Argosy Property Limited · NZX:ARG
Argosy Property — 1H18 Earnings Presentation
35 slides from Argosy Property's earnings presentation, Nov 21, 2017
Slide 1: Interim Results Presentation
Interim Results Presentation Argosy Property Limited 21 November 2017 www.argosy.co.nz
Slide 2: Agenda
AGENDA Highlights Page 5 Financials Page 7 Strategy Overview Page 16 Leasing Update Page 26 Outlook Page 30 PRESENTED BY: Peter Mence CEO Dave Fraser CFO Note: Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may not exactly reflec
Slide 3: Our strength lies in the diversity of our properties
Our strength lies in the diversity of our properties across sectors, grades, sizes and locations allowing us to adapt to the changing needs of our growing family of tenants. Peter Mence CEO 3
Slide 4: Highlights
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Slide 5: Highlights
HIGHLIGHTS Portfolio quality 82 Wyndham St. $48.5m and metrics development improved over first completed, six months of FY18 others on track Net property income 3.23c 1.55c $1.06 Net Distributable Income 2nd Qtr Dividend (+1.6%) Net Tangible Assets per per share Share 2.8% 98.1% 5.6 years Annualised
Slide 6: Financials
FINANCIALS Argosy > WWW.argosy.co.nz
Slide 7: Income Reconciliation
Income Reconciliation 60.0 1.0 1.1 56.8 -0.5 -0.8 55.0 51.9 -5.7 50.0 Rental income $m 45.0 40.0 35.0 30.0 Gross Property Acquisitions / Disposals Rent reviews Vacancy & leasing up Net movement re Gross Property Income 1H17 developments NZ Post House Income 1H18 7
Slide 8: Financial Performance
Financial Performance 1H18 1H17 $m $m Net property income 48.5 53.7 Administration expenses (4.7) (4.6) Profit before financial income/(expenses), other gains/(losses) and tax 43.8 49.1 Interest expense (12.6) (13.0) Gain/(loss) on derivatives (2.6) (9.7) Finance income 0.0 0.0 (15.2) (22.7) Revalua
Slide 9: Distributable Income
Distributable Income 1H18 1H17 $m $m Profit before income tax 27.4 62.2 Adjusted for: Revaluations gains - (35.8) Realised losses/(gains) on disposal (0.1) 0.0 Derivative fair value loss/(gain) 2.6 9.7 Earthquake expense net of recoveries 1.3 0.0 Gross distributable income 31.2 36.1 Depreciation rec
Slide 10: Investment Properties
Investment Properties 1,500.0 28.9 1,463.6 1,442.2 -7.5 1,450.0 1,400.0 Investment Properties $m 1,350.0 1,300.0 1,250.0 1,200.0 Investment Properties FY17 Capitalised costs Disposals Investment Properties 1H18 10
Slide 11: Movement in NTA per share
Movement in NTA per share 1.20 0.03 1.06 1.06 (0.03) 1.00 0.80 $ per share 0.60 0.40 0.20 - NTA at FY17 Comprehensive income Dividends paid NTA at 1H18 11
Slide 12: Gearing / Capital Structure
Gearing / Capital Structure 1H18 FY17 $m $m Investment properties 1,463.6 1,442.2 Assets held for sale 0.0 13.0 Other assets 5.7 3.4 Total assets 1,469.3 1,458.6 Bank debt (excl. capitalised borrowing costs) 540.6 529.8 Debt-to-total-assets ratio 36.8% 36.3% Argosy remains at the bottom end of the m
Slide 13: Funding & Interest Rate Management
Funding & Interest Rate Management 1H18 FY17 $m $m Weighted average duration of bank facility 3.6 years 2.5 years Weighted average interest rate1 5.04% 4.88% Interest Cover Ratio 3.2x 3.4x % of fixed rate borrowings 64% 65% Average fixed interest rate 4.56% 4.56% Argosy maintains strong relationship
Slide 14: Dividends
Dividends The second quarter cash dividend of 1.55 cents per share has been declared, with imputation credits of 0.32720 cents per share attached, and will be paid on 20 December 2017. The FY18 dividend guidance of 6.20 cents per share remains unchanged, an increase of 1.6% on the previous year. Arg
Slide 15: Strategy Overview
Strategy Overview Argosy
Slide 16: Strategy
Strategy Argosy will continue to invest in a diverse range of properties across sectors, grades, sizes and locations. Our Investment Strategy consists of Core and Value Add properties. Parameters for these are; Core properties between 75-90% of the portfolio by value. Value add properties between 10
Slide 17: Portfolio at a glance
Portfolio at a glance TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION BY VALUE 5% 4% 22% 11% 24% 40% 71% 38% 85% Industrial Auckland Core properties Office Wellington Value Add properties Retail Regional North Island & Properties and land to divest South Island 17
Slide 18: Value Add
Value Add The following properties have been designated as Value Add, which make up 11% of the total portfolio: Book Value1 Property Sector Location $m 90 - 104 Springs Road Industrial Auckland 4.1 80 Springs Road Industrial Auckland 9.6 211 Albany Highway Industrial Auckland 15.8 8 Foundry Drive In
Slide 19: Industrial
Industrial NUMBER OF BUILDINGS 37 MARKET VALUE OF ASSETS ($M) $588.0 OCCUPANCY (BY INCOME) 100% WALT (YEARS) 6.6 PASSING YIELD 7.2% 19
Slide 20: Office
Office NUMBER OF BUILDINGS 17 MARKET VALUE OF ASSETS ($M) $560.6 OCCUPANCY (BY INCOME) 96.3% WALT (YEARS) 4.5 PASSING YIELD 7.3% 20
Slide 21: Retail
Retail NUMBER OF BUILDINGS 9 MARKET VALUE OF ASSETS ($M) $315.0 OCCUPANCY (BY INCOME) 98.4% WALT (YEARS) 5.5 PASSING YIELD 7.4% 21
Slide 22: Tenant-led Developments
Tenant-led Developments Spent to Total Cost 30-Sep $m Development Type Location $m FY 2018 FY 2019 Sep-17 Mar-18 Sep-18 Mar-19 Foundry Drive IND CHC 7.5 7.5 Substantially complete 82 Wyndham OFF AKL 9.0 7.5 Substantially complete Mighty Ape 1 IND AKL 24.7 17.4 Dec-17 Snickel Lane OFF AKL 7.5 6.6 Ear
Slide 23: Mighty Ape Green Star Project
Mighty Ape Green Star Project Mighty Ape, Highgate Business Park, Silverdale - Auckland $24.7m development 22,575sqm of land, 10,500sqm of net lettable including $8.1m cost of land space (9,000sqm warehouse, 1,500sqm office over two levels, 116 onsite carparks) Joint partnership with tenant with sha
Slide 24: Waterloo Quay (NZ Post)
7 Waterloo Quay (NZ Post) Damage Assessment Cost unlikely to be higher than $50m per initial estimate. Working hard to complete damage assessment and progress claim. Insurance Claim Received $4m on an unallocated basis. Total claim to 30 September was $8.7m with a $4.8m deductible applied. Leasing /
Slide 25: Leasing Update
Leasing Update freedom’, i i t » im 2 a) 8 ¥ be pie = ae a j £5) all | ite a ee Bye rit = ——_ a www.argosy.co.nz
Slide 26: Leasing Success
Leasing Success Strong first six months with lease activity. During the period Argosy has completed 22 leasing transactions totalling ~61,000m² of NLA. Notable leasing successes during include: Property Tenant NLA (sqm) Lease Term 1 Rothwell Avenue, Albany New Zealand Couriers Limited 12,737 12 year
Slide 27: Lease Maturity
Lease Maturity 22% 35 20% 30 18% 33 Percentage of portfolio (by income) 16% 25 14% 14.6% 11 20 12% 28 11 19 12.5% 9 6 10% 26 11.0% 9.9% 19 15 9.7% 9.4% 8% 10 8.5% 8.0% 6% 10 6.4% 5.7% 13 4% 5 2% 1.9% 2.4% 0% 0 Vacant Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26 Mar-27 Mar-28 + Tota
Slide 28: Market Update
Market Update Solid domestic economic growth remains, and this is driving steady net absorption. There are few catalysts for change in the near term. The mixture of a steady economy and advancing technology supporting demand for industrial assets. Continued growth of online retailing bringing challe
Slide 29: Outlook
Outlook Argosy
Slide 30: Outlook
Outlook Fundamental real estate drivers remain sound. Despite ongoing global unpredictability, New Zealand remains solid with good economic growth and a positive property market outlook is expected to continue. Argosy’s diversified portfolio allows it to make the most of buoyant current market condi
Slide 31: Appendices
Appendices > WWW. argosy.co.nz
Slide 32: Adjusted Funds from Operations (AFFO)
Adjusted Funds from Operations (AFFO) 1H18 1H17 $m $m Profit before income tax 27.4 62.2 Revaluation gains - (35.8) Derivative fair value (gain)/loss 2.6 9.7 Realised losses/(gains) on disposal (0.1) - Earthquake expense net of recoveries 1.3 - Gross distributable income 31.2 36.1 Depreciation recov
Slide 33: Rent Reviews
Rent Reviews Annualised $ Previous Rent New rent $ Increase Annualised % % of rent Type # % Increase Increase (000's) (000's) (000's) Increase reviewed (000's) Total 41 13,512.2 13,948.3 436.1 3.2% 374.2 2.8% 100.0% By review type Fixed 23 6,586.4 6,817.4 231.0 3.5% 231.0 3.5% 48.7% Market 9 3,521.7
Slide 34: Rent Reviews
Rent Reviews Annualised $ Previous Rent New rent $ Increase Annualised % % of rent # % Increase Increase (000's) (000's) (000's) Increase reviewed (000's) Auckland Office 14 2,919.0 3,024.8 105.8 3.6% 102.7 3.5% 21.6% Industrial 7 4,542.0 4,696.2 154.2 3.4% 120.6 2.7% 33.6% Retail 16 5,141.3 5,289.5
Slide 35: 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