Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — FY2018 Earnings Presentation
49 slides from Growthpoint Properties Australia's earnings presentation, Aug 16, 2018
Slide 1: Space to thrive: 2018 Annual Results Presentation
Growthpoint Properties Australia Growthpoint Properties Australia Trust ARSN 120 121 002 Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL 316409 www.growthpoint.com.au space to thrive 2018 Annual Results Presentation For the year ended 30 June 2018 | 16 August 2018
Slide 2: Agenda
Agenda Executive Management Team 1. FY18 Highlights 2. Opportunities and Performance 3. Financial Management Timothy Collyer Managing Director Dion Andrews Chief Financial Officer 4. Property Portfolio 5. Summary Michael Green Yien Hong* Chief Investment Officer General Counsel & Company Secretary I
Slide 3: FY18 Highlights, Opportunities & Performance
FY18 Highlights, Opportunities & Performance 5 Murray Rose Avenue, Sydney Olympic Park, NSW
Slide 4: Highlights for FY18
Highlights for FY18 Securityholder returns Property nn 25.0 cents in Funds From Operations nn Net tangible assets increased 10.8% (FFO) per security to $3.19 per security nn 22.2 cents in distributions per security nn Like-for-like valuation uplift of $193.8 million, or nn 22.3% Total Securityholder
Slide 5: Considered investment decisions in competitive direct market
Considered investment decisions in competitive direct market Market opportunities not limited to direct property acquisition Robust capital position well placed for future growth LISTED NEW RETAIL BIDDING ON MARKET DIRECT MARKET DIRECT MARKETS REVIEW PROPERTY BALANCE EQUITY INVESTMENTS SHEET CAPITAL
Slide 6: Post-balance date acquisitions and planned divestments
Post-balance date acquisitions and planned divestments Perth office asset acquisition Two Sydney Olympic Park assets placed on market nn Entered transaction documents for acquisition of 836 Wellington Street, West Perth, WA nn Formal marketing for sale of 6 Parkview Drive nn $91.3 million acquisitio
Slide 7: Planned developments and expansions to begin in FY19
Planned developments and expansions to begin in FY19 Botanicca 3, Woolworths Richmond, VIC DC, Gepps Cross, SA nn 19,300 sqm, A-grade office building nn Negotiating with tenant regarding nn Designed to achieve: $50 to $60 million –– 5-star NABERS expansion of energy rating Gepps Cross –– 5-star Gree
Slide 8: Track record of strong returns
Track record of strong returns nnFY19 FFO guidance takes into account the West Perth acquisition to settle in October 2018, up to $110 million of asset sales expected to take place throughout FY19 and the Dividend Reinvestment Plan activated for the August 2018 distribution. Long-term growth in FFO
Slide 9: Financial Management
Financial Management 75 Dorcas Street, South Melbourne, VIC
Slide 10: FY18 Financial Management Highlights
FY18 Financial Management Highlights Statutory profit Funds From Operations Distributions Payout ratio to FFO $357.7m 25.0cps 22.2cps 88.8% 29% increase on prior corresponding period NTA per share Gearing reduced to Average cost of debt increased 10.8% to $3.19 33.9% 1 4.4% From 38.5%1 From 4.3% at
Slide 11: Areas of interest: Gearing further reduced over FY18
Areas of interest: Gearing further reduced over FY18 nnProceeds from above- Key items influencing gearing (%) book value sale of 522-550 Wellington Road, Mulgrave 40% used to pay down debt at end of CY17 39% 38.5% 460bps reduction since 30 June 2017 nnBook value of property 38% +3.0% portfolio incre
Slide 12: Areas of interest: Movements in NTA over FY18
Areas of interest: Movements in NTA over FY18 Uplift driven by: Movements in NTA per stapled security ($) 10.8% increase since nn28 bps fall in weighted 30 June 2017 average capitalisation rate to 6.25% 3.20 +$0.01 $3.19 +$0.01 nnImprovement in market +$0.04 rents, particularly in 3.15 +$0.25 Sydney
Slide 13: Areas of interest: Near-term debt maturities extended
Areas of interest: Near-term debt maturities extended nn$515 million of bank debt extended in 2H18. Earliest Debt maturity profile ($m) maturity now September 2020 Bank debt Institutional term loan USPP Undrawn bank debt nnMaintained weighted average debt maturity at 5 years 500 50 nnContinue to pur
Slide 14: Summary
Summary nnLong track record of earnings and distributions growth nnBalance sheet in excellent shape –– Low gearing at 33.9% –– Long weighted average debt maturity –– High percentage of fixed debt at 82% nnGood access to capital to support the right transactions Growthpoint Properties Australia Full
Slide 15: Property Portfolio
Property Portfolio 333 Ann Street, Brisbane, QLD
Slide 16: Well diversified portfolio
Well diversified portfolio Sector diversity (%) Geographic diversity (%) Tenant type (%) by property value, as at 30 June 2018 by property value, as at 30 June 2018 by income, as at 30 June 2018 5 1 6 20 34% Industrial 6 29 66% Office 26 56 24 27 Listed company VIC NSW 87% Located Government owned P
Slide 17: Low vacancy and diversity of use
Low vacancy and diversity of use Vacancy Tenant use (%) Annual rent review type1 (%) as at 30 June 2018 as at 30 June 2018 as at 30 June 2018 2 1 2 2 7 1 17 8 2% vacant 32 WARR2 98% occupied 3.3% 61 67 Office Fixed 2.00-2.99% Logistics / Distribution Fixed 3.00-3.99% Manufacturing Fixed over 4.00% R
Slide 18: High quality tenants and manageable near-term expiries
High quality tenants and manageable near-term expiries Top ten tenants Portfolio lease expiry profile (%) by passing rent, as at 30 June 2018 per financial year, by income WALE % (yrs) Major lease expiries NSW Police 8.7% Woolworths 10.9% Lion 2.6% Woolworths 15 4.5 Industrial Samsung 2.7% Linfox 1.
Slide 19: 132,433 sqm of office and industrial leasing completed in FY18
132,433 sqm of office and industrial 1 leasing completed in FY18 13% 8% of total portfolio of total lettable area2 portfolio rent3 Lettable area Lettable area Lettable area 44,424 sqm 6,343 sqm 1,193 sqm Lease extension to Lease extension to New lease to Flow Power Australian Postal Corporation West
Slide 20: Track record of creating additional valuation growth
Track record of creating Concentrated asset management program additional valuation growth delivering enhanced returns for Securityholders +27% increase in value since June 2016 333 Ann St, Brisbane, QLD +45% nn Occupancy increased from 77% to 95% following leasing success increase in value nn Subdi
Slide 21: Focus on renewable projects
Focus on renewable projects 75 Dorcas Street, South Melbourne, VIC 599 Main North Road, Botanicca 3, 572-576 Swan t tFeasibility study completed to identify most Gepps Cross, SA Street, Richmond, VIC viable solar projects within Growthpoint portfolio t tDorcas Street suitable investment proposition
Slide 22: Major infrastructure investment positive for non-CBD markets
Major infrastructure investment positive for non-CBD markets VIC - Office VIC - Industrial NSW - Office NSW - Industrial Melbourne Metro Rail CityLink - Tullamarine widening, West Connex, Sydney Light Rail, Second Sydney West Connex West Gate Tunnel Airport, Sydney Metro - City and Southwest 75 Dorc
Slide 23: Summary
Summary 2 & 10 Hugh Edwards Drive, Perth Airport, WA
Slide 24: Summary
Summary nnStrong operational result in FY18 driven by accretive acquisitions and asset sales above book value nnFavoured office and industrial sectors continue to display superior growth prospects nnAttractive FY19 DPS yield with growth in distributions targeted at 3% to 4% nnBalance sheet in excell
Slide 25: Appendices
Appendices 836 Wellington Street, West Perth, WA
Slide 26: Appendix 1: State of key office markets
Appendix 1: 4% of 15% of Growthpoint Growthpoint Portfolio Brisbane - CBD Brisbane - Fringe Portfolio state of key office markets Vacancy 14.4% Prime Secondary Vacancy 16.0% Prime Secondary R $725 gross $562 gross R $544 gross $441 gross R Average face rent per sqm per annum I 39% 40% I 38% 38% I In
Slide 27: Appendix 2: State of key industrial markets
Appendix 2: state of key industrial markets R Average face rent per sqm per annum I Indicative incentives Y Average core market yield 7% of Brisbane Growthpoint Portfolio Market Market 491,544 sqm* Strength- Softening Market Prime Secondary ening Stable R $111 net $85 net I 8-15% 10-15% Y 6.00-6.75%
Slide 28: Appendix 3: Economic fundamentals remain supportive
Appendix 3: Economic fundamentals remain supportive Unemployment (%) NAB Business Survey (net balance) 30 6.4 20 6.2 10 6.0 Forecast 0 5.8 -10 5.6 -20 5.4 -30 5.2 Business Confidence Business Conditions -40 5.0 Jun 06 Jun 08 Jun10 Jun12 Jun14 Jun16 Jun18 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec
Slide 29: Appendix 4: Geographic diversity
Appendix 4: Geographic diversity1,2 87% of properties located on Eastern seaboard Office properties Industrial properties (number of assets) 26% Queensland $876.9m – Office $632.0m – Industrial $244.9m 27% New South Wales $893.5m 7 4 – Office $699.3m – Industrial $194.3m 2 2 4 6 5 5% Australian Capi
Slide 30: Appendix 5: Office portfolio review
Appendix 5: Office portfolio review Office portfolio Top ten office tenants Office portfolio lease expiry profile (%) key statistics by passing rent, as at 30 June 2018 per financial year, by income (as at 30 June 2018) WALE % (yrs) $2,209.3m NSW Police 13 5.9 total value Commonwealth of Australia 8
Slide 31: Appendix 6: Industrial portfolio review
Appendix 6: Industrial portfolio review Industrial portfolio Top ten industrial tenants Industrial portfolio lease expiry profile (%) key statistics by passing rent, as at 30 June 2018 per financial year, by income (as at 30 June 2018) WALE % (yrs) $1,146.8m Woolworths 44 4.5 38 total value Linfox 1
Slide 32: Appendix 7: Summary Financials
Appendix 7: Summary Financials FY18 FY17 Change % Change Net property income $'000 218,512 223,318 (4,806) (2.2) Like-for-like property income $'000 174,214 173,649 565 0.3 Statutory accounting profit $'000 357,709 278,090 79,619 28.6 Statutory accounting profit per security ¢ 53.5 42.7 10.8 25.3 Fu
Slide 33: Appendix 8: Reconciliation from statutory profit to FFO
Appendix 8: Reconciliation from statutory profit to Funds From Operations (FFO) FY18 FY17 Change % Change $’000 $’000 $’000 % Profit after tax 357,709 278,090 79,619 28.6% Less non-FFO items: - Straight line adjustment to property revenue (5,962) (2,522) (3,440) - Net changes in fair value of invest
Slide 34: Appendix 9: Financial position
Appendix 9: Financial position as at 30 June 2018 as at 30 June 2017 $’000 $’000 Assets Cash and cash equivalents 31,463 31,459 Investment properties 3,291,800 3,180,275 Other assets 151,306 116,638 Total assets 3,474,569 3,328,372 Liabilities Borrowings 1,197,555 1,299,380 Distributions payable 75,
Slide 35: Appendix 10: Lease incentives
Appendix 10: Lease incentives Lease incentives for leasing completed in FY18 averaged 17% (27% office and 11% industrial). This includes fit-out, rent free, rental abatement and cash payments. Average lease incentives (%) Financial impact of lease incentives and leasing costs¹ The impact of tenant i
Slide 36: Appendix 11: Operating and capital expenses
Appendix 11: Operating and capital expenses Operating expenses FY18 FY17 Total operating expenses $'000 13,362 12,385 Average gross assets value $'000 3,377,737 3,204,716 Expected to remain around Operating expenses to average % 0.40% 0.39% 0.40% based on current portfolio Capital expenditure FY18 F
Slide 37: Appendix 12: Gearing
Appendix 12: Gearing Summary of debt facilities Secured bank loans Limit $m Drawn $m Maturity 5.0yrs 33.9% 4.4% Weighted average Gearing All-in cost Syndicated Facility debt maturity of debt Gearing - Facility B 100 100 Mar-23 target range - Facility C 245 245 Dec-21 35%-45% - Facility D 70 70 Dec-2
Slide 38: Appendix 13: Target fixed debt
Appendix 13: Target fixed debt 65% to 100% of drawn debt Weighted average fixed debt Weighted average fixed debt (term) Time Fixed Face value 5.5yrs Maturity date to maturity rate of Swap Interest Rate Swaps (IRS) Jun-2020 2.0yrs 2.36% $25m (30 June 2017: 6.4 years) Jun-2020 2.0yrs 2.36% $25m Dec-20
Slide 39: Appendix 14: Portfolio overview – Five year performance summary
Appendix 14: Portfolio overview – Five year performance summary As at 30 June FY18 FY17 FY16 FY15 FY14 Number of properties no. 57 58 58 53 51 Total value $m 3,356.1 3,283.8 2,832.6 2,372.5 2,093.7 Occupancy % 98 99 99 97 98 Like-for-like value change $m / % of asset value 193.8 / 6.2 138.6 / 5.2 13
Slide 40: Appendix 15: Leasing
Appendix 15: Leasing At 30 June 2018 Leases completed since 30 June 2017 Term Annual rent NLA Car Address Sector Tenant Start date (yrs) increases (%) (sqm) Parks Industrial portfolio A1, 32 Cordelia Street South Brisbane QLD Office Jacobs Group (Australia) Q4, FY17 1.0 Fixed 3.75% 1,311 11 6 Parkvi
Slide 41: Appendix 16: Top five office properties by value
Appendix 16: Top five office properties/property groups by value 59% of office portfolio $1,298.3m total value of top five properties / property groups 5.9yrs SW1 Complex, 1 Charles St, Sydney Olympic Park, 75 Dorcas St, Bldgs 1, 2, & 3, 572-576 weighted average South Brisbane, QLD Parramatta, NSW N
Slide 42: Appendix 17: Top five industrial properties by value
Appendix 17: Top five industrial properties/property groups by value 79% of industrial portfolio $910.7m total value of top five properties / property groups 5.1yrs Woolworths Linfox properties, Melbourne Airport Knoxfield industrial Perth Airport industrial weighted average Distribution Centres Ers
Slide 43: Appendix 18: Equity capital overview
Appendix 18: Equity capital overview Market capitalisation and Location of Growthpoint Growthpoint free float ($m) Securityholders1 (%) Securityholders1 (%) 105% as at 30 June 2018 as at 30 June 2018 Market Capitalisation increase in free float since 30 June 2014 Free float 10 0.7 7.5 2,438.1 2,076.
Slide 44: Appendix 19: Growthpoint Properties Limited - South Africa (GRT)
Appendix 19: Growthpoint Properties Limited - South Africa (GRT)1 Growthpoint Properties Limited of South Africa (“GRT”) owns 65.5% of the Key Facts (as at 31 December 2017)1 securities of Growthpoint (at 30 June 2018) and is its major Security holder. Other information • Good corporate governance w
Slide 45: Appendix 20: Board of Directors
Appendix 20: Board of Directors 1. Geoffrey Tomlinson (70) 3. Maxine Brenner (56) 5. Grant Jackson (52) 7. Norbert Sasse (53) BEC BA, LLB Assoc. Dip. Valuations, FAPI BCom (Hons) (Acc), CA (SA) Independent Chairman (since Independent Director (since Independent Director (since Director4 (since 5 Aug
Slide 46: Appendix 21: 2018 Securityholder calendar
Appendix 21: 2018 Securityholder calendar* 16 August 2018 • Results for the full year ended 30 June 2018 announced to ASX 31 August 2018 • Distribution paid for the half year ending 30 June 2018 • FY18 Annual Report sent to Securityholders 18 October 2018 • Investor Update released to ASX 21 Novembe
Slide 47: Glossary
Glossary A-REIT Australian Real Estate Investment Trust FY14, FY15, FY16, FY17 and FY18 the 12 months ended NPI net property income on 30 June in the year listed i.e. “FY18” means the 12 months ASX Australian Securities Exchange NTA net tangible assets ended 30 June 2018 bn billion m million FY19, F
Slide 48: Important information
Important information Disclaimer pro forma historical financial information included in this Presentation current market conditions. This presentation and its appendices (“Presentation”) is dated 16 August does not purport to be in compliance with Article 11 of Regulation Forward-looking statements
Slide 49: Thank you
Contact details: Retail Investors: Computershare Investor Services Pty Limited, GPO Box 2975, Melbourne VIC 3001 Australia Phone (within Australia): 1300 850 505 Phone (outside Australia): +61(0)3 9415 4000 Fax: +61(0)3 9473 2500 Email: webqueries@computershare.com.au Institutional Investors: Daniel
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