Argosy Property Limited · NZX:ARG
Argosy Property — H1 FY2025 Earnings Presentation
42 slides from Argosy Property's earnings presentation, Nov 20, 2024
Slide 1: FY25 Interim Results: Green, diversified, resilient
FY25 Interim Results: Green, diversified, resilient. 20 November 2024
Slide 2: Agenda
Agenda Vision & Strategy 4 Peter Mence, CEO Dave Fraser, CFO Sustainability 5 Results Summary 10 Portfolio Highlights 11 Financials 15 Leasing & Sector Commentary 26 Focus and Outlook 30 Appendices 32 Note: This results presentation should be read in conjunction with the NZX release dated 20 Novembe
Slide 3: CEO quote on green strategy
“Our green strategy underpins the sustainability and stability of earnings and dividends over the long term.” Peter Mence, CEO Argosy Property Limited 3
Slide 4: Building a better future
Building a better future Proactive delivery of sustainable growth A business culture that is environmentally focused Executing green Value Add portfolio opportunities A diversified portfolio by sector and region to drive earnings and capital growth A diversified asset allocation across sectors to A
Slide 5: Sustainability Commitment
Sustainability Commitment COHESIVE APPROACH ACROSS THE BUSINESS To reduce our impact on the environment, create vibrant spaces for tenants, engage more with stakeholders and provide transparent and effective governance. • Targeting >50% of the portfolio to be green by 2031 • Targeting carbon emissio
Slide 6: Our sustainability journey has been long
Our sustainability journey has been long Argosy Property Limited 6
Slide 7: Value & risk advisory report (JLL August 24)
Value & risk advisory report (JLL August 24) +6.7% Rental premium for 6 Star Green / -1.5% Lower vacancy with a Green Star +9.8% Sales premium for 6 Star Green / 5 Star NABERSNZ office rating and the lowest vacancy if 5 Star NABERSNZ building combination NABERSNZ rated as well combination +10% Green
Slide 8: Neilson Street Development
224 Neilson Street Development 16,500 6 Star m2 of warehouse to be available Green Built rating being targeted 5 Star +8.1% NABERSNZ energy rating Forecast IRR on completion being targeted Argosy Property Limited 8
Slide 9: Value Add & Green Developments
Value Add & Green Developments GREEN ASSETS DRIVING DEVELOPMENT Property Sector Location Valuation @ PIPELINE 30 Sep 24 • Value Add properties are a key strategic pillar 32 Bell Avenue, Mt Wellington future Industrial Auckland 18.7 and will transform the portfolio over the next 90-104 Springs Road,
Slide 10: Results Summary
Results Summary $58.4m Net property income flat $8.7m Revaluation gain, up 0.4% on 30 1.6625c Q2 dividend declared September book values $1.46 $33.0m 37.2% NTA per share, up 1 cent Interim net profit after tax Gearing within the target 30-40% band Argosy Property Limited 10
Slide 11: Portfolio Highlights
Portfolio Highlights 95.8% 5.0yrs 2.6% Occupancy Weighted Average Lease Term Annualised growth on rent reviews 82.1% Tenant retention rate 34.1% Government sector rental income 47.2% Weighting to Auckland Industrial Argosy Property Limited 11
Slide 12: Sector Summary
Sector Summary Industrial Office Large format retail Number of buildings Number of buildings Number of buildings 33 13 4 Market value of assets ($m) Market value of assets ($m) Market value of assets ($m) $1,036.3 $770.5 $200.0 Occupancy (by income) Occupancy (by income) Occupancy (by income) 99.5%
Slide 13: Portfolio at a glance
Portfolio at a glance Sector by value % Region by value % Asset mix by value % 10 3 6 11 27 52 38 70 83 Industrial (60-70%) Office (20-30%) LFR (5-15%) Auckland (70-80%) Wellington (15-25%) Regional (0-10%) Core (75-90%) Value Add Divest 1. Large format retail. 2. Regional North Island and South Isl
Slide 14: Revaluations
Revaluations CAP RATE SOFTENING ABATING, 30 Sep 24 30 Sep 24 Sep 24 Mar 24 Book Value 1 Valuation Cap rate Cap rate PORTFOLIO UNDER RENTED $m % ($m) ($m) % % • An independent review as at 30 September Auckland 1,392.3 1,397.4 5.1 0.4% 6.10% 6.07% was performed on the portfolio. Wellington 549.
Slide 15: Financials
Financials Argosy Property Limited 15
Slide 16: Gross Property Income Waterfall
Gross Property Income Waterfall RENT REVIEWS AND DEVELOPMENTS PROVIDED GOOD RENTAL GROWTH 80.0 70.0 65.8 66.6 1.5 1.1 -0.1 -1.7 60.0 Rental income $m 50.0 40.0 30.0 20.0 10.0 - Gross Property Income Rent Reviews Vacancy/ Leasing up/ Other Developments Disposals Gross Property Income 30 September 202
Slide 17: Financial Performance
Financial Performance PERFORMANCE IN LINE WITH PRIOR 1H25 1H24 COMPARABLE PERIOD (Restated) $m $m • Net property income was flat on the prior Net property income 58.4 58.4 comparable period. Administration expenses (5.6) (5.5) • Interest expense was also flat. Lower Profit before financial income/(e
Slide 18: Distributable Income
Distributable Income SOUND RESULT 1H25 1H24 $m $m • Gross distributable income for the year was $31.6m compared to $31.7m in the prior Profit before income tax 38.9 (16.8) comparable period. Adjustments: • Taxation expense was higher than the prior Revaluation (gains)/losses on investment property (
Slide 19: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) 1H25 1H24 AFFO DOWN DUE TO HIGHER TAX $m $m Net distributable income 27.5 29.5 • AFFO adjustments consistent with prior Amortisation of tenant incentives and leasing costs 1.1 1.3 comparable period. Share based payment expense 0.1 0.1 • AFFO 3.17cps compared to
Slide 20: Investment Property Waterfall
Investment Property Waterfall POSITIVE REVALUATION GAIN IN THE INTERIM PERIOD 2,200 24 9 2,046 2,014 2,006 Investment Properties ($m) 2,000 -1 -40 1,800 1,600 1,400 Balance 1 April 2024 Capitalised costs Change in fair value Change in capitalised Balance Right of use asset Balance 30 September 2024
Slide 21: Net Tangible Assets
Net Tangible Assets 1.60 0.01 1.50 0.03 1.45 1.46 (0.03) NTA per share ($) 1.40 1.30 1.20 1.10 1.00 NTA at 31 March 2024 Profit for the period Revaluations Dividends paid NTA at 30 September 2024 Argosy Property Limited 21
Slide 22: Balance Sheet Management
Balance Sheet Management GEARING AT THE MID-RANGE OF 1H25 FY24 TARGET BAND $m $m • The balance sheet is in good shape. Investment properties 2,046.2 2,013.8 Asset held for sale 35.2 35.2 • Argosy has sufficient facility headroom to complete existing developments and act on Other assets 8.2 20.0 any
Slide 23: Interest Rate Management
Interest Rate Management FIXED RATE COVER OF 69% 1H25 FY24 $m $m • Weighted average interest rate reduced slightly to 5.5% from 5.6% at 31 March Weighted average interest rate1 5.5% 5.6% 2024. Interest Cover Ratio 2.4x 2.4x • Fixed rate cover at 69% of drawdown debt. % of fixed rate borrowings 69% 7
Slide 24: Debt Profile
Debt Profile GREEN BOND DIVERSIFICATION 38% • The total amount of the bank facility is 400 $525m with the nearest tranche expiring in 350 October 2027 (FY28). • Argosy’s $325m of green bonds continue to 300 provide important diversification. 125 250 Facilities ($m) 200 150 100 210 215 50 100 100 100
Slide 25: Dividends
Dividends STEADY DIVIDEND 6.80 • A 2nd quarter dividend of 1.6625 cents per share has been declared with 0.246287 6.60 6.65 6.65 6.65 cents per share imputation credits attached. 6.55 • Overseas investors will receive an additional 6.40 6.45 supplementary dividend of 0.111761 cents 6.35 per share to
Slide 26: Leasing & sector commentary
Leasing & sector commentary Argosy Property Limited 26
Slide 27: Leasing Outcomes
Leasing Outcomes 21,350 8yr 26 m2 of NLA leased to 30 September New lease to Trust Investments Management Leases executed, 13 new leases, Limited at 105 Carlton Gore Road 8 renewals and 5 extensions 8,790 m2 of NLA new lease to Booths 7yr New lease to New Zealand Educational 48 Rent reviews over the
Slide 28: Lease Expiry & Rent Review Profile
Lease Expiry & Rent Review Profile MEDIUM TERM LEASE EXPIRY PROFILE IS As at 30 September 2024 WELL MANAGED 18 • Largest single expiry remains MBIE in 2027. 16 Percentage of portfolio (by income) • Average annual expiry over the next two years (FY26 and FY27) is ~11.5%. 14 12 5.3 11.5 10.6 10 8 Tota
Slide 29: Market Insights
Market Insights INDUSTRIAL OFFICE LARGE FORMAT RETAIL • Softer period of both supply and demand currently is projected • Flexible working environments continue but working from home • Retail turnover rates have declined significantly on a per capita for first half of 2025. and full-time remote work
Slide 30: Focus and outlook
Focus and outlook Argosy Property Limited 30
Slide 31: Outlook
Outlook STAYING FOCUSED ON ACHIEVING STRONG OPERATIONAL RESULTS AND EXECUTING ON STRATEGIC GOALS • New Zealand’s domestic economy continues to experience challenging headwinds from increased costs and restrictive interest rates. • Low supply and low demand across the market with tenants focused on p
Slide 32: Appendices
Appendices Argosy Property Limited 32
Slide 33: Balance Sheet Management
Balance Sheet Management GEARING REMAINS COMFORTABLY WITHIN THE MID-RANGE OF THE BAND 50 40 38.8 36.5 37.2 35.9 Debt to total assets (%) 35.1 30 31.1 20 10 0 FY20 FY21 FY22 FY23 FY24 1H25 Argosy Property Limited 33
Slide 34: Hedges, Interest Rates & Debt Maturity
Hedges, Interest Rates & Debt Maturity HEDGES & WEIGHTED AVERAGE DEBT MATURITY PROFILE (DRAWN) & INTEREST RATES (MARCH Y/E) WEIGHTED AVERAGE MARGIN AND LINE FEE 500 6.00% 390 5.00% 400 Weighted Average Interest Rate (%) Face Value of Hedges ($m) 4.00% 300 275 275 225 3.00% 200 2.00% 100 85 1.00% 0 0
Slide 35: Rent review summary – by type, sector and location
Rent review summary – by type, sector and location Annualised $ % of Total Type # Previous Rent % of rent New Rent $ Increase Increase Annualised Annualised % ($000's) reviewed ($000's) (000's) % Increase (000's) Increase Increase Total 48 27,267 100% 28,010 744 2.7% 709 100% 2.6% By review type Fix
Slide 36: Portfolio metrics
Portfolio metrics RENT ROLL BY INDUSTRY TOP 10 CUSTOMERS BY RENT MBIE Government Administration General Distributors Limited Transport and Storage 4% 2%2%2% 6% 5% Statistics New Zealand Manufacturing 5% Cardinal Logistics Limited 8% 34% Retail Trade 6% Kainga Ora Property and Business Services The W
Slide 37: Portfolio snapshot
Portfolio snapshot Occupancy (% ) WALT (years) 100 6.0 99.0 98.7 99.3 96.7 95.8 5.7 5.0 5.5 5.4 80 5.2 5.0 4.0 60 3.0 40 2.0 20 1.0 0 0.0 FY21 FY22 FY23 FY24 1H25 FY21 FY22 FY23 FY24 1H25 Net Tangible Assets ($ per share) Debt-to-total-assets (% ) 2.00 40 36.5 37.2 1.74 35.9 35.1 1.50 30 1.53 1.58 3
Slide 38: Portfolio summary - Industrial
Portfolio summary - Industrial Type Valuation WALT Net lettable Vacant Contract $000s (years) area (m2) space (m2) Yield Auckland 19 Nesdale Avenue, Wiri $69,900 10.1 20,677 - 5.75% 240 Puhinui Road, Manukau $44,300 10.1 17,715 - 5.53% 244 Puhinui Road, Manukau $15,500 10.1 5,504 - 5.19% Highgate Pa
Slide 39: Portfolio summary – Industrial (cont.)
Portfolio summary – Industrial (cont.) Type Valuation WALT Net lettable Vacant Contract $000s (years) area (m2) space (m2) Yield Wellington 54-56 Jamaica Drive, Wellington $11,400 11.0 1,825 - 6.01% 147 Gracefield Road, Seaview $20,000 3.5 8,018 - 5.62% 19 Barnes Street, Seaview $17,300 6.9 6,857 -
Slide 40: Portfolio summary - Office
Portfolio summary - Office Type Valuation WALT Net lettable Vacant Contract $000s (years) area (m2) space (m2) Yield Auckland 99-107 Khyber Pass Road, Grafton $16,200 2.7 2,509 - 6.96% 8 Nugent Street, Grafton $47,900 3.4 8,125 - 7.37% 39 Market Place, Viaduct Harbour $5,900 4.0 10,365 7,395 11.10%
Slide 41: Portfolio summary – Large Format Retail
Portfolio summary – Large Format Retail Type Valuation WALT Net lettable Vacant Contract $000s (years) area (m2) space (m2) Yield Auckland Albany Mega Centre and 11 Coliseum Drive, Albany $149,000 4.0 33,792 - 6.85% 50 & 54-62 Cavendish Drive, Manukau $30,000 1.1 9,939 - 6.72% 252 Dairy Flat Highway
Slide 42: Thank you
DISCLAIMER Thank you This presentation has been prepared by Argosy Property Limited. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to