Argosy Property Limited · NZX:ARG
Argosy Property — HY2017 Earnings Presentation
36 slides from Argosy Property's earnings presentation, Nov 23, 2016
Slide 1: Interim Results Presentation
Interim Results Presentation Argosy Property Limited 23 November 2016 www.argosy.co.nz
Slide 2: Agenda
Agenda Highlights Page 4 Financials Page 6 Strategy Overview Page 16 Leasing Update Page 24 Outlook Page 29 PRESENTED BY: Peter Mence CEO Dave Fraser CFO 2
Slide 3: Argosy is a well diversified company with a portfolio of quality properties
Argosy is a well diversified company with a portfolio of quality properties. We have an excellent track record of re-leasing vacancies and pending expiries promptly. Peter Mence CEO 3
Slide 4: Highlights
Highlights Pstudio. italia ia WWw.argosy.co.nz
Slide 5: Highlights
Highlights 3.82c Positive property Tenant-led revaluation of developments on $35.8 million track Net Distributable Income per Share $53.7m $36.1m 97.9% Net Property Income Gross Distributable Occupancy (by rental) Income 4.44c $1.04 5.26y Gross Distributable Net Tangible Assets per Weighted Average
Slide 6: Financials
Financials 6
Slide 7: Income Reconciliation
Income Reconciliation 60 5.0 56.8 1.4 ( 1.0 ) 51.5 ( 0.1 ) 50 40 $m 30 20 10 0 Gross Property Acquisitions/ Disposals Other rental Net movement re Gross Property Income developments movement NZ Post House¹ Income 30 September 30 September 2015 2016 ¹This is the movement relating to the top three flo
Slide 8: Financial Performance
Financial Performance HY2017 HY2016 Net property income¹ $53.7m $48.6m Administration expenses $(4.6m) $(4.4m) Profit before financial income/(expenses), other $49.1m $44.2m gains/(losses) and tax Interest expense $(13.0m) $(14.2m) Gain/(loss) on derivatives $(9.7m) $(7.8m) Finance income - $0.1m Re
Slide 9: Distributable Income
Distributable Income HY2017 HY2016 Profit before income tax $62.2m $50.3m Adjusted for: Revaluations gains $(35.8m) $(27.6m) Derivative fair value loss/(gain) $9.7m $7.8m Realised losses/(gains) on disposal - $(0.8m) Unrealised loss on non-current assets held for sale - $0.4m Gross distributable inc
Slide 10: Investment Properties
Investment Properties 1,450 35.8 ( 0.1 ) 1,404.9 1,400 ( 6.0 ) 16.4 ( 8.8 ) 1,367.6 1,350 1,300 1,250 $m 1,200 1,150 1,100 1,050 1,000 Investment Capex NZ Post House Transfer to Change in fair Other Investment Properties purchase price properties held value Properties 31 March adjustment for sale 30
Slide 11: Movement in NTA per share
Movement in NTA per share 104 0.3 103.6 ( 0.6 ) 0.7 4.4 102 99.7 ( 0.9 ) 100 98 cps 96 94 92 90 NTA Net loss on Revaluation Tax timing Residual Other NTA 31 March derivatives gain on adjustments earnings less 30 September 2016 investment dividends paid 2016 properties 11
Slide 12: Gearing
Gearing HY2017 FY2016 Investment properties $1,404.9m $1,367.6m Assets held for sale $8.8m - Other assets $6.6m $7.3m Total assets $1,420.3m $1,374.9m Bank debt (excl. capitalised borrowing costs) $504.0m $503.9m Debt-to-total-assets ratio 35.5% 36.7% The Board’s policy is for debt to total assets t
Slide 13: Treasury
Treasury HY2017 FY2016 Weighted average duration of bank facility 3.0 years 3.5 years Weighted average interest rate 5.04% 5.12% (incl. margin & line fees) Interest Cover Ratio 3.46x 3.17x % of fixed rate borrowings 68% 66% Weighted average fixed interest rate 4.56% 4.52% Argosy maintains strong rel
Slide 14: Dividends
Dividends The second quarter cash dividend of 1.525 cents per share has been declared, with imputation credits of 0.4291 cents per share attached, and will be paid on 21 December 2016. Based on current projections, it is expected that the FY17 dividend will be 6.10 cents per share, fully paid from d
Slide 15: Valuations
Valuations Increase in property valuations of $35.8 million, up 2.6% on book values immediately prior to the revaluation. Valuation review was conducted by Colliers International, acting as independent valuer. The portfolio is now valued at $1.4 billion. Post revaluation passing yield of 7.25% and f
Slide 16: Strategy Overview
Strategy Overview a C 4 < NT 2 } B 4 ua se : » www.argosy.co.nz
Slide 17: Strategy
Strategy Argosy is and will remain invested in a portfolio that is diversified by sector, grade, location and tenant mix. The portfolio will be in the Auckland and Wellington markets with modest tenant-driven exposure to other markets. Argosy’s portfolio consists of “Core” and “Value Add” properties
Slide 18: Portfolio Mix
Portfolio Mix TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION 6% 9% 22% 39% 26% 68% 39% 87% Retail Auckland Core properties Office Properties and land to divest Wellington Industrial Value Add properties Regional North Island & South Island 18
Slide 19: Value Add
Value Add The following properties have been designated as Value Add, which make up 9% of the total portfolio: Book Value Property Sector Total cost as at 30 Sep 16 90 - 104 Springs Road Industrial Auckland $3.94m 80 Springs Road Industrial Auckland $8.70m 211 Albany Highway Industrial Auckland $16.
Slide 20: Industrial
Industrial NUMBER OF BUILDINGS 38 MARKET VALUE OF ASSETS ($M) $540.69 OCCUPANCY (BY RENT) 97.7% WALT (YEARS) 6.04 PASSING YIELD 7.08% 20
Slide 21: Office
Office NUMBER OF BUILDINGS 17 MARKET VALUE ASSETS ($M) $550.60 OCCUPANCY (BY RENT) 97.6% WALT (YEARS) 4.87 PASSING YIELD 7.36% 21
Slide 22: Retail
Retail NUMBER OF BUILDINGS 9 MARKET VALUE OF ASSETS ($M) $313.63 OCCUPANCY (BY RENT) 99.0% WALT (YEARS) 4.67 PASSING YIELD 7.35% 22
Slide 23: Tenant-led Developments
Tenant-led Developments Argosy has the following tenant-led development and acquisition pipeline: To Complete as at Development Location Total cost Completion 30 Sept 2016 Silverdale, Mighty Ape¹ $22.3m Oct 2017 $22.0m Auckland New Zealand Post House Wellington $13.0m Jan 2017 $8.6m Hutt Road, Place
Slide 24: Leasing Update
Leasing Update at iis, Bele i ae www.argosy.co.nz
Slide 25: Leasing Success
Leasing Success Argosy has a demonstrable track record of managing lease expiries promptly. Since 31 March 2016, Argosy has completed 29 leasing transactions totalling 41,416m² of net lettable area or $7.7 million in contract rent. Expiries to 31 March 2017 have reduced to 7.3% of the portfolio, dow
Slide 26: Lease Maturity
Lease Maturity 18% 35 16% 30 9 14% Percentage of portfolio (by income) 33 13.6% 25 12% 12.5% 33 11 7 11.0% 11.0% 20 10% 23 10.2% 17 8% 16 8.6% 8.3% 15 7 7.3% 19 6% 6.5% 5.9% 10 4% 13 3.0% 5 2% 2.1% 0% 0 Vacant Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26 Mar-27 + Total expir
Slide 27: Market Update
Market Update New Zealand continues to be dominated by rising asset prices accompanying a critically imbalanced housing market. The dairy industry is gradually improving and there has been a confirmation of the boom in tourist numbers and revenues, along with promising returns from other primary sec
Slide 28: Gross Prices Indexed to 100 / Total Shareholder Return
Gross Prices Indexed to 100 80 100 120 140 160 180 200 220 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Argosy Property Limited Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 NZ Property Gross Index 28 Mar-14 Jun-14 Sep-14 Dec-14 Total Shareholder Return/Risk Argosy Beta (RHS) Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Pr
Slide 29: Outlook
Outlook 29
Slide 30: Outlook
Outlook We continue to operate in a low interest rate and low inflation environment, although the possibility of rising interest rates has caused nervousness around the world’s stock markets. The economy, and thus the property market, in New Zealand however remains solid with good economic growth ex
Slide 31: Appendix
Appendix Argosy
Slide 32: Adjusted Funds from Operations (AFFO)
Adjusted Funds from Operations (AFFO) HY2017 HY2016 Profit before income tax $62.2m $50.3m Revaluations gains $(35.8m) $(27.6m) Derivative fair value loss/(gain) $9.7m $7.8m Realised losses/(gains) on disposal - $(0.8m) Unrealised loss on non-current assets held for sale - $0.4m Gross distributable
Slide 33: Rent Reviews
Rent Reviews Previous Annualised Review Type # Rent New Rent $ Increase % $ Increase Annualised % of rent (000) (000) (000) Increase (000) % Increase reviewed TOTAL REVIEWS 52 $24,526.7 $25,223.2 $696.5 2.8% $490.1 2.0% - By review type Market 13 $10,108.8 $10,316.2 $207.4 2.1% $126.3 1.2% 40.9% CPI
Slide 34: Rent Reviews
Rent Reviews Previous Annualised Review Type # Rent New Rent $ Increase % $ Increase Annualised % of rent (000) (000) (000) Increase (000) % Increase reviewed Auckland Office 15 $4,381.6 $4,543.8 $162.2 3.7% $155.0 3.5% 18.0% Industrial 9 $8,530.8 $8,731.7 $200.9 2.4% $86.5 1.0% 34.7% Retail 19 $7,6
Slide 35: Valuations
Valuations 31 Mar 16 Movement 30 Sep 16 Book Value Change Market Yield Valuation to 30 Sep Valuation ($m) ($m) ($m) ($m) ($m) % 31 Mar 16 30 Sep 16 TOTAL 1,367.6 1.5 1,369.1 1,404.9 35.8 2.61% 7.53% 7.30% By location Auckland 920.4 0.4 920.8 954.8 34.0 3.69% 7.38% 7.12% Wellington 372.4 0.3 372.7 37
Slide 36: 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