Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — Precinct Properties New Zealand — H1 FY2018 Earnings Presentation
32 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, Feb 28, 2018
Slide 1: Precinct Properties New Zealand Interim Results
Precinct Properties New Zealand Interim Results 28 February 2018
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 – Strategy progress Page 4 Section 2 – Development summary Page 6 Section 3 – Interim results and capital management Page 16 Section 4 – Market and portfolio overview Page 21 Section 5 – Conclusion and outlook Page 30 Precinct Properties New Zealand Limited Scott P
Slide 3: Highlights
Highlights Financial performance $40.9m 1H18 net operating income1 before tax up 3.8% 3.7% increase in net property income $17.7m 1H18 net profit after tax Capital management $250m Non bank funding secured during the period 23.0% reduced gearing ratio Portfolio performance 99% occupancy and 8.8 year
Slide 4: Section 1 – Strategy progress
Section 1 Strategy progr my? = W Nfs
Slide 5: Strategy progress since June
Strategy progress since June Empowering People - Sourcing retail management team for Commercial Bay - Diversity policy updated - Intern program completed Operational Excellence - 50% ANZ Centre being marketed for sale - $250 million capital management initiatives - Third location secured for Generat
Slide 6: Section 2 – Development summary
Section 2 Development summary
Slide 7: Development Summary
Development Summary Current Forecast cost to complete ■ Targeted metrics remain on track Bowen $131 m $21 m $51 m – Blended return on cost of 27% – Blended yield on cost of 7.5% ■ +76,000sqm additional office NLA Com Bay $302 m $172 m $211 m – Currently 80% leased $100 m $200 m $300 m $400 m $500 m
Slide 8: Commercial Bay
Commercial Bay ■ Independent advice on ■ Settlement of Queen ■ Targeted return completion dates Elizabeth Square metrics maintained updated completed FY18 INTERIM RESULTS Page 8
Slide 9: Retail Leasing
Retail Leasing ■ Leasing now at 60% 60% ■ Significant progress Committed to date achieved at Harbour Eats: – 50% of F&B operators already committed ■ Secured renowned F&B operators – Mimi Gilmour – Al Brown – Josh Emett ■ New to NZ fashion retailers committed adding to the retail mix FY18 INTERIM R
Slide 10: Office Leasing
Office Leasing ■ Total office commitments remain at 66% ■ Leasing momentum continues: – Circa. 15% (6,000sqm) of space under negotiations – Commercial terms remain consistent with feasibility assumptions ■ Supportive Auckland CBD property environment for the remaining tower floors FY18 INTERIM RESUL
Slide 11: Commercial Bay programme update
Commercial Bay programme update ■ Previously announced delayed retail completion until late Q1 2019 based on independent advice ■ Contract date for retail completion is November 2018, contractor has recently advised December 2018 date ■ Our independent advice is that December 2018 completion is unli
Slide 12: Bowen Campus
Bowen Campus ■ 100% pre-committed – Lease to the Crown now unconditional ■ Lease to the New Zealand Defence Force at Bowen State building extended to 18 years ■ Project works remain on programme and budget FY18 INTERIM RESULTS Page 12
Slide 13: Future opportunities – Wynyard Quarter Stage Two
Future opportunities Wynyard Quarter Stage Two ■ Continue to advance Stage Two (10 Madden St) – 1 of the remaining 3 sites ■ Development consists of another 8,000sqm office building across 6 floors as well as a new F&B precinct and plaza ■ Negotiations are taking place with occupiers seeking 50% pre
Slide 14: Future opportunities – Commercial Bay Stage Two
Future opportunities Commercial Bay Stage Two - 1 Queen St ■ Investigations continue into development options ■ Most feasible option mixed use development – Hotel with office above ■ Negotiations with preferred hotel operator are on-going ■ Hotel use will further support the Commercial Bay retail pr
Slide 15: Future opportunities – Wynyard Quarter and Bowen Balance
Future opportunities Wynyard Quarter Stage 3 ■ Remaining stage of Wynyard Quarter precinct ■ Potential for up to 20,000sqm of NLA across 2 separate or interconnected buildings ■ Commencement of stages 3 and 4 will be demand led Bowen Balance land ■ Stage 2 currently being designed ■ Site preparation
Slide 16: Section 3 – Interim Results and Capital Management
Section 3 Interim Results and Capital Management
Slide 17: Financial performance
Financial performance six months ended 31 December 2017 31 December 2016 ■ Net operating income of 3.15 cps ($m) Unaudited Unaudited ■ Full year guidance remains around 6.30 cps Net property income $47.6 m $45.9 m ■ Net profit after tax impacted by the ($14.7) Indirect expenses ($1.1 m) ($1.1 m) mil
Slide 18: Net property income
Net property income Unaudited Unaudited ■ Overall NPI was $1.7 million (3.7%) higher following six months six months For the 12 months ended ended 31 ended 31 D the completion of Wynyard Quarter Stage One $m December December 2017 2016 ■ Allowing for developments and HSBC House net AMP Centre $4.8 $
Slide 19: Taxation reconciliation
Taxation reconciliation ■ Tax expense of $2.7 million Tax expense reconciliation Unaudited Unaudited – $2.1 million higher than six months ended 31 six months ended 31 comparable period December 2017 December 2016 ■ Higher tax charge due to: Net profit after tax and unrealised gains $17.7 m $39.1 m
Slide 20: Capital management
Capital management ■ $250 million of funding secured in period Key metrics Dec 2017 June 2017 Debt drawn ($m) 600 452 – Total facilities increased to $1.18 billion Gearing - Banking Covenant 23.0% 25.1% ■ Borrowings increased to $600 million due to development expenditure Weighted facility expiry (y
Slide 21: Section 4 – Market and Portfolio Overview
Section 4 Market and Portfolio Overview
Slide 22: Portfolio activity
Portfolio activity Leasing Events ■ Strong portfolio performance, driven by growth in rental levels and New Leases Number Area occupancy, especially Wellington. Auckland 8 2,918 m² Wellington 6 2,733 m² ■ Total Rent reviews were 4.1% higher Sub Total 14 5,651 m² than valuation ■ Market events (leasi
Slide 23: Portfolio metrics
Portfolio metrics 8.8 years Lease expiry profile by Area (including pre-commit) Weighted average lease term Wellington Auckland 60.0% (including development pre-leasing) 49.8% 50.0% 99% 40.0% Occupancy 30.0% 11.8% 20.0% 9.9% 11.8% of Auckland portfolio has a market event over the 10.0% 5.1% 4.3% 4.7
Slide 24: Auckland Portfolio
Auckland Portfolio FY18 INTERIM RESULTS Page 24
Slide 25: Auckland CBD office market
Auckland CBD office market Occupier Demand Forecast vacancy (JLL, Dec 2017) According to Colliers research, total Auckland CBD Premium A grade vacancy has not exceeded 6.0% since the middle of 2015. Vacancy Rate % 10.0% The recent rise to 5.9% stems from vacancy arising in both Viaduct Harbour and V
Slide 26: Wellington Portfolio
Wellington State Insurance Tower Portfolio Dimension Data House 10 Brandon St Pastoral House 1 -3 The Terrace Mayfair House Bowen Campus Bowen Campus Stage Two FY18 INTERIM RESULTS Page 26
Slide 27: Wellington CBD office market
Wellington CBD office market Forecast vacancy (JLL, December 2017) Occupier Demand A Grade B Grade With the loss of nearly 100,000sqm of office space, Vacancy Rate % 15.0% vacancy has hit record lows, indicating continued strong demand for office space. 10.0% Supply The completion of several new bui
Slide 28: 10 Brandon Street
10 Brandon Street ■ A number of options for the building have been explored to date: – Strengthen existing – Strengthen with façade upgrade – Full office redevelopment – Student accommodation – Apartments – Office/Apartment hybrid ■ Preferred option is to strengthen with façade upgrade ■ Commencemen
Slide 29: Generator update
Generator update ■ Generator now manage circa 12,000 sqm of co-working space over three locations ■ Stanbeth & Excelsior – Established location with stable operations in heritage Britomart buildings – Recently expanded and facilities upgraded to total 340 desks ■ 10 Madden Street and Mason Brothers
Slide 30: Section 5 – Conclusion and outlook
Section 5 Conclusion and outlook
Slide 31: Conclusion and outlook
Conclusion and outlook ■ Global economic growth continues to improve ■ Strengthening markets – Signs of post election stability emerging – Strong occupier and investment markets ■ New Zealand is well placed to continue to grow ■ Precinct well positioned – Strong balance sheet ■ Precinct has a clear
Slide 32: Thank you
Thank you
Precinct Properties New Zealand — H1 FY2018 Earnings Presentation on 6ix