Argosy Property Limited · NZX:ARG
Argosy Property — Investor Presentation (February 2013)
32 slides from Argosy Property's investor presentation, February 2013
Slide 1: Argosy Property Investor Presentation February 2013
ARGOSY PROPERTY INVESTOR PRESENTATION FEBRUARY 2013
Slide 2: Significant change since our last Roadshow
Significant change since our last Roadshow Last time we were a Listed Property Trust with Unit Holders controlling the management company, now we are a Listed internally managed Property Company. After a period of contraction, we have recently expanded with the acquisition of two Wellington properti
Slide 3: Our focus areas for FY13
Our focus areas for FY13 Maintain Net Property Income. Net property income maintained at $35.4 million for the half year. Increase Occupancy Occupancy increased from to 94.1% to 96.3% (95.9% at 31 December 2012) Lower Debt to Total Assets Debt to total assets lowered to 40.7% (40.0% at 31 Dece
Slide 4: Share price performance
Share price performance Argosy Property Limited - 12 months to 31 December 130 2012 125 120 Gross Prices Indexed to 100 115 110 105 100 95 Mar-12 Oct-12 Dec-11 Nov-12 Dec-12 Jan-12 Apr-12 Jun-12 Jul-12 Sep-12 Feb-12 May-12 Aug-12 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 5: Analyst Reaction to the half-year result
Analyst Reaction to the half-year result “In its 2013 interim result yesterday, Argosy Property Limited (ARG) announced a number of improved portfolio metrics that suggest it has made strong progress over 2012. With many of the key portfolio measures looking significantly better of late, we have add
Slide 6: Acquisition overview
Argosy Acquisition overview
Slide 7: Executive summary
Executive summary The conditional acquisition of 2 properties, comprising in aggregate, $179.8 million: 15 Stout Street • Acquisition of 15 Stout Street for $33.2 million, with $46.6 million further upgrade capital expenditure, to be completed by June 2014 • Adjacent to the Government precinct and c
Slide 8: Summary of properties acquired
Summary of properties acquired 15 Stout Street NZ Post House 15 Stout Street, Location: Location: Waterloo Quay Wellington Price: $33.2m Price: $60.0m Upgrade cost: $46.6m1 Upgrade cost: $40.0m End cost: $79.8m End cost: $100.0m Passing yield2: 8.11% Passing yield2: 8.50% WALT: 12.00yrs WALT: 7.33yr
Slide 9: Rationale for transactions
Rationale for transactions The transactions are consistent with Argosy’s stated strategy of pursuing acquisitions that are well located, meet the needs of tenants and are accretive to shareholders Core strategic objectives for Argosy Offered by Transactions Transactions consistent with the Company’s
Slide 10: Consideration and funding
Consideration and funding The capital raise will fund the acquisition of Stout Street and NZ Post, while providing balance sheet flexibility for subsequent upgrade capex and other near term property acquisitions Two sources of equity are being used to partly finance the Transactions: A Placement of
Slide 11: Pro-forma summary statistics
Pro-forma summary statistics Post 30 September Acquisition/ 2012¹ Development² Book value of properties $905.7m $1,085.5m Number of properties 63 65 Average value of properties $14.4m $16.7m Occupancy by rental 96.3% 96.9% Weighted average lease term 5.30 years 6.07 years ¹ From Argosy’s half year r
Slide 12: Financial overview
Argosy Financial overview
Slide 13: Financial performance
Financial performance HY13 HY12 Net property income $35.4m $35.6m Interest expense $(12.4m) $(15.9m) Loss on derivatives $(13.0m) $(11.4m) Administration expenses $(2.9m) $(4.1m) Abnormals $(0.9m) $(28.2m) Realised gains/(losses) on disposal $(0.8m) $0.1m Finance Income $0.1m $0.1m Profit/(loss) bef
Slide 14: Income reconciliation
Income reconciliation 60 55 50 45 38.7 (1.7) 40 (1.0) 0.7 36.7 35 30 25 20 15 10 30 September 2011 Sales Vacancy During Rent reviews 30 September 2012 $m Gross Property Period Gross Property Income Income
Slide 15: Distributable income
Distributable income HY13 HY12 Profit/(loss) before income tax $5.5m $(23.8m) Adjust for: Investment disposal losses/(gains) $0.8m $(0.1m) Derivatives fair value adjustment $13.0m $11.4m Internalisation/corporatisation/other $0.9m $22.1m Amortisation of management contract $0.0m $6.1m Gross distribu
Slide 16: Financial position
Financial position HY13 FY12 HY12 Shares on issue 563.6m 558.5m 554.5m Shareholders funds (less intangible assets) $481.8m $488.4m $478.7m Net tangible asset backing per share (cents) 85.5c 87.5c 86.3c Investment properties $905.7m $905.2m $924.9 Other assets $15.5m $24.1m $23.6m Total assets $921.2
Slide 17: Investment properties
Investment properties 960 940 920 905.2 (12.1) 12.5 0.1 905.7 900 880 860 840 820 800 1 April 2012 Disposals Capex Capitalised 30 September 2012 $m Investment Lease & Tenant Investment Properties Incentives Properties
Slide 18: Movement in NTA per share
Movement in NTA per share 90.0 89.0 88.0 (0.1) (2.3) 87.5 87.0 86.0 0.4 85.5 85.0 84.0 83.0 82.0 81.0 80.0 1 April 2012 Acquisition Investigation Interest Rate Swaps Retained Earnings less 30 September 2012 Costs Dividends & Abnormals
Slide 19: Portfolio overview
Argosy Portfolio overview
Slide 20: Leasing environment
Leasing environment The movement in leased space has been positive in the industrial and commercial sectors in Auckland, where the majority of Argosy’s portfolio is located, and vacancy rates have fallen, particularly in office space outside the CBD. Occupancy enquiry from potential tenants has been
Slide 21: Leasing performance
Leasing performance Occupancy remains a key focus as values are fundamentally affected by weighted average lease term and projected incentive levels. The asset management team is actively managing current leases to meet the requirements of tenants to ensure that retention rates are high. Occupancy (
Slide 22: Portfolio mix at 30 September
Portfolio mix at 30 September By Sector By Location 4% 6% 8% 35% 30% 74% 12% 2% Retail Auckland Retail Land 29% Commercial Wellington Industrial Palmerston North Industrial Land Regional / Other
Slide 23: Portfolio after acquisitions
Portfolio after acquisitions A larger and more diverse property portfolio Portfolio Exposures By Category Argosy Pro-Forma 34% 28% 31% 37% 29% 41% By Geography Argosy Pro-Forma Retail Commercial Industrial 13% 11% 12% 27% 62% 75% Auckland Wellington Regional
Slide 24: Lease maturity
Lease maturity LEASE EXPIRY PROFILE Total expiry Vacant Largest single expiry 18% 45 17% % of portfolio (by income) 16% 40 15% 14% 35 13% 40 12% 28 No. of leases 30 11% 25 34 10% 23 25 9% 20 8% 20 7% 6% 22 12 15 5% 9 4% 8 8 5 10 3% 3 2% 5 1% 0% 0
Slide 25: Strategy
Strategy Argosy is and will remain invested in a quality portfolio that is diversified by sector, location and tenant mix. The bulk of the portfolio will be in the primary Auckland and Wellington markets with only modest exposure to provincial markets. In line with this strategy a reduction in expos
Slide 26: Capital management
Capital management The Board’s policy is for debt to total assets to be below 40% in the medium-term. Valuations have been stable over the last 2 years and market activity suggests there is a reduced risk of declines in the future. Following internal assessment no interim revaluation but full valuat
Slide 27: Bank covenants
Bank covenants HY13 FY12 Loan to valuation ratio – based on: Fair market value of properties $895.4m* $905.2m Total borrowings $375.0m $384.6m Not to exceed 50% 41.9% 42.5% Interest cover ratio – based on EBIT/Interest and Financing Costs: Must exceed 2:00x 2.24x 2.07x *Based on 31 March 2012 valuat
Slide 28: Risk mitigation
Risk mitigation The largest tenant in the portfolio remains the Department of Internal Affairs (less than 4% of gross property rental). We will continue to carefully monitor regional asset performance. Initial evaluation assessments by structural engineers have been undertaken on 18 properties (incl
Slide 29: Portfolio positioning for the future
Portfolio positioning for the future Major refurbishment projects are nearing completion at Te Puni Kokiri (143 Lambton Quay) and TSB Tower (46 Waring Taylor Street). Works are expected to be completed by 31 March 2013 and are on budget. Two properties were sold during the interim period (221 Bush R
Slide 30: Concluding comments
Concluding comments Argosy has made real progress in the first-half of FY13. Occupancy has improved; The leasing expiry profile has improved; Debt-to-total assets is down; and most importantly Distributable income is up. Key continuing operational areas of focus for the asset management team
Slide 31: Disclaimer
Disclaimer This presentation has been prepared by Argosy Property Limited. The details in this presentation provide general information only. It is not intended as investment or financial advice and must not be relied upon as such. You should obtain independent professional advice prior to making an
Slide 32: Thank you – questions?
Argosy Thank you — questions?
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