Growthpoint Properties Australia Growthpoint Properties Australia Trust ARSN 120 121 002 Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL316409 growthpoint.com.au FY20 results. 20 August 2020 Space to thrive.
Executive management team Agenda. 1. Overview Timothy Collyer Michael Green 2. Property portfolio update Managing Director Chief Investment Officer 3. Financial results 4. Outlook 5. Supplementary information Dion Andrews Jacquee Jovanovski Chief Financial Officer Chief Operating Officer
1 Charles Street, Parramatta, NSW Overview . Timothy Collyer Managing Director
Botanicca 3, 570 Swan Street, Richmond, VIC FY20 highlights. Profit after tax FFO Distribution ‒ Delivered FFO growth, ahead of $272.1m 25.6cps 21.8cps guidance set at beginning of year 1 ‒ Achieved valuation uplift, driven by leasing success in first half FY19: $375.3m, -27.5% FY19: 25.1cps, +2.0% FY19: 23.0cps, -5.2% ‒ Signed 25-year lease with largest single tenant ‒ Reached practical completion of Property NTA per WALE portfolio value security Botanicca 3 and expansion of $4.2b $3.65 6.2yrs distribution centre in Gepps Cross ‒ Maintained strong balance sheet and healthy leverage ratios 30 June 2019: $4.0b, +5.0% 30 June 2019: $3.50, +4.3% 30 June 2019: 5.0yrs, +1.2yrs ‒ Maintained high average NABERS Energy rating of 4.9 stars 1. In March 2020, Growthpoint withdrew all forward-looking statements, including FFO guidance of at least 25.4 cps, due to uncertainty caused by the COVID-19 pandemic. 4 Growthpoint Properties Australia –– FY20 results
Resilient portfolio able to withstand challenging period. Exposure to only industrial Portfolio of modern, Portfolio tenants weighted to and office properties high-quality assets large companies and government Sector diversity Office property type Tenant type by value, as at 30 June 2020 by value, as at 30 June 2020 by income, as at 30 June 2020 Listed A-grade Industrial company 97% 32% 58% 89% Large metro private offices Weighted B-grade company 97% 2% 93% average office 15% Car parks property age of tenants are warehousing/ 1% non-SME 11.1 years SME 1 logistics 3% Office Government 68% 24% 1. Growthpoint estimate of proportion of tenants with revenue below $50 million. 5 Growthpoint Properties Australia –– FY20 results
11 March 18 March 26 March 7 April WHO declares GOZ transitions GOZ withdraws Commercial code of Pandemic all employees guidance conduct announced Our response to WFH to COVID-19. March April June May State by state easing of restrictions 2 Government-mandated lock-down Ongoing : : GOZ receives and reviews rent relief requests FY20 rent abatement $0.8m Corporate measures 97% of portfolio 3% of portfolio ‒ income Increased Group’s income liquidity and extended FY20 rent deferred debt maturities SME tenants Non-SME tenants $2.0m ‒ Delayed all non- ‒ ‒ Proactively engaged with Implemented a Board- essential capital our tenants who manage approved process to projects and hospitality or small retail review rent relief requests operating expenses operations at outset of ‒ Proportion of total billings Requested detailed ‒ the pandemic Implemented a collected 1 information from tenants Group-wide hiring ‒ Offered rental to determine impact of freeze April 2020 – June 2020 abatements to help them the pandemic on their Office 96% survive lockdown period business Industrial 98% 1. Rent abatements are not included in total billings. Rent that has been deferred is included. Data as at 11 August 2020. 2. Lockdown measures were reintroduced in Victoria in July. 6 Growthpoint Properties Australia –– FY20 results
Consistent outperformance of the S&P/ASX 200 A-REIT index Total Securityholder return 1 Return on equity to 30 June 2020 to 30 June 2020 13.9% 15.7% 15.5% 9.2% 13.8% 6.8% 6.8% 4.4% 10.8% 2.0% 1 year 3 years 5 years 10 years Growthpoint S&P/ASX 200 A-REIT accumulation index -17.7% 1 year 3 years 5 years 10 years -21.3% 1. UBS Investment Research. Annual compound returns to 30 June 2020. 7 Growthpoint Properties Australia –– FY20 results
100 Skyring Terrace, Newstead, QLD Property portfolio. Michael Green Chief Investment Officer
Office market update While the way people work A recent survey of 40,000 individuals’ may change, offices will experience working from home found 1 remain prominent only 50% Challenges of working from home: of respondents agree/strongly agree they feel personally connected to the culture of their Employees: Managers: company – Sub-par connectivity – Difficult to develop company culture – Inadequate workspace only 56% – Challenging to mentor – Missed social interaction and develop employees – Difficulty collaborating with of respondents – Hard to agree/strongly agree they colleagues are connecting and innovate – Inability to switch bonding with colleagues off from work 1. Cushman & Wakefield, ‘The future of workplace’, May 2020. 9 Growthpoint Properties Australia –– FY20 results
Office metro market update 89% of Growthpoint’s office Metro markets well placed properties located in fringe or metropolitan markets to benefit from new ways of working ‘Hub and spoke’ model expected to become Significant cost savings from moving increasingly popular in Australia 1 from CBD to metro/fringe markets Metro and fringe markets’ rent discount to CBD 2 Centralisation Hub and spoke Metropolitan Sydney Olympic Park / Melbourne Melbourne Brisbane Parramatta Rhodes fringe SES fringe West Perth 0% -10% -7% -20% -26% -30% -37% -42% Melbourne Sydney European model -40% -51% CBD office stock totals CBD office stock totals CBD office stock totals -50% 61% of all stock 52% of all stock • Berlin 16% -64% -60% • Paris 20% • Barcelona 13% -70% • 1. JLL, ‘Office precincts for 2030 and beyond’, May 2020. Munich 24% • 2. JLL REIS Data – 2Q20. Discount to prime face rents. Amsterdam 25% of all stock 10 Growthpoint Properties Australia –– FY20 results
Industrial market update 93% of Growthpoint’s Demand continuing to grow for well-located industrial assets are industrial assets driven by growth in ecommerce used for logistics or warehousing Growthpoint’s industrial tenants are heavily Australian online sales have dramatically weighted to grocery distribution and logistics increased during COVID-19 pandemic Australian online retail trade sales 1 Growthpoint’s industrial tenants by industry (million) by income, as at 30 June 2020 $3,500 Grocery distribution 41% $3,000 Logistics 27% $2,500 Manufacturing 14% $2,000 Non-grocery retail 8% $1,500 Other consumer and $1,000 business services 6% $500 Health 3% $0 Resources, infrastructure Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 and construction 1% 1. ABS, July 2020. 11 Growthpoint Properties Australia –– FY20 results
Property portfolio highlights Defensive characteristics of portfolio highlighted in challenging period ‒ Property portfolio value increased by 5.0% Portfolio Weighted average ‒ WALE extended by 1.2 years occupancy rent review 93% 3.3% 1 Sector diversity as at 30 June 2020 30 June 2019: 98% 30 June 2019: 3.3% $4.2b Industrial $1.3b Weighted average Weighted average 30 June 2019: $1.2b, +8.3% lease expiry cap rate Property portfolio value 6.2yrs 5.7% 30 June 2019: $4.0b, +5.0% Office $2.9b 30 June 2019: 5.0yrs 30 June 2019: 5.9% 30 June 2019: $2.8b, +3.6% 1. Portfolio occupancy excluding Botanicca 3 is 97%. 12 Growthpoint Properties Australia –– FY20 results
Leasing update Leases completed Tenant Leases completed – total volume retention – % portfolio income Significant WALE 150,602sqm 85% 19% extension driven by FY19: 116,901sqm FY19: 6% FY19: 66% leasing success WALE +1.2 yrs ‒ 51 new leases/renewals signed, 5.0 yrs 6.2 yrs representing 19% of portfolio income. Portfolio lease expiry Weighted average lease term was per financial year, 34% Woolworths 5.2% 13.3 years and WARR was 3.6% by income, Woolworths 3.9% Samsung 2.5% as at 30 June 2020 Laminex 1.1% Lion 2.4% ANZ 2.9% ‒ Signed new 25-year lease with single Collection House 1.8% Downer 1.0% Linfox 1.5% Peabody 1.3% Coffey 1.2% largest tenant, NSW Police Force Fox Sports 1.8% Monash Uni 1.7% Central SEQ 1.7% Federal Gov 2.6% lease renewed for ‒ Renewed leases with key tenants, Optus, Aus Post 1.3% 5 yrs in Aug-20 Botannica 3 Linfox 1.1% 14% 14% ANZ and Linfox 3.7% 10% 9% ‒ Continued focus on tenant satisfaction and 7% 7% 5% tenants’ reluctance to move in uncertain environment, leading to higher levels of 3% retention Vacant FY21 FY22 FY23 FY24 FY25 FY26 FY27+ 6-7 John Morphett Place, Erskine Park, NSW 13 Growthpoint Properties Australia –– FY20 results
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