Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — Precinct Properties New Zealand — Investor Day (September 2016)
41 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's investor day presentation, September 2016
Slide 1: Precinct Properties New Zealand Investor day September 2016
Precinct Properties New Zealand Investor day September 2016
Slide 2: Agenda
Agenda Introduction, market overview 2.00pm Scott Pritchard Operations, portfolio strategy and leasing backfill 2.15pm George Crawford Commercial Bay 2.30pm David Johnson Bowen Campus and Wynyard Quarter Stage 1 2.45pm Andrew Buckingham 3.00pm Questions 3.15pm Refreshments Wynyard Quarter Stage 1 si
Slide 3: Section 1: Introduction and market overview
Section 1 Introduction and market overview
Slide 4: Today we’re focussed on
Today we’re focussed on ■ Our strategy – portfolio transformation ■ Resourcing ■ Supply constraints – Auckland – Construction cost – Land cost ■ Leasing ■ Capital management / dividend policy ■ Project updates PRECINCT INVESTOR DAY Page 4
Slide 5: Portfolio transformation
Portfolio transformation Targeted portfolio transformation Anticipated geographic mix 2015 2022+ Auckland - Age 27 years 11 years CBD Core Wellington Quality A-Grade Premium Maintenance Capex Allowance Auckland - 0.60%-0.80% p.a. 0.40% p.a. Waterfront % to Government (by value) 21% 15% Retail % CBD
Slide 6: Development resourcing
Development resourcing Senior Development Manager – Retail CB Senior Development Project Director – CB Manager – Retail CB Development Manager - CB Retail Lease Administrator Property and Facilities Management Senior Development Development Manager - GM Development Manager - Wynyard Wynyard Executiv
Slide 7: Development pipeline
Development pipeline $968m 7.5% Total project cost Blended yield on cost 18% 80% Blended return on cost Weighting to Auckland Key development metrics Strong occupier covenant (of leased space) Total Development NLA 109,827 m² 7% Total Office NLA 89,542 m² 32% Office leased to date 66,131 m² % of off
Slide 8: Waterfront Drift
Waterfront Drift Over 400,000sqm of new commercial office development valued at over $3 billion. PRECINCT INVESTOR DAY Page 8
Slide 9: Construction constraints
Construction constraints ■ Publically funded infrastructure projects committed equivalent to $6-7 billion ■ Privately funded commercial projects equivalent to $3 billion over the next 5 years PRECINCT INVESTOR DAY Page 9
Slide 10: CBD development sites
CBD development sites PRECINCT INVESTOR DAY Page 10
Slide 11: CBD development sites
CBD development 46-58 Albert Street (For sale) $68,000,000 (Market Value) sites 4,258sqm / 51,000sqm (12:1) $16,000psm Required Average Net Face Rent $830psm 28 Shortland Street $26,000,000 (April 2014) 5-15 Albert Street 2,010sqm / 26,000sqm (13:1) $60,000,000 (Under Contract) $13,000psm 3,158sqm /
Slide 12: Private Developer example
Pre 2007 Post 2015 Private 2007-2015 NZME site Developer Residential 2015+ example Secured leasing profile 80,000sqm 70,000sqm 60,000sqm 50,000sqm 40,000sqm 30,000sqm 20,000sqm 10,000sqm 0sqm Pre 2007 2007-2015 Post 2015 Fringe Occupier Traditional CBD Occupier PRECINCT INVESTOR DAY Page 12
Slide 13: Wynyard Quarter
Wynyard Quarter Residential / Hotel Commercial Marine Industry Other / Open space PRECINCT INVESTOR DAY Page 13
Slide 14: Vacancy and supply
Vacancy and supply Forecast vacancy (CBRE, June 2016) Supply Pipeline 2016-2020+ (sqm) 7.0% 50,000 Pre-commitment Vacant Requires Pre-commitment Prime PCT View 2016 2017 2018-2019 2020+ 6.0% 40,000 15 year average 5.0% 30,000 4.0% 20,000 3.0% 2.0% 10,000 1.0% 0 0.0% 2016 2017 2018 2019 2020 Potentia
Slide 15: Section 2: Operations, portfolio strategy and leasing backfill
Section 2 Operations, portfolio strategy and leasing backfill
Slide 16: Working age population (WAP)
Working age population (WAP) ■ Auckland to account for 94% of Change in working age population Change in working age population NZ’s WAP growth over next 30 - 50,000 100,000 150,000 200,000 250,000 years (Stats NZ) 1996-2006 Grown by 35% – Recent net migration in 2006-2013 excess of these forecasts
Slide 17: CBD office growth forecast
CBD office growth forecast PRECINCT INVESTOR DAY Page 17
Slide 18: Portfolio strategy and initiatives
Portfolio strategy and initiatives Portfolio Initiatives ■ Implement concierge strategy delivering enhanced service across the portfolio ■ Focus on portfolio car park strategy ■ Digital opportunities emerging Wellington ■ Government portfolio substantially de-risked – Bowen State residual and 1 The
Slide 19: Portfolio strategy and initiatives
Portfolio strategy and initiatives Auckland ■ Deliver client focused solutions which reposition portfolio occupancy and drive sustainable rental growth – Proactive approach to new leasing and forward expiries – Engagement well ahead of expiry – Decisions and engagement increasingly design led – Oppo
Slide 20: Backfill leasing
Backfill leasing Leased ■ Key focus with 14,900sqm of Commercial Bay pre- Backfill remaining commitment coming from within the portfolio Advanced discussions ■ 3 years before backfill space is available ■ Complexity of client moves ■ Considering future options for 1 Queen Street PRECINCT INVESTOR DA
Slide 21: Dividend policy review
Dividend policy review Preferred FFO pay out ratio ■ Dividend policy established in 2011 – 90% net operating income ■ Since 2011 PCT has averaged; – FFO payout ratio of 84% retaining over $50 million – AFFO payout ratio of c.100% ■ Policy reviewed and retained in June 16 – Global investors prefer FF
Slide 22: New Zealand context
New Zealand context ■ NZ disclosure varied and not Payout ratio to funds from operations considered best practice 120% FFO ■ New Zealand out of step with 100% investor preference Australia and North America 80% ■ Global investors see FFO yield 60% as a key valuation metric PCT KPG GMT ARG PFI VHP ■
Slide 23: Capital management
Capital management ■ New five year $860 million bank facility Funding diversity secured in December – Funds development pipeline $98 m $75 m ■ No debt expiries during development phase with first expiry in November 2020 ■ Committed gearing of 39% allowing for committed developments and assuming $860
Slide 24: Earnings pathway
Earnings pathway ■ Earnings pathway updated and ranges narrowed from previous guidance – Funding certainty, RFP finalised, leasing success at Commercial Bay ■ FY17 and FY18 supported by lower tax expense ■ FY19 and FY20 growth driven by NPI and development yield spread Earnings per share – Actual an
Slide 25: Section 3: Commercial Bay
3 Section Wes VA MEELIS 410) TITTIES
Slide 26: Works on site today
Works on site today Bentonite tank installation D-wall installation Building 6 works Ground stabilisation Deconstruction of the structure Piling around C2 stub end PRECINCT INVESTOR DAY Page 26
Slide 27: Programme
Programme Key development milestones Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Commercial Bay launch Works commence Demolition complete Excavation and retaining complete CRL Works Retail Works Retail open Office Works Tower Complete ■ Focus on site has been on strip out of existing cen
Slide 28: Office Leasing
Office Leasing Significant leasing success through the year 60% ■ Secured MinterEllisonRuddWatts Pre-leased by net market committing to 4,000sqm at income Commercial Bay ■ Occupier demand remains elevated for remaining vacant space ■ Expecting to lease an additional 10-15% during FY17 PRECINCT INVE
Slide 29: Retail leasing
Retail leasing ■ Secured major international Retail leasing fashion retailer H&M Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 ■ Discussions with further flagships Majors Early engagement to anchor centre Majors - complete ■ Specialty retail leasing Large F&B engagement campaign set to expand Q4
Slide 30: Dining concept plans
Dining concept plans PRECINCT INVESTOR DAY Page 30
Slide 31: Section 4: Bowen Campus and Wynyard Stage
Section 4 Bowen Campus and Wynyard Stage 1
Slide 32: Bowen Campus site plan
Bowen Campus site plan PRECINCT INVESTOR DAY Page 32
Slide 33: Bowen State extension
Bowen State extension PRECINCT INVESTOR DAY Page 33
Slide 34: Facade
Facade PRECINCT INVESTOR DAY Page 34
Slide 35: PRECINCT INVESTOR DAY Page 35
PRECINCT INVESTOR DAY Page 35
Slide 36: Lobby and on floor
Lobby and on floor Charles Fergusson Tower Bowen State Building PRECINCT INVESTOR DAY Page 36
Slide 37: Development land
Development land ■ 4,000sqm of land remaining available for future development ■ Land provides opportunity for two additional buildings ■ Land retained at $2,500/m² PRECINCT INVESTOR DAY Page 37
Slide 38: Wynyard Quarter Stage One
Wynyard Quarter Stage One
Slide 39: Wynyard Quarter
Wynyard Quarter ■ Integrated masterplan – Residential, Willis Bond – Park Hyatt, Fu Wah – ASB Auckland Theatre ■ Further public investment of $100m over next 3 years Integrated master plan Stage 1 PRECINCT INVESTOR DAY Page 39
Slide 40: Innovation building progress
Innovation building progress January 2016 April 2016 August 2016 PRECINCT INVESTOR DAY Page 40
Slide 41: Mason Brothers progress
Mason Brothers progress January 2016 April 2016 August 2016 PRECINCT INVESTOR DAY Page 41
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