Goodman Group · ASX:GMG
Goodman — Goodman Property Trust — FY2019 Earnings Presentation
46 slides from Goodman's earnings presentation, May 2019
Slide 1: Annual Result 2019
Goodman Property Trust Annual Result 2019
Slide 2: Contents
Contents 03 Targeted strategy 09 Investment portfolio 22 Financial result 29 Capital management 32 Summary and outlook 35 Appendix Presented by: John Dakin Chief Executive Officer James Spence Director - Investment Management Andy Eakin Chief Financial Officer Unless otherwise indicated, all numeric
Slide 3: Gateway warehouse B – Highbrook Business Park
Gateway warehouse B – Highbrook Business Park 3
Slide 4: Investment strategy
Investment strategy Annual Result 2019 Targeted strategy Targeted investment strategy to concentrate on the best locations within the Auckland Industrial market Auckland Customers ＋ Geographically constrained with limited industrial land supply ＋ Businesses strong and many at capacity, limited space
Slide 5: Strategy driving performance
Strategy driving performance Annual Result 2019 Targeted strategy Profit after tax ($m) Total return (NTA + distribution) 400 20% ＋ Profit after tax of $319.5 million for FY19 17.8% reflects strong operational and revaluation 17.2% result 319.5 14.4% ＋ Five year total profit after tax over $1.1 bill
Slide 6: Portfolio repositioned
Portfolio repositioned Annual Result 2019 Targeted strategy Investment activity1 ($m) Industrial weighting 500 100.0% ＋ Portfolio quality improved following $1.2 billion 100% of disposals offset by $1.0 billion of 400 95% acquisitions and developments2 over 5 years 282.5 300 ＋ Following settlement o
Slide 7: GMT portfolio positioned for growth
GMT’s portfolio is positioned for growth, with assets located in efficient and desirable distribution locations. $2.6bn Property portfolio 235 ha Portfolio footprint 1.0m sqm Net lettable area Acquisition of Favona Road remains conditional 7
Slide 8: Balance sheet strength
Balance sheet strength Annual Result 2019 Targeted strategy Loan-to-value ratio1 40% ＋ Conservative gearing level 34.2% – loan-to-value ratio below 20% 35% 33.9% 30.6% – well below the 50% maximum allowed 30% under the Trust’s debt covenants 25.0% ＋ Significant capacity for development pipeline 25%
Slide 9: Premium Apparel – Highbrook Business Park
Premium Apparel – Highbrook Business Park 9
Slide 10: Portfolio highlights
Annual Result 2019 Investment portfolio Portfolio highlights 98.2% Occupancy1 100% Auckland industrial weighting1 5.2 years Weighted average lease term1 3.0% Like-for-like net property income growth $160.5m Development commencements Gateway warehouse G – Highbrook Business Park 1 Excludes Show Place
Slide 11: Strong leasing results
Strong leasing results Annual Result 2019 Investment portfolio ＋ Leasing across the portfolio totalled 97,385 sqm (equates to 10% of the portfolio) ＋ Sustained period of economic growth in region is a major driver behind increased requirement for warehouse space ＋ Development leasing a strong mixtur
Slide 12: Completed developments
Completed developments Annual Result 2019 Investment portfolio Highly successful leasing outcome ＋ 6 developments (18 buildings) completed across 50,428 sqm, 96% leased ＋ Build-to-lease programme ahead of expectations with average period of 2 months to let-up ＋ 65% of development leasing is the resu
Slide 13: New developments
New developments Annual Result 2019 Investment portfolio Renewal and expansion of OfficeMax and Panasonic buildings at Highbrook Business Park ＋ OfficeMax 18,901 sqm of existing space plus 7,344 sqm of additional warehouse space ＋ Panasonic 7,503 sqm of existing space plus 2,660 sqm of additional wa
Slide 14: Projects underway
Projects underway Annual Result 2019 Investment portfolio Volume of work in progress reflects strong demand ＋ 14 developments across 57,992 sqm (2 additional announced today) ＋ Additional spend of $142.9m ($195.7m TPC) ＋ 9 projects (51%) on a build-to-lease basis with significant amount of forward i
Slide 15: Development track record
Development track record Annual Result 2019 Investment portfolio Development commencements ($m, total project cost including land) 180 ＋ Programme of build-to-lease developments 164.8 has been a successful part of GMT’s strategy 160.5 160 148.9 with 127,627 sqm developed since 2014 140 ＋ Over the la
Slide 16: Stabilised leasing
Stabilised leasing Annual Result 2019 Investment portfolio Solid leasing totalling 51,459 sqm across GMT’s stabilised portfolio ＋ Rental growth on new leases of 9.6% ＋ Average industrial vacancy downtime of 2 months ＋ Face rental range for premium warehouses of $120psm - $140psm, dependent on size ＋
Slide 17: Rental growth
Rental growth Annual Result 2019 Investment portfolio Rental reversion (industrial) Income subject to Increase from FY19 Increase from FY19 ＋ New leases and market reviews (reversion reversion in FY19 reversion events reversion event pa1 events) within the industrial portfolio recorded Core 6.0% 7.0
Slide 18: Property returns
Property returns Annual Result 2019 Investment portfolio FY19 property total return by asset class1 20% ＋ Significant re-rating of core portfolio large driver 18.7% behind record revaluation of $201.9m or 8.2% 18% 13.4% ＋ Portfolio cap rate now 5.8% 16% ＋ Developments contributed $26.2 million to th
Slide 19: Lease expiry profile
Lease expiry profile Annual Result 2019 Investment portfolio Lease expiry profile (% of portfolio income) 30% ＋ Limited expiries (2%) over next 12 months following strong leasing and retention 25% ＋ Proposals for renewals sought from one third of customers expiring over the next 36 months 20% 15% 10
Slide 20: Customer exposure
Customer exposure Annual Result 2019 Investment portfolio Top ten customers (% of portfolio income, split by subsidiary companies) ＋ GMT’s customer base robust and diversified New Zealand Post Group with top 10 customers accounting for 33% of portfolio income DHL Group ＋ Majority of GMT customers fo
Slide 21: Future development potential
Future development potential Annual Result 2019 Investment portfolio ＋ Significant level of developments has reduced greenfield land weighting to 2.2% ＋ Focus shifted towards income producing brownfield sites with future development potential ＋ Total medium to long term development pipeline across p
Slide 22: Premium Apparel – Highbrook Business Park
Premium Apparel – Highbrook Business Park 22
Slide 23: Financial highlights
Annual Result 2019 Financial result Financial highlights $334.8m Profit before tax 61.6% increase 36.1% Total Unitholder Return1 12 months to 31 March 2019 $201.9m Portfolio revaluation 140.9% increase 6.98cpu Cash earnings 157.0cpu Net tangible asset backing 13.0% increase 6.65cpu Cash distribution
Slide 24: Net property income
Net property income Annual Result 2019 Financial result Look-through net property income bridge ($m) 160 ＋ Income from acquisitions and developments in -1.2 -0.3 +2.6 -0.9 addition to like-for-like rental growth has -3.8 mitigated some of the impact of asset +5.8 disposals 150 148.5 +1.9 -11.5 ＋ Ave
Slide 25: Cash earnings
Cash earnings Annual Result 2019 Financial result Cash earnings summary ($m) FY19 FY18 FY17 FY16 FY15 ＋ Holding the GMT dividend consistent for 4 years has Adjusted operating earnings after tax1 99.5 101.6 106.0 98.1 101.1 significantly closed the gap with underlying cash Capitalised borrowing costs
Slide 26: Net tangible assets
Net tangible assets Annual Result 2019 Financial result Net tangible assets (cents per unit) 160 ＋ NTA increased 18.1 cpu (13%) for the year +0.8 157.0 155 +2.0 ＋ 8.2% increase in stabilised valuation +2.5 main contributor 150 ＋ $35.1 million gain on sale of interests in WPH joint venture 145 +12.8
Slide 27: Investment property
Investment property Annual Result 2019 Financial result Look-through investment property ($m) 2,700 2,633.4 ＋ Total look-through investment property 69.6 increased by $125.2 million +24.9 2,508.2 +165.2 85.2 2,500 ＋ Acquisitions and developments adding 120.0 $248.5 million +32.9 +1.8 67.5 -277.2 +11
Slide 28: Capacity for growth
Capacity for growth Annual Result 2019 Financial result Committed LVR 25% ＋ GMT in strong liquidity position now disposal programme complete 24% $10m 23.7% ＋ Revised target LVR range of 25-35% 23% $29m (previously 30-35%) 22% ＋ Target provides $500 million of capacity to $97m invest in preferred Auc
Slide 29: Mainfreight warehouse – Savill Link
Mainfreight warehouse – Savill Link 29
Slide 30: Managing funding risk
Managing funding risk Annual Result 2019 Capital management Non-bank funding maturity profile ＋ Material reduction in debt levels from asset sales: — Bank facilities resized to $300 million total ($288 undrawn at 31 March 2019) ＋ Earliest maturity is October 2020 ＋ Maintained Standard & Poor’s corpo
Slide 31: Managing interest rate risk
Managing interest rate risk Annual Result 2019 Capital management Hedging profile 100% ＋ Debt repayment has resulted in elevated hedging levels 90% ＋ NZ interest rate environment has seen significant 80% downward movement during FY19: 70% — 1Y swap rate at 1.70% from 2.06% — 10Y at 2.15% from 3.05%
Slide 32: Gateway warehouses - Highbrook Business Park
Gateway warehouses - Highbrook Business Park 32
Slide 33: Summary and outlook
Summary Annual Result 2019 Summary and outlook GMT repositioned to capture benefits from exposure to rapidly evolving Auckland industrial market ＋ Demographic changes, economic growth, and the rapid expansion of online retailing are creating an unprecedented level of demand for well-located and oper
Slide 34: Goodman office – VXV Precinct
Goodman office – VXV Precinct 34
Slide 35: Appendix
Appendix NCI Packaging – Savill Link 35
Slide 36: 5 year financial summary
5 year financial summary Annual Result 2019 Appendix 36
Slide 37: Profit or loss
Profit or loss Annual Result 2019 Appendix 37
Slide 38: Balance sheet
Balance sheet Annual Result 2019 Appendix 38
Slide 39: Cash flows
Cash flows Annual Result 2019 Appendix 39
Slide 40: Loan-to-value ratio
Loan-to-value ratio Annual Result 2019 Appendix 40
Slide 41: Valuation
Valuation Annual Result 2019 Appendix Portfolio valuation summary Valuation ($m) Cap rate Change ($m) Change (%) Highbrook Business Park 1,322.8 5.5% 64.5 5.1% Savill Link 292.5 5.8% 31.3 12.0% M20 Business Park 247.2 6.1% 13.6 5.8% The Gate Industry Park 232.5 5.5% 42.3 22.2% Westney Industry Park
Slide 42: Capital expenditure
Capital expenditure Annual Result 2019 Appendix Stabilised capital expenditure summary Capital % of asset Average ＋ Stabilised capex spend of $12.1 million expenditure1 value building age equates to 0.60% of asset value ($m) (years) Core 10.9 0.58% 10.0 ＋ $3.1 million of spend was maintenance capex
Slide 43: Work in progress
Work in progress Annual Result 2019 Appendix Total project cost Lettable area Expected Development Estate Leased ($m) (sqm) completion date The Crossing Carpark Highbrook 10.7 3241 Nov-19 50% Quest Expansion Highbrook 12.0 602 Apr-19 100% NCI Packaging Savill Link 38.2 14,050 Aug-19 100% Waiouru Yar
Slide 44: Completed projects
Completed projects Annual Result 2019 Appendix Building 6 Estate Highbrook Business Park Completion Dec-18 NLA 3,026 sqm Parade units Estate Highbrook Business Park Completion Jan-19 NLA 6,051 sqm 44
Slide 45: Completed projects
Completed projects Annual Result 2019 Appendix Gateway warehouses Estate Highbrook Business Park Completion Jan-19 NLA 22,305 sqm Mainfreight warehouse Estate Savill Link Completion Dec-18 NLA 8,510 sqm 45
Slide 46: Completed projects
Completed projects Annual Result 2019 Appendix Plytech warehouse Estate Highbrook Business Park Completion Dec-18 NLA 5,132 sqm MOVE Logistics expansion Estate Highbrook Business Park Completion Mar-19 NLA 5,423 sqm 46
Goodman Property Trust — FY2019 Earnings Presentation on 6ix