investor briefing - goodman · 2019. 5. 5. · briefing goodman property trust 4 october 2018....
TRANSCRIPT
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InvestorBriefingGoodman Property Trust
4 October 2018
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Contents
Unless otherwise indicated, all numerical data provided in this presentation is stated as at 31 March 2018.
All dollar values are NZD unless otherwise stated. All figures are rounded.
Presented by:
John Dakin
Chief Executive Officer
James Spence
Director – Investment Management
Michael Gimblett
General Manager - Development
Andy Eakin
Chief Financial Officer
Auckland Focus 3
GMT Portfolio 12
Development Programme 24
Financial 29
Summary 32
2
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Aucklandfocus
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Aucklandcontext
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Auckland
Population 1.7m
% of NZ popn 35%
Urban area1 607km2
GDP growth2 2.7%
Unemployment 4.3%
Melbourne
Population 4.9m
% of Aus popn 20%
Urban area1 2,543km2
GDP growth2 2.9%
Unemployment 6.8%
Sydney
Population 5.1m
% of Aus popn 21%
Urban area1 2,037km2
GDP growth2 2.9%
Unemployment 6.0%
Brisbane
Population 2.4m
% of Aus popn 10%
Urban area1 1,972km2
GDP growth2 2.9%
Unemployment 7.4%
New Zealand
Australia
All statistics refer to greater city region unless stated.1 Refers to urban area only, as defined by nation’s statistical areas2 National statistic, average annual change to June 2018
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Australian industrial marketcomparison
+ Auckland more land constrained than Australian markets
+ Tight rental range across the Auckland market indicates no differential being paid for location in contrast to Sydney and Melbourne
+ Opportunity to drive market rentals in key locations with superior logistics qualities
Auckland Sydney Melbourne Brisbane
Prime Industrial stock (million m2) 4.8 11.5 10.3 5.4
Industrial land supply (ha) 1,111 2,815 6,669 3,173
Prime warehouse rental ($/m2) 120-135 119-196 78-125 108-117
Prime capitalisation rate 5.0%-5.5% 4.5%-5.25% 5.75% 6%
Prime vacancy 2% 1% 4% 4%
5Statistics for greater city regions above reflect Goodman’s estimates and various agency reports.
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Key logistics infrastructure
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Key
State Highway 1
Other State Highway
Rail
Auckland
Airport
Port of
Auckland
Wiri Inland
Port
Metroport
+ Land constrained city driven by geographic challenges
(harbours, topography)
+ Experiencing increased pressure on existing
infrastructure given
significant net migration
(circa 110,000 people last 4
years)
+ Major infrastructure projects underway
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Aucklandindustrialmarket
+ Economic growth fuelling occupier demand
+ Historically low vacancy and rising market rents a feature of most
suburbs
+ Industrial land values now being driven by offshore demand and
residential conversion factors
Auckland industrial rentals$/m2
0
20
40
60
80
100
120
140
160
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
Prime Secondary
Auckland industrial yields
0%
2%
4%
6%
8%
10%
12%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
Prime Secondary
Auckland industrial vacancy
0%
1%
2%
3%
4%
5%
6%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
Prime Secondary
200
250
300
350
400
450
500
550
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
South Auckland Industrial land values$/m2
Source: CBRE
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8
Industrialsupply
+ 186,000sqm pa of new industrial space developed over the past ten years, utilising approximately 37ha of land pa
+ Currently around 490ha of industrial land supply in core Auckland locations
+ Total land supply expected to support 13 years of new development
East Tamaki69ha
Wiri251ha
Airport Corridor141ha
Mangere17ha
Mt Wellington8ha
Rosebank2ha
Penrose5ha
New South Auckland Industrial StockNLA million m2
Auckland Industrial Land Supply
Source: CBRE & Goodman
7.07.2
7.5 7.5 7.57.7
7.98.1
8.48.6
0
50
100
150
200
250
300
350
400
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total stock million sqm (LHS) New stock '000sqm (RHS)
Average new stock pa '000sqm (RHS)
Industrial land identified area includes south of Auckland harbour bridge, as far west as Rosebank Rd and as far south as Wiri.
Source: JLL & Goodman
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Zoning
$290m
$160m
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1
Key
Unitary plan zoning
Business – Heavy industry zone
Business – Light industry zone
Future urban zone
West Auckland Glen Innes
East Tamaki
Penrose / Mt
Wellington
Auckland
Airport
Mount
Roskill
Wiri
Otahuhu
+ Large quantity of industrial stock re-zoned to other uses
within Auckland unitary plan
process
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Industrial re-zoninginfluence
+ Example – 13,000m2 GMT development at Savill link for
NCI who relocated from Mt
Wellington industrial building
re-zoned to mixed use
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Goodman NCI development
Existing NCI warehouse
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e-Commercein NZ
GMT top ten customers split by subsidiary companies1
% of portfolio income
0% 1% 2% 3% 4% 5% 6% 7% 8%
New Zealand Post
DHL
Fletcher Building
Coda
Fliway Transport
Toll
Spicers
CSR Building Products
Officemax
Big Chill
+ e-Commerce is a significant and growing part of global trade and has an estimated value of $3.8 trillion – twice the size of what it was five years ago
+ New Zealanders spent a total of $3.6 billion online in 2017 ($746 per capita)
+ Online shopping now delivers 8.1% of all retail spend in New Zealand
+ The greater Auckland region accounted for 37% of online spend in 2017
+ NZ Post delivered 38.9 million parcels in the month of December 2017 (9% increase on December 2016)
e-Commerce sales by country% of total retail sales in 2017
23.1%
19.1%
16.0%
12.6%
10.0%9.0%
8.1% 7.9% 7.9%6.6%
3.2%2.2%
0%
5%
10%
15%
20%
25%
Source: New Zealand Post 1 As at 31 March 2018
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GMTportfolio
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Strategic overview
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Strategy
+ High quality portfolio situated in key industrial locations close to consumers
▪ positioned to capitalise on growth in e-commerce and technological
change
+ Strategic holdings provide development pipeline and urban regeneration opportunities
▪ number of estates held significantly below replacement cost
+ Development programme improving asset quality and growth profile of GMT
+ Balance sheet capacity expected to support build out of remaining land holdings
Targeting
+ Increased growth in rental cashflows and cash earnings
+ Creation of a lower capex portfolio
+ Resilient portfolio with the balance sheet capacity to be opportunistic should markets turn
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GMToverview
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6.1yearsWALT 1
$2.7bnProperty portfolio1
6.2%Weighted average
capitalisation rate1
1m sqmNet lettable area1
25.0%Look-through loan
to value ratio2
98.2%Portfolio occupancy1
260+Customers1
$2.0bnMarket capitalisation3
1 Including contracted sales, as at 31 March 20182 Adjusted for all sales contracted as at 31 March 20183 As at 27 September 2018
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Aucklandlocations
+ GMT assets situated in key logistics locations, well suited to
assist in the creation of fast and
efficient supply chains
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Portfolio statistics1
Value ($m) 2,746.7
Land area (ha) 242.3
NLA (m2) 1,111,244
$psm land 1,133
1 Including contracted sales, as at 31 March 2018 (excludes Roma Rd)2 Under contract
VXV Precinct (conditionally sold)
Central Park (sold)
2
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Asset recycling
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DISPOSALS
$1.2 billion
ACQUISITIONS
$267 million1
DEVELOPMENTS
$672 million2
5 year programme Gateway Warehouses development (artists impression), Highbrook Business Park
Roma Road Estate, Mt Roskill, Auckland
Developed
Bought Sold
1 Includes Roma Rd acquisition2 Development starts (TPC including land)
VXV Precinct, Auckland CBD
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+ Portfolio now predominately Auckland industrial
+ Improving quality reflected in the portfolio metrics
+ Like-for-like NPI growth of 3.9% in 2018 and 2.8% in 2017
+ 98% occupancy
+ Large number of pending expiries secured in 2018 YTD with only 10% of
portfolio income due to expire over the
FY19 and FY20 years
Portfoliotransformed
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Key metrics March 2018 March 2013
Auckland weighting 99% 92%
Portfolio occupancy 98% 96%
Weighted average cap rate 6.2% 8.1%
Weighted average lease term (years) 6.1 5.3
Development commitments ($m) 164.8 117.8
Relative property return1
2.9% -0.2%
Industrial60.0%
Development Land 12.0%
Office Park28.0%
MH/DJ – to be 31 March
post contracted sales
1 MSCI New Zealand Universe index2 Post contracted sales, as at 31 March 2018
Industrial94.8%
Development Land4.5%
Office Park0.7%
Asset diversity 20182 Asset diversity 2013
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Portfoliomatrix
+ Strategic decision to focus investment in key locations within the Auckland
industrial market
+ 93% of core assets have been developed by Goodman
+ 84% of assets sold have been office
+ Value add estates offer future opportunity
Pre
ferr
ed
lo
ca
tio
n
Higher quality
Core assets Value-add Sold properties Future disposals
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HighbrookBusinessParkMetrics1
NLA 434,107m2
Land area 107.0ha
Site coverage 41%
Value $1,192m
Value (psm land area) $1,114/m2
WALE 6.0 years
Average age 6.4 years
% complete 82%
Cap rate 5.8%
1 As at 31 March 2018
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Other core estates
Savill Link
The Gate Industry Park
M20 Business Park
Westney Industry ParkMetrics1
NLA 426,015m2
Land area 96.7ha
Site coverage 44%
Value $800m
Value (psm land
area)$834/m2
WALE 6.2 years
Average age 12.4 years
% complete 96%
Cap rate 6.5%
1 As at 31 March 2018
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Value-addestates
Penrose Industrial Estate
Tamaki Estate
Connect Industrial Estate
Metrics1
NLA 92,426m2
Land area 23.1ha
Site coverage 40%
Value $148.6m
Value (psm land
area)$642.4/m2
WALE 2.8 years
Average age 37.9 years
% complete 100%
Cap rate 6.2%
1 As at 31 March 201821
Concourse Industry Park
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Acquisition:Roma Road
+ Site located in centre of Auckland Urban area and surrounded by low-
medium intensity residential
+ Area earmarked for intensification
+ Access and direct frontage to SH20
+ Expected to benefit from light rail network running between Auckland
CBD and the airport in the
medium/long term
Waterview
tunnel
SH20
CBD
Proposed
light rail
Roma
Road
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Acquisition:Roma Road
Metrics
NLA 36,977m2
Land area 13.1 ha
Site coverage 27%
Value $93m
Value (land) $710/m2
WALE 2.5 years
Age c. 40 years
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Developmentprogramme
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Capitaldeployment
+ $672 million of development starts over the last five years, providing average yield on additional spend of 9.4% and development gains of $81 million1
+ $165 million of new developments announced in FY18, with a further $54 million YTD
+ 80% of remaining portfolio has been developed by Goodman, providing for high quality, well-designed long-term investments
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98.2108.8
148.7
97.0
164.8
54.1
0
20
40
60
80
100
120
140
160
180
FY14 FY15 FY16 FY17 FY18 FY19 Q1$ m
Other Highbrook
100%
100%72%
100% 65%
52%
200
400
600
800
1,000
1,200
Highbrook Savill M20 Westney The Gate Other
Developed by Goodman Other
$ m
Development commencements2
(total project cost including land)
Assets developed by Goodman2
(total value of stabilised assets by estate)
1 Revaluation gains recorded on developments completed during the period2 As as 31 March 2018, including FY19 Q1 announcements
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Development programme
2626
Gateway
WarehousesHighbrook Business Park
COMPLETION
November 2018
NLA
22,195m2
Parade
UnitsHighbrook Business Park
COMPLETION
November 2018
NLA
5,972m2
COMPLETION
November 2018
NLA
8,494m2
Savill Drive
WarehouseSavill Link
+ 66,000 sqm of space currently under construction within GMT portfolio
+ Includes 27,000 sqm of space which is yet to have terms agreed (equivalent to
circa 2.5% of GMT portfolio)
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Constructioncosts
+ Costs escalating but offset by yield compression and rising rents
+ Quality of base build specification also rising
+ Developments typically recording gains of 15-20% when valued on completion
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$250
$400
$550
$700
$850
$1,000
2013 2014 2015 2016 2017 2018
Warehouse construction cost$/m2
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Developmentpipeline
+ Remaining land supply 22 ha1
+ Supports a further 116,000 sqm of industrial and commercial development
+ Yield on additional spend expected to range between 8-9%
+ Estimated additional spend of approximately $290 million
+ Highbrook represents 82% of remaining land supply
+ New land opportunities tightly held and difficult to secure
1 As at 31 March 2018, including FY19 Q1 announcements
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Gateway Warehouses development (artists impression), Highbrook Business Park
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Financial
29
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Con
tra
cte
d s
ale
s
WP
H d
isp
osa
l
Com
mitte
d
de
ve
lop
me
nts R
om
a R
oa
d
Deve
lop
me
nt
pip
elin
e
25.0%
14.1%
19.9%
22.9%
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NTA + distribution
Total returns
+ NTA growing strongly with CAGR of 8.9% over last five years
+ Improving quality and focus on industrial reflected in returns with five year total return of 13.7%
Total returns 2
2 Total return is a combination of NTA growth + distribution paid
11.6%
14.4%
17.2%
13.8%
11.6%
0%
5%
10%
15%
20%
FY14 FY15 FY16 FY17 FY18
Income return Capital return
5 year total
return: 13.7%
5 year income
return: 5.9%
100.4
108.4
120.4
130.4
138.9141.4
90
100
110
120
130
140
150
FY14 FY15 FY16 FY17 FY18 Post WPHsale
1 Post contracted sales, as at 31 March 2018
1
NTA per unitcents
31
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Summary
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Focus
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Own
+ Modern high quality assets with strong customer covenants in the best locations
+ Industrial property is the preferred sector, unique characteristics make it a superior long-term investment
+ Auckland is the favoured location, demographic and consumer trends support this decision
Develop
+ Development programme has created portfolio of unrivalled quality
+ Essential business activity to service customers, while continually improving the portfolio
+ New land opportunities difficult to secure, value add opportunities increasingly important
Manage
+ Assets and customer relationships to maximise rental cashflows and long-term value
+ Balance sheet capacity funding development programme
+ Treasury initiatives to manage interest costs improving diversity and tenor
+ Transition to cash earnings based distribution policy, headwinds while completing asset disposals
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Thank you
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