Precinct Properties NZ Ltd & Precinct Properties Investments Ltd · NZX:PCT
Precinct Properties NZ Ltd & Precinct Properties Investments — AMP NZ Office — FY2011 Earnings Presentation
28 slides from Precinct Properties NZ Ltd & Precinct Properties Investments's earnings presentation, Aug 11, 2011
Slide 1: AMP NZ Office Limited (ANZO) Annual Results
AMP NZ Office Limited (ANZO) Annual Results Twelve months ended 30 June 2011 •11 August 2011
Slide 2: Agenda
Agenda Highlights Page 3 Section 1 - Financial results and capital management Page 4 Section 2 - Corporate initiatives Page 12 Section 3 - Market snapshot Page 16 Section 4 - Portfolio performance Page 19 Section 5 - Conclusion and outlook Page 26 ANZO Annual Results, 30 June 2011 Page 2
Slide 3: Highlights
Highlights Operating profit after tax of $61.1 million (6.13cps) Net profit after tax of $10.4 million Lower expenses offset by higher interest costs Capital initiatives New $400m debt facility Chews Lane sold at 3.3% premium to 2010 financial year valuation Dividend policy transitioning t
Slide 4: Section 1 – Financial results and capital management
Section 01 – Financial results and capital management
Slide 5: Financial performance
Financial performance For the 12 months ending 30 Jun 11 30 Jun 10 ($m) Audited Audited 1 Change Total gross income $137.0 m $137.9 m ($0.9 m) Property expenses $35.9 m $37.3 m + $1.4 m Net property income $101.1 m $100.6 m + $0.5 m Indirect expenses $1.4 m $1.1 m ($0.3 m) Base fees $5.8 m $8.5 m +
Slide 6: Balance sheet
Balance sheet Financial Position as at 30 Jun 11 30 Jun 10 ($m) Audited Audited 1 Movement Assets Property Assets $1,254.2 m $1,276.8 m ($22.6 m) Other $29.7 m $22.5 m $7.2 m Total Assets $1,283.9 m $1,299.3 m ($15.4 m) Liabilities Bank Debt $282.5 m $262.0 m $20.5 m Deferred Tax depreciation $76.0
Slide 7: Capital management
Capital management 30 June ■ Strong balance sheet with significant Key metrics 2011 headroom to covenants Debt drawn $282.5m Gearing - Banking Covenant 23.7% ■ Bank facilities recently refinanced Weighted facility expiry 3.3 yr – $400m unsecured facility Weighted average debt cost (incl margin & lin
Slide 8: Capital management
Capital management Debt maturity profile ■ Revised financial risk management 100% Current Expiry Profile policy introduced Fully Drawn Expiry Profile 75% ■ Liquidity policy provides adequate time to pursue alternatives to refinancing where 50% credit market conditions adversely change 25% ■ Maximum
Slide 9: Dividend
Dividend ■ Previous policy Dividend 30 Jun 11 30 Jun 10 – Payout between 90% - 110% of Distributable Profit after tax $61.1 m $60.7 m distributable earnings Weighted average num of shares (m) 997.23 m 997.72 m ■ Revised policy Distributable Profit - Net (cps) 6.13 cps 6.08 cps – Adopted an AFFO divi
Slide 10: Valuations
Valuations ■ Devaluation of $36.3m or 2.8% ■ Excluding the ANZ Centre the devaluation was $19.6m or 1.8% ■ 6.9% over rented across the portfolio however market rents in Wellington are stabilising with signs of growth in Auckland 2010 2011 Weighted cap rate 1 Valuation Additions Disposals Book Value
Slide 11: Earnings outlook
Earnings outlook ■ FY12 operating earnings forecast at 5.1 cps to 5.4 cps ■ Earnings outlook for FY12 impacted by: – Reduced portfolio occupancy due to Westpac and BNZ departure – Continued rental reversion ■ Chews Lane sale impacts short term earnings; extent of impact dependent on timing of reinve
Slide 12: Section 2 – Corporate change
Section 02 – Corporate change
Slide 13: Corporate change
Corporate change Previous Current Structure Unit Trust Company Governance ANZO did not have a board of New board established for ANZO directors Majority of Board comprises Management company board with independent directors directors Independent directors appointed by Appointed by sh
Slide 14: Executive team
Executive team ■ Senior appointments Andrew Stringer - General Manager – Property Previously held senior executive roles within the property industry and has a deep understanding of property investment markets. Most recently led Colliers New Zealand professional services Peter Walkinshaw - General M
Slide 15: Property management
Property management ■ Existing ‘outsourced’ contract due to expire 30 November ■ ANZO and AHML have agreed terms for AHML to provide property management services ■ Key terms include: – 3 year initial term – Cost recovery model for fees – ANZO board to have full transparency on service levels and cos
Slide 16: Section 3 – Market overview
Section 03 – Market overview
Slide 17: CBD office market
CBD office market Wellington Auckland Corporate market stable with Market preference for quality. Occupier Demand ► ongoing consolidation in ▲ Auckland economy well placed to Government sector grow Lower quality buildings removed from market supply however Stable but still potentially influenced Sup
Slide 18: Market snapshot
Market snapshot % of Grade Total Stock % Total Vacancy Vacancy rate vacancy Wellington Premium 94,000 m² 7% 2,307 m² 2% 2% A Grade 266,000 m² 19% 10,130 m² 9% 4% B & C Grade 899,000 m² 64% 102,332 m² 89% 11% Total Stock 1,259,000 m² 114,769 m² 9% Auckland Premium 109,000 m² 8% 6,796 m² 4% 6% A Grade
Slide 19: Section 4 – Portfolio performance
Section 04 – Portfolio performance •Zurich fitout works, Zurich House
Slide 20: Portfolio performance
Portfolio performance ■ 50 new leases securing 53,700m2 of NLA ■ 19 renewals/extensions securing 10,800m2 of NLA ■ 64,500m2 of leasing transactions or 24% of the portfolio by NLA ■ 8,000m2 leased to 16 new customers ■ 96 rent reviews in the period over 54,000m2 of NLA – Settled rent reviews -1.7% on
Slide 21: Major leasing transactions
Major leasing transactions Secured 69 new leases/renewals and 16 new customers. Major leasing transactions include Property Customer NLA (m2) Lease Term (yrs) ANZ Centre ANZ National Bank 19,579 m² 15.0 Years 125 The Terrace NZ Qualifications Authority 5,213 m² 6.0 Years Vodafone on the Quay Russell
Slide 22: Zurich House leasing
Zurich House leasing ■ 8 new leases since 30 June 2010 including four Level 17 New Lease new customers New Lease Level 16 461 m² ■ Occupancy now 70% compared to 10% as at 30 New Lease June 2010, Building WALT of 7.4 years Level 15 New Lease ■ Leasing momentum expected to continue with Level 14 Lease
Slide 23: Portfolio composition
Portfolio composition Net Property Property Book Value NLA Occupancy WALT Income Auckland PWC Tower $18.7 m $207.0m 31,314 m² 95% 2.6 yrs ANZ Centre $14.7 m $158.5m 32,794 m² 99% 11.6 yrs AMP Centre $7.8 m $98.3m 25,134 m² 90% 6.8 yrs 151 Queen Street $4.0 m $73.3m 17,649 m² 79% 3.1 yrs Zurich House
Slide 24: Portfolio metrics
Portfolio metrics Earnings source Portfolio by industry 1 Govt. Dept. 28% 2 Legal 12% 3 Banking 11% % of 4 Insurance 9% Sector Rent 5 Financial Services 9% Roll 6 Accounting 6% Office 83% 7 Consultancy 5% Car Parks 10% 8 Retail 4% 9 Information Technology 4% Retail 7% 10 Primary Industry 3% Lease ex
Slide 25: FY12 lease event profile
FY12 lease event profile One third of portfolio (by NLA) has a lease FY12 Lease event profile event in FY12 Review mechanism % by total % of total NLA events 27% of all portfolio income will be subject to CPI 3% 9% market rental risk in FY12 Fixed 5% 13% Market - Ratchet 3% 8% – 13% to market re
Slide 26: Section 5 – Conclusion and outlook
Section 05 – Conclusion and outlook
Slide 27: Conclusion
Conclusion A year of significant improvement through: – Structural changes – unit trust to company structure with aligned fee – Dedicated ANZO board established with majority of independent directors – New executive team appointed – Fresh approach to relationships Changes resulted in: – Growth i
Slide 28: Outlook
Outlook Global economy remains uncertain Stability in property markets becoming more evident Property earnings lagging general economy ANZO well positioned to secure stability of earnings with potential for growth through: – Utilising balance sheet capacity – Reverting occupancy levels to no