Property for Industry Limited · NZX:PFI
Property for Industry — FY2014 Earnings Presentation
28 slides from Property for Industry's earnings presentation, Feb 17, 2015
Slide 1: 2014 Annual Results Briefing
2014 ANNUAL RESULTS BRIEFING
Slide 2: Agenda
AGENDA 1. Highlights 2. Portfolio 3. 2014 Annual Results 4. Strategy, Market & Outlook 5. Questions 6. Appendices PROPERTY FOR INDUSTRY 2014 ANNUAL RESULTS BRIEFING 2
Slide 3: 1. Highlights
1. HIGHLIGHTS
Slide 4: Highlights
HIGHLIGHTS • Profit after tax for the year of $59.9 million or 14.55 cents per share • Distributable profit for the year of 7.53 cents per share, 3.7% ahead of the prior year • Fourth quarter final cash dividend of 1.95 cents per share, total cash dividends for the year of 7.25 cents per share • $36
Slide 5: 2. Portfolio
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Slide 6: Portfolio Snapshot
PORTFOLIO SNAPSHOT 31 December 2014 31 December 2013 Number of properties 79 83 Number of tenants 134 136 Contract rent $65.8m $65.4m Occupancy 98.5% 97.1% Weighted average lease term 5.26 years 5.31 years PROPERTY FOR INDUSTRY 2014 ANNUAL RESULTS BRIEFING 6
Slide 7: Lease Expiry Profile
LEASE EXPIRY PROFILE Vacancies % Rent Roll 2015 Expiries Tenant % Rent Roll 27 Zelanian Drive East Tamaki 0.7% 212 Cavendish Drive Various 1.6% 2-6 Niall Burgess Road Mt. Wellington 0.5% 124 Hewletts Road Carter Holt Harvey 1.2% 85 Cavendish Drive Manukau 0.3% 12 Southpark Place Wineworks 0.7% Other
Slide 8: Operating Revenue
OPERATING REVENUE • Ex-Direct Property Fund properties contributed $16.35m uplift in operating revenue • 32 leases agreed over more than 103,000 sqm of space • 68 rent reviews conducted resulting in an average annual uplift of ~1.8% Refer: Appendix 1: Leasing Transactions for further detail. PROPERT
Slide 9: Investment Properties
INVESTMENT PROPERTIES • Unrealised fair value gain of $36.29m or 4.3% • Passing yield compressed from 7.77% to 7.51% • Market yield compressed from 7.73% to 7.37% • Refer also slide 19: Strategy – Divestment; and slide 20: Strategy – Acquisition and Development PROPERTY FOR INDUSTRY 2014 ANNUAL RESU
Slide 10: 3. 2014 Annual Results
3. 2014 ANNUAL RESULTS
Slide 11: Comprehensive Income
COMPREHENSIVE INCOME For the year ended (audited, $000) Dec 2014 Dec 2013 Change • Operating revenues up Total operating revenue 63,772 48,080 15,692 33%, primarily due to the Interest expense and bank fees (18,230) (12,869) (5,361) 1 July 2013 merger with Management fees (5,604) (3,785) (1,819) Dir
Slide 12: Distributable Profit (Cents per Share)
DISTRIBUTABLE PROFIT (CENTS PER SHARE) • Distributable profit per share up 0.27 cents per share (cps) or 3.7% • Full year dividends of 7.25 cps, up 0.05 cps or 0.7% • Payout ratio reduced to 96% • FY15 earnings guidance of 7.35 cps • FY15 dividend guidance of 7.30 cps Refer: Appendix 2: Distributabl
Slide 13: Net Tangible Assets (Cents per Share)
NET TANGIBLE ASSETS (CENTS PER SHARE) • Net tangible assets (NTA) per share up 7 cps or 5.9% • Increase in fair value of investment properties partially offset by loss on disposal of investment properties and a reduction in the fair value of derivatives Refer: Appendix 3: Financial Position for furt
Slide 14: Treasury
TREASURY • Facilities: refinanced during Q2 2014, average term extended, cost reduced • Covenants: gearing reduced, interest cover ratio maintained December 2014 December 2013 Facilities Drawn (excluding overdraft) $313.5M $315.2M Facilities limit $350.0M $350.0M Facilities headroom $36.5M $34.8M Fa
Slide 15: Treasury
TREASURY • Interest rates: hedging profile extended, average duration increased to 2.5 years from 1.7 years PROPERTY FOR INDUSTRY 2014 ANNUAL RESULTS BRIEFING 15
Slide 16: Total Returns Since Merger
TOTAL RETURNS SINCE MERGER All returns are gross with imputation. Series rebased to 1000 on 30 June 2014. Source: Forsyth Barr analysis, IRESS, NZX. PROPERTY FOR INDUSTRY 2014 ANNUAL RESULTS BRIEFING 16
Slide 17: 4. Strategy, Market & Outlook
4. STRATEGY, MARKET & OUTLOOK
Slide 18: Strategy
STRATEGY • PFI’s strategy is to invest in quality industrial property in New Zealand’s main urban centres • The company will drive shareholder returns by: • Managing the vacancy and upcoming lease expiries • Considering the sale of selected assets to recycle capital into higher quality industrial pr
Slide 19: Strategy – Divestment
STRATEGY – DIVESTMENT • $26.6m generated from the sale of non-core properties during 2014 • Capital reinvested into the acquisition and development of investment grade industrial assets 174b Marua 326 Rosebank 19 Omega 19 Omega 18 Ron Driver 5 Cable Street, Road, Road, Street (lot 2), Street (lot 3)
Slide 20: Strategy – Acquisition and Development
STRATEGY – ACQUISITION AND DEVELOPMENT 143 Hutt Park Road, 9a Narek Place, 124c Hewletts Road, Wellington Wiri Mount Maunganui1 Purchase price / $15.4m $3.6m $10.0m development spend Tenant Masterpet Corporation Ltd Z Energy NZ Ltd RMD Bulk Storage Ltd Property description Industrial, distribution I
Slide 21: Market & Outlook
MARKET & OUTLOOK Forecast Forecast % Portfolio Occupancy WALT Prime Rental Prime Value Value Change Change Auckland 86.1% 98.2% 5.07 years 2.2% 4.7% Waikato & BOP 5.0% 100.0% 5.97 years Not forecast Not forecast Wellington 5.3% 100.0% 6.21 years 2.5% 3.0% Christchurch 3.6% 100.0% 7.18 years 2.5% 2.5
Slide 22: Market & Outlook
MARKET & OUTLOOK • Continued optimism in the industrial property market built upon the general improvement in the wider economy • Investor activity remains high, chasing quality stock which has resulted in strong transactional evidence for prime industrial property • Leasing enquiry up • Outlook for
Slide 23: 5. Questions
5. QUESTIONS
Slide 24: 6. Appendices
6. APPENDICES 1. HIGHLIGHTS
Slide 25: Appendix 1: Leasing Transactions
APPENDIX 1: LEASING TRANSACTIONS Tenant Address Area % Rent Roll Fletcher Building Products 30-32 Bowden Road, Mt. Wellington 18,497 sqm 2.0% Fonterra 124a Hewletts Road, Mt. Maunganui 10,497 sqm 1.5% Massey University 229 Dairy Flat Highway, North Shore 4,429 sqm 1.3% Brambles 9 Nesdale Ave, Manuka
Slide 26: Appendix 2: Distributable Profit
APPENDIX 2: DISTRIBUTABLE PROFIT For the year ended (audited, $000 unless otherwise stated) Dec 2014 Dec 2013 Change Profit for the year attributable to the shareholders of PFI 59,877 40,512 19,365 Adjusted for: Fair value gain on investment properties (36,286) (12,326) (23,960) Material damage insu
Slide 27: Appendix 3: Financial Position
APPENDIX 3: FINANCIAL POSITION As at (audited, $000 unless otherwise stated) Dec 2014 Dec 2013 Change Investment properties (including property prepayments) 876,005 841,841 34,164 Goodwill 29,086 29,086 - Other assets 1,788 6,017 (4,229) Total assets 906,879 876,944 29,935 Borrowings 312,797 314,599
Slide 28: Disclaimer
DISCLAIMER The information included in this presentation is provided as at 17 February 2015. Neither Property For Industry Limited (PFI) nor PFIM Limited (PFIM), the manager of PFI, guarantee the repayment of capital or the performance referred to in this presentation. Past performance is not a reli