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1 2016 Interim Result Highlights 2 Successful delivery, ahead of - PowerPoint PPT Presentation

Oct 04, 2023 •15 likes •155 views

1 2016 Interim Result Highlights 2 Successful delivery, ahead of PDS Exceeded revised earnings guidance Solid capital management Six months to 31 Dec 15 7.97 c 7.65 c $ 2.15 28.3 % Earnings per unit Distribution per unit NTA per unit Net

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  2. 2016 Interim Result Highlights 2 Successful delivery, ahead of PDS Exceeded revised earnings guidance Solid capital management Six months to 31 Dec 15 7.97 c 7.65 c $ 2.15 28.3 % Earnings per unit Distribution per unit NTA per unit Net gearing Quality portfolio of 100% A-Grade office assets Growth outlook – FY16 Guidance $ 412.9 m 94.1 % Office occupancy¹ 16.1 c - 16.3 c Earnings per unit 15.35 c Asset portfolio Distribution representing a $9.4m per unit asset revaluation uplift within 90% - 100% payout ratio 1. Includes rental guarantees.

  3. 2016 Interim Result Summary 3 Financial summary 6 months to 31 December 2015 ($m) Actual PDS Change (%) Net Profit After Tax (NPAT) 18.3 10.9 68.1 Less: Valuation increases (9.4) 0.0 Add: Treasury items marked to market 1.2 0.0 Less: Other items 1 0.1 (0.3) Distributable Earnings / Funds From Operations (FFO) 10.2 10.5 2.5 Divided by: Number of weighted average units on issue (million) 128.5 127.6 Distributable Earnings / Funds From Operations per unit (cents) 2 7.97 8.23 IPO Allotment to 31 December 2015 (PDS) Actual PDS Change (%) Distributable Earnings / Funds From Operations per unit (cents) 19.25 18.56 3.7 1. Other includes amortisation expense, profit/(loss) on sale and the tax impact. 2. Revised guidance of 7.84 cents per unit was provided at the 2015 Annual Result.

  4. 2016 Interim Result Summary 4 Financial summary 6 months to 31 December 2015 ($m) Actual PDS Change ($m) Portfolio net income 14.0 14.1 0.1 Prior period surrenders 20 bps lower Net financing costs (2.7) (2.8) 0.1 average cost of debt Responsible Entity fee (1.3) (1.1) 0.2 30 bps of GAV per half Management and administrative expenses (0.5) (0.5) - Other items 1 0.7 0.9 0.2 Funds From Operations (FFO) 10.2 10.5 0.3 Retained earnings (0.4) (0.7) 0.3 Distribution 9.8 9.8 - 96% payout ratio Distribution per unit (cents) 7.65 7.65 - IPO Allotment to 31 December 2015 (PDS) Actual PDS Change (%) Distribution per unit (cents) 17.80 17.46 1.9 1. Other includes amortisation expense, profit/(loss) on sale and the tax impact.

  5. Capital Management 5 Strong balance sheet with conservative gearing Active capital management • Both loans refinanced • 12 month extension • 5 basis points lower margin and fees 31 Dec 15 30 Jun 15 Change Net tangible assets per unit $2.15 $2.09 3.1% Total borrowings $119.4m $119.5m 0.1% Net gearing 28.3% 28.9% 60 bps Weighted average cost of debt 4.6% 4.8% 20 bps Weighted average term to maturity 4.1 years 3.6 years 0.5 years Interest cover ratio 4.6 times 6.7 times 1 2.1 times Weighted average term of interest rate hedging 4.8 years 5.3 years 0.5 years Average interest rate hedging over hedge term 69% 71% 200 bps 1. Excluding capitalised interest related to the 3 Murray Rose Avenue development, the interest cover ratio was 4.7 times.

  6. Fund Update 6 Maintaining strong portfolio metrics Moving to Quarterly Distribution Payments • Increased frequency – more regular income returns • Commencing March 2016 Revaluations 3 Murray Rose Avenue, Sydney Olympic Park • 3.9% increase to $86.0m 5 Murray Rose Avenue, Sydney Olympic Park • 7.7% increase to $86.7m Portfolio Metrics • Six assets across Sydney, Melbourne and Brisbane • 100% A-grade totalling 64,500 sqm • Asset valuations up $9.4m to $412.9m • 7.09% weighted average cap rate • Long WALE of 5.9 years

  7. Portfolio/Asset Updates 7 A focus on leasing Asset Updates Quads 2 and 3, Sydney Olympic Park • 2 tenancies re-leased • Total of 7 tenancies (2,430 sqm) now leased since Allotment, ahead of forecast Vantage, Hawthorn • Level 1 full refurbishment complete, including new reception area and change facilities • Lobby upgrade and End of Trip facilities to commence • Café operator renewed for 5 years Optus Centre, Fortitude Valley • Oil Search to surrender small suite (350 sqm) in April 2016 Sustainability • Portfolio NABERS Energy Rating 5.2 stars • Portfolio NABERS Water Rating 5.2 stars

  8. Australian Metro Office Markets 8 Favourable demand and supply fundamentals continue to support rental growth National Metro Office Markets: Annual Demand vs. Supply 400,000 16% Demand tracking economic growth 350,000 300,000 • Metro office demand at 1.5% 11% 250,000 10.8% Vacancy Rate per annum 200,000 sqm. pa 150,000 6% 62,085 63,437 100,000 50,000 Balanced fundamentals remain 1% 0 -50,000 • Second year of positive net absorption, -100,000 -4% matched by constrained supply, has Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 resulted in a steady vacancy rate Net Absorption Net Supply Vacancy Rate National Metro Office: Face vs Effective Rents - Prime 3.0% 10% Continued growth in rents 2.5% 8% 2.0% Annual Growth (Line) • Face and effective rents continue to 6% Quarterly Growth (Bar) 1.5% 4.2% Net Face Rents 4% recover from 2013/14 trough 1.0% 3.9% 2% 0.5% 0% 0.0% -2% -0.5% Liquidity in metro markets Net Effective -4% -1.0% Rents -6% • Increase in asset transactions from -1.5% -2.0% -8% 1H 2015, totalling $4.5bn for 2015 -2.5% -10% Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Source: Deloitte Access Economics, JLL and GPT Research.

  9. Sydney Metro Office Markets 9 Strong fundamentals with falling vacancy rates Sydney Metro Office Market: Annual Demand vs. Supply 300,000 12% NSW modest economic growth 9.0% 10% 250,000 • Growth of 1.9% per annum 8% Vacancy Rate 200,000 6% sqm. pa 150,000 4% 61,087 Positive growth in office demand 100,000 2% 31,783 50,000 • 2.0% per annum growth in office 0% 0 -2% demand has led to positive net -50,000 -4% absorption, exceeding net supply Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Net Absorption Net Supply Vacancy Rate Sydney Metro Office: Face vs Effective Rents - Prime • Vacancy has fallen 70 basis points 3.0% over the past 12 months and has 12% 2.5% Annual Growth (Line) trended down since 2013 10% 2.0% Quarterly Growth (Bar) 8% 1.5% Net Face Rents 6.5% 6% 1.0% Stable incentives 4% 4.7% 0.5% 2% • Positive growth in face rents and 0.0% 0% consistent incentive levels have led Net Effective -0.5% -2% Rents to solid net effective rental growth -1.0% -4% Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Source: Deloitte Access Economics, JLL and GPT Research.

  10. Melbourne Metro Office Markets 10 Solid economic and office employment helping to support rental growth Melbourne Metro Office Market: Annual Demand vs. Supply 100,000 14% VIC economy the fastest in Australia 12% 10.5% 75,000 10% • 2.6% growth per annum Vacancy Rate 8% 50,000 36,241 6% 33,811 sqm. pa 25,000 4% Fundamentals pushing up rents 2% 0 0% • Office demand growing more strongly -2% -25,000 than other states at 2.3% per annum, -4% leading to positive net absorption -50,000 -6% Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Net Absorption Net Supply Vacancy Rate • Net supply has increased from last Melbourne Metro Office: Face vs Effective Rents - Prime 6.0% 12% year and in line with net absorption 8.8% Net Face Rents 4.0% 8% Annual Growth (Line) 6.4% Quarterly Growth (Bar) 2.0% 4% Strong growth in rents 0.0% 0% • Growing face rents with steady -2.0% -4% incentive levels have led to the Net Effective -4.0% -8% Rents strongest growth in net effective -6.0% -12% rents at a state level -8.0% -16% Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Source: Deloitte Access Economics, JLL and GPT Research.

  11. Brisbane Metro Office Markets 11 Soft fundamentals continue, however weakness is abating Brisbane Metro Office Market: Annual Demand vs. Supply 100,000 QLD economy still facing headwinds 17% 80,000 • 1.4% contraction but the rate of 15.8% 60,000 12% Vacancy Rate decline has slowed 40,000 sqm. pa 7% 20,000 • Growth in office demand weak 2% 0 but positive at 0.7% per annum -3% -20,000 -8,010 -18,519 -40,000 -8% Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Soft fundamentals for office Net Absorption Net Supply Vacancy Rate • Demand conditions have led to Brisbane Metro Office: Face vs Effective Rents - Prime negative net absorption and while 6.0% offset in part by stock withdrawals, 12% 4.0% Net Face Rents Annual Growth (Line) vacancy rates have softened 4.2% 6% Quarterly Growth (Bar) 2.0% 0% 0.0% -6% • Growth in face rents has -3.1% -2.0% remained positive, however -12% -4.0% Net Effective elevated incentives have led to a Rents -18% -6.0% decline in effective rents -8.0% -24% Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Source: Deloitte Access Economics, JLL and GPT Research.

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