m Facilities headroom $41.4m $41
Slide 24: Interest Rate Hedging
INTEREST RATE HEDGING ▪ Weighted average cost of debt reduced to 4.78% at the end of the interim period ▪ Fair value of PFI’s interest rate hedging largely unchanged from year-end ($10.5m liability) PROPERTY FOR INDUSTRY 2017 INTERIM RESULTS BRIEFING 24
Slide 25: 06. Review & Questions
Slide 26: Review & Questions
REVIEW & QUESTIONS ▪ PFI’s strategy is to invest in quality industrial property in New Zealand’s main urban centres and the Company aims to deliver strong, stable shareholder returns ▪ Highlights of the first half of 2017: ▪ Internalisation of management on 30 June 2017 ▪ Increased guidance: distrib
Slide 27: Appendices
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Slide 28: Appendix 1: EPS & NTA Excl. Internalisation
APPENDIX 1: EPS & NTA EXCL. INTERNALISATION Earnings per share For the six For the six (unaudited, $000) months ended months ended 30 June 2017 30 June 2016 Total comprehensive income attributable to the shareholders of the Company (5,637) 22,491 Adjusted for internalisation: Termination of manageme
Slide 29: Appendix 2: Financial Position
APPENDIX 2: FINANCIAL POSITION Unaudited Audited As at ($000, unless noted) Change Jun 2017 Dec 2016 Investment properties 1,095,989 1,083,300 12,689 Goodwill 29,086 29,086 - Other assets 9,450 9,413 37 Total assets 1,134,525 1,121,799 12,726 Borrowings 372,913 332,924 (39,989) Deferred tax liabilit
Slide 30: Disclaimer
DISCLAIMER The information included in this presentation is provided as at 9 August 2017. Property for Industry Limited (PFI) does not guarantee the repayment of capital or the performance referred to in this presentation. Past performance is not a reliable indicator of future performance. The prese
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