Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — FY2010 Earnings Presentation
36 slides from Kiwi Property's earnings presentation, May 20, 2010
Slide 1: Annual Result for the year ended 31 March 2010
ANNUAL RESULT For the year ended 31 March 2010 KIWI INCOME PROPERTY TRUST 20 May 2010 Chris Gudgeon Chief Executive Gavin Parker Chief Financial Officer
Slide 2: Agenda
Agenda 2 Chris Gudgeon, Chief Executive – Annual result overview Gavin Parker, Chief Financial Officer – Financial review Chris Gudgeon, Chief Executive – Review of operations – Portfolio overview – Outlook
Slide 3: Annual result overview
Annual result overview Annual result presentation for the year ended 31 March 2010
Slide 4: The Trust's position
Annual result overview The Trust’s position 4 Largest LPT – Remains largest listed diversified property trust with property assets of $1.85 billion Sound financial – Combined market capitalisation of over $1.1 billion (incl. MCNs) position – Balance sheet strength and flexibility with low net debt t
Slide 5: Financial result
Annual result overview Financial result 5 31-Mar-10 31-Mar-09 Variance Financial performance For the year ended [$M] [$M] [$M] [%] Total revenue 188.6 183.8 +4.8 +2.6 Net rental income 133.7 133.7 - - Operating profit before tax 73.4 69.9 +3.5 +5.0 Current tax expense -10.7 -8.5 -2.2 -25.9 Non-cash
Slide 6: Total returns
Annual result overview Total returns 6 – The Trust has generally out- Total returns Annual 3 year 5 year performed the two NZX For the periods to 31-Mar [%pa] [%pa cum] [%pa cum] indices over the longer term KIP [Unit Price $1.00] 13.5 -8.8 4.9 NZX 50 Gross Index 26.2 -7.3 1.5 – Cumulative average T
Slide 7: LPT global total return
Annual result overview LPT global total return 7 Five years ended 31-Mar-10 Singapore 88% KIP 27% New Zealand 22% Canada 20% USA 18% Japan 6% UK -28% Australia -32% -40% -20% 0% 20% 40% 60% 80% 100% Source: Goldman Sachs JB Were Research
Slide 8: Capital management initiatives
Annual result overview Capital management initiatives 8 Value Initiative Date [$M] Institutional Placement 50 8-Apr-09 Unit Purchase Plan 15 8-Jun-09 Asset sale [Fisher & Paykel Finance Building] 12 15-Jun-09 Asset sale [BP House] 26 4-Aug-09 Mandatory Convertible Notes 120 8-Dec-09 TOTAL
Slide 9: Net debt to total assets
Annual result overview Net debt to total assets 9 – The average net debt to total assets ratio over the past five financial years is approximately 25% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Mar-05 Mar-08 Mar-09 Mar-06 Mar-07 Mar-10 Sep-05 Sep-08 Sep-09 Sep-06 Sep-07 Trust Deed maximum Forecast ratio
Slide 10: Financial review
Financial review Annual result presentation for the year ended 31 March 2010
Slide 11: Distributable profit
Financial review Distributable profit 11 Distributable profit 31-Mar-10 31-Mar-09 Variance For year ended [$M] [$M] [$M] [%] – Distributable profit after Net operating income - retail1 70.6 71.9 -1.3 -1.8 tax adversely impacted Net operating income - office1 57.9 57.8 +0.1 +0.2 by additional tax exp
Slide 12: Financial position
Financial review Financial position 12 Financial position 31-Mar-10 31-Mar-09 Movement As at [$M] [$M] [$M] [%] – Reduction in gearing Assets provides greater balance Property assets 1,848.7 1,906.2 -57.5 -3.0 sheet flexibility Cash on deposit 117.8 2.9 +114.9 +100.0 Other assets 18.3 18.5 -0.2 -1.1
Slide 13: Debt - Facility summary
Financial review Debt - Facility summary 13 Bank facilities 31-Mar-10 31-Mar-09 Bilateral facilities [ANZ, BNZ, CBA and Westpac] $800M $800M Balance drawn $571M $634M Balance undrawn $229M $166M Cash on deposit $118M $3M Weighted average cost of debt [incl. margins & fees] 7.07% 6.45% Weighted avera
Slide 14: Debt – Hedging profile
Financial review Debt – Hedging profile 14 Hedging profile 31-Mar-10 31-Mar-09 Percentage of drawn debt hedged [fixed rate] 94% 89% Weighted average interest rate on hedged debt [excl margin and fees] 6.67% 6.13% Weighted average term to maturity of interest rate hedges 3.6 years 4.8 years Hedge mat
Slide 15: Debt covenants
Financial review Debt covenants 15 Debt covenants Threshold 31-Mar-10 31-Mar-09 Bank covenants Loan to value ratio1 Calculated as bank borrowings [incl. net interest rate derivatives liability of <45% 30.5% 35.0% $32.7M and $36.6M at 31-Mar-10 and 31-Mar-09 respectively) over total assets] Interest
Slide 16: 2005 MCN conversion
Financial review 2005 MCN conversion 16 – The 2005 MCNs convert into units on 30 June 2010 – The conversion price1 is the lower of: – a 2% discount to the average of the daily volume weighted average price (VWAP) of the units on the 20 business days prior to the conversion announcement date; or – $1
Slide 17: Review of operations
Review of operations Annual result presentation for the year ended 31 March 2010
Slide 18: General economy
Review of operations General economy 18 Indicator 2008A 2009A 2010A/F 2011F 2012F – Economy out of recession – positive GDP growth in GDP Growth 2.1% -3.0% 2.8% 1.5% 3.0% three successive quarters to Dec-09 Private Consumption Growth 3.2% -1.1% 0.5% 2.8% 1.3% – 2010 expected to be a year of steady,
Slide 19: Retail sales and GOC
Review of operations Retail sales and GOC 19 Sales and gross occupancy costs Portfolio sales 31-Mar-10 31-Mar-09 Variance For the year ended [Incl. GST] – Specialty sales remained Portfolio moving annual turnover [$M] 1,045.5 1,045.8 -0.3 -0.0% constrained for most of the year however signs of impro
Slide 20: Office markets
Review of operations Office markets 20 Auckland Wellington Supply ~80,000m2 of largely pre-committed space over the next ~95,000m2 of predominantly A-grade space over the two-three years with spike in 2013 as new bank HQs next three years with 88% pre-commitment5 are anticipated2 Vacancy 13.3% overa
Slide 21: Lease and rental activity
Review of operations Lease and rental activity 21 NLA Rental uplift Portfolio [No.] [M2] [$000] [%] [CAGR] NEW LEASES AND RENEWALS Centre NLA [M2] Rental uplift Retail1 135 12,971 -792 -6.7 N/A Sylvia Park 1,566 +9.0% Office 25 18,220 1,021 14.1 N/A Centre Place 1,665 -21.0% Office [renewals where r
Slide 22: Valuation summary
Review of operations Valuation summary 22 Capitalisation rate Value Gain/loss in value Portfolio / property 31-Mar-10 31-Mar-09 +/- bps [$M] [$M] [%] Sylvia Park 6.88% 6.63% -25 452.0 +3.9 +0.9 Centre Place 9.13% 8.88% -25 92.9 -12.5 -11.9 Downtown Plaza 10.00% 9.50% -50 21.9 -2.9 -11.8 The Plaza 7.
Slide 23: Valuation summary: cap rates and cumulative revaluation
Review of operations Valuation summary 23 Portfolio cap rates Cumulative portfolio revaluation gain/(loss) [$M] 9.0% 600 Retail 8.5% Office 500 +$64.7 Total 8.0% 400 -$215.1 7.5% +$226.2 300 7.0% -$74.7 200 6.5% +$103.2 100 =$220.0 6.0% +$65.0 Mar-08 Mar-09 Mar-10 Sep-08 Sep-09 Notional Peak Mkt +$5
Slide 24: The Plaza Shopping Centre
Review of operations The Plaza Shopping Centre 24 Centre statistics Before On Completion NLA [M2] 19,700 32,000 Kmart, Kmart, Major tenants Countdown, Countdown Farmers Mini-majors - JB Hi-Fi Specialty shops 64 106 Carparks 684 1,200 Carpark ratio [per 100m2] 3.50 3.75 Project statistics Development
Slide 25: The Plaza Shopping Centre
Review of operations The Plaza Shopping Centre 25
Slide 26: The Plaza Shopping Centre
Review of operations The Plaza Shopping Centre 26
Slide 27: Sylvia Park plan change
Review of operations Sylvia Park plan change 27 – Sylvia Park identified as one of three ‘principal centres’ by Auckland City Council – Private plan change initiated in consultation with the council to support their vision for a comprehensively planned sub-regional centre with provision for retail,
Slide 28: ASB Head Office, Wynyard Quarter
Review of operations ASB Head Office, Wynyard Quarter 28 Potential project statistics [Based on conditional contract] Development budget $121M Target initial yield 8.78% Net lettable area 18,000m2 ASB lease term 18 years Construction start June 2011 Project completion June 2013
Slide 29: Portfolio overview
Portfolio overview Annual result presentation for the year ended 31 March 2010
Slide 30: Occupancy
Portfolio overview Occupancy 30 NLA Vacant Occupancy Portfolio / Property [M2] [M2] [%] Sylvia Park 71,168 - 100.0 Centre Place 15,110 1,013 93.3 Downtown Plaza 6,156 - 100.0 The Plaza 30,676 835 97.3 North City 25,757 792 96.9 Northlands 42,247 116 99.7 Total: Retail 191,115 2,757 98.6 Vero Centre
Slide 31: Diversification: Sector and regional
Portfolio overview Diversification: Sector and regional 31 Palmerston TOTAL By value Auckland Wellington Christchurch Hamilton North [% Total by Sector] Retail 25% 5% 13% 11% 6% 60% Office 22% 12% 3% - - 37% Other 2% 0% 0% 0% 1% 3% TOTAL [% Total by Region] 49% 17% 16% 11% 7% 100% Regional diversifi
Slide 32: Diversification: Tenant
Portfolio overview Diversification: Tenant 32 Analysis of property portfolio – The portfolio contains over 790 retail and office tenants Portfolio No. Tenants NLA Gross income – The top 20 tenants comprise ‘blue-chip’ Retail 83% 55% 60% organisations and underpin the portfolio’s Office 17% 45% 40% p
Slide 33: Lease expiry and WALT
Portfolio overview Lease expiry and WALT 33 Lease expiry profile By gross income 40% Retail portfolio – Weighted average lease term: 4.3 years 33% 33% Office portfolio 32% 35% Investment portfolio – Retail: 4.3 years 30% – Office: 4.2 years 25% 22% 21% 18% 18% 20% 15% 14% 13% 12% 15% 11% 11% 11% 11%
Slide 34: Outlook
Outlook Annual result presentation for the year ended 31 March 2010
Slide 35: Outlook
Outlook 35 – Prospects improving for return to economic growth, with improved business and consumer confidence – Economic recovery will initially benefit the retail sector as domestic consumption recovers – Office sector recovery expected post vacancy peak in 2013 – Trust is expected to benefit from
Slide 36: Disclaimer
Disclaimer 36 Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust ('KIP'). The Manager is a subsidiary of Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way
Kiwi Income Property Trust — FY2010 Earnings Presentation on 6ix