Argosy Property Limited · NZX:ARG
Argosy Property — FY2024 Earnings Presentation
36 slides from Argosy Property's earnings presentation, May 22, 2024
Slide 1: FY24 Annual Results: Building a better future
FY24 Annual Results: Building a better future 22 May 2024
Slide 2: Agenda
Agenda Vision & Strategy 4 Peter Mence, CEO Dave Fraser, CFO Sustainability 5 Results Summary 6 Portfolio Highlights 7 Financials 13 Leasing & Sector Commentary 24 Focus and Outlook 28 Appendices 30 Note: This results presentation should be read in conjunction with the NZX release dated 22 May 2024.
Slide 3: CEO quote on portfolio diversity
“Our strength lies in the diversity of our portfolio by sector, location and tenant mix, providing flexibility to support our tenants changing needs, ensuring a resilient business through economic cycles.” Peter Mence, CEO Argosy Property Limited Ltd. 3
Slide 4: Building a better future
Building a better future Proactive delivery of sustainable growth A business culture that is environmentally focused Developing green Value Add portfolio opportunities A diversified portfolio by sector and region to drive earnings and capital growth A diversified asset allocation across sectors to A
Slide 5: Sustainability Commitment
Sustainability Commitment Portfolio by Green Asset Type COHESIVE APPROACH ACROSS THE BUSINESS 11 To reduce our impact on the environment, create vibrant spaces for tenants, engage more with stakeholders and provide transparent1and effective governance… SUBHEADING • Targeting >50% of the portfolio to
Slide 6: Results Summary
Results Summary $116.5m Net property income increased 6.65c Full year FY24 dividend 1.6625c Q4 final dividend declared 3.3% $1.45 -$55.3m 36.5% Gearing comfortably in the middle NTA per share down from $1.58 Full year net loss after tax, driven driven by revaluation decline by -$111.7m revaluation d
Slide 7: Portfolio Highlights
Portfolio Highlights 96.7% Occupancy 5.2yrs Weighted Average Lease Term 3.3% Like for like rental growth 85% Tenant retention rate 34.4% Government sector rental income 44% Weighting to Auckland Industrial Argosy Property Limited Ltd. 7
Slide 8: Sector Summary
Sector Summary Office Industrial Large format retail Number of buildings Number of buildings Number of buildings 33 13 4 Market value of assets ($m) Market value of assets ($m) Market value of assets ($m) $1,014.9 $763.5 $195.5 Occupancy (by income) Occupancy (by income) Occupancy (by income) 99.1%
Slide 9: Portfolio at a glance
Portfolio at a glance Sector by value % Region by value % Asset mix by value % 10 3 1 11 28 51 39 69 88 Target Bands Target Bands Target Bands 2 Industrial (60-70%) Office (20-30%) 1 LFR (5-15%) Auckland (70-80%) Wellington (15-25%) Regional (0-10%) Core (75-90%) Value Add Divest 1. Large format ret
Slide 10: Revaluations
Revaluations 31 Mar 24 31 Mar 24 Mar 24 Mar 23 Book Value 1 Valuation ($m) $m % Cap rate Cap rate ($m) % % CAP RATE SOFTENING ABATING, Auckland 1,439.8 1,369.7 (70.1) (4.9%) 6.07% 5.66% RENTAL GROWTH STILL EVIDENT Wellington 585.8 548.2 (37.7) (6.4%) 6.49% 6.25% • Independent valuations as at 31
Slide 11: Value Add & Green Developments
Value Add & Green Developments GREEN ASSETS DRIVING DEVELOPMENT Valuation @ PIPELINE Property Sector Location 31 Mar 24 • Value Add properties are a key strategic pillar 32 Bell Avenue, Mt Wellington future Industrial Auckland 15.8 and will transform the portfolio over the next 90-104 Springs Road,
Slide 12: Neilson Street Development
224 Neilson Street Development +8.0% 6 Star Forecast IRR on completion Green Built rating being targeted 5 Star 17,200 NABERSNZ energy rating m2 of warehouse to be being targeted available Argosy Property Limited Ltd. 12
Slide 13: Financials
Financials Argosy Property Ltd. 13
Slide 14: Gross Property Income Waterfall
Gross Property Income Waterfall Rent reviews and developments key drivers of rental growth Argosy Argosy Property Property Limited Ltd. 14
Slide 15: Financial Performance
Financial Performance FY24 FY23 SOLID TOP LINE GROWTH $m $m Net property income 116.5 112.8 • The net property income increase for the period was principally driven by solid like- Administration expenses (11.6) (10.8) for-like rental growth and development Profit before financial income/(expenses),
Slide 16: Distributable Income
Distributable Income FY24 FY23 SOUND RESULT $m $m • Net distributable income for the year was Profit before income tax (50.8) (70.9) $55.8m compared to $64.2m in the prior Adjustments: comparable period Revaluation (gains)/losses on investment property 111.7 146.6 • The variance from last year was d
Slide 17: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) FY24 FY23 AFFO COVERED DIVIDENDS $m $m Net distributable income 55.8 64.2 • Higher amortisation of tenant incentives Amortisation of tenant incentives and leasing costs 3.5 2.7 reflect divested assets and lease terminations during the year Share based payment ex
Slide 18: Investment Property Waterfall
Investment Property Waterfall Revaluation impacts portfolio value decline 2,400 2,185 35 2,200 -35 -58 2,014 2,000 1,974 -112 -1 -40 1,800 Investment Properties ($m) 1,600 1,400 Balance at 1 April Capitalised costs Transfer to property Disposals Change in fair value Change in Balance 31 March Right
Slide 19: Net Tangible Asset
Net Tangible Asset Revaluation key driver of NTA decline Argosy Argosy Property Property Limited Ltd. 19
Slide 20: Balance Sheet Management
Balance Sheet Management GEARING AT THE MID-RANGE OF FY24 FY23 TARGET BAND $m $m • The balance sheet is in good shape Investment properties 2,013.8 2,184.9 Asset held for sale 35.2 - • Argosy has sufficient facility headroom to complete existing developments and act on Other assets 20.0 27.7 any nea
Slide 21: Interest Rate Management
Interest Rate Management FIXED RATE COVER OF 71% FY24 FY23 1 • Weighted average interest rate increased Weighted average interest rate 5.6% 5.4% to 5.6% from 5.4% at 31 March 2023 Interest Cover Ratio 2.4x 2.8x • Fixed rate cover at 71% of drawdown debt % of fixed rate borrowings 71% 71% • $255m in
Slide 22: Debt Profile
Debt Profile GREEN BOND DIVERSIFICATION 38% • The total amount of the bank facility is $525m with the nearest tranche expiring in April 2025 (FY26) 400 • Argosy’s $325m of green bonds continue to provide important diversification and tenor 350 benefits to the business 300 100 100 250 125 200 220 190
Slide 23: Dividends
Dividends STEADY THROUGH TOUGH ECONOMIC 6.80 CYCLES • A 4th quarter dividend of 1.6625 cents per 6.60 6.65 6.65 6.65 share has been declared with 0.1633 cents 6.55 per share imputation credits attached 6.40 6.45 6.35 • Overseas investors will receive an 6.20 6.28 additional supplementary dividend of
Slide 24: Leasing & sector commentary
Leasing & sector commentary Argosy Property Ltd. 24
Slide 25: Leasing Outcomes
Leasing Outcomes 151,660 m2 of NLA leased to 31 March 24% Equivalent of total by NLA 44 Leases executed, 20 new leases, 21 renewals and 3 extensions 14,000 m2 of NLA renewed with Electrix 12yr New lease to Harbour Cancer 115 Rent reviews over the period, for 4 years Centre Limited annualised rental
Slide 26: Lease Expiry & Rent Review Profile
Lease Expiry & Rent Review Profile MEDIUM TERM LEASE EXPIRY PROFILE IS WELL MANAGED As at 31 March 2024 18 • Largest single expiry remains MBIE in 2027 • Average annual expiry over the next three 16 years is ~11% 14 12 5.6 Total remaining 10.4 expiry 10 9.5 8 6 Percentage of portfolio (by income) 5.
Slide 27: Market Insights
Market Insights INDUSTRIAL OFFICE LARGE FORMAT RETAIL • Softer period of both supply and demand currently as • Flexible working environments continue but working from • Retail turnover rates have declined significantly on a per projected for 2024 as both occupiers and developers struggle home and fu
Slide 28: Focus and outlook
Focus and outlook Argosy Argosy Property Property Limited Ltd. 28
Slide 29: Outlook
OUTLOOK STAYING FOCUSED ON ACHIEVING STRONG OPERATIONAL RESULTS AND EXECUTING ON STRATEGIC GOALS • New Zealand’s domestic economy continues to experience challenging headwinds from stubborn inflation and restrictive interest rates. • The diversified portfolio exposure continues to provide a degree o
Slide 30: Appendices
Appendices Argosy Property Ltd. 30
Slide 31: Balance Sheet Management
Balance Sheet Management Gearing remains comfortably within the mid-range of the band 50 Target Range 30-40% 40 38.8 35.9 36.5 35.1 30 31.1 20 Debt to total assets (%) 10 0 FY20 FY21 FY22 FY23 FY24 Argosy Argosy Property Property Limited Ltd. 31
Slide 32: Hedges, Interest Rates & Debt Maturity
Hedges, Interest Rates & Debt Maturity Hedges & Weighted Average Debt Maturity Profile (drawn) & Interest Rates (March) Weighted Average Margin and Line Fee 400 6.0% 450 2.20% 400 5.0% 2.00% 325 350 300 4.0% 300 1.80% 100 Weighted Average Interest Rate (%) Weighted average margin & Line fee (%) 250
Slide 33: Rent review summary – by type, sector and location
Rent review summary – by type, sector and location % of Total Type # Previous Rent % of rent New Rent $ Increase Annualised $ Annualised Annualised % ($000's) reviewed ($000's) (000's) % Increase Increase (000's) Increase Increase Total 115 93,038 100% 98,581 5,543 6.0% 3,274 100% 3.5% By review typ
Slide 34: Portfolio metrics
Portfolio metrics Rent Roll by Industry Top 10 Customers by Rent Government Administration MBIE Transport and Storage General Distributors Limited 6% 3%2%2% Retail Trade 3% Statistics New Zealand 4% 10% Cardinal Logistics Limited 34% Manufacturing 5% Kainga Ora Property and Business 5% Services The
Slide 35: Portfolio snapshot
Portfolio snapshot Occupancy (%) WALT (years) 0 7.0 98.8 99.0 98.7 99.3 96.7 6.0 0 6.1 5.0 5.5 5.7 5.4 5.2 0 4.0 0 3.0 2.0 0 1.0 0 0.0 FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 Net Tangible Assets ($ per share) Debt-to-total-assets (%) 0 50 0 1.74 40 1.53 1.58 38.8 1.45 35.9 35.1 36.5 1.30 3
Slide 36: Thank you
Thank you 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