Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — AMP NZ Office — H1 FY2012 Earnings Presentation
25 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, 2012
Slide 1: AMP NZ Office Limited Interim Results
AMP NZ Office Limited (ANZO) Interim Results Six months ended 31 December 2011 ANZO Interim Results, 31 December 2011 Page 1 Copyright © 2012 AMP NZ Office Limited
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 – Financial results and capital management Page 4 Section 2 – Market and portfolio overview Page 10 Section 3 – Conclusion and outlook Page 22 Note: All $ are NZD unless otherwise stated. ANZO Interim Results, 31 December 2011 Page 2
Slide 3: Highlights
Highlights Operating profit after tax of $26.6 million (2.67cps) Net profit after tax of $20.4 million (2010: $28.4 million) Lower property income due to sale of Chews Lane and Westpac, BNZ departures Leasing success leading to de-risked portfolio Thirty-two leasing transactions completed, ove
Slide 4: Section 1 – Financial Results and Capital Management
Section 01 – Financial Results and Capital Management
Slide 5: Financial performance
Financial performance For the six months ending 31 Dec 11 31 Dec 10 $m Unaudited Unaudited Change Net property income $45.3 $50.2 ($4.9 ) Indirect expenses ($0.8 ) ($0.7 ) ($0.2 ) Performance fee ($1.0 ) ($1.0 ) Management services fee ($3.3 ) ($2.5 ) ($0.8 ) EBIT $40.2 $47.0 ($6.8 ) Net interest ex
Slide 6: Balance sheet
Balance sheet Financial Position as at 31 Dec 11 30 Jun 11 $m Unaudited Audited Movement Assets Property assets $1,246.9 $1,254.2 ($7.3 ) Other $15.1 $29.7 ($14.6 ) Total assets $1,262.0 $1,283.9 ($21.9 ) Liabilities Bank debt $261.0 $282.5 ($21.5 ) Deferred tax depreciation $75.6 $76.0 ($0.4 ) Othe
Slide 7: Capital management
Capital management ■ Strong balance sheet maintained Key metrics 31 Dec 2011 1 Debt drawn $261m – Loan to value ratio of 22.2% Gearing - Banking Covenant 22.2% compared to bank covenant of Weighted facility expiry 2.8yr 50% Weighted average debt cost (incl margin & line fee) 8.1% – Interest cover 3.
Slide 8: Capital management review
Capital management review ■ Outlook 12 months ago: – Significant vacancy risk (21 Queen Street, ANZ, BNZ, PWC and Westpac pending expiries), – Potential for new market supply; and – A WALT of 4.6 years ■ Balance sheet used to defend portfolio maintaining occupancy above 90%, increasing WALT to 6.2 y
Slide 9: Earnings outlook
Earnings outlook ■ FY12 operating earnings guidance remains at 5.1 to 5.4 cps: – Timing of Chews Lane proceeds reinvestment impacts FY12 earnings; therefore lower end of guidance is likely – Reduced portfolio occupancy due to Westpac and BNZ departure ■ Earnings growth potential beyond 2012 from: –
Slide 10: Section 2 – Market and Portfolio Overview
Section 02 – Market and Portfolio Overview
Slide 11: Portfolio performance
Portfolio performance ■ 19 new leases securing 12,600m2 of NLA ■ 13 renewals/extensions securing 16,800m2 of NLA ■ 29,400m2 of leasing transactions or 11% of the portfolio by NLA ■ 7 new clients introduced to portfolio across 5,000m2 ■ Occupancy of 92% down from 94% in June 2011 and up from 89% at t
Slide 12: Major leasing activity
Major leasing activity ■ 32 leasing transactions completed including 4 lease restructures. Major leasing includes: Property Client Lease Type Area Term Certain PwC Tower PricewaterhouseCoopers Restructure 9,082 m² 9.0 years SAP Tower Marsh Mercer New Lease 3,027 m² 8.0 years PwC Tower Hesketh Henry
Slide 13: Long term earnings security
Long term earnings security ■ Improved long term earnings security Lease Expiry Profile (by income)– Dec 2010 ■ Optimal review structure 20% – 64% market reviews 15% – 28% fixed reviews 10% – 8% CPI reviews 5% 0% Vacant 1 2 3 4 5 6 7 8 9 10 Beyond Certain Income Profile Lease Expiry Profile (by inco
Slide 14: Property and facilities management update
Property and facilities management update ■ Property and facilities management “in-house” transition complete (1 December) ■ Market leading and best practice ■ Cost recovery model for ANZO – Annual cost maintained at c.$2.2 million per annum – Increased resources with increased capability ■ In-house
Slide 15: Auckland CBD office market
Auckland CBD office market Key Metrics Premium CBD Office Rents (CBRE, Dec 2011) CBD Office Stock (m2) 1.37 million 500 Prime Grade (m2) c.560,000 450 Market Size ($m) c.$7.0 b $/sqm CBD Premium Yield (Sept 11) 7.9% 400 Premium and A Grade Vacancy Rate (2011) 8.7% 350 Market Rent Discount to Economi
Slide 16: Auckland portfolio
Auckland portfolio ■ Continued leasing success - 82% of all Key Metrics Auckland leasing transactions occurred in Auckland NLA (m2) 121,000 ■ Over 50,000 sqm of leasing in the past 12 Portfolio Value ($m) $629 m months WALT (years) 7.7 yrs ■ Only 7% of portfolio due for expiry in next 2 Occupancy %
Slide 17: Wellington CBD office market
Wellington CBD office market Key Metrics Premium CBD Office Rents (CBRE, Dec 2011) CBD Office Stock (m2) 1.24 million 550 Prime Grade (m2) c.380,000 500 Market Size ($m) c.$5.5 b 450 $/sqm CBD Premium Yield (Sept 11) 8.6% 400 Premium & A Grade Vacancy Rate (2011) 3.6% Market Rent Discount to Economi
Slide 18: Wellington portfolio
Wellington portfolio ■ Some market inactivity due to seismic Key Metrics Wellington uncertainties NLA (m2) 137,000 – Demand forecast to increase for Portfolio Value ($m) $618 m buildings with seismic resilience WALT (years) 4.7yrs – Potential for new development to meet Occupancy % 94% demand Cap ra
Slide 19: CBD office market outlook
CBD office market outlook Wellington Auckland Occupier Market uncertainties over stock Continued enquiry for higher quality Demand ► quality ▲ space over secondary space Stable with no quality CBD office Lower quality buildings removed Supply ▼ from market supply ► development expected in next 3-5 y
Slide 20: Global yield shifts since market peak
Global yield shifts since market peak Chicago ■ Yield compression has San Francisco 1. Yield softening occurred since peak in 2. Yield firming Boston overseas markets Manhattan London City ■ New Zealand yet to see Madrid any compression in yields Paris CBD Frankfurt 2% 4% 6% 8% Auckland Wellington M
Slide 21: Seismic performance
Seismic performance ■ Earthquake resilience continues to be biggest priority for occupiers ■ ANZO well positioned with high quality buildings which meet occupier demand ■ More in-depth assessments continuing on certain assets ■ ANZO is committed to retaining a market leading position expected to be
Slide 22: Section 3 – Conclusions and Outlook
Section 03– Conclusions and Outlook
Slide 23: Conclusions
Conclusions ■ Current economic conditions set to remain for sometime with Auckland expected to outperform ■ Investment market stable with limited sales ■ Auckland leasing activity ahead of expectations with more than 50% of PwC Tower vacancy leased. ■ Wellington leasing activity subdued as occupiers
Slide 24: Outlook
Outlook ■ Interim earnings are in line with forecast with full year FY12 earnings guidance retained at 5.1- 5.4 cps (lower end likely) ■ Leasing enquiry expected to remain however level of leasing expected to reduce in second half ■ ANZO well positioned to grow earnings due to: – Reversion in occupa
Slide 25: Disclaimer
Disclaimer The information and opinions in this presentation were prepared by AMP NZ Office Limited or one of its subsidiaries (ANZO). ANZO makes no representation or warranty as to the accuracy or completeness of the information in this presentation. Opinions including estimates and projections in