Precinct Properties Nz Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties Nz Ltd & Precinct Properties Investments — AMP NZ Office — FY2012 Earnings Presentation
29 slides from Precinct Properties Nz Ltd & Precinct Properties Investments's earnings presentation, Aug 15, 2012
Slide 1: AMP NZ Office Limited (ANZO) Annual Results
AMP NZ Office Limited (ANZO) Annual Results Year ended 30 June 2012 15 August 2012 Copyright © 2012 AMP NZ Office Limited
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 – Financial results and capital management Page 4 Section 2 – Market and portfolio overview Page 12 Section 3 – Conclusion and outlook Page 25 Note: All $ are NZD unless otherwise stated. ANZO Annual Results, 30 June 2012 Page 2
Slide 3: Highlights
Highlights Net profit after tax of $45.1 million (2011: $10.4 million) Net operating income after tax of $51.3 million or 5.14 cps (2011: $61.1 million) Lower property income due to sale of Chews Lane and Westpac, BNZ departures Positive revaluation due to stabilisation and improvement in prop
Slide 4: Section 01 – Financial Results and Capital Management
Section 01 – Financial Results and Capital Management Vodafone on the Quay
Slide 5: Net property income
Net property income Movement ■ Overall net property income (NPI) was $10.2 million or 10% down $m FY12 FY11 $ % 125 The Terrace $4.9 $5.3 ($0.4) (7.8% ) ■ Excluding transactions and the ANZ redevelopment NPI was 4.8% down Zurich House $4.3 $0.2 +$4.1 + 1734.0% AMP Centre $7.2 $7.8 ($0.6) (7.7% ) ■ A
Slide 6: Financial performance
Financial performance For the 12 months ending 30 Jun 12 30 Jun 11 ($m) Audited Audited Change Net property income $90.9 m $101.1 m ($10.2 m) Indirect expenses $1.8 m $1.4 m ($0.4 m) Performance fees $3.2 m $2.0 m ($1.2 m) Base fee $6.6 m $5.8 m ($0.8 m) EBIT $79.3 m $91.9 m ($12.6 m) Net interest e
Slide 7: Balance sheet
Balance sheet Financial Position as at 30 Jun 12 30 Jun 11 ($m) Audited Audited Movement Reconciliation of NTA movement cps Assets NTA 30 June 2011 88.5 Property assets $1,332.1 m $1,254.2 m $77.9 m Revaluation 0.6 Other $18.3 m $29.7 m ($11.4 m) Deferred tax -0.6 Total assets $1,350.4 m $1,283.9 m
Slide 8: Capital management
Capital management ■ Overall facility increased and term 30 June 2012 30 June 2011 Debt drawn $346m $282m extended Gearing - Banking Covenant 27.0% 23.7% – New $125 million tranche Weighted average term to expiry 3.2yrs 3.3yrs expiring in July 2017, and Weighted average debt cost (incl fees) 6.8% 7.
Slide 9: Valuations
Valuations ■ Revaluation of $5.5 million or 0.4% ■ Valuation increased 4.8% or $59 million due to yield compression and slight increase in market rents ■ Excluding Bowen Campus and Chews Lane the portfolio cap rate compressed from 7.90% to 7.78% ■ Over renting of 3% compared to 7% at 30 June 2011 20
Slide 10: Insurance costs and cover
Insurance costs and cover ■ Insurance costs continue to increase Two year change in ANZO Insurance Premiums significantly May 2012 May 2010 % change ■ Basis of cover: Total Premium $4.6 m $1.8 m +156% Wellington (m²) $25.7 /m² $10.1 /m² +154% – Buildings insured at full Auckland (m²) $9.3 /m² $2.9 /
Slide 11: Earnings outlook
Earnings outlook ■ FY13 net operating income guidance of 5.7 cps before performance fees: – 5.5 cps assuming 50% of the maximum performance fee is payable – Potential change in tax treatment of lease inducements – Income producing occupancy expected to average between 93% and 94%, reflecting the tim
Slide 12: Section 02 – Market and Portfolio Overview
Section 02 – Market and Portfolio Overview
Slide 13: Leasing activity
Leasing activity ■ 65 leasing transactions covering 16% of portfolio 46,000m2 of leasing transactions, ■ 20 new clients across 9,900 sqm secured on a WALT of 6.6 years ■ 2 key cross city leasing successes 20,000m2 of vacant space leased - 33 transactions Leasing Transactions - 70% leased to new Clie
Slide 14: Events in review
Events in review Compared with passing rent ■ ROR and extensions were 2.5% Major leasing transactions during the year down Property Client Area m² Term years ■ Settled rent reviews were 6.5% PwC Tower PwC 10,281 9 down SAP Tower MMC 3,027 8 ■ Portfolio over renting reduced PwC Tower Hesketh Henry Pa
Slide 15: Transactions in review
Transactions in review ■ Successful disposal of Chews Lane at 3.3% premium to valuation ■ Reinvestment of proceeds into – Bowen Campus for $50.4 m – ANZ Centre redevelopment ■ Government (PMCOE) request for proposal (RFP) – Agencies include Ministry of Health, Crown Law Office, Ministry of Social De
Slide 16: Portfolio metrics
Portfolio metrics ■ Substantial leasing success has resulted in Occupancy – Improved WALT, Auckland now 7.5 years AXA Centre – Rebuilt occupancy of 94% Mayfair House ■ Over 80% of revenue from office Deloittte House Bowen Campus – 30% from government clients representing Pastoral House around 19% of
Slide 17: Historical performance
Historical performance ■ Occupancy trending to historical average of Leasing Transactions 96%+ 70,000 m² Total Leasing Transactions ■ Over 110,000 sqm of leasing in 2 years 60,000 m² 50,000 m² – Improved WALT 40,000 m² 30,000 m² – Negative rental reversion largely complete 20,000 m² and market rent
Slide 18: Long term earnings security
Long term earnings security Certain Income Profile 100% $494m Dec-10 Dec-11 30-Jun-12 75% $606m $339m 50% 25% 0% 1 2 3 4 5 6 7 8 9 Years ANZO Annual Results, 30 June 2012 Page 18
Slide 19: FY13 Lease events
FY13 Lease events ■ 39% of portfolio (by NLA) subject to ■ 6% of portfolio expiring lease event in FY13 ■ 10% forecast FY13 incentive level ■ 20% of portfolio subject to market review – 10% relates to Bowen Campus – 7% balance of Wellington portfolio % of expiries FY13 event profile Major expiries F
Slide 20: Auckland CBD office market
Auckland CBD office market Key Metrics Auckland ANZO Premium CBD office forecast (CBRE, June 2012) CBD office stock (m2) 1.3 million 121,000 Prime grade (m2) c.570,000 121,000 Market size ($m) c.$7.0 b $671 m CBD premium yield (CBRE June 12) 7.75% 7.5% Premium & A grade vacancy rate (CBRE June 8.7%
Slide 21: Wellington CBD office market
Wellington CBD office market Key Metrics Wellington ANZO Premium CBD office forecast (CBRE, June 2012) CBD office stock (m2) 1.2 million 168,000 Prime grade (m2) c.320,000 168,000 Market size ($m) c.$5.5 b $662 m CBD premium yield (CBRE June 12) 8.25% 8.2% Premium & A grade vacancy rate (CBRE June 3
Slide 22: Market activity
Market activity Commercial building consents 1 ■ Auckland commercial 600 building activity Annual $M demonstrating significant 500 recovery and likely driven by leasing activity 400 ■ Wellington 12-18 months 300 behind in cycle ■ Seismic concerns and 200 regulatory uncertainty 100 leading to inactiv
Slide 23: CBD office market outlook
CBD office market outlook Wellington Auckland Market uncertainties over stock ► ▲ Occupier Continued enquiry for higher quality quality, Government continuing to Demand space over secondary space retract albeit slightly Obsolescence accelerated due to Stable with no quality CBD office Supply ▼ seism
Slide 24: Seismic
Seismic ■ Seismic concerns remain amongst occupiers and owners ■ ANZO taking responsible approach and moving from completed preliminary assessments to 3D modelled analysis where required – Analysis being peer reviewed to ensure rigor ■ Analysis continues to conclude that ANZO is compliant with some
Slide 25: Section 03 – Conclusions and Outlook
Section 03– Conclusions and Outlook PWC Tower
Slide 26: Conclusions
Conclusions ■ NZ economy expected to remain steady amongst continued global uncertainty ■ Interest rates to remain below long term averages ■ Property market showing defensive characteristics ■ Occupier markets strengthening ■ Investment markets increasingly active as the occupier market improves ■
Slide 27: Outlook
Outlook ■ FY13 forecast EPS growing by 7% to 5.5 cps (assuming 2 performance fees) ■ Growth in EPS generated from increased occupancy ■ Future growth potential beyond FY13 remains from: – Continued growth in market rents – Use of balance sheet – Reduction in interest rates ■ ANZO to be renamed with
Slide 28: Disclaimer
Disclaimer The information and opinions in this presentation were prepared by AMP NZ Office Limited or one of its subsidiaries (ANZO). ANZO makes no representation or warranty as to the accuracy or completeness of the information in this presentation. Opinions including estimates and projections in
Slide 29: Appendix 1 - Portfolio composition
Appendix 1 - Portfolio composition Net Property Property Book Value NLA Occupancy WALT Income Auckland PWC Tower $13.2 m $222.4m 31,314 m² 87% 5.9 yrs ANZ Centre $12.8 m $192.5m 32,930 m² 100% 10.9 yrs AMP Centre $7.2 m $100.2m 25,134 m² 89% 6.2 yrs SAP Tower $6.5 m $80.0m 17,649 m² 85% 5.0 yrs Zuri