Growthpoint Properties Australia Growthpoint Properties Australia Trust ARSN 120 121 002 Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL316409 www.growthpoint.com.au Space to thrive. 1H20 results. 25 February 2020
Executive Agenda management team 1. Overview 2. Property portfolio update 3. Financial results 4. Outlook Timothy Collyer Michael Green Managing Director Chief Investment Officer 5. Supplementary information Dion Andrews Jacquee Jovanovski Chief Financial Officer Chief Operating Officer 2 Growthpoint Properties Australia –– 1H20 results
CB1, 22 Cordelia Street, South Brisbane, QLD Overview. Timothy Collyer Managing Director
3 Murray Rose Avenue, Sydney Olympic Park, NSW 1H20 6.4yrs 11.8cps $4.2b highlights WALE Distribution Property portfolio value 30 June 2019: 5.0yrs, +1.4yrs 1H19: 11.4cps, +3.5% 30 June 2019: $4.0b, +5.0% � Strong valuation uplift across portfolio � Leased 111,000 sqm, representing 15% of total portfolio income 12.6cps $3.66 � Signed 25-year lease agreement with largest single tenant FFO NTA per security � Increased average NABERS Energy 1H19: 12.5cps, +0.8% 30 June 2019: $3.50, +4.6% rating to 4.9 stars � Reduced cost of debt and extended debt facilities � Reaffirmed FY20 guidance 4 Growthpoint Properties Australia –– 1H20 results
Strong track record of delivering value for Securityholders Total Securityholder return 1 Return on equity to 31 December 2019 to 31 December 2019 19.4% 18.0% 18.0% 17.2% 17.4% 15.5% 15.3% 14.9% 13.7% 11.5% 10.9% 9.1% 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years Growthpoint S&P/ASX 200 A-REIT accumulation index 1.UBS Investment Research. Annual compound returns to 31 December 2019. 5 Growthpoint Properties Australia –– 1H20 results
333 Ann Street, Brisbane, QLD Property portfolio update. Michael Green Chief Investment Officer
Metro office market update Accessibility and desirability of metro markets continued to be 29% 28% 32% of office of office of office NSW VIC QLD enhanced by new portfolio portfolio portfolio infrastructure and � Vacancy rates remained low and � Vacancy rates remained � Strong positive net population growth supply remains constrained in stable in most metro markets absorption recorded in most metro markets Brisbane’s CBD � Increased supply in fringe � Above average face and effective � Vacancy rates continued to markets including Richmond and rent growth continued; Cremorne as the precinct evolves decline in CBD and fringe Parramatta the strongest as a creative and technology markets performer precinct � Investment demand continued to Key � Strong investment activity as � Rent growth evident in strengthen due to increased Sydney remained a focal point of Melbourne’s fringe markets, confidence in leasing markets Airport investor interest. New pricing stable in the south-east suburbs and lack of opportunities in Port benchmarks achieved following Sydney and Melbourne � Further yield compression Number of assets further yield compression observed in most markets as Melbourne remained a preferred investment location 7 Growthpoint Properties Australia –– 1H20 results
Industrial market update Transformation of the industrial sector 17% of 31% of 20% of continued as industrial industrial industrial NSW VIC QLD portfolio portfolio portfolio demand � Land availability in core markets � Land values continued to grow, � Face rents within the prime strengthens is limited in the short term given limited supply and strong markets continued to grow leasing demand � Supply completions were above � Infrastructure projects � Face rent growth evident in average, although the majority supported investment activity was pre-committed most Melbourne industrial within Brisbane market sub-markets � The rate of capital flows � Strong competition for � Increased occupier and investor continued to accelerate as industrial assets led to further Key investors re-weight to the sector attention on Melbourne’s north yield compression � Investment yields continued to � Yield compression cycle Airport trend down, the result of continued Port strengthening demand and Number of assets limited stock availability 8 Growthpoint Properties Australia –– 1H20 results
Property portfolio highlights 98% 5.7% 6.4 years 3.3% 1 Significant valuation Portfolio occupancy Weighted average WALE WARR cap rate 30 June 2019: 3.3% 2 30 June 2019: 98% 30 June 2019: 5.0 years, uplift, driven by 30 June 2019: 5.9%, +1.4 years -20bps leasing success and development Sector diversity projects as at 31 December 2019 � Strong valuation gains across Industrial both office and industrial portfolios $4.2b $1.3b � WALE extended by 1.4 years to 30 June 2019: $1.2b, +8.3% Property 6.4 years portfolio value 30 June 2019: $4.0b, +5.0% Office $2.9b 30 June 2019: $2.8b, +3.6% 1.Assumes CPI change of 1.8% per annum as per ABS release for CY19. 2.Assumes CPI change of 1.6% per annum as per ABS release for FY19 . 9 Growthpoint Properties Australia –– 1H20 results
Leasing update Leases completed Leases completed 15% 95% 111,000sqm Continued focus on tenant satisfaction, Proportion of Total volume Tenant retention portfolio income 1H19: 5,198sqm 1H19: 85% leading to higher levels 1H19: 1% of retention Woolworths 5.7% Samsung 2.5% � 27 new leases/renewals signed, 46% Portfolio Lion 2.4% Downer 1.6% Broadmeadows Linfox 1.5% development lease expiry representing 15% of portfolio income Peabody 1.5% project 2.3% per financial Central SEQ 1.9% � Signed new 25-year lease with single year, by income, Fox Sports 1.8% Leases Federal Gov 2.9% negotiated in Aus Post 1.1% largest tenant, NSW Police Force as at 31 15% Monash Uni 3Q20 2.0% December 2019 1.4% � Renewed leases with key tenants, 10% 10% Only 2% of Optus and ANZ, for 7 years and lease expiries 6% 6% 5% 6 years, respectively remain in FY20 2% � More than 25,000sqm of leasing success since 31 December 2019 – Vacant FY20 FY21 FY22 FY23 FY24 FY25 FY26+ FY20 expiries now less than 2% of As at 30 June 2019 2% 9% 6% 16% 8% 19% 6% 34% portfolio income 1 1.Excludes 120 Northcorp Boulevard, Broadmeadows, Victoria, which may be developed or sold post Woolworths vacating in February 2020. 27-49 Lenore Drive, Erskine Park, NSW 10 Growthpoint Properties Australia –– 1H20 results
Case study: creating value Signed longest lease agreement to date with single largest tenant Curtis Cheng Centre, 1 Charles Street, Parramatta, NSW IRR NSW Police Force Tenant 16.5% 32,356sqm, 444 car parks Lettable area per annum 2014 2015 2016 2017 2018 2019 2020 25 years Lease term $21.1 million Annual rent 3.5% per annum 1 Rent escalation December June 2014 June 2019 74% 19% 2019 $241m $353m Upgrade works $44 million $420m Increase in Purchase price Book value Increase in value since value since 1.Except in January 2025. In January 2025, the rental Book value acquired 30 June 2019 escalation will be 0%. 11 Growthpoint Properties Australia –– 1H20 results
100 Skyring Terrace, Newstead, QLD Sustainability Investing in initiatives across 4.9 our business to deliver better Portfolio NABERS outcomes to all stakeholders Energy rating 100 Skyring Terrace, Newstead, QLD 30 June 2019: 4.8 stars � Achieved highest NABERS Energy rating (6-star) at 100 Skyring Terrace, Newstead – now own 2 of only 31 buildings in 72 /100 Australia with this rating 1 � Installed solar panels at 75 Dorcas Street, GRESB score South Melbourne. Expected to decrease for CY19 the property’s green house gas emissions CY18: 66/100 by ~150tCO2-e � Upgraded lighting to LED in all car park areas at A1, 32 Cordelia Street, South Brisbane and CB2, 42 Merivale Street, South Brisbane 1.NABERS. As at 31 January 2020. 12 Growthpoint Properties Australia –– 1H20 results
Botanicca 3, Expected Richmond, VIC Development completion Development projects 3Q20 expected to deliver FY19 attractive returns Woolworths Expected yield on development FY20 distribution centre, cost compared to market yield Gepps Cross, SA 7.5% - 8.5% FY21 6.75% 5.75% vacant 1 1Q21 5.25% 5.25% 1 FY22 fully-let Northside 120, FY23 Broadmeadows, VIC Botanicca 3 Gepps Cross Market yield (cap rate) 1 FY24 Growthpoint’s return on development cost 1.As per 31 December 2019 external valuation. 13 Growthpoint Properties Australia –– 1H20 results
$149m Development Value upon completion 1 Botanicca 3 practical $113m completion achieved ahead of schedule Building exterior and solar installation complete Development cost 2 Perforated sunshades $36m � A -grade office building includes hotel style end-of-trip facilities Development profit and dedicated fitness studio � Vacant on completion; no ~$200m impact on FY20 guidance Expect to achieve 5-star � Expect to be progressively NABERS Energy Fully-leased value leased over FY21 and Water rating Lift foyer 1.As per 31 December 2019 external valuation. 2.Estimated total development cost to achieve practical completion. Does not include costs associated with leasing to achieve full occupancy. 14 Growthpoint Properties Australia –– 1H20 results
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