INVESTA OFFICE FUND ANNUAL RESULTS JUNE 2017 24 AUGUST 2017
Agenda 02 SECTION SLIDE 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION FUND HIGHLIGHTS 3 1 Penny Ransom, IOF Fund Manager PROPERTY PORTFOLIO UPDATE 11 2 Nicole Quagliata, IOF Assistant Fund Manager DEVELOPMENT UPDATE 20 3 Mark Tait, Head of Commercial Development 32 4 ESG AND MARKET UPDATE Penny Ransom, IOF Fund Manager 5 QUESTIONS AND ANSWERS 42 Deutsche Bank Place, 126 Phillip Street, Sydney
1. Fund Highlights Penny Ransom, IOF Fund Manager 567 Collins Street, Melbourne
Achievement of FY17 Key Objectives OUTPERFORMANCE ACTIVE ASSET MANAGEMENT 04 • • Exceeded ASX200 A-REIT Near record leasing of 116,805sqm Accumulated Index by 1,337bps • High occupancy at 97% • 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION Return on Equity of 18.0% • Strong WALE of 5.1 years • Strong Portfolio Total Return of 15.7% • FY19 expiry reduced 4% to 25% • Distributions up 3.1% • Property valuation uplift of 10% MANUFACTURING CORE ASSETS SELECTIVE TRANSACTIONS • • Barrack Place development Disposed 800 Toorak Rd and ahead of expectations 383 La Trobe St in Melbourne ¥ • • Reinvestment into the Fund’s value Significantly progressed the repositioning of 388 George St and add/development pipeline to 347 Kent St in Sydney drive returns RESOLVE JV OPTION PRUDENT CAPITAL MANAGEMENT • Opportunity to acquire 50% of • Low gearing at 21.4% Investa Office Management platform • Launched first AREIT A$ green bond, triggered in August 2016 and extending debt duration Unitholders determined not to pursue • Revised and implemented higher in May 2017 hedging strategy
Year in Review – Continued Strong Results o FFO growth driven by the strong Sydney market and Brisbane leasing partially offset by two 05 divestments and the redevelopment of Barrack Place, 151 Clarence Street o Significant statutory net profit of $472 million with strong valuation uplifts 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION o Low gearing of 21.4% provides capacity to fund value add/development pipeline o NTA increased by 13.2% to $4.79 Key Reporting Metrics Profit and Loss 30 June 2017 30 June 2016 Change FFO $182.6m $175.6m 4.0% FFO per unit 29.7c 28.6c 4.0% Distributions per unit 20.2c 19.6c 3.1% Key reporting metrics Statutory Net Profit $471.6m $493.8m (4.5%) - Property Revaluations $360.4m $316.2m 14.0% 30 June 2017 30 June 2016 Balance Sheet Change Gearing (look-through) 21.4% 27.7% (630bps) NTA per unit $4.79 $4.23 13.2%
Year in Review – Attractive Returns o 18% Unitholder Return on Equity 06 o Strong Portfolio Unlevered Total Return of 15.7% 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION o Attractive compound average distribution growth of 3.5% pa o Investa platform of 200+ people has again demonstrated ability to proactively add value Overall Performance Distribution Growth 10.0 12 Month Unitholder Portfolio Unlevered Cents per unit 10.20 10.00 9.80 9.80 Return on Equity Total Return 9.70 9.55 9.0 9.25 9.25 To 30 June To 30 June To 30 June To 30 June 9.00 8.75 2017 2016 2017 2016 8.0 18.0% 22.3% 15.7% 16.2%
High Quality Portfolio with High Weighting to Performing Markets 07 $ 3.8 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION 20 billion 432 OFFICE 100% AUSTRALIAN PORTFOLIO BUILDINGS EXPOSURE VALUE TENANTS Portfolio Composition by CBD – Portfolio Composition by grade – ~80% weighting to Sydney and Melbourne 1 ~80% weighting to Prime assets Sydney 64% A Grade 63% Melbourne 16% 15% 15% Brisbane 21% Premium B Grade 3% 4% Canberra Perth 1. Totals do not add to 100% due to rounding.
Strong Valuation Uplift o Entire portfolio independently valued at 30 April 2017 % Uplift over June 2016 1 15% o 10% ($344 million) uplift over June 2016 1 : 08 – Continued strength in the Sydney office market 13.0% 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION 10% – Solid leasing in the Brisbane portfolio 10.5% 10.1% – Value accretive leasing overall 5% 6.3% o WACR 2 tightened 46bps to 5.74% 4.4% o 242 Exhibition St and 836 Wellington St significantly 1.4% 0% de-risked Sydney Brisbane Nth Canberra Melbourne Perth Sydney Capitalisation Rate Compression By CBD Proportion of Total Uplift over June 2016 1 Asset Cap Rate Sydney -34bps Canberra Perth 0.5% 1.8% North Sydney -38bps Brisbane Melbourne (includes 242 Exhibition St) -71bps 15.3% Brisbane -70bps Melbourne Sydney Perth (includes 836 Wellington St) -66bps 7.2% Canberra -15bps 57.0% Total WACR 2 -46bps 18.2% 242 Exhibition St, Melbourne (Telstra) -125bps North Sydney 836 Wellington St, Perth (Commonwealth Govt) -100bps 1. 30 June 2016 Book Value. 2. Weighted Average Capitalisation Rate.
Selective Divestments to Drive Long Term Performance $211 million of non-core assets 09 divested for future capital recycling ¥ Development 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION 383 La Trobe St, Melbourne Barrack Place, 800 Toorak Rd, 151 Clarence St, Sydney Melbourne Asset Repositioning Accretive Incentive Spend ALLENS: TELSTRA: 347 Kent St, 388 George St, 126 Phillip St, 242 Exhibition St, Sydney Sydney Sydney Melbourne
Prudent Capital Management o Low gearing supports anticipated future Key Indicators 30 June 2017 30 June 2016 capital expenditure 10 Drawn debt 2 $826m $1,013m o Higher hedged debt levels reflecting Gearing 1,2 21.4% 27.7% 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION current environment Weighted average debt cost 4.1% 4.2% o Further enhanced diversity of debt sources Weighted average debt maturity 4.7yrs 5.0yrs Average debt hedged 50% 36% o Announcing on-market buy-back of up to 5% of units Interest cover ratio 2 4.8x 4.3x S&P credit rating BBB+ BBB+ Debt Maturity Profile ($m) 250 Undrawn bank debt Drawn bank debt USPP ($A) MTN 200 150 118 155 100 66 150 129 125 50 88 89 73 66 55 50 50 0 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 1. Refer to Gearing (look-through) appendix for calculation methodology. 2. Calculated on a look-through basis.
2. Property Portfolio Update Nicole Quagliata, IOF Assistant Fund Manager Gensler fitout, 6 O’ Connell Street, Sydney
Active Asset Management Driving Consistent Performance o IOF portfolio consistently providing strong unlevered portfolio returns – 12 month total return 15.7% 12 – Annualised 3 year total return 13.5% 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION o Returns supported by an attractive income return of 6.0% o 12 month returns enhanced by strong weighting to Sydney market and active leasing in Brisbane Sydney 18.4% 15.7% Brisbane 16.1% 78% of 8.7% portfolio North Sydney 15.9% 15.9% Total Total 15.7% 13.5% Canberra 11.1% 14.3% Melbourne 10.1% 1 Yr Income Return 14.2% 1 Yr Capital Return Perth 8.7% 3 Yr Income Return -0.3% 3 Yr Capital Return 0.0% 5.0% 10.0% 15.0% 20.0% Notes: Total returns based on movement in portfolio book value plus portfolio net income over 12 months to 30 June 2017, as a percentage of total book value. In chart above some total returns do not equal addition of income and capital returns due to rounding.
FY17 Portfolio Overview 13 Key Portfolio Metrics 30 June 2017 30 June 2016 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION Net Property Income (NPI) $201.2m $200.1m Effective like-for-like NPI growth 1 4.7% 3.1% Leased 116,805sqm 52,004sqm Tenant retention 85% 77% Face rent growth (deals completed) -1.4% 1.2% Face rent growth (deals completed excl. 242 Exhibition St & 836 Wellington St) 6.2% n/a Average incentive (renewal / new) 18% (17% / 25%) 30% (21% / 32%) Occupancy (by income) 97% 96% Weighted average lease expiry 5.1 years 4.8 years Average passing face rent $661psm $604psm Average incentives 116,805sm of Strong like-for-like reduced to 18%, leasing driving NPI up 4.7% influenced increase in driven by major occupancy, by Sydney renewals tenant retention and Brisbane and WALE 1. Like-for-like NPI growth is calculated by reference to the previous corresponding period.
Active Leasing Transforming Property Fundamentals 14 24 AUGUST 2017 INVESTA OFFICE FUND FY17 RESULTS PRESENTATION 242 Exhibition Street 126 Phillip Street 836 Wellington Street 10 year lease to Commonwealth 63,372sqm extension to Telstra 13,353sqm of leasing across to October 2031 9 leases, including Allens (8,424sqm) and Government over 11,973sqm Property NSW (2,888sqm) Artists impression 6 O’Connell Street 567 Collins Street 140 Creek Street 5,063sqm of leasing across 4 leases 17 leases signed over 4,647sqm with 99% leased with further 3,526sqm bringing occupancy to 91% average face rents 26% higher than passing lease signed to Qld Government
Recommend
More recommend
