Dexus Industria Reit · ASX:DXI

Dexus Industria Reit — H1 FY2019 Earnings Presentation

32 slides from Dexus Industria Reit's earnings presentation, Feb 19, 2019

  1. Slide 1: 31 December 2018 Results

    APN INDUSTRIA REIT 31 DECEMBER 2018 RESULTS 19 FEBRUARY 2019 www.apngroup.com.au ASX Code: ADI (formerly IDR)

  2. Slide 2: Agenda

    Agenda 01 Highlights and Outcomes 02 Investment Proposition 03 Portfolio Performance 04 Outlook Appendices 2

  3. Slide 3: 01 Highlights and Outcomes

    01 HIGHLIGHTS AND OUTCOMES 3

  4. Slide 4: Highlights and Outcomes

    Highlights and Outcomes 3.3% FFO growth; NTA $2.71 – up 1c; ~6,600 square Affordable rents to a 9.4 cents per weighted average metres of leasing – diverse pool of security cap rate 6.5% increasing tenants driving occupancy to 96% growth of 2 – 3% per annum 4

  5. Slide 5: December 2018 financials

    31 December 2018 financials  Statutory net profit $14.6 million – contributions from 1H19 1H18 Change contracted leases with fixed growth, boosted by income from new acquisitions and valuation uplifts Statutory net profit ($m) $14.6 $13.8 ▲ 5.8%  FFO up from $14.8 million to $15.3 million: FFO ($m

  6. Slide 6: Strong balance sheet, consistently outperforming peers

    Strong balance sheet, consistently outperforming peers  Maturities broken into small annual expiries, reducing Debt maturity profile – limited refinance risk refinancing risks: $140m ‐ Nearest debt maturity ~$46 million in Sept 2019 Small maturity exposures limit refinance risk $120m ‐ Weighted ave

  7. Slide 7: 02 Investment Proposition

    02 INVESTMENT PROPOSITION 7

  8. Slide 8: The APN Industria REIT opportunity

    The APN Industria REIT opportunity Strategy to grow through The opportunity investing in office and  Benefit from a growing rent profile from low-risk portfolio – no potential volatility from industrial assets “active earnings” (e.g. funds management or development)  Leveraging APN’s market knowle

  9. Slide 9: At a glance

    At a glance $692 ~$475 S&P/ASX 300 INDEX MILLION MILLION MARKET TOTAL ASSETS CAPITALISATION MEMBER ~6% 33.3% 6.4 3% CASH DISTRIBUTION GEARING YEAR WALE AVG RENT REVIEWS YIELD HIGH QUALITY ASSETS DELIVERING STRONG INCOME PROFILE AND ALIGNED MANAGEMENT WITH ~$78 MILLION CO-INVESTED CONSERVATIVE BALANC

  10. Slide 10: Diversified portfolio in attractive sectors

    Diversified portfolio in attractive sectors 21.1% 28.5% WesTrac Newcastle Industrial Melbourne Located adjacent to and Adelaide M1 motorway Key industrial precincts 50% 50% ~$197 million invested ~$146 million invested 15.7 year WALE 9 buildings; 4.4 year WALE 22.0% 28.4% Locations Portfolio by type

  11. Slide 11: APN Property Group – aligned and experienced manager

    APN Property Group – aligned and experienced manager Strong investor Focused and Governance Manager with long alignment dedicated overseen by an track record and  APN is strongly aligned to management team Independent Board deep relationships delivering investor returns – owning a ~$78 million co-

  12. Slide 12: 03 Portfolio Performance

    03 PORTFOLIO PERFORMANCE 12

  13. Slide 13: Actively managing Industria's real estate

    Actively managing Industria’s real estate High occupancy Generating organic growth Cumulative leasing outcomes Rent review profile Square metres 83% 90,500 96% 96% 83,900 95% 95% 70,300 92% 45,900 18,800 7% 10% Jun-15 Jun-16 Jun-17 Jun-18 Dec-18 CPI 2 - <3% ≥ 3% Jun-15 Jun-16 Jun-17 Jun-18 Dec-18 St

  14. Slide 14: Rhodes Corporate Park

    Rhodes Corporate Park  The business park continues to evolve – with new occupiers Building A Building C including KPMG and Super Retail Group attracted by: ‐ Affordable gross rent profiles of $500 - $550 per square metre ‐ Connectivity to public transport including rail within 200m ‐ Easily accessi

  15. Slide 15: Brisbane Technology Park

    Brisbane Technology Park  High levels of leasing activity with 15 deals completed Leasing deals across ~3,000 sqm: Building Area (sqm) ‐ Leasing pipeline includes >10 small businesses 88 Brandl Street 880  Occupiers are attracted to our approach of adapting to their 8 Clunies Ross Court 740 requir

  16. Slide 16: BTP – highlights and projects

    BTP – highlights and projects 88 Brandl Street 9 McKechnie Drive 7 Clunies Ross Court  Increased occupancy from 66% - 90%  Agreed terms with existing client to  Improved amenity with new café and  Assisted incumbent and new tenants to expand by 900 square metres and take Anytime Fitness opening

  17. Slide 17: BTP – driving value through innovation

    BTP – driving value through innovation Lowers volatility Equivalent of 43% $1.0m of energy costs for planting energy met by investment delivering Industria’s tenants solar PV 15% return on cost1 1,600 trees p.a. ACTING SWIFTLY TO CAPITALISE ON OPPORTUNITIES TO ADD VALUE 1 Additional ~220 Kilowatt in

  18. Slide 18: WesTrac Newcastle – world leading real estate

    WesTrac Newcastle – world leading real estate  Leased to WesTrac until 2034 with annual 3% fixed rental uplifts  WesTrac generated $203 million of EBIT in FY18 – up 23% on pcp  The facility is running near or at capacity, driven by record part and support volumes  Property completed in 2012 – an

  19. Slide 19: Continued discipline and active management across industrial assets

    Continued discipline and active management across industrial assets  Acquired two assets with an average WALE of 5.7 years and Leasing completed and forthcoming expiries (by area) average yield of 7.1%: ‐ Established collaborative relationships with both tenants to 20,000 seek-out efficiencies and

  20. Slide 20: 04 Outlook

    APN | Property Group ———— = it;

  21. Slide 21: Outlook

    Outlook Sustainable returns underpinned by quality and affordable workspaces  Industria is well positioned: Lease expiry profile (by income) ‐ High quality portfolio with annual fixed growth from rent reviews ‐ No potential volatility from active earnings that may rely FY2019 2% on development or f

  22. Slide 22: Appendices

    ico feet xchange nance APN | Property Group 22

  23. Slide 23: Appendix A: Property portfolio

    Appendix A Property portfolio 23

  24. Slide 24: Portfolio details as at December 2018

    Portfolio details as at 31 December 2018 Book Value NLA Occupancy WALE Property State Ownership Sector Cap Rate ($m) (sqm) (by area) (by area) Building A, Rhodes NSW 100% Office 110.5 6.00% 14,642 100% 2.8 Building C, Rhodes NSW 100% Office 86.0 6.00% 10,544 100% 4.0 18 Brandl Street, BTP QLD 100% O

  25. Slide 25: Tenancy mix

    Tenancy mix Tenant % portfolio income WesTrac 26% Link Market Services 14% AAE Retail 4% Frasers Property 4% Mitre 10 4% Interactive 4% Queensland Health 4% RFS 3% Dempsey Group 3% Edlyn Foods 3% Top 10 Tenants 69% Other 31% Total 100% 25

  26. Slide 26: Appendix B: Financial information

    Appendix B Financial information 26

  27. Slide 27: Consolidated Statement of Financial Position

    Consolidated Statement of Financial Position As at 31 December 2018 30 June 2018 $’000 $’000 Assets Cash and cash equivalents 5,125 1,659 Trade and other receivables 539 1,134 Other assets 447 462 Total current assets 6,111 3,255 Investment properties 691,759 660,732 Total non-current assets 691,759

  28. Slide 28: Consolidated Statement of Profit or Loss and other comprehensive income

    Consolidated Statement of Profit or Loss and other comprehensive income Financial period ended 31 December 2018 31 December 2017 $’000 $’000 Income Net rental income 25,463 23,405 Straight line rental income recognition 1,699 2,027 Total revenue 27,162 25,432 Expenses Property costs (5,675) (4,696)

  29. Slide 29: Reconciliation to FFO

    Reconciliation to FFO Financial period ended 31 December 2018 31 December 2017 $’000 $’000 Net profit after tax 14,581 13,788 Adjusted for: Reverse straight lining adjustments included in net rental income (1,699) (2,027) Add back / (deduct) income tax expense / (benefit) 827 309 Add back amortised

  30. Slide 30: Interest rate hedging profile

    Interest rate hedging profile Weighted Hedged Amount Average Fixed Rate (lhs) 6% $120m 5% $112m $98m 4% Average Fixed Rate $78m 3% 2% $41m $30m 1% $16m 0% FY19 FY20 FY21 FY22 FY23 FY24 FY25 30

  31. Slide 31: Disclaimer

    Disclaimer This presentation has been prepared by APN Funds Management Limited (ACN 080 647 479, AFSL No. 237500) (the "Responsible Entity") as the responsible entity and issuer of the financial products in respect of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491)

  32. Slide 32: Contact

    Contact Alex Abell Fund Manager – APN Industria REIT Ph: (03) 8656 1070  aabell@apngroup.com.au ASX Code: ADI Follow us… @apngroup APN Property Group Limited Level 30,101 Collins Street, APN Property Group Limited Melbourne, Vic 3000 apnpropertygroup apngroup.com.au http://blog.apngroup.com.au apnp

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