Precinct Properties NZ Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties NZ Ltd & Precinct Properties Investments — AMP NZ Office Trust — FY2010 Earnings Presentation
21 slides from Precinct Properties NZ Ltd & Precinct Properties Investments's earnings presentation, Aug 3, 2010
Slide 1: AMP NZ Office Trust Full Year Result FY10
AMP NZ Office Trust www.anzo.co.nz Stock ticker: APT.NZ Full Year Result – FY10 3 August 2010 Craig Stobo, Chairman Amish Vallabh, Acting Chief Executive Officer Peter Walkinshaw – Portfolio Manager 1 Managed by AMP Haumi Management Limited
Slide 2: Agenda
Agenda h Key Messages h Financial Review h Corporate Governance and Management Fee Review h Portfolio Activity h Market Review h Outlook 2
Slide 3: Key Messages
Key Messages h Focus is on core strategy and improving portfolio performance h Initiatives to create greater unit-holder alignment: better governance and management fee structures h Strong and flexible capital structure h Operating result: reasonable given tough market conditions h 7.058cpu (+2%) FY
Slide 4: Earnings Overview
Earnings Overview FY10 FY09 % Consolidated NZIFRS Profit and Loss ($000's) ($000's) Change h Total Revenue up 3.3% to $138.1m Total Revenue 138,107 133,717 3.3% Like for like contract rent increased 2.8% Total Direct Expenses 37,285 33,684 10.7% Operating Profit Before Direct Expenses 100,822 100,
Slide 5: Balance Sheet (as at 30 June 2010)
Summary Statement of Financial Position FY10 ($000's) FY09 ($000's) Balance Sheet (as at 30 June 2010) Current Assets 9,597 7,794 Leasing fees 4,936 3,757 Deferred tax - fair value of interest rate swaps 6,101 4,573 h Strong and flexible balance sheet Investment properties 1,276,775 1,327,850 Develo
Slide 6: Balance Sheet: Valuations and Cap Rates
Balance Sheet (as at 30 June 2010) h Total Assets down 7.7% to $1.3bn $115.3m or 7.8% net annual revaluation decline (total decline from peak in June 2008 now 22.0%) Cap rates stabilising at 8.14% (vs 8.03 June 2009), cap rates now at 2004 levels. 10 year portfolio average cap rate 7.75% Portf
Slide 7: Balance Sheet: Liabilities and Bank Facility
Balance Sheet (as at 30 June 2010) h Total Liabilities up 23.5% to $532.3m Deferred tax liabilities $237m (Non-cash item) Government Budget changes to building depreciation – additional $112.7m deferred tax liability h Bank Facility Bank facility unchanged at $342.5m Facility size materially
Slide 8: Swap Rate and Treasury Management
Balance Sheet (as at 30 June 2010) h Treasury management Immunised against gearing and interest cover covenant pressure Current average interest rate (including margin and line fees) is 7.90% 94.5% of total bank debt fixed via interest rate swaps as at 30 June 2010 Weighted average duration
Slide 9: Distributions to Investors
Distributions to Investors FY10 Cents h FY10 Gross Distribution 7.058 cents per unit Distribution Reconciliation Statement ($000's) per Unit Full year gross DPU 7.058 cpu gross , +2.0% yoy Net Profit (Loss) After Tax (152,118) Less Realised Gain on Sale of Investment Property (735) 4th qtr net D
Slide 10: Tax Changes – Budget 2010
Tax Changes – Budget 2010 h Key Budget announcements affecting property Remove building depreciation allowances from 1 July 2011 Reduction on PIE tax rate to 28% from 1 July 2011 h Impact of removing building depreciation allowances FY12 Distributable profit (after tax) declines 7-9% No impa
Slide 11: Corporate Governance Review
Corporate Governance Review h Change from Unit Trust to Company h Provides clear separation between interests of ANZO and Manager h Board of Directors to include majority of independent Directors Nominated and elected by shareholders h Strategy and business plan determined/approved by the Board h
Slide 12: Management Fee Review
Management Fee Review h Proposed new fee structure to improve alignment between Manager and Investors h New fee (subject to unit-holder approval) back dated to 1 July 2009 h Tiered Base Asset Management Fee 0.55% for first $1b of investment properties 0.45% of investment properties above $1b F
Slide 13: Portfolio Review
Portfolio Review Pricewaterhouse Coopers Tower IAG House AMP Centre ANZ Centre State Insurance Tower HP Tower AXA Centre Mayfair House Vodafone on the Quay No.1 The Terrance 125 The Terrace Pastoral House Deloitte House 21 Queen Street 13
Slide 14: Portfolio Occupancy 90.4%
Portfolio Occupancy 90.4% h Portfolio occupancy affected by completion of development 90.4% 95% 12 year long-run average Portfolio 90.4% 29 Willis Street 99.4% h Portfolio leasing activity Deloitte House 100.0% AXA Centre 97.2% 23 new leases over 26,405sqm Mayfair House 100.0% 14 leases rene
Slide 15: Forward Lease Expiry
Forward Lease Expiry h Sustained high tenant retention Market environment supports high retention rates 64% tenant retention. A further 24% of FY10 expiries already re-leased > 90% average annual tenant retention rate over last 6 years h Solid progress being made on renewals and forward expiri
Slide 16: Rent Reviews
Rent Reviews h Portfolio rent reviews continued to under-pin FY10 revenue growth through tough market environment h During FY10 period 78 rent reviews (81,277sqm) completed with average upward reversion of 22.7% Rent reviews settled in line with expectations Full year impact will flow through in
Slide 17: Sustainable and High Covenant Revenue Base
Sustainable and High Covenant Revenue Base h High quality and diversified tenant base Industry Sector by NLA (% of Portfolio) 30.0% 25.0% h Government is largest customer 20.0% occupying 27% of total portfolio NLA 15.0% h Government occupies 44.1% of 10.0% Wellington portfolio NLA 5.0% h Largest ten
Slide 18: Market Environment
Market Environment Market Environment h Property market fundamentals remain challenging A new world order – navigating through the turmoil…. Weaker conditions likely to persist for at least a further 12-18 months Vacancy rising from a low base through to end of 2011 Sublease risks appear more
Slide 19: Office Markets Historic and Projected Vacancy Rates
Office Markets Historic and Projected Office Vacancy Rates - Auckland CBD Total Vacancy % 24% Top 10 Buildings Secondary h Auckland vacancy at historical lows and now rising 21% Prime & A Grade 18% Current (Prime: top 10): 22,734sqm or 9.41% 15% Dec’13 forecast (Prime: top 10): 9,957sqm or 4.17%
Slide 20: Summary and Outlook
Summary and Outlook h Governance structure and management fee review will improve unit-holder alignment h Balance sheet is strong with desired liquidity and ample covenant headroom Scope to leverage balance sheet to improve returns Maintain disciplined assessment of growth opportunities – in lin
Slide 21: ANZO Disclaimer
ANZO DISCLAIMER Important Notice This presentation contains not only a review of operations, but also some forward looking statements (including forecasts and projections) about AMP NZ Office Trust (ANZO) and the environment in which ANZO operates. Because these statements are forward looking, ANZO’