Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — H1 FY25 Earnings Presentation
55 slides from Kiwi Property's earnings presentation, Nov 25, 2024
Slide 1: Interim Results Presentation
Interim Results Annual Results Presentation Presentation FY23 For the six months ended 30 September 2024 22 May 2023 25• November 2024
Slide 2: Disclaimer
Disclaimer Kiwi Property Group Limited has prepared this document. By accepting this document and to the maximum extent permitted by law, you acknowledge and agree to the following matters. No liability Kiwi Property Group Limited, its advisers, affiliates, related bodies corporate, directors, offic
Slide 3: Contents
Contents Section Page Business highlights 4 Growing with diverse sources of capital 10 Interim financial results FY25 13 Resido and development update 17 Guidance & FY25 priorities 23 Appendix 1: Financial update 26 Appendix 2: Property update 41 Glossary 52 This interim results presentation for the
Slide 4: Business highlights
Business highlights 4
Slide 5: Delivering on strategy
Delivering on strategy New Zealand’s leading creator and curator of retail-led mixed-use communities Lead the Kiwi Property’s first build-to-rent asset, Resido, officially opened on 11 June 2024 and is 50% leased as at 21 market on November, with 148 leases signed. retail-led Drury Stage 1 earth
Slide 6: Driving rental growth
Driving rental growth Leasing spreads remain strong despite macro conditions 349 Total leasing transactions +4.2% Rental growth: total +5.6% Rental growth: new leases (total) +11.1% Rental growth: new office leases General note: Figures exclude Resido. 6
Slide 7: Sales performance aligns with expectations
Sales performance aligns with expectations Resilient sales despite the challenging economy Mixed-use1 Total portfolio2 • Portfolio sales totaled $2.10 billion for the 12 12 months ended 30-Sep-24 30-Sep-23 30-Sep-24 30-Sep-23 months ending 30 September 2024, representing a slight decline compared to
Slide 8: Asset values stabilising
Asset values stabilising Resilient capitalisation rates and rental growth underpin valuations • Kiwi Property’s total portfolio value increased 0.3% Six-month fair value Sep-24 valuation or $9.5 million in the six months to 30 September movement 2024. Cap. rate Val. Cap. rate Val. Val. % $m %1 $m %
Slide 9: Driving cost control
Driving cost control Increasing efficiency and reducing overheads • Implementation of new Yardi 1H25 2H24 1H24 2H23 enterprise IT system is complete. The technology rollout and other initiatives $m $m $m $m have enabled a reduction in Total property revenue1 128.4 126.9 117.7 126.4 employee headcoun
Slide 10: Growing with diverse sources of capital
Growing with diverse sources of capital 10
Slide 11: Focusing on capital allocation
Focusing on capital allocation We are focused on the optimal allocation of capital to drive superior shareholder returns • Kiwi Property’s capital allocation framework classifies investments into three categories, with each category having a targeted return threshold based on the underlying risk pro
Slide 12: Investment in funds management platform
Investment in funds management platform Investment in Mackersy Property to provide additional capital source and earnings growth over time • Mackersy Property is one of New Zealand’s leading full-service investment management firms with over $2 billion in assets under management. • It is focused on
Slide 13: Interim financial results FY25
Interim financial results FY25 13
Slide 14: HY25 key financial results
HY25 key financial results 30-Sep-24 30-Sep-23 Variance • We continue to rebalance our Six months ended portfolio towards assets that we $m $m $m % expect will be more resilient and Net rental income1 95.3 89.1 +6.2 +7.0 higher performing over time. • Increase in reported net rental Operating profit
Slide 15: Mixed-use, office and retail leasing activity
Mixed-use, office and retail leasing activity 4.2% Rental growth • Overall rental growth from mixed-use, office and retail leasing activity was +4.2%, with new leasing +5.6% and rent reviews Total rental growth +3.8%. FY24: 4.4% • +6.0% uplift in leasing spreads for new lease deals across the mixed-
Slide 16: Capital management and balance sheet
Capital management and balance sheet 5.25% 3.1 years • Refinance completed in September 2024: • Bank facilities increased by $50m to $1b. • $246m of undrawn headroom at September 2024. Weighted average Weighted average cost of debt term to maturity of debt • Gearing remains relatively stable at 38.0
Slide 17: Resido and development update
Resido and development update 17
Slide 18: Resido lease up progressing well
Resido lease up progressing well Resido has been well-received by the market • Leasing commenced during a period of softness Achieved vs target lease up in the Auckland residential rental market with 160 search activity down 29% and new listings up 29% 140 vs the same month last year.2 120 100 • We
Slide 19: Resido: realising our mixed-use strategy
Resido: realising our mixed-use strategy Our Resido lease up to date suggests we are attracting our target demographic 68% 48% 66% of residents previously lived The average income of Resido of Resido residents are outside Sylvia Park’s primary & tenants is 48% above the professionals or managers. se
Slide 20: Resido: development metrics update
Resido: development metrics update Opex savings bolstering return metrics Updated project metrics Completion date 4 June 2024 Target sustainability rating 8 Home Star Total project cost $240m1 Net operating income $11.2m2,3 Ancillary income $1.1m2,3 Operating expense ratio 20% - 23%2 Projected yield
Slide 21: Resido: valuation to recover as rental growth is delivered
Resido: valuation to recover as rental growth is delivered Initial valuation is below cost, but clear path to higher value Resido value and project cost • The Resido development was impacted by the downstream effects of COVID-19 including construction 300 ~$25m value write down due labour and materi
Slide 22: Continued momentum at Drury
Continued momentum at Drury Development update Stage 1 Drury earthworks were completed in June 2024, with Stage 1 civil works ready to commence. Drury selected as a Fast-track project A new Fast-track Bill is due to come before Parliament to advance projects that boost employment and economic recove
Slide 23: Guidance & FY25 priorities
Guidance & FY25 priorities 23
Slide 24: AFFO, dividend and guidance
AFFO, dividend and guidance 3.05cps 89% • HY25 AFFO per share remained relatively flat (-1.0%) despite higher interest costs and the removal of building tax depreciation. HY25 AFFO AFFO payout ratio • Kiwi Property confirms dividend guidance of 5.40 -0.03 cps (-1.0%) cents per share for the FY25 ful
Slide 25: FY25 priorities
FY25 priorities Strategic initiatives will help to drive sustainable growth and create value for shareholders Successfully lease up Execute sell-down of Drury Maintain strong discipline Drive sustained Resido large format retail sites on costs operational excellence Sustainably grow total shareholde
Slide 26: Appendix 1: Financial update
Appendix 1: Financial update 26
Slide 27: Contents
Contents Appendix Slide Page 1.1 Profit/(loss) after income tax 28 1.2 Operating profit before income tax 29 1.3 Interest and finance charges 30 1.4 Management expense ratios (MER) 31 1.5 Adjusted funds from operations (AFFO) 32 1.6 Dividends 33 1.7 Balance sheet 34 1.8 Trade debtors 35 1.9 Investme
Slide 28: 1.1 Profit/(loss) after income tax
1.1 Profit/(loss) after income tax • Increase in property revenue of $10.7m arising Six months ended 30-Sep-24 30-Sep-23 Variance mainly from rental growth of $4.1m, tenancy $m $m $m % termination fees of $3.0m and growth in recovery Property revenue 126.4 115.7 +10.7 +9.2 income of $2.8m. Property
Slide 29: 1.2 Operating profit before income tax
1.2 Operating profit before income tax Six months ended 30-Sep-24 30-Sep-23 Variance • Increase in operating profit before $m $m $m % income tax reflects the growth in net Profit/(loss) before income tax (Appendix 1.1) 54.7 -24.9 +79.6 +319.7 rental income, tenancy termination Adjusted for: fees and
Slide 30: 1.3 Interest and finance charges
1.3 Interest and finance charges 30-Sep-24 30-Sep-23 Variance Six months ended $m $m $m % • Interest costs reflected the high interest Interest on bank debt -23.0 -15.6 -7.4 -47.4 rate environment until the easing cycle Interest on bonds -11.1 -13.5 +2.4 +17.8 began in August 2024. Interest expense
Slide 31: 1.4 Management expense ratios (MER)
1.4 Management expense ratios (MER) 30-Sep-24 30-Sep-23 12-month period ended $m $m • Kiwi Property continues to focus on reducing the Total property revenue (including property management revenue) 255.3 244.1 ratio of employment and administration expenses Direct operating expenses -60.1 -54.0 to n
Slide 32: 1.5 Adjusted funds from operations (AFFO)
1.5 Adjusted funds from operations (AFFO) 30-Sep-24 30-Sep-23 Variance Six months ended $m $m $m % Profit/(loss) after tax (Appendix 1.1) 43.2 - 36.5 +79.7 +218.4 • Higher operating profit before income tax has contributed to a slight Adjusted for: increase in FFO. Net fair value (gain)/loss on inve
Slide 33: 1.6 Dividends
1.6 Dividends 30-Sep-24 30-Sep-23 30-Sep-24 30-Sep-23 • Dividend payout ratio is 89%, close to Six months ended 1 $m $m cps cps1 the target payout range of 90-100% of Dividend 43.2 45.2 2.70 2.85 AFFO. Imputation credits 10.7 7.8 0.67 0.49 Gross dividend 53.9 53.0 3.37 3.34 • Higher imputation credi
Slide 34: 1.7 Balance sheet
1.7 Balance sheet As at 30-Sep-24 31-Mar-24 Movement • Investment properties value increase $m $m $m % of $69.4m driven by an additional Investment properties (Appendix 1.9) 3,191.2 3,121.8 +69.4 +2.2 $62.5m in capital expenditure and a Inventories 80.9 73.5 +7.4 +10.1 $9.5m fair value gain, partly
Slide 35: 1.8 Trade debtors
1.8 Trade debtors As at 30-Sep-24 31-Mar-24 30-Sep-23 31-Mar-23 • Trade debtors as a percentage of net $m $m $m $m rental income for the six months ended 30 September 2024 has increased from Trade debtors 9.3 7.9 7.8 9.4 8.8% to 9.7% (in comparison to the six Provision for doubtful debts -2.1 -1.7 -
Slide 36: 1.9 Investment properties movement
$m 3,000 3,020 3,040 3,060 3,080 3,100 3,120 3,140 3,160 3,180 3,200 Property portfolio fair value as at Mar-24 $3,121.8 Sylvia Park Precinct $31.9 The Plaza $10.0 Vero Centre $11.1 Drury $3.0 Capital Expenditure The Base $2.3 1.9 Investment properties movement Other $1.6 Fair value change $9.5 Prop
Slide 37: 1.10 Net finance debt movement
1.10 Net finance debt movement 30-Sep-24 31-Mar-24 Movement As at $m $m $m % Bank debt (Appendix 1.7) 754.0 694.0 +60.0 +8.6 Bonds (Appendix 1.7) 501.5 501.2 +0.4 +0.1 Cash on deposit (Appendix 1.7) -13.7 -18.2 +4.4 +24.2 Net finance debt 1,241.8 1,177.0 +64.8 +5.5 1,300 1,250 $34.0 $8.2 $1,241.8 $7
Slide 38: 1.11 Capital management metrics
1.11 Capital management metrics Finance debt metrics as at 30-Sep-24 31-Mar-24 • The recent refinance of bank facilities Weighted average term to maturity 3.1 years 3.6 years saw the term to maturity reduce from Weighted average interest rate (Incl. of bonds, active interest rate derivatives, 5.25%
Slide 39: 1.12 Fixed-rate debt profile
1.12 Fixed-rate debt profile Fixed-rate profile (inclusive of bonds on issue Sep-24: $500m (Mar-24: $500m)) 30-Sep-24 31-Mar-24 • Kiwi Property continues to proactively Percentage of drawn finance debt at fixed rates 89% 89% manage hedging levels, increasing or decreasing levels in line with progres
Slide 40: 1.13 Finance debt facilities
1.13 Finance debt facilities 30-Sep-24 Debt maturity profile as at: $0 $m % FY25 $125 125.0 8.3% FY26 $100 $50 100.0 6.7% Debt sources FY27 $75 $30 $75 $40 220.0 14.7% 16.7% FY28 $75 $30 $50 $100 $60 $70 385.0 25.7% 33.3% 8.0% FY29 $150 $50 $30 $50 $90 $40 410.0 27.3% 13.3% FY30 $125 $50 $30 $25 $30
Slide 41: Appendix 2: Property update
Appendix 2: Property update 41
Slide 42: Contents
Contents Appendix Slide Page 2.1 Our investment portfolio 43 2.2 Investment portfolio summary 44 2.3 Net rental income 45 2.4 Portfolio statistics 46 2.5 Rent reviews and new leasing 47 2.6 Lease expiry profile 48 2.7 Retail sales 49 2.8 Retail sales by property 50 2.9 Retail sales by category 51 42
Slide 43: 2.1 Our investment portfolio
2.1 Our investment portfolio Sylvia Park Shopping Centre 3 Te Kehu Way Resido The Base (Sylvia Park Precinct) (Sylvia Park Precinct) (Sylvia Park Precinct) Sylvia Park Lifestyle ANZ Raranga LynnMall Centre Place North (Sylvia Park Precinct) (Sylvia Park Precinct) Vero Centre ASB North Wharf Aurora C
Slide 44: 2.2 Investment portfolio summary
2.2 Investment portfolio summary 30-Sep-24 31-Mar-24 Mixed-use Office Retail Total Mixed-use Office Retail Total Number of assets (Appendix 2.4) 4 3 2 9 4 3 2 9 Value ($m)1 (Appendix 2.4) 2,141.5 814.0 157.7 3,113.2 2,086.6 816.0 144.2 3,046.8 % of total portfolio by value (Appendix 2.7) 65 25 5 95
Slide 45: 2.3 Net rental income
2.3 Net rental income Six months ended 30-Sep-24 30-Sep-23 Variance $m $m $m % Sylvia Park 31.8 28.7 3.1 +10.8 • Total net rental income (NRI), increased by ANZ Raranga 2.5 2.5 0.0 +0.0 $6.2m (+7.0%) on the prior comparative period. This is primarily a result of 3 Te Kehu Way 1.0 0.3 0.7 +233.3 unde
Slide 46: 2.4 Portfolio statistics
2.4 Portfolio statistics Adopted value $m Capitalisation rate % NLA sqm Occupancy % WALE years As at 30-Sep-24 31-Mar-24 30-Sep-24 31-Mar-24 30-Sep-24 31-Mar-24 30-Sep-24 31-Mar-24 30-Sep-24 31-Mar-24 Sylvia Park 1,051.5 1,025.0 5.88 5.88 94,244 94,261 99.2 99.4 3.0 3.2 ANZ Raranga 89.1 90.0 6.00 6.
Slide 47: 2.5 Rent reviews and new leasing
2.5 Rent reviews and new leasing Rent reviews Mixed-use Office Retail Total Rent reviews • High percentage of future rent reviews are No. 177 26 52 255 structured (98%) of which ~65% are fixed at NLA (sqm) 86,975 34,338 8,455 129,767 3% or greater, CPI or CPI plus, providing % investment portfolio N
Slide 48: 2.6 Lease expiry profile
2.6 Lease expiry profile Mixed-use Lease expiry profile • Mixed-use expiries remain relatively steady % of investment portfolio gross income over the next five years. Office 60% • The longer-dated WALE of the office portfolio means 70% of gross office income 50% expires in FY30 and beyond. 40% 37% I
Slide 49: 2.7 Retail sales
2.7 Retail sales All centres1 Mixed-use Mixed-use Other • Reflecting the wider economic conditions, (incl. large format centres2 centres3 centres4 12 months ended centres) (incl. large format (excl. large portfolio sales were -1.8% on the previous 30 September 2024 centres) format centres) year. Act
Slide 50: 2.8 Retail sales by property
2.8 Retail sales by property MAT $m1 % var • Assets have performed in line with or 12 months ended 30-Sep-24 vs 30-Sep-23 exceeded the performance of the Stats NZ Sylvia Park 847.7 -3.9% electronic card transactions data3, which Sylvia Park Lifestyle2 43.8 1.2% reported a 3.8% decline over the past
Slide 51: 2.9 Retail sales by category
2.9 Retail sales by category MAT $m % var. from 30-Sep-23 • Cinemas continue to experience the residual 12 months ended 30-Sep-24 Total Like-for-like effects of the Hollywood writers' strike, which has led to delays and a reduced release Supermarkets 192.1 6.0% 6.0% schedule for major films. Departm
Slide 52: Glossary
Glossary 52
Slide 53: Glossary
Glossary Adjusted funds from operations Adjusted funds from operations (AFFO) is an alternative non-GAAP performance measure used by Kiwi Property. AFFO is a measure (AFFO) commonly used by real estate entities to describe their underlying and recurring cash flows from operations. Broadly, AFFO adju
Slide 54: Glossary
Glossary Profit/(loss) after income tax The reported profit/(loss) after income tax has been prepared in accordance with GAAP and complies with New Zealand Equivalents to International Financial Reporting Standards. The reported profit/(loss) after income tax information has been extracted from the
Slide 55: Thank you
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