Argosy Property Limited · NZX:ARG
Argosy Property — H1 FY2016 Earnings Presentation
37 slides from Argosy Property's earnings presentation, Nov 16, 2015
Slide 1: Half Year Results Presentation
Half Year Results Presentation Argosy Property Limited 16 November 2015
Slide 2: 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 3: Argosy Clear Strategy
Argosy CLEAR STRATEGY
Slide 4: Highlights
Highlights
Slide 5: Highlights of 1H16
Highlights of 1H16 Gross distributable income increased to $30.1 million (increase of 9.3%) Net distributable income increased to 3.10 cents per share (increase of 5.1%) Net property income increased to $48.6 million (increase of 11.1%) Portfolio revaluation gain of $27.6 million (increase o
Slide 6: Financial Overview
Financial Overview
Slide 7: Income Reconciliation
Income Reconciliation 55 5.8 ( 2.3 ) 0.6 51.5 50 47.4 45 40 35 30 25 20 15 10 5 0 Gross Property Acquisitions/ Disposals Rent changes Gross Property $m Income developments Income 30 September 2014 30 September 2015
Slide 8: Financial Performance
Financial Performance HY16 HY15 Net property income $48.6m $43.8m Administration expenses $(4.4m) $(3.8m) Profit before financial income/(expenses) and $44.2m $40.0m other gains/(losses) Interest expense $(14.2m) $(12.6m) Gain/(loss) on derivatives $(7.8m) $(9.1m) Finance income $0.1m $0.1m Revaluat
Slide 9: Distributable Income
Distributable Income HY16 HY15 Profit before income tax $50.3m $42.8m Adjusted for: Revaluation gains $(27.6m) $(24.9m) Unrealised loss on non-current assets held for sale $0.4m - Investment disposal losses $(0.8m) $0.5m Derivative fair value adjustment $7.8m $9.1m Gross distributable income $30.1m
Slide 10: Investment Properties
Investment Properties 27.6 ( 20.2 ) 1,400 17.3 ( 1.1 ) ( 0.9 ) 1,374.2 45.1 1,350 1,306.4 1,300 1,250 1,200 1,150 1,100 1,050 1,000 950 900 Investment Acquisitions Capex Disposals Change in fair Transfer to Other Investment Properties value properties held Properties $m 31 March 2015 for sale 30 Sep
Slide 11: Movement in NTA per share
Movement in NTA per share 99 98.6 0.1 0.1 0.1 3.4 98 97 ( 0.9 ) 96 95.8 95 94 93 92 91 90 NTA Loss on Revaluation Realised Tax timing Residual NTA cps 31 March derivatives gain on gains/losses adjustments earnings less 30 September 2015 investment on disposal dividends paid 2015 properties
Slide 12: Gearing
Gearing HY16 FY15 HY15 Investment properties $1,374.2m $1,306.4m $1,222.6m Other assets $22.8m $6.8m $51.7m Total assets $1,397.0m $1,313.2m $1,274.3m Bank debt (excl. capitalised borrowing costs) $548.4m $497.0m $474.6m Debt to total assets ratio 39.3% 37.8% 37.2% Following the settlement of prop
Slide 13: Banking
Banking HY16 FY15 HY15 Weighted average fixed interest rate 4.52% 4.54% 4.53% (excl. margin & line fees) Weighted average interest rate 5.12% 5.60% 5.72% The weighted average duration of the bank facility is 3.75 years at 30 September 2015. The weighted average duration of swaps is 8 years at 30
Slide 14: Dividends
Dividends Based on current projections, the FY16 dividend will be maintained at 6 cents per share, fully payable from net distributable income. Again, based on current projections, it is expected that the dividend will increase in FY17.
Slide 15: Portfolio Overview
Portfolio Overview
Slide 16: Industrial
Industrial NUMBER OF BUILDINGS 40 BOOK VALUE OF ASSETS ($M) $527.1 VACANCY FACTOR (BY RENT) 0.2% WALT (YEARS) 5.83 PASSING YIELD 7.49%
Slide 17: Office
Office NUMBER OF BUILDINGS 17 BOOK VALUE OF ASSETS ($M) $540.8 VACANCY FACTOR (BY RENT) 0.9% WALT (YEARS) 5.25 PASSING YIELD 7.50%
Slide 18: Retail
Retail NUMBER OF BUILDINGS 10 BOOK VALUE OF ASSETS ($M) $306.3 VACANCY FACTOR (BY RENT) 0.8% WALT (YEARS) 4.89 PASSING YIELD 7.48%
Slide 19: Leasing Environment
Leasing Environment The global economy still faces uncertainty with moderate growth and volatility in financial markets. The New Zealand economy looks encouraging with stabilising domestic data and consumer confidence on the rise, despite sharp declines in commodity prices and the exchange rate
Slide 20: Leasing
Leasing Occupancy, tenant retention and lease expiries remain key focus areas for the asset management team. Occupancy (by rental) has remained at a very high level at 99.4% compared to 99.2% at March 2015. Outstanding lease expiries for the period to 31 March 2016 have reduced to 5.8% from 11
Slide 21: Lease Maturity
Lease Maturity 16% 40 15% 8 14% 35 34 14.1% 13% Percentage of portfolio (by income) 12% 12.9% 30 34 11% 24 7 8 10% 32 10.7% 25 10.0% 10.1% 9% 9.8% 9.5% 8% 15 20 7% 10 7.2% 6% 15 15 7 5% 5.8% 4.8% 4% 4.5% 10 3% 2% 5 1% 0.6% 0% 0 Vacant Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Ma
Slide 22: Weighted Average Lease Term
Weighted Average Lease Term WALT remains in a strong position at 5.39 years 7 6 5 4 WALT (YEARS) 3 2 1 0 Excludes properties held for sale
Slide 23: Occupancy (by rental)
Occupancy (by rental) Occupancy remains at historically high level at 99.4% 100% 99% 98% 97% OCCUPANCY % 96% 95% 94% 93% 92% 91% Excludes properties held for sale
Slide 24: Developments
Developments Argosy has a five-year evergreen lease with NZ Post from the development completion date at 7-27 Waterloo Quay in Wellington. Notwithstanding this lease, the requirements of NZ Post have changed and subsequently progress on the development has slowed as we work with NZ Post to determine
Slide 25: Valuations
Valuations Increase in property valuations of $27.6 million, up 2.1% on book values immediately prior to the revaluation. The desktop valuation was performed due to evidence of a firming in capitalisation rates over the first six months of this financial year. The portfolio is now valued at $1
Slide 26: Strategy
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Slide 27: Portfolio Mix as at September 2015
Portfolio Mix as at 30 September 2015 TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION 4%3% 9% 22% 13% 38% 27% 66% 78% 40% Target Target Target Retail 15 – 25% Auckland 65 – 75% Core 75 – 85% Office 35 – 45% Wellington 20 – 30% Value Add properties Industrial 35 – 45% Pa
Slide 28: Strategy & Capital Management
Strategy & Capital Management Argosy’s strategy has not changed. We have a clear investment strategy marked by a diversified portfolio of desirable properties that attract high-quality, long-term tenants. The Board’s policy is for debt to total assets to be between 35 to 40% in the medium term
Slide 29: Divestments
Divestments Divestment of vacant land and non-Core assets will continue to be a key strategy TOTAL DISPOSALS FY2016 for the company. The sale of vacant land at the Manawatu Industrial Park $M remains a focus. $4.3 The Porirua Mega Centre, 65 Upper Queen Street, Auckland and 7 El Prado Drive, Pal
Slide 30: Total Shareholder Return
Total Shareholder Return
Slide 31: Total Shareholder Return – 5 Years
Gross Prices Indexed to 100 80 120 160 220 100 140 180 200 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Argosy Property Limited Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 NZ Property Gross Index Dec-13 Mar-14 Jun-14 Total Shareholder return – 5 Years Sep-14 NZX 50 Index Dec-14 Mar-15 Jun-15 Sep-1
Slide 32: Total Shareholder Return – Year
Total Shareholder Return – 1 Year 125 120 115 Gross Prices Indexed to 100 110 105 100 95 Apr-15 May-15 Jul-15 Dec-14 Sep-14 Sep-15 Jan-15 Oct-14 Feb-15 Mar-15 Jun-15 Aug-15 Nov-14 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 33: Concluding comments
Concluding comments » wWww.argosy.Co.nz
Slide 34: Concluding comments
Concluding comments Our focus remains on adhering to the strategy, maintaining the portfolio’s high level of occupancy, reducing near term lease expiries and improving tenant retention rates. We are closely monitoring the property cycle so as to not be overexposed in the event of a downturn. W
Slide 35: Thank you
Argosy www.argosy.co.nz
Slide 36: Appendix
> www.argosy.co.nz
Slide 37: Portfolio Interim Valuation
Portfolio Interim Valuation By location 31 Mar 15 1H2016 Book value 30 Sep 15 r$ r% Market Yield Valuation Movement Valuation 31 Mar 15 30 Sep 15 Auckland $841.4m $42.8m $884.2m $901.9m $17.7m 2.0% 7.58% 7.44% Wellington $365.8m - $365.8m $376.2m $10.4m 2.8% 7.71% 7.33% Palmerston North $55.3m ($2.8