Growthpoint Properties Australia · ASX:GOZ
Growthpoint Properties Australia — H1 2024 Earnings Presentation
53 slides from Growthpoint Properties Australia's earnings presentation, Feb 22, 2024
Slide 1: 1H24 half year results
Growthpoint Properties Australia 1H24 half year results. 22 February 2024 space to thrive.
Slide 2: Agenda
Building 3, 570 Swan Street, Richmond, VIC (Botanicca 3) Agenda. Overview Portfolio & strategy update 3 10 Financial Outlook Supplementary results information 17 22 28 Acknowledgement of Country Growthpoint Properties Australia acknowledges the Traditional Custodians of Country throughout Australia
Slide 3: 1H24 overview & strategy
1H24 overview & strategy. Timothy Collyer Managing Director Woolworths DC, 599 Main North Road, Gepps Cross, SA
Slide 4: Strategy execution in 1H24
Strategy execution Our goal is to provide Securityholders with sustainable income returns and in 1H24. capital appreciation over the long term Invest in high- Maximise Maintain high FUM Disciplined capital quality Australian value occupancy Growth management assets Completed the sale of 22,976 sqm o
Slide 5: 1H24 overview
1H24 overview. Property Loss after tax Gearing portfolio value -$120.4m 38.4% $4.6b 1H23: loss after tax $109.6m Target 35-45% 30 June 2023: $4.8b, -4.2% FFO Hedging Office portfolio $2.9b Industrial portfolio $1.7b 12.1cps 77.0% 1H23: 15.3cps, -20.9% 30 June 2023: 70.5% Portfolio occupancy Distribu
Slide 6: Flight to quality evident in GOZ office markets
Flight to quality evident Growthpoint offices attract high-quality tenants, c.69% of all leases over the past three years in GOZ office markets. are Government or listed companies High-calibre tenants attracted Strong demand for prime assets Vacancy in GOZ portfolio to GOZ A-Grade properties in GOZ
Slide 7: Office supply in GOZ markets is moderating
Office supply in GOZ markets is moderating. Supply (completions) Supply (completions) All markets (sqm) GOZ markets (sqm) 1,000,000 350,000 900,000 300,000 Forecast 800,000 Forecast completions 700,000 completions 250,000 600,000 500,000 200,000 Canberra 400,000 150,000 St Leonards 300,000 Parramatt
Slide 8: Industrial portfolio, continued rent growth
Average vacancy rate (%) Industrial portfolio, 10% continued rent growth 8% 6% Sydney Melbourne Brisbane 4% • Supply remains limited, whilst demand is Adelaide Perth being supported by population growth 2% • The supply/demand mismatch and the 0% 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 ongoing challe
Slide 9: Funds management
Fund completion: Funds Fortius Green Square Commercial Trust management. Gross sale price: C.$87m IRR (levered) • Total FUM $1.7 billion as at 31 December 2023 • Actively bidding on countercyclical and income c.11% over the 7-year focussed assets and anticipate transaction markets fund term to impro
Slide 10: Portfolio update
Portfolio update. Michael Green Chief Investment Officer 109 Burwood Road, Hawthorn, VIC
Slide 11: Portfolio leasing
1H24 leasing, 6.1% of office portfolio income (4.2% of total income), Portfolio leasing. 1.5% of total portfolio income leased post 31 December 20231 National Heavy Vehicle Regulator SA Government Office leasing 7.4 years average lease term 3.6% WARR2 Term: 10.6 years Term: 10 years Term: 5.0 years
Slide 12: Portfolio snapshot
14.5 year weighted average portfolio age1 Portfolio snapshot. 5.2 stars portfolio NABERS Energy rating 1H24 Office Industrial $35m divestment 64% 36% Total assets Portfolio occupancy WALE Sale price Property 57 95% 5.8yrs 1-3 Pope Court, c.15% portfolio value 30 June 2023: 58 30 June 2023: 93% 30 Ju
Slide 13: Portfolio key metrics
Portfolio key metrics. Office portfolio Industrial portfolio Portfolio Office WALE WACR Portfolio Industrial WALE WACR occupancy portfolio value occupancy portfolio value 93% $2.96b 6.2yrs 6.0% 100% $1.66b 4.9yrs 5.7% 30 June 2023: 90% 30 June 2023: $3.12b 30 June 2023: 6.3yrs 30 June 2023: 5.7% 30
Slide 14: High-quality tenants
Office portfolio tenants High-quality as at 31 December 2023 tenants. • Secure, defensive income streams from high-quality tenants with long WALE 9.6 years 4.9 years 4.4 years 4.5 years WALE % of portfolio 40% 44% 10% 6% • Portfolio tenancy well diversified income Government Listed Large Other acros
Slide 15: Long WALE
Long WALE. Portfolio lease expiry per financial year, by income, WALE 16% as at 31 December 2023 5.8 years Australian 30-Jun-23: 16% 1H24 Office Industrial Commonwealth 6.0 years ANZ 2.2% Government 2.4% FY23 Office Industrial Samsung 2.2% BOQ 2.1% 40% of Woolworths 4.0% Jacobs 1.6% Industrial Linfo
Slide 16: Continued strong performance on sustainability
Rooftop solar PV System at 52 Merivale Street, South Brisbane, QLD Continued strong performance on sustainability. • Solar photovoltaic (PV) Continuing improvement in Maintained high systems have been GRESB performance portfolio average completed at six assets, NABERS ratings with another two to rea
Slide 17: Financial results
Financial results. Dion Andrews Chief Financial Officer 3 Maker Place, Truganina, VIC
Slide 18: 1H24 financial results
1H24 financial results. % Components of FFO 1H24 1H23 change • NPI – decrease driven by divestments of 333 Ann Street, NPI (includes investment distributions) $m 125.9 144.0 (12.6%) Brisbane, QLD and 1-3 Pope Court, Beverley, SA, and lower lease surrender fees received in 1H24 relative to 1H23 Add b
Slide 19: Financial performance
Financial performance. FFO per security movement NTA per security movement 4.20 16.0 0.2 0.2 15.3 4.10 15.0 $4.00 4.00 14.0 3.90 -2.0 13.0 3.80 $0.02 $3.75 -1.2 12.1 -$0.24 12.0 -0.3 -$0.02 -$0.01 -0.1 3.70 11.0 3.60 10.0 3.50 1H23 NPI1 Fund Net surrender Net Acquired/ Other 1H24 NTA Office Industri
Slide 20: Gearing within target range
Gearing within Gearing1 as at 31 December 2023 Target target range. 50% gearing range 35-45% • Gearing supported by secure Key debt income profile underpinned by a covenants 45% at 31 Dec 2023 long WALE of 5.8 years and 100% 41.2% of properties income producing LVR2<60% 40% 40.5% 38.4% • Ample headr
Slide 21: Capital management
Capital management. Metrics Hedge maturity profile Group debt maturity profile at 31 December 2023 at 31 December 2023 ($ million) $1,600 5.0% $1,000 WACD 50 $900 4.7%p.a $1,400 147 With WADM of 3.2 years 4.0% $800 $1,200 Weighted average rate $700 100 Undrawn Fixed debt $1,000 3.0% facilities $600
Slide 22: Outlook
Outlook. Timothy Collyer Managing Director 836 Wellington Street, West Perth, WA
Slide 23: Current market expectations
Current market expectations. Inflation continues to moderate, Australia retains one of the highest forecast reducing pressure on interest rates rates of population growth globally 2023-2033 8% Canada 16% 7% Australia 15% New Zealand 9% 6% India 8% Forecast Switzerland 8% 5% Singapore 7% RBA Cash Rat
Slide 24: Security price discount to NTA
Security price discount to NTA. GOZ security price relative to NTA1 For GOZ NTA to fall by 38% as implied by the 31 December as at 31 December 2023 2023 security price discount to NTA (all else being equal), the Property portfolio value as at 31 December 2023 weighted average capitalisation rate of
Slide 25: Market outlook
Market outlook. Australian Markets are Commercial real The potential economy forecasting a estate transaction development underpinned by decline in inflation activity remains pipeline for the high levels of and short-term subdued, but is office sector is immigration interest rates in showing signs o
Slide 26: FY24 guidance
1 Charles Street, Parramatta, NSW FY24 guidance. Strong leasing performance and a positive start to CY2024, reaffirming guidance FY24 FFO FY24 guidance distribution guidance 22.5 – 23.1 cps A key assumption to guidance 19.3 cps is in respect of interest rates, with the Group assuming an average FY24
Slide 27: Questions
Thank you for joining us. Questions. 104 Melbourne Street, South Brisbane, QLD
Slide 28: Supplementary information
Supplementary information. Financial Property information portfolio 29 39 Key market Additional metrics information 48 50 Rooftop Solar Installation, 52 Merivale Street, South Brisbane, QLD
Slide 29: Financial information
75 Dorcas Street, South Melbourne, VIC Financial information.
Slide 30: Summary financials
Summary financials. 1H24 1H23 Change % Change 1H24 1H23 Change % Change NPI1 $m 125.9 144.0 (18.1) (12.6) Office NPI $m 82.8 101.5 (18.7) (18.4) Like-for-like NPI $m 120.8 136.4 (15.6) (11.4) Industrial NPI $m 39.1 38.3 0.8 2.1 Fund management revenue $m 4.1 2.8 1.3 46.4 Distributions from securitie
Slide 31: Reconciliation from statutory profit to FFO
Reconciliation from statutory profit to FFO. 1H24 1H23 Change Change $m $m $m % Loss after tax (120.4) (109.6) (10.8) 9.9 Adjustment for non-FFO items: - Straight line adjustment to property revenue (5.4) (5.4) – - Net loss in fair value of investment properties 198.0 206.4 (8.4) - Net gain in fair
Slide 32: Financial position
Financial position. 31 December 2023 30 June 2023 $m $m Assets Cash and cash equivalents 62.3 49.4 Investment properties 4,703.7 4,917.2 Investment in securities 138.8 129.5 Intangible assets 35.3 38.2 Other assets 61.8 76.4 Total assets 5,001.9 5,210.8 Liabilities Borrowings 1,911.4 1,918.7 Distrib
Slide 33: Additional financial information
Additional financial information. Reconciliation of operating cashflow to FFO 1H24 1H23 Change $m $m Operating cashflow 74.5 97.7 (23.2) Lease incentives and leasing costs 15.5 13.7 1.8 Net (prepaid)/accrued operating activities 1.2 3.7 (2.5) COVID deferrals – 0.5 (0.5) Provision for income tax 1.4
Slide 34: Lease incentives
Consolidated Statement of Profit and Loss 1H24 1H23 Lease incentives. $m $m Property revenue (excluding incentives) 175.6 194.2 Amortisation of tenant incentives (19.5) (20.0) Lease incentives include fit out, rent free, Property revenue 156.1 174.2 rental abatement and cash payments. The Net change
Slide 35: Capital expenses
Capital expenses. Capital expenditure CY23 CY22 Portfolio maintenance capex $m 28.5 19.2 Expected to Average property asset value $m 4,971.6 5,282.3 average Capital expenditure to average property portfolio value % 0.57 0.36 0.3%-0.6% over medium-term based on current portfolio 35 Growthpoint Proper
Slide 36: Capital management
Capital management. 2.7 years 3.2% 50%-100% Weighted average Weighted average Target fixed/hedged fixed debt term fixed debt rate debt 31-Dec-23 30-Jun-23 Carrying Carrying amount Fair value amount Fair value ($m) ($m) ($m) ($m) FY24 FY25 FY26 FY27 FY28 FY29 Total Non-current liabilities Cross curre
Slide 37: Key debt metrics and changes during 1H24
Key debt metrics and changes during 1H24. 31 December 2023 30 June 2023 Change Gross assets $m 5,001.9 5,210.8 (208.9) Interest bearing liabilities $m 1,911.4 1,918.7 (7.3) Total debt facilities $m 2,215.3 2,226.3 (11.0) Undrawn debt $m 297.0 300.0 (3.0) Gearing % 38.4 37.2 1.2 Weighted average cost
Slide 38: Capital management
Capital management. Stress testing covenants ICR >1.6x Gearing movement GOZ: 2.9x for the six months ended 31 December 2023 To breach this covenant, NPI 42% LVR <60% would need to fall GOZ: 40.5% by 44.2%1 41% To breach this 1.4% 0.1% covenant, GOZ cap rate would need to Secured 40% rise by 278 bps1
Slide 39: Property portfolio
Building C, 219-247 Pacific Highway, Artarmon, NSW Property portfolio.
Slide 40: Portfolio summary
85% of properties Portfolio summary. located on Eastern seaboard As at 31 December 2023 20% Queensland $4.6b $940.4 million Office $648.8m Property Industrial $291.6m Office metropolitan properties (25 assets) portfolio value 57 Office CBD properties (2 assets) Properties 25% Industrial properties (
Slide 41: Portfolio metrics over the long term
Portfolio metrics over the long term. Portfolio weighted average Portfolio occupancy (%) Average lease expiry (years) to 31 December 2023 97% to 31 December 2023 Average 6.1yrs 6.9 6.7 6.9 6.1 5.3 5.0 6.2 6.2 6.3 6.0 5.8 98 97 99 99 98 98 93 97 97 93 95 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 F
Slide 42: Portfolio summary
Portfolio Sector diversity by value Geographic diversity by value Occupancy by income summary. NSW WA 8% Vacant 5% Industrial 25% SA 7% 36% As at 31 December 2023 ACT 5% Office 64% QLD 20% VIC 35% Occupied 95% Tenant type Tenant use Lease type Annual rent review type by income by income by income by
Slide 43: Office portfolio – top five assets (by value)
Office portfolio – top five assets (by value) 1 Charles Street, 75 Dorcas Street, 100 Skyring Terrace, Building 3, 570 Swan Street, 165-169 Thomas Street, Parramatta, New South Wales South Melbourne, Victoria Newstead, Queensland Richmond, Victoria Dandenong, Victoria Title Freehold Title Freehold T
Slide 44: Industrial portfolio – top five assets (by value)
Industrial portfolio – top five assets (by value) 70 Distribution Street, 20 Colquhoun Road, 599 Main North Road, 27-49 Lenore Drive, 6-7 John Morphett Place, Larapinta, Queensland Perth Airport, Western Australia Gepps Cross, South Australia Erskine Park, New South Wales Erskine Park, New South Wal
Slide 45: Portfolio metrics
Portfolio metrics. Key metrics 31 December 2023 30 June 2023 Number of assets 57 58 Property portfolio value $4.6 billion $4.8 billion Number of tenants 165 161 Portfolio occupancy 95% 93% Tenant retention1 43% 62% WALE 5.8 years 6.0 years Weighted average property age2 14.5 years 13.9 years Weighte
Slide 46: Top ten tenants – by income
Top ten tenants – by income. Total portfolio % portfolio WALE Office tenants % portfolio WALE Industrial tenants % portfolio WALE as at 31 December 2023 income (yrs) as at 31 December 2023 income (yrs) as at 31 December 2023 income (yrs) Woolworths 12 6.1 Australian Commonwealth Woolworths 39 6.1 12
Slide 47: Leases executed in 1H24
1H24 leases completed represent Average lease Leases executed in 1H24. 6.1% of office portfolio income term: 7.4 years Location Tenant Start date Term (yrs) NLA (sqm) Car parks (no.) 104 Melbourne Street South Brisbane QLD Spicy Bear Jun-23 5.3 122 - Building B, 211 Wellington Road Mulgrave VIC M &
Slide 48: Key market metrics
34-44 Raglan Street, Preston, VIC Key market metrics.
Slide 49: Key market metrics
Key market metrics. Prime Secondary % of GOZ Total Average face rent Average Average core Average face rent Average Average core Market portfolio vacancy per sqm / p.a. incentives market yield per sqm / p.a. incentives market yield Office markets Adelaide – CBD SA – 18.0% $597 gross 39% 6.25% - 8.25
Slide 50: Additional information
15 Green Square Close, Fortitude Valley, QLD Additional information.
Slide 51: Glossary
Glossary. Term Definition Term Definition Term Definition ABS Australian Bureau of Statistics gearing Interest bearing liabilities less cash divided by total NPI Net property income plus distributions from equity ACT Australian Capital Territory, Australia assets less finance lease assets less intan
Slide 52: Important information
Important information. This presentation has been prepared by Growthpoint Properties Australia Limited prove incorrect, there can be no assurance that actual outcomes for Growthpoint (ACN 124 093 901) in its personal capacity and as responsible entity of will not differ materially from statements ma
Slide 53: Contact us
Contact us. Retail investors Computershare 1300 665 792 (within Australia) +61 (3) 9415 4366 (outside Australia) webqueries@computershare.com.au Institutional investors Luke Maffei Investor Relations and Communications Manager +61 (3) 8681 2933 investor.relations@growthpoint.com.au 2024 calendar. •
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