Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — H1 2021 Earnings Presentation
39 slides from Dexus Industria Reit's earnings presentation, Feb 17, 2021
Slide 1: 1H21 Results Presentation
1H21 RESULTS PRESENTATION 17 FEBRUARY 2021 www.apngroup.com.au ASX Code: ADI
Slide 2: Agenda
Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio Performance 04 Outlook Appendices 2
Slide 3: 01 Highlights and Outcomes
01 HIGHLIGHTS AND OUTCOMES wf IF Ea | Property Group
Slide 4: Delivering disciplined and high quality growth
Delivering disciplined and high quality growth FFO $19.8m Balance sheet ~25,100 square Being accountable: Up 8.2% on pcp; remains strong – metres completed, ADI will be carbon >99% gross rent 31.1% gearing; $19.0 million of neutral for FY21 collections capacity to unlock valuation uplifts further gr
Slide 5: 31 December 2020 financials
31 December 2020 financials ▪ Statutory net profit $31.9m: Income Statement 1H21 1H20 Change - Valuation gains of $19.0 m (compared to $25.5 m in prior Statutory net profit ($m) $31.9 $39.3 q 18.8% period) FFO ($m)1 $19.8 $18.3 p 8.2% - Net Property Income up 6.7% to $24 million – like for like grow
Slide 6: Strong balance sheet, consistently outperforming peers
Strong balance sheet, consistently outperforming peers ▪ Maintaining a staggered debt maturity profile, reducing Debt maturity profile – limited refinance risk concentration risk over any given period: $400m - Weighted average debt maturity 2.8 years $350m - Three financiers with no more than ~45% e
Slide 7: Valuation gains driven by active management
Valuation gains driven by active management ▪ Portfolio was 100% independently re-valued throughout Independent valuation outcomes 2020, including 56% at 31 December 2020: Book Reval Reval Cap Cap rate – 4.1% average revaluation gain, totalling $19.0 million Portfolio Value Gain Gain Rate mvmt – Wei
Slide 8: Track record of disciplined growth and delivering securityholder value
Track record of disciplined growth and delivering securityholder value Over the last three years - $230 million of acquisitions | average WALE 4.8 years | average cap rate 6.6% TSR1: 51% / 13% p.a. 13 Ricky Way and 10 Jersey Drive Knoxfield and Kilsyth portfolio 350-356 Cooper St, Epping Butler Blvd
Slide 9: Resilient income profile from high quality tenants
Resilient income profile from high quality tenants Tenant composition by income Tenants across the portfolio 7% 93% 7% 5% ASX Listed 7% National Listed Multinational 48% Government 15% Multinational Private 18% Tenant composition by industry – office assets Tenant composition by industry – industria
Slide 10: 02 Investment Proposition
02 INVESTMENT PROPOSITION 10
Slide 11: The APN Industria REIT opportunity
The APN Industria REIT opportunity Strategy to grow through The opportunity investing in office and ▪ Low-risk portfolio benefiting from a growing rent profile – average rent reviews of industrial assets ~3%, no potential volatility from “active earnings” (e.g. funds management or development) ▪ Pro
Slide 12: At a glance
At a glance $953 ~$600m S&P/ASX 300 INDEX MILLION MILLION MARKET PORTFOLIO CAPITALISATION MEMBER 6.0% 31% 5.1 3% CASH DISTRIBUTION GEARING YEAR WALE AVG RENT REVIEWS YIELD HIGH QUALITY OFFICE AND INDUSTRIAL ASSETS DELIVERING A STRONG INCOME PROFILE COMBINED WITH A CONSERVATIVE BALANCE SHEET PROVIDIN
Slide 13: Diversified portfolio generating consistent and growing income
Diversified portfolio generating consistent and growing income 61% industrial and logistics 39% business parks 19% 38% Industrial Melbourne, Brisbane 39% Adelaide and Brisbane Technology Park Key industrial precincts 15 minutes south of CBD ~$363 million valuation ~$178 million valuation 20% 61% 21
Slide 14: APN Property Group – aligned and experienced manager
APN Property Group – aligned and experienced manager Strong investor Focused and Governance Manager with long alignment dedicated overseen by an track record and ▪ APN is strongly aligned to management team Independent Board deep relationships delivering investor returns – owning a co-investment sta
Slide 15: 03 Portfolio Performance
03 PORTFOLIO PERFORMANCE 15
Slide 16: Actively managing Industria's real estate
Actively managing Industria’s real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 97% 97% 96% 96% 79% 95% 95% 151,600 126,500 97,600 83,900 70,300 45,900 11% 10% 18,800 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Dec-20 CPI 2 - <3% ≥ 3% Jun15 Jun
Slide 17: Industrial assets
Industrial assets ▪ Industrial portfolio 100% leased with 7.3 year WALE Independent valuation outcomes ▪ Average cap rate of 6.0% Book Reval Cap Cap rate Largest 6 properties Value Gain Rate mvmt ▪ 7.9% valuation growth driven by leasing success and market ($m) ($m) (%) (%) conditions: 34 Australis
Slide 18: Investor and occupier demand driving value growth
Investor and occupier demand driving value growth ▪ $26 billion of capital seeking industrial investment Industrial and logistics investment volumes ($billion)1 opportunities1, reallocating out of other real estate sub- $7.2 sectors: $6.4 $5.9 - Demand represents ~5 years of transactions $5.0 $4.9 $
Slide 19: Westrac Newcastle – world leading real estate
Westrac Newcastle – world leading real estate ▪ Leased to Westrac until 2034, with the higher of CPI or 3% annual rent reviews ▪ ~$5.5 million expansion underway – to generate 6.75% yield on cost from August 2021 ▪ Property completed in 2012 – and is regarded as best-in- class by Caterpillar dealers
Slide 20: Brisbane Technology Park
Brisbane Technology Park ▪ 18 leases across ~1,750sqm; 86% retention; 16% average Brisbane Technology Park | APN Industria REIT ownership incentive BRISBANE CBD ▪ Development complete of new childcare; 8% yield on cost on 15 mins to CBD $4.4 million development 25 mins to Airport ▪ 79% occupancy1 –
Slide 21: Brisbane Technology Park
Brisbane Technology Park ▪ APN’s on-site management platform is providing unique Innovation at Brisbane Technology Park opportunities to: - Engage with genuine innovators such as Lyro Robotics – who are commercialising world-leading picking and packing technology for deployment in supply chains - Bu
Slide 22: Rhodes Corporate Park
Rhodes Corporate Park ▪ Rents achieved in 2020 range from $450 - $475psm, delivering Rhodes Corporate Park and amenity growth of 11% on passing Building A Building C ▪ Focus remains on September 2021 expiry of Link Market Services: - 6 floors, 1800 – 2,250sqm floor plates with quality fit-out; centr
Slide 23: Rhodes and surrounding markets
Rhodes and surrounding markets ▪ Rhodes is highly accessible to a deep base of employees: Population within 20 minutes drive of metro office locations2 - ~30mins to Sydney CBD using existing road and rail infrastructure - 78,662 people live within a 20 minute drive – a denser population than Parrama
Slide 24: Asset management delivery
Asset management delivery 632Kw solar system - 81 Rushdale St, Knoxfield, Victoria New Childcare Facility– Brisbane Technology Park WesTrac expansion Radio Frequency Systems warehouse, 32 - 40 Garden St, Kilsyth 24
Slide 25: 05 Outlook
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Slide 26: Outlook
Outlook Sustainable returns underpinned by quality and affordable workspaces ▪ Industria is well positioned: Lease expiry profile (by income) - Anticipated to be the first A-REIT to be carbon neutral across both portfolio and operations, in accordance with the Climate Active Standard FY21 2% - High
Slide 27: Appendices
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Slide 28: Appendix A: Property portfolio
Appendix A Property portfolio 28
Slide 29: Independent Valuations
Independent Valuations Independent valuation outcomes Book Reval Cap Cap rate Property Value Gain Rate mvmt ($m) ($m) (%) (%) 10 Brandl Street $10.0 ($0.1) 7.50% (0.75%) 18 Brandl Street $13.7 $0.3 7.25% (0.75%) 37 Brandl Street $15.8 ($0.1) 7.00% (0.50%) 7 Clunies Ross Court $55.5 $5.2 6.50% (0.75%
Slide 30: APN Industria REIT portfolio as at 31 December 2020
APN Industria REIT portfolio as at 31 December 2020 Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector ($m) (%) (sqm) (by area) (by income) APN Industria REIT Portfolio Industrial Portfolio 585.5 6.03% 288,100 100% 7.3 Office Portfolio 367.0 6.39% 61,157 80% 2.1 Portfolio 952.5 6
Slide 31: APN Industria REIT portfolio as at 31 December 2020
APN Industria REIT portfolio as at 31 December 2020 Book Value Cap Rate NLA Occupancy WALE Property State Ownership Sector ($m) (%) (sqm) (by area) (by income) Industrial Portfolio (cont) 16-18 Quarry Road, Stapylton QLD 100% Industrial 58.9 5.75% 40,970 100% 3.1 5 Butler Boulevard, Adelaide Airport
Slide 32: Tenancy mix
Tenancy mix Tenant % portfolio income WesTrac 21% Link Market Services 11% Woolworths Group 3% AAE Retail 3% Frasers Property 3% Mitre 10 3% Interactive 3% Vesco 3% Autopact Victoria 3% RFS 3% Top 10 Tenants 56% Other 44% Total 100% 32
Slide 33: Appendix B: Financial information
Appendix B Financial information 33
Slide 34: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position As at Dec 2020 Jun 2020 $’000 $’000 Assets Cash and cash equivalents 4,988 4,928 Trade and other receivables 609 377 Other assets 2,322 733 Total current assets 7,919 6,038 Investment properties 923,648 826,481 Investment properties - Right-of-use assets
Slide 35: Consolidated Statement of Profit or Loss and other comprehensive income
Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended Dec 2020 Dec 2019 $’000 $’000 Income Net rental income 30,864 29,117 Straight line rental income recognition 904 1,277 Total revenue 31,768 30,394 Expenses Property costs (5,780) (6,048) Trust management f
Slide 36: Reconciliation to FFO
Reconciliation to FFO Financial period ended Dec 2020 Dec 2019 $’000 $’000 Statutory net profit after tax for the period 31,850 39,271 Adjusted for: Reversal of straight-line lease revenue recognition (904) (1,277) Reversal of fair value (gain) on investment properties (13,779) (21,466) Reversal of
Slide 37: Interest rate hedging profile
Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate 5% $170m $160m 4% $131m Average Fixed Rate (including caps) $127m 3% $72m 2% 1% 0% 2H21 FY22 FY23 FY24 FY25 37
Slide 38: Disclaimer
Disclaimer This presentation has been prepared by APN Funds Management Limited (ACN 080 647 479, AFSL No. 237500) (the "Responsible Entity") as the responsible entity and issuer of the financial products in respect of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491)
Slide 39: Contact
Contact Alex Abell Fund Manager – APN Industria REIT Ph: (03) 8656 1070 aabell@apngroup.com.au ASX Code: ADI Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, APN Property Group Limited Melbourne, Vic 3000 apnpropertygroup apngroup.com.au http://blog.apngroup.com.au apnp