Presentation on theme: "Investor Update - May 2010 Overview of Growthpoint Properties Australia (ASX Code: GOZ) Growthpoint Properties Australia Group announced its December 2009."— Presentation transcript:
Investor Update - May 2010 Overview of Growthpoint Properties Australia (ASX Code: GOZ) Growthpoint Properties Australia Group announced its December 2009 half year results in February 2010. The main points included: Completion of the restructure and recapitalisation of the Group. Profit from operations was $8.8 million, equating to operating earnings of 5.51 cents per stapled security. A distribution of 5.50 cents per stapled security was paid to security holders on 26 February 2010. An overall increase in the value of the property portfolio of 2.5%, with the average capitalisation rate falling from 8.9% to 8.6%. Many commentators have confirmed the view that values have bottomed and are at the early stages of an upturn. The NTA per stapled security rose to $2.03, up from the pro-forma forecast of $1.80 provided in the Rights Issue Offer Booklet, dated 19 August 2009. The Group is focused on providing a strong income return to security holders and diversifying the portfolio into office and retail sectors over time. Key strengths of the Group include: Simple structure – income derived solely from the rent from the properties the Group owns. Stable income - the Group is not engaged in more risky activities such as development or funds management activities. Internalised management – security holders own the property trust and manager providing an alignment of interests. There are no fund management fees paid to external parties. 100% domestic investment – all the Group’s property investments are located in Australia. Quality tenants - Woolworths (61% of rent), Coles Group (10% of rent), Star Track Express (5% of rent) amongst others. Long leases and high occupancy – weighted average lease expiry of 10.4 years and 98% portfolio occupancy. Fixed rental growth – leases have annual increases in rents either by CPI or fixed at between 2% and 4% per annum. Page 1 Portfolio Update Acquisition: Modern distribution centre with long term lease providing strong income yield In February 2010, the purchase of a modern distribution centre of 42,826 square metres located in Goulburn, NSW, leased to Coles Group Limited to February 2022 was completed. The purchase price was $64 million (under the sale contract an additional early settlement fee of $1.5 million was also payable). The initial yield from 16 February 2010 for the acquisition is 9.93%. The lease has fixed rental increases of 2.75% per annum. Leasing Update: 98% portfolio occupancy, new leases and lease extension brings WALE to 10.4 years The previous vacancy at 45-55 South Centre Road, Tullamarine, VIC has now been fully leased with Willow Ware Australia (an existing tenant of the Group) leasing 9,576 square metres from December 2009 and 1300Temp Fence leasing the remaining 4,506 square metres from 1 March 2010. This leaves 12,840 square metres, less than 2% of the lettable area of the portfolio, vacant. There is currently an active campaign to lease the office and warehouse space in Preston, Victoria. Growthpoint Properties Australia management have agreed a lease extension with Blue Star Print Group at 81 Derby Street, Silverwater, NSW. Blue Star have agreed to exercise their 5 year option early, with the lease now expiring in September 2017, providing a remaining lease term of 7.5 years. This eliminates a potential lease expiry in September 2012. This leasing activity provides for a weighted average lease expiry (WALE) for the portfolio of approximately 10.4 years as at 31 March 2010. Property acquisition - 134 Lillkar Road, Goulburn, NSW
Major Securityholder Growthpoint Properties Limited (South Africa) Growthpoint Properties Limited (JSE code: GRT) is the largest property company on the Johannesburg Stock Exchange with a diversified portfolio valued at approximately AUD 4.5 billion (spanning 435 properties and approximately 4.5 million square metres) and with a market capitalisation of approximately AUD 3.2 billion. This represents significant growth since 2001, when Growthpoint’s total assets and market capitalisation was less than AUD $20 million. In addition to its acquisition of a majority stake in GOZ, GRT’s achievements for the half year to 31 December 2009 include a rise in net property income of around 9% (excluding GOZ), a 5% increase in distributions to shareholders, a Rand 1,3 billion equity raising, Moody’s global long-term and short-term issuer ratings of Baa2 and P2 respectively and growth in its non-South African domiciled shareholders to over 7% of its share register. Growthpoint Properties Australia Level 10, 379 Collins Street Melbourne, VIC, 3000 03 8681 2900 www.growthpoint.com.au Property Market Update Office - The national office market of 24.0 million square metres had a vacancy rate of approximately 9.1% as at 31 December 2009, up from 6.8% as at 31 December 2008 due to around 1.0 million square metres of additional supply and low levels of net absorption over the year. However, net absorption has been positive for the last 2 quarters as employment in the finance, insurance, rental and real estate sectors has improved which is consistent with an upturn in demand for office accommodation. Leasing incentive levels have stabilised and are trending downwards. Retail - Retail sales have remained strong with the ABS recording an annual 5.9% increase in sales to January 2010. Consumer confidence remains strong and, despite rising interest rates and lower levels of direct government stimulus, sales of non- discretionary items have performed well (i.e. clothing, footwear and personal items). Rental levels in most retail sectors have shown positive rental growth between 0% and 2% in the last year (excluding the bulky goods sector). However, rents appear to be stabilising in this market. Property yields have stabilised, but are above their 2007 peak. Industrial - Demand for industrial space has improved in the December 2009 quarter, with increased tenant and owner-occupier enquiry. Supply of new industrial premises has been constrained over the past two and a half years due to tight credit conditions. A greater level of pre-commitment and, hence, new development activities is predicted for the second half of 2010. Prime property yields, which bottomed at 6.5%, have now stabilised in the range 8% to 9%. At this level, there is increasing investor demand where properties are well leased and enjoy a strong location. Source: Jones Lang LaSalle/Growthpoint Properties Australia Registry – Computershare Investor Service For all enquiries and correspondence regarding your Growthpoint Properties Australia securities, please contact the share registry, Computershare on 1800 260 453 or visit www.computerhsare.com.au Portfolio Update – Continued Major Tenants – Results announcements The Group’s major tenant Woolworths (61% of portfolio income) reported net profit was up 11.1% to $1.1 billion for the six months to January 3, 2010, on revenue up 4.2% to $27.2 billion. Coles Group (10% of portfolio income) reported a strong 12.8% increase in earnings before interest to $486 million, whilst parent entity Wesfarmers net profit after tax of $879 million, up 1 per cent. The portfolio’s weighted average lease expiry to these two tenants is in excess of 12 years, providing excellent income security for investors. Next Distribution The Group is forecasting a distribution of 8.5 cents per security for the six months ended 30 June 2010. Confirmation of the actual distribution will be made in August 2010, post audit of the financial accounts, with payment made to securityholders on or about 31 August 2010. At an ASX price of $1.80, the distribution annualised to 17.0 cents per security, provides a yield of 9.4% per annum. Investor Update - May 2010 Page 2
Your consent to our cookies if you continue to use this website.