Stride Property Group · NZX:SPG
Stride Property — DNZ Property Fund — FY2012 Earnings Presentation
30 slides from Stride Property's earnings presentation, May 23, 2012
Slide 1: Annual Result for the Year Ended 31 March 2012
ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012
Slide 2: Agenda & Contents
2 Agenda & Contents Page Introduction Tim Storey Chairman Highlights 3 Paul Duffy Chief Executive Financial Performance 6 Jennifer Whooley Chief Financial Officer Capital Management 10 Portfolio Overview 13 Market Overview 22 Paul Duffy Chief Executive Outlook 25 Appendices 27 This DNZ Property Fund
Slide 3: Highlights
3 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 4: Highlights
4 Highlights (31 March 2011 figures in brackets) Operating profit before tax of $28.8m ($21.8) up 32% on prior year OPERATING PROFIT Distributable profit of $27.8m or 11.22 cents per share ($21.9m or 9.60 cents per share) BEFORE TAX Net rental income of $52.9m ($52.0m) Loan to value ratio (LVR) 40.6
Slide 5: Highlights
5 Highlights (31 March 2011 figures in brackets) Asset values stable as at 31 March 2012 PORTFOLIO 189 lease transactions over 232,122m2 OCCUPANCY Occupancy increased to 98.7% (97.9%) Weighted average lease term (WALT) extended to 5.4 years (4.3 years) 98.7% Purchased three Foodstuffs supermarkets i
Slide 6: Financial Performance
6 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 7: Financial Performance – Consolidated Group
7 Financial Performance – Consolidated Group Actual Actual 31 March 2012 31 March 2011 Variance ($ millions) ($ millions) ($ millions) Net rental income 52.9 52.0 0.9 Management fee income 1.3 1.0 0.3 Corporate expenses (7.4) (9.0) 1.6 Operating profit before net finance expenses and income tax 46.8
Slide 8: Distributable Profit – Consolidated Group
8 Distributable Profit – Consolidated Group Actual Actual 31 March 2012 31 March 2011 Variance ($ millions) ($ millions) ($ millions) Net profit/(loss) before tax 25.8 (25.5) 51.3 NZ IFRS and other adjustments: - Net change in fair value of investment properties (0.5) 11.5 (12.0) - Net change in fai
Slide 9: Financial Summary
9 Financial Summary As at As at 31 March 2012 31 March 2011 ($ millions) ($ millions) Property values1 658.3 637.7 Bank debt drawn 267.3 252.9 Bank loan to value ratio2 40.6% 40.4% Equity 381.0 382.3 Shares on issue3 247.4 246.6 NTA per share4 $1.53 $1.54 Adjusted NTA per share5 (refer Appendix 2) $
Slide 10: Capital Management
10 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 11: Capital Management
11 Capital Management As at Covenant Covenant 31 March 2012 Loan to Value Ratio (Bank Debt / Property Values) < 50% 40.6% Interest Cover Ratio (EBIT / Interest and Financing Costs) > 1.75 x 2.62 Fully Leased Unexpired Term1 > 3.0 years 5.18 years Gross realisation of $51.9m from asset sales The use
Slide 12: Debt Facility Summary
12 Debt Facility Summary As at As at Bank Facility 31 March 31 March 2012 2011 Facility limit (ANZ, BNZ, CBA) $300m $350m Balance drawn $267m $253m Balance undrawn $33m $97m Weighted average cost of debt (incl. 6.16% 7.34% margins & line fees) Weighted maturity of facility 3.1 years 2.5 years Percen
Slide 13: Portfolio Overview
13 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 14: Portfolio Summary
14 Portfolio Summary As at As at Overview 31 March 2012 31 March 2011 Properties 51 50 Tenants 252 283 Net Lettable Area (m2) 379,965 371,481 WALT (years) 5.4 4.3 Occupancy Rate (by area) 98.7% 97.9% Asset Valuation $658m $638m DNZ’s top 10 tenants represent 52% of total contract rental DNZ PROPERTY
Slide 15: Major Lease Transactions Completed
15 Major Lease Transactions Completed Annual Contract Tenant Commencement Area (m2) Term (years) Rental ($) Goodyear & Dunlop Tyres1 September 2015 9,727 5.5 938,521 DDB2 June 2012 3,659 6 921,001 healthAlliance April 2012 2,141 3 684,420 NZ Post September 2011 6,027 6 549,634 Financial Markets Auth
Slide 16: Lease Expiry Profile
16 Lease Expiry Profile As at 31 March 2012 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 17: Major Lease Expiries FY13
17 Major Lease Expiries FY13 % of Property Tenant NLA (m2) Contract Post Balance Date Rental Johnsonville Retail, Wellington Various 5,817 2.39 62 Columbia Avenue, Christchurch Progressive Enterprises 12,665 1.75 20 Rockridge Avenue, Penrose, Auckland CEVA 10,239 1.55 Leased – NZ Merchants 35 Maclag
Slide 18: Major Lease Expiries FY14
18 Major Lease Expiries FY14 % of Property Tenant NLA (m2) Contract Post Balance Date Rental 1 Grey Street, Wellington Westpac 4,266 2.84 132 Vincent Street, Auckland Beca 5,938 2.19 Sale Settles Aug 2012 230 Fenton Street, Rotorua Progressive Enterprises 5,172 1.58 Extended 33 Customhouse Quay, Wel
Slide 19: Portfolio Occupancy – 98.7%
19 Portfolio Occupancy – 98.7% Occupancy (%) Vacancy (m2) Total Area (m2) Occupancy (%) Property 31 March 2012 31 March 2012 31 March 2012 31 March 2011 80 Greys Avenue, Auckland 94.9 279 5,456 86.7 8 Rockridge Avenue, Penrose, Auckland 73.9 811 3,112 73.9 7-9 Fanshawe Street, Auckland 94.8 250 4,81
Slide 20: Acquisitions
20 Acquisitions Foodstuffs Portfolio Three supermarkets in Napier, New Plymouth and Wellington Settled 4 October 2011 $40.7m 18 year leases to Foodstuffs (Wellington) Co-op Limited Foodstuffs DNZ’s 5th largest tenant by contract rental Annual rent review mechanism Bunnings, Mt Roskill, Auckland Sett
Slide 21: Seismic Review
21 Seismic Review DNZ is well advanced on completing seismic reviews of all its properties, with the safety of tenants and their customers’ being paramount in this process. Initial Evaluation Procedure (IEP) reports are being completed on all properties within the portfolio that were built prior to
Slide 22: Market Overview
22 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 23: Total Returns
23 Total Returns IPD/PCNZ total return index has increased from 7.6% for March 2011 to 8.4% for March 2012 Income levels have held up over the current cycle while capital values have now flattened DNZ asset values remain stable as at 31 March 2012 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE Y
Slide 24: Sector Returns
24 Sector Returns Overall total property returns reduced due to the office sector capital movement This negative valuation movement is Wellington centric Wellington yields have softened, with earthquake risk becoming more paramount Longer term outlook is positive for well positioned office assets in
Slide 25: Outlook
25 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 26: Outlook
26 Outlook Capital Management Continue to actively manage DNZ’s hedging profile On market share buyback still in 12 month window Bank debt in low 40% range Strategy Increasing ownership in the Auckland region Pre-development planning for Johnsonville Shopping Centre Continue with portfolio review of
Slide 27: Appendices
27 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 28: Appendix 1 – Valuation Summary
28 Appendix 1 – Valuation Summary March 2012 Revaluation Revaluation Market Cap Market Cap March 2012 Revaluation Revaluation Market Cap Market Cap Address Valuation Movement1 Movement1 Rate 2012 Rate 2011 Address Valuation Movement1 Movement1 Rate 2012 Rate 2011 $ $ % % % $ $ % % % 33 Corinthian Dr
Slide 29: Appendix 2
29 Appendix 2 DNZ PROPERTY FUND LIMITED :: ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2012 :: 23 MAY 2012
Slide 30: Thank You
THANK YOU Important Notice: Certain statements in this presentation constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors (many of which are beyond the control of DNZ) which may cause the actual results, p