ASX/Media Release 24 February 2010 AJA HALF YEAR RESULTS - PRESENTATION We attach the Presentation relating to Astro Japan Property Group’s Half Year Results to 31 December 2009. ENDS Investor & Media Enquiries: Eric Lucas Ian Hay Senior Advisor Chief Financial Officer Phone: +61 2 8987 3900 (Australia) Phone: +61 2 8987 3902 +81 3 3238 1671 (Japan) About Astro Japan Property Group Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 43 retail, office and residential properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd. AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com .
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ASX/Media Release
24 February 2010
AJA HALF YEAR RESULTS - PRESENTATION
We attach the Presentation relating to Astro Japan Property Group’s Half Year Results to 31 December 2009.
ENDS Investor & Media Enquiries: Eric Lucas Ian Hay Senior Advisor Chief Financial Officer Phone: +61 2 8987 3900 (Australia) Phone: +61 2 8987 3902 +81 3 3238 1671 (Japan) About Astro Japan Property Group Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 43 retail, office and residential properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd. AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com.
This publication is issued by the Astro Japan Property Group (“Astro Group”), comprising Babcock & Brown Japan Property Management Limited (ABN 94 111
874 563, AFSL 283142) (“Responsible Entity”) as responsible entity of the Astro Japan Property Trust (ARSN 112 799 854) (“AJT”) and Astro Japan Property
Group Limited (ABN 25 135 381 663) (“AJCo”).
The Astro Group and its directors, officers, employees and contractors do not accept, and expressly disclaim, any liability whatsoever for any loss howsoever
arising from any use of this publication or its contents.
This publication is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, express or implied, is made as to the
accuracy, completeness or thoroughness of the content of the information contained in this publication. The recipient should consult with their own investment,
financial, taxation or other professional adviser as to the accuracy and application of the information contained herein and should conduct their own due
diligence and other enquiries in relation to such information.
The information contained in this publication does not constitute an offer of, or invitation to invest in or subscribe for, or a recommendation of, AJA stapled
securities.
The information contained in this publication constitutes general information only. The Responsible Entity is not licensed to provide financial product advice
(including personal financial product advice), and the information contained in this publication does not constitute financial product advice.
In providing this publication, the Astro Group has not considered the investment objectives, financial situation and particular needs of an investor. Before
making any investment decision with respect to AJA stapled securities, an investor should consider its own investment objectives, financial circumstances and
needs, and if necessary consult its investment, financial, taxation or other professional adviser.
This publication may include information forecasting or projecting future outcomes. Such outcomes may be affected by a wide range of influences outside of
the Astro Group‟s control. In respect of such forward-looking information, no representation or warranty is made by or on behalf of the Astro Group that any
projection, forecast, forward-looking statement, assumption or estimate contained in this publication should or will be achieved.
The Astro Group specifically prohibits the redistribution or reproduction of this material in whole or in part without the written permission of the Astro Group and
the Astro Group accepts no liability whatsoever for the actions of third parties in this respect.
Asset management services in Japan are generally undertaken by Spring Investment Co. Limited (“Spring”). Property level information contained in this
publication has been provided by Spring.
AGENDA
• Key points
• Financial results
• Portfolio overview and leasing activity
• Debt and FX hedging
• Events since 31 December 2009
• Outlook
• Appendices
3
Key Points
KEY POINTS
• Net operating profit after tax of A$26.7m, down approximately 17.7% on the prior corresponding period,
mainly due to a decline in net property income
• Net property income declined 15.6% on the prior corresponding period of which approximately 7.2%
represents the impact of the sale of Shinjuku Sanei in May 2009
• Excluding the sale of Shinjuku Sanei, net property income declined by approximately 8.4% on the prior
corresponding period, primarily due to a fall in office occupancy and office rental income
• Funds from operations (FF0)¹ of ¥2.0bn (A$25.1m) down ¥0.6bn (A$7.5m) relative to the prior
corresponding period of which approximately ¥0.3bn (A$3.8m) represents the impact of the sale of
Shinjuku Sanei
• Portfolio occupancy by area remains at 92.7% as at 31 December 2009 versus 94.0% as at 30 June 2009
• Portfolio debt service coverage ratio (DSCR)² remains strong at 3.5x
• Distribution of 3.50 cps for the period after retaining 2.13 cps for capital management purposes
• Full year distribution guidance of 7.00 cps
5
¹ FFO consists of operating cashflow excluding foreign exchange hedge income and Japanese withholding tax
² Portfolio DSCR is FFO divided by debt service costs
ACHIEVEMENTS DURING THE HALF YEAR
Debt
Definitive term sheet signed for a new five year, senior, non-recourse loan of ¥13.4bn (A$160m)
Loan will be used to refinance the five year term loan set to mature in March 2010, representing 16.3% of AJA‟s
total debt balance
Favourable margin payable of 195 bps, all-in margin cost of approximately 237 bps
Formal loan documentation currently being finalised with closing expected to take place in March
Discussions have commenced with current lender and other lender candidates regarding refinancing of loan
maturing in December 2010
Capital and distribution hedging
Successfully renegotiated positive changes to foreign exchange hedging terms including:
Waiver of counterparty‟s August 2009 option to terminate
Removal of the gearing ratio covenant
Amendment of the minimum securityholders‟ equity covenant reducing the threshold to A$250m (previously
A$458m)
As at 24 February 2010, at an FX rate of A$1.00 = ¥78.30, the hedging position is fully cash collateralised on a
mark to market basis. No further collateral can be called on the basis of mark to market movements
Counterparty has retained annual option to terminate in August. AJA is in constructive discussions with the
counterparty to manage the upcoming August 2010 termination option
6
ACHIEVEMENTS DURING THE HALF YEAR (cont‟d)
Property performance
Only 15 properties required to be revalued as at 31 December 2009 (compared to all 43 as at 30 June 2009)
resulting in a portfolio decline of 4.8%
Rate of increase in capitalisation rates appears to have slowed significantly since June 2009. Cyclical
expansion in capitalisation rates may be concluding
Internalisation progress
Securityholders approved implementation of the stapled security proposal at the EGM held on 4 November
2009
Normal trading of the stapled securities on the ASX commenced on 19 November 2009
Responsible Entity of Astro Japan Property Trust, Babcock & Brown Japan Property Management Limited, will
legally become part of AJA following closing of the March 2010 refinancing completing AJA‟s final separation
from the Babcock & Brown Group. Upon completion, the name of the Responsible Entity will be changed
7
Financial Results
FINANCIAL RESULTSSix months to
31 Dec 2009
Six months to
31 Dec 2008
Change
Net property income (¥) ¥ 3.5bn ¥ 4.1bn -15.6%
Net property income (A$) $43.6m1 $54.4m2 -19.9%
Net operating profit after income tax (A$) $26.7m1 $32.4m2 -17.7%
Net profit/(loss) after income tax (A$) $(35.1)m1 $(215.2)m2 nm
FFO (¥) ¥ 2.0bn ¥ 2.6bn -23.3%
FFO per security (¥) ¥3.92 ¥5.11 -23.3%
Distribution per security (A$) 3.50¢ 4.00¢ -12.5%
9
¹ Average exchange rate for period of A$1.00 = 79.80 ³ Exchange rate of A$1.00 = 83.15
² Average exchange rate for period of A$1.00 = 80.06 4 Exchange rate of A$1.00 = 78.01
• Net property income declined 15.6% on the prior corresponding period of which approximately 7.2% represents the impact of
the sale of Shinjuku Sanei in May 2009
• Excluding the sale of Shinjuku Sanei, net property income declined by approximately 8.4% on the prior corresponding period,
primarily due to a fall in office occupancy and office rental income
• Net loss after income tax includes non-cash items during 1H10 - property devaluations of A$73.5m and unrealised mark-to-
market gain on FX hedging contracts of A$11.3m - vs. A$125.5m of property devaluations and A$121.0m mark-to-market
hedging loss during 1H09
• FFO of ¥2.0bn (A$25.1m) was down ¥0.6bn (A$7.5m) relative to the prior corresponding period of which approximately
¥0.3bn (A$3.8m) represents the impact of the sale of Shinjuku Sanei
• NTA movement due to property revaluations (15c of change) and movement in A$/ ¥ exchange rate (2c of change)
31 Dec 2009 30 June 2009 Change
Total assets (A$) $1.6b3 $1.8b4 -11.1%
NTA per security (A$) $0.763 $0.934 -18.3%
MAIN COMPONENTS OF NET PROPERTY INCOME
DECLINE
10
• Rental income declined relative to the prior corresponding period reflecting the rise in office vacancies and a general
softening in market rents. Of the 8.9% decline in office rental income, Kokusai Nihombashi contributed 2.7%
• Occupancy levels declined relative to the prior corresponding period mainly due to a rise in office vacancies. Of the
14% decline in office occupancy levels, the vacancy of a sole tenanted office asset, Kokusai Nihombashi,
represented approximately 6% of the decline
• Occupancy in the retail segment has increased
Property revenue (¥ million)Six months to
31 Dec 2009
Six months to
31 Dec 2008
(ex. Shinjuku Sanei)
Change
Retail 2,300 2,542 -9.5%
Office 2,191 2,405 -8.9%
Residential 429 430 -0.2%
Total portfolio 4,920 5,377 -8.5%
Occupancy by area 31 Dec 200931 Dec 2008
(ex. Shinjuku Sanei)Change
Retail 97.6% 96.0% 1.7%
Office 79.1% 92.0% -14.0%
Residential 99.6% 99.8% -0.2%
Total portfolio 92.7% 95.3% -2.7%
OPERATING PERFORMANCE
11
36.0
46.3
54.4
43.6
0
10
20
30
40
50
60
Dec-06 Dec-07 Dec-08 Dec-09
A$
mil
lio
ns
Net Property Income
4.17
4.51
5.11
3.92
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Dec-06 Dec-07 Dec-08 Dec-09
¥ p
er
secu
rity
FFO
NTA PER UNIT
Movement for half year ended 31 December 2009
12
*
0.02
0.76 0.05
0.14
0.93
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
NTA at 30/6/09 Impacts of FX FV of cap & dist hedges Revaluation of properties Closing NTA at 31/12/09
NT
A p
er secu
rity
NTA movement - A$ per security
FX 78.10
FX83.15
NTA SENSITIVITIES
13
0.33
0.48
0.62
0.76
0.90
1.04
1.18
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
-15% -10% -5% 0% 5% 10% 15%
NT
A (
A$)
Property revaluations
NTA sensitivity to revaluations
1.030.95
0.890.83
0.76 0.74 0.710.67 0.64
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
60 65 70 75 83 85 90 95 100
NT
A (
A$)
A$:¥ exchange rate
NTA sensitivity to A$:¥ exchange rate
Portfolio Overview and Leasing Activity
PORTFOLIO OVERVIEW
31 Dec 2009 30 Jun 2009 Change
Portfolio value ¥119.5 bn ¥125.5 bn -4.8%
Total number of properties 43 43 0
NRA (sqm) 275,946 275,877 0.0%
Occupancy by area 92.7% 94.0% -1.4%
Number of leases 409 422 -13
% non-cancellable leases by income 45.4% 45.5% -0.2%
Total non-current liabilities 740,690 974,283 76,003,817
Total liabilities 1,232,028 1,338,491 102,443,129 104,415,683
Net assets 396,212 481,936 32,945,027 37,595,827
Net tangible assets per unit 0.76 0.93
Gearing ratio (interest bearing debt/property value) 72.9% 69.4%
1 Restricted cash consits of cash in trust (e.g. tenant security deposits) and lender reserves (e.g. cash required under loan agreements for items such as capex and repairs).