I nte rim Re sults Pre se nta tio n Arg o sy Pro pe rty L imite d 21 No ve mb e r 2017 www.argosy.co.nz
AGE NDA Hig hlig hts Pa g e 5 F ina nc ia ls Pa g e 7 Stra te g y Ove rvie w Pa g e 16 L e a sing Upda te Pa g e 26 Outlo o k Pa g e 30 PRE SE NT E D BY: Pe te r Me nc e CE Da ve F ra se r CF O O No te : Due to ro unding , numb e rs pre se nte d in this pre se nta tio n ma y no t a dd up e xa c tly to the to ta ls pro vide d a nd pe rc e nta g e s ma y no t e xa c tly re fle c t a b so lute fig ure s. 2
Our stre ng th lie s in the dive rsity o f o ur pro pe rtie s a c ro ss se c to rs, g ra de s, size s a nd lo c a tio ns a llo wing us to a da pt to the c ha ng ing ne e ds o f o ur g ro wing fa mily o f te na nts. Pe te r Me nc e CE O 3
HI GHL I GHT S 4
HI GHL I GHT S Po rtfo lio q ua lity 82 Wyndha m St. a nd me tric s de ve lo pme nt $48.5m impro ve d o ve r first c o mple te d, six mo nths o f F Y18 o the rs o n tra c k Ne t pro pe rty inc o me 1.55c $1.06 3.23c 2 nd Qtr Divide nd (+1.6%) Ne t T a ng ib le Asse ts pe r Ne t Distrib uta b le I nc o me Sha re pe r sha re 98.1% 2.8% 5.6 ye a rs Annua lise d re nt re vie w Oc c upa nc y (b y re nta l) We ig hte d Ave ra g e inc re a se L e a se T e rm 5
F I NANCI AL S 6
I nc o me Re c o nc ilia tio n 60.0 1.0 1.1 56.8 - 0.5 - 0.8 55.0 51.9 - 5.7 50.0 Re ntal inc ome $m 45.0 40.0 35.0 30.0 Gross Prope r ty Ac quisitions / Disposa ls Re nt re vie ws Va c a nc y & le a sing up Ne t move me nt re Gross Prope r ty Inc ome 1H17 de ve lopme nts NZ Post House Inc ome 1H18 7
F ina nc ia l Pe rfo rma nc e 1H18 1H17 $m $m Ne t pro pe rty inc o me 48.5 53.7 Administra tio n e xpe nse s (4.7) (4.6) Pr ofit be for e financ ial inc ome / (e xpe nse s), othe r gains/ (losse s) and tax 43.8 49.1 I nte re st e xpe nse (12.6) (13.0) Ga in/ (lo ss) o n de riva tive s (2.6) (9.7) F ina nc e inc o me 0.0 0.0 (15.2) (22.7) Re va lua tio n g a ins - 35.8 Re a lise d g a ins/ (lo sse s) o n dispo sa l 0.1 (0.0) Ne t: I nsura nc e pro c e e ds & e a rthq ua ke e xpe nse (1.3) - Pr ofit be for e tax 27.4 62.2 T a xa tio n e xpe nse (4.0) (6.0) Pr ofit afte r tax 23.4 56.2 Ba sic a nd dilute d e a rning s pe r sha re (c e nts) 2.84 6.90 8
Distrib uta b le I nc o me 1H18 1H17 $m $m Pr ofit be for e inc ome tax 27.4 62.2 Adjuste d fo r: Re va lua tio ns g a ins - (35.8) Re a lise d lo sse s/ (g a ins) o n dispo sa l (0.1) 0.0 De riva tive fa ir va lue lo ss/ (g a in) 2.6 9.7 E a rthq ua ke e xpe nse ne t o f re c o ve rie s 1.3 0.0 Gr oss distr ibutable inc ome 31.2 36.1 De pre c ia tio n re c o ve re d 0.4 - Curre nt ta x e xpe nse ¹ (5.0) (7.0) Ne t distr ibutable inc ome 26.6 29.1 We ig hte d a ve ra g e numb e r o f o rdina ry sha re s (m) 823.6 813.8 Gro ss distrib uta b le inc o me pe r sha re (c e nts) 3.79 4.44 Ne t distrib uta b le inc o me pe r sha re (c e nts) 3.23 3.58 ¹ Unde r the a me nde d b a nk fa c ility a g re e me nt, ta x pa id ha s c ha ng e d to c urre nt ta x e xpe nse in line with the re st o f the se c to r. 9
I nve stme nt Pro pe rtie s 1,500.0 28.9 1,463.6 - 7.5 1,442.2 1,450.0 1,400.0 tie s $m ope r 1,350.0 Inve stme nt Pr 1,300.0 1,250.0 1,200.0 Inve stme nt Prope r tie s F Y17 Capitalise d c osts Disposals Inve stme nt Prope r tie s 1H18 10
Mo ve me nt in NT A pe r sha re 1.20 0.03 1.06 1.06 (0.03) 1.00 0.80 e shar $ pe r 0.60 0.40 0.20 - NT A at F Y17 Compre he nsive inc ome Divide nds paid NT A at 1H18 11
Ge a ring / Ca pita l Struc ture 1H18 F Y17 $m $m I nve stme nt pro pe rtie s 1,463.6 1,442.2 Asse ts he ld fo r sa le 0.0 13.0 Othe r a sse ts 5.7 3.4 T o ta l a sse ts 1,469.3 1,458.6 Ba nk de b t (e xc l. c a pita lise d b o rro wing c o sts) 540.6 529.8 De bt- to- total-asse ts r atio 36.8% 36.3% Arg o sy re ma ins a t the b o tto m e nd o f the me dium te rm po lic y g e a ring ra ng e o f b e twe e n 35 to 40%. 36.8% De b t-to -to ta l a sse ts ra tio 12
F unding & I nte re st Ra te Ma na g e me nt 1H18 F Y17 $m $m We ig hte d a ve ra g e dura tio n o f b a nk fa c ility 3.6 ye a rs 2.5 ye a rs We ig hte d a ve ra g e inte re st ra te 1 5.04% 4.88% I nte re st Co ve r Ra tio 3.2x 3.4x % o f fixe d ra te b o rro wing s 64% 65% Ave ra g e fixe d inte re st ra te 4.56% 4.56% Arg o sy ma inta ins stro ng re la tio nships with its b a nking pa rtne rs ANZ Ba nk Ne w Ze a la nd L imite d, Ba nk o f Ne w Ze a la nd a nd T he Ho ng ko ng a nd Sha ng ha i Ba nking Co rpo ra tio n L imite d, a nd re ma ins we ll within its b a nking c o ve na nts. Arg o sy re struc ture d its syndic a te d b a nk fa c ility in Ma y 2017. At 30 Se pte mb e r 2017 the we ig hte d a ve ra g e de b t e xpiry wa s 3.6 ye a rs pro viding me dium te rm funding c e rta inty. 3.6 ye a rs We ig hte d a ve ra g e de b t fa c ility te rm ¹ I nc luding ma rg in a nd line fe e s 13
Divide nds T he se c o nd q ua rte r c a sh divide nd o f 1.55 c e nts pe r sha re ha s b e e n de c la re d, with imputa tio n c re dits o f 0.32720 c e nts pe r sha re a tta c he d, a nd will b e pa id o n 20 De c e mb e r 2017. T he F Y18 divide nd g uida nc e o f 6.20 c e nts pe r sha re re ma ins unc ha ng e d, a n inc re a se o f 1.6% o n the pre vio us ye a r. Arg o sy inte nds to mo ve to a n a me nde d divide nd po lic y, b a se d o n AF F O e a rning s, in the me dium te rm. T he Bo a rd e xpe c ts, b a se d o n c urre nt pro je c tio ns, tha t the c a sh divide nd will b e a t le a st ma inta ine d o ve r the tra nsitio n pe rio d. 6.20c 20 De c 2 nd q ua rte r divide nd pa yme nt F Y18 divide nd g uida nc e 14
Stra te g y Ove rvie w 15
Stra te g y Arg o sy will c o ntinue to inve st in a dive rse ra ng e o f pro pe rtie s a c ro ss se c to rs, g ra de s, size s a nd lo c a tio ns. Our I nve stme nt Stra te g y c o nsists o f Co re a nd Va lue Add pro pe rtie s. Pa ra me te rs fo r the se a re ; Co re pro pe rtie s b e twe e n 75-90% o f the po rtfo lio b y va lue . Va lue a dd pro pe rtie s b e twe e n 10-15% o f the po rtfo lio b y va lue . Our I nve stme nt Po lic y se c to r b a nd pa ra me te rs (b y va lue ) a re : I ndustria l 40-50% Offic e 30-40% Re ta il 15-25% As a t 30 Se pte mb e r 2017, Arg o sy wa s o pe ra ting within the pa ra me te rs o f its I nve stme nt Po lic y. Arg o sy strive s to de live r re lia b le a nd susta ina b le re turns to sha re ho lde rs. We ta ke a c o nside re d a ppro a c h to a c q uisitio n, dive stme nt, de ve lo pme nt, le a sing a nd c a pita l ma na g e me nt de c isio ns, re fle c ting o ur pro po sitio n to sha re ho lde rs a s a divide nd sto c k, with a ll the a dva nta g e s o f the PI E Re g ime . 16
Po rtfo lio a t a g la nc e T OT AL PORT F OL IO VAL UE T OT AL PORT F OL IO VAL UE PORT F OL IO MIX BY SE CT OR BY RE GI ON BY VAL UE 5% 4% 11% 22% 24% 40% 71% 38% 85% I nd ustria l Auc kla nd Co re pro pe rtie s Offic e We lling to n Va lue Add pro pe rtie s Re g io na l No rth I sla nd & Pro pe rtie s a nd la nd to dive st Re ta il So uth I sla nd 17
Va lue Add T he fo llo wing pro pe rtie s ha ve b e e n de sig na te d a s Va lue Add, whic h ma ke up 11% o f the to ta l po rtfo lio : Book Value 1 Pr ope r ty Se c tor L oc ation $m 90 - 104 Spring s Ro a d I ndustria l Auc kla nd 4.1 80 Spring s Ro a d I ndustria l Auc kla nd 9.6 211 Alb a ny Hig hwa y I ndustria l Auc kla nd 15.8 8 F o undry Drive I ndustria l Christc hurc h 13.0 960 Gre a t So uth Ro a d I ndustria l Auc kla nd 6.1 Hig hg a te , Silve rda le I ndustria l Auc kla nd 20.2 99-107 K hyb e r Pa ss Ro a d Offic e Auc kla nd 8.1 8-14 Willis Stre e t Offic e We lling to n 15.2 82 Wynd ha m Stre e t Offic e Auc kla nd 38.2 180-202 Hutt Ro a d Re ta il We lling to n 8.6 Ste wa rt Da wso ns Cnr Re ta il We lling to n 15.5 T OT AL $m (e xc l. land) 154.4 56 Ja ma ic a Drive L a nd We lling to n 1.1 15 Unity Drive L a nd Auc kla nd 4.1 246 Puhinui Ro a d L a nd Auc kla nd 3.1 T OT AL $m 162.7 ¹ At 30 Se pte mb e r 2017 18
I ndustria l NUMBE R OF BUI L DI NGS 37 MARK E T VAL UE OF ASSE T S ($M) $588.0 OCCUPANCY (BY I NCOME ) 100% WAL T (YE ARS) 6.6 PASSI NG YI E L D 7.2% 19
Offic e NUMBE R OF BUI L DI NGS 17 MARK E T VAL UE OF ASSE T S ($M) $560.6 OCCUPANCY (BY I NCOME ) 96.3% WAL T (YE ARS) 4.5 PASSI NG YI E L D 7.3% 20
Re ta il NUMBE R OF BUI L DI NGS 9 MARK E T VAL UE OF ASSE T S ($M) $315.0 OCCUPANCY (BY I NCOME ) 98.4% WAL T (YE ARS) 5.5 PASSI NG YI E L D 7.4% 21
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