Gdi Property Group · ASX:GDI
Gdi Property — H1 FY2024 Earnings Presentation
42 slides from Gdi Property's earnings presentation, Feb 19, 2024
Slide 1: Half year results
Half year results 19 February 2024
Slide 2: Table of contents
Table of contents Acknowledgement of Country 01 02 03 GDI acknowledges and pays respect to the past, present and future Traditional Custodians and Elders of this nation and the continuation of cultural, Introduction Delivering on Financial spiritual and educational practices of strategy snapshot Abo
Slide 3: Introduction: Strong Leasing Results
Introduction Strong Leasing Results ˃ Leasing momentum in the Perth market continues to underpin our results ˃ During the 6 months to December 2023, GDI leased an additional c. 28% of the Perth office portfolio (51% for 18 months to December 2023) ˃ Over 18,000m2 of leasing at Westralia Square to Mi
Slide 4: Delivering on strategy: Westralia Square
Delivering on strategy WESTRALIA SQUARE ˃ Minister of Works (WAPOL) now leases entire lower lift bank, encompassing 16,347 sqm (approximately 50% of the NLA), until March 2034 ˃ Also signed Hexagon (level 16) and Infosys (1,037 sqm of level 17) for 5 years, leaving only part level 17 (~700 sqm) vaca
Slide 5: Delivering on strategy: WS2
Delivering on strategy WS2 ˃ Savills commenced occupation as WS2’s first tenant ˃ Arup and Navitas leases commence prior to 30 June 2024, with both currently undertaking fitout works ˃ With additional Heads of Agreement, only two floors remain to be leased ˃ WALE of 8.6 years and occupancy of 82%, w
Slide 6: Delivering on strategy: Co-Living Joint Venture
Delivering on strategy CO-LIVING JOINT VENTURE ˃ Repositioning of South Hedland has improved occupancy, client mix and revenues ˃ Consideration of adding additional rooms at South Hedland ˃ Actively pursuing targeted acquisition opportunities ˃ On track for +20% return on invested capital 02 Deliver
Slide 7: Delivering on strategy: Extension of Principal Facility
Delivering on strategy EXTENSION OF PRINCIPAL FACILITY ˃ Secured through cycle funding with an extension of our Principal Facility to December 2026 ˃ Facility was also increased by $25.0 million, providing excess capacity with undrawn debt of $49.4 million ˃ Second Tier 1 financier introduced ˃ CY24
Slide 8: Financial snapshot
Financial snapshot NTA $1.20 ˃ All wholly owned assets revalued at 31 December 2023 ˃ Minimal change in independent valuations, with increases at Westralia Square and WS2 offsetting decreases at Wellington St carpark and Mill Green ˃ Weighted average capitalisation rate of 6.6% ˃ Average rate/sqm of
Slide 9: Contributors to FFO
Contributors to FFO Higher operating segment FFO offset by a higher interest expense ˃ Net interest expense significantly higher than PCP at $7.0 million vs $3.8 million ˃ Property business FFO marginally lower than PCP ($18.5 million vs $19.0 million) ˃ Corporate and administration expenses include
Slide 10: Debt and interest rates
Debt and interest rates Principal Facility drawn to $322.1 million with undrawn debt of $49.4 million Interest rate caps and swaps protect from rising rates Gearing of 32%, LVR on the Principal Facility of 38% (covenant 50%) and ICR 31 December 2024 30 June 2025 31 December 2025 of 2.0X (covenant of
Slide 11: Perth market key trends
Perth market key trends ˃ Nine quarters of positive absorption ˃ Leasing levels higher than seen for many years ˃ Positive macro dynamics ˃ Strong lead indicators such as job ads ˃ High c.90% levels of back to work office usage ˃ Minimal supply ˃ Resources and government are the large drivers of dem
Slide 12: National performance
National performance Perth CBD is the strongest performing CBD market in the country Net Absorption Comparison Vacancy Comparison 80,000 CBD Vacancy Rate 6 Month Vacancy Vacancy Trend 60,000 Dec 23 Change (last 3 years) 40,000 20,000 Perth 14.9% -1.0% - sqm -20,000 Adelaide 19.3% +2.3% Adjusted for
Slide 13: Return to the office indicator
Return to the office indicator National sublease vacancy Perth continues to lead the nation in return Hasn’t really been a factor in Perth to office PCA ‘Work From Home’ Statistics National Sublease Vacancy 100% 120,000 94% 90% 88% 83% 91% 100,000 80% 79% 85% 70% 75% 75% 80,000 60% 63% sqm 50% 56% 6
Slide 14: Perth CBD enquiry and leasing transactions
Perth CBD enquiry Perth CBD leasing transactions Annual enquiry levels remain strong Strong 2023 with a huge volume of active tenants in the market Perth CBD Enquiry By Year Perth CBD Leasing Volumes (500+ sqm) 400,000 500 140,000 80 350,000 450 70 120,000 400 300,000 60 Total Sqm of Transactions 35
Slide 15: Tenant growth analysis and supply pipeline
Tenant growth analysis (500 sqm+) Perth CBD supply pipeline 73% of tenants relocating expanded Upcoming supply pipeline relatively mild compared to prior cycles Tenant Growth Analysis Perth CBD Supply Pipeline 50 Heightened Expansion Activity 12.0% Expansion No Change 21 The 10.0% Esplanade 40 Reduc
Slide 16: Property portfolio
Property portfolio Independent valuation Book value Fair value Cap rate 31/12/23 30/06/23 Date % Details $m $m $m 141 St Georges Terrace, Perth (WS1) 31/12/23 379.0 6.00 379.0 371.0 143 St Georges Terrace, Perth (WS2) 31/12/23 94.0 6.50 94.0 90.0 197 St Georges Terrace, Perth 31/12/23 205.0 7.25 205
Slide 17: The portfolio: Weighted average lease expiry
The portfolio WEIGHTED AVERAGE LEASE EXPIRY1 100% KEY STATISTICS Occupancy1 85.6% 80% WALE1 5.7 years Weighted average 60% capitalisation rate2 6.6% Average value psm3 $8,094 40% Total NLA (sqm)2 126,847 Near term opportunity 20% Low medium-term risk 0% Vacant FY24 FY25 FY26 FY27 FY28+ 1. Excludes 1
Slide 18: The portfolio
The portfolio WESTRALIA SQUARE, WS2, 197 ST GEORGES TERRACE, 5 MILL STREET, PERTH PERTH PERTH PERTH Valuation date 31 December 2023 31 December 2023 31 December 2023 31 December 2023 Valuation $379.0 million $94.0 million $205.0 million $54.0 million Carrying value $379.0 million $94.0 million $205.
Slide 19: The portfolio
The portfolio Architectural drawings Architectural drawings 1 MILL STREET, 180 HAY STREET, MURRAY STREET, WELLINGTON STREET, PERTH PERTH PERTH PERTH Valuation date 31 December 2023 31 December 2023 31 December 2023 31 December 2023 Valuation $38.3 million $18.8 million $42.9 million $24.4 million Ca
Slide 20: The portfolio
The portfolio AUTOLEAGUE, STANLEY PLACE, WA TOWNSVILLE Valuation date 31 December 2023 31 December 2022 Valuation $140.6 million $51.0 million Carrying value $140.6 million $52.2 million NLA (sqm) n/a 12,820 Value/sqm - $3,952 Discount rate 7.26%3 8.00% Capitalisation rate 6.37%3 (6.01% Jun 22) 7.75
Slide 21: Funds business highlights
Funds business highlights IKEA GDI No. 43 Property Trust ˃ Successful extension of the debt facility to 31 August 2028 with a new financier ˃ Executed heads of agreement for a 3 year term on the only FY24 lease expiry Stanley Place, Townsville GDI No. 42 Office Trust ˃ Welcomed Great Barrier Reef Ma
Slide 22: Co-Living Joint Venture
Co-Living Joint Venture NORSEMAN ˃ 267 rooms located in Norseman, WA ˃ Pantoro South Pty Limited underwrite usage of 208 rooms for approximately 5.5 more years ˃ Also own the Norseman Hotel and at the time of entering the JV, 49 residential homes During the period: ˃ Focussed on operating efficienci
Slide 23: Strategy & Guidance
08 Strategy & Guidance 4 :
Slide 24: Business model
Business model THE GDI VALUE PROPOSITION Core business Our objectives Result STRATEGY TO CREATE VALUE Ensure the GDI skills and capability DRIVEN BY INVESTMENT matches our ability to execute on our • Entering and exiting markets and ACHIEVE OPTIMAL SHORT TERM AND strategy. GDI must have an elite tea
Slide 25: Strategy execution
Strategy execution Refinancing Debt facility successfully refinanced – December 2026 2nd Tier 1 bank introduced C. $50m unutilised 32% gearing, ICR 2.0X (Covenant 1.50X) Leasing Very active with +c. 28% of the office portfolio leased December half 2023 (+40% for 12 months) Momentum continues / F
Slide 26: Guidance for FY24
Guidance for FY24 We confirm that it is our intent to pay a cash distribution of no less than 5.00 cents per security for FY24, subject to GDI remains relentlessly focused no material change in circumstances on its leasing efforts in Perth to or unforeseen events, noting that 2.50 maximise the value
Slide 27: Appendix
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Slide 28: The portfolio – Weighted average lease expiry
The portfolio – Weighted average lease expiry WESTRALIA SQUARE WESTRALIA SQUARE 2 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ 09 Appendix
Slide 29: The portfolio – Weighted average lease expiry
The portfolio – Weighted average lease expiry 197 ST GEORGES TERRACE 5 MILL STREET 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ 09 Appendix
Slide 30: The portfolio – Weighted average lease expiry
The portfolio – Weighted average lease expiry 1 MILL STREET 180 HAY STREET 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ 09 Appendix
Slide 31: The portfolio – Weighted average lease expiry
The portfolio – Weighted average lease expiry 235 STANLEY STREET AUTOLEAGUE 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Vacant FY24 FY25 FY26 FY27 FY28+ Vacant FY24 FY25 FY26 FY27 FY28+ 09 Appendix
Slide 32: Balance sheet
Balance sheet Dec-23 Jun-23 Pro forma for post balance sheet events $’000 $’000 Current assets Cash and cash equivalents 8,900 8,228 Derivative financial instruments 532 730 ˃ GDI No. 42 Office Trust (Stanley Place) $52.2 Other assets 13,489 10,719 million Total current assets 22,921 19,687 Non-curr
Slide 33: Profit or loss
Profit or loss GDI Trust Dec-23 Dec-22 Dec-23 Dec-22 $'000 $'000 $'000 $'000 Revenue from ordinary activities Property income 31,066 30,776 29,866 29,579 Funds management income 1,217 1,193 - - Interest income 219 155 1,234 151 Total revenue from ordinary activities 32,502 32,125 31,101 29,729 Share
Slide 34: Net profit after tax to FFO
Net profit after tax to FFO GDI Dec-23 Dec -22 $’000 $’000 Total comprehensive income for the period (7,388) 1,450 Acquisition expenses - 10 Contribution resulting from consolidated trusts (5,031) (4,515) Distributions / funds management fees received from consolidated trusts 1,869 2,157 Straight li
Slide 35: Property information
Property information December 23 December 22 December 23 Property Maintenance Incentives & IFRS NPI1 FFO IFRS NPI1 FFO Capex Spent capex spent lease costs $m $m $m $m $m $m $m 1 Mill Street - - - 5 Mill Street - - 0.8 197 St Georges Terrace 6.2 0.1 0.1 Mill Green, Perth 4.2 6.8 6.3 8.6 6.2 0.1 0.9 W
Slide 36: Focus on agility
Focus on agility Leasing is Under-writing the Perth Market ˃ Tenants taking expansion space ˃ Resources and Government are the big space takers ˃ Very limited 10,000m2 NLA + opportunities (even fewer 20,000m2) ˃ GDI can spec small developments like WS2 but prefers specific tenant pre-commitments tha
Slide 37: ESG trends
ESG trends Primary ESG Themes – Perth ˃ Resources industry overtly focussing (offset dirty industry perception) ˃ Majors leading change through supply chain (a “must demonstrate” criteria) ˃ Carbon conservation is priority metric (embodied and operational) ˃ Offsetting/greenwashing disingenuity ˃ Gr
Slide 38: The GDI difference
The GDI difference “Understanding the brown to green dynamics WESTRALIA SQUARE will lead to a competitive advantage” Learnings from WS2 ˃ Defining the real ESG/Carbon benefits (including embodied) ˃ Proving of timber technology (delivery/cost/design/risk/product) ˃ Recognising timber only works in a
Slide 39: GDI opportunities: Wellington Street
GDI opportunities CONSTRUCTION READY PROJECTS Wellington Street ˃ DA approval for 28,000m2 commercial NLA ˃ Setup for government or other whole of building tenant 09 Appendix
Slide 40: GDI opportunities: Mill Street
GDI opportunities CONSTRUCTION READY PROJECTS 1 Mill Street ˃ Existing building 6,000m2 ˃ Approved DA 35,000m2 NLA (circa 1,800m2 NLA floor plates) ˃ Opportunity to stage in smaller sub-buildings (and speculate) ˃ Whole of building tenant opportunity for sub-buildings (circa 10,000m2 NLA stages) 09
Slide 41: Disclaimer
Disclaimer This presentation has been prepared and issued by GDI Property Group Property Group does not represent or warrant that the information in this Limited (ACN 166 479 189) and GDI Funds Management Limited (ABN 34 presentation is free from errors or omissions, is complete or is suitable for 1
Slide 42: Tere)!
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