Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — H1 FY2015 Earnings Presentation
36 slides from Kiwi Property's earnings presentation, Nov 12, 2014
Slide 1: Interim Result 30 September 2014
INTERIM RESULT 30 SEPTEMBER 2014 0
Slide 2: Contents
Contents 02 Result overview 05 Financial review 10 Portfolio performance 15 Development activity 19 Summary and outlook 20 Appendices This interim result presentation should be read in conjunction with the NZX announcement and online interim report also released 12 November 2014 Refer to: kipt.co.nz
Slide 3: Result Overview
RESULT OVERVIEW MARKETS FINANCIAL OPERATING Economic fundamentals underpin Strong operational performance Improving market conditions assisted prospects for both retail and office value growth and key metrics sectors Economy $42.1m 2.10b - Reflects - Growth remains positive - Up $4.6 million (12.3%)
Slide 4: Result Overview: developments and insurance settlement
RESULT OVERVIEW ACTIVE DEVELOPMENTS NEW DEVELOPMENT INSURANCE SETTLEMENT Progress has been made on the New development at LynnMall to Insurance claim at Northlands Trust’s development activity commence January 2015 Shopping Centre settled The Majestic Centre LynnMall - Settlement reached for all - T
Slide 5: Corporatisation Proposal
CORPORATISATION PROPOSAL – Proposal to move from a trust to a Key dates1 company structure 28-Nov Notice of Special Meeting and Prospectus mailed to investors Notice of Special Meeting and Prospectus issued for Unit Holder consideration 15-Dec Special Meeting of Unit Holders 19-Dec Units cease tra
Slide 6: Rental Income
RENTAL Assisted by developments, leasing and INCOME internalisation Net operating income1 30-Sep-14 30-Sep-13 Variance For the six months ended $m $m $m % - NOI increase assisted by: Sylvia Park 18.2 16.5 +1.7 +10.3 completion of Centre Place LynnMall 8.0 7.5 +0.5 +6.7 completion of Northlands C
Slide 7: Financial Performance
FINANCIAL PERFORMANCE Solid operating result Financial performance 30-Sep-14 30-Sep-13 Variance For the six months ended $m $m $m % - Operating profit increased Gross rental income 102.3 101.5 +0.8 +0.8 by improved NRI Property operating expenditure -25.3 -30.1 +4.8 +15.9 - Profit before tax reduced
Slide 8: Distributions
DISTRIBUTIONS In line with guidance Distributable income 30-Sep-14 30-Sep-13 Variance For the six months ended $m $m $m % - Distributable Operating profit before other income/(expenses) and tax1 42.1 37.5 +4.6 +12.3 income increased Fixed rental income adjustments -1.5 -0.8 -0.7 -87.5 by: improved
Slide 9: Financial Position
FINANCIAL POSITION Strong financial position maintained Financial position 30-Sep-14 31-Mar-14 Movement As at $m $m $m % - Total value of investment Assets properties decreased due: Investment properties Appendix 3 2,102.6 2,130.2 -27.6 -1.3 sale of remaining 50% Cash Appendix 4 9.5 9.2 +0.3 +3.3
Slide 10: Finance Debt
FINANCE Debt sources diversified and weighted DEBT duration extended Facilities expiring Finance debt facilities $m % - Refinanced all bank debt facilities FY15 - - - Completed a $125 million bond FY16 - - offer Seven-year tenure FY17 WBC $57.5 57.5 6.4 6.15% per annum fixed interest FY18 ANZ $5
Slide 11: Portfolio Metrics
PORTFOLIO METRICS Sound portfolio metrics maintained 30-Sep-14 31-Mar-14 Core portfolio metrics1 Retail Office Total Total Number of assets 6 5 11 12 Value ($000) 1,399.7 637.0 2,036.7 2,064.8 Proportion of total portfolio by value Appendix 7 67% 30% 97% 97% Weighted average capitalisation rate 7.17
Slide 12: Portfolio Value
PORTFOLIO VALUE Firming capitalisation rates in office sector Fair value Portfolio / property Capitalisation rates % Adopted value $m increase/(decrease) As at Sep-14 Mar-14 Var. bps Sep-14 Mar-14 $m % - Final 50% tranche of Sylvia Park n/a 6.50 n/a 567.9 564.0 +0.4 +0.1 205 Queen sale LynnMall n/a
Slide 13: Leasing and Rent Reviews
LEASING AND RENT REVIEWS Positive rental growth achieved NLA Uplift over prior passing rent Retail portfolio Static portfolio activity No. of % of CAGR WALT By portfolio tenancies sqm portfolio $000 % % years - CPI and fixed rental reviews underpin growth Rent reviews 386 59,100 26 1,662 +4.0 +4.0 -
Slide 14: Expiries and WALT
EXPIRIES AND WALT Leasing activity maintains WALT - The weighted average lease term Weighted average lease term (by gross income) for the office portfolio has As at 30-Sep-14 31-Mar-14 improved primarily due to leasing at Vero Centre and The Majestic Retail 3.6 years 3.8 years Centre Office 6.8 year
Slide 15: Sales
SALES Increasing sales trend continues MAT $m % variance from prior Specialty sales Centre Sep-14 Mar-14 Sep-13 $/sqm GOC - Total portfolio sales +4.4% Sylvia Park 466.7 +2.0 +2.3 9,700 Sales increased for all centres except LynnMall which continues to be LynnMall 216.3 -0.6 -0.8 7,600 impacted by
Slide 16: LynnMall Development Overview
LYNNMALL Development overview $36 million development to create a new dining Financial metrics and entertainment precinct announced Cost and value Pre-development value (Mar-14) $206m – The development incorporates: a new 8-screen Reading Cinemas multiplex on a Development cost1 $36m 15-year lease
Slide 17: LynnMall Development Imagery
LYNNMALL Development imagery “LynnMall’s new retail and dining areas will present a modern edgy retail environment, embracing the natural forms of native trees and open spaces.” Kiwi Income Property Trust • September 2014 Interim Result Presentation • 12 November 2014 16
Slide 18: The Majestic Centre
THE MAJESTIC CENTRE Project challenges increase forecast cost Project status Leasing status – Two critical elements – foundation works – Since the project commenced in July 2012, and transfer beam - structurally complete leases representing 13,800 sqm (56% of – Complexity and logistical challenges h
Slide 19: 56 The Terrace
56 THE TERRACE Redevelopment works commenced Project status – Preliminary strip out, demolition and enabling works commenced in Sep-14 – Construction works commenced early Nov-14 Key project metrics Development cost1 $65.7m Estimated value on $120.5m completion Estimated yield on ~7.5% completion Cr
Slide 20: Summary and Outlook
SUMMARY AND OUTLOOK Projected full-year cash distribution of 6.50 cpu – Economic activity, investment intention and confidence remains positive – Property sector fundamentals are positive, under-pinned by rental growth prospects – Corporatisation proposal, if approved, will provide further benefits
Slide 21: Appendices Index
APPENDICES Index Contents Appendix Page No. Financial review Net interest expense 1 21 Operating profit before tax (six months to Sep-13 versus six months to Sep-14) 2 22 Investment properties (movement for the six months ended Sep-14) 3 23 Finance debt (movement for the six months ended Sep-14) 4 2
Slide 22: Net Interest Expense
APPENDIX 1 Net interest expense 30-Sep-14 30-Sep-13 Variance For the six months ended $m $m $m % Interest income 0.3 0.2 +0.1 +50.0 Interest on bank debt -22.5 -25.1 +2.6 +10.4 Interest on MCNs -5.4 -5.4 - - Interest on bond -1.4 - -1.4 -100.0 Net interest expense incurred -29.0 -30.3 +1.3 +4.3 Inte
Slide 23: Operating Profit Before Tax Movement
APPENDIX Operating profit before other 2 income/(expenses) and tax Movement: six months ended 30-Sep-13 versus six months ended 30-Sep-14 ($m) 60 39.7 39.4 37.5 36.8 28.1 +$5.7 50 +$3.0 +$0.7 +$2.9 40 +$4.0 -$0.1 -$0.7 -$6.0 -$0.2 30 -$4.7 20 =$42.1 $37.5 10 +$4.9m from NOI change 0 +$5.6m from NRI
Slide 24: Investment Properties Movement
APPENDIX 3 Investment properties Movement for the six months ended 30-Sep-14 ($m) 2,200 +$13.7 +$6.5 +$17.6 -$5.1 -$3.7 2,100 -$56.6 2,000 +$2,130.2 =$2,102.6 1,900 1,800 As at Mar-14 Development Development Other capital Fair value change Other Disposal of 2nd As at Sep-14 costs: The costs: 56 The
Slide 25: Finance Debt Movement
APPENDIX 4 Finance debt Movement for the six months ended 30-Sep-14 ($m) 1,000 900 +$7.5 +$20.2 +$31.4 +$1.6 +$25.2 800 -$83.8 -$26.0 +$1.3 700 -$55.9 $777.3 600 =$698.8 500 1 Net bank debt Net interest Investment and Tax Distributions 1 Management Net rental Insurance Disposal Other Net bank debt M
Slide 26: Interest Rate Hedging Profile
APPENDIX 5 Interest rate hedging profile Hedging profile (inclusive of $125m bond) 30-Sep-14 31-Mar-14 Percentage of drawn finance debt hedged (fixed rate) 98% 74% Weighted average interest rate of active swaps (excl. fees and margin) 4.76% 4.70% Weighted average term to maturity of interest rate he
Slide 27: Portfolio Statistics
APPENDIX 6 Portfolio statistics Ownership % NLA sqm Occupancy %1 WALT years Property / portfolio As at Sep-14 Mar-14 Sep-14 Mar-14 Sep-14 Mar-14 Sep-14 Mar-14 Sylvia Park, Auckland 100 100 71,344 71,185 99.6 99.6 3.4 3.6 LynnMall, Auckland 100 100 32,446 32,220 99.6 100.0 3.4 3.6 Centre Place, Hamil
Slide 28: Sector and Geographic Diversification
APPENDIX 7 Sector and geographic diversification (by value) Total by sector Palmerston By value (%) Auckland Wellington Christchurch North Hamilton Sep-14 Mar-14 Retail 36.9 4.6 9.8 9.4 5.9 66.6 65 Office 23.1 7.2 - - - 30.3 32 Other 2.5 - 0.3 - 0.3 3.1 3 Total by region Sep-14 62.5 11.8 10.1 9.4 6.
Slide 29: Tenant Diversification and Top Tenants
APPENDIX 8 Tenant diversification and top 20 tenants Tenant diversification (% core portfolio gross income) Top 20 tenants (% core portfolio gross income) 01. New Zealand chains 29 1. ASB Bank 7.4 02. Australian and international chains 23 2. Farmers 3.9 03. Department and discount department stores
Slide 30: The Majestic Centre Seismic Strengthening Works Overview
APPENDIX The Majestic Centre 9 Seismic strengthening works overview Status of key workstreams as at Nov-14 Foundation pad Completed Aug-14 Transfer beam structure Completed Sep-14 Tower floors In progress Shear (lift) core Transfer beam trusses Strengthen (Target completion Jan-15) connection of flo
Slide 31: The Majestic Centre Seismic Strengthening Works: Foundation and Beam
APPENDIX The Majestic Centre 9 Seismic strengthening works overview Foundation pads Level 5 transfer beam Strengthen lift core foundations Strengthen transfer beam that extends around circumference of the tower base Foundations strengthened with the addition of 38 piles to Transfer beam strength imp
Slide 32: The Majestic Centre Seismic Strengthening Works: Floors and Core
APPENDIX The Majestic Centre 9 Seismic strengthening works overview Tower floors Shear core walls Strengthen connection of floors to tower perimeter columns and Strengthen and improve resilience of shear (lift) core walls lift core walls Tower floors strengthened with 457 tonnes of structural Shear
Slide 33: Markets: Retail
APPENDIX Markets 10 Retail sales Portfolio weighting by value Outlook Key points: Sales growth - Consumers remain positive and businesses are optimistic outlook remains - GDP is forecast to grow (3.3% for 2015 and 2.9% for 2016) 67.0% positive - Unemployment is reducing - Wages are growing - New Z
Slide 34: Markets: Auckland CBD Office
APPENDIX Markets 11 Auckland CBD office Portfolio weighting by Key points: value Outlook (Premium and A-grade accommodation) Supply - Prime office (Premium and A-grades) expected to remain static over 2014 before fringe CBD A-grade development comes on stream from 2015 Absorption - Solid tenant dema
Slide 35: Markets: Wellington CBD Office
APPENDIX Markets 12 Wellington CBD office Portfolio weighting by Key points: value Outlook (A-grade and B-grade accommodation) Supply - Limited new building activity forecast and the supply environment is unpredictable, being dictated by removal of buildings from the market for seismic strengthening
Slide 36: Disclaimer
DISCLAIMER Kiwi Property Management Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust (KIP). The information contained in this presentation (the ‘Presentation’) is intended to provide general information only and does not take into account your individual objectives, financial sit
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