Argosy Property Limited · NZX:ARG
Argosy Property — H1 2015 Earnings Presentation
38 slides from Argosy Property's earnings presentation, Nov 19, 2014
Slide 1: Half Year Results Presentation
Half Year Results Presentation Argosy Property Limited 19 November 2014
Slide 2: Argosy Continued Momentum
Argosy CONTINUED MOMENTUM
Slide 3: Highlights
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Slide 4: Highlights of 1H15
Highlights of 1H15 Portfolio revaluation gain of $24.9 million (increase of 2.0%) Net property income increased to $43.8 million (increase of 8.7%) Gross distributable income increased to $29.1 million (increase of 22.7%) Net distributable earnings 2.95 cents per share Weighted average lea
Slide 5: Financial Overview
Financial Overview
Slide 6: Income Reconciliation
Income Reconciliation 50 5.2 (0.6) 0.7 (1.2) 47.4 45 43.3 40 35 30 25 20 15 10 5 0 Gross Property Acquisitions Disposals Rent reviews Other Gross Property $m Income Income 30 September 30 September 2013 2014
Slide 7: Financial Performance
Financial Performance HY15 HY14 Net property income $43.8m $40.3m Administration expenses $(3.8m) $(3.8m) Profit before financial income/(expenses) $40.0m $36.5m and other gains/(losses) Interest expense $(12.6m) $(12.9m) Gain/(loss) on derivatives $(9.1m) $16.0m Finance income $0.1m $0.1m Revaluati
Slide 8: Distributable Income
Distributable Income HY15 HY14 Profit before income tax $42.8m $39.7m Adjusted for: Investment disposal losses $0.5m $0.1 Derivative fair value adjustment $9.1m $(16.1m) Revaluation gains $(24.9m) - Depreciation recovered $1.6m - Gross distributable income $29.1m $23.7m Tax paid $(5.7m) - Net distri
Slide 9: Investment Properties
Investment Properties 1,300 24.9 (45.0) 27.8 (12.4) 1,250 1,226.3 1.0 1,222.6 1,200 1,150 1,100 1,050 1,000 950 900 Investment Capex Disposals Change in fair Transfer to Tenant Investment ` $m Properties value properties held Incentives Properties 31 March for sale 30 September 2014 2014
Slide 10: Financial Position
Financial Position HY15 FY14 HY14 Shares on issue 798.1m 790.9m 783.9m Shareholders’ funds $760.7m $739.5m $700.2m Net tangible asset backing per share (cents) 95.3 93.5 89.3c HY15 FY14 HY14 Investment properties $1,222.6m $1,226.3m $1,130.9m Other assets $51.7m $6.1m $13.0m Total assets $1,274.3m $
Slide 11: Movement in NTA per share
Movement in NTA per share 96 3.1 ( 0.3 ) 0.1 95.3 94 93.5 ( 1.1 ) 92 90 88 86 84 82 80 NTA Loss on Revaluation Deferred Tax Residual NTA cps 31 March Derivatives Gain on Earnings less 30 September 2014 Investment Dividends Paid 2014 Properties
Slide 12: Portfolio Overview
Portfolio Overview
Slide 13: Office
Office NUMBER OF BUILDINGS 17 BOOK VALUE OF ASSETS ($M) $469.14 VACANCY FACTOR (BY RENT) 1.3% WALT (YEARS) 5.75 PASSING YIELD 8.09%
Slide 14: Industrial
Industrial NUMBER OF BUILDINGS 35 BOOK VALUE OF ASSETS ($M) $450.51 VACANCY FACTOR (BY RENT) 0.6% WALT (YEARS) 6.07 PASSING YIELD 7.52%
Slide 15: Retail
Retail NUMBER OF BUILDINGS 11 BOOK VALUE OF ASSETS ($M) $302.92 VACANCY FACTOR (BY RENT) 0.8% WALT (YEARS) 5.37 PASSING YIELD 7.70%
Slide 16: Leasing Environment
Leasing Environment The New Zealand economy remains reasonably solid, despite a troubling European environment, lower dairy commodity prices and confidence levels coming off the highs at the start of the year. Lower than expected inflation may result in the Reserve Bank holding interest rates at
Slide 17: Leasing
Leasing Occupancy, tenant retention and lease expiries remain key focus areas for the asset management team. Occupancy (by rental) has improved to 99.1% from 98.7% at March 2014. Outstanding lease expiries for the period to 31 March 2015 have reduced to 4.7% from 9.4% at 31 March 2014. As at 3
Slide 18: Lease Maturity
Lease Maturity 24% 10 35 Percentage of portfolio (by income) 22% 20% 30 18% 25 16% No. of leases 14% 31 10 20 22.5% 12% 29 24 10% 20 15 13.1% 8% 33 12.7% 10 6% 11.2% 14 10.3% 5 9.5% 11 4% 4.7% 5.9% 5 3.7% 5 2% 12 3.8% 1.7% 0% 0.9% 0 Vacant Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-
Slide 19: Weighted Average Lease Term
Weighted Average Lease Term WALT remains in a strong position 5.91 5.77 5.68 5.30 5.30 5.24 5.00 5.00 4.92 4.84 4.84 4.70 4.37 4.20 MAR 2008 SEP 2008 MAR 2009 SEP 2009 MAR 2010 SEP 2010 MAR 2011 SEP 2011 MAR 2012 SEP 2012 MAR 2013 SEP 2013 MAR 2014 SEP 2014
Slide 20: Occupancy (by rental)
Occupancy (by rental) Highest occupancy rate in six years 99.1% 99.1% 99.1% 98.7% 97.3% 96.6% 96.3% 96.3% 96.3% 96.2% 95.8% 95.7% 94.6% 94.1% MAR 2008 MAR 2009 MAR 2010 MAR 2011 MAR 2012 MAR 2013 MAR 2014 SEP 2008 SEP 2009 SEP 2010 SEP 2011 SEP 2012 SEP 2013 SEP 2014
Slide 21: Developments: 15-21 Stout Street
Developments 15-21 Stout Street The redevelopment was successfully completed on time with MBIE occupying in July 2014 Net lettable area 19,629 sqm Lease commencement July 2014 Lease term 12 years End cost $80.4 million Valuation $86.0 million Passing yield on value 7.04%
Slide 22: Developments: NZ Post House
Developments NZ Post House Work has commenced and is expected to be complete by late 2016. Net lettable area 24,977 sqm Lease commencement March 2013 Lease term 5 years from practical completion date Passing yield on end cost 8.50% Purchase price $60.0 million Upgrade cost $40.0 million End cost $10
Slide 23: Valuations
Valuations Increase in property valuations of $24.9 million, up 2.0% on book values immediately prior to the revaluation. This is the first time since September 2009 that an independent valuation has been performed at the half year. The desk top valuation was performed due to evidence of a firmi
Slide 24: Portfolio Interim Valuation
Portfolio Interim Valuation By location 31 Mar 14 2014 Book value 30 Sep 14 r$ r% Market Yield r bps Valuation Movement Valuation 31 Mar 14 30 Sep 14 Auckland $858.5m ($49.0m) $809.5m $825.7m $16.2m 2.0% 7.96% 7.67% (29 bps) Wellington $265.9m $22.2m $288.1m $296.1m $8.0m 2.7% 8.15% 7.99% (16 bps) P
Slide 25: Strategy
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Slide 26: A clear investment strategy with a diversified portfolio
We have a clear investment strategy marked by a diversified portfolio of desirable properties that attract high-quality, long-term tenants.
Slide 27: 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 28: Portfolio Mix as at 30 September 2014
Portfolio Mix as at 30 September 2014 TOTAL PORTFOLIO VALUE TOTAL PORTFOLIO VALUE PORTFOLIO MIX BY SECTOR BY REGION 4% 6% 5% 10% 25% 37% 24% 67% 38% 84% Target Target Target Retail 15 – 25% Auckland 65 – 75% Core 75 – 85% Office 35 – 45% Wellington 20 – 30% Value Add properties Industrial 35 – 45% P
Slide 29: 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 non-Core 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 period,
Slide 30: Bank Covenants
Bank Covenants Loan to valuation ratio (LVR) – HY15 FY14 HY14 based on: Total borrowings $474.7m $449.5 $391.3m Fair market value of properties¹ $1,235.3m† $1,226.9m $1,119.5m† Not to exceed 50% 38.4% 36.6% 35.0% Interest cover ratio – based on HY15 FY14 HY14 EBIT/Interest and Financing Costs: Must
Slide 31: Interest Rate Hedging Profile
Interest Rate Hedging Profile 30 September 31 March 14 30 September 14 13 Percentage of drawn debt hedged 67% 69% 72% Weighted average duration (years) † 6.70 7.11 5.85 Weighted average interest rate 5.72% 6.06% 6.58% (incl. margin & line fees) 350 300 250 200 150 100 50 - FY15 FY16 FY17 FY18 FY19 F
Slide 32: Total Shareholder Return
Total Shareholder Return
Slide 33: Total Shareholder Return – Year
Total Shareholder Return – 1 Year 120 115 Gross Prices Indexed to 100 110 105 100 95 Nov-13 Apr-14 Jun-14 Jul-14 Feb-14 Mar-14 Dec-13 Jan-14 Aug-14 Sep-13 Oct-13 May-14 Sep-14 Argosy Property Limited NZ Property Gross Index NZX 50 Index
Slide 34: Total Shareholder Return – 5 Years
Gross Prices Indexed to 100 100 120 140 160 180 200 80 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Argosy Property Limited Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 NZ Property Gross Index Mar-13 Jun-13 Total Shareholder return – 5 Years Sep-13 Dec-13 NZX 50 Index Mar-14 Jun-14 Sep-14
Slide 35: Concluding comments
Concluding comments
Slide 36: 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, maintaining the portfolio’s high level of occupancy, reducing near term lease expiries and improving tenant retention rates. We will also continue
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