Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — FY2011 Earnings Presentation
35 slides from Kiwi Property's earnings presentation, May 18, 2011
Slide 1: Annual Result
ANNUAL RESULT For the year ended 31 March 2011 KIWI INCOME PROPERTY TRUST 18 May 2011 Chris Gudgeon Chief Executive of Kiwi Income Properties Limited Gavin Parker Chief Financial Officer of Kiwi Income Properties Limited
Slide 2: Agenda
Agenda 2 Chris Gudgeon, Chief Executive – Annual result highlights (Page 4) Gavin Parker, Chief Financial Officer – Financial review (Page 9) Chris Gudgeon, Chief Executive – Property portfolio performance (Page 15) – Strategic initiatives (Page 26) – External environment (Page 30) – Outlook (Page 3
Slide 3: Annual result highlights
Annual result highlights Annual result presentation for the year ended 31 March 2011
Slide 4: Operating highlights
Annual result highlights Operating highlights 4 Financial performance Operational performance Distributable Cash distribution WALT Occupancy profit $68.8m 7.00cpu 4.0 yrs 97.1% 2010 7.50cpu 2010 4.3 yrs 2010 97.0% 2010 $61.1m Financial position Returns Net debt to Outperformed Total Return T
Slide 5: Cumulative returns
Annual result highlights Investment return highlights 5 Cumulative Total Return Total return over the ten years from 31 March 2001 Total Returns1 Annual 3 year 5 year 220% For the periods [%pa] [%pa cum] [%pa cum] to 31-Mar 200% KIP 7.8 1.4 2.1 [Unit Price $1.00] 180% NZX 50 Gross 5.3 -0.3 -1.5 Inde
Slide 6: Strategic highlights
Annual result highlights Strategic highlights 6 Strategy / Step Achieved Details Balance sheet protection Favourably positioned: – Absorbed cyclical decline in asset values Maintaining conservative gearing and – Refinanced $303 million bank debt on favourable terms optimising the cost of capital –
Slide 7: LynnMall purchased for $174m
Annual result highlights LynnMall purchased for $174m 7 Portfolio statistics At acquisition At 31-Mar-11 Purchase price / value $174m $175m Occupancy 99.6% 100.0% Weighted average lease term 3.0 years 2.9 years Moving annual turnover $216m $217m Specialty GOC ratio 14.6% 14.5%
Slide 8: Financial review
Financial review Annual result presentation for the year ended 31 March 2011
Slide 9: Financial performance
Financial review Financial performance 9 Restated1 Financial performance 31-Mar-11 31-Mar-10 Variance For the year ended [$m] [$m] [$m] [%] Gross rental income 191.6 186.9 +4.7 +2.5 Property operating expenditure -53.8 -53.2 -0.6 -1.1 Net rental income 137.8 133.7 +4.1 +3.1 Net interest expense2 -48
Slide 10: Distributable profit
Financial review Distributable profit 10 Distributable profit 31-Mar-11 31-Mar-10 Variance For the year ended [$m] [$m] [$m] [%] Operating profit before tax 76.4 73.4 +3.0 +4.1 Non-cash rental adjustments1 1.0 -1.6 +2.6 +162.5 Distributable profit before tax 77.4 71.8 +5.6 +7.8 Current tax expense -
Slide 11: Financial position
Financial review Financial position 11 Restated1 Financial position 31-Mar-11 31-Mar-10 Movement As at [$m] [$m] [$m] [%] Assets Property assets 1,984.7 1,848.7 +136.0 +7.4 Cash on deposit 107.3 117.8 -10.5 -8.9 Other assets 20.6 18.3 +2.3 +12.6 Total assets 2,112.6 1,984.8 +127.8 +6.4 Liabilities S
Slide 12: Bank debt profile
Financial review Bank debt profile 12 Bank Debt Maturities as at 31-Mar-11 Bank facilities 31-Mar-11 31-Mar-10 $350 Bilateral facilities $800m $800m 37.2% Balance drawn $759m $571m $300 Balance undrawn $41m $229m $250 Cash on deposit $107m $118m $135.0 Weighted cost of debt 6.71% 7.07% [incl. margin
Slide 13: Interest rate hedging profile
Financial review Interest rate hedging profile 13 Hedging profile 31-Mar-11 31-Mar-10 Percentage of drawn debt hedged [fixed rate] 84% 94% Weighted average interest rate on hedged debt [excl margin and fees] 6.20% 6.67% Weighted average term to maturity of interest rate hedges 3.1 years 3.1 years He
Slide 14: Property portfolio performance
Property portfolio performance Annual result presentation for the year ended 31 March 2011
Slide 15: Stabilising valuations
Property portfolio performance | Valuations Stabilising valuations 15 Net revaluations NTA impact – The total portfolio write-down for FY11 was $82.4 million [$m] [%] [$pu] – $52.1 million due to earthquake impacts FY09 -215.1 -10.1 -0.30 in Christchurch FY10 -74.7 -3.9 -0.09 – $30.3 million from th
Slide 16: Underlying cap rates continue to stabilise
Property portfolio performance | Valuations Underlying cap rates continue to stabilise 16 – Capitalisation rates softened ~128 bps Like-for-Like Portfolio Capitalisation Rate Movements from the market peak, estimated at Q3 8.75% 2007, through to September 2009 – The easing appeared to have reached a
Slide 17: Summary of valuations
Property portfolio performance | Valuations Summary of valuations 17 Capitalisation rate Value Gain/loss in value Portfolio / property (excl 31-Mar-11 31-Mar-10 +/- bps [$m] [$m] [%] Sylvia Park 6.75% 6.88% -13 474.0 +22.7 +5.0 LynnMall 8.00% - - 175.0 +0.3 +0.2 Centre Place 9.50% 9.13% +37 87.0 -9.
Slide 18: Weighting increased to Auckland and retail
Property portfolio performance | Diversification Weighting increased to Auckland and retail 18 TOTAL [% total by sector] By value Auckland Wellington Christchurch Palmerston North Hamilton FY11 FY10 Retail 33% 6% 10% 10% 5% 64% 60% Office 20% 10% 2% - - 32% 37% Other 3% - - - 1% 4% 3% TOTAL [% Total
Slide 19: NOI growth driven from retail strategies
Property portfolio performance | Net operating income NOI growth driven from retail strategies 19 Net operating income1 31-Mar-11 31-Mar-10 Variance For the year ended Retail NOI [$000] [$000] [$000] [%] – Growth driven by: Sylvia Park 30,182 27,680 +2,502 +9.0 – Full year’s income from the LynnMall
Slide 20: Rental uplift of 2.2% achieved on prior rent
Property portfolio performance | Leasing activity Rental uplift of 2.2% achieved on prior rent 20 Uplift over prior passing rent Portfolio over-renting NLA Portfolio [No.] [sqm] [$000] [%] [CAGR] – The over-renting for the portfolio based on valuation reports at year NEW LEASES AND RENEWALS end is a
Slide 21: Occupancy remains >97% and WALT 4.0 years
Property portfolio performance | Occupancy and WALT Occupancy remains >97% and WALT 4.0 years 21 NLA Occupancy [%] WALT [Years] Portfolio / Property [sqm] FY11 FY10 FY11 FY10 Sylvia Park 71,277 100.0% 100.0% 3.7 4.4 LynnMall 31,413 100.0% n/a 2.9 n/a Centre Place 14,815 84.4% 93.3% 2.2 2.2 Downtown
Slide 22: Credible sales result in flat trading conditions
Property portfolio performance | Retail sales and GOC Credible sales result in flat trading conditions 22 FY11 FY10 Variance Portfolio sales Total sales by centre [$m] [$m] [%] – Total sales up 10.2% Sylvia Park 415.3 404.6 +2.6 – The Plaza +41% with first full year’s LynnMall (three months only) 49
Slide 23: Portfolio expiries remain well spread
Property portfolio performance | Lease expiries Portfolio expiries remain well spread 23 Key expiries forthcoming: Office Lease Expiry Profile (by gross income) FY Property Tenant NLA [sqm] 50% 12 Natl Bank Centre ANZ National Bank 2,061 45% 12 PwC Centre Beca 2,139 40% 13 Unisys House Crown Law 4,8
Slide 24: Tenant mix remains well diversified
Property portfolio performance | Diversification Tenant mix remains well diversified 24 Tenant Diversification (by gross income) Analysis of Property Portfolio [Total Tenants : 940] NZ Chains 25% Portfolio No. Tenants NLA Gross income Retail 84% 59% 64% Office 16% 41% 36% Other 3% Aust. & Intern'l C
Slide 25: Strategic initiatives
Strategic initiatives Annual result presentation for the year ended 31 March 2011
Slide 26: Started construction of ASB's new head office
Strategic initiatives Started construction of ASB’s new head office 26 Project statistics Development budget $126.2m Target initial yield 8.5% Net lettable area 21,400 sqm ASB lease term 18 years Preliminary works started January 2011 Construction commenced April 2011 HEAD OFFICE Project completion
Slide 27: Images of ASB's new head office
Strategic initiatives Images of ASB’s new head office 27
Slide 28: Enhancing the retail portfolio
Strategic initiatives Enhancing the retail portfolio 28 Sylvia Park Auckland Council approved the Trust’s plan change application in September. This allows: – An increase in gross floor area (GFA) from 148,000 sqm to 250,000 sqm (included within this is an increase in allowance for retail and ente
Slide 29: External environment
External environment Annual result presentation for the year ended 31 March 2011
Slide 30: Economic recovery now expected from 2012
External environment Economic recovery now expected from 2012 30 Growth in Real GDP, Retail Sales and House Prices – The Canterbury earthquakes have 8% 25% undermined near-term economic growth prospects 20% – Domestic activity was weaker than 6% expected in the second half of 2010 15% – Impacted by
Slide 31: Auckland office
External environment Auckland office 31 Rent (net effective) Auckland CBD Premium Office Rent and Vacancy Grade Dec-10 Mvmt. Dec-08 550 25% Premium 360/sqm 12.8% 413/sqm 500 A-grade 220/sqm 25.1% 294/sqm 450 20% – Both Premium and A-grade forecast to 400 increase from 2011, with good growth in 20
Slide 32: Wellington office
External environment Wellington office 32 Rent (gross effective) Wellington CBD Premium Office Rent and Vacancy Grade Dec-10 Mvmt. Dec-08 550 30% Premium 435/sqm 12.5% 497/sqm 500 B-grade 269/sqm 14.3% 314/sqm 450 25% – Premium rents are expected to fall 400 through to 2012 but return to 2009 le
Slide 33: Outlook
Outlook Annual result presentation for the year ended 31 March 2011
Slide 34: Outlook
Outlook 34 – Positive outlook for rural economy Economic – Real GDP growth forecast to lift from 1.5% per annum to 3.2% per annum over the next two years recovery under – Retail sector to benefit as domestic consumption recovers way – Office sector recovery post vacancy peak in 2011/2012 – Trust is
Slide 35: Disclaimer
Disclaimer 35 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
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