Argosy FY20 interim release
20.11.2019
Interim Results
FY2020
PRESENTED BY
Agenda
2—
Peter Mence
Dave Fraser
CEO
CFO
Highlights
4
Strategy/Portfolio
6
Financials
20
Leasing Update
29
Focus and Outlook
33
Appendices
35
Note: This results presentation should be read in conjunction with the NZX release dated 20 November 2019.
Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and
percentages may not reflect exactly absolute figures.
“Our strength lies in the diversity of our portfolio by
sector, location and tenant mix, providing flexibility to
support our tenants changing needs, ensuring a
resilient business model through various economic
cycles."
3—
Peter Mence
CEO
Highlights
4—
1H20 Interim Result
5—
24.3%
Total shareholder return
for the six month period
$1.28
New NTA, a 4.9% increase driven
by a $50.8m revaluation gain
6.275¢
Full year dividend guidance
100m
2
nd
successful 7 year green bond
issued post reporting date
3.5%
Net distributable income
increase per share
Strategy / Portfolio
6—
Create.Manage.Own.
7—
2020 Focus
8—
OUR PERFORMANCE SO FAR
Create
Proactive delivery of
sustainable growth.
Manage
Manage all elements of our
business to deliver the right
outcomes for all our
stakeholders.
Own
Own the right assets, with
the right attributes in the
right locations.
Several strategic acquisition opportunities being considered, with long term
capital growth upside.
Settled strategic acquisition of 244 PuhinuiRoad, contiguous with an existing site.
Sold the non Core Albany Lifestyle Centre.
Solid leasing outcomes over 1H20, only ~5% of portfolio expiring over the
remainder of 2020.
Excellent leasing results announced with the Crown for 7WQ space, building is
now 82% leased. Strong inquiry for remaining floors.
Second 7 year Green Bond issue of $100m completed post reporting date,
improving debt funding diversification and tenor.
Transition towards AFFO based dividend policy continues.
We have continued to transition Value Add properties to drive earnings and
capital growth.
Current organic value add development pipeline of $194m. More opportunities
(including green developments) currently being considered.
$1.69B
Portfolio Snapshot
9—
Portfolio highlights
10—
97.6%
Occupancy
70%
Auckland portfolio weighting
3.2%
Like for like rent growth for the half
year
6.0 yrs
Weighted average lease term
(WALT)
47%
Industrial portfolio weighting
50.8m
$ desktop revaluation gain, 3.1%
above 30 September book value
Portfolio at a glance
11—
$1.69 BILLION
1
@ 30 SEPTEMBER 2019
TOTAL PORTFOLIO VALUE
BY SECTOR
47%
40%
13%
Industrial
Office
Retail
TOTAL PORTFOLIO VALUE
BY REGION
70%
27%
3%
Auckland
Wellington
Regional North Island
& South Island
TOTAL PORTFOLIO VALUE
BY ASSET MIX
85%
11%
4%
Core
Non Core
Value Add
Bands
40-50%
30-40%
15-25%
Bands
65-75%
20-30%
<10%
Bands
75-90%
-
-
1. 30 September desk top valuation and excluding asset held for sale and right-of-use
asset at 39 Market Place.
Sector Summary
12—
37
Number of buildings
16
Number of buildings
6
Number of buildings
$786.8
Market value of assets ($m)
$682.1
Market value of assets ($m)
$221.2
Market value of assets ($m)
97.8%
Occupancy (by income)
96.6%
Occupancy (by income)
100%
Occupancy (by income)
7.2yr
Weighted average lease term (WALT)
4.9yr
Weighted average lease term (WALT)
5.1yr
Weighted average lease term (WALT)
5.86%
Contract yield
6.56%
Contract yield
6.02%
Contract yield
INDUSTRIALOFFICERETAIL
Value Add
13—
OPPORTUNITY TO DRIVE EARNINGS AND CAPITAL GROWTH
$ of Value Add properties with
potential to deliver capital growth
194m
Value Add properties total 11% of
the portfolio.
Several major development projects
underway within the group to
transition them to Core properties,
driving earnings and long term
capital growth.
A real focus on transforming Value
Add assets into green developments
where possible.
Note: Valuation is 30 September 2019 desk top valuation.
PropertySectorLocation
Valuation
$m
90 - 104 Springs Road, East TamakiI ndust rialA uckland6.6
5 Unit y Driv e, A lbany
I ndust rialA uckland
7.5
80 Springs Road, East T amaki (com plete)I ndust rialA uckland
15.9
211 Albany Highway, Albany (com plete)I ndust rialA uckland
26.7
960 Great South Road, Penrose (planned)IndustrialAuckland7.2
15 Unit y Driv e, A lbanyI ndust rialA uckland4.6
133 Roscommon Road, Wiri
I ndust rialA uckland9.2
107 Carlton Gore Road, N ewmarket (underway)OfficeAuckland39.3
252 Dairy Flat Highway, Albany
OfficeA uckland9.1
8-14 Willis Street (underway)OfficeWellington39.6
St ewart Dawson Corner (underway)
Ret ailWellingt on22.3
54-56 Jamaica Driv e, Wellingt on (underway)I ndust rialWellingt on6.1
TOTAL $m
194.0
Development Pipeline
14—
A REAL FOCUS ON GREEN DEVELOPMENTS
180-202 Hutt Road: Works
expected to be completed by
December.
107 Carlton Gore Road: 12 year
lease with Housing New
Zealand Corporation
commencing 1 March 2020 for
the entire 6,100m
2
. Targeting
minimum 4 Green Star and
NABERSNZ ratings for this A
Grade building.
1. Expected value on completion based on ‘as if complete’ valuations performed by independent valuers.
8-14 Willis Street: Substantially new 11 level,
12,300m
2
building targeting a 6 Green Star Built
rating and 5 Star NABERSNZ energy efficiency rating.
New 15 year lease with the Crown (Statistics New
Zealand). Due for completion in April 2021.
DevelopmentMajor TenantTypeLocation
$m
1
Forecast
completion
Sep-19Mar-20Sep-20Mar-21
Underway / commenced
180-202 Hutt RoadPlacemakersINDWTN
19.4
Dec-19
107 Cartlon Gore RoadKāinga Ora OFFAKL44.5
Dec-19
Stewart Dawson CornerInternational RetailerRETWTN30.0
Jul-20
8-14 Willis StreetStatistics New ZealandOFFWTN94.5
Apr-21
TOTAL
188.4
Green Devel opmentsStandard Devel opments
FY 2020FY 2021
Green Projects Underway
15—
Target completion: April 2021December 2019
NLA / WALT: 12,300m
2
/15 years6,100m
2
/12 years
Tenant:Statistics New ZealandHousing Corporation of NZ
Green Star rating: Targeting 6 Star Built Targeting minimum 4Star Built
NABERSNZ rating: Targeting 5 StarTargeting 4 Star
Value
1
:$94.5m$44.5m
107 Carlton Gore Road,
Newmarket
8-14 Willis Street,
Wellington
1. Expected value on completion based on ‘as if complete’ valuations performed by
independent valuers.
Case Study – Mighty Ape
16—
9,000m
2
of warehouse.
1,600m
2
of office across two levels.
116 onsite carparks.
7.3% IRR.
5 STAR GREEN RATING
“This award is just the beginning for us. We will
continue to develop new sustainable business
practices with the goal of protecting our country
and its environment for generations to come."
Alastair Burns,General Manager, Mighty Ape.
7WQ Leasing Update
17—
BUILDING NOW 82% LEASED, STRONG INQUIRY FOR OTHER FLOORS
Levels 2 and 10: Department of Internal
Affairs (DIA) has entered into an initial 9-
year lease for 4,130m
2
. Lease
commencement date 1 February 2020.
Level 3, 4 and 5: Kāinga Ora (formerly
Housing New Zealand) Kāinga Ora has
entered into an initial 9-year, 3 months
lease for 7,000m
2
. Lease commencement
date 1 March 2020.
Levels 6, 7 & 8: Argosy recently concluded
negotiations with the Ministry of Housing
and Urban Development (HUD) for an initial
9- year, 3 months lease over 3,660m
2
. The
lease commences 1 March 2020.
Following these negotiations, the building is
now 82% leased.
7WQ’s large floor plates are an attractive
option in a Wellington office market short
on inventory.
* NZ Post lease expiries.
Lease
Commence
BasementBasement
L1
NZ Post
31-Dec-25*
Ground
NZ Post (part) / Common
31-Dec-25*
L3
Kāinga Ora (Crown)
1-M ar-20
L2
Department of Internal Affairs (DIA)
1-Feb-20
L5
Kāinga Ora (Crown)
1-M ar-20
L4
Kāinga Ora (Crown)
1-M ar-20
L7
HUD
1-M ar-20
L6
HUD
1-M ar-20
1-Feb-20
L9
Strong enquiry
L8
HUD
1-M ar-20
L10
DIA
Plant
L12Strong enquiry
L11Strong enquiry
7WQ Reinstatement & Insurance Claim
18—
PROGRESS BEING MADE
Reinstatement
Substantial progress has been made on the reinstatement and seismic works to the building.
The reinstatement project is largely complete apart from some works to Level 12. These are expected to be
completed this financial year.
The seismic programme is also largely complete with all key milestones achieved. This project is also expected to be
completed this financial year.
Insurance Claim
Claims for material damage (reinstatement works and claims assessment costs) undertaken have been submitted
based on costs actually incurred. The total claimed from inception of the claim to 31 July 2019 is $45.3 million. These
costs relate primarily to urgent reinstatement works required to make damaged levels of the building available for
reoccupation (estimated at $49.5 million) and were not able to be agreed with insurers in advance. Further claims will
be made in respect of reinstatement works as costs are incurred.
Claims have been submitted to 31 July 2019 for business interruption costs (loss of rents, additional costs and claims
preparation) totalling $15.0 million. The main component of this is loss of rents ($14.3 million) and no further claims in
respect of loss of rents are expected.
From inception of its claim to 30 September 2019 Argosy has received progress payments from insurers of $23.4
million (after a $4.9 million deductible) in relation to its interim claims. Of these, $10.8 million has been allocated to
reinstatement of earthquake damage, $1.6 million to expense recoveries and $11.0 million to loss of rents.
Revaluations
19—
RENTAL GROWTH AND CAP RATE FIRMING KEY DRIVERS
Solid revaluation gain 3.1%
above book value. Portfolio
market yield¹ firmed 29bps.
Regionally, Auckland was the
biggest contributor of the
revaluation gain at 92% and
Industrial was the largest
contributing sector, at 72%.
Note 1: Market Yields are excluding 7 Waterloo Quay, Stewart Dawson Corner, 8-14 Willis Street and 54-56 Jamaica Drive as the rents of these properties included in
the desk top valuation were based on the completion of the planned remedial and redevelopment work required to be undertaken.
Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may notexactly reflect absolute figures.
30 Sep 1931 Mar 19
A uckland 1,135.3 1,181.9 46.6 4.1%6.17%6.43%
Wellingt on 456.6 459.0 2.40.5%6.96%7.48%
Regional Nort h Island & Sout h
I sland
47.5
49.3 1.8 3.8%7.35%7.45%
Total 1,639.4 1,690.1 50.8 3.1%6.36%6.65%
30 Sep 1931 Mar 19
I ndust rial 750.2 786.8 36.6 4.9%6.18%6.46%
Office 668.8 682.1 13.32.0%6.77%7.14%
Ret ail 220.4 221.2 0.8 0.4%5.92%6.27%
Total 1,639.4 1,690.1 50.8 3.1%6.36%6.65%
30 Sep 19
Book Value
$m
30 Sep 19
Valuation
$m
Δ
$m
30 Sep 19
Book Value
$m
30 Sep 19
Valuation
$m
Market Yield
Market Yield
Δ
%
Δ
%
Δ
$m
Financials
20—
Income Reconciliation
21—
SOLID RENTAL GROWTH OFFSET BY DEVELOPMENTS AND DISPOSALS
Financial Performance
22—
OPERATIONAL PERFORMANCE VERY SOLID
Like-for-like rental growth of 3.2%
during the period.
Net property income up slightly
with lower gross rental income
offset by lower property
expenses
1
.
Expenses up slightly due to
additional resourcing costs across
the business.
Interest expense lower due to
lower average rate and
capitalisation of interest.
1H201H19
$m$m
Net propert y income51.050.8
A dminist rat ion expenses(5.6)(5.1)
Profit before financial income/(expenses),
other gains/(losses) and tax
45.445.6
I nt erest expense(11.1)(12.2)
Gain/(loss) on deriv at iv es(3.6)(1.5)
Rev aluat ion gains 50.8 34.6
Realised gains/(losses) on disposal(0.0) 2.9
Net : I nsurance proceeds & eart hquake
expense
(0.2) 1.7
Profit before tax81.371.2
T axat ion expense(4.4)(4.5)
Profit after tax76.966.8
Basic and dilut ed earnings per share (cent s)9.308.07
Note 1: $1 million reclassified from property expenses to interest expense under NZ IFRS
16. This is the first time this standard has been adopted by the Company.
Distributable Income
23—
INCREASE IN NET DISTRIBUTABLE INCOME PER SHARE
After non cash adjustments,
Gross Distributable Income was
up $0.9m or 2.5%.
Gross distributable income per
share was also up by 2.5%.
Increasein Net Distributable
Income per share
3.5%
1H201H19
$m$m
Profit before income tax
81.371.2
Adjust ed for:
Rev aluat ions gains
(50.8)(34.6)
Realised losses/(gains) on disposal 0.0 (2.9)
Deriv at iv e fair v alue loss/(gain) 3.6 1.5
Eart hquake expense net of recov eries
0.2 (1.7)
Gross distributable income34.333.4
Depreciat ion recov ered
- 0.2
Current t ax expense(4.6)(4.9)
Net distributable income29.728.7
Weight ed av erage number of ordinary shares ( m)
827.1827.0
Gross dist ribut able income per share (cent s)4.144.04
Net dist ribut able income per share (cent s)3.593.47
Investment Properties
24—
GROWTH DRIVEN BY DEVELOPMENTS AND REVALUATION GAINS
Capitalisedcosts: Driven by
large developments including
7WQ, Willis Street, Carlton Gore
Rd, Stewart Dawson Corner,
Hutt Road, 99 Khyber Pass.
Acquisitions: 54 Jamaica Drive
Wellington.
Transfers: Albany Lifestyle
Centre contracted for sale for
$89m, settles 27 March 2020.
IFRS adjustments: In relation to
the treatment of the ground
lease at 39 Market Place,
Auckland.
NTA per share reconciliation
25—
GROWTH UNDERPINNED BY REVALUATION GAIN
Gearing
26—
Current asset held for sale is
Albany Lifestyle Centre ($87.6m)
which settles 27
th
March 2020.
Target policy gearing range is
between 30-40%.
Debt to total assets ratio excluding
NZ IFRS 16 adjustment
36.2%
CAPITAL STRUCTURE WITHIN TARGET RANGE
Note: * Excludes NZ IFRS 16 adjustment.
1H20FY19
$m$m
I nv est ment propert ies* 1,690.11,667.0
A sset held for sale87.60.0
Ot her asset s14.28.0
T ot al asset s*1,791.91,675.1
Fixed Rat e Green Bonds100.0100.0
Bank debt (excl. capit alised borrowing cost s)548.9496.2
Debt-to-total-assets ratio36.2%35.6%
Funding & Interest Rate Management
27—
In September 2019, Argosy
extended its bank facilities,
refinanced three tranches of
existing debt and expanded its
syndicate.
Argosy’s incumbent banking
partners of ANZ Bank New
Zealand Limited, Bank of New
Zealand and The Hongkong
and Shanghai Banking
Corporation Limited was
expanded to include
Commonwealth Bank of
Australia and Westpac New
Zealand Limited.
Post 30 September, Argosy
issued a second $100m 7 year
senior secured Green Bond
which was over-subscribed.
The interest rate (coupon) was
set at 2.90% reflecting a margin
of 1.75% above the seven year
swap rate.
Weighted average facility term
after issuance of 2
nd
green bond in
October
4.3yrs
1. Including margin and line fees.
ATTRACTIVE ENVIRONMENT TO EXTEND TENOR & DIVERSIFY CAPITAL MIX
1H20FY19
Weighted average duration of bank facility3.6 years2.7 years
Weighted average interest rate
1
4.35%4.75%
Interest Cover Ratio3.1x3.2x
% of fixed rate borrowings49%53%
Dividends
28—
A second quarter cash dividend of
1.56875 cents per share has been
declared, with imputation credits of
0.26493 cents per share attached, and
will be paid on 19 December 2019.
FY20 dividend guidance of 6.275 cents
per share remains unchanged and in
line with our earlier guidance.
The FY20 dividend reflects the Board’s
wish for shareholders to share in the
continued strong results whilst allowing
Argosy to maintain its momentum
towards an AFFO based dividend
policy over the medium terms.
6.275c
FY20 dividend guidance
CONSISTENT, SUSTAINABLE DIVIDEND GROWTH
Leasing Update
29—
Leasing Success
30—
SOLID FIRST HALF LEASING, MORE TO COME
1H leasing of 47,800m
2
across the
portfolio, or 9% of the portfolios total net
lettable area. 17 transactions over the
period, with 8 renewals, 3 extensions and
6 new leases.
Notable leases over 1H include:
Extension by 3 years to Cardinal
Logistics for 20,700m
2
and 17,700m
2
respectively (Auckland)
Renewal of 10 years to US Embassy for
1,300m
2
(Auckland)
New 15 year lease to Big Chill
Distribution for 1,885m
2
(Wellington)
New 10 year lease to Oregon Group
for 690m
2
(Auckland).
Lease Expiry
31—
NORMALISED PROFILE OVER THE MEDIUM TERM
5yr average income percentage
expiring in any year ~7%.
Largest single expiry over next 5
years is 3.7% being MBIE in 147
Lambton Quay (Wellington).
Lease expiries to address over 2H
include;
Digital Island 845m
2
(Auckland)
Steel & Tube 2,100m
2
(Wellington)
MBIE 147 Lambton Quay
(Wellington)
Sector Summary
32—
INDUSTRIALOFFICERETAIL
►Net absorption continues to
drive additional supply.
►Limited land supply in Auckland
and Wellington encourages
non-traditional locations.
►Rental growth continues for
good quality property.
►Vacancy remains very low, with
constrained funding limiting
speculative supply.
►Flexible working environments
continue to drive a disconnect
between employment growth
and net absorption. This is
expected to continue with
recent transactions
demonstrating a move to agile
work environments.
►Rental growth impacted by new
supply – softer in Auckland,
reflected in higher incentives,
and firmer in Wellington.
►The Wellington market continues
to show strong demand, with low
vacancy for good quality
seismically sound space that is
well located. There is a shortage
of large floor plate/high quality
stock with upward rental growth
pressure as a result. Premium and
Grade A vacancy is minimal.
►Equilibrium with on-line retailing is
yet to show full effect.
►Structural change in retail
property will show increased
focus on showroom and semi
industrial facilities.
►Impact of additional
development will be felt in
secondary locations.
►Large format, and entertainment
retail expected to be most
secure.
Focus and Outlook
33—
2020 Focus
34—
Create
Proactive delivery of
sustainable growth.
Manage
Manage all elements of our
business to deliver the right
outcomes for all our
stakeholders.
Own
Own the right assets, with
the right attributes in the
right locations.
Continue to invest in a diverse range of properties across sectors, locations and sizes.
Maximise current attractive vendor market conditions.
Investment activity focused on existing portfolio – with a focus on more green
developments.
Maintain high tenant retention rates and address key expiries / vacancies.
Lease up the balance of 7 Waterloo Quay.
Consider additional diversification of debt funding to increase tenor.
Maintain transition towards AFFO based dividend policy.
Continue transitioning Value Add properties to drive earnings and capital growth.
Ensure projects are completed on time and on budget.
Keep investigating strategic acquisitions (off market or contiguous).
Appendices
35—
Adjusted Funds From Operations (AFFO)
36—
Note: Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may not exactly reflect absolute figures. AFFO is an
alternative performance measure used to assist investors in assessing the Company’s underlying performance and to determine income available for distribution. This reconciliation is based
on guidelines for disclosing AFFO as provided by the Property Council of Australia.
1H201H19
$m
$m
Profit before income t ax
81.371.2
Rev aluat ion gains
(50.8)(34.6)
Deriv at iv e fair v alue (gain)/loss 3.6 1.5
Realised losses/(gains) on disposal 0.0 (2.9)
Eart hquake expense net of recov eries 0.2 (1.7)
Gross distributable income34.333.4
Depreciat ion recov ered - 0.2
Current t ax expense
(4.6)(4.9)
Net distributable income29.728.7
A mort isat ion of t enant incent iv es and leasing cost s 1.7 2.0
Funds from operations (FFO)31.430.7
Capit alisat ion of t enant incent iv es and leasing cost s(2.0)(3.0)
Maint enance capit al expendit ure(4.0)(2.5)
T ax effect ed maint enance capit al expendit ure recov ered - 0.1
Adjusted funds from operations (AFFO)25.425.3
Weight ed av erage number of shares on issue ( m)827.1827.0
AFFO per share (cents)
3.063.07
Div idends paid / payable in relat ion t o period3.143.13
Div idend payout rat io ( t o A FFO)103%102%
Rent Reviews by Type, Sector & Location
37—
Note: Due to rounding, numbers presented in this presentation may not add up exactly to the totals provided and percentages may not exactly reflect absolute figures.
Total5021,135100%21,9878524.0%632100.0%3.0%
By review type
Fixed3312,53259%12,9524203.4%42067%3.4%
Mark et104,92923%5,2393106.3%13622%2.8%
CPI73,67417%3,7961223.3%7512%2.0%
By sector
Industrial1610,79351%11,2254324.0%33753%3.1%
Office195,08424%5,2711873.7%14323%2.8%
Retail155,25925%5,4912324.4%15224%2.9%
By location
Auck land
4519,73293%20,5528204.2%60395%3.1%
Wellington51,4037%1,435332.3%295%2.0%
Other000%000.0%00%0.0%
Type#
New r ent
(000's)
% of r ent
r evi ewed
Pr evi ous Rent
(000's)
$ Incr ease
(000's)
% Incr ease
Annualised $
Incr ease
(000's)
% of Total
Annualised
Incr ease
Annualised %
Incr ease
Rent Reviews – Auckland & Wellington
38—
#
Pr evi ous Rent
(000's)
% of r ent
r evi ewed
New r ent
(000's)
$ Incr ease
(000's)
% Incr ease
Annualised $
Incr ease
(000's)
% of Total
Annualised
Incr ease
Annualised %
Incr ease
Auckland
Industrial
139,73849%10,1444064.2%31550%3.2%
Office174,73624%4,9171823.8%13722%2.9%
Retail155,25927%5,4912324.4%15224%2.9%
4519,732100%20,5528204.2%60395%3.1%
Wellington
Industrial
31,05575%1,081272.5%234%2.2%
Office234825%35461.7%61%1.7%
Retail000%000.0%00%0.0%
51,403100%1,435332.3%295%2.0%
Portfolio Metrics
39—
STRONG BREADTH AND DEPTH OF TENANTS AND SECTORS
Portfolio Snapshot
40—
IMPROVED PORTFOLIO QUALITY IS BEING REFLECTED IN OUR METRICS
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
FY16FY17FY18FY191H20
WALT (years)
0.0%
5.0%
1 0. 0%
1 5. 0%
2 0. 0%
2 5. 0%
3 0. 0%
3 5. 0%
4 0. 0%
FY16FY17FY18FY191H20
Debt-to-total-assets
0.0%
2 0. 0%
4 0. 0%
6 0. 0%
8 0. 0%
100.0%
FY16FY17FY18FY191H20
Occupancy
$ 0. 00
$ 0. 20
$ 0. 40
$ 0. 60
$ 0. 80
$ 1. 00
$ 1. 20
$ 1. 40
FY16FY17FY18FY191H20
Net Tangible Assets
Portfolio Summary -Industrial
41—
Note: Total contract yield excludes
54-56 Jamaica Drive
Property Address
Valuation
$000s
Weighted
average lease
term (years)
Net lettable
area (m
2
)
Vacant
Space (m
2
)
Contract
Yield
Industrial
Auckland
90 - 104 Springs Road, East Tamaki6,550
$ 7.4 3,885 - 5.50%
8 Forge Way, Panmure31,500$ 11.2 4,231 - 4.76%
10 Transport Place, East Tamaki29,300$ 4.6 10,641 - 6.70%
1 Rothwell Avenue, Albany30,200$ 10.8 12,683 - 5.47%
4 Henderson Place, Onehunga28,700$ 11.8 10,841 - 5.49%
320 Ti Rakau Drive, East Tamaki63,800$ 7.5 28,353 - 6.10%
1-3 Unity Drive, Albany11,300$ 2.0 6,204 - 6.64%
5 Unity Drive, Albany7,450$ 1.5 3,046 - 5.46%
80 Springs Road, East Tamaki15,900$ - 9,675 9,675 0.00%
211 Albany Highway, Albany26,700$ 3.3 14,589 - 5.46%
12-16 Bell Avenue, Mt Wellington25,700$ 1.3 14,809 - 5.85%
18-20 Bell Avenue, Mt Wellington15,650$ 1.7 8,941 - 5.93%
32 Bell Avenue, Mt Wellington12,500$ 0.6 8,139 - 6.18%
9 Ride Way, Albany26,700$ 13.0 9,178 - 5.53%
80-120 Favona Road, Mangere93,500$ 4.9 59,386 - 6.89%
19 Nesdale Av enue, Wiri58,400$ 15.2 20,677 - 5.09%
2 Allens Road, East Tamaki5,200$ 5.0 2,920 - 6.16%
12 Allens Road, East Tamaki4,600$ 2.1 2,325 - 6.07%
106 Springs Road, East Tamaki6,700$ 5.0 3,846 - 6.15%
5 Allens Road, East Tamaki5,560$ 2.2 2,663 - 5.02%
960 Great South Road, Penrose7,200$ 0.4 3,676 - 5.85%
17 Mayo Road, Wiri29,100$ 7.3 13,351 - 5.30%
Cnr William Pickering Drive & Rothwell Ave 15,450$ 1.0 7,074 - 5.67%
15 Unity Drive, Albany4,600$ 0.6 7,002 - 5.62%
240 Puhinui Road, Manukau 36,900$ 15.2 17,735 - 4.97%
Highgate Parkway, Silverdale31,900$ 8.4 10,581 - 5.13%
133 Roscommon Road, Wiri9,150$ 14.0 15,862 - 4.82%
Wellington
180-202 Hutt Road, Kaiwharawhara15,464$ 9.0 6,019 - 6.14%
Cnr Wakefield, Taranaki & Cable Streets22,000$ 4.0 3,307 - 4.12%
147 Gracefield Road, Seav iew15,600$ 8.5 8,018 - 6.53%
19 Barnes Street, Seav iew13,450$ 8.9 6,857 - 7.62%
39 Randwick Road, Seaview18,900$ 3.0 16,249 - 8.85%
68 Jamaica Drive, Grenada North16,750$ 1.8 9,609 - 7.31%
54-56 Jamaica Drive, Wellington6,088$ 15.7 860 - 0.00%
Other
8 Foundry Drive, Woolston, Christchurch15,750$ 10.3 7,668 - 6.98%
1478 Omahu Road, Hastings10,500$ 7.8 8,514 - 7.17%
223 Kioreroa Road, Whangarei12,100$ 2.4 9,797 - 9.73%
TOTAL786,812$ 7.2 389,209 9,675 5.86%
Portfolio Summary -Office
42—
Note: Total contract yield excludes 7 Waterloo Quay and 8-14 Willis Street
Property Address
Valuation
$000s
Weighted
average lease
term (years)
Net lettable
area (m
2
)
Vacant
Space (m
2
)
Contract
Yield
OFFICE
Auckland
99-107 Khyber Pass Road, Grafton14,500$ 3.5 2,509 1,522 1.98%
101 Carlton Gore Road, New market27,000$ 1.1 4,821 - 6.69%
8 Nugent Street, Grafton51,000$ 4.4 8,125 325 6.06%
39 Market Place, Viaduct Harbour40,000$ 2.8 10,365 - 9.37%
105 Carlton Gore Road, New market31,500$ 1.7 5,312 - 7.12%
302 Great South Road, Greenlane10,150$ 4.3 1,890 - 6.40%
308 Great South Road, Greenlane7,450$ 0.9 1,568 - 6.78%
25 Nugent Street, Grafton13,200$ 3.1 3,028 - 6.21%
107 Carlton Gore Road, New market39,303$ 12.4 6,061 - 6.50%
Citibank Centre, 23 Customs Street East73,800$ 4.4 9,633 1,539 5.76%
82 Wyndham Street45,800$ 6.2 6,012 - 5.83%
Wellington
143 Lambton Quay29,500$ 5.8 6,216 - 7.27%
147 Lambton Quay35,400$ 1.1 8,539 134 8.85%
8-14 Willis Street39,636$ - - - 0.00%
7 Waterloo Quay108,043$ 6.2 23,841 - 0.00%
15-21 Stout Street115,850$ 6.8 20,709 - 6.18%
TOTAL682,132$ 4.9 118,628 3,520 6.56%
Portfolio Summary -Retail
43—
1. Excludes Stewart Dawson Corner
2. Excludes Stewart Dawson Corner, 8-14 Willis Street, 7 Waterloo Quay and
54-56 Jamaica Drive.
Property Address
Valuation
$000s
Weighted
average lease
term (years)
Net lettable area
(m
2
)
Vacant
Space (m
2
)
Contract
Yield
RETAIL
Auckland
Albany Mega Centre, Albany122,000$ 4.7 25,155 - 6.27%
11 Col iseum Driv e, Al bany27,700$ 5.5 8,637 - 4.99%
50 & 54-62 Cav endish Driv e, Manukau29,200$ 5.7 9,939 - 5.84%
252 Dairy Flat Highway, Albany9,100$ 10.3 2,255 - 5.43%
Wellington
Stewart Dawson Corner22,297$ - - - 0.00%
Other
Cnr Taniwha & Paora Hapi Streets, Taupo10,900$ 3.0 4,212 - 6.89%
TOTALS (excl property held for sale)221,197$ 5.1 50,197 - 6.02%
1
TOTALS (excl property held for sale)1,690,141$ 6.0 558,033 13,195 6.13%
2
Disclaimer
44—
This presentation has been prepared by Argosy Property Limited. The details in this presentation
provide general information only. It is not intended as investment or financial advice and must
not be relied upon as such. You should obtain independent professional advice prior to making
any decision relating to your investment or financial needs. This presentation is not an offer or
invitation for subscription or purchase of securities or other financial products. Past performance
is no indication of future performance.
All values are expressed in New Zealand currency unless otherwise stated.
20 November 2019
---
MARKET RELEASE
FOR THE 6 MONTHS TO 30 SEPTEMBER 2019
Argosy will present the 2020 interim results via a teleconference and webcast at 10am today.
Please visit https://s1.c-conf.com/diamondpass/argosy-10002733-invite.html or dial 0800 122 367 and
quote the conference ID 10002733. It is recommended that you dial in or log in a few minutes before the
start time. A copy of the webcast will be available on Argosy’s website later in the day.
Argosy Property Limited (“Argosy” or the “Company”) has reported its results for the six months to 30
September 2019.
Highlights
- Total shareholder return of 24.3% for the six month period;
- Net distributable income
1
up 3.2%;
- Net distributable income per share up 3.5%;
- A six month revaluation gain of $50.8 million, an increase of 3.1% on book value;
- Portfolio metrics in excellent shape with high occupancy and WALT maintained at 6.0 years;
- Lift in net tangible assets (NTA) to $1.28 from $1.22 at 31 March 2019;
- Full year dividend guidance of 6.275 cents per share reaffirmed.
Argosy’s Chief Executive Officer, Peter Mence said “ We are pleased to have delivered on some of our
key focus areas over the first six months of the 2020 financial year. The leasing progress at 7 Waterloo
Quay has taken time but we currently have 82% of the building leased to high quality Crown tenants.
Strong interest is being shown in the remaining floors. We also issued our second $100 million, 7 year green
bond just after reporting date, although the work was done within the period. The bond issue continues
to demonstrate our strategy of funding green developments with green financing. F ollowing the bond
issue, we have diversified our debt mix further and extended our tenor. The revaluation gain reported
over the first half continues to reflect strong rental growth, a proactive management approach to our
business and a generally buoyant real estate market. Our portfolio metrics remain solid. We will continue
to deliver on our focus areas over the remainder of the financial year, including the residual leasing up of
7 Waterloo Quay.”
Chairman Mike Smith said ”The Board is pleased with the results for the first six months of the 2020 financial
year. Shareholders received a total return over the six month period of 24.3% and a 4.9% increase in NTA
to $1.28, underpinned by a 3.1% revaluation uplift of $50.8 million. The management team has continued
to manage the business well through the combination of transitioning Value Add properties to drive
earnings and capital growth, green developments, strategic divestments and solid operational results
across leasing and rent reviews.
The focus on greening the portfolio will continue as these position Argosy very well for the long term.
There are other green developments being considered for commencement, potentially in the next 12
months.
1
Profit before tax and distributable income are alternative performance measures used to assist investors in assessing the Company’s underlying
operating performance and to determine income available for distribution to shareholders. The accompanying presentation released today provides
a full reconciliation between profit before tax and distributable income.
20 November 2019
ARGOSY FY20 INTERIM RESULT – DELIVERING A SUSTAINABLE PATHWAY
Argosy’s Create, Manage, Own strategic framework will continue to guide our overall long term goals,
supported by our Investment Strategy and Investment Policy. Argosy remains focused on Creating a
sustainable business, Managing the business for the benefit of all stakeholders and Owning the right
assets in the right locations with the right attributes. This remains our simple message to shareholders and
provides a sustainable pathway for the future.
After a strong start to 2020, the Board is pleased to reaffirm our expectations of a full year dividend of
6.275 cents per share for this financial year. This guidance reflects our ongoing belief that investors share
in the continuing strength of the business. However, we are also cognisant that we must maintain our
momentum towards an Adjusted Funds from Operations (AFFO) based dividend policy over the medium
term.”
Financial Results
Statement of Comprehensive Income
For the six months to 30 September, Argosy reported net property income of $51.0 million for the period,
which includes rental loss recoveries from insurers, and is 0.5% higher than the previous interim period.
Argosy has reclassified $1 million of property expenses to interest expense in accordance with NZ IFRS 16,
which has been adopted for the first time. The adjustment relates to the ground lease at 39 Market Place,
Viaduct Harbour, Auckland.
Administration expenses were up on the previous interim period primarily due to additional resourcing
costs across the business.
Interest expense of $11.1 million was down on the previous interim period as the interest on higher
average debt and the NZ IFRS 16 adjustment noted above was offset by interest rate savings and higher
capitalised interest on developments.
The independent desktop valuations for the period to 30 September 2019 were performed by Colliers
International (‘Colliers’). The valuations demonstrated continued evidence of favourable market
conditions since the 2019 full year revaluations. Underpinned by rental growth and general firming in
capitalisation rates across the portfolio, Argosy reported a revaluation gain for the six month period of
$50.8 million.
The portfolio is 1.0% under-rented excluding market rentals on vacant space.
Net profit after tax was $76.9 million compared to $66.8 million in the previous interim period.
Distributable Income
For the six months ended 30 September 2019, gross distributable income was $34.3 million which was 2.5%
higher than the previous interim period. Gross distributable income per share was 4.14 cents per share
compared to 4.04 cents per share in the previous interim period, up 2.5%.
Net distributable income increased by 3.2% to $29.7 million compared to the previous interim period of
$28.7 million. Net distributable income per share increased 3.5% to 3.59 cents per share from 3.47 cents
per share in the previous interim period.
Valuations
The work performed by Colliers resulted in an interim revaluation uplift of $50.8 million, or a 3.1% increase
on book values immediately prior to the revaluation. As a result of the revaluation gain, Argosy’s NTA has
increased to $1.28, 4.9% up from $1.22 at 31 March 2019. F ollowing the revaluation, Argosy’s portfolio
shows a contract yield on values of 6.13% and a yield on fully let market rentals of 6.36%.
Portfolio Activity
Leasing and Rent Reviews
Argosy has commenced the FY20 financial year strongly with solid rent review and leasing activity across
the portfolio. For the six months to 30 September Argosy completed 17 lease transactions across 47,800m
2
of net lettable area, including 8 rights of renewal, 6 new leases and 3 extensions. These leases accounted
for $41.6 million in contract rent over the respective lease terms or $8.1 million on an annual basis.
Significant leasing transaction successes over the first six months include;
• Lease extension by 3 years (to December 2034) to Cardinal Logistics for 20,700m
2
and 17,700m
2
respectively;
• Lease renewal for 10 years to US Embassy for 1,300m
2
;
• New 15 year lease to Big Chill Distribution for 1,885m
2
;
• New 10 year lease to Oregon Group for 690m
2
;
• New 8 year lease to North Beach Limited for 1,085m
2
;
• New 6 year lease to Oxford Finance Limited for 501m
2
;
• Lease renewal for 6 years to Kathmandu Limited for 899m
2
;
• Lease renewal for 5 years to Hallenstein Bro’s Limited for 525m
2
;
Following the successful leasing activity over the first half of the FY20 financial year, Argosy’s WALT at 30
September 2019 was maintained at a healthy 6.0 years (6.1 years at 31 March 2019). “We believe the
combination of proactive portfolio management, a portfolio of quality assets and the lack of new
inventory across all markets has allowed Argosy to deliver strong results for its tenants and shareholders”
said Peter Mence.
Argosy has maintained a high occupancy rate of 97.6% versus 97.7% at 31 March 2019. Key vacancy
areas Argosy remains focused on include 23 Customs Street (1,539m
2
across levels 6 & 7, part of 13), 99
Khyber Pass Road (1,522m
2
across ground floor and level 1 (part)) and 80 Springs Road (9,675m
2
). There is
interest across all these properties.
For the first six months of the financial year, Argosy completed a total of 50 rent reviews on $21.1 million of
existing rental income. Rental growth of 4.0% was achieved or 3.0% on an annualised basis on all rents
reviewed. The industrial portfolio accounted for 53% of the annualised rental uplift on 51% of the rent
reviewed (16 reviews). The balance of the rental uplift saw the office portfolio account for 23% (19
reviews) and the retail portfolio 24% (15 reviews). For the six months to 30 September, approximately 59%
of rents reviewed were subject to fixed reviews, 23% were market reviews and 18% were CPI based. Fixed
reviews accounted for 67% of the total annualised rental uplift and Auckland accounted for 95% of the
total annualised rental uplift.
Acquisitions and Value Add Developments
Over the first six months Argosy acquired a property at 54 Jamaica Drive, Grenada, Wellington for $3.5
million, which is currently leased to Big Chill with four years remaining on the lease. As announced
previously, this property is adjacent to existing Argosy owned development land at 56 Jamaica Drive.
With Big Chill’s existing facilities at capacity, Argosy has commenced a development on the vacant land
to support Big Chill’s long term growth. The 54 Jamaica Drive acquisition delivers opportunity to add
value to all three contiguous sites owned by Argosy, and is a good example of our Create strategy.
Subsequent to reporting date we acquired a property at 244 Puhinui Road, Mangere, which is
contiguous to existing Argosy sites, for $12.4 million.
Value add developments
180-202 Hutt Road, Wellington - Placemakers
This project is another green development for Argosy, targeting a 4 Green Star Industrial Built rating.
Stage 2 works, comprising the drive through warehouse and hardstand area, remain on track to be
completed in December 2019. Argosy has previously indicated that as the various stages are completed,
and subject to market demand, works will commence for additional bulk retail space on the vacant site
of approximately 2,000m
2
.
107 Carlton Gore Road, Auckland - Housing New Zealand Corporation (HCNZ)
This $12.0 million green project is on course for practical completion in December 2019. The scope of
works was similar to that at 82 Wyndham Street (Auckland) and includes new lighting, air conditioning
systems, seismic restraints, end of trip facilities (showers, changing facilities and bike parks) and lift
replacement. HNZC has taken a new 12 year lease commencing 1 March 2020 for the entire 6,100m
2
of
net lettable area. On completion, the building will be A Grade and we are targeting a minimum 4 Green
Star Office Built rating with a seismic rating of 100% of NBS.
8-14 Willis Street, Wellington - Statistics New Zealand
In its largest green project to date at $64 million, Argosy is targeting a 6 Green Star Built rating and 5 Star
NABERSNZ energy efficiency rating. The building will be a substantially new 11 level, 12,300m
2
building.
The 15 year lease to Statistics New Zealand to occupy the entire building underpins the development’s
long term cashflows. The development is forecast for completion by April 2021.
Stewart Dawson Corner, Wellington
Following the resolution of some residual consent issues with the Council, Argosy is shortly expecting to
confirm a lease with a major international retailer. The initial term is 5 years plus three, 5-year rights of
renewal.
Peter Mence, Argosy Chief Executive Officer said “We have a number of exciting developments in
progress across both our key Auckland and Wellington markets. A mix of international corporates and
Crown organisations are key partners in these projects, and we are excited to be working with them all .
Our developments are consistent with our Create strategy. The green developments in particular, deliver
modern, functional and appealing workspace environments to all of our tenant’s employees. Argosy will
benefit from new, high quality tenants and modern buildings along with the long term cashflow certainty
they bring. It is a real focus for Argosy to continue pursuing these green focused opportunities to improve
overall portfolio quality and create incremental value for shareholders.”
Divestment of non Core Assets
The low interest rate environment has continued to underpin strong property market fundamentals
through the first six months of FY20. Both Auckland and Wellington markets are relatively buoyant.
While conditions remain attractive for vendors, Argosy did not settle any non Core assets during the
period. The Albany Lifestyle Centre has now been transferred to held for sale and is on track to settle in
March 2020. In November, Argosy entered into an unconditional agreement for the sale of 223 Kioreroa
Road, Whangarei for $12.3 million. The sale price represents a 1.7% premium to its 30 September 2019
valuation and continues to support Argosy’s strategy of reducing its regional exposures. Settlement is
expected to occur on 12 December 2019 and the funds will initially be applied to reducing bank debt. At
30 September, Argosy had approximately $65.6 million
2
or 3.9% of its portfolio classified as non Core.
Argosy will continue its divestment programme over the next 12-18 months to take advantage of current
market conditions.
7 Waterloo Quay (7WQ), Wellington: Reinstatement Works and Leasing
Substantial progress has been made on the reinstatement and seismic works to the building. The
reinstatement project is largely complete apart from some works to Level 12. These are expected to be
completed this financial year. The seismic works programme was completed post reporting period with
certification of 80% of NBS being achieved.
As previously announced to the market, Argosy has achieved the following leasing transactions for space
at the building:
• Ground Floor and Level 1: New Zealand Post
New Zealand Post will remain on the Ground Floor, and relocate from the four tower floors it presently
occupies down to Level 1 toward the end of this year (4,430m
2
leased to New Zealand Post);
• Levels 2 and 10: Department of Internal Affairs (DIA)
The DIA has entered into an initial 9-year lease for 4,130m
2
. Lease commencement date 1 February
2020.
• Level 3, 4 and 5: Kāinga Ora (formerly Housing New Zealand)
Kāinga Ora has entered into an initial 9-year, 3 months lease for 7,000m
2
. Lease commencement
date 1 March 2020.
Argosy has also recently concluded negotiations with the Ministry of Housing and Urban Development
(HUD) for an initial 9-year, 1 month lease over 3,660m
2
on Levels 6, 7 and 8. The lease commencement
date is 1 March 2020 resulting in the building now being 82% leased. There is strong interest from potential
tenants for the remaining 3,650m
2
of space on Levels 9, 11 and 12.
2
This number includes 223 Kioreroa Road, Whangarei.
7WQ Insurance Claim
The building sustained substantial damage in the 7.5 magnitude Kaikoura earthquake in November 2016.
Soon after the earthquake independent engineers confirmed that the building remained structurally
sound, but it suffered damage to fit out and services. As with many significant insurance claims for
earthquake damage, there is debate with insurers over the extent of damage, the scope of repair works,
the repair methodology and the extent of insurance cover. To support its claim, Argosy commissioned a
comprehensive damage survey of 7 Waterloo Quay, detailed damage assessment reports,
corresponding reinstatement scopes and a comprehensive reinstatement cost estimate. Argosy
submitted these to insurers and is now addressing feedback received from insurers’ consultants.
Argosy has submitted 11 interim claims in respect of material damage and business interruption to 31 July
2019;
• Claims for material damage (reinstatement works and claims assessment costs) undertaken have
been submitted based on costs actually incurred. The total claimed from inception of the claim to 31
July 2019 is $45.3 million. These costs relate primarily to urgent reinstatement works required to make
damaged levels of the building available for reoccupation (estimated at $49.5 million) and were not
able to be agreed with insurers in advance. Further claims will be made in respect of reinstatement
works as costs are incurred.
• Claims have been submitted to 31 July 2019 for business interruption costs (loss of rents, additional
costs and claims preparation) totalling $15.0 million. The main component of this is loss of rents ($14.3
million) and no further claims in respect of loss of rents are expected.
• From inception of its claim to 30 September 2019 Argosy has received progress payments from
insurers of $23.4 million (after a $4.9 million deductible) in relation to its interim claims. Of these, $10.8
million has been allocated to reinstatement of earthquake damage, $1.6 million to expense
recoveries and $11.0 million to loss of rents.
Capital Management
At 30 September 2019, Argosy’s debt-to -total-assets ratio, excluding capitalised borrowing costs, was
36.2% versus 35.6% at 31 March 2019. The ratio reflects the net impact of acquisitions and developments
during the period, offset by revaluation gains. The ratio also excludes the lease liability and right of use
asset at 39 Market Place of $41.8 million, recorded in the period for the first time under NZ IFRS 16.
During the period Argosy added to its existing syndicated bank facilities with ANZ Bank New Zealand
Limited, Bank of New Zealand Limited and Hongkong and Shanghai Banking Corporation. A new $50
million Tranche (Tranche F) provided additional liquidity headroom above existing drawn down debt. The
new facility is for a 2-year period to 8 October 2021.
In the first six months of FY20 Argosy also refinanced three Tranches of its existing syndicated bank
facilities with ANZ Bank New Zealand Limited, Bank of New Zealand Limited and Hongkong and Shanghai
Banking Corporation. Additionally, it has extended its syndicate to include Commonwealth Bank of
Australia and Westpac New Zealand Limited. Tranches B, D and E have been refinanced and replaced
with three new Tranches as follows:
• B1 - $100m for 2 years;
• B2 - $125m for 4 years; and
• B3 - $125m for 5 years.
In October 2019, Argosy successfully completed a second $100 million 7 year Green Bond offer. As a
result, Argosy cancelled $100 million of bank facilities that were due to expire in October 2021. Following
this cancellation, the company’s total bank debt facility was $500 million ($550 million at 31 March 2019).
The execution of the green bond and cancellation of part of the banking facilities has resulted in an
increased debt tenor to 4.3 years at 31 October 2019. Argosy’s target gearing band is unchanged at 30%
to 40% and continues to provide flexibility depending on financial and property market conditions.
Argosy remains well within all bank covenants and currently sits just above the middle of the target debt-
to -total-assets band. At 30 September 2019, Argosy’s weighted average interest rate was 4.35% versus
4.75% at 31 March 2019.
Dividends
Consistent with the first quarter, a second quarter dividend of 1.56875 cents per share has been declared
for the September quarter with imputation credits of 0.26493 cents per share attached. The second
quarter dividend will be paid to shareholders on 19 December 2019 and the record date will be 5
December 2019.
Argosy remains focused on delivering sustainable dividends to shareholders. Based on current projections
for the portfolio, the Board has reaffirmed its previous guidance for a full year 2020 cash dividend of 6.275
cents per share as noted above. This forecast reflects our belief that shareholders continue to share in the
positive operating results of the company and allows us to maintain our momentum towards an AFFO
based dividend policy in the medium term.
Governance – ex Annual Meeting results and appointments
The Board changes signalled in 2018 continued throughout calendar 2019 with the appointment of two
new Directors and the resignation of two Directors. This year Argosy held its AGM in August at the
Stamford Plaza in Auckland. Argosy’s Chairman Mike Smith and Chief Executive Officer Peter Mence
both gave addresses on Argosy’s performance for the 2019 financial year. At the meeting, Mike Smith
and Peter Brook were re-elected onto the Board and Stuart McLauchlan, Chris Gudgeon and Mike Pohio
were all elected to the Board.
Following the meeting, Rachel Winder was appointed as a director. Rachel has been involved in the
property sector for over 20 years across a variety of roles including strategy, portfolio management,
facilities management and development. Rachel is currently Head of Property Services for Westpac New
Zealand Limited and holds an MBA from the University of Otago.
Outlook
Economic conditions since 31 March have not changed materially. The current domestic and global
economic environments are demonstrating a degree of ongoing volatility and weakness. Over the next
12-24 months we expect to see the continuation of low interest rates and a lower inflation outlook, along
with a continued positive environment for real estate pricing. Previous economic forecasts of 2.5% growth
over the medium term now seem optimistic.
Lower migration, waning business confidence and tighter bank capital requirements will tighten financial
conditions generally. Together with an economy with modest growth, the economic outlook over the
medium term certainly needs careful navigation.
Argosy remains well positioned to weather the shifting economic conditions over the near to medium
term. Its capital position has been diversified further and remains very sound. Argosy has a portfolio of
high quality, diversified real estate properties. The focus on sustainability and continued greening of the
portfolio at every opportunity is good for the environment and will be good for shareholders over the long
term.
As Value Add properties are transitioned into higher quality properties, they will deliver added resilience,
certainty and stability to Argosy’s cashflows and earnings.
The focus on addressing key lease expiries within the portfolio and ensuring that the tenant retention rate
remains high, remains unchanged. Argosy will continue to focus on delivering on its strategy to support
the creation of long term value for shareholders.
– ENDS –
Enquiries
Peter Mence
Chief Executive Officer
Argosy Property Limited
Telephone: 09 304 3411
Email: pmence@argosy.co.nz
Dave Fraser
Chief Financial Officer
Argosy Property Limited
Telephone: 09 304 3469
Email: dfraser@argosy.co.nz
Stephen Freundlich
Head of Investor Relations
Argosy Property Limited
Telephone: 09 304 3426
Email: sfreundlich@argosy.co.nz
---
Interim Financial Statements
30 September 2019
PROACTIVE DELIVERY OF
SUSTAINABLE GROWTH
RIGHT ASSETS,
RIGHT ATTRIBUTES,
RIGHT LOCATIONS
MANAGE OUR BUSINESS TO
DELIVER THE RIGHT OUTCOMES
FOR ALL STAKEHOLDERS
C
R
E
A
T
E
M
A
N
A
G
E
O
W
N
Target off market
opportunities
or contiguous properties
with potential
An environmentally focused
& sustainable business
A diversified portfolio of
high quality, well located
assets with growth potential
Strong and valued relationships
across all key stakeholders
Transition value add properties
to drive earnings
and
capital growth
Real estate with a primary
focus on Auckland &
Wellington markets
Safe working environments
for Argosy’s people and
its partners
Streamlined tenant led
development process
and execution
A commitment to
management
excellence
CONSOLIDATED FINANCIAL
STATEMENTS
Contents
Condensed Consolidated Interim Statement of Financial
Position
4
Condensed Consolidated Interim Statement of
Comprehensive Income
5
Condensed Consolidated Interim Statement of Changes
in Equity
6
Condensed Consolidated Interim Statement of Cash
Flows
7
Notes to the Condensed Consolidated Interim Financial
Statements
8
Independent Review Report16
3
Argosy Property Limited
Interim Financial Statements 30 September 2019
CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019 (UNAUDITED)
Note
Group (unaudited)
30 September 2019
$000s
Group (audited)
31 March 2019
$000s
Non-current assets
Investment properties
4
1,731,9891,667,030
Derivative financial instruments
6
7,3901,857
Other non-current assets1,4171,605
Total non-current assets
1,740,7961,670,492
Current assets
Cash and cash equivalents2,8542,190
Trade and other receivables1,8101,474
Other current assets691905
5,3554,569
Non-current asset classified as held for sale
5
87,628–
Total current assets
92,9834,569
Total assets
3
1,833,7791,675,061
Shareholders' funds
Share capital
7
792,826792,620
Share based payments reserve300389
Retained earnings266,774215,966
Total shareholders' funds
1,059,9001,008,975
Non-current liabilities
Interest bearing liabilities
8
646,125593,536
Derivative financial instruments
6
51,29342,225
Non-current lease liabilities41,743–
Deferred tax9,85010,114
Total non-current liabilities
749,011645,875
Current liabilities
Trade and other payables16,39515,412
Derivative financial instruments
6
30–
Current lease liabilities105–
Other current liabilities3,4452,595
Deposit received for non-current asset classified as held for sale4,525–
Taxation payable3682,204
Total current liabilities
24,86820,211
Total liabilities
773,879666,086
Total shareholders' funds and liabilities
1,833,7791,675,061
For and on behalf of the Board
P Michael Smith
Director
Stuart McLauchlan
Director
Date: 19 November 2019
The notes to the accounts form part of and are to be read in conjunction with these consolidated financial statements.
4
Argosy Property Limited
Interim Financial Statements 30 September 2019
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 (UNAUDITED)
Note
Group (unaudited)
Six months to
30 September 2019
$000s
Group (unaudited)
Six months to
30 September 2018
$000s
Gross property income from rentals50,24951,767
Insurance proceeds - rental loss2,5002,287
Gross property income from expense recoveries10,17810,086
Property expenses(11,917)(13,371)
Net property income
3
51,01050,769
Administration expenses5,6055,123
Profit before financial income/(expenses),
other gains/(losses) and tax
45,40545,646
Financial income/(expenses)
Interest expense
9
(11,144)(12,238)
Loss on derivative financial instruments held for trading(3,564)(1,492)
Interest income1920
(14,689)(13,710)
Other gains/(losses)
Revaluation gains on investment property50,77534,633
Realised (losses)/gains on disposal of investment property(4)2,895
Insurance proceeds - reinstatement–2,838
Earthquake expenses(212)(1,089)
50,55939,277
Profit before income tax attributable to shareholders
81,27571,213
Taxation expense4,3604,461
Profit and total comprehensive income after tax
76,91566,752
All amounts are from continuing operations.
Earnings per share
Basic and diluted earnings per share (cents)9.308.07
The notes to the accounts form part of and are to be read in conjunction with these consolidated financial statements.
5
Argosy Property Limited
Interim Financial Statements 30 September 2019
CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 (UNAUDITED)
Shares
on issue
$000s
Share based
payments
reserve
$000s
Retained
earnings
$000s
Total
$000s
For the six months ended
30 September 2019 (unaudited)
Shareholders' funds at the
beginning of the period
792,620389215,9661,008,975
Total comprehensive income
for the period
––76,91576,915
Contributions by shareholders
Dividends to shareholders––(26,107)(26,107)
Equity settled share based payments206(89)–117
Shareholders' funds at the
end of the period
792,826300266,7741,059,900
For the six months ended
30 September 2018 (unaudited)
Shareholders' funds at the
beginning of the period
792,620389133,884926,893
Total comprehensive income
for the period
––66,75266,752
Contributions by shareholders
Dividends to shareholders––(25,739)(25,739)
Shareholders' funds at the
end of the period
792,620389174,897967,906
The notes to the accounts form part of and are to be read in conjunction with these consolidated financial statements.
6
Argosy Property Limited
Interim Financial Statements 30 September 2019
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 (UNAUDITED)
Note
Group
(unaudited)
Six months to
30 September
2019
$000s
Group
(unaudited)
Six months to
30 September
2018
$000s
Cash flows from operating activities
Cash was provided from:
Property income62,78061,593
Insurance proceeds received2,500–
Interest received1920
Cash was applied to:
Property expenses(11,243)(14,906)
Earthquake expenses(239)(1,089)
Interest paid(11,168)(14,291)
Employee benefits(4,237)(3,626)
Taxation paid(6,140)(4,480)
Other expenses(2,551)(2,345)
Net cash from/(used in) operating activities
29,72120,876
Cash flows from investing activities
Cash was provided from:
Sale of properties, deposits and deferrals3,33328,990
Cash was applied to:
Capital additions on investment properties(49,952)(36,283)
Capitalised interest on investment properties(4,673)(2,254)
Purchase of properties, deposits and deferrals(3,440)(35,259)
Net cash from/(used in) investing activities
(54,732)(44,806)
Cash flows from financing activities
Cash was provided from:
Debt drawdown72,22883,175
Cash was applied to:
Repayment of debt(19,500)(32,377)
Dividends paid to shareholders net of reinvestments(26,428)(26,078)
Bond costs(142)–
Facility refinancing fee(483)(60)
Net cash from/(used in) financing activities
25,67524,660
Net increase/(decrease) in cash and cash equivalents
664730
Cash and cash equivalents at the beginning of the period2,1901,274
Cash and cash equivalents at the end of the period
2,8542,004
The notes to the accounts form part of and are to be read in conjunction with these consolidated financial statements.
7
Argosy Property Limited
Interim Financial Statements 30 September 2019
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Argosy Property Limited (APL or the Company) is an FMC
Reporting Entity under the Financial Markets Conduct Act 2013
and the Financial Reporting Act 2013. APL is incorporated under
the Companies Act 1993 and domiciled in New Zealand.
The principal activity of the Company and its subsidiaries (the
Group) is investment in properties which include industrial,
office and retail properties throughout New Zealand.
These condensed consolidated interim financial statements
(interim financial statements) are presented in New Zealand
dollars which is the Company's functional currency and have been
rounded to the nearest thousand dollars ($000) and include those
of APL and its subsidiaries.
These interim financial statements were approved by the Board
of Directors on 19 November 2019.
2. BASIS OF PREPARATION
These interim financial statements have been prepared in
accordance with Generally Accepted Accounting Practice in New
Zealand (NZ GAAP) and comply with NZ IAS 34 and IAS 34
Interim Financial Reporting as applicable to the Company as a
profit-oriented entity. These interim financial statements do not
include all of the information required for full annual financial
statements.
The interim financial statements have been prepared on the
historical cost basis except for derivative financial instruments
and investment properties which are measured at fair value.
The preparation of financial statements in conformity with NZ
GAAP requires the use of certain critical accounting estimates
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The area involving a
higher degree of judgement or complexity, and where
assumptions and estimates are significant to the financial
statements is the valuation of investment property and right-of-
use assets under NZ IFRS 16 leases (Note 4).
Insurance income recognition
The Company recognises income from insurance proceeds when
it is virtually certain that the claims made in an accounting period
have been accepted by insurers.
Change in accounting policies
Accounting policies and methods of computation have been
applied consistently to all periods and by all Group entities.
The Group has adopted NZ IFRS 16 Leases for the interim
financial statements. NZ IFRS 16 Leases eliminates the distinction
between operating and finance leases for lessees and results in
lessees bringing most leases onto their balance sheet, with the
exception of certain short-term leases and leases of low-value
assets.
From 1 April 2019, leases are recognised as a right-of-use asset and
a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated
between liability and finance cost. The finance cost is charged to
the Statement of Comprehensive Income over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease
term. The finance cost is recognised as interest paid in the
statement of cash flows, (formerly recognised as property
expenses under NZ IAS 17 Leases). The repayment of the
principal portion of the lease liability is recognised as a financing
activity in the statement of cash flows. Payments associated with
short-term leases and leases of low-value assets are recognised as
an expense in the Statement of Comprehensive Income.
Assets and liabilities arising from a lease are initially measured on
a present value basis. Lease liabilities include the net present
value of the following lease payments:
•
Fixed payments, less any incentives receivable
•
Variable lease payments that are based on an index or rate
•
Amounts expected to be payable by the lessees under residual
value guarantees
•
The exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
•
Payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee
would have to pay to borrow the funds necessary to obtain an asset
of similar value in a similar economic environment with similar
terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
•
The amount of the initial measurement of lease liability
•
Any lease payments made before the commencement date less
any lease incentives received
•
Any initial direct costs, and
•
Restoration costs.
In applying NZ IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
•
The accounting for operating leases with a remaining lease
term of less than 12 months as at 1 April 2019 as short term
leases, and
•
Leases for which the underlying asset is of low value.
On adoption of NZ IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
‘operating leases’ under the principles of NZ IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee’s incremental
borrowing rate as of 1 April 2019.
The only material lease that has been recorded on the Statement
of Financial Position is the ground lease that exists over 39 Market
Place, Viaduct Harbour, Auckland. As the lessee, the Group has
recognised a ‘right-of-use’ asset and corresponding lease liability
(representing the obligation to make lease payments) in the
Statement of Financial Position. The Group has chosen the
modified retrospective transition method, which allows the
Group to measure the lease liability at the date of initial
application as the present value of the remaining lease payments.
The incremental borrowing rate used to calculate the lease
liability was 5%. The fair value of the right-of-use asset was
determined using a discount rate of 6% which is reflective of the
quality of the property. A total lease liability of $41.8 million was
recognised as at 1 April 2019, with the corresponding amount
being recognised as a right-of-use asset. It does not require a
restatement of prior period financial statements or an adjustment
to opening equity.
8
Argosy Property Limited
Interim Financial Statements 30 September 2019
3. SEGMENT INFORMATION - OPERATING SEGMENTS
The principal business activity of the Group is to invest in, and actively manage, properties in New Zealand. NZ IFRS 8 - Operating
Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly
reviewed by the chief operating decision maker, being the Chief Executive Officer, in order to allocate resources to the segments and
to assess their performance.
The information reported to the Group’s Chief Executive Officer includes information by investment property and has been aggregated
based on three business sectors, being Industrial, Office and Retail, based on what occupants actual or intended use is. Segment profit
represents the profit earned by each segment including allocation of identifiable revaluation gains on investment properties and gains/
(losses) on disposal of investment properties. This is the measure reported to the Chief Executive Officer.
The following is an analysis of the Group’s results by reportable segments.
IndustrialOfficeRetailTotal (unaudited)
Six months to
30 September
Six months to
30 September
Six months to
30 September
Six months to
30 September
2019
$000s
2018
$000s
2019
$000s
2018
$000s
2019
$000s
2018
$000s
2019
$000s
2018
$000s
Segment profit
Net property income
1
22,12420,51019,95319,4968,93310,76351,01050,769
Realised gains/(losses) on
disposal of investment
properties
(4)(11)–––2,906(4)2,895
Insurance proceeds -
reinstatement
–––2,838–––2,838
Earthquake expenses––(212)(1,089)––(212)(1,089)
22,12020,49919,74121,2458,93313,66950,79455,413
Revaluation gains on
investment properties
36,59613,67013,339(711)84021,67450,77534,633
Total segment profit
2
58,71634,16933,08020,5349,77335,343101,56990,046
Unallocated:
Administration expenses(5,605)(5,123)
Net interest expense(11,125)(12,218)
Gain/(loss) on derivative financial instruments held for trading(3,564)(1,492)
Profit before income tax
81,27571,213
Taxation expense(4,360)(4,461)
Profit for the period
76,91566,752
1. Net property income consists of revenue generated from external tenants less property operating expenditure plus insurance proceeds - rental loss.
2. There were no inter-segment sales during the period (30 September 2018: Nil).
9
Argosy Property Limited
Interim Financial Statements 30 September 2019
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
3. SEGMENT INFORMATION (CONTINUED)
Industrial
$000s
Office
$000s
Retail
$000s
Total
$000s
Segment assets as at 30 September 2019 (unaudited)
Current assets3393731,2861,998
Investment properties786,812723,980221,1971,731,989
Non-current asset classified as held for sale––87,62887,628
Total segment assets
787,151724,353310,1111,821,615
Unallocated assets12,164
Total assets
1,833,779
Segment assets as at 31 March 2019 (audited)
Current assets4951,3331511,979
Investment properties737,670626,610302,7501,667,030
Total segment assets
738,165627,943302,9011,669,009
Unallocated assets6,052
Total assets
1,675,061
For the purposes of monitoring segment performance and allocating resources between segments, all assets are allocated to reportable
segments other than cash and cash equivalents, derivatives, other non-current assets and other minor current assets that cannot be
allocated to particular segments.
4. INVESTMENT PROPERTIES
Industrial
Six months to
30 September
2019
$000s
Office
Six months to
30 September
2019
$000s
Retail
Six months to
30 September
2019
$000s
Group
(unaudited)
Six months to
30 September
2019
$000s
Movement in investment properties
Balance at the beginning of the period737,670626,610302,7501,667,030
Acquisition of properties3,581––3,581
Capitalised costs9,13941,5255,29855,962
Transfer to properties held for sale––(87,628)(87,628)
Change in fair value36,59613,33984050,775
Change in capitalised leasing costs(93)756(9)654
Change in lease incentives(81)(98)(54)(233)
Investment properties balance at 30 September
excluding NZ IFRS 16 leases adjustments
786,812682,132221,1971,690,141
NZ IFRS 16 lease adjustments:
Right-of-use asset (land at 39 Market Place)–41,848–41,848
Investment properties balance at 30 September with
NZ IFRS 16 leases adjustments
786,812723,980221,1971,731,989
10
Argosy Property Limited
Interim Financial Statements 30 September 2019
4. INVESTMENT PROPERTY (CONTINUED)
Industrial
12 months to
31 March 2019
$000s
Office
12 months to
31 March 2019
$000s
Retail
12 months to
31 March 2019
$000s
Group (audited)
12 months to
31 March 2019
$000s
Movement in investment properties
Balance at the beginning of the period637,569577,251298,3001,513,120
Acquisition of properties8,615–26,69335,308
Capitalised costs17,36160,63413,03591,030
Disposals(35,606)(9,829)–(45,435)
Transfer between segments61,500–(61,500)–
Change in fair value47,094(1,861)25,22870,461
Change in capitalised leasing costs1021,2431821,527
Change in lease incentives1,035(828)8121,019
Investment properties balance at 31 March
737,670626,610302,7501,667,030
Investment properties are classified as level 3 (inputs are unobservable for the asset or liability) under the fair value hierarchy on the
basis that adjustments must be made to observable data of similar properties to determine the fair value of an individual property.
The Group holds the freehold to all investment properties other than 39 Market Place, Viaduct Harbour, Auckland and a small part of
19 Barnes Street, Wellington.
Valuation of investment properties
The Group's policy is for investment property to be measured at fair value for which the Group completes property valuations at least
annually by independent registered valuers. Following recent market property sale transactions and improved leasing activity, the
Board and Management engaged Colliers International New Zealand Limited (Colliers) to review key valuation metrics in order to
undertake a high-level desktop review of the property portfolio as at 30 September 2019. These indicative market values provided by
Colliers were then adopted by Management. Overall, there was an uplift in the valuation of the portfolio of $50.8 million (2018:
$34.6 million) which has been recognised as a revaluation gain on investment property as at 30 September 2019. Colliers reviewed key
information (tenancy schedules, operating expenditure and capital expenditure) associated with each property. Full property
inspections were not undertaken as part of the high-level desktop review.
Generally as occupancy and weighted average lease terms increase, yields firm, resulting in increased fair values for investment
properties. A movement in any of these assumptions could result in a significant change in fair value.
Following the adoption of NZ IFRS 16 on 1 April 2019, the right-of-use asset and investment was recognised on the ground lease that
exists over 39 Market Place, Viaduct Harbour, Auckland.
Investment property metrics for the period ended 30 September 2019 are as follows:
IndustrialOfficeRetailTotal
Contract yield
1
- Average5.86%6.56%6.02%6.13%
- Maximum9.73%9.37%6.89%9.73%
- Minimum0.00%1.98%4.99%0.00%
Market yield
1
- Average6.18%6.77%5.92%6.36%
- Maximum8.46%9.28%6.63%9.28%
- Minimum4.12%5.61%5.14%4.12%
Occupancy (rent)97.75%96.59%100.00%97.55%
Occupancy (net lettable area)97.51%97.03%100.00%97.64%
Weighted average lease term (years)7.194.875.056.02
No. of buildings
2
3716659
Fair value total (000s)
$786,812$682,132$221,197$1,690,141
1. 7 Waterloo Quay, Stewart Dawson Corner, 8-14 Willis Street and 54-56 Jamaica Drive have been excluded from these yield metrics as the rents of these
properties included in the valuation reports were based on the completion of the planned remedial and redevelopment work required to be undertaken.
2. Certain titles have been consolidated and treated as one. The total number of buildings excludes the property held for sale.
11
Argosy Property Limited
Interim Financial Statements 30 September 2019
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENT PROPERTIES (CONTINUED)
Investment property metrics for the year ended 31 March 2019 are as follows:
IndustrialOfficeRetailTotal
Contract yield
1
- Average6.15%6.88%6.22%6.41%
- Maximum9.82%10.02%7.15%10.02%
- Minimum0.00%2.04%4.83%0.00%
Market yield
1
- Average6.46%7.14%6.27%6.65%
- Maximum8.42%10.45%6.68%10.45%
- Minimum0.00%5.99%5.25%0.00%
Occupancy (rent)97.75%96.75%100.00%97.71%
Occupancy (net lettable area)97.51%97.14%100.00%97.75%
Weighted average lease term (years)7.224.945.966.14
No. of buildings
2
3716760
Fair value total (000s)
$737,670$626,610$302,750$1,667,030
1. 7 Waterloo Quay and Stewart Dawson Corner have been excluded from these yield metrics as the rents of both properties included in the valuation reports
were based on the completion of the planned remedial and redevelopment work required to be undertaken.
2. Certain titles have been consolidated and treated as one. The total number of buildings excludes properties held for sale.
5. PROPERTY HELD FOR SALE
Albany Mega Centre, Albany ($87.6 million) was subject to an unconditional sale and purchase agreement at 30 September 2019
(31 March 2019: Nil).
6. DERIVATIVE FINANCIAL INSTRUMENTS
Group (unaudited)
30 September 2019
$000s
Group (audited)
31 March 2019
$000s
Nominal value of interest rate swaps - fixed rate payer315,000315,000
Nominal value of interest rate swaps - fixed rate receiver100,000100,000
Average fixed interest rate - fixed rate payer4.49%4.49%
Floating rates based on NZD BBR (including margin)2.14%2.79%
Interest rate swaps are measured at present value of future cash flows estimated and discounted based on applicable yield curves
derived from observable market interest rates. Accepted market best practice valuation methodology using mid-market interest rates
at the period end date is used, provided from sources perceived to be reliable and accurate. Interest rate swaps have been classified
into Level 2 of the fair value hierarchy on the basis that the valuation techniques used to determine the values at period end date use
observable inputs.
The net liability for derivative financial instruments as at 30 September 2019 is $43.9 million (31 March 2019: $40.4 million). The mark-
to-market increase in the liability for derivative financial instruments is a result of movements in the interest rate curve during the
interim period.
12
Argosy Property Limited
Interim Financial Statements 30 September 2019
7. SHARE CAPITAL
Group (unaudited)
30 September 2019
$000s
Group (audited)
31 March 2019
$000s
Balance at the beginning of the period792,620792,620
Issue of shares from equity settled share based payments206–
Total share capital
792,826792,620
The number of shares on issue at 30 September 2019 was 827,186,969 (31 March 2019: 827,030,390).
All shares are fully paid and rank equally with one vote attached and carry the right to dividends. All ordinary shares have equal voting
rights.
Reconciliation of number of shares
(in 000s of shares)
Group (unaudited)
30 September 2019
Group (audited)
31 March 2019
Balance at the beginning of the period827,030827,030
Issue of shares from equity settlement share based payments157–
Total number of shares on issue
827,187827,030
8. INTEREST BEARING LIABILITIES
Group (unaudited)
30 September 2019
$000s
Group (audited)
31 March 2019
$000s
Syndicated bank loans548,917496,189
Fixed rate green bonds100,000100,000
Borrowing costs(2,792)(2,653)
Total interest bearing liabilities
646,125593,536
Syndicated bank loans
Group (unaudited)
30 September 2019
$000s
Group (audited)
31 March 2019
$000s
ANZ Bank New Zealand Limited146,850217,966
Bank of New Zealand122,500152,779
The Hongkong and Shanghai Banking Corporation Limited100,000125,444
Commonwealth Bank of Australia50,000–
Westpac New Zealand Limited129,567–
Total syndicated bank loans
548,917496,189
13
Argosy Property Limited
Interim Financial Statements 30 September 2019
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
8. INTEREST BEARING LIABILITIES (CONTINUED)
As at 30 September 2019, the Group had a syndicated revolving facility with ANZ Bank New Zealand Limited, Bank of New Zealand,
The Hongkong and Shanghai Banking Corporation Limited, Commonwealth Bank of Australia, and Westpac New Zealand Limited for
$600.0 million (31 March 2019: $550.0 million) secured by way of mortgage over the investment properties of the Group. The facility
includes a Tranche A limit of $175.0 million, a Tranche B1 limit of $100.0 million, a Tranche B2 limit of $125.0 million, a Tranche B3
limit of $125.0 million, a Tranche C limit of $25.0 million and a Tranche F limit of $50.0 million. Tranche A matures on 31 October 2021,
Tranche B1 on 1 October 2021, Tranche B2 on 1 October 2023, Tranche B3 on 1 October 2024, Tranche C on 31 October 2021 and Tranche
F on 8 October 2021. Tranche A and C limits and maturity dates remain unchanged from 31 March 2019. Tranches B, D and E were
cancelled during the interim period and Tranches F, B1 , B2, and B3 were introduced.
Fixed rate green bonds
NZX code
Value of Issue
$000sIssue DateMaturity DateInterest Rate
Fair Value
$000s
ARG010100,00027 March 201927 March 20264.00%107,263
The fair value of the fixed rate green bonds is based on the listed market price at balance date and is therefore classified as Level 1 in
the fair value hierarchy. Interest on the bonds is payable in equal instalments on a quarterly basis in March, June, September and
December.
9. INTEREST EXPENSE
Group
(unaudited)
Six months to
30 September
2019
$000s
Group
(unaudited)
Six months to
30 September
2018
$000s
Interest expense(14,769)(14,492)
Interest costs on lease (39 Market Place)(1,048)–
Less amount capitalised to investment properties4,6732,254
Total interest expense
(11,144)(12,238)
Capitalised interest relates to the developments at 180-202 Hutt Road, Kaiwharawhara, 7 Waterloo Quay, Wellington, 99-107 Khyber
Pass Road, Grafton, 8-14 Willis Street, Wellington, 107 Carlton Gore Road, Auckland and Stewart Dawson Corner, Wellington
(30 September 2018: capitalised interest relates to the developments at 180-202 Hutt Road, Kaiwharawhara, 7 Waterloo Quay,
Wellington, and Stewart Dawson Corner, Wellington).
14
Argosy Property Limited
Interim Financial Statements 30 September 2019
10. COMMITMENTS
Building upgrades and developments
Estimated capital commitments contracted for building projects not yet completed at 30 September 2019 and not provided for were
$92.1 million (31 March 2019: $60.0 million).
There were no other commitments as at 30 September 2019 (31 March 2019: Nil).
11. CONTINGENCIES
There were no contingencies as at 30 September 2019 (31 March 2019: Nil).
12. SUBSEQUENT EVENTS
On 29 October 2019, the Company issued $100 million of senior secured 7 year green bonds (ARG020) with a fixed rate of 2.90% per
annum.
On 29 October 2019, the facility agreement with Argosy's banking syndicate was changed to reduce the Tranche A facility limit from
$175.0 million to $75.0 million with the same maturity dates. All other Tranche facilities and maturity dates remain unchanged.
On 31 October 2019, the Company settled on the acquisition of 244 Puhinui Road, Manukau for $12.4 million.
On 19 November 2019 a dividend of 1.5688 cents per share was approved by the Company. The record date for the dividend is 5 December
2019 and a payment is scheduled to shareholders on 19 December 2019. Imputation credits of 0.2649 cents per share are attached to
the dividend.
13. RELATED PARTY TRANSACTIONS
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated
on consolidation and are not disclosed in this note.
There were no significant changes in relationships or transactions with related parties during the period ended 30 September 2019.
15
Argosy Property Limited
Interim Financial Statements 30 September 2019
INDEPENDENT REVIEW REPORT
TO THE SHAREHOLDERS OF ARGOSY PROPERTY LIMITED
We have reviewed the condensed consolidated interim financial statements of Argosy Property Limited and
its subsidiaries (‘the Group’) which comprise the statement of financial position as at 30 September 2019,
and the statement of comprehensive income, statement of changes in equity and statement of cash flows
for the six months ended on that date, and a summary of significant accounting policies and other
explanatory information on pages 4 to 15.
This report is made solely to the company’s shareholders, as a body. Our review has been undertaken so
that we might state to the company’s shareholders those matters we are required to state to them in a
review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company’s shareholders as a body, for our engagement, for this
report, or for the opinions we have formed.
Board of Directors’ Responsibilities
The Board of Directors are responsible for the preparation and fair presentation of the condensed
consolidated interim financial statements, in accordance with NZ IAS 34 Interim Financial Reporting and
IAS 34 Interim Financial Reporting and for such internal control as the Board of Directors determine is
necessary to enable the preparation and fair presentation of the condensed consolidated interim financial
statements that are free from material misstatement, whether due to fraud or error.
Our Responsibilities
Our responsibility is to express a conclusion on the condensed consolidated interim financial statements
based on our review. We conducted our review in accordance with NZ SRE 2410 Review of Financial
Statements Performed by the Independent Auditor of the Entity (‘NZ SRE 2410’). NZ SRE 2410 requires us
to conclude whether anything has come to our attention that causes us to believe that the condensed
consolidated interim financial statements, taken as a whole, are not prepared, in all material respects, in
accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting. As the
auditor of Argosy Property Limited, NZ SRE 2410 requires that we comply with the ethical requirements
relevant to the audit of the annual financial statements.
A review of the condensed consolidated interim financial statements in accordance with NZ SRE 2410 is a
limited assurance engagement. The auditor performs procedures, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other
review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in
accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an
audit opinion on those financial statements.
Other than in our capacity as auditor and for the attendance and scrutineering at the Annual Meeting, we
have no relationship with or interests in Argosy Property Limited or its subsidiaries. These services have
not impaired our independence as auditor of the Group.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed
consolidated interim financial statements of the Group do not present fairly, in all material respects, the
financial position of the Group as at 30 September 2019 and its financial performance and cash flows for
the six months ended on that date in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting.
Chartered Accountants
Auckland, New Zealand
19 November 2019
16
Argosy Property Limited
Interim Financial Statements 30 September 2019
39 Market Place
PO Box 90214, Victoria Street West, Auckland 1142
P / 09 304 3400
F / 09 302 0996
www.argosy.co.nz
---
Results announcement
Results for announcement to the market
Name of issuer Argosy Property Limited
Reporting Period 6 months to 30 September 2019
Previous Reporting Period 6 months to 30 September 2018
Currency
Amount (000s) Percentage change
Revenue from continuing
operations
$51,010 0.5%
Total Revenue $51,010 0.5%
Net profit/(loss) from
continuing operations
$76,915 15.2%
Total net profit/(loss) $76,915 15.2%
Interim Dividend
Amount per Quoted Equity
Security
$ 0.0156875
Imputed amount per Quoted
Equity Security
$0.002649
Record Date 5 December 2019
Dividend Payment Date 19 December 2019
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.28 $1.17
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
The financial information for this announcement has been
extracted from the unaudited financial statements of Argosy
Property Limited which has been released to NZX in conjunction
with this announcement.
Authority for this Announcement
Name of person
authorised
to make this announcement
Steve Freundlich
Contact person for this
announcement
Steve Freundlich
Contact phone number (09) 304 3426
Contact email address sfreundlich@argosy.co.nz
Date of release through MAP
20/11/2019
Unaudited financial statements accompany this announcement.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- PFI — Property for Industry Limited: PFI Announces Record Annual Results2020-02-16
“Section 4: Distribution re-investment plan (if applicable) DRP % discount (if any) N/A Start date and end date for determining market price for DRP Date strike price to be announced (if not available at this time) Specify source of financial produ…”
- KPG — Kiwi Property: Kiwi Property delivers solid rental growth in 1H2019-11-17
“Kiwi Property > Type Presentation Name > Date Kiwi Property half-year 2020 result presentation 5 1.03 1.04 1.11 1.12 Portfolio statistics Net rental income New leasing and rent reviews Lease expiry profile •Portfolio strength continues to improve,driven by intensive asset manag…”
- GNZ — Goodman NZ: GMT’s Industrial Focus Delivers Record Interim Profit2019-11-13
“＋GMT continues to be conservatively leveraged ＋LVR of 17.9% at 30 September with fully committed LVR at 20.6% ＋ICR of 3.9x on a normalised basis 1 (covenant: not less than 2.0x) ＋Significant capacity for investment in development pipeline and other opportunities Balance sheet…”