Property Portfolio 2012
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INVESTA OFFICE FUND Property Portfolio 30 June 2012 property INVESTA OFFICE FUND PROPERTY PORTFOLIO What’s inside IOF PROPERTY PORTfoLIO Investa Office Fund 01 Portfolio overview 02 AUSTRALiaN PORTfoLIO New South Wales 04 Queensland 14 Victoria 22 Western Australia 28 Australian Capital Territory 28 OFFSHORE poRTfoLio Europe 32 IOFInvesta Office Fund (ASX code: IOF) is an ASX-listed real estate investment trust (A-REIT) and is included in the S&P/ASX100 index. The Fund is a leading owner and manager of investment grade office buildings and receives rental income from a tenant register comprising predominantly Government and blue chip tenants. IOF has total assets under management of AU$2.5 billion, with investments located in core CBD markets throughout Australia and select offshore markets in Europe. IOF’s strategy is to reposition the portfolio to an Australian-only focus. COVER: 111 PACIFIC HIGHWAY, NORTH SYDNEY IOF PORTFOLIO | 30 JUNE 2012 01 OUR INVESTMENT STRATEGY The Fund’s strategy is to focus on high quality assets in Australian CBD office markets where it can actively enhance returns via its active asset management strategies and by repositioning or recycling assets through the market cycle. The Fund currently has assets in key European markets from which it will undertake a withdrawal over time in order to become 100% Australian focused. Since the transfer of management of IOF in April 2011, the Fund is now managed by Investa Property Group (“Investa”). Supported by a well-resourced integrated office platform with strong capability and experience in the commercial property sector, Investa will oversee the delivery of IOF’s strategy. Significant progress has been made to date with a number of initiatives implemented including the sale of USD$503m of US assets, €69m in European assets and the $394m acquisition of two core Australian CBD assets. IOF has an active asset management approach which builds strong relationships with tenants in order to ensure high levels of retention and occupancy while continuously assessing value add and repositioning opportunities. $ investa.com.au/IOF 2.5bn Total assets 5.1yrs Weighted average lease expiry ABOUT INVESTA Investa Property Group is a fully integrated real estate company and the largest owners/ managers of investment grade office real estate in Australia. Since its inception in 2000, Investa has grown to control property assets of approximately AU$8.4 billion. Investa owns and/or manages over 45 office buildings throughout Australia which incorporates % more than one million square metres of quality offfice space. Investa accommodates a range 96 of leading companies across its high-quality office portfolio, including Deutsche Bank, Telstra, Westpac, Allens, Coca-Cola Amatil, Vodafone Hutchison Australia and numerous State and Occupancy Federal government departments. Investa is one of the world leaders in real estate sustainability and has been recognised with numerous highly coveted industry awards; including the 10th Australian Sustainability Award – Award for Environment and three NSW Government 2011 Green Globe Awards, including the Premier’s Award for Sustainability Excellence. Find out more about Investa at investa.com.au INVESTA OFFICE FUND PROPERTY PORTFOLIO 02 Portfolio overview Lease expiry by income Lease expiry by NLA Australia Europe Australia Europe % % 70 70 30% 62% 60 63% 60 50 50 40 40 37% 37% 30 30 20 22% 20 14% 16% 14% 15% 15% 14% 2% 12% 11% 4% 11% 10 10% 12% 11% 4% 10 8% 8% 2% 8% 10% 0 Vacant Jun 13 Jun 14 Jun 15 Jun 16 Jun 17+ 0 Vacant Jun 13 Jun 14 Jun 15 Jun 16 Jun 17+ AUSTRALIAN % $ yrs MARKET OVERVIEW 96 2.5bn 5.1 Like the broader Australian Occupancy Total assets Weighted average economy, office markets have lease expiry proved to be resilient in spite of volatile financial markets. Vacancy rates are below average 1 2 and overall tenant demand has held up well. These factors, 19 312 477,533 combined with an outlook for Properties Tenants Total lettable area (sqm) supply that is below average for the next few years, have resulted in both increasing market rents and asset valuations. Some markets have however, performed better than others. Perth market rental levels have surged in FY12, due to high levels of tenant demand – mainly from the resources sector. Similarly 4.0 3.5 the Brisbane market has turned; vacancy has now peaked and Star NABERS Star NABERS rents have re-entered the growth Energy rating3 Water rating3 phase. Conditions in the other major markets, such as Sydney and Melbourne, have been more challenging. Tenant contractions in some sectors have been offset by expansion in other industries. Despite moderated tenant demand, rents have continued to increase, driving income and capital returns. 1. Excluding 14.2% ownership of Dutch Office Fund 2. IOF ownership 3. Weighted by net lettable area Market research sources: Jones Lang LaSalle Research and Investa Research IOF PORTFOLIO | 30 JUNE 2012 03 “The past 12 months have been focused on improving occupancy, delivering on our capital expenditure programme and reducing the Fund’s offshore exposure.” TOby PHElpS, FUND MANAGER Geographic diversification by value Rental income by value1 3% 2% REGION A$m REGION A$m 13% 13% 17% NSW 1,149.5 Australia 130.3 QLD 478.4 Europe 20.3 VIC 426.6 Total 150.6 73.0 19% WA 46% ACT 37.0 87% Europe 327.8 Total 2,492.3 Total portfolio Net Book Occupancy FY12 lettable value2 Cap rate WALE at 30 Jun Net property Property area (sqm) (A$m) (%) (yrs) 2012 (%) income1 (A$m) Deutsche Bank Place – 126 Phillip Street, Sydney, NSW (25%) 42,256 176.3 6.35 4.5 98 2.96 10-20 Bond Street, Sydney, NSW (50%) 37,0 50 169.5 6.88 5.9 98 3.7 388 George Street, Sydney, NSW (50%) 38,743 190.4 7.0 0 6.2 100 12.7 347 Kent Street, Sydney, NSW 26,271 254.0 7.0 0 6.7 100 21.7 151 Clarence Street, Sydney, NSW 16,921 82.5 8.25 1.1 91 5.5 Campus MLC – 105-151 Miller Street, North Sydney, NSW 27,10 3 154.8 7.9 0 7.7 99 9.7 111 Pacific Highway, North Sydney, NSW 18,768 122.0 8.00 3.5 100 7.5 Hitachi Complex – 239 George Street, Brisbane, QLD 24,414 124.0 8.63 3.1 89 10.6 – 15 Adelaide Street, Brisbane, QLD 11,605 56.4 8.63 3.4 87 4.1 Australian Government Centre – 140 Creek Street, Brisbane, QLD 28,158 167.5 8.00 2.7 99 13.4 – 295 Ann Street, Brisbane, QLD 20,274 113.0 8.00 7.0 100 7.5 – 232 Adelaide Street, Brisbane, QLD 4,459 17.5 8.75 3.4 94 1.3 Telstra Global Headquarters – 242 Exhibition Street, Melbourne, VIC (50%) 65,915 217.5 7.0 0 7.8 100 3.76 QBE House – 628 Bourke Street, Melbourne, VIC 24,961 96.0 7.75 5.9 94 5.2 Royal Mint Centre – 383 La Trobe Street, Melbourne, VIC 9,679 51.6 8.00 5.0 100 4.2 800 Toorak Road, Melbourne, VIC (50%) 41,878 61.5 9.25 4.3 100 5.6 Wellington Central – 836 Wellington Street, Perth, WA 11,972 73.0 8.75 6.6 100 5.7 Times Square 16-18 Mort Street, Canberra, ACT 14,506 37.0 9.75 0.7 100 5.3 TOTAL AUSTRALIAN PORTFOLIO 464,9333 2,164.5 7.61 5.1 98 130.3 TOTAL EUROPEAN PORTFOLIO 869,8314 327.8 6.08 4.5 86 20.3 TOTAL IOF PORTFOLIO 1,334,7645 2,492.3 7.41 5.1 96 150.6 1. Excludes assets sold during period 2. Book value based on IOF’s ownership 3. NLA IOF ownership = 341,448sqm 4. NLA IOF ownership = 136,086sqm 5. NLA IOF ownership = 477,533sqm 6. NPI reflective of post 2 April 2012 acquisition date. INVESTA OFFICE FUND PROPERTY PORTFOLIO 04 PORTFOLIO OVERVIEW – NEW SOUTH WALES W E The Sydney market has been marked by strong rental growth, moderate W tenant demand and the recent confirmation of the Barangaroo development which VI has added to the future supply pipeline. Vacancy is at average levels and tight throughout the metropolitan area which will likely insulate Sydney from variations ER in tenant demand. We anticipate the continued trend of tenant relocations OV NS to the CBD continue over the medium term. NT QLD Deutsche Bank Place 126 Phillip Street, Sydney WA 10-20 Bond Street, Sydney SA 388 George Street, Sydney NSW 347 Kent Street, Sydney SYDNEY 151 Clarence Street, Sydney ACT VIC Campus MLC 105-151 Miller Street, North Sydney 111 Pacific Highway, North Sydney New South Wales Portfolio Net Book Occupancy FY12 lettable value1 Cap rate WALE at 30 Jun Net property Property area (sqm) (A$m) (%) (yrs) 2012 (%) income (A$m) Deutsche Bank Place – 126 Phillip Street, Sydney (25%) 42,256 176.3 6.35 4.5 98 2.9 10-20 Bond Street, Sydney (50%) 37,0 50 169.5 6.88 5.9 98 3.7 388 George Street, Sydney (50%) 38,743 190.4 7.0 0 6.2 100 12.7 347 Kent Street, Sydney 26,271 254.0 7.0 0 6.7 100 21.7 151 Clarence Street, Sydney 16,921 82.5 8.25 1.1 91 5.5 Campus MLC – 105-151 Miller Street, North Sydney 27,10 3 154.8 7.9 0 7.7 99 9.7 111 Pacific Highway, North Sydney 18,768 122.0 8.00 3.5 100 7.5 TOTAL 207,112 2 1,149.5 7.20 5.5 98 63.7 1.