New Zealand Rural Land Co. Ltd. · NZX:NZL
New Zealand Rural Land — FY2022 Earnings Presentation
49 slides from New Zealand Rural Land's earnings presentation, Aug 26, 2022
Slide 1: Full Year Results Presentation, Year Ending 30 June 22
New Zealand Rural Land Co The Rural Land Investors FULL YEAR RESULTS PRESENTATION YEAR ENDING 30 JUNE 22 26 August 2022 www.nzrlc.co.nz listed on: NEW ZEALAND RURAL LAND COMPANY 1
Slide 2: Disclaimer
DISCLAIMER The information and opinions in this presentation were prepared by New Zealand Rural Land Company (NZL). NZL makes no representation or warranty as to the accuracy or completeness of the information in this report. Opinions including estimates and projections in this report constitute the
Slide 3: New Zealand Rural Land Co owns and leases some of the best farmland
New Zealand Rural Land Co owns and leases some of the best farmland in the world, offering an unparalleled investment opportunity. New Zealand Rural Land Co The Rural Land Investors
Slide 4: Introduction: New Zealand Rural Land Company - Today
INTRODUCTION New Zealand Rural Land Company - Today New Zealand Rural Land Company is a landlord to New Zealand’s highly advantaged agricultural sector. We own rural land and lease it to high quality tenants. 11,710 NZL currently owns 7 High Quality Tenants hectares of rural land. (28,963 acres) 9.8
Slide 5: Section 1: FY22 Results and Market Update
SECTION 1 FY22 RESULTS AND MARKET UPDATE NEW ZEALAND RURAL LAND COMPANY 5
Slide 6: FY22: Substantial NAV Uplift Demonstrates Quality of Portfolio
1 FY22: Substantial NAV Uplift Demonstrates Quality of Portfolio F Y 2 2 R E S U LT S $39.7m 3.61cps** $289.0m FY22 NPAT FY22 Full Year Dividend Total Assets $4.3m* $1.656 +18.6% FY22 AFFO Net Asset Value per Share Net Asset Value per Share Growth NZL Share Price vs Audited NAV Per Share (NAV/sh) $1
Slide 7: FY22: Highlights
1 FY22: Highlights F Y 2 2 R E S U LT S Substantial uplift to NAV demonstrating the quality of NZL’s portfolio. NAV Growth Asset and Portfolio Growth NZL has total assets of $289.0m, composed Audited NAV/sh is $1.656. This compares primarily of 11,710ha of premium rural land. to a Share Price of $1.
Slide 8: FY22: Update on Market Conditions - Transactions
1 FY22: Update on Market Conditions - Transactions MARKET CONDITIONS In FY22, sales of New Zealand rural land* totalled $4.9b. This was +17% higher than in FY21 ($4.2b), more than double the total value of sales in FY20 ($2.3b). The average value of rural land sold in FY22 was higher than at any poi
Slide 9: FY22: Update on Market Conditions - Inflation
1 FY22: Update on Market Conditions - Inflation MARKET CONDITIONS Inflation reached a 30-year high of +7.3% in June 2022. New Zealand’s large trading banks believe inflation has peaked but expect levels to remain above 3% into 2024. All NZL’s leases have three yearly CPI indexing and remove all oper
Slide 10: Section 2: Latest Financials & Key Metrics
SECTION 2 LATEST FINANCIALS & KEY METRICS NEW ZEALAND RURAL LAND COMPANY 10
Slide 11: FY22: Profit & Loss Statement
2 FY22: Profit & Loss Statement $39.68m 42.43cps FINANCIALS FY22 NPAT FY22 EPS NZ$000 30 June 2022 30 June 2021* Variance Gross Rental Income Rental Income 8,215 498 +7,717 Net Rental Income 8,215 498 +7,717 Less Overhead Costs Directors Fees (217) (170) +47 Insurance (80) (31) +49 Marketing Expense
Slide 12: FY22: Current Balance Sheet
2 FY22: Current Balance Sheet NZ$000 30 June 2022 30 June 2021 Variance Current Assets FINANCIALS Cash and Cash Equivalents 1,004 20,496 (19,492) Trade and Other Receivables 1,411 668 +743 Current Tax Receivable 10 23 (13) Total Current Assets 2,425 21,187 (19,341) Non-Current Assets Investment Prop
Slide 13: FY22: Adjusted Funds From Operations (AFFO)
2 FY22: Adjusted Funds From Operations (AFFO) FINANCIALS 5.52cps 3.81cps 3.61cps 95% FY22 FFO FY22 AFFO FY22 Total Dividend FY22 AFFO Payout Ratio NZ$000 30 June 2022 30 June 2021* Variance Net Profit After Tax 39,680 15,115 +24,565 Adjusted for: Unrealised Net Gain on Investment Properties (35,342)
Slide 14: FY22: Net Asset Value Per Share Performance
2 FY22: Net Asset Value Per Share (NAV/sh) Performance FINANCIALS NZL’s audited NAV/sh increased +18.6% in FY22. Since listing on the NZX, 21 December 2020, NZL’s audited NAV/sh has increased +15.1% (+$0.203) per annum on average*. NZL Audited NAV Performance Since Listing $1.80 C AG R +1 5 .1 % $1.
Slide 15: FY22: Debt Summary
2 FY22: Debt Summary FINANCIALS NZL has hedging arrangements in place for 40% of its total borrowings at an average all in cost of 4.50%. NZL’s remaining debt is borrowed on a floating rate (BKBM plus bank margins) and the average all in cost of this debt as at 22 August 2022 was 4.69%. 35.2%* 4.7%*
Slide 16: Section 3: Portfolio Overview & Operational Update
SECTION 3 PORTFOLIO OVERVIEW & OPERATIONAL UPDATE NEW ZEALAND RURAL LAND COMPANY 16
Slide 17: Portfolio Overview
3 Portfolio Overview P O RT F O L I O OV E R V I E W Region Otago Canterbury Southland Total Land Area (ha) 3,991 6,333 1,386 11,710 Rural Asset Class Dairy Dairy Dairy Dairy WALT (years)1 9.6 9.8 10.1 9.8 # Tenants 3 3 1 72 Occupancy 100% 100% 100% 100% WALT is weighted by lease value. 1 One of our
Slide 18: Tenant Concentration, Lease Profile & Lease Overview
3 Tenant Concentration, Lease Profile & Lease Overview P O RT F O L I O OV E R V I E W NZL expects tenant diversification to increase as it continues to grow its asset base. NZL’s Weighted Average Lease Term (WALT) is currently 9.8 years*. NZL’s leases all have three, six and nine year uncapped CPI
Slide 19: Operational Update
3 Operational Update O P E R AT I O N A L U P DAT E Biodiversity & Carbon Sustainability NZL has undertaken studies and analysis NZL and its tenants share a vision of to better understand carbon sequestration sustainable practices. These include opportunities on marginal/non-productive practices tha
Slide 20: Section 4: NZL Outlook
SECTION 4 NZL OUTLOOK NEW ZEALAND RURAL LAND COMPANY 20
Slide 21: Outlook: Forecasts, Hedging, CPI Accumulation and Key Changes
4 Outlook: Forecasts, Hedging, CPI Accumulation and Key Changes O U T LO O K NZL’s leases incorporate regular, uncapped, CPI reviews. Accordingly, high inflation yields higher than anticipated rental growth. Furthermore, NZL is insulated from inflation-impacted (and all other operational) on-farm co
Slide 22: Outlook: Creating a Diversified Rural Land Portfolio Over Time
4 Outlook: Creating a Diversified Rural Land Portfolio Over Time N Z L O U T LO O K Portfolio Construction: Target Rural Land Asset Classes: Sector: Description: Timeframe: NZL’s initial focus has been on acquiring New Zealand dairy properties. NZ’s environment suits dairy farming and has a lower co
Slide 23: Questions
QUESTIONS NEW ZEALAND RURAL LAND COMPANY 23
Slide 24: Appendix 1: Historical Returns & Global Peers
APPENDIX 1 HISTORICAL RETURNS & GLOBAL PEERS (COMPARABLE COMPANIES) NEW ZEALAND RURAL LAND COMPANY 24
Slide 25: Attractive Long Term Land Value Growth
1 New Zealand Rural Land Offers the Continued Prospect of Attractive Long Term Land Value Growth APPENDIX Since 1996 the value of rural land in New Zealand has grown considerably, with REINZ’s Rural Land Price Index increasing at a CAGR of +6.6% per annum. NZL believes New Zealand’s land value will
Slide 26: New Zealand Rural Land Subsector Return History
Source: REINZ - 5,000 10,000 15,000 20,000 25,000 - 100,000 150,000 200,000 250,000 300,000 350,000 400,000 50,000 1996 1996 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 Livestock Land 2002 2002 2003 Horticulture Land 2003 2004 2004 2005 2005 2006 2006 2007 2007 2007 2007 2008 2008 20
Slide 27: Global Peer Metrics vs. NZL
1 Global Peer Metrics vs. NZL APPENDIX Ownership Model Net Asset Value NAV per Share Share Price Premium/ (Discount) to NAV New Zealand Rural Land Co Owns land only $186.60m $1.65 $1.06 (36.0)% The Rural Land Investors Owns land and $949.89m $2.49 $2.90 +16.9% operations Owns land only $851.50m $24.
Slide 28: Global Peer Metrics vs. NZL
1 Global Peer Metrics vs. NZL Market Capitalisation Dividend Yield APPENDIX 2,500 12% 10% 2,000 8% 1,500 NZ$m 6% 1,000 4% 500 2% - 0% Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Gladstone RFF Farmland Partners NZL Glad
Slide 29: Rural Funds Group - ASX Listed
1 Rural Funds Group - ASX Listed Rural Funds Group (RFF.ASX) is a real estate investment trust which owns a diversified portfolio of high quality Australian agricultural assets that are leased predominantly to corporate agricultural operators. APPENDIX Revenues are primarily derived from long-term l
Slide 30: Gladstone Land Corporation - Nasdaq Listed
1 Gladstone Land Corporation - Nasdaq Listed Gladstone Land (LAND.NASDAQ). Gladstone owns farmland in Arizona, California, Colorado, Delaware, Florida, Georgia, Maryland, Michigan, Nebraska, New Jersey, North Carolina, Oregon, South Carolina, Texas and Washington. As of 10 May 2022, the Company’s po
Slide 31: Farmland Partners - NYSE Listed
1 Farmland Partners - NYSE Listed Farmland Partners Inc. (FPI.NYSE) is a publicly traded real estate investment trust (REIT) that manages and seeks to acquire both high-quality farmland and land with excellent agricultural development potential located throughout North America. APPENDIX • The Compan
Slide 32: Appendix 2: NZL Advantages
APPENDIX 2 NZL ADVANTAGES NEW ZEALAND RURAL LAND COMPANY 32
Slide 33: NZL Advantages
2 NZL Advantages APPENDIX SECTORAL SUSTAINABILITY STRUCTURAL RISK MANAGEMENT RETURNS NEW ZEALAND NEW ZEALAND RURAL LAND RURAL COMPANY 33 LAND COMPANY
Slide 34: Sectoral Advantages
2 Sectoral Advantages APPENDIX The global population is expected to reach 9.7 billion by 2050. A growing global population and surging demand for food alongside declining available productive land provide a strong long-term global tailwind for productive land ownership. Productive rural land is scar
Slide 35: Sustainability Advantages
2 Sustainability Advantages APPENDIX Soil in New Zealand is predominantly fertile volcanic loams – ideal for productive farming. This, coupled with New Zealand’s temperate climate, consistent rainfall, adequate sunshine and abililty to grow grass and other crops year round make it a highly advantage
Slide 36: Sustainability Advantages
2 Sustainability Advantages APPENDIX High Quality Tenants - All NZL’s leases incorporate a requirement that tenants reserve a large buffer of equity relative to annual lease costs to ensure that leases are paid even in adverse operating conditions. NZL only selects tenants with a track record of env
Slide 37: Structural Advantages
2 Structural Advantages ACCESS TO APPENDIX TRANSACTIONS ACCESS TO CAPITAL • NZX listed • First mover • Relationship with Rabobank • Profile (and other rural lenders) • Volume • Network • Reputation ACCESS ACCESS • Listed Company TO TO TRANSACTIONS CAPITAL NZL’s DOMESTICALLY STRUCTURAL DOMICILED ACCE
Slide 38: Risk Management Advantages
2 Risk Management Advantages APPENDIX By only owning the land NZL has no direct exposure to the operational risks of farming: No direct No direct Limited exposure No exposure to No direct Listing provides on-farm risks exposure to environmental animal health exposure greater liquidity (via either sh
Slide 39: Return Advantage
2 Return Advantage APPENDIX Land is low risk, generates consistent returns (non-cyclical) and NZL has a demonstrated history of providing above market returns. For the last 26 years the value of rural land in New Zealand has grown consistently, with REINZ’s Rural Land Price Index increasing at a CAG
Slide 40: Return Advantage
2 Return Advantage APPENDIX NZL is establishing a demonstrable track record of delivering above market returns. NZL’s property assets increased in value by +16.7% to 30 June 2022 this was +5.2% higher than the +11.5% increase in the REINZ Dairy Farm Index over the same period. NZL’s property assets
Slide 41: Appendix 3: Company Structure & Ownership
APPENDIX 3 COMPANY STRUCTURE & OWNERSHIP NEW ZEALAND RURAL LAND COMPANY 41
Slide 42: NZL Company Structure & Board as at June 2022
3 NZL Company Structure & Board as at 30 June 2022 New Zealand Rural Land Co Accountant APPENDIX NEW ZEALAND Auditor The Rural Land Investors RURAL LAND MANAGEMENT Registry Listed ROB SARAH TIA CHRISTOPHER CAMPBELL KENNEDY GREENAWAY SWASBROOK Independent Independent Independent Non-Independent Chair
Slide 43: NZL Key People as at June 2022
3 NZL Key People as at 30 June 2022 APPENDIX New Zealand Rural Land Co The Rural Land Investors ROB CAMPBELL SARAH KENNEDY TIA GREENAWAY CHRISTOPHER SWASBROOK Independent Chair Independent Director Independent Director Non-Independent Director Chair – EPA NZ Director - Comvita NZ Hailing from Ngāti
Slide 44: NZL Director & Manager Ownership Interests
3 NZL Director & Manager Ownership Interests as at 30 June 2022 APPENDIX All Directors & Shareholders of the Manager are investors in NZL (including Independent Chair of the Manager - Shelley Ruha). As at 30 June 2022 these holdings total: # Shares Clyde & Rena Holland 9,589,329 Elevation Capital Ma
Slide 45: NZL Foreign Ownership Rules & Levels as at June 2022
3 NZL Foreign Ownership Rules & Levels as at 30 June 2022 APPENDIX New Zealand buyer Current Listed Current NZL Foreign NZL is highly advantaged Company foreign ownership because it is a ownership rules As at 30 June 2022, NZL New Zealand buyer of Under the Overseas had foreign domiciled rural land
Slide 46: Appendix 4: Index Inclusions, Broker Research Coverage & Investor Contacts
APPENDIX 4 INDEX INCLUSIONS, BROKER RESEARCH COVERAGE & INVESTORS CONTACTS NEW ZEALAND RURAL LAND COMPANY 46
Slide 47: NZL Index Inclusions and Broker Research Coverage
4 NZL Index Inclusions and Broker Research Coverage APPENDIX Index Inclusions Broker Research Coverage FTSE Global Micro Cap Index Kieran Carling Arie Dekker S&P / NZX All Real Estate Index kieran.carling@craigsip.com arie.dekker@jarden.co.nz Nicholas Hill nicholas.hill@craigsip.com NEW ZEALAND RURA
Slide 48: NZL Investor Relations Contacts
4 NZL Investor Relations Contacts APPENDIX NZL Investor Relations Contacts: Christopher Swasbrook Richard Milsom chris@nzrlc.co.nz richard@nzrlm.co.nz +64 21 928 262 +64 21 274 2476 Level 4, The Blade Level 4, The Blade 12 St Marks Road 12 St Marks Road Remuera Remuera Auckland 1050 Auckland 1050 Ne
Slide 49: Rural Land Co
New Zealand Rural Land Co The Rural Land Investors New Zealand Rural Land Company +64 9 379 6493 Level 4, 12 St Marks Road info@nzrlc.co.nz Remuera www.nzrlc.co.nz Auckland 1050 nzrlc New Zealand nzrlc listed on:
New Zealand Rural Land Company — FY2022 Earnings Presentation on 6ix