Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — FY2020 Earnings Presentation
49 slides from Growthpoint Properties Australia's earnings presentation, Aug 20, 2020
Slide 1: FY20 results
Growthpoint Properties Australia Growthpoint Properties Australia Trust ARSN 120 121 002 Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL316409 growthpoint.com.au FY20 results. 20 August 2020 Space to thrive.
Slide 2: Agenda
Executive management team Agenda. 1. Overview Timothy Collyer Michael Green 2. Property portfolio update Managing Director Chief Investment Officer 3. Financial results 4. Outlook 5. Supplementary information Dion Andrews Jacquee Jovanovski Chief Financial Officer Chief Operating Officer
Slide 3: Overview
1 Charles Street, Parramatta, NSW Overview. Timothy Collyer Managing Director
Slide 4: FY20 highlights
Botanicca 3, 570 Swan Street, Richmond, VIC FY20 highlights. Profit after tax FFO Distribution ‒ Delivered FFO growth, ahead of guidance set at beginning of year1 $272.1m 25.6cps 21.8cps ‒ Achieved valuation uplift, driven by leasing success in first half FY19: $375.3m, -27.5% FY19: 25.1cps, +2.0% F
Slide 5: Resilient portfolio able to withstand challenging period
Resilient portfolio able to withstand challenging period. Exposure to only industrial Portfolio of modern, Portfolio tenants weighted to and office properties high-quality assets large companies and government Sector diversity Office property type Tenant type by value, as at 30 June 2020 by value, a
Slide 6: Our response to COVID-19
11 March 18 March 26 March 7 April WHO declares GOZ transitions GOZ withdraws Commercial code of Our response Pandemic all employees to WFH guidance conduct announced to COVID-19. March April May June Government-mandated lock-down State by state easing of restrictions2 FY20 rent abatement Ongoing: G
Slide 7: Consistent outperformance of the S&P/ASX A-REIT index
Consistent outperformance of the S&P/ASX 200 A-REIT index Total Securityholder return1 Return on equity to 30 June 2020 to 30 June 2020 13.9% 15.5% 15.7% 9.2% 6.8% 6.8% 13.8% 4.4% 1 year 2.0% 10.8% 3 years 5 years 10 years Growthpoint S&P/ASX 200 A-REIT accumulation index -17.7% 1 year 3 years 5 yea
Slide 8: Property portfolio
100 Skyring Terrace, Newstead, QLD Property portfolio. Michael Green Chief Investment Officer
Slide 9: Office market update
Office market update While the way people work A recent survey of 40,000 individuals’ may change, offices will experience working from home found1 remain prominent only 50% Challenges of working from home: of respondents agree/strongly agree they feel personally connected Employees: Managers: to the
Slide 10: Metro markets well placed to benefit from new ways of working
Office metro market update 89% of Growthpoint’s office Metro markets well placed properties located in fringe or metropolitan markets to benefit from new ways of working ‘Hub and spoke’ model expected to become Significant cost savings from moving increasingly popular in Australia1 from CBD to metro
Slide 11: Demand continuing to grow for well-located industrial assets
Industrial market update 93% of Growthpoint’s Demand continuing to grow for well-located industrial assets are industrial assets driven by growth in ecommerce used for logistics or warehousing Australian online sales have dramatically Growthpoint’s industrial tenants are heavily increased during COV
Slide 12: Property portfolio highlights
Property portfolio highlights Defensive characteristics of portfolio highlighted in challenging period ‒ Property portfolio value increased by 5.0% Portfolio Weighted average ‒ WALE extended by 1.2 years occupancy rent review Sector diversity as at 30 June 2020 93% 1 3.3% 30 June 2019: 98% 30 June 2
Slide 13: Leasing update
Leasing update Leases completed Leases completed Tenant – total volume – % portfolio income retention Significant WALE extension driven by 150,602sqm 19% 85% FY19: 116,901sqm FY19: 6% FY19: 66% leasing success WALE +1.2 yrs ‒ 51 new leases/renewals signed, 5.0 yrs 6.2 yrs representing 19% of portfol
Slide 14: Delivered $203 million development
Botanicca 3, Woolworths’ Development Richmond, VIC distribution centre, Gepps Cross, SA Delivered $142.5m Book value $54m $203 million Expansion 19,447sqm development Lettable area 15yr Lease extension projects 419 Car spaces 36.4% Increase in lettable area Expected to achieve 5.0 star NABERS $47.8m
Slide 15: Sustainability
Sustainability Reducing our Prioritising our Focusing on our people, Our ongoing environmental tenants wellbeing culture and governance impact ‒ Implemented response ‒ Introduced new Working From commitment ‒ Completed two to FY19 tenant engagement survey Home policy substantial solar ‒ Increased pa
Slide 16: Financial results
13 Business Street, Yatala, QLD Financial results. Dion Andrews Chief Financial Officer
Slide 17: FFO above original guidance, in a challenging year
Financial summary Increase driven by contribution from FFO above original guidance, in a recently-acquired assets, surrender fees and annual rent increases challenging year1 Significant saving due to reduced cost FY20 P&L analysis of debt and capitalised interest on developments Components of FFO FY
Slide 18: Earnings not materially impacted to date by the COVID-19 pandemic
Accounting Financial summary implications of COVID-19 Earnings not materially impacted to date ‒ FFO decreased by $0.8 million due to COVID-19 by the COVID-19 pandemic rental abatements Key FFO drivers in FY20 ‒ FFO includes $2.0 cents per security million of rent deferred. 0.4 25.6 25.1 0.5 Rent de
Slide 19: Increase in net tangible assets driven by leasing success in first half
Financial summary Increase in net tangible assets driven by leasing success in first half Decrease in valuation of Higher level of cash office portfolio partially retained in business due NTA per security movement offset by increase in to uncertainty caused by for the year ending 30 June 2020 indust
Slide 20: Maintained robust balance sheet, with gearing well below target range
Capital management Target range reflects: Maintained robust balance sheet, ‒ Nature of Group’s earnings - 100% derived from rental income with gearing well below target range ‒ Portfolio’s long WALE ‒ High-proportion of fixed debt Gearing movement for the 12 months ended 30 June 2020 Gearing target
Slide 21: Substantial liquidity with continued access to finance on favourable terms
Capital management Secured LVR <60% ICR >1.6x property percentage GOZ: 33.5% Substantial liquidity Stress testing To breach this GOZ: 4.6x To breach this >85% covenants GOZ: 98% covenant, GOZ cap covenant, NPI with continued rate would need to would need to fall Percentage must remain above 85% rise
Slide 22: Outlook
Building B, 211 Wellington Road, Mulgrave, VIC Outlook. Timothy Collyer Managing Director
Slide 23: Continued uncertainty around impact of COVID-19 in FY21
Outlook Continued uncertainty around impact of COVID-19 in FY21 Key factors that could influence FFO in FY21 Performance variables Base case Upside risks Downside risks As a result of this Property ‒ Portfolio occupancy (excluding ‒ Quicker lease-up of ‒ New or extended uncertainty, Botanicca 3) mai
Slide 24: COVID-19 expected to have far-reaching implications for a number of years
Outlook COVID-19 expected to have Growthpoint well positioned to far-reaching implications for deliver value to Securityholders a number of years over the long term External factors that will influence Growthpoint’s operating environment Industrial assets and Tenants heavily metro offices weighted t
Slide 25: Supplementary information
Building 1, 572-576 Swan Street, Richmond, VIC Supplementary information. 1. Detailed financial information 2. Property portfolio 3. Key market metrics 4. Glossary
Slide 26: Detailed financial information
6-7 John Morphett Place, Erskine Park, NSW Detailed financial information.
Slide 27: Summary financials
Summary financials FY2O FY19 Change % Change NPI1 $m 242.1 230.4 11.7 5.1 Like-for-like NPI $m 219.5 214.7 4.8 2.2 Statutory accounting profit $m 272.1 375.3 (103.3) (27.5) Statutory accounting profit per security ¢ 35.3 52.9 (17.6) (33.3) FFO $m 197.2 178.0 19.3 10.8 Distributions $m 168.3 167.4 0.
Slide 28: Reconciliation from statutory profit to FFO
Reconciliation from statutory profit to FFO FY20 FY19 Change $m $m $m Profit after tax 272.1 375.3 (103.3) Less non-FFO items: - Straight line adjustment to property revenue 1.0 (6.2) 7.2 - Lease liability repayments (4.7) 0.0 (4.7) - Depreciation of right of use assets 4.1 0.0 4.1 - Interest expens
Slide 29: Financial position
Financial 30 June 2020 $m 30 June 2019 $m position Assets Cash and cash equivalents 42.7 30.2 Investment properties 4,325.7 3,983.8 Investment in securities 69.9 85.6 Other assets 62.4 18.3 Total assets 4,500.7 4,117.9 Liabilities Borrowings 1,446.0 1,433.3 Distributions payable 77.2 84.4 Lease liab
Slide 30: Additional financial information
Additional financial information Impact of COVID-19 pandemic on FY20 results and balance sheet Reconciliation of operating cashflow to FFO FFO Cashflows Receivables FY20 $m $m $m $m Provided $0.8m rental abatements (0.8) (0.8) – Operating cashflow 181.2 Lease incentives and leasing costs 11.2 Provid
Slide 31: Lease incentives
Lease incentives Consolidated Statement of Profit and Loss FY20 $m FY19 $m Lease incentives includes fit out, rent free, rental Property revenue (excluding incentives) 308.1 296.4 abatement and cash payments. The tables on this page Amortisation of tenant incentives (20.8) (19.3) show the financial
Slide 32: Operating and capital expenses
Operating and capital expenses Operating expenses FY20 FY19 Total operating expenses $m 14.4 13.9 Expected to Average gross assets value $m 4,170.8 3,821.1 remain around Operating expenses to average % 0.35 0.36 0.40% based on current portfolio Capital expenditure FY20 FY19 Expected to Total portfol
Slide 33: Capital management
Face value Maturity date Time to maturity Fixed rate of swap Capital Interest rate swaps management Jun-2024 Jun-2025 4.0yrs 5.0yrs 1.21% 1.29% $100m $100m Jun-2023 3.0yrs 1.15% $75m Jun-2023 3.0yrs 1.15% $25m Weighted average interest rate swaps 4.0yrs 1.21% $300m 3.58% 65%-100% Fixed rate debt fac
Slide 34: Key debt metrics and changes during FY20
Key debt metrics and changes during FY20 30 June 2020 30 June 2019 Change Gross assets $m 4,500.7 4,117.9 382.8 Interest bearing liabilities $m 1,446.0 1,433.3 12.7 Total debt facilities $m 1,813.0 1,684.5 128.5 Undrawn debt $m 360.0 245.7 114.3 Gearing % 32.2 34.3 (2.1) Weighted average cost of deb
Slide 35: Property portfolio
27-49 Lenore Drive, Erskine Park, NSW Property portfolio.
Slide 36: Property portfolio $4.2b
85% of properties located on eastern seaboard Property portfolio by property value $4.2b 28% Property portfolio Queensland value $1,173.1 million Office $911.1m Office metropolitan properties (23 assets) Industrial $262.0m Office CBD properties (3 assets) Industrial properties (32 assets) 25% 7 1 4
Slide 37: Portfolio summary
Sector diversity Geographic diversity Occupancy Portfolio by value by value by income WA 8% Vacant 7% summary Industrial 32% NSW 25% SA 7% ACT 4% As at 30 June 2020 VIC 28% QLD 28% Office 68% Occupied 93% Tenant type Tenant use Annual rent review type by income by income by income SME 3% Large priva
Slide 38: Portfolio metrics
Portfolio metrics Key metrics Like-for-like NPI growth (FY19 to FY20) Distributions 30 June 2020 30 June 2019 from equity Number of assets 58 57 Office Industrial investments Total Property portfolio value $4.2 billion $4.0 billion NPI growth 1.6% 3.3% 1.6% 2.2% Number of tenants 163 155 Portfolio o
Slide 39: Largest tenants by passing rent
Largest tenants by passing rent Top ten tenants, total portfolio Top ten office tenants Top ten industrial tenants as at 30 June 2020 as at 30 June 2020 as at 30 June 2020 % portfolio WALE % portfolio WALE % portfolio WALE income (yrs) income (yrs) income (yrs) Woolworths 13 6.4 NSW Police Force 12
Slide 40: Leasing
Leasing Office leases executed in FY20 Location Tenant Start date Term (yrs) NLA (sqm) Car parks (no.) 1 Charles Street Parramatta NSW NSW Police Force Q3, FY20 25.0 32,356 444 75 Dorcas Street South Melbourne VIC ANZ Banking Group Q3, FY20 6.0 13,744 120 15 Green Square Close Fortitude Valley QLD O
Slide 41: Leasing
Leasing Office leases executed in FY20 (continued) Location Tenant Start date Term (yrs) NLA (sqm) Car parks (no.) 102 Bennelong Parkway Sydney Olympic Park NSW Think Advance Solutions Q3, FY20 3.0 162 2 6 Parkview Drive Sydney Olympic Park NSW Dynamic Support Services Q2, FY20 3.0 156 4 6 Parkview
Slide 42: Leasing
Leasing Industrial leases executed in FY20 Location Tenant Start date Term (yrs) NLA (sqm) 6-7 John Morphett Place Erskine Park NSW Linfox Q3, FY20 5.0 24,881 Lots 2, 3 & 4, 34-44 Raglan Street Preston VIC Paper Australia Q1, FY20 5.0 14,111 75 Annandale Road Melbourne Airport VIC Unipart Group Aust
Slide 43: Key market metrics
3 Maker Place, Truganina, VIC Key market metrics.
Slide 44: Key metrics for office markets
3% of 18% of Growthpoint Brisbane - CBD Growthpoint Brisbane - Fringe Portfolio Portfolio Key metrics for R Vacancy 12.8% Prime Secondary $762 gross $595 gross R Vacancy 15.0% Prime Secondary $585 gross $470 gross office markets I 39% 40% Y 5.00-6.25% 5.75-7.00% I 39% Y 5.75-7.50% 6.00-7.75% 39% R –
Slide 45: Key metrics for industrial markets
Key metrics for 6% of Brisbane Growthpoint industrial markets V: 445,019 sqm1 Prime Secondary Portfolio R $115 net $87 net R – Average face rent per sqm per annum I 5-20% 8-15% I – Average incentives Y 5.00-6.25% 7.00-8.25% Y – Average core market yield V – Vacancy 5% of Sydney Growthpoint Brisbane
Slide 46: Glossary
100 Skyring Terrace, Newstead, QLD Glossary.
Slide 47: Glossary
Term Definition Term Definition 1H First half of the financial year LVR Loan to value ratio Glossary ABS ACT Australian Bureau of Statistics Australian Capital Territory, Australia m MER Million Management expense ratio A-REIT Australian Real Estate Investment Trust NLA Net lettable area ASX Austral
Slide 48: Important information
Important information This presentation has been prepared by Growthpoint Properties Australia Limited (ACN 124 093 901) in its personal capacity and as responsibility entity of Growthpoint Properties Australia Trust (ARSN 120 121 002) about the activities of Growthpoint Properties Australia (ASX: GO
Slide 49: Contact us
Contact us. Retail investors Computershare 1300 665 792 (within Australia) +61 (3) 9415 4366 (outside Australia) webqueries@computershare.com.au Institutional investors Virginia Spring Investor Relations Manager +61 (3) 8681 2933 investor.relations@growthpoint.com.au 2020 calendar. • 29 October – 1Q
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