Argosy Property Limited · NZX:ARG
Argosy Property — Non-Deal Roadshow (May 2018)
38 slides from Argosy Property's roadshow presentation, May 28, 2018
Slide 1: Retail Roadshow Presentation 2018
2018 Retail Roadshow Presentation Argosy Property Limited 28 May 2018 to 18 June 2018 www.argosy.co.nz
Slide 2: Agenda
AGENDA Highlights Page 4 Financials Page 6 Strategy Page 16 Leasing Update Page 31 Outlook Page 35 PRESENTED BY: Peter Mence CEO Dave Fraser CFO Note: This result should be read in conjunction with the NZX stock exchange release dated 23 May 2018. Due to rounding, numbers presented in this presentat
Slide 3: CEO quote on portfolio diversity
Our strength lies in the diversity of our properties across sectors, grades, sizes and locations allowing us to adapt to the changing needs of our growing family of tenants. Peter Mence CEO 3
Slide 4: Highlights
HIGHLIGHTS Argosy 4 » www.argosy.co.nz
Slide 5: Highlights
HIGHLIGHTS $101m 6.62c 1.55c Net property income Net Distributable Income 4th Quarter Dividend +1.6% per share +1.1% $48.8m completed, $1.12 3.0% including $33.8m of green projects NTA +5.5% on prior year Annualised rent review Value Add Developments increase 98.8% 6.1 years 6.25c Occupancy (by rent
Slide 6: Financials
FINANCIALS Change image 6
Slide 7: Income Reconciliation
Income Reconciliation 120.0 2.5 0.4 110.0 106.8 1.3 107.4 -1.3 -0.1 -2.2 100.0 90.0 Rental income $m 80.0 70.0 60.0 50.0 40.0 30.0 Gross Property Acquisitions / Disposals Rent reviews Vacancy & leasing Other Net movement re Gross Property Income FY17 developments up NZ Post House Income FY18 7
Slide 8: Financial Performance
Financial Performance FY18 F17 $m $m Net property income 101.0 100.8 Net income stable year on year Administration expenses (9.9) (9.3) Expenses up due to additional Profit before financial income/(expenses), resourcing costs across the 91.1 91.4 other gains/(losses) and tax business Interest expens
Slide 9: Distributable Income
Distributable Income FY18 FY17 $m $m Profit before income tax 109.3 120.4 Adjusted for: Revaluations gains (47.3) (42.3) Realised losses/(gains) on disposal (0.3) (2.7) Derivative fair value loss/(gain) 4.1 (11.0) Earthquake expense net of recoveries -0.2 1.2 Gross distributable income 65.6 65.6 Dep
Slide 10: Investment Properties
Investment Properties Portfolio growth driven by a combination of developments completed and revaluation gains 1,550.0 47.3 1,513.1 61.4 1,500.0 -0.3 -10.1 1,442.2 -27.4 1,450.0 Investment Properties $m 1,400.0 1,350.0 1,300.0 1,250.0 1,200.0 Investment Properties Capitalised costs Disposals Transfe
Slide 11: Movement in NTA per share
Movement in NTA per share Annual revaluation gain key driver of 5.5% NTA uplift year on year 1.20 0.01 1.18 0.05 1.16 1.14 0.06 $ per share 1.12 1.12 (0.06) 1.10 1.08 1.06 1.06 1.04 1.02 1.00 NTA at FY17 Profit for the year* Revaluations DRP & other Dividends paid NTA at FY18 * Excluding revaluation
Slide 12: Gearing
Gearing FY18 FY17 $m $m Investment properties 1,513.1 1,442.2 Assets held for sale 27.4 13.0 Other assets 4.3 3.4 Total assets 1,544.8 1,458.6 Bank debt (excl. capitalised borrowing costs) 554.2 529.9 Debt-to-total-assets ratio 35.9% 36.3% Further divestment of non Core assets will see the portfolio
Slide 13: Portfolio Snapshot
Portfolio Snapshot Our focus is delivering improved portfolio quality and is reflected in our strong portfolio metrics Occupancy WALT (years) 100.0% 7.0 98.0% 96.0% 6.0 94.0% 5.0 92.0% 4.0 90.0% 88.0% 3.0 86.0% 2.0 84.0% 82.0% 1.0 80.0% 0.0 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Net Tangi
Slide 14: Funding & Interest Rate Management
Funding & Interest Rate Management FY18 FY17 Weighted average duration of bank facility 3.1 years 2.5 years Weighted average interest rate1 4.98% 4.88% Interest Cover Ratio 3.3x 3.4x % of fixed rate borrowings 62% 65% Average fixed interest rate2 4.56% 4.56% Argosy maintains strong relationships wit
Slide 15: Dividends
Dividends A final quarter cash dividend of 1.55 cents per share has been declared, with imputation credits of 0.3744 cents per share attached, and will be paid on 27 June 2018 FY19 dividend guidance of 6.25 cents per share is an increase of ~1.0% on the FY18 full year dividend The FY19 dividend refl
Slide 16: Strategy Overview
Strategy Overview 16
Slide 17: Strategy
Strategy Argosy will continue to invest in a diverse range of properties across sectors, grades, sizes and locations. Our Investment Strategy consists of Core and Value Add properties. Core properties between 75-90% of the portfolio by value. Our Investment Policy sector band parameters (by value) a
Slide 18: Portfolio at a glance
Portfolio at a glance TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION BY VALUE 5% 6% 20% 7% 24% 42% 71% 38% 87% Industrial Auckland Core properties Office Wellington Properties and land to divest Regional North Island & Value Add properties Retail South Island Focus on
Slide 19: Portfolio Metrics
Portfolio Metrics The strength of our diversified portfolio is in the breadth and depth of our tenant base and sectors they represent. Rent Roll by Industry Government Top 10 Customers by Rent MBIE Administration NZ Post Retail General Distributors Transport and Storage Cardinal Logistics Manufactur
Slide 20: Revaluations
Revaluations 31 March Market Yield1 Strong revaluation gain 3.2% above 31 Mar 18 18 Book Value Valuation Δ $m Δ % book value ($m) 31 Mar 17 31 Mar 18 ($m) Auckland 1,025.4 1,081.5 56.1 5.5% 7.14% 6.75% Regionally, Auckland biggest contributor Wellington 367.1 358.1 (9.0) -2.5% 7.53% 7.60% North Isla
Slide 21: Value Add
Value Add The following properties have been designated as Value Add, which make up ~6% of the total portfolio: Market Value1 Property Sector Location $m 90 - 104 Springs Road Industrial Auckland 5.4 80 Springs Road Industrial Auckland 10.0 211 Albany Highway Industrial Auckland 20.5 960 Great South
Slide 22: Value Add – Stewart Dawson Corner
Value Add – Stewart Dawson Corner 22
Slide 23: Value Add – Stewart Dawson Corner
Value Add – Stewart Dawson Corner 23
Slide 24: Industrial
Industrial NUMBER OF BUILDINGS 36 MARKET VALUE OF ASSETS ($M) $637.6 OCCUPANCY (BY INCOME) 99.9% WALT (YEARS) 7.4 PASSING YIELD 6.7% 24
Slide 25: Office
Office NUMBER OF BUILDINGS 17 MARKET VALUE OF ASSETS ($M) $577.3 OCCUPANCY (BY INCOME) 97.3% WALT (YEARS) 5.0 PASSING YIELD 7.0% 25
Slide 26: Retail
Retail NUMBER OF BUILDINGS 8 MARKET VALUE OF ASSETS ($M) $298.3 OCCUPANCY (BY INCOME) 100% WALT (YEARS) 5.7 PASSING YIELD 7.1% 26
Slide 27: Completed Developments
Completed Developments Total Cost $m Development Major Tenant Type Location Highgate Business Park Mighty Ape IND AKL 24.7 82 Wyndham Panuku OFF AKL 9.1 Foundry Drive Polarcold Stores Ltd IND CHC 7.5 Snickel Lane Various OFF AKL 7.5 TOTAL 48.8 Argosy completed two green developments totalling $33.8m
Slide 28: Green Case Study: Wyndham Street, Auckland
Green Case Study 82 Wyndham Street, Auckland BEFORE: AFTER: Valuation $29.0m (31 March 2017) $42.3m (31 March 2018) Building rating: nil Targeting 5 Star Office Built Rating NABERSNZ rating: nil Targeting 5 Star Office Base Build Rating Total project capex¹ $9.1m NEW FEATURES: Replaced air condition
Slide 29: Green Case Study: Highgate Business Park, Auckland
Green Case Study Highgate Business Park, Auckland BEFORE: AFTER: Valuation Nil $28.2m (31 March 2018) Building rating: nil Targeting 4 Star Industrial Built Rating NABERSNZ rating: nil nil Total project capex¹ $16.6m NEW FEATURES: Air conditioning system to 50% above building code with CO 2 sensors
Slide 30: NZ Post House, at Waterloo Quay
NZ Post House, at 7 Waterloo Quay Damage Assessment Interim damage assessment reports now with insurers. Insurance Claim Three interim claims made under Argosy’s material damage and business interruption insurance. Total recognised to 31 March was $9.8m (after deductible) and allocated as follows; L
Slide 31: Leasing Update
Leasing Update Change image 31
Slide 32: Leasing Success
Leasing Success Excellent leasing results over the back half of the year driving the higher WALT of 6.1 years During the period Argosy completed 51 leasing transactions totalling ~150,000m² of NLA. Notable leasing successes include: Property Tenant NLA (sqm) Lease Term 9 Ride Way, Albany Amcor Flexi
Slide 33: Lease Maturity
Lease Maturity Lease maturity profile relatively stable over the medium term, no material single tenant exposure 22% 35 20% 30 18% Percentage of portfolio (by income) 16% 13 25 12 14% 15.0% 8 20 12% 12.8% 9 29 23 21 10% 11.3% 10.0% 28 15 9.9% 9.7% 10.0% 8% 8.6% 6% 12 10 17 4% 4.7% 4 4.2% 5 2% 2.6% 1
Slide 34: Market Update
Market Update Modest economic growth still forecast which will drive steady net absorption. The mixture of a stable economy and continued technology change is driving demand for industrial assets. Growth in Auckland office supply is yet to cause concern, projections for increased vacancy around 2020
Slide 35: Outlook
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Slide 36: Outlook
Outlook Fundamental real estate drivers remain sound. Whilst global volatility is still present, the New Zealand economic outlook is still positive with economic growth forecast and resilient local equity markets. Argosy’s diversified portfolio provides balance across sectors allowing it to make the
Slide 37: Thank you.
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Slide 38: 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