BONDS
FEBRUARY 2018
GOODMAN BONDS FEBRUARY 2018 Arranger and Joint Lead Manager Joint - - PowerPoint PPT Presentation
GOODMAN BONDS FEBRUARY 2018 Arranger and Joint Lead Manager Joint Lead Managers This presentation contains the key terms of an offer of fixed rate secured debt securities by GMT Bond Issuer Limited ( Issuer ), a wholly owned subsidiary of
FEBRUARY 2018
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INVESTMENT HIGHLIGHTS
BBB+
expected issue credit rating investment grade
5½ years
term
$75m
size
1 total property portfolio includes GMT’s proportionate share in the properties owned by its Viaduct joint venture.Up to $75m with up to $25m of over subscriptions
The Crossing — Highbrook Business Park03
investment grade term size expected issue credit rating Up to $75m with up to $25m of over subscriptions
BBB+ years $75m
Business focus 05 Investment portfolio 09 Development programme 14 Financial overview 20 Capital management 23 Business outlook 26 Goodman+Bonds 28 Questions & thank you 34 Selected abbreviations Square metres sqm Net lettable area NLA Year to date YTD
Goodman+BondsCONTENTS
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Goodman+BondsGOODMAN PROPERTY TRUST
Auckland ~99% Christchurch ~1%
$2.6bn1
total property portfolio97.6%
property6.1
years WALT
$1.7bn2
market capitalisation32.4%3
Loan to value ratio (look through basis)200+
customers1m sqm
net lettable area6.5%
weighted average capitalisation rateAssets by region
1 total property portfolio includes GMT’s proportionate share in the properties owned by its Viaduct joint venture. 2 market capitalisation of Goodman Property Trust Ordinary Units as at 31 January 2018. 3 on a proportionately consolidated basis including GMT’s interests in its Viaduct joint venture. Holders of Goodman+Bonds will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31.06
Goodman+Bonds+ Goodman Group, a long term partner committed to the New Zealand market and current business structure + Manager’s relationships provide access to international customers, investors and global capital markets + prime investment portfolio with strategic land holdings situated in key industrial locations + focused on Auckland, New Zealand’s gateway city + development programme improving asset quality and growth profile of GMT + assets actively managed to maximise earnings, value and balance sheet strength + gearing currently within 30% to 35% range, with strong liquidity profile + sustainable growth with asset recycling funding development and investment activity + diversity of capital sources + asset sales enabling de-gearing and funding of development pipeline prime portfolio prudent capital management strongly aligned manager
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Goodman+BondsREINFORCING STRATEGIC GOALS
+ operating conditions supporting an organic growth strategy with new development and investment activity funded through asset disposals + continued focus on realising the value in GMT land holdings with around $100 million of new development projects targeted per annum + active portfolio management, maximising rental income and asset values + positive economic outlook continues, particularly in Auckland + property markets reflecting increased customer demand with high occupancy levels and improved rental growth + focused on cash earnings to maximise unitholder value + sustainable level of distributions to support investment activity
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Goodman+Bondsactive strategy strong financial focus
BUILDING EXCELLENCE
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Goodman+BondsViaduct joint venture Tamaki Estate Highbrook Business Park Penrose Industrial Estate The Gate Industry Park Connect Industrial Estate Concourse Industry Park Savill Link Westney Industry Park M20 Business Park
AUCKLAND ESTATES
HIGHBROOK BUSINESS PARK
QUALITY-+-INCOME
portfolio occupancy + a positive economic environment and strong property fundamentals are supporting greater levels of customer demand + top ten customers represent 27.5%12
Goodman+Bonds 0% 1% 2% 3% 4% 5% New Zealand Post Group DHL Fletcher Building Limited Fonterra Coda Toll Group New Zealand Spicers (NZ) Limited Air New Zealand Datacom Officemax Limited 96% 97% 96% 97% 98% 98% 90% 92% 94% 96% 98% 100% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Dec-17 the colours in the chart above represent the contribution from different subsidiary companies.Office Park 10.6% Industrial 84.5% Development Land…
QUALITY-+-CERTAINTY
+ WALT of 6.1 years at 31 December 2017 + 10.1% of income due to expire in FY19 1 asset diversity is presented on a value basis on completion13
Goodman+Bonds lease expiry profile2 asset diversity1 0% 5% 10% 15% 20% 25% 30% 35% Vacant Expiring Income14
Goodman+Bonds+ continued focus to activate remaining land with development starts reaching record levels YTD + a greater volume of development activity has included a successful industrial build-to-lease programme underway since 2012 with around 90% leased within six months of completion
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Goodman+BondsDEVELOPMENT ACTIVITY
commenced development projects $m (total project cost including land) commenced development projects sqm (NLA)The Hill, Highbrook Business Park CSR, The Gate
COMPLETION May 2017 VALUE$11.0m
NLA4,937 sqm ACCO, Highbrook Business Park
COMPLETION June 2017 VALUE$17.8m
NLA7,503 sqm
COMPLETION Aug 2017 VALUE$16.9m
NLA6,402 sqm
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Goodman+BondsCOMPLETED PROJECTS
Coda Stage 2, Savill Link AB Equipment, Highbrook Business Park Showroom Units, Highbrook Business Park
NLA7,410 sqm
COMPLETION Nov 2017 NLA2,929 sqm
COMPLETION Dec 2017 NLA1,730 sqm
COMPLETION Dec 201717
Goodman+BondsCOMPLETED PROJECTS
Building 6 Highbrook Business Park Quest Expansion Highbrook Business Park
NLA3,006 sqm
COMPLETION Sep 2018 ROOMS60
COMPLETION Nov 2018Crossing Carpark Highbrook Business Park
CARPARKS343
COMPLETION May 201918
Goodman+BondsWORK IN PROGRESS
+ seven developments announced YTD, $164.8 million total project cost + $118.4 million of additional spend, yielding 8.3% + 131,000 sqm of development land utilised + 63,468 sqm of additional NLA + build-to-lease units receiving strong enquiry with three units leased prior to construction commencement
Development Location Additional Capital ($m) NLA Completion DateSpicers Highbrook Business Park $13.4m 9,800 sqm Mar-18 Fliway expansion Westney Industry Park $2.7m 1,895 sqm Feb-18 Gateway units Highbrook Business Park $46.1m 21,470 sqm Dec-18 Parade units Highbrook Business Park $11.0m 5,770 sqm Jul-18 Selwood units The Concourse $22.2m 10,933 sqm Dec-18 Savill Link Warehouse Savill Link $11.7m 8,500 sqm Nov-18 Plytech Highbrook Business Park $11.4m 5,100 sqm Nov-18 Total YTD $118.4m 63,468 sqm
Gateway units – Artist Impression Parade units – Artist Impression19
Goodman+BondsNEW DEVELOPMENTS
Parade units – Artist Impression Gateway units – Artist Impression20
Goodman+Bonds+ low gearing levels with a look through loan to value ratio of 32.4%1 + sector leading diversity of debt funding sources + $209 million sale of Central Park2 + $64.9 million net property income ($67.5 million in 1H17) + $59.8 million operating earnings before tax ($59.9 million in 1H17) + $45.3 million before tax profit ($73.1 million in 1H17) + $39.5 million after tax profit ($67.6 million in 1H17) + property level rental growth through fixed, CPI and market increases + developments contributing $10.1 million of value uplift in 1H18
1 on a proportionately consolidated basis including GMT’s interests in its Viaduct joint venture. Holders of Goodman+Bonds will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31. 2 subject to Overseas Investment Office approval.21
Goodman+Bondsstable operating earnings positive property performance capital management
1H18 FINANCIAL HIGHLIGHTS
Net property income ($m) 64.9 67.5 134.2 133.8 Operating earnings before tax ($m) 59.8 59.9 121.7 117.0 Profit after tax ($m) 39.5 67.6 213.8 233.1 Investment Property assets ($m) 2,313.9 2,109.7 2,249.3 2,275.3 Total assets ($m) 2,561.4 2,543.5 2,460.7 2,475.5 Total liabilities ($m) 884.7 977.2 785.8 939.3 Equity ($m) 1,676.7 1,566.3 1,674.9 1,536.2 Borrowings for LVR calculation1 ($m) 835.5 664.5 761.6 832.4 Assets for LVR calculation1 ($m) 2,575.0 2,310.1 2,491.7 2,458.5 Look through loan to value ratio1 (%) 32.4 28.8 30.6 33.9 NTA per unit (cpu) 130.2 122.4 130.4 120.4
1 on a proportionately consolidated basis including GMT’s interests in its Viaduct joint venture. Holders of Goodman+Bonds will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31.+ stable performance as a result
development activity + quality of earnings improved through new developments and asset recycling + look through loan to value ratio remains low
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Goodman+BondsFINANCIAL SUMMARY
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Goodman+Bonds Highbrook Business Park+ 56% of drawn debt from non-bank funding2 + weighted average debt term to expiry of 4.2 years2 + most diversified funding in NZ listed property sector
1 incudes the contracted sale of Central Park 2 as at 31 December 2017, excludes GMT’s interests in its Viaduct joint venture.+ GMT’s look through loan to value ratio is 32.4% + bond debt covenant loan to value ratio of 35.9% + bond, bank, USPP and Trust Deed loan to value covenants aligned at 50% + FY18 interest cover ratio expected to be greater than 3.0 times providing significant headroom against GMT’s banking covenant of no less than 2.0 times + over $750 million of sales in the last 4 years1 + strong contracted rental cashflows from high quality customers + GMT debt currently around 60%2 hedged to reduce interest rate volatility + USPP USD issuance swapped to NZD; no exchange rate risk
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Goodman+Bondsconservative financial gearing strong balance sheet industry leading diversity
CAPITAL MANAGEMENT
+ amounts of $150 million or less are well suited to sourcing funding in multiple markets + post issuance, GMT will have around $350 million of headroom within its bank facility + weighted average debt term to expiry of 4.6 years (from 4.2 years)1 + around 68% of drawn debt from non-bank funding (from 56%)1 + bank funding retained for operational flexibility
Debt maturity profile2 1 based on 31 December 2017 debt levels 2 excludes GMT’s 51% share of its Viaduct joint venture debt facility. GMT’s Viaduct joint venture has a $112 million debt facility maturing September 2019.25
Goodman+Bonds stronger funding metrics maturity profile well-suited to multiple funding sourcesISSUANCE+BENEFITS
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Goodman+Bonds+ focus on asset and customer quality + targeted investment to Auckland industrial market + intensification of development programme to utilise GMT’s land bank + sustainable growth with asset recycling funding new investments + greater balance sheet capacity and improved financial metrics + alignment between cash earnings and cash distributions
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Goodman+BondsSTRATEGIC OBJECTIVES
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Goodman+BondsGMT Bond Issuer Limited + a wholly-owned subsidiary of GMT + sole purpose of the Issuer is to issue bonds for the benefit of the wholly-owned subsidiaries of GMT (GMT Group) + funds received from the offer will be loaned to GMT + the Issuer will receive interest from GMT to enable it to pay interest to holders of the Goodman+Bonds + this is the fifth issue of senior secured bonds by the Issuer + the Issuer has the same board as GMT’s Manager, Goodman (NZ) Limited, providing consistency and appropriate oversight for holders of bonds
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Goodman+BondsTHE ISSUER
+ Goodman+Bonds are guaranteed by GMT + secured over certain property and other assets (Security Pool Assets) of the GMT Group + assessed security value (ASV) of $2,220 million + finance debt of $797 million + bond debt covenant loan to value ratio (LVR) of 35.9% + security over the Security Pool Assets is held by the Security Trustee (NZGT (GMT) Security Trustee Limited) for the benefit of existing bondholders, USPP noteholders and lenders under GMT’s bank facility, pro rata based on the
+ Security Pool Assets include: + real estate properties wholly owned by the GMT Group or in which the GMT Group hold a freehold interest or a leasehold interest + certain real estate assets co-owned on a 50:50 basis with Goodman Group + Security Pool Assets do not include; + the incremental spend on developments in progress, or + any shares in the Viaduct joint venture (Wynyard Precinct Holdings Limited) or the joint venture’s assets, or + any related rights arising from GMT’s shares in the joint venture
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Goodman+BondsSECURITY
+ LVR covenant restricts total borrowings of GMT and the GMT Group to 50% of the Assessed Security Value of the Security Pool Assets + breach of LVR covenant is an event of review requiring + 6 months to formulate plan + 20 business day notice period + further 6 months to remedy before event of default occurs + other events of default include + non-payment of interest or principal + insolvency + cross-acceleration from bank debt or USPP notes
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COVENANT & DEFAULT
KEY TERMS OF THE OFFER
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Goodman+Bonds+ NZX notice announced 19 February +
19 February + firm bids due 10:30am, 23 February + rate set date 23 February +
23 February + issue date 1 March + expected date of initial quotation on the NZX debt market 2 March + interest payment dates 1 September and 1 March each year including the maturity date + first interest payment date Monday, 3 September 20181 + maturity date 1 September 2023
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KEY DATES OF THE OFFER
1 payment will be made on Monday 3 September 2018 as 1 September 2018 is a Saturday34
Goodman+Bonds Highbrook Business Park