Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — FY2019 Earnings Presentation
35 slides from Dexus Industria Reit's earnings presentation, Aug 21, 2019
Slide 1: FY19 Results Presentation
FY19 RESULTS PRESENTATION 21 AUGUST 2019 www.apngroup.com.au ASX Code: ADI
Slide 2: Agenda
Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio Performance 04 Outlook Appendices 2
Slide 3: 01 Highlights and Outcomes
WQS Ni ~ (0 a ot —7 , . . —_ = ‘2 i y Win N a 2 ~ ONNYYYV VS 01 HIGHLIGHTS AND OUTCQ} ples
Slide 4: FY19: Continuing to deliver
FY19: Continuing to deliver 19.2 cents per Acquired ~$65 ~13,700 square Affordable rents to a security; 3.8% FFO million of property metres of leasing – diverse pool of growth and reduced gearing strong occupancy of tenants driving to 30% 97% growth of 2 – 3% per annum Significantly ahead of Opportu
Slide 5: 30 June financials
30 June financials ▪ Statutory net profit $29.2 million – with major drivers being FY2019 FY2018 Change revenue $3.6 million higher than pcp, offset by non-cash fair Statutory net profit ($m) $29.2 $48.2 q 39.4% value adjustments that were $16.3 million lower than pcp ▪ FFO up from $30.1 million to
Slide 6: Strong balance sheet, consistently outperforming peers
Strong balance sheet, consistently outperforming peers ▪ Continuing to execute on strategy of maintaining a Debt maturity profile – limited refinance risk staggered debt maturity profile, reducing concentration risk over any given period: $140m Small maturity exposures limit refinance risk $120m - R
Slide 7: 02 Investment Proposition
02 INVESTMENT PROPOSITION 7
Slide 8: The APN Industria REIT opportunity
The APN Industria REIT opportunity Strategy to grow through The opportunity investing in office and ▪ Benefit from a growing rent profile from low-risk portfolio – no potential volatility from industrial assets “active earnings” (e.g. funds management or development) ▪ Leveraging APN’s market knowle
Slide 9: At a glance
At a glance $739 ~$522m S&P/ASX 300 INDEX MILLION MILLION MARKET TOTAL ASSETS CAPITALISATION MEMBER 6.1% 30% 6.1 3% CASH DISTRIBUTION GEARING YEAR WALE AVG RENT REVIEWS YIELD HIGH QUALITY OFFICE AND INDUSTRIAL ASSETS DELIVERING A STRONG INCOME PROFILE COMBINED WITH A CONSERVATIVE BALANCE SHEET PROVI
Slide 10: Diversified portfolio generating consistent and growing income
Diversified portfolio generating consistent and growing income 25.2% 26.6% WesTrac Newcastle Industrial Melbourne Located adjacent to and Adelaide M1 motorway Key industrial precincts 52% 48% ~$197 million invested ~$186 million invested 15.2 year WALE 13 buildings; 4.1 year WALE 21.6% 26.6% Locatio
Slide 11: APN Property Group – aligned and experienced manager
APN Property Group – aligned and experienced manager Strong investor Focused and Governance Manager with long alignment dedicated overseen by an track record and ▪ APN is strongly aligned to management team Independent Board deep relationships delivering investor returns – owning a ~$83 million co-
Slide 12: 03 Portfolio Performance
03 PORTFOLIO PERFORMANCE 12
Slide 13: Actively managing Industria's real estate
Actively managing Industria’s real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 97% 83% 96% 97,600 95% 95% 83,900 92% 70,300 45,900 18,800 9% 8% Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 CPI 2 - <3% ≥ 3% Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Str
Slide 14: Sustainability and managing for the long term
Sustainability and managing for the long term ▪ Leveraging the built environment by enhancing existing Brisbane Technology Park - self-sufficiency per building asset performance and driving efficiencies: Self sufficiency (%) Self sufficiency - Daylight (%) - Delivering >15% yield on cost and reducin
Slide 15: Active year of acquisitions to improve portfolio diversity and scale
Active year of acquisitions to improve portfolio diversity and scale ▪ Improved portfolio diversity and exposure to properties that 1 West Park Drive, 13 Ricky Way and 10 offer high quality and well-located warehouses for tenants: Derrimut, VIC Jersey Dr, Epping, VIC - ~$65 million of acquisitions -
Slide 16: Continued discipline and active management across industrial assets
Continued discipline and active management across industrial assets ▪ Fully leased across the portfolio, after new leasing at Butler Leasing completed and forthcoming expiries (by area) Boulevard, Adelaide Airport: sqm 20,000 - Leased ~1,400 square metres and renewed 4,200sqm (FY20 expiries) 15,000
Slide 17: WesTrac Newcastle – world leading real estate
WesTrac Newcastle – world leading real estate ▪ Leased to WesTrac until 2034 with annual 3% fixed rental uplifts ▪ The facility is running near or at capacity, driven by record part and support volumes ▪ Property completed in 2012 – and is regarded as best-in- class by Caterpillar dealers globally:
Slide 18: Rhodes Corporate Park
Rhodes Corporate Park ▪ Agreed terms to renew 3 leases and maintained 100% occupancy, with 8% growth on passing rents and average 12% incentives Building A Building C ▪ September 2021 expiry of Link Market Services provides an opportunity to drive rents: - Leasing campaign has >2 year lead-time - Ex
Slide 19: Rhodes Corporate Park
Rhodes Corporate Park Rhodes offers outstanding transport linkages in all directions, close proximity to growing population, and affordable rent profiles1 Parramatta ($645/sqm) ~30mins to Sydney CBD using existing infrastructure (road & rail) Rhodes ($550/sqm) Corridor forecast to grow by Sydney 420
Slide 20: Brisbane Technology Park
Brisbane Technology Park ▪ Another very active period: Brisbane Technology Park - 47 deals completed across 6,800sqm - Agreed terms over 1,400 square metres of FY20 renewals - 87% retention ▪ On-site management team have established relationships, enhanced tenant amenity and driven considerable impr
Slide 21: Brisbane Technology Park
Brisbane Technology Park ▪ BTP remains an attractive occupancy proposition: Brisbane Gross Rent comparisons1 - CBD rents 55% and fringe rents 40% higher than BTP 800 ~$700 - Highly accessible – 15 minutes from CBD; 20 minutes ~$630 55% from airport; 8 minute walk from public transport 600 premium 40
Slide 22: 04 Outlook
04 OUTLOOK 22
Slide 23: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) - High quality portfolio with annual fixed growth from rent reviews - No potential volatility from active earnings that may rely FY20 6% Terms agreed 2% on de
Slide 24: APN Property Group
APN | Property Group Brandl Street Saleslink et) IQEail
Slide 25: Appendix A: Property portfolio
Appendix A Property portfolio 25
Slide 26: APN Industria REIT portfolio as at June 2019
APN Industria REIT portfolio as at 30 June 2019 Age Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector (years) ($m) (%) (sqm) (by area)(by income) APN Industria REIT Portfolio Industrial Portfolio 383.4 6.33% 193,426 100% 9.2 Office Portfolio 356.0 6.66% 57,564 88% 2.8 Portfolio
Slide 27: APN Industria REIT portfolio as at June 2019
APN Industria REIT portfolio as at 30 June 2019 Age Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector (years) ($m) (%) (sqm) (by area)(by income) Office Portfolio Building A, 1 Homebush Bay Drive, Rhodes NSW 100% Office 11.8 110.5 6.00% 14,642 100% 2.4 Building C, 1 Homebush Bay
Slide 28: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 25% Link Market Services 13% AAE Retail 4% Frasers Property 4% Mitre 10 4% Interactive 4% Queensland Health 3% RFS 3% Dempsey Group 3% Edlyn Foods 2% Top 10 Tenants 65% Other 35% Total 100% 28
Slide 29: Appendix B: Financial information
Appendix B Financial information 29
Slide 30: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position As at Jun 2019 Jun 2018 $’000 $’000 Assets Cash and cash equivalents 2,435 1,659 Trade and other receivables 1,007 1,134 Other assets 764 462 Total current assets 4,206 3,255 Investment properties 739,378 660,732 Total non-current assets 739,378 660,732 T
Slide 31: Consolidated Statement of Profit or Loss and other comprehensive income
Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended Jun 2019 Jun 2018 $’000 $’000 Income Net rental income 52,153 47,771 Straight line rental income recognition 3,149 3,906 Total revenue 55,302 51,677 Expenses Property costs (11,700) (9,919) Trust managemen
Slide 32: Reconciliation to FFO
Reconciliation to FFO Financial period ended Jun 2019 Jun 2018 $’000 $’000 Net profit after tax 29,243 48,158 Adjusted for: Reverse straight lining adjustments included in net rental income (3,149) (3,906) Add back / (deduct) income tax expense / (benefit) 2,847 47 Add back amortised borrowing costs
Slide 33: Interest rate hedging profile
Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate (lhs) 6% $152m $138m 5% $127m 4% Average Fixed Rate $80m 3% $67m 2% 1% $15m 0% FY20 FY21 FY22 FY23 FY24 FY25 33
Slide 34: Disclaimer
Disclaimer This presentation has been prepared by APN Funds Management Limited (ACN 080 647 479, AFSL No. 237500) (the "Responsible Entity") as the responsible entity and issuer of the financial products in respect of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491)
Slide 35: Contact
Contact Alex Abell Fund Manager – APN Industria REIT Ph: (03) 8656 1070 aabell@apngroup.com.au ASX Code: ADI Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, APN Property Group Limited Melbourne, Vic 3000 apnpropertygroup apngroup.com.au http://blog.apngroup.com.au apnp