Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — H1 2022 Earnings Presentation
52 slides from Growthpoint Properties Australia's earnings presentation, Feb 17, 2022
Slide 1: 1H22 half year results
Growthpoint Properties Australia 1H22 half year results. 17 February 2022 space to thrive.
Slide 2: Agenda
Agenda. Overview Portfolio Financial Strategy Supplementary update results and outlook information 3 6 18 22 27 Michael Green Dion Andrews Chief Investment Officer Chief Financial Officer 3 Murray Rose Avenue, Sydney Olympic Park, NSW 2 Growthpoint Properties Australia –– 1H22 results
Slide 3: Overview
Overview. 11 Murray Rose Avenue, Sydney Olympic Park, NSW
Slide 4: Strong 1H22 performance
Strong 1H22 performance. ‒ Invested over $300m capital, acquiring three quality office Profit after tax WALE assets and additional Dexus Industria REIT (DXI) securities ‒ Refinanced $715m debt and $374.3m 6.3yrs 1H21: $205.8m, +81.9% 30 June 2021: 6.2yrs entered $150m new facilities at lowest pricin
Slide 5: Continued delivery of out-performance
Continued delivery Growthpoint trading at of out-performance. 11% discount to NTA2 Total securityholder return1 Return on equity to 31 December 2021 to 31 December 2021 (per annum) Growthpoint S&P/ASX 200 A-REIT Accumulation Index 24.5% 31.0% 17.5% 16.4% 16.1% 17.2% 15.8% 12.8% 13.8% 12.1% 11.0% 9.3
Slide 6: Portfolio update
Portfolio update. 12-16 Butler Boulevard, Adelaide Airport, SA
Slide 7: Strategic acquisitions in 1H22
Strategic acquisitions in 1H22. ‒ Over $300 million invested in high-quality assets ‒ Blended WALE of 7.2 years and yield of 5.0% for three quality $52.0m1 $84.6m1 $125.0m2 office asset acquisitions Aug 2021 Dec 2021 Contract exchanged ‒ Investing in markets and sectors where we see potential to 11
Slide 8: Portfolio snapshot
Portfolio snapshot. 1 Total assets Portfolio occupancy Weighted average lease expiry Weighted average cap rate 97% of portfolio leased 57 97% 6.3yrs 5.0% to government, listed or large 30 June 2021: 55 30 June 2021: 97% 30 June 2021: 6.2yrs 30 June 2021: 5.2% organisations2 Industrial Office Top ten
Slide 9: Office market update
Office market update Market signals returning confidence, Increasing level of tenant demand and positive trends in metro markets. investor confidence Office net absorption (sqm)1 1H CY21 2H CY21 CY21 % of total market (sqm) CY21 CBD CY21 Metro CY21 CBD markets Metro Markets net absorption net absorp
Slide 10: Office portfolio overview: valuation highlights
Valuation Highlights 23.0yr +9% WALE Office portfolio overview Valuation uplift and positive leasing 1 Charles St, Parramatta, NSW reflect portfolio strength. $45.0 increase as investors continue to seek securely leased, long-WALE assets Portfolio Office Weighted ave. Weighted occupancy portfolio va
Slide 11: Office portfolio – case study
Office portfolio – case study Disciplined strategy consistently creates value. Building C, 219-247 Pacific Highway, Artarmon, NSW WALE Dec 2021 6.1yrs $146.0m Book value WALE $82.7m 7.3yrs Fund-through development Architect rendering in 2012 Valuation uplift2 IRR3 Renewed 100% of tenancy on an eight
Slide 12: Industrial market update
Industrial market update Market momentum Historic low vacancy rates nationally. Competition accelerated 1H22. driving rental growth. Net effective rent growth1 1.3% Industrial floorspace gross market vacancy rate 2H CY20 1H CY21 2H CY21 across five capital take-up across Australia1 (sqm) cities at D
Slide 13: Industrial portfolio overview: valuation highlights
Valuation Highlights 2.3yr +28% WALE Industrial portfolio overview Valuation uplift and active leasing Lots 2, 3 and 4, 34-44 Raglan St, Preston, VIC reflect quality of portfolio. $11.7m increase following strengthened demand and rental growth in the tightly held ‘last mile’ industrial precinct Port
Slide 14: Industrial portfolio – case study
Industrial portfolio – case study Targeted acquisition delivers on investment strategy. 3 Maker Place, Truganina, VIC Dec 2021 $56.9m WALE Book value 0.7yrs Yield WALE 4.4% 3.0yrs Sep 2019 $40.0m Yield 5.8% Purchase price September 2019: December 2021: Valuation uplift1 IRR2 Acquired recently comple
Slide 15: Key leasing completed in 1H22
Portfolio overview Total leasing completed in 1H22 Average Key leasing completed in 1H22. Tenant retention1 ~106,000sqm or 10% lease term 5.0yrs 93% of portfolio income Term: 5.0 years2 Term: 8.0 years2 Term: 9.5 years2 Term: 2.0 years Term: 11.2 years Term: 3.0 years NLA: 13,423 sqm NLA: 8,092 sqm
Slide 16: Long WALE maintained on leasing success
Portfolio leasing update Long WALE maintained on leasing success. 33% Portfolio lease expiry 29% per financial year, by income, BOQ 3.1% Remaining FY22 key expiry: as at 31 December 2021 Samsung 2.4% Woolworths, Larapinta, QLD Federal Gov 2.4% FY21 1H22 5.3% portfolio by income ‒ Served notice of in
Slide 17: Continued progress on ESG and net zero by 2025 target
ESG Strategy 2 Continued progress on ESG and net zero by 2025 target. 1 Rating B maintained Progress on Progressing solar projects an additional 120-132 Atlantic Drive, CB1, 22 Cordelia Street, A4, 52 Merivale Street, 15 Green Square Close, across our Keysborough, VIC South Brisbane, QLD South Brisb
Slide 18: Financial results
Financial results. 141 Camberwell Road, Hawthorn East, VIC
Slide 19: 1H22 financial results
Financial summary 1H22 financial results. Increase primarily driven by Building 3, 570 Swan % Street, Richmond, VIC (Botanicca 3) and Components of FFO 1H22 1H21 change 11 Murray Rose Avenue, Sydney Olympic Park, NSW, and offset by the sale of 102 Bennelong NPI $m 121.0 117.4 3.1 Parkway and 6 Parkv
Slide 20: Strong financial performance
Financial summary Strong financial performance. FFO per security movement NTA per security movement (cents per security) (cents per security) +7.1% +9.1% since since 31 Dec 2020 30 Jun 2021 1H21 NPI1 Net Acquired Divested Other 1H22 NTA Office Industrial DXI Retained Other NTA FFO borrowing properti
Slide 21: Gearing well below target range
Capital management Gearing well below Able to deploy $315 million of undrawn debt and remain target range. below target gearing range Gearing1 as at 30 June Distribution payout ratio % of FFO Target 94.0% 65% 95% gearing range 94.0% 93.1% 35-45% 89.4% 88.8% 85.3% 55% 85% 84.3% 77.9% 45% 75% 40.3% 41
Slide 22: Strategy and outlook
Strategy and outlook. Building 3, 570 Swan Street, Richmond, VIC (Botanicca 3)
Slide 23: Our strategy
Our strategy Our goal is to provide Securityholders with sustainably growing income returns and long-term capital appreciation. Invest in high- Maximise Maintain high- quality assets value occupancy We seek to invest in We develop asset We asset manage the high-quality, modern management and tenant
Slide 24: Delivering in 1H22, strong growth momentum for 2H22
Our strategy Delivering in 1H22, strong growth Opportunities momentum for 2H22. for growth Property acquisition Invest in high- Maximise Maintain high- quality assets value occupancy Funds management Long track record delivery Achieved largest like- Industrial portfolio Over $300 million invested fo
Slide 25: FY22 guidance
Outlook FY22 guidance. FY22 FFO guidance at least Strong 1H22 performance, positioned for continued 27.0 cps growth in 2H22 +5.1% on FY21 FY22 ‒ Deployed capital for FFO growth and distribution portfolio enhancement guidance ‒ Valuation uplift across portfolio ‒ Leasing success Forecast 20.8 cps ‒ R
Slide 26: Questions
Thank you for joining us. Questions. 2-6 Bowes Street, Phillip, ACT
Slide 27: Supplementary information
Supplementary information. Financial Property Key market Additional information portfolio metrics information 28 39 46 49 599 Main North Road, Gepps Cross, SA
Slide 28: Financial information
27-49 Lenore Drive, Erskine Park, NSW Financial information.
Slide 29: Summary financials
Financial information Summary financials. 1H22 1H21 Change % Change NPI1 $m 121.0 117.4 3.6 3.1 Like-for-like NPI $m 116.2 113.5 2.8 2.5 Statutory accounting profit $m 374.3 205.8 168.5 81.9 Statutory accounting profit per security ¢ 48.5 26.7 21.8 81.6 FFO $m 104.8 98.4 6.4 6.5 Distributions $m 80.
Slide 30: Reconciliation from statutory profit to FFO
Financial information Reconciliation from statutory profit to FFO. 1H22 1H21 Change Change $m $m $m % Profit after tax 374.3 205.8 168.5 81.9 Less FFO items: - Straight line adjustment to property revenue (5.9) (5.7) (0.2) - Net (gain) in fair value of investment properties (267.1) (102.1) (165.0) -
Slide 31: Financial position
Financial information Financial position. 31 December 2021 30 June 2021 $m $m Assets Cash and cash equivalents 39.2 33.5 Investment properties 5,055.6 4,619.6 Investment in securities 172.2 104.8 Other assets 43.6 19.9 Total assets 5,310.6 4,777.8 Liabilities Borrowings 1,559.6 1,327.1 Distributions
Slide 32: Additional financial information
Financial information Additional financial information. Reconciliation of operating cashflow to FFO 1H22 $m Operating cashflow 80.1 Lease incentives and leasing costs 22.5 Net (prepaid)/accrued operating activities (5.6) Net accrued capital expenditure 5.8 COVID deferrals (net) 0.7 Provision for inc
Slide 33: Lease incentives
Financial information Lease incentives. Consolidated Statement of Profit and Loss 1H22 $m 1H21 $m Property revenue (excluding incentives) 163.2 158.0 Lease incentives includes fit out, rent free, rental Amortisation of tenant incentives (15.5) (12.5) abatement and cash payments. The tables on this p
Slide 34: Operating and capital expenses
Financial information Operating and capital expenses. Operating expenses CY21 CY20 Average Total operating expenses $m 17.6 13.7 0.38% Average gross assets value $m 4,669.7 4,219.2 FY16 – FY21 Operating expenses to average gross assets % 0.38 0.32 Capital expenditure Expected to average CY21 CY20 0.
Slide 35: Capital management
Financial information Capital management. Maturity date Time to maturity Fixed rate Principal Amount Interest rate swaps Dec-2023 2.0yrs 0.22% $20m 2.96% Dec-2023 2.0yrs 0.21% $15m Weighted average Feb-2024 2.1yrs 0.22% $25m fixed debt rate Sep-2024 2.7yrs 0.50% $75m 4.1 yrs Sep-2024 2.7yrs 0.44% $2
Slide 36: Key debt metrics and changes during 1H22
Financial information Key debt metrics and changes during 1H22. 31 December 2021 30 June 2021 Change Gross assets $m 5,310.6 4,777.8 532.8 Interest bearing liabilities $m 1,559.6 1,327.1 232.5 Total debt facilities $m 1,882.2 1,720.0 162.2 Undrawn debt $m 315.5 387.5 (72.0) Gearing % 29.4 27.9 1.5 W
Slide 37: Capital management
Financial information Capital management. Stress testing covenants ICR >1.6x Gearing movement GOZ: 5.0x for the six months ended 31 December 2021 To breach this covenant, NPI LVR <60% would need to fall GOZ: 32.3% by 68%1 To breach this covenant, GOZ cap rate would need to Secured rise by 429 bps 1
Slide 38: Group debt maturity profile
Financial information Group debt maturity profile. Refinancing 1H22: ‒ $715 million of existing debt facilities refinanced, reducing As at 31 December 2021 ($ million) average cost of debt by 23 bps and Bank debt Undrawn bank debt Institutional term loan USPP1 extending the weighted average debt mat
Slide 39: Property portfolio
100 Skyring Terrace, Newstead, QLD Property portfolio.
Slide 40: Geographic diversity – by property value
84% of properties Property portfolio located on Eastern seaboard Geographic diversity 24% – by property value. Queensland $1,215.8 million As at 31 December 2021 $5.0b Office Industrial $938.0m $277.8m Property Office metropolitan properties (23 assets) portfolio value 26% Office CBD properties (3 a
Slide 41: Portfolio summary
Property portfolio Sector diversity Geographic diversity Occupancy by value by value by income Portfolio Vacant 3% WA 8% summary. Industrial 33% NSW 26% SA 8% ACT 5% As at 31 December 2021 Office 67% VIC 29% QLD 24% Occupied 97% Tenant type Tenant use Annual rent review type by income by income by i
Slide 42: Portfolio metrics
Property portfolio Portfolio metrics. Key metrics Like-for-like NPI growth (1H21 to 1H22) Distributions 31 December 2021 30 June 2021 from equity Number of assets 57 55 Office Industrial investments Total Property portfolio value $5.0 billion $4.5 billion NPI growth 3.1% 1.3% 0.58% 2.5% Number of te
Slide 43: Top ten tenants – by income
Property portfolio Top ten tenants – by income. Total portfolio Office tenants Industrial tenants as at 31 December 2021 as of 31 December 2021 as at 31 December 2021 % portfolio WALE % portfolio WALE % portfolio WALE income (yrs) income (yrs) income (yrs) Woolworths 13 4.9 NSW Police Force 12 23.0
Slide 44: Leasing – office leases executed in 1H22
1H22 leases Ave. Property portfolio completed – % lease term office portfolio 5.8 yrs Leasing – office leases executed in 1H22. income 9% Location Tenant Start date Term (yrs) NLA (sqm) Car parks (no.) 15 Green Square Close Fortitude Valley QLD Stella Rossa Leasing Jul-20 7 88 – Building B, 211 Well
Slide 45: Leasing – industrial leases executed in 1H22
1H22 leases Ave. Property portfolio completed - % lease term industrial 3.6 yrs Leasing – industrial leases executed in 1H22. portfolio income 12% Location Tenant Start date Term (yrs) NLA (sqm) 5 Viola Place Brisbane Airport QLD Eagers Automotive Dec-21 11.2 14,726 1-3 Pope Court Beverley SA Alumin
Slide 46: Key market metrics
120 Link Road, Melbourne Airport, VIC Key market metrics.
Slide 47: Office markets
Key market metrics 3% of Growthpoint Brisbane - CBD 16% of Growthpoint Brisbane - Fringe Portfolio Portfolio Office markets. Vacancy 15.5% Vacancy 17.9% Prime Secondary Prime Secondary R $771 gross $608 gross R $599 gross $474 gross I 43% 45% I 44% 43% Y 5.00-6.25% 5.75-7.00% Y 5.75-7.25% 6.00-7.75%
Slide 48: Industrial markets
Key market metrics Industrial markets. Brisbane 6% of Growthpoint Portfolio V: 435,305 sqm1 Prime Secondary R $115-124 $89-99 R – Average face rent per sqm per annum I 10-25% 5-13% I – Average incentives Y 4.00-5.25% 5.50-7.50% Y – Average core market yield V – Vacancy 6% of Sydney Growthpoint Brisb
Slide 49: Additional information
15 Green Square Close, Fortitude Valley, QLD Additional information.
Slide 50: Glossary
Additional information Glossary. Term ABS Definition Australian Bureau of Statistics Term NABERS Definition National Australian Built Environment Rating System ACT Australian Capital Territory, Australia net zero 2025 Growthpoint’s goal is to reach net zero emissions by 1 July 2025 as A-REIT Austral
Slide 51: Important information
Additional information Important information. This presentation has been prepared by Growthpoint Properties Australia Limited (ACN 124 093 901) in its personal capacity and as responsible entity of Growthpoint Properties Australia Trust (ARSN 120 121 002) about the activities of Growthpoint Properti
Slide 52: Contact us
Contact us. Retail investors Computershare 1300 665 792 (within Australia) +61 (3) 9415 4366 (outside Australia) webqueries@computershare.com.au Institutional investors Kirsty Collins Investor Relations and Communications Manager +61 (3) 8681 2933 investor.relations@growthpoint.com.au 2022 calendar.
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