Argosy Property Limited · NZX:ARG
Argosy Property — H1 2014 Earnings Presentation
34 slides from Argosy Property's earnings presentation, Nov 21, 2013
Slide 1: Half Year Results Presentation
Half Year Results Presentation Argosy Property Limited 21 November 2013
Slide 2: Highlights
Highlights
Slide 3: Highlights of 1H14
Highlights of 1H14 Net property income increased to $40.3 million (increase of 13.7%) Distributable income increased to $23.7 million (increase of 17.8%) Debt-to-total-assets reduced to 34.2% Weighted average lease term increased to 5.91 years Occupancy (by rental) increased to 97.3% Suc
Slide 4: Financial Overview
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Slide 5: Financial Performance
Financial Performance HY14 HY13 Net property income $40.3m $35.4m Interest expense $(12.9m) $(12.4m) Gain/(loss) on derivatives $16.0m $(13.0m) Administration expenses $(3.7m) $(2.9m) Abnormals $(0.0m) $(0.9m) Realised losses on disposal $(0.1m) $(0.8m) Finance income $0.1m $0.1m Profit before tax $
Slide 6: Income Reconciliation
Income Reconciliation 50 45 0.9 43.3 5.5 (0.2) 0.4 40 36.7 35 30 25 20 15 10 5 0 Gross Property Income Acquisitions Sales Rent reviews Other Gross Property Income $m 30 September 2012 30 September 2013
Slide 7: Distributable Income
Distributable Income HY14 HY13 Profit before income tax $39.7m $5.5m Adjusted for: Investment disposal losses $0.1 $0.8m Derivative fair value adjustment $(16.1m) $13.0m Corporatisation costs - $0.1m Acquisition investigation costs - $0.8m Gross distributable income $23.7m $20.2m Tax paid - - Net di
Slide 8: Financial Position
Financial Position HY14 FY13 HY13 Shares on issue 783.9m 680.9m 563.6m Shareholders’ funds $700.2m $601.3m $481.8m Net tangible asset backing per share (cents) 89.3c 88.3c 85.5c HY14 FY13 HY13 Investment properties $1,130.9m $976.9m $905.7m Other assets $13.0m $15.8m $15.5m Total assets $1,143.9m $9
Slide 9: Investment Properties
Investment Properties 1,200 1,130.9 1,150 18.4 3.4 132.2 1,100 1,050 1,000 976.9 950 900 850 800 Investment Acquisitions Capex Tenant Investment $m Properties Incentives Properties 31 March 2013 30 September 2013
Slide 10: Movement in NTA per share
Movement in NTA per share 92 (1.2) 2.3 90 (0.3) 0.2 89.3 88.3 88 86 84 82 80 NTA Gain on Deferred Tax Issue Costs Residual Earnings NTA cps 31 March 2013 Derivatives Movement in Profit less Dividends Paid 30 September & Loss 2013
Slide 11: Portfolio Overview
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Slide 12: Leasing Environment
Leasing Environment The New Zealand economy showing signs of improvement, despite continuing challenges overseas. Improving consumer and business confidence point to solid GDP growth and a corresponding improvement in underlying property market performance. Increased expectation of growth in n
Slide 13: Leasing
Leasing Occupancy, tenant retention and lease expiries remain key focus areas for the asset management team. Occupancy (by rental) has improved to 97.3% from 96.2% at March 2013. Outstanding lease expiries for the period to 31 March 2014 have reduced to 4.9% from 7.2% at 31 March 2013. As at 3
Slide 14: Lease Maturity
Lease Maturity 24% 23% 22% 21% 20% Percentage of portfolio (by income) 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 10 + Vacant Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year At 30 Sept 2013 At 31 March 2013
Slide 15: Top FY14 expiries remaining as at October 2013
Top 10 FY14 expiries remaining as at 31 October 2013 Tenant Building NLA Current Rent Expiry (sqm) Date Polarcold Stores Limited 8 Foundry Drive, Christchurch 4,305 $480,000 Monthly Linfox 32 Bell Avenue, Auckland 5,272 $407,005 31/03/2014 Noel Leeming Group Limited Albany Mega Centre, Auckland 1,46
Slide 16: WALT
WALT Weighted Average Lease Term as at 30 September 2013 6.2 6.11 6.1 6.07 6.0 5.91 5.9 5.8 5.7 YEARS 5.6 5.5 5.48 5.4 5.3 5.2 5.1 TOTAL Industrial Commercial Retail
Slide 17: Developments: 15-21 Stout Street
Developments 15-21 Stout Street The redevelopment is progressing well, is on budget and is expected to be completed by mid-2014. Net lettable area 19,630 sqm Lease commencement July 2014 Lease term 12 years Passing yield on end cost 8.11% Purchase price $33.2 million Upgrade cost $46.6 million End c
Slide 18: Developments: NZ Post House
Developments NZ Post House The contract to complete the redevelopment is due to be awarded at the end of November with development due to commence in early 2014. Net lettable area 24,977 sqm Lease commencement March 2013 Lease term 7 years Passing yield on end cost 8.50% Purchase price $60.0 million
Slide 19: Strategy
Strategy ‘a > Www.argosy.co.nz
Slide 20: We have a clear investment strategy
We have a clear investment strategy marked by a diversified portfolio of desirable properties that attract high-quality, long-term tenants.
Slide 21: Portfolio Investment Strategy
Portfolio Investment Strategy Argosy is and will remain invested in a portfolio that is diversified by primary sector, grade, location and tenant mix. The portfolio will be in the primary Auckland and Wellington markets with modest tenant- driven exposure to provincial markets. Argosy’s portfolio co
Slide 22: Portfolio Mix
Portfolio Mix TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION 4% 5% 10% 30% 9% 34% 20% 71% 81% 36% Target Target Target Retail 15 – 25% Auckland 65 – 75% Core 75 – 85% Commercial 35 – 45% Wellington 20 – 30% Value Add properties Industrial 35 – 45% Palmerston North Prop
Slide 23: Capital Management
Capital Management The Board’s policy is for debt to total assets to be between 35 to 40% in the medium term. Divestment of vacant land and under-yielding assets will continue to be a key strategy for the company. The sale of vacant land at Manawatu Business Park remains a focus. During the pe
Slide 24: Bank Covenants
Bank Covenants Loan to valuation ratio (LVR) – HY14 FY13 HY13 based on: Total borrowings $391.3m $328.7m $375.0m Fair market value of properties $1,119.5m¹ $983.6m $895.4m Not to exceed 50% 35.0% 33.4% 41.9% Interest cover ratio – based on HY14 FY13 HY13 EBIT/Interest and Financing Costs: Must excee
Slide 25: Share Price Performance
Share Price Performance
Slide 26: Share price performance – year
Share price performance – 1 year 130 125 120 115 Gross Prices Indexed to 100 110 105 100 95 90 Jun-13 Mar-13 Sep-12 Dec-12 Sep-13 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 27: Share price performance – 5 years
Gross Prices Indexed to 100 60 80 100 120 140 160 180 200 220 240 260 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Argosy Property Limited Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 NZ Property Gross Index Mar-12 Share price performance – 5 years Jun-12 Sep-12 NZX 50 Index Dec-12 Mar-13 Ju
Slide 28: Concluding comments
Concluding comments
Slide 29: Concluding comments
Concluding comments The first six months of the year have been a busy and exciting time for Argosy. Our focus remains on adhering to the strategy, increasing the portfolio’s occupancy, lease expiry and tenant retention rates. We will also continue to look for opportunities to develop the portf
Slide 30: Thank you
Thank you
Slide 31: Commercial
Commercial NUMBER OF BUILDINGS 19 BOOK VALUE OF ASSETS ($M) $408.22 VACANCY FACTOR (BY RENT) 4.63% WALT (YEARS) 6.07
Slide 32: Industrial
Industrial NUMBER OF BUILDINGS 34 BOOK VALUE OF ASSETS ($M) $388.22 VACANCY FACTOR (BY RENT) 0.64% WALT (YEARS) 6.11
Slide 33: Retail
Retail NUMBER OF BUILDINGS 13 BOOK VALUE OF ASSETS ($M) $334.45 VACANCY FACTOR (BY RENT) 2.01% WALT (YEARS) 5.48
Slide 34: 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