Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — Precinct Properties New Zealand — H1 FY2013 Earnings Presentation
30 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, February 2013
Slide 1: Interim results
Interim results Six months ended 31 December 2012 February 2013
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 – Financial Results and capital management Page 4 Section 2 – Market and portfolio overview Page 13 Section 3 – Conclusion and Outlook Page 23 Precinct Properties New Zealand Limited Scott Pritchard, CEO George Crawford, CFO Note: All $ are in NZD unless otherwise
Slide 3: Highlights
Highlights $23.6m net profit after tax Financial performance $26.2m net operating income +1.6% increase in first half dividend Portfolio performance 95% occupancy Precinct our +2% new corporate leasing secured ahead of valuation identity Downtown Shopping Centre PRECINCT INTERIM RESULTS, 31 DECEMBER
Slide 4: Section 1: Financial Results and Capital Management
Section 1 Financial Results and Capital Management
Slide 5: Financial performance
Financial performance For the 6 months ended 31 Dec 12 31 Dec 11 ($m) Unaudited Unaudited Change Net property income $47.6 m $45.3 m + $2.3 m Indirect expenses ($0.8 m) ($0.8 m) - Performance fees ($1.2 m) ($1.0 m) ($0.2 m) Base fee ($3.6 m) ($3.3 m) ($0.3 m) EBIT $42.0 m $40.2 m + $1.8 m Net intere
Slide 6: Earnings track
Earnings track Major events Announcement Loss of Departure of Improving Occupancy of ANZ Centre building Westpac and Acquisitions : Downtown redevelopment depreciation BNZ from Shopping Centre portfolio Bowen Campus Note: EPS based on net operating income after current taxation PRECINCT INTERIM RESU
Slide 7: Balance sheet
Balance sheet Financial Position as at 31 Dec 12 30 June 12 ($m) Unaudited Audited Movement Assets Property assets $1,461 m $1,332 m $129 m Other $22 m $18 m $4 m Total Assets $1,483 m $1,350 m $133 m Liabilities Bank debt $482 m $347 m $135 m Deferred tax depreciation $87 m $84 m $3 m Fair value of
Slide 8: Capital management
Capital management ■ Gearing of 33.5% Key metrics 31 Dec 2012 30 June 2012 Debt drawn $482m $347m – Increased following Gearing - Banking Covenant 33.5% 27.0% Downtown Shopping Centre Weighted facility expiry 3.5 yrs 3.2 yrs acquisition Weighted average debt cost (incl fees) 6.2% 6.8% – Increases to
Slide 9: Capital management review
Capital management review ■ Balance sheet utilised to secure Balance sheet deployed over last 12 months earnings accretion plus long ANZ Centre redevelopment $76m term strategic opportunities Bowen Campus acquisition $50m ■ Significant reduction in cost of Downtown Shopping Centre $90m debt Total $2
Slide 10: Funding approach
Funding approach ■ Gearing optimal for stage of cycle ■ Expectation of valuation growth returning ■ Maintain current hedging approach ■ Moderating capital expenditure – Leasing activity reduces as occupancy increases – Incentives and capex reducing – Portfolio repositioned over previous 2-3 years ■
Slide 11: Valuation environment
Valuation environment ■ Over $500 million in office sales Major non office sales activity Value WALT Market Yield Initial Yield ■ Wellington market particularly active Westfield North Shore $83.5m 3.0 years 8.0% 9.4% Westfield Pakuranga $81.7m 2.7 years 8.84% 9.37% – Demonstrated by initial yields W
Slide 12: Earnings outlook
Earnings outlook Earnings ■ FY13 net operating income after tax of around 5.8 cps, before performance fees ■ Strengthening second half earnings ■ Dividend guidance of 5.12cps Adding value beyond FY13 ■ Occupancy improvements driving earnings growth ■ Market rental growth, particularly in Auckland ■
Slide 13: Section 2: Market and Portfolio Overview
Section 2 Market and Portfolio Overview
Slide 14: Portfolio activity
Portfolio activity Leasing Events ■ 40 leasing transactions totalling18,000m2 or $7 million in New Leases Number Area annualised rent Auckland 16 4,787 m² Wellington 17 9,049 m² ■ New office leases were secured Sub Total 33 13,837 m² at a 2% premium to valuation ROR and Extensions Compared with prev
Slide 15: Leasing successes
Leasing successes ■ 11 new clients secured across the Major leasing transactions during the six months portfolio Property Client Area m² Term years ■ ANZ commitment to 171 Featherston Street, Wellington 171 Featherston Street ANZ 4,070 m² 12 years AXA Centre NZFS – 4,000 sqm leased representing 2,32
Slide 16: Portfolio metrics
Portfolio metrics Weighted average lease term by NLA 5.5years 20% Weighted average lease term 95% 15% Occupancy 10% 77% proportion of office revenue 5% % of NLA 54% 0% weighting to Auckland Vacant 13 14 15 16 17 18 19 20 21 22 >22 Wellington Auckland Financial Year Occupancy 100% 80% 60% 40% % of bu
Slide 17: Downtown Shopping Centre
Downtown Shopping Centre ■ Settled 31 October 2012 Key information 31 Dec 2012 Occupancy 100% ■ Transition from Westfield complete Moving annual turnover (MAT) $63.8 million ■ Colliers appointed to manage the Change in MAT to previous year -6% Centre on a day to day basis MAT by sqm $4,450 m2 ■ Reve
Slide 18: Auckland CBD office market
Auckland CBD office market Key metrics Premium CBD office forecast (CBRE, Dec 2012) Market PCT CBD office stock (m2) 1.3 million 121,000 Prime grade (m2) c.570,000 121,000 Market size ($m) c.$7.0 b $704 m CBD premium yield (CBRE Dec 12) 7.5% 7.5% Premium & A grade vacancy rate (CBRE 6.4% 5% Dec12) M
Slide 19: Wellington CBD office market
Wellington CBD office market Key metrics Premium CBD office forecast (CBRE, Dec 2012) Market PCT CBD office stock (m2) 1.2 million 168,000 Prime grade (m2) c.320,000 168,000 Market size ($m) c.$5.5 b $666 m CBD premium yield (CBRE Dec 12) 8.1% 8.2% Premium & A grade vacancy rate (CBRE 2.9% 4% Dec12)
Slide 20: Building consents
Building consents ■ Auckland commercial building activity continuing to grow ■ Wellington remains subdued as lease expiry profiles shorten Commercial building consents – 12 month moving average 1 Note 1: Consents for offices and admin buildings: new + additions and alterations, Source: Statistics Ne
Slide 21: CBD office market
CBD office market Wellington Auckland Continued enquiry for higher Market uncertainties over stock Occupier quality space over secondary Demand ► quality, Government continuing ▲ space. Potential for B grade to retract albeit slightly repositioning Obsolescence accelerated due Stable with no quality
Slide 22: Portfolio Strategy
Portfolio Strategy ■ Auckland investment bias ■ Structured growth preferred ■ Continued focus on driving cashflow given strong WALT ■ Wellington focus remains on seismic strength and price point ■ Opportunity exists for asset repositioning of well located B grade assets in Auckland ■ Future developm
Slide 23: Section 3: Conclusions and Outlook
Section 3 Conclusions and Outlook
Slide 24: Conclusion
Conclusion ■ New Zealand economy well positioned: – Low interest rates – Population growth, and – Christchurch rebuild ■ Property market improving: – Auckland positioned for rental growth – Wellington demonstrating defensive characteristics – Yield compression now occurring and set to continue ■ Fol
Slide 25: Outlook
Outlook ■ Interim earnings are in line with forecast with strong momentum for second half ■ Leasing transactions expected to remain elevated in Auckland and accelerate in Wellington ■ Investment market and expected to continue driven by strong occupier markets and low funding costs ■ Precinct well p
Slide 26: Precinct overview
Precinct overview New Zealand’s only specialist listed investor in premium CBD office buildings New Zealand's third largest listed property entity New Zealand's 14th largest listed company with a market cap of around $1 billion Total assets of over $1.5 billion Net property income of around $100 mil
Slide 27: Auckland Property Portfolio
Auckland Property Portfolio 01. 02. 03. 04. 05. 06. PwC Tower ANZ Centre AMP Centre SAP Tower Zurich House Downtown Shopping Centre Occupancy 87% Occupancy 100% Occupancy 91% Occupancy 94% Occupancy 100% Occupancy 100% WALT 5.7 years WALT 10.4 years WALT 5.7 years WALT 4.8 years WALT 5.8 years WALT
Slide 28: Wellington Property Portfolio
Wellington Property Portfolio 01. 02. 03. 04. 05. 06. State Insurance Tower Vodafone on the Quay No. 1 The Terrace 171 Featherston Street 125 The Terrace Pastoral House Occupancy 76% Occupancy 100% Occupancy 100% Occupancy 100% Occupancy 100% Occupancy 100% WALT 4.6 years WALT 4.0 years WALT 5.3 yea
Slide 29: Wellington Property Portfolio
Wellington Property Portfolio 07. 08. 09. 10. 05. 06. Bowen Campus Deloitte House Mayfair House AXA Centre PwC Tower PwC Tower Occupancy 97% Occupancy 100% Occupancy 100% Occupancy 100% Occupancy 87% Occupancy 87% WALT 2.0 years WALT 3.5 years WALT 2.7 years WALT 2.3 years WALT 6 years WALT 6 years
Slide 30: Disclaimer
Disclaimer The information and opinions in this presentation were prepared by Precinct Properties New Zealand Limited or one of its subsidiaries (Precinct). Precinct makes no representation or warranty as to the accuracy or completeness of the information in this presentation. Opinions including est
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