Challenger Diversified Property Group

Transcription

1 Challenger Diversified Property Group Challenger Diversified Property Group Half-year ended 31 December 2012 update Challenger Diversified Property Group Comprising: Challenger Diversified Property Trust 1 ARSN Challenger Diversified Property Trust 2 ARSN Responsible Entity Challenger Listed Investments Limited ABN AFSL

2 Table of contents Fund objectives 1 Key points 2 Fund Manager s report 3 Portfolio summary 6 Unit holder information 8 Directory IBC Important notice The material in this presentation is provided by Challenger Listed Investments Limited (ABN ) (AFSL ) ( Challenger ), as Responsible Entity of the Challenger Diversified Property Trust 1 (ARSN ) and the Challenger Diversified Property Trust 2 (ARSN ) which together comprise the Challenger Diversified Property Group ( Group ). The material is general background information about the Group s activities and is current at the date of this report. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered with professional advice when deciding if an investment is appropriate.

3 Challenger Diversified Property Group (ASX:CDI) Fund objectives To provide investors with exposure to a diversified portfolio of properties generating stable income returns and potential for capital growth Vision and strategy Our Vision Be the preferred mid-cap Australian diversified REIT and a member of the S&P/ASX 200 Property Index Our Strategy Portfolio enhancement Actively manage and add value to a diversified and environmentally sustainable portfolio Our Strategy Leasing Actively manage tenant relationships and expiries to provide sustainable rental income growth Our Strategy Capital management Actively manage capital structure to deliver an efficient cost of capital Challenger Diversified Property Group Half-year Update 31 December

4 Key points Results for the six months ended 31 December 2012 (1H13) Profit from operating activities: $22.9 million (1H12: $23.9 million) Normalised earnings per unit (epu): cents Distribution per unit (dpu): 8.60 cents FY13 guidance reaffirmed-normalised epu of 21.0 cents and dpu of 17.4 cents Statutory net profit after tax: $20.8 million (1H12: $18.8 million) Net tangible assets (NTA) per unit: $2.74 (FY12: $2.73) Balance sheet gearing 30.2% 1 Property valuations up $10.3 million (1.2%) on FY12 Weighted average lease expiry (WALE): 4.8 years Occupancy: 94.3% Financial highlights 1H13 1H12 Change Net property income $ 000s 33,703 33,812 0% Profit from operating activities $ 000s 22,913 23,859 (4%) Net profit after tax $ 000s 20,797 18,847 10% Cash flow from operating activities $ 000s 24,027 21,381 12% Units on issue million (3%) Normalised earnings cpu % AFFO distribution payout ratio 2 % 90% 95% (5%) Distribution cpu % Total assets $ million % Net tangible assets per unit $ $2.74 $2.72 1% 1 Pro forma post payment of 1H13 distribution in February AFFO: Available Funds From Operations. 2 Challenger Diversified Property Group Half-year Update 31 December 2012

5 Fund Manager s report Challenger Diversified Property Group (ASX:CDI) announced its results for the six months ended 31 December 2012 on 5 February Profit from operating activities was $22.9 million and normalised earnings per unit increased marginally (0.2%) to cents compared to the six months ended 31 December 2011 (1H12). Compared to the six months ended 30 June 2012 (2H12), normalised earnings per unit increased 12% from 9.56 cents per unit. The primary driver of the increase was portfolio rental increases, which on a like for like basis increased by 5%. The growth in net property income was underpinned by leasing activities. CDI s focus on leasing is a key strategic priority. Over the past six months CDI s future earnings have been significantly strengthened with FY14 lease expiries now standing at only 2.4% of total portfolio income. Both normalised earnings and distribution guidance for FY13 have been reaffirmed. Normalised earnings per unit guidance is 21.0 cents and distribution per unit guidance is 17.4 cents, representing an increase of 3.8% and 3.6% respectively over FY12. The growth in both earnings and distribution guidance from FY12 is due to focus on improving both leasing metrics and the portfolio mix. Total net assets at 31 December 2012 was $588 million, representing $2.74 per unit. CDI s strategy remains unchanged, with a focus on portfolio enhancement; improving leasing metrics; and active capital management. CDI s focus on these priorities has been a major driver of CDI s sustained outperformance against the S&P/ASX 200 Property Accumulation Index. Portfolio The CDI portfolio comprises interests in 22 office, retail and industrial assets located in Australia (94.2%) and five properties (5.8%) in France as well as an Australian industrial development site. In addition, CDI holds a leasehold interest in Sydney s Domain car park which expires in April CDI has identified a number of opportunities to enhance the portfolio, with these opportunities representing the next phase of CDI s portfolio enhancement strategy. CDI will look to capture the latent upside in the portfolio as development opportunities align with tenant lease expiries. Challenger Diversified Property Group Half-year Update 31 December

6 Revaluations Over the last six months, 52% of the portfolio was independently valued and internal valuations were undertaken for the remainder of the portfolio. Investment property valuations increased by $10.3 million (1.2%) to $854 million in 1H13. After adjusting for capital expenditure and incentives, the fair value movement of investment properties held at 31 December 2012 was unchanged. CDI s weighted average capitalisation (cap) rate for the total portfolio softened 13 basis points from 8.22% at 30 June 2012 to 8.35% at 31 December The majority of cap rates in the Australian portfolio remained unchanged, with the exception of the office portfolio. Leasing During the 2012 calendar year, CDI successfully negotiated 31 leasing transactions covering 60,260 square metres or over $12.1 million in annual gross rent (13.2% of CDI portfolio). CDI remains focused on reducing current vacancies and future lease expiries as this significantly strengthens future earnings. Lease expiries for FY14 have reduced from 6.0% at 30 June 2012 to 2.4% at 31 December Occupancy at 31 December 2012 was 94.3%, up marginally from 94.1% at 30 June The WALE of the portfolio has reduced slightly to 4.8 years from 5.0 years at 30 June Capital management In August 2012, CDI completed a 1 for 4 unit consolidation which has resulted in an improvement in relative liquidity and a unit price more aligned to other AREITs. CDI s gearing remains conservative, with pro forma balance sheet gearing at 31 December 2012 of 30.2%, which is within CDI s targeted gearing range of 25% to 35%. The average cost of drawn debt fell slightly during the half year to 6.4%, with an incremental cost of drawing additional Australian debt of 4.0%. CDI operates an on-market buy-back program, with 0.6 million units ($1.2 million) bought back in 1H13. Over the past six months, CDI has deployed capital to enhance the portfolio rather than buying back additional units as this is presently considered a more strategic long term use of capital. 4 Challenger Diversified Property Group Half-year Update 31 December 2012

7 Distribution The distribution for the six months ending 31 December 2012 is 8.60 cents per unit and will be paid on 28 February This distribution represents an operating earnings payout ratio of 80% and an Available Funds From Operations (AFFO) payout ratio of 90%. Summary During the six months to 31 December 2012 CDI has made further progress on its strategic objectives, particularly portfolio enhancement and leasing. Both of these strategic objectives, when coupled with the active approach to capital management have had a positive impact on both earnings and distributions. CDI has reaffirmed FY13 guidance and is well positioned to continue to grow future earnings. I look forward to providing another update at the FY13 financial year results in August Yours sincerely Trevor Hardie Fund Manager Challenger Diversified Property Group Half-year Update 31 December

8 Portfolio summary Net Occupancy at lettable 31-Dec-12 area (by income) Property Location sqm % Office portfolio ABS House Belconnen, ACT 31, % 31 Queen Street Melbourne, VIC 19, % DIAC Building Belconnen, ACT 29, % The Forum, Cisco St Leonards, NSW 16, % Discovery House Woden, ACT 22, % Makerston House Brisbane, QLD 14, % The Forum, Verizon St Leonards, NSW 11, % Elder House Adelaide, SA 14, % Executive Building Hobart, TAS 9, % Office portfolio total/average 169, % Retail portfolio Jam Factory South Yarra, VIC 20, % Century City Walk Glen Waverley, VIC 8, % Innaloo Cinema Centre Innaloo, WA 11, % Kings Langley Shopping Centre Kings Langley, NSW 4, % Retail portfolio total/average 44, % Industrial portfolio Distribution Centres The Junction, Stage 2 Enfield, NSW 20, % The Junction, Stage 1 Enfield, NSW 13, % 6 Foray Street Fairfield, NSW 18, % Spotlight Laverton North, VIC 20, % Toll Drive Altona North, VIC 13, % 2-10 Toll Drive Altona North, VIC 6, % 1-9 Toll Drive Altona North, VIC 3, % Distribution portfolio total/average 96, % High tech Taylors House Waterloo, NSW 11, % 187 Todd Road Port Melbourne, VIC 9, % High tech portfolio total/average 20, % Industrial portfolio total/average 117, % Australian portfolio total/average 330, % French portfolio Sully Sully sur Loire 15, % Aulnay Aulnay sous Bois, Paris 5, % Beziers Rue Charles Nicolle 9, % Gennevilliers Gennevilliers, Paris 7, % Tours Parcay Meslay, Tours 5, % French portfolio total/average 42, % Investment portfolio total/average 373, % Development portfolio The Junction, Stage 3 Enfield, NSW Development portfolio total 6 Challenger Diversified Property Group Half-year Update 31 December 2012

9 Weighted average Book lease expiry value (by income) Valuation Valuation 31-Dec-12 years $m date $m Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Sector diversification (by value) 17% 18% 5% 60% Office Retail Industrial Distribution centres Industrial High tech Geographic diversification (by value) Dec Dec % 3% 3%2% 6% 25% Dec Dec Dec Dec Dec $m $m % NSW ACT VIC QLD SA WA TAS France 26% Challenger Diversified Property Group Half-year Update 31 December

10 Unit holder information ASX listing Challenger Diversified Property Group (CDI) is listed on the Australian Securities Exchange (ASX). CDI s units trade under the ASX code CDI. Unit prices are published daily in major Australian metropolitan newspapers, and are also accessible on the CDI and ASX website. The CDI website The CDI website ( contains important information about CDI, including unit prices, market announcements, annual reports and a summary of the CDI property portfolio. Unit holder enquiries If you have queries relating to your unit holding or wish to provide a change of address, Tax File Number, instructions for payment of distributions or annual report elections, please contact the Unit Registry, Link Market Services Limited, using the contact details located on the inside back cover. Alternatively, visit the Link Investor Service Centre at where you can access information about your unit holding and update your holding details online. If you have any questions relating to the management of CDI, please contact Challenger on , or send an to cdi@challenger.com.au. Distributions CDI pays distributions six monthly for the periods ending 30 June and 31 December. Distribution payments can be paid by: direct credit to a nominated Australian financial institution account; or a cheque mailed to your registered unitholding address. An Annual Taxation Statement is sent to unit holders in August each year. This statement includes important taxation information and should be retained by unit holders to assist in the completion of their taxation return. 8 Challenger Diversified Property Group Half-year Update 31 December 2012

11 Directory Challenger Diversified Property Group Comprising: Challenger Diversified Property Trust 1 ARSN Challenger Diversified Property Trust 2 ARSN Australian Securities Exchange (ASX) code CDI Responsible Entity Challenger Listed Investments Limited ABN AFSL Directors of Responsible Entity Michael Cole (Chair) Geoff McWilliam Ian Moore Brendan O Connor Rob Woods Phil Peters (as alternate director for Rob Woods) Manager Challenger Management Services Limited ABN Address Level Pitt Street Sydney NSW 2000 Telephone: Facsimile: cdi@challenger.com.au Website: Registry Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Telephone: Telephone (outside Australia): Facsimile: Company Secretary Michael Vardanega Andrew Brown

12 Challenger Diversified Property Group Level Pitt Street Sydney NSW 2000 telephone facsimile /0213