Argosy Property Limited · NZX:ARG
Argosy Property — FY2019 Earnings Presentation
36 slides from Argosy Property's earnings presentation, May 23, 2019
Slide 1: FY19 Annual Results Presentation
FY19 Annual Results Presentation Argosy Property Limited 23 May 2019 www.argosy.co.nz
Slide 2: Agenda
AGENDA Highlights Page 4 Strategy / Portfolio Page 6 Financials Page 15 Leasing Update Page 24 Looking Ahead Page 28 PRESENTED BY: Peter Mence CEO Dave Fraser CFO Note: This result should be read in conjunction with the NZX release dated 23 May 2019. Due to rounding, numbers presented in this presen
Slide 3: Our strength lies in the diversity of our portfolio
Our strength lies in the diversity of our portfolio by sector, location and tenant mix, providing flexibility to support our tenants changing needs, ensuring a resilient business model through various economic cycles.” Peter Mence CEO 3
Slide 4: Highlights
HIGHLIGHTS Change image 23 Customs Street, Snickel Lane 4
Slide 5: FY19 Full Year Highlights
FY19 Full Year Highlights 35.1% 5.0% Total shareholder Net Distributable return for 12 months Income increase $70.5m $100m Annual revaluation gain, Successful Green Bond 4.3% above book value Issue 4 Henderson Place, Compaq 6.1yr 6.275c Weighted average Full year dividend lease term (WALT) 5
Slide 6: Strategy / Portfolio
Strategy / Portfolio 23 Customs Street, Level 2 – Predict HQ 6
Slide 7: Investment Strategy / Policy
Investment Strategy / Policy Investment Strategy Consists primarily of Core and Value Add properties. Core properties to be between 75-90% of the portfolio by value. Value add properties to be between 10-15% of the portfolio by value. Investment Policy Target sector bands (Industrial 40-50%, Office
Slide 8: Create. Manage. Own.
Create. Manage. Own. Proactive delivery of sustainable growth. Manage all elements of the business to deliver the right outcomes for all our stakeholders. Own the right assets, with the right attributes in the right locations. 8
Slide 9: Portfolio at a Glance
Portfolio at a Glance TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION BY VALUE 3% 8% 18% 10% 25% 44% 38% 72% 82% Industrial Auckland Core properties Office Wellington Value Add properties Retail Regional North Island non Core & South Island Divestment of non Core assets
Slide 10: Sector Summary
Sector Summary INDUSTRIAL OFFICE RETAIL NUMBER OF BUILDINGS NUMBER OF BUILDINGS NUMBER OF BUILDINGS 37 16 7 MARKET VALUE OF ASSETS ($M) MARKET VALUE OF ASSETS ($M) MARKET VALUE OF ASSETS ($M) $737.7 $626.6 $302.8 OCCUPANCY (BY INCOME) OCCUPANCY (BY INCOME) OCCUPANCY (BY INCOME) 97.8% 96.8% 100% WALT
Slide 11: Value Add
Value Add The following properties have been designated as Value Add and make up ~10% of the total portfolio: Property Sector Location Valuation $m 90 - 104 Springs Road, East Tamaki Industrial Auckland 5.7 80 Springs Road, East Tamaki Industrial Auckland 13.2 211 Albany Highway, Albany Industrial A
Slide 12: Development Pipeline
Development Pipeline Spent to Total Cost 31-Mar Forecast Development Major Tenant Type Location $m $m completion FY 2020 FY 2021 Sep-19 Mar-20 Sep-20 Mar-21 Underway / commenced 180-202 Hutt Road Placemakers IND WTN 10.3 6.1 Dec-19 Stewart Dawsons Corner In final discussions RET WTN 20.0 12.0 Jul-20
Slide 13: 7 Waterloo Quay Update
7 Waterloo Quay Update Damage Assessment Interim damage assessment reports and reinstatement scope reports with insurers. Cost assessment estimate has recently been completed and submitted to insurers. Currently reconciling reinstatement costs incurred with the cost estimate submitted to insurers. I
Slide 14: Valuations
Valuations 31 March 19 31 Mar 19 Second half revaluation gain Market Yield Book Value Valuation Δ Δ of $35.8m or 2.2% above book $m $m $m % 31 Mar 19 31 Mar 18 value resulting in a full year Auckland 1,161.5 1,206.8 45.3 3.9% 6.43% 6.75% gain of $70.5m or 4.3% above Wellington 422.9 412.8 (10.1) -2.
Slide 15: Financials
FINANCIALS Change image Albany Mega Centre 15
Slide 16: Income Reconciliation
Income Reconciliation Like for like rent growth of 3.2% 16
Slide 17: Financial Performance
Financial Performance FY19 FY18 Like-for-like gross rental $m $m growth of 3.2% driving Net property income 102.5 101.0 increase in net income Administration expenses (10.9) (9.9) Profit before financial income/(expenses), other Expenses up due to one-off 91.5 91.1 restructuring and additional gains
Slide 18: Distributable Income
Distributable Income FY19 FY18 $m $m Profit before income tax 143.3 109.3 Adjusted for: Revaluations gains (70.5) (47.3) Realised losses/(gains) on disposal (6.1) (0.3) Derivative fair value loss/(gain) 7.4 4.1 Earthquake expense net of recoveries (6.8) (0.2) Gross distributable income 67.3 65.6 Dep
Slide 19: Investment Properties
Investment Properties Portfolio growth (+10%) driven by a combination of capital projects, acquisitions and revaluation gains. 19
Slide 20: Movement in NTA per share
Movement in NTA per share Full year revaluation gain key driver of ~9% NTA uplift to $1.22. 20
Slide 21: Gearing
Gearing FY19 FY18 The sale of non Core assets $m $m totalled ~$45m. Investment properties 1,667.0 1,513.1 Assets held for sale 0.0 27.4 The asset held for sale last year Other assets 8.0 4.3 was Wagener Place, settled in Q2 of FY19. Total assets 1,675.1 1,544.8 Fixed rate green bonds 100.0 0.0 Durin
Slide 22: Funding & Interest Rate Management
Funding & Interest Rate Management FY19 FY18 Weighted average duration of debt facilities 2.7 years 3.1 years Weighted average interest rate1 4.75% 4.98% Interest Cover Ratio 3.2x 3.3x % of fixed rate borrowings 53% 62% Average fixed interest rate2 4.49% 4.56% Argosy maintains strong relationships w
Slide 23: Dividends
Dividends A fourth quarter cash dividend of 1.5875 cents per share has been declared, with imputation credits of 0.3026 cents per share attached, and will be paid on 26 June 2019. The Board has signalled FY20 dividend guidance of 6.275 cents per share. The FY20 dividend reflects the Board’s wish for
Slide 24: Leasing Update
Leasing Update Change image Albany Mega Centre 24
Slide 25: Leasing Success
Leasing Success Strong leasing results for the year have continued, delivering a WALT of 6.1 years. 44 lease transactions were completed on 81,274m2 of net lettable area, including 21 new leases, 12 renewals and 11 extensions. Notable leasing successes include; Property Tenant NLA (m2) Lease Term 10
Slide 26: Lease Maturity
Lease Maturity Normalised lease maturity profile relatively stable over the medium term. Strong Crown interest in 7 Waterloo Quay space. 26
Slide 27: NZ Market Update
NZ Market Update Office Flexible working environments continue to drive a disconnect between employment growth and net absorption. This is expected to continue with recent transactions demonstrating a move to agile work environments. Rental growth impacted by new supply – softer in Auckland, reflect
Slide 28: Looking Ahead
Looking Ahead Change image 28
Slide 29: 2020 Focus
2020 Focus Create Continue transitioning Value Add properties to drive earnings and capital growth. Proactive delivery of sustainable growth. Ensure projects are completed on time and on budget. Keep investigating strategic acquisitions (off market or contiguous). Manage Maintain high tenant retenti
Slide 30: Appendices
Appendices 30
Slide 31: Adjusted Funds from Operations (AFFO)
Adjusted Funds from Operations (AFFO) FY19 FY18 $m $m Profit before income tax 143.3 109.3 Revaluation gains (70.5) (47.3) Derivative fair value (gain)/loss 7.4 4.1 Realised losses/(gains) on disposal (6.1) (0.3) Earthquake expense net of recoveries (6.8) (0.2) Gross distributable income 67.3 65.6 D
Slide 32: Rent Reviews
Rent Reviews Annualised Type # Previous Rent New rent Increase Increase Annualised % % of rent ($000's) ($000's) ($000's) % Increase ($000's) Increase reviewed Total 103 39,378 40,959 1,581 4.0% 1,119 2.8% 100.0% By review type Fixed 49 16,637 17,148 511 3.1% 511 3.1% 42.2% Market 24 11,462 12,205 7
Slide 33: Rent Reviews
Rent Reviews Annualised Location # Previous Rent New rent Increase Increase Annualised % % of rent ($000's) ($000's) ($000's) % Increase ($000's) Increase reviewed Auckland Office 38 9,835 10,295 460 4.7% 267 2.7% 30.8% Industrial 21 13,554 14,074 520 3.8% 417 3.1% 42.4% Retail 29 8,583 8,913 331 3.
Slide 34: Portfolio Metrics
Portfolio Metrics The strength of our diversified portfolio is in the breadth and depth of our tenant base and sectors they represent. Note: Data as at 31 March 2019 34
Slide 35: Portfolio Snapshot
Portfolio Snapshot Our focus is delivering improved portfolio quality and is reflected in our strong portfolio metrics Occupancy WALT (years) 100.0% 6.40 6.20 80.0% 6.00 5.80 60.0% 5.60 5.40 40.0% 5.20 20.0% 5.00 4.80 0.0% 4.60 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Net Tangible Assets De
Slide 36: Disclaimer
Disclaimer 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 making an