Arena Reit · ASX:ARF
Arena Reit — H1 FY2014 Earnings Presentation
31 slides from Arena Reit's earnings presentation, Feb 27, 2014
Slide 1: Half Year Results to 31 December 2013
For personal use only Arena REIT (ASX code: ARF) Half Year Results to 31 December 2013 Improved earnings and diversified portfolio risk 27 February 2014
Slide 2: Presenters
Presenters For personal use only Bryce Mitchelson James Goodwin Vin Harink Joint Managing Director Joint Managing Director Senior Portfolio Manager • Appointed to the Board in • Appointed to the Board in • Joined Arena in 2009. April 2010. January 2012. • Previously CEO of • Previously held position
Slide 3: Agenda
Agenda For personal use only 1 Results overview 4 2 Financial results 8 3 Portfolio update 13 4 Conclusion 23 5 Questions 26 6 Appendices 27 Arena REIT | arenainvest.com.au 3
Slide 4: Results overview
For personal use only Results overview Bryce Mitchelson 4
Slide 5: Key achievements
1.1 Key achievements A busy first half where ARF took advantage of several value adding activities: For personal use only Broadened investment diversification into healthcare Strategy implementation through addition of 6 medical centres. FY14 earnings ahead of IPO distribution forecast at 8.75* Outp
Slide 6: Financial highlights
1.2 Financial highlights For personal use only Income Statement Half Year Period 31 Dec 2013 31 Dec 2012 Change Change % Statutory net profit $12.6m $6.8m + $5.8m +85% Distributable income $8.5m $5.1m + $3.4m + 67% Distributable income per security (cents) 4.13 3.84 + 0.29 +7.6% Distributions per se
Slide 7: Delivered on strategy to drive earnings growth
1.3 Delivered on strategy to drive earnings growth Objective Sectors Preferred characteristics Progress For personal use only Relatively long remaining Increased WALE to 8.7 years Childcare lease terms. (30 June: 8.3 years). 83%* Premises that have strategic To generate importance to the Diversified
Slide 8: Financial results
For personal use only Financial results James Goodwin 8
Slide 9: Income statement
2.1 Income statement For the Half Year Period 31 Dec 31 Dec Change Commentary For personal use only $ million 2013 2012 % Income Lease rental 11.37 10.68 +6.4% Asset additions in Dec 13, Average rent increase on reviews during the period of 2.8%. Other 0.03 0.38 -92% Investment in AET sold in Dec 12
Slide 10: Balance sheet
2.2 Balance sheet $ million Dec 2013 June 2013 Change Commentary For personal use only Cash 5.5 5.0 +10% Trade and other receivables 1.2 1.4 -14% Investment properties 325.1 234.9 +38% Healthcare & Childcare asset additions Total assets 331.8 241.3 +38% Trade and other payables 4.4 3.3 +33% Distribu
Slide 11: Capital management
2.3 Capital management Key Debt Metrics Dec 13 June 13 Highlights For personal use only Facility limit $140m $110m • Debt facility limit extended by $30m to fund Drawn amount $82.3m $25.0m growth opportunities. Undrawn amount $57.7m $85.0m • Arena is currently exploring opportunities to Remaining fa
Slide 12: Hedging of interest rate risk
2.4 Hedging of interest rate risk Hedging profile by financial year For personal use only Hedging Profile as at 31 December 2013 $120m 4% Amount of debt hedged $75m 3.81% % of drawn debt hedged 91%* 3.73% Weighted average interest rate of hedges 3.24% $100m 3.57% 4% Weighted average maturity of hedg
Slide 13: Portfolio update
For personal use only Portfolio update James Goodwin and Vin Harink 13
Slide 14: Key portfolio metrics
3.1 Key portfolio metrics Medical centres Leased childcare Vacant childcare Childcare sites Combined For personal use only centres centres (development) No of properties 6 183 3** 7^ 199 Carrying value ($m) 55.3 261.8 3.0 5.0 325.1 Annual rent ($m) 4.9 24.0 28.9 Yield# 8.86% 9.15% 9.10% Occupancy (b
Slide 15: Diversified by geography and tenant
3.2 Diversified by geography and tenant Greater geographic diversity with NSW presence increasing from 14.1% to 27.6%. For personal use only The addition of properties and the assignment of leases has seen the tenant profile change with the addition of ASX listed Primary Health Care, Affinity Ed
Slide 16: Long lease maturity profile
3.3 Long lease maturity profile For personal use only 60.0% Lease Expiry by Income 50.0% 40.0% Healthcare Portfolio Childcare Portfolio 30.0% 20.0% 10.0% 0.0% FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23+ A lease for office space at Murarrie expiring in December 2013 was extended for a furthe
Slide 17: Revaluation uplift
3.4 Revaluation uplift Portfolio overview Number of Number with Carrying Movement Percentage For personal use only (as at 31 December 2013) assets Valuation Change value ($’000) Movement $4.96 Properties subject to independent valuation 27 27 35,270 1,665 4.95% Properties subject to directors valuat
Slide 18: High quality childcare portfolio
3.5 High quality childcare portfolio Portfolio overview (as at 31 December 2013) December 2013 June 2013 % change WALE increase as result of For personal use only Leased Childcare Centres 183 167 +9.6% acquisitions and options exercised. Available for Sale / Lease 3 6 -50% Rental growth of 2.69%
Slide 19: Childcare state by state yields
3.6 Childcare state by state yields Portfolio overview Number Carrying Rent (pa) Passing Average passing rental yield on book For personal use only (as at 31 December 2013) of assets value ($’000) $’000 Yield value for leased childcare centres Queensland 68 104,549 9,754 9.33% was 9.15% reflecting
Slide 20: A strong development pipeline
3.7 A strong development pipeline 4 development sites held as at 30 June 2013. For personal use only Acquired 3 further childcare development sites in the second half of 2013. Commencing construction on 4 of these sites now, with another development expected to commence during 2014. A second
Slide 21: Affinity transaction
3.8 Affinity transaction 14 childcare centres acquired in December for $24.0 million on a 9.05% passing yield on purchase price. For personal use only All are purpose-built childcare centres situated in metropolitan and regional Queensland. All are fully leased on Arena’s standard 15 year leas
Slide 22: Medical centre transaction in line with strategy
3.9 Medical centre transaction in line with strategy Arena REIT stapled with Sydney Healthcare Trust (SHCT) in For personal use only December 2013 after both ARF and SHCT investors voted overwhelmingly in favour. Six large scale multi-disciplinary medical centres. Introduced healthcare exposur
Slide 23: Conclusion
For personal use only Conclusion Bryce Mitchelson 23
Slide 24: Outlook
4.1 Outlook Continue to explore investment opportunities in line with For personal use only Further growth to be explored our strategy. Unallocated funds of $22 million available for future investment. Developments to be completed 5 projects in progress to be completed later this year. Continue to a
Slide 25: Delivering strong distribution growth
4.2 Delivering strong distribution growth Cents per security For personal use only 9.0 8.8 8.75 8.65 FY14 expected 8.6 growth 9.4% 8.4 8.2 8.2 8.0 8.0 7.8 7.6 Actual June 13 Nov 13 Feb 14 IPO upgrade upgrade FY13 FY14 distribution guidance Arena REIT | arenainvest.com.au 25
Slide 26: Questions
For personal use only 26 Questions
Slide 27: Appendices
For personal use only 27 Appendices
Slide 28: Childcare industry update
6.1 Childcare industry update For personal use only Productivity Commission Inquiry into Childcare In November 2013 the Federal Government announced the establishment of a Productivity Commission Inquiry into Childcare and Early Childhood Learning. The Commission is expected to provide a draft repor
Slide 29: For further information
For further information For personal use only Bryce Mitchelson Investor and Adviser Services Joint Managing Director Ph. 1800 008 494 Ph. 03 9093 9120 info@arenainvest.com.au Bryce.mitchelson@arenainvest.com.au www.arenainvest.com.au Arena REIT | arenainvest.com.au 29
Slide 30: Important notice
Important notice This document has been prepared by Arena Investment Management Limited ACN 077 235 879 AFSL No. 233190 (“Arena”) as responsible entity of Arena REIT No. 1 ARSN 106 891 641 and Arena REIT No. 2 ARSN 101 067 878 (collectively referred to as “Arena REIT”). The information contained in
Slide 31: For personal use only
For personal use only