Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — Kiwi Income Property Trust — H1 2013 Earnings Presentation
39 slides from Kiwi Property's earnings presentation, Nov 14, 2012
Slide 1: Interim Result 30 September 2012
INTERIM 30 SEPTEMBER 2012 RESULT KIWI INCOME PROPERTY TRUST IS MANAGED WITHIN Chris Gudgeon, Chief Executive Gavin Parker, Chief Financial Officer
Slide 2: Vision and agenda
Our vision is to be New Zealand’s leading property investment entity with a diversified portfolio of high quality assets providing superior returns Today we are New Zealand’s largest listed 2 diversified property entity, with over $2.0 billion invested in a portfolio predominantly comprising prime o
Slide 3: Interim Result Overview
3 INTERIM RESULT OVERVIEW 3 Six months ended 30 September 2012
Slide 4: Interim result overview
Interim result overview 4 Financial position – Over $100 million of bank debt repaid strengthened – Net bank debt gearing ratio reduced to 31.3%1 – Renewal and extension of bank debt facilities increases term to 4.3 years Financial result reflects – Distributable income2 $30.2 million, down $5.8 mil
Slide 5: Interim result overview
Interim result overview 5 Centre Place – New Rebel Sport premises opened July 2012 redevelopment – Construction commenced for new Farmers department store achieves milestones – New 15-year lease with Hoyts Cinemas1 consolidates competitive repositioning The Majestic Centre – On-site works commenced
Slide 6: Financial Review
FINANICAL REVIEW Six months ended 30 September 2012 The Plaza Shopping Centre, Palmerston North 6
Slide 7: Financial performance
Financial performance Operating result reflects absence of PwC Centre and Beca House 7 Financial performance 30-Sep-12 30-Sep-11 Variance Key movements in net rental For the six months ended $m $m $m $m % income Gross rental income 98.2 100.7 -2.5 -2.5 Sylvia Park +0.3 Property operating expenditure
Slide 8: Distributions
Distributions Payment in line with previous guidance 8 Distributable income 30-Sep-12 30-Sep-11 Variance For the six months ended $m $m $m % September 2012 distribution Operating profit before tax 34.7 41.2 -6.5 -15.8 DRP discount 2% Non-cash rental adjustments1 0.3 0.5 -0.2 -40.0 Record date 29-Nov
Slide 9: Financial position
Financial position Strong financial position maintained 9 Financial position 30-Sep-12 31-Mar-12 Movement As at $m $m $m % Assets Property assets Appendix 4 2,006.7 2,008.9 -2.2 -0.1 Cash on deposit Appendix 5 35.1 62.8 -27.7 -44.1 Insurance proceeds - 63.0 -63.0 -100.0 Other assets 24.3 25.0 -0.7 -
Slide 10: Bank debt profile
Bank debt profile Term extended through pro-active treasury management 10 – Weighted term to maturity increased through renewal Bank facilities 30-Sep-12 31-Mar-12 and extension of $227.5 million of facilities Bilateral facilities $850.0m $850.0m – No expiries before the Trust’s 2016 financial year
Slide 11: Portfolio Performance
PORTFOLIO PERFORMANCE Six months ended 30 September 2012 11 11
Slide 12: Leases executed
Leases executed Active leasing across both portfolios 12 Weighted Shops / key NLA average Portfolio / property lease term tenant sqm years – Good leasing success over both RETAIL retail and office portfolios with a Sylvia Park 51 shops 6,513 5.2 healthy weighted average lease term for new deals of 7
Slide 13: New leasing and rent reviews
New leasing and rent reviews Retail rent reviews support portfolio rental growth 13 NLA Uplift over prior passing rent Portfolio No. sqm $000 % CAGR % RETAIL – Average 3.3% growth from fixed and CPI-related retail Rent reviews 318 54,158 1,174 3.3 3.0 rent reviews underpins New leasing 103 23,909 -2
Slide 14: Occupancy and WALT
Occupancy and WALT Portfolio fundamentals remain healthy 14 NLA Occupancy WALT (Years) Portfolio / Property sqm Sep-12 Mar-12 Sep-12 Mar-12 Sylvia Park 71,247 100.0% 100.0% 3.8 3.2 LynnMall 31,755 100.0% 100.0% 4.0 3.2 Centre Place 18,938 77.9% 72.0% 5.1 4.8 The Plaza 32,442 100.0% 99.7% 4.2 4.5 Nor
Slide 15: Lease expiry profile
Lease expiry profile Leasing activity improves expiry profile 15 Key forthcoming office expiries (>2,500 sqm) Lease expiry profile (by gross income %) NLA FY Property Tenant sqm 60% 13 Unisys House Crown Law 4,806 14 Unisys House Department of Labour 9,345 50% 14 National Bank Centre ANZ Bank 6,431
Slide 16: Annual sales by centre
Annual sales by centre Sales performance in line with expectations 16 Total sales Specialty ‒ Strong sales contributions were made Centre for the year to Sep-12 sales $m % change $/sqm by: ̶ Sylvia Park as it continues to grow Sylvia Park 451.6 +5.4 8,931 market share LynnMall 223.8 +1.1 7,618 ̶ The
Slide 17: Annual sales by category
Annual sales by category Value-based department stores and mini-majors lead sales performance 17 Total sales Unaffected sales1 Category for the year to 30-Sep-12 for the year to 30-Sep-12 $m % $m % Supermarkets 388.5 -0.2 223.0 +1.3 Department and discount department stores 185.3 +2.3 128.4 +3.7 Cin
Slide 18: Portfolio seismic strengthening
Portfolio seismic strengthening Status 18 The Majestic Centre Portfolio seismic rating By reinstatement value – Strengthening works being undertaken to bring building to a ‘low risk’ classification1 – Work commenced on-site July 2012 NBS: <34% – Target completion by Q4 2014 5% NBS: 34-50% Northlands
Slide 19: Development Update
DEVELOPMENT UPDATE Six months ended 30 September 2012 19
Slide 20: ASB North Wharf development update
ASB North Wharf development update On program, on budget 20 – Remains on program and on budget Key project metrics Development budget $132.1m – ASB fit-out underway Target initial yield ~8.5% – Strong tenant interest in ground floor retail ASB net lettable area 19,465 sqm (93% of building NLA) Augus
Slide 21: Centre Place development update
Centre Place development update Rebel opened, construction of Farmers commenced 21 Key project metrics (incl. Hoyts) Project leasing status (incl. Hoyts) Development budget $47m Net lettable area leased [incl/excl majors] 81% / 45% Target initial incremental yield 7.0% - 7.5% Budgeted rent achieved
Slide 22: Conclusion and Outlook
CONCLUSION AND OUTLOOK Six months ended 30 September 2012 22 22
Slide 23: Market outlook
Market outlook 83% of portfolio located in recovering markets 23 Portfolio Medium- Short-term Sector weighting term Key points outlook by value1 outlook Retail KIP retail – Continuing retail sales growth ~2% for 2012 Occupancy 97.9% 65% – Medium term sales growth forecast of 2-4% per annum in li
Slide 24: Summary and outlook
Summary and outlook Projected FY13 cash distribution of 6.60 cents per unit 24 Financial position – Capital recycled to pay down bank debt strengthened – Net bank debt gearing ratio reduced to 31.3% – Operating result reflects absence of PwC Centre and Beca House Active asset – Leasing achievements
Slide 25: Appendices
APPENDICES Six months ended 30 September 2012 25 25 25
Slide 26: Appendices index
Appendices Index 26 Contents Appendix Page No. Financial review Net rental income 1 27 Net interest expense 2 28 Movement in: – operating profit before tax 3 29 – profit after tax Property assets 4 30 Movement in net bank debt 5 31 Interest rate hedging profile 6 32 Portfolio Sector and geographic d
Slide 27: Net rental income
Appendix 1 Net rental income 27 Net rental income (NRI) 30-Sep-12 30-Sep11 Variance Retail NRI For the six months ended $m $m $m % – Growth driven by continued positive Sylvia Park 15.6 15.3 +0.3 +2.0 performance at Sylvia Park and The Plaza LynnMall 7.5 7.7 -0.2 -2.6 – Offset by: Centre Place 2.4 2
Slide 28: Net interest expense
Appendix 2 Net interest expense 28 30-Sep-12 30-Sep-11 Variance Component $m $m $m % Interest income 1.0 2.1 -1.1 -52.4 Interest on bank debt -26.2 -24.8 -1.4 -5.6 Interest on 2009 MCNs -5.4 -5.4 - - Net interest expense incurred -30.6 -28.1 -2.5 -8.9 Interest capitalised to: ASB North Wharf 4.9 3.9
Slide 29: Movement in operating profit before tax and profit after tax
Appendix 3 Movement in operating profit before tax and profit after tax 29 50 Sep-11 to Sep-12 movement in operating profit before tax ($m) 40 +$0.1 -$2.5 -$1.1 -$0.4 -$1.3 -$1.3 30 -$4.0m from NRI change 20 $41.2 =$34.7 10 0 Sep-11 operating NRI from asset NRI from store NRI from balance of Net int
Slide 30: Property assets
Appendix 4 Property assets 30 Portfolio value 30-Sep-12 31-Mar-12 Variance As at Movement $m $m $m $m % Sylvia Park 500.5 500.0 +0.5 +0.1 Opening balance 2,008.9 LynnMall 187.8 184.5 +3.3 +1.8 Property disposals -55.4 Centre Place 102.9 98.8 +4.1 +4.1 Capital expenditure 52.5 The Plaza 196.1 195.5 +
Slide 31: Movement in net bank debt
Appendix 5 Movement in net bank debt 31 Mar-12 to Sep-12 movement in bank debt net of cash on deposit ($m) 900 +$27.6 +$1.8 +$49.7 +$6.6 800 +$25.9 +$5.3 -$73.3 700 -$63.0 $706.7 -$54.4 600 =$632.9 500 Net bank debt Net interest Manager's Investment & Tax Distributions Other Net rental Insurance Dis
Slide 32: Interest rate hedging profile
Appendix 6 Interest rate hedging profile 32 Hedging profile 30-Sep-12 31-Mar-12 Percentage of drawn debt hedged [fixed rate] 93% 83% Weighted average interest rate on hedged debt [excl margin and fees] 6.25% 6.39% Weighted average term to maturity of interest rate hedges 2.1 years 2.4 years Hedge co
Slide 33: Sector and geographic diversification
Appendix 7 Sector and geographic diversification 33 Palmerston Total by sector By value Auckland Wellington Christchurch Hamilton North Sep-12 Mar-12 Retail 34% 5% 11% 10% 5% 65% 65% Office 18% 8% - - 0% 26% 28% Other 8% 0% 0% - 1% 9% 7% Total by region Sep-12 60% 13% 11% 10% 6% 100% Total by region
Slide 34: Tenant diversification
Appendix 8 Tenant diversification 34 Top 20 tenants (by gross income) Analysis of property portfolio Total no. tenants: 880 Progressive Enterprises 3.3% Russell McVeagh 2.9% Gross Farmers Dept. Store 2.9% Portfolio No. tenants NLA income ANZ Bank 2.8% Bell Gully 2.6% Vero Insurance 2.6% Retail 87% 6
Slide 35: Auckland office market
Appendix 9 Auckland office market 35 Actual Actual Forecast Statistic Grade As at / YE Mvmt As at / YE Mvmt As at / YE Comments Dec-11 Jun-12 Dec-12 Premium 110,000 110,000 110,000 – Premium stock levels remain static with no expected increase in the short-term Stock (sqm) – Nominal increase in
Slide 36: Wellington office market
Appendix 10 Wellington office market 36 Actual Actual Forecast Statistic Grade As at / YE Mvmt As at / YE Mvmt As at / YE Comments Dec-11 Jun-12 Dec-12 – Varying stock levels as buildings are re-classified but A-grade 253,000 258,000 252,000 overall supply stable Stock (sqm) – Supply pipeline ex
Slide 37: New Zealand economic overview
Appendix 11 New Zealand economic overview 37 Economic growth – Economy showing signs of a gradual recovery, although unsettled overseas markets are still providing uncertainty. GDP expected to be 1.7% and 2.7% in 2012 and 2013 calendar years respectively, driven largely by the Canterbury rebuild 1 U
Slide 38: New Zealand economic overview
Appendix 12 New Zealand economic overview 38 Annual GDP growth Unemployment rate (%) (% change YoY) 12% 8.0% 10% 6.0% 8% 4.0% 6% 2.0% 4% 0.0% -2.0% 2% -4.0% 0% Mar-86 Mar-88 Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Jun-88 Jun-90 Jun-94 Jun-96 Jun-98
Slide 39: Disclaimer
Disclaimer 39 Kiwi Income Properties Limited is the manager (the ‘Manager’) of Kiwi Income Property Trust ('KIP'). The Manager is a subsidiary of Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124. Neither the Bank nor any member of the Bank’s group of companies guarantees or in any way
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