Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — H1 FY2014 Earnings Presentation
37 slides from Kiwi Property's earnings presentation, Nov 11, 2013
Slide 1: Interim Result
KIWI INCOME PROPERTY TRUST 30 SEPTEMBER 2013 INTERIM RESULT KIWI INCOME PROPERTY TRUST IS MANAGED WITHIN Global Asset Management 0
Slide 2: Contents
CONTENTS 02 Results overview 04 Financial review 08 Portfolio performance 13 Development and divestment 20 Summary and outlook 23 Appendices This presentation should be read in conjunction with the accompanying NZX announcement METRO by Hoyts, Centre Place, Hamilton Refer to: kipt.co.nz or nzx.com1
Slide 3: Results Overview
RESULTS OVERVIEW MARKETS FINANCIAL OPERATING General economy and property Improved operating profit and profit Firming capitalisation rates in markets showing signs of gradual after tax compared to prior Auckland assist growth in portfolio recovery comparable period value Economy - Canterbury rebuil
Slide 4: Results Overview: Operating
RESULTS OVERVIEW OPERATING COMPLETED DEVELOPMENTS POTENTIAL DEVELOPMENT The addition of ASB North Wharf Three development projects Advanced negotiations underway for new to the core portfolio has improved successfully completed during the long-term Crown lease and building most metrics, notably WALT
Slide 5: Financial Performance
FINANCIAL PERFORMANCE Solid operating result Financial performance 30-Sep-13 30-Sep-12 Variance For the six months ended $m $m $m % - Operating profit before tax Gross rental income 101.5 98.2 +3.3 +3.4 improvement due to: Property operating expenditure -30.1 -30.2 +0.1 +0.3 rental income from ASB
Slide 6: Distributions
DISTRIBUTIONS Delivered in line with guidance Distributable income 30-Sep-13 30-Sep-12 Variance For the six months ended $m $m $m % - Movement in current tax Operating profit before tax1 37.5 34.7 +2.8 +8.1 impacted by depreciation Depreciation recovery offset2 - 3.4 -3.4 -100.0 recovery in the prio
Slide 7: Financial Position
FINANCIAL POSITION Strong financial position maintained 30-Sep-13 31-Mar-13 Movement Financial position As at $m $m $m % - Investment properties Assets movement due to: Investment properties Appendix 4 2,143.9 2,076.5 +67.4 +3.2 capital expenditure on development projects Cash on deposit 4.2 12.0
Slide 8: Bank Debt Profile
BANK DEBT PROFILE $465m of bank debt extended Facilities expiring Bank facilities $m % - Weighted term to FY14 - - maturity extended FY15 - - through the renewal and extension of: FY16 ANZ $60.0 60.0 7 $300 million of CBA facilities in May-13 FY17 ANZ $105.0 Westpac $65.0 170.0 20 $165 million o
Slide 9: Portfolio Metrics
PORTFOLIO METRICS Sound portfolio metrics maintained 30-Sep-13 31-Mar-13 Core portfolio metrics1 Retail Office Total Total - The addition of ASB Number of assets 6 6 12 11 North Wharf to the Value ($000) 1,385.1 696.8 2,081.9 1,874.9 portfolio has improved Proportion of total portfolio by value 65%
Slide 10: Portfolio Value
PORTFOLIO VALUE Valuations stable Fair value Portfolio / property Capitalisation rates % Adopted value $m increase/(decrease)1 As at Sep-13 Mar-13 Var. bps Sep-13 Mar-13 $m % - Three office assets Sylvia Park n/a 6.63 n/a 542.4 540.0 +0.1 +0.0 independently valued: LynnMall n/a 7.38 n/a 204.6 204.0
Slide 11: Leasing and Rent Reviews
LEASING AND RENT REVIEWS Positive rental growth achieved NLA Uplift over prior passing rent Static portfolio leasing No. of % of CAGR WALT CPI and fixed rent reviews By portfolio tenancies sqm portfolio $000 % % years underpin retail growth Rent reviews 361 65,900 30.2 1,351 +3.3 3.0 - - Fixed and C
Slide 12: Expiries and WALT
EXPIRIES AND WALT Improved WALT for both retail and office - Improved retail portfolio WALT results Weighted average lease term (by gross income) from the average 5.1-year term across 4.1 years [Mar-13: 4.0 years] 86 new leasing deals 7.0 years [Mar-13: 4.8 years] - ASB North Wharf, with a 17.1-year
Slide 13: Sales
SALES Retail sales levels steady $m % variance from prior Specialty sales Centre Sep-13 Mar-13 Sep-12 $/sqm GOC % - Total sales are down 1.7% from Sep-12 Sylvia Park 455.6 +0.1 +0.9 9,407 but remain steady compared to Mar-13 LynnMall 218.2 -0.9 -2.0 7,288 levels. The annual decrease is mainly due Ce
Slide 14: ASB North Wharf
ASB NORTH WHARF Iconic building added to the Trust’s core portfolio Kiwi Income Property Trust • September 2013 Interim Result Presentation • 11 November 2013 13 13
Slide 15: ASB North Wharf: Long-term, low risk rental stream
ASB NORTH WHARF Long-term, low risk rental stream ASB lease details Net lettable area 20,103 sqm Lease commencement July 2013 Lease term 18 years Rent reviews Fixed 2.5% pa Cost and value Achieved Forecast Development budget1 $134.0m $132.1m Target initial yield 8.5% ~8.5% Value on completion $158.5
Slide 16: Centre Place
CENTRE PLACE Successfully opened 17 October 2013 Kiwi Income Property Trust • September 2013 Interim Result Presentation • 11 November 2013 15 15
Slide 17: Centre Place: Repositioning complete
CENTRE PLACE Repositioning complete - The aim of the redevelopment was to reposition Centre Place as a competitive CBD specialty centre with a focus on fashion, dining and entertainment - This has been achieved through: a latest generation 7,100 sqm, two-level flagship Farmers department store a
Slide 18: Centre Place: Key metrics
CENTRE PLACE Key metrics LEASING Despite a challenging environment, the latest stage of development opened substantially leased 99% Leased by area 94% Forecast FY15 rent achieved FINANCIALS Projected yield on total investment 5.8%, rising to 7.0% over three years Project metrics Pre-development valu
Slide 19: 56 The Terrace
56 THE TERRACE Long-term Crown lease over all office space FINANCIAL METRICS Cost and value Sep-13 value $51.2m Development cost1 $65.7m Total investment $116.9m Estimated value on completion $120.5m Cap rate on completion 7.25% Income and yield Estimated NOI on completion ~$9.0m Estimated yield on
Slide 20: 205 Queen Disposal
205 QUEEN Disposal (post period end) Transaction details Purchaser Auckland City Holdings Ltd (a company associated with Brisbane-based Bloomberg Incorporation Ltd) Tranche 1 Interest 50% Settlement Expected to be by January 2014 Purchase price $47.5m Tranche 2 Interest 50% Settlement In March or Se
Slide 21: Economic Overview
ECONOMIC OVERVIEW Sustained but gradual recovery Medium-term Indicator outlook Economic growth - Economic momentum is lifting and expansion is broadening, driven by: high export commodity incomes the gaining pace of the Canterbury rebuild housing market momentum, particularly in the Auckland
Slide 22: Market Outlook
MARKET OUTLOOK Markets continue to show recovery Portfolio Short-term Medium-term Sector weighting1 market outlook market outlook Key points Retail KIP retail - New store openings in the competitive supermarket industry resulted in lower sales at existing supermarkets Occupancy 99.8% 65% - Impro
Slide 23: Summary and Outlook
SUMMARY AND OUTLOOK Projected full-year cash distribution 6.40cpu - Economy showing continued signs of gradual recovery - The Trust is in a solid position supported by: a portfolio of high-quality assets; and a strong balance sheet - Projected distribution guidance of 6.40 cpu maintained1 1. Sub
Slide 24: Appendices Index
APPENDICES Index Contents Appendix Page No. Financial review Net operating / rental income 1 24 Net interest expense 2 25 Operating profit before tax 3 26 Investment properties 4 27 Net bank debt 5 28 Interest rate hedging profile 6 29 Property portfolio Net lettable area (NLA), occupancy and weight
Slide 25: Net operating / rental income
APPENDIX 1 Net operating / rental income Net operating income1 30-Sep-13 30-Sep-12 Variance For the six months ended $m $m $m % - Improved by: Sylvia Park 16.5 15.8 +0.7 +4.4 the addition of ASB North LynnMall 7.5 7.5 - - Wharf to core portfolio one-off payment at Centre Place 1.3 2.5 -1.2 -48.0
Slide 26: Net interest expense
APPENDIX 2 Net interest expense 30-Sep-13 30-Sep-12 Variance For the six months ended $m $m $m % Interest income 0.2 1.0 -0.8 -80.0 Interest on bank debt -25.1 -26.2 +1.1 +4.2 Interest on MCNs -5.4 -5.4 - - Net interest expense incurred -30.3 -30.6 +0.3 +1.0 Interest capitalised to: ASB North Wharf
Slide 27: Operating profit before tax
APPENDIX 3 Operating profit before tax Movement: six months ended 30-Sep-12 to six months ended 30-Sep-13 ($m) 50 31.6 40 +$1.1 +$1.0 +$0.8 +$0.7 +$0.2 +$0.1 +$2.6 -$1.7 -$0.9 -$1.1 30 +$2.3m from NOI change 20 =$37.5 $34.7 +$3.4m from NRI change 10 0 Sep-12 NOI: asset NOI: centres NOI: ASB NOI: bal
Slide 28: Investment properties
APPENDIX 4 Investment properties Movement for the six months ended 30-Sep-13 ($m) 2,200 +$17.3 +$4.4 +$8.0 +$10.5 +$18.2 2,100 +$9.0 2,000 =$2,143.9 +$2,076.5 1,900 1,800 As at Mar-13 Development Development Development Development Fair value change Other As at Sep-13 costs: ASB North costs: Centre
Slide 29: Net bank debt
APPENDIX 5 Net bank debt Movement for the six months ended 30-Sep-13 ($m) 1,000 900 +$22.7 +$1.1 +$6.9 800 +$82.6 +$25.9 +$7.1 -$75.4 700 =$739.9 600 $669.0 500 Net bank debt Net interest Manager's fees Investment and Tax Distributions Other expenses Net rental income Net bank debt Mar-13 expense de
Slide 30: Interest rate hedging profile
APPENDIX 6 Interest rate hedging profile Hedging profile 30-Sep-13 31-Mar-13 Percentage of drawn debt hedged [fixed rate] 87% 80% Weighted average interest rate on hedged debt [excl margin and fees] 5.40% 5.85% Weighted average term to maturity of interest rate hedges 2.4 years 2.4 years Hedge matur
Slide 31: NLA, occupancy and WALT
APPENDIX 7 NLA, occupancy and WALT NLA sqm Occupancy % WALT years Property / portfolio As at Sep-13 Sep-13 Mar-13 Sep-13 Mar-13 Sylvia Park, Auckland 71,262 99.9 100.0 4.0 3.9 LynnMall, Auckland 32,269 100.0 100.0 3.8 4.0 Centre Place, Hamilton 15,999 98.7 97.8 6.8 5.8 The Plaza, Palmerston North 32
Slide 32: Sector and geographic diversification (by value)
APPENDIX 8 Sector and geographic diversification (by value) Total by sector Palmerston By value % Auckland Wellington Christchurch North Hamilton Sep-13 Mar-13 Retail 35 5 10 9 6 65 65 Office 25 7 - - - 32 25 Other 3 - - - - 3 10 Total by region Sep-13 63 12 10 9 6 100 Total by region Mar-13 64 12 1
Slide 33: Tenant diversification (by gross income)
APPENDIX 9 Tenant diversification (by gross income) 13 01. New Zealand chains 27% 12 11 02. Australian and international chains 22% 03. Department and discount department stores 6% 10 01 04. Supermarkets 5% Office Retail 05. Independent retailers 5% 09 34% income 66% income 06. Cinemas 1% 132 tenant
Slide 34: Top tenants (by gross income)
APPENDIX 10 Top 20 tenants (by gross income) ASB Bank 5.5% Farmers 3.7% Progressive Enterprises 3.1% Russell McVeagh 2.6% Vero Insurance 2.4% Bell Gully 2.2% Foodstuffs 1.9% Department of Labour 1.9% Just Group 1.7% Kmart 1.5% Hallenstein/Glasson 1.5% The Warehouse 1.4% The top 20 tenants represent
Slide 35: Auckland office market
APPENDIX 11 Auckland office market Actual Actual Forecast As at / YE As at / YE As at / YE Statistic Grade Dec-12 Mvmt Jun-13 Mvmt Dec-13 Comments - ANZ Centre returns to Premium stock post redevelopment Premium 109,669 142,298 141,575 - No additional supply forecast over next 3 years Stock (sqm
Slide 36: Wellington office market
APPENDIX 12 Wellington office market Actual Actual Forecast As at / YE As at / YE As at / YE Statistic Grade Dec-12 Mvmt Jun-13 Mvmt Dec-13 Comments - No significant movement in stock until 2016 when stock returns to A-grade 257,518 257,518 262,518 the market following refurbishment Stock (sqm)
Slide 37: Disclaimer
DISCLAIMER Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust (KIP). The Manager is a subsidiary of Commonwealth Bank of Australia (the Bank) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way stands
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