ICPF Quarterly Report (Q3 FY18) | 31 March 2018
Quarterly Report(Q4 FY19)30 June 2019
2
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Quarterly Highlights 3
Snapshot 4
Investment Returns 5
Portfolio 8
Investa Office Management 24
Environmental, Social & Governance 26
Capital Management 27
Balance Sheet 30
Compliance and Disclaimer 31
Contact Us 32
Contents
3
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
“ During the quarter, ICPF negotiated contracts to sell 242 Exhibition Street at a premium to book value of 17%.”Jason Leong – Group Executive and Fund Manager, ICPF
RAP Launch Reconciliation Action Plan
$82 million Secondary units transferred
~20,000sqm Leasing deals executed
/under negotiation
5.91%Net quarterly return (NAV);
One-year return (NAV): 14.54%
5%Average valuation uplift
on prior book values
Major Lease Renewal ~50% of NLA in 117 Clarence St, Sydney
Quarterly Highlights
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
4Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Snapshot31 Mar 19 30 Jun 19 Quarterly
change
Overview
Number of properties1 15 15 -
Portfolio occupancy (by area) (%) 96.8 96.8 0.1
Portfolio occupancy (by income) (%) 96.8 97.0 0.2
Portfolio area2 (m²) 547,023 547,022 (1)
Weighted average lease expiry (years) 5.2 5.1 (0.1)
NABERS Energy rating (stars) 4.8 4.8 -
No. of Tenants 362 364 2
Area leased3 (m²) 28,974 19,439 (9,535)
Valuations
Weighted average capitalisation rate (%) 5.13 5.13 (0.00)
Weighted average discount rate (%) 6.52 6.50 (0.02)
Valuations completed during the quarter 4 6 2
Weighted average age of valuations (mths) 4.1 3.7 (0.4)
Returns (Net)
Three month NAV return (%)4 2.46 5.91 3.2
Twelve month NAV return (%)4 14.16 14.54 0.1
Three month CUV return (%) 2.41 5.44 3.0
Twelve month CUV return (%) 13.81 13.71 (0.1)
Asset values5
Portfolio book value ($m) 5,289.5 5,525.8 236.3
Gross assets ($m) 5,370.2 5,616.3 246.1
Net assets ($m) 4,324.1 4,537.5 213.5
31 Mar 19 30 Jun 19 Quarterly Change
Borrowings6
Debt drawn ($m) 959.2 989.2 30.0
Undrawn debt ($m) 517.0 387.0 (130.0)
Gearing (%) (debt / total assets) 17.9 17.6 (0.2)
Debt hedged ($m) 470.0 470.0 -
% of debt hedged 49.0 47.5 (1.5)
ICR - 12 month historical7 4.8x 4.9x 0.1x
Security prices8
NAV (ex-div) ($) 1.7737 1.8544 0.0807
NAV (cum-div) ($) 1.7887 1.8692 0.0805
Unamortised acquisition costs ($)9 0.0114 0.0101 (0.0013)
CUV ($) 1.7983 1.8809 0.0826
Equity
Number of stapled securities on issue (m) 2,437.9 2,446.9 9.0
Number of Securityholders 54 56 2.0
New equity issued ($m) - - -
Distribution / Dividend (cps) 1.4750 1.4829 0.0079
Distribution Yield (%, 12 month historical) 5.03 4.37 (0.66)
DRA participation (%) 48.0 45.6 (2.4)
Secondary Securities traded (m) 73.5 45.3 (28.2)
Note: "Overview" and "Valuation" metrics exclude 60 Martin Place, Sydney (under redevelopment); 360-380 Queen Street, Brisbane; and 123-131 Clarence Street, Sydney unless otherwise stated.1 Includes 60 Martin Place, Sydney redevelopment; 360-380 Queen Street,
Brisbane; and 123-131 Clarence Street, Sydney.2 Based on 100% of property NLA.3 Includes leases executed & signed heads of agreement.4 NAV in accordance with the Australian accounting standards adjusted for
the independently assessed fair value changes of intangible assets.
5 Portfolio value based on book value of real estate assets.6 USPP borrowings expressed at the original fully FX swapped rate for all
debt ratios unless otherwise stated.7 Interest Coverage Ratio.8 NAVPS ratios based on NAV in accordance with the Australian
accounting standards.9 Reflects $24.74m of unamortised acquisition costs relating to acquisitions
since 1 July 2013. This amount is a component in the calculation of CUV.
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
5Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Total net return Income Capital Total Return (NAV*) Total Return (CUV)
As at 30 Jun 2019
Three months 0.8% 4.6% 5.9% 5.4%
One year 3.5% 10.5% 14.5% 13.7%
Two years 3.9% 11.0% 15.3% 14.8%
Three years 4.3% 10.7% 15.4% 14.8%
Five years 4.5% 9.4% 14.3% 14.1%
Since inception 9.9% 9.9%
Investment Returns
Quarterly Return AttributionAn attribution of the Group’s performance for the quarter ended 30 June 2019:
Return OverviewA summary of returns to 30 June 2019:
* Net Asset Value (NAV) in accordance with the Australian accounting standards, adjusted for the independently assessed fair value changes of intangible assets, including management rights.
IncomeReturn
CapitalReturn
Total ReturnNet
(AccountingNAV)
Excl. M2Mhedges
changes
Excl. effect of change in securities
TotalReturn Net (NAV Adj.)
ResidualExcl.FXgain/losson debt
Change inbalance ofunamort.
Acq. Costs
Denominatoreffect
TotalReturn
Net (CUV)
0.0%
0.5%
1.0%
1.5%
2.5%
2.0%
3.0%
4.0%
3.5%
6.0%
4.5%
5.0%
5.5%
0.8%
4.6% 5.4%
5.9%
5.4%(0.07%)(0.05%) (0.00%)(0.11%) (0.27%)
0.44%
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
6Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Investment Returns
MSCI/IPD Unlisted Wholesale PFIThe Group’s performance against Australian unlisted wholesale funds is shown below. Charts show performance for the quarter, annually and over 3 years. ICPF is the top performing core office fund over each time period and is also ranked number one over 5 years.
Net 3 month return
Net 1 year return
Net 3 year return
0
1
2
3
4
5
6
All Office Weighted Average
All Core FundsWeighted Average
IPG/ICPF CUV Return
IPG/ICPF
5.9%5.4%
3.4%
1.5%
All OfficeWeighted Average
IPG/ICPF All Core FundsWeighted Average
IPG/ICPF CUV Return
11.9%14.5% 13.7%
7.2%
18
12
1416
8
6
10
4
2
0
IPG/ICPF CUV Return
All OfficeWeighted Average
All Core FundsWeighted Average
IPG/ICPF
12.2%
15.5%
13.7%
10.4%
14
10
12
16
6
8
4
2
0
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
7Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Investment Returns
Distribution InformationICPF will pay a distribution of at least 1.4829 cents per unit for the quarter ending 30 June 2019. The fund’s policy is to pay an amount at least equal to full year taxable income. Should FY19 taxable income be above the proposed full year distribution, a top-up will be paid to ensure taxable income is distributed to Securityholders. Taxable income will be finalised by early August 2019 ahead of the distribution payment date.
Pro-rating of the distribution will apply to securities issued on a CUV Ex-Div price during the quarter.
No further dividend has been declared for ICPF Holdings Limited in FY19.
The current distribution forecast for the September 2019 quarter is 1.650 cents per security, in line with the recently approved FY20 budget. The IPG dividend yield for the year to 30 June 2019 is approximately 4.4%.
The following key points should be noted:
• Each security is a stapled security in IPG comprising a unit in the Investa Commercial Property Fund (ICPF Unit) and a share in ICPF Holdings Limited (ICPFH Share);
• Unamortised acquisition costs of $24.7 million are incorporated within the CUV. These costs relate to acquisitions since 1 July 2013 and are amortised monthly across a five-year period in accordance with the Trust Deed; and
• The key differences between CUV and NAV are as follows:
– CUV excludes the mark to market revaluations of derivative and FX instruments;
– CUV includes the fair value of management rights; and
– CUV includes the amortisation of acquisition costs.
IPG Security PriceSecurity pricing of CUV and NAV is summarised below:
Security pricing1 Last quarter This quarter Change
NAV (ex-div) ($) 1.7737 1.8544 0.0807
NAV (cum-div) ($) 1.7887 1.8692 0.0805
Unamortised acquisition costs ($)2 0.0114 0.0101 (0.0013)
CUV ($) 1.7983 1.8809 0.0826
1 NAVPS ratios based on NAV in accordance with the Australian accounting standards2 Reflects $24.74m of unamortised acquisition costs relating to acquisitions since 1 July 2013. This amount is a component in the calculation of CUV.
Security Price ($)
Past 4 years (CUV)
1.06
1.16
1.26
1.36
1.46
1.56
1.66
1.76
1.86
Jun 19Mar 19Dec 18Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18Jun 15
1.5517
1.7254
1.4191
1.2997
1.8809
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
8Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Property Quality / grade
State Ownership (%)
Book Value (A$m)
ICPF Share
% of Portfolio
Latest Independent
Valuation Date
Cap Rate (%)
Discount Rate (%)
Total NLA (m2)
Occupancy (%)
WALE (years)
Co-owners
126 Phillip St, Sydney Prem. NSW 50.0 555.0 10.0 Jun-19 4.63 6.25 41,960 96.4 6.1 CIC / OIPP
120 Collins St, Melbourne Prem. VIC 50.0 420.0 7.6 Jun-19 4.88 6.25 62,966 95.5 4.3 CIC
567 Collins St, Melbourne Prem. VIC 50.0 346.0 6.3 Oct-18 5.00 6.50 55,151 99.2 8.0 OIPP
250 St Georges Terrace, Perth Prem. WA 50.0 381.7 6.9 Oct-18 6.50 6.75 64,869 95.6 4.6 CSC
242 Exhibition St, Melbourne A VIC 50.0 401.6 7.3 Oct-18 4.75 6.50 65,914 99.6 11.9 OIPP
420 George Street, Sydney A NSW 75.0 536.3 9.7 Jun-19 4.75 6.38 37,598 100.0 4.1 Mercer
201 Kent St, Sydney A NSW 100.0 600.4 10.9 Apr-19 5.50 6.75 39,843 90.9 2.7
1 Market St, Sydney A NSW 100.0 485.4 8.8 Mar-19 5.25 6.63 29,493 99.0 2.8
400 George St, Sydney A NSW 25.0 265.7 4.8 Oct-18 4.84 6.51 50,940 99.6 7.1CIC / M&G
APF
40 Mount St, North Sydney A NSW 50.0 331.7 6.0 Nov-18 5.00 6.50 28,402 100.0 6.6 M&G APF
135 King Street, Sydney A NSW 50.0 304.9 5.5 Mar-19 4.80 6.46 32,576 96.8 4.8 Stockland
259 Queen Street, Brisbane A QLD 100.0 251.6 4.6 Nov-18 5.63 6.50 24,794 93.9 6.0 -
Core portfolio 4,880.2 88.3 5.12 6.50 534,506 96.9 5.4
60 Martin Place, Sydney Prem. NSW 50.0 432.5 7.8 Jun-19 Gwynvill
360-380 Queen Street, Brisbane A QLD 50.0 41.6 0.8 Mar-19 CPOF
Clarence Street Precinct** B NSW 100.0 171.5 3.1 May-19 -
Development 645.6 11.7
Total 5,525.8 100.0 5.13 6.50 534,506 97.0 5.1
PortfolioSummaryPortfolio summary
*Cap Rate, Total NLA, Occupancy & WALE (years) excludes 123-131 Clarence Street, 60 Martin Place, 360-380 Queen Street.** Clarence Street Precinct includes 117, 123, 131 Clarence St
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
9Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
SummaryPortfolio weightings
By value %
Geographic weighting (by state)
By value %
NSW VIC QLDWA
Change since Mar 19Weighting Jun 19
-20
-10
0
10
20
30
40
50
60
70
67.4% 20.2% 5.4%7.0%0.4% -0.2% -0.1%-0.1%
10.2%
8.9%
7.0%
9.8%
7.9%
6.3%
6.2%
6.1%
5.6%
4.9%
4.6%
3.1%
7.7%
360-380 Queen Street
400 George Street
259 Queen Street
40 Mount Street
135 King street
Clarence Street Precinct*
0.8%
126 Phillip Street
420 George Street
1 Market Street
250 St Georges Terrace
567 Collins Street
242 Exhibition Street201 Kent Street
120 Collins Street
11.0 %
60 Martin Place
* Clarence Street Precinct includes 117, 123, 131 Clarence St, Sydney
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
10Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
SummaryTenant industry diversification
By income %
Major tenants
By income %
*242E – Oct 2031 / 400G –Jan 2025 & Mar 2030
22.0%
17.6%
9.6%
7.3%
6.2 %
4.6%
4.4%
3.8%
3.0%
2.5%
2.2%
2.2%
2.1%
1.7%
Financial & Insurance Services
Information, Media & Telecommunications
Rental, Hiring & Real Estate Services
Public Administration & Safety
Mining
Management, Consulting & Accounting
Manufacturing
Other Services
Accommodation & Food Services
Retail Trade
Other Professional, Scientific & Technical Services
Electricity, Gas, Water & Waste Services
Arts and Recreation Services
Construction
Other
0 5 10 15 20 25
2.9%
7.8%Legal Services
11.8%*
5.3% (QV1 - Dec 2023)
2.7% (201K – Jul 2022)
2.6% (420G – May 2023)
2.5% (126P – Dec 2026 / QV1 – Dec 2021)
2.4% (120C – Oct 2020 / 420G – May 2021)
2.2% (117C – Jun 2020 / 201K – Feb 2020)
2.0% (40M - Dec 2030)
2.0% (259Q - Sep 2027)
2.0% (126P - Oct 2028)
Telstra
Chevron Australia Pty Ltd
AON
AECOM Australia Pty Ltd
Allens Linklaters
State Street
Government Property NSW
NAB
Coca-Cola
Deutsche Australia
0 2 4 6 8 10 12
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
11Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Property Tenant Area (m2) Term (years)
New/ renewal
% of property
NLA
Executed leases
60 Martin Place Munich RE 2,624.0 10.0 New Lease 6.5%
135 King Street InfoTrack 2,302.6 6.4 Renewal 7.1%
135 King Street Ray White 1,609.4 3.0 Renewal 4.9%
126 Phillip Street Woori Bank 551.0 10.0 New Lease 1.3%
120 Collins Street Kirkland Lake Gold 540.5 7.0 New Lease 0.9%
Heads of agreement
40 Mount Street Goodman Fielder 3,732.3 5.0 New Lease 13.1%
201 Kent Street Manpower Services 1,733.8 10.0 New Lease 4.4%
120 Collins Street Bank of China 1,360.0 10.0 New Lease 2.2%
201 Kent Street Commonwealth of Australia
1,326.0 10.0 New Lease 3.3%
120 Collins Street Commonwealth of Australia
364.0 2.0 New Lease 0.6%
Quarter ended Quarter end 31 Mar 19
Quarter end 30 Jun 19
Change FY19 Yr To Date
Leases executed (m²) 16,411 9,830 (6,581) 61,715
Heads of Agreement (m²) 12,563 9,609 (2,954) 79,765
Total leasing activity (m²) 28,974 19,439 (9,535) 141,479
% of Portfolio 4.9 3.3 -1.6 24.1
Fund occupancy by income (%) 96.8 97.2 0.4
Fund occupancy by area (%) 96.8 97.0 0.2
Portfolio
LeasingOverview
A summary of the leasing activity:
Key lease deals
The 5 largest leases and HoA’s executed during the quarter were:
The portfolio occupancy rate (by income) improved slightly to 97% (March 2019: 96.8%).
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
12Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
Lease Expiry ProfileThe chart below outlines current vacancy and the largest expiries across the portfolio across the next 5 years (FY20 – 24):
Across the portfolio there were 16 leases executed and 12 Heads of Agreements (HoA) were signed during the quarter. Key deals are as follows:
• Ministerial Approval from the NSW State Government was received for its renewal at 117 Clarence St (as mentioned on the highlights page)
• HoA for a direct lease with current sub-tenant Goodman Fielder (Levels 6 & 7) for 5 years at 40 Mount St
• Level 29 at 201 Kent St was due to become vacant in October 2019; however, a HoA has been executed for a new tenant to occupy this space on a 10-year term with no downtime
0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
Weighted passing gross income ($m)
L10
– 2
01 K
ent S
tree
t
L9 –
201
Ken
t Str
eet
L7 –
259
Que
en S
tree
t
L10
– 1
26 P
hilip
Str
eet
L4 –
250
St G
eorg
es T
erra
ce
Com
mon
wea
lth
Ban
k of
Aus
tral
ia
Gov
ernm
ent P
rope
rty
NS
W
Wor
ley
Par
sons
Sec
ure
Par
king
Voda
fone
Sta
te S
tree
t
Cre
dit C
orp
Aust
rade
Bro
okfi
eld
Rus
sell
Inve
stm
ent
JLL
Wils
on P
arki
ng
Cro
wn
Tour
ism
Aus
tral
ia
Alle
ns L
inkl
ater
s
AON
AEC
OM
Sta
te o
f Que
ensl
and
Her
bert
Sm
ith
Free
hills
MLC
Che
vron
Aus
tral
ia
Gar
tner
Aus
tral
asia
Reg
us
Mea
t and
Liv
esto
ck A
ustr
alia
FIIG
Gross Income(%)
Vacant HoA Signed
FY20 FY21 FY22 FY23FY20
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
13Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
Lease expiry profilePortfolio weightings
By income
Weighted average lease expiry
By income
0
2
4
6
8
10
12
14
242
Exh
ibit
ion
Str
eet
Year
s
567
Col
lins
Str
eet
400
Geo
rge
Str
eet
126
Phi
llip
Str
eet
259
Que
en S
tree
t
120
Col
lins
Str
eet
Por
tfol
io
420
Geo
rge
Str
eet
250
St G
eorg
es T
erra
ce
1 M
arke
t Str
eet
135
Kin
g S
tree
t
40 M
ount
Str
eet
201
Ken
t Str
eet
117
Cla
renc
e S
tree
t
1.82.72.8
4.8 4.5 4.3 4.15.1
6.06.16.6
7.18.0
12.0
05
1015202530
35404550
Vacant Jun 25 Jun 26+Jun 24Jun 23Jun 22Jun 21Jun 20
% E
xpir
ies
32.5%
6.0%
11.9%
16.4%
8.9%10.7%10.3%
3.0%
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
14Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
Lease expiry profileOccupancy
By area
Expiries FY19
By income
40 M
ount
Str
eet
420
Geo
rge
Str
eet
242
Exh
ibit
ion
Str
eet
567
Col
lins
Str
eet
400
Geo
rge
Str
eet
117
Cla
renc
e S
tree
t
1 M
arke
t Str
eet
Por
tfol
io
135
Kin
g S
tree
t
250
St G
eorg
es T
erra
ce
120
Col
lins
Str
eet
126
Phi
llip
Str
eet
259
Que
en S
tree
t
201
Ken
t Str
eet
Occupancy Jun 19Change since Mar 19
-20
20
0
40
60
80
100 100% 100% 100% 99.6% 99.6% 99.2% 99.0% 96.4%96.8% 96.4%93.7%
95.5%93.9% 90.9%
1.3%1.6% 0.2% 0.2% 1.6% 0.2%1.9%
(0.2%) (0.6%)
-6-5-4-3-2-1
0123
Expiry as at Jun 19Change since Mar 19
420
Geo
rge
Str
eet
1 M
arke
t Str
eet
250
St G
eorg
es T
erra
ce
Por
tfol
io
117
Cla
renc
e S
tree
t
201
Ken
t Str
eet
120
Col
lins
Str
eet
135
Kin
g S
tree
t
126
Phi
llip
Str
eet
40 M
ount
Str
eet
259
Que
en S
tree
t
400
Geo
rge
Str
eet
242
Exh
ibit
ion
Str
eet
567
Col
lins
Str
eet
2.1%
– –
–
–
(4.6%)
2.7%
0.5%0.1%
0.4%
(5.2%)
(1.7%)
(1.1%) (1.0%) (0.8%)(0.4%)
–
–
–
–
–
–
–
–
–
–
–
–
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
15Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
ValuationsValuations completed during the quarter
The key metrics, movements and commentary are shown in the table below.
Property New Val (ICPF %)
Val. Change $m (%)
Book Val. Change $m (%)
Cap Rate % (prior val ch.)
Disc Rate % (prior val ch.)
Term. Yield % (prior val ch.)
Primary Drivers of Val Change
126 Phillip Street (50%) $555.0m $17.5m $15.2m 4.63% 6.25% 5.00% Growth in market NOI
(3.3%) (2.8%)
420 George Street (75%) $536.3m $11.3m $10.0m 4.75% 6.38% 5.13% Growth in market NOI
(2.1%) (1.9%)
120 Collins Street (50%) $420.0m $20.0m $17.7m 4.88% 6.25% 5.13% Growth in market NOI, discount rate compression and improved occupancy
(5.0%) (4.4%) (-25 bps)
60 Martin Place (50%) $432.5m $82.5m $57.9m 4.75% 6.38% 5.00% Reduced profit & risk factor as completion nears, lower actual and forecast incentives
(23.6%) (15.5%)
117 Clarence Street (100%)
$155.0m $2.0m $2.0m 5.38% 6.50% 5.63% Increase in passing and market NOI
(1.3%) (1.3%)
201 Kent Street (100%) $600.0m $25.0m $23.4m 5.50% 6.75% 6.00% Increase in passing and market NOI and improved occupancy
(4.3%) (4.1%)
Total $2,698.8m $158m $126m 4.95% 6.42% 5.31%
(+6.2%) (+4.9%) (-4 bps)
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
16Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
Change in property valuesQuarterly change in Book Value
Management Operating CostsIPG’s Management Expense Ratio (MER) is calculated based on the direct and allocated operating expenses of ICPF as a percentage of the Group’s gross asset value. The below table outlines the estimated Quarterly MER for the Group.
Item Dec 2018 Mar 2019 Jun 2019
ICPF RE fee & trust expenses (% of GAV) 0.59% 0.49% 0.53%
Less: RE fee profit margin (% of GAV) (0.15%) (0.15%) (0.15%)
MER (% on GAV) 0.44% 0.34% 0.38%
MER (% on NAV) 0.51% 0.41% 0.47%
0
5
10
15
20
25
40 M
ount
Str
eet
60 M
arti
n P
lace
1 M
arke
t Str
eet
420
Geo
rge
Str
eet
259
Que
en S
tree
t
Cla
renc
e S
tree
t Pre
cinc
t
360-
380
Que
en S
tree
t
250
St G
eorg
es T
erra
ce
242
Exh
ibit
ion
Str
eet
126
Phi
llip
Str
eet
400
Geo
rge
Str
eet
Por
tfol
io
135
Kin
g S
tree
t
120
Col
lins
Str
eet
201
Ken
t Str
eet
23.6%
4.7% 4.2% 4.5%
2.8% 2.5%
19.8%
1.9% 1.3% 1.2%– 0.7% 0.4% 0.1% –0.1%
Assets revalued in the quarter
567
Col
lins
Str
eet
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
17Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Portfolio
Capital TransactionsAcquisitions
• Exchanged and settled contracts to purchase two strata lots at 131 Clarence Street, Sydney for $5m. A further three lots are currently in due diligence. In total, this will take ICPF’s ownership to 30%.
• Following a marketing campaign, co-owner Stockland issued a pre-emptive notice to divest its 50% interest in 135 King St, Sydney. ICPF has exercised its pre-emptive right to purchase and contracts are currently being negotiated. Exchange is expected in July 2019 and settlement is targeted for 30 September 2019. ICPF has the benefit of a nomination right and may find a capital partner to acquire 25% or 50% of the asset.
Divestments
ICPF’s 50% interest in 242 Exhibition Street, Melbourne was placed into due diligence during the quarter with Charter Hall, who is ultimately proposed to acquire a 100% interest in the property (co-owner OIPP is also divesting its 50% interest). Contracts were recently exchanged at a gross price of $830 million. Once outstanding incentives, committed capital expenditure and transaction costs are deduced, net proceeds are expected to deliver a premium of ~$55m (+17%) to book value, contributing ~1.2% to the quarterly return. ICPF has negotiated a flexible settlement arrangement, allowing for settlement to occur between August 2019 and December 2019.
Development Activity60 Martin Place
Practical completion remains on track for September 2019. Hand over of numerous floors has recently been provided to pre-committed tenants, allowing them to undertake their fit-out work ahead of occupation in late 2019. On floor finishes, including bathrooms, are nearing completion with just a few high rise floor remaining. Leasing commitments remain at ~65% of NLA, with several negotiations underway on the remaining vacant space.
The development is targeting a minimum 6-Star Green Star Office rating, 5-Star NABERS Energy rating and WELL Platinum rating.
Capital ExpenditureA development application was submitted to Melbourne City Council for the proposed refurbishment of the ground floor lobby and adjacent outdoor area at 120 Collins St, Melbourne. Following feedback from Council, the design will be further progressed, then tendered and works are forecast to commence in 2020.
Concept plans were also finalised for a proposed lobby upgrade at 135 King Street, Sydney. These are being refined before a preferred scheme is finalised and submitted to Council for approval.
During the quarter the team at 567 Collins Street, Melbourne completed a forecourt and retail enhancement project. Working very closely with each of 567’s retail tenants to showcase their menu offerings an opening event was held and the event was incredibly successful.
Tenants and staff of surrounding buildings can now use this dynamic space which is a really unique offering.
IWFML and ICPF Holdings Board MeetingsBoard meetings were held in June to approve FY20 budgets. Other matters covered included review of current debt facilities and approvals relating to current capital transaction activities (buying and selling).
18
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Acquisition details
Acquisition date 28 Nov 2005
(25%)
28 May 2012
(24%)
28 Sep 2015(1%)
Acquisition price ($m) $149.2 $169.2 $8.9
ICPF interest (%) 50%
Key features
Location Sydney CBD
Sub market Core
Year completed 2005
Grade Premium
Net lettable area (m²) 41,960
Car spaces 78
Car park ratio 1:537
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 2.8%
WALE by income (years) 6.1
Average passing rent (gross) / m² $1,514
Number of tenants 36
Major tenants NLA (m2) NLA % Expiry
Deutsche Australia 8,664 20.6% Oct 28
Allens Linklaters 8,424 20.1% Dec 26
Bank of Queensland 2,888 6.9% Mar 25
Sydney Portfolio (NSW)1 Market Street 126 Phillip Street
Acquisition details
Acquisition date 24 Feb 2003
(50%)
1 Mar 2016
(50%)
Acquisition price ($m) $102.0 $167.5
ICPF Interest (%) 100%
Key features
Location Sydney CBD
Sub market Western Corridor
Year completed 1991
Grade A
Net lettable area (m²) 29,493
Car spaces 671
Car park ratio 1:43
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 0.9%
WALE by income (years) 2.8
Average passing rent (gross) / m² $993
Number of tenants 48
Major tenants NLA (m2) NLA % Expiry
Commonwealth Bank of Australia 5,019 17.0% May 20
Dicanco 1,933 6.6% Jun 23
Coty Australia 1,512 5.1% Feb 21
Acquisition details
Acquisition date 23 May2005
(19.9%)
01 Oct2010
(30.1%)
01 Sep2014
(50%)
Acquisition price ($m) $46.9 $88.5 $173.0
ICPF interest (%) 100%
Key features
Location Sydney CBD
Sub market Western Corridor
Year completed 1998
Grade A
Net lettable area (m²) 39,843
Car spaces 264
Car park ratio 1:150
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 9.1%
WALE by income (years) 2.7
Average passing rent (gross) / m² $926
Number of tenants 39
Major tenants NLA (m2) NLA % Expiry
AON 8,562 21.5% Jul 22
Credit Corp 3,023 7.6% Aug 20
Government Property NSW 2,650 6.7% Feb 20
201 Kent Street
19
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Acquisition details
Acquisition date 23 May2005
(19.9%)
22 Dec2011
(5.1%)
Acquisition price ($m) $81.8 $29.0
ICPF interest (%) 25%
Key features
Location Sydney CBD
Sub market Core
Year completed 1998
Grade A
Net lettable area (m²) 50,940
Car spaces 91
Car park ratio 1:559
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 0.8%
WALE by income (years) 7.1
Average passing rent (gross) / m² $814
Number of tenants 13
Major tenants NLA (m2) NLA % Expiry
Telstra 45,673 89.7%Jan 25 /
Mar 30**
Acquisition details
Acquisition date 1 Apr 2016 (75%)
Acquisition price ($m) $442.5
ICPF interest (%) 75%
Key features
Location Sydney CBD
Sub market Core
Year completed 2010
Grade A
Net lettable area (m²) 37,598
Car spaces 73
Car park ratio 1:515
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) -
WALE by income (years) 4.1
Average passing rent (gross) / m² $1,186
Number of tenants 21
Major tenants NLA (m2) NLA % Expiry
AECOM 10,525 28.0% May 23
State Street 9,136 24.3% May 21
JLL 3,660 9.7% May 22
Sydney Portfolio400 George Street 420 George Street
** Tranche 1 expiry: 30,161m2 / Tranche 2 expiry: 15,511 m2
Acquisition details
Acquisition date 31 Jan 2014 (50%)
Acquisition price ($m) $140.0
ICPF interest (%) 50%
Key features
Location Sydney CBD
Sub market Core
Year completed 1990
Grade A
Net lettable area (m²) 32,576
Car spaces 72
Car park ratio 1:452
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 3.4%
WALE by income (years) 4.8
Average passing rent (gross) / m² $922
Number of tenants 26
Major tenants NLA (m2) NLA % Expiry
H&M 5,052 15.5% Oct 30
Brookfield 4,877 15.0% Mar 21
Russell Investment 3,696 11.3% Aug 20
135 King Street
20
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Sydney Portfolio123–131 Clarence Street
Acquisition details
Acquisition dates 31 Dec 2017 – Present
Acquisition price ($m) $22.7
ICPF Interest (%) Strata
Key features
Location Sydney CBD
Sub market Western Corridor
Year completed 1981
Grade B
Net lettable area (m²) 1,217
Car spaces 7
117 Clarence Street
Acquisition details
Acquisition date 17 Aug 2018 (100%)
Acquisition price ($m) $153
ICPF Interest (%) 100%
Key features
Location Sydney CBD
Sub market Western Corridor
Year Completed 1972
Grade B
Net lettable area (m²) 12,517
Car spaces 29
Car park ratio 1:431
NABERS Energy Rating
NABERS Water Rating
Vacancy by Income (%) -
WALE by income (years) 1.8
Average passing rent (gross) / m² $760
Number of Tenants 15
Major tenants NLA (m2) NLA % Expiry
Government Property NSW 5,753 46.0% Jun 20
The Smith Family 1,540 12.3% Jun 21
Actvale 938 7.5% Mar 32
40 Mount Street
Acquisition details
Acquisition date 1 Oct 10 (50%)
1 Mar 19 (25%)
Acquisition price ($m) $112.5 $109.3
ICPF interest (%) 75%
Key features
Location North Sydney CBD
Sub market -
Year completed 2010
Grade A
Net lettable area (m²) 28,402
Car spaces 96
Car park ratio 1:295
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) -
WALE by income (years) 6.6
Average passing rent (gross) / m² $898
Number of tenants 11
Major tenants NLA (m2) NLA % Expiry
Coca-Cola 8,823 31.1% Dec 30
Vodafone 4,775 16.8% Jun 20
MLC 3,499 12.3% Jun 23
21
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Sydney Portfolio Brisbane Portfolio (QLD)360–380 Queen Street259 Queen Street
Artistic impression of 360–380 Queen St
**380 Queen Street settled Jun 17. 366 & 370 Queen Street settled Aug 17 & 360 Queen Street settling in May 18
Acquisition details
Acquisition date 1 Jul 2013 (100%)
Acquisition price ($m) $173.0
ICPF interest (%) 100%
Key features
Location Brisbane CBD
Sub market -
Year completed 2004
Grade A
Net lettable area (m²) 24,794
Car spaces 118
Car park ratio 1:210
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 5.7%
WALE by income (years) 6.0
Average passing rent (gross) / m² $708
Number of tenants 10
Major tenants NLA (m2) NLA % Expiry
NAB 8,046 32.5% Sep 27
Commonwealth of Australia 6,118 24.7% Apr 26
State of Queensland 4,651 18.8% Apr 23
Acquisition details
Acquisition date 1 Aug 2017 (50%)*
Acquisition price ($m) $26.875
ICPF interest (%) 50%
Key features
Location Brisbane CBD
Sub market Core
Year completed 2022 (target)
Grade A
Net lettable area (m²) 50,000 (target)
Car spaces 220 (target)
Car park ratio 1:200
NABERS Energy Rating (target)
NABERS Water Rating (target)
60 Martin Place
Artistic impression of 60 Martin Place
Acquisition details
Acquisition date 31 May 2016 (50%)
Acquisition price ($m) $117.5
ICPF interest (%) 50%
Key features
Location Sydney CBD
Sub market Core
Year completed Q4 2019 (expected)
Grade Premium
Net lettable area (m²) 40,300
Car spaces 66
Car park ratio 1:610
NABERS Energy Rating (target)
NABERS Water Rating (target)
22
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Acquisition details
Acquisition date 20 May 2013 (50%)
Acquisition price ($m) $231.0
ICPF interest (%) 50%
Key features
Location Melbourne CBD
Sub market Western Core
Year completed 2015
Grade Premium
Net lettable area (m²) 55,151
Car spaces 156
Car park ratio 1:353
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 0.9%
WALE by income (years) 8.0
Average passing rent (gross) / m² $768
Number of tenants 29
Major tenants NLA (m2) NLA % Expiry
Jemena 14,363 26.0% Jul 28
CPB 12,890 23.4%Jul 22/ Jul 27**
Corrs Chambers Westgarth 8,689 15.8% Aug 27
Acquisition details
Acquisition date 22 Dec 2011 (50%)
Acquisition price ($m) $255.0
ICPF interest (%) 50%
Key features
Location Melbourne CBD
Sub market North Eastern Core
Year completed 1991
Grade Premium
Net lettable area (m²) 62,966
Car spaces 258
Car park ratio 1:244
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 4.4%
WALE by income (years) 4.3
Average passing rent (gross) / m² $838
Number of tenants 70
Major tenants NLA (m2) NLA % Expiry
ASIC 6,902 11.0% Jun 29
Crown Bet 4,505 7.2% Mar 23
Commonwealth of Australia 3,092 4.9% Jun 22
Acquisition details
Acquisition date 31 Mar 2006
(19.9%)
01 Nov 2010
(30.1%)
Acquisition price ($m) $59.1 $109.0
ICPF interest (%) 50%
Key features
Location Melbourne CBD
Sub market North Eastern Core
Year completed 1992
Grade A
Net lettable area (m²) 65,914
Car spaces 346
Car park ratio 1:190
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 0.3%
WALE by income (years) 11.9
Average passing rent (gross) / m² $711
Number of tenants 19
Major tenants NLA (m2) NLA % Expiry
Telstra 63,458 96.3% Oct 31
Melbourne Portfolio (VIC)567 Collins Street120 Collins Street 242 Exhibition Street
* Tranche 1 expiry: 5,131m2/ Tranche 2 expiry: 7,759m2
23
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Perth Portfolio (WA)250 St Georges Terrace
Acquisition details
Acquisition date 4 Nov 2014 (50%)
Acquisition price ($m) $388.5
ICPF interest (%) 50%
Key features
Location Perth CBD
Sub market -
Year completed 1992
Grade Premium
Net lettable area (m²) 64,869
Car spaces 1066
Car park ratio 1:60
NABERS Energy Rating
NABERS Water Rating
Vacancy by income (%) 4.4%
WALE by income (years) 4.5
Average passing rent (gross) / m² $1,099
Number of tenants 27
Major tenants NLA (m2) NLA % Expiry
Chevron Australia 27,988 43.1% Dec 23
Herbert Smith Freehills 6,119 9.4% Mar 23
King + Wood Mallesons 5,071 7.8% Dec 28
60 Martin Place, Sydney
24
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
The below table provides an overview of key IOM statistics as at 30 June
Investa Office Management 31 Mar 19 30 June 19 Quarterly change
Assets under management (A$bn) 13.1 12.9 -0.2
Number of properties (#) 36 34 -2
NLA (m2) (‘000s) 1,020 995 -25
No of tenants (#) 828 801 -27
Leasing invoiced (m2) (‘000s) 61 116 +55
Employees- male - female
21411698
(54%/46%)
220120100
(55%/45%)
+6
EBITDA vs FY19 Budget Outperforming(~39%)
Outperforming(~42%)
Investa Office Management Platform
Financial performanceReforecast full year IOM earnings are expected to exceed FY19 budget by ~42%. This is largely driven by the recognition of the performance fee relating to 737 Bourke Street and higher than forecast development management fees. These results are partially offset by increasing FY19 insurance costs.
Leasing A total of 116,000m² has been invoiced across the Group during the year ended 30 June 2019, against a full year budget of 120,000m².
Gender DiversityInvesta continues its commitment to achieving 40:40:20 gender balance in all managerial and professional role categories. In FY19, this was achieved in three out of five employee categories, with the remaining categories within striking distance. Pleasingly, the number of women in the Technical and Trade category (including traditionally male-dominated roles such as Facilities Management) doubled over the course of the 12 months to 30 June 2019.
Aboriginal and Torres Strait Islander InclusionInvesta acknowledges the traditional owners and ongoing custodians of the land on which we do business, and pay our respects to their elders past, present and emerging.
As part of our commitment to diversity and inclusion, and in acknowledgement of the importance of strengthening relationships with First Australians, Investa has launched its first Reconciliation Action Plan (RAP). Working in partnership with Reconciliation Australia, the RAP contains a number of important deliverables designed to enhance our employees’ understanding of First Australian cultures and build mutually respectful and beneficial relationships with local Aboriginal and Torres Strait Islander communities.
On 28 May Investa participated in the Nation Reconciliation Week, which commemorate two significant milestones in the reconciliation journey – the successful 1967 referendum in which Australians overwhelmingly voted to support the inclusion of Aboriginal people in the census; and the High Court Mabo decision. To create a nation strengthened by respectful relationships between the wider Australian community and Aboriginal and Torres Strait Islander peoples, reconciliation must live in the hearts, minds and actions of all of us.
Investa is proud to be contributing to the reconciliation journey through the implementation of our first Reconciliation Action Plan (RAP), for which we have now been granted conditional approval by Reconciliation Australia.
25
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Investa Young Leaders Scholarship
The recipient of the third annual Investa Young Leaders Scholarship in 2019 was Timothy Ingate, Senior Fund Analyst for ICPF. As part of his scholarship, Timothy recently travelled to Shanghai to represent Investa at the 2019 Urban Land Institute (ULI) Asia Pacific Summit, where he also participated in a study tour as part of the ULI Young Leaders Group. Timothy gained valuable knowledge, insights and connections from both the summit and the tour that he can apply to his role, as well as share with his colleagues across the business.
Biggest Morning Tea
During the quarter, Investa hosted the Biggest Morning Tea in support of the Cancer Council, raising $2,303.35. Investa's goal was to raise enough money to fund at least two gene sampling research projects, which it successfully overachieved.
Investa Office Management Platform
Investa Young Leaders Scholarship, Shanghai City
26
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Environmental, Social & Governance
TCFD Reporting Management has progressed to the second phase of it’s response to the Taskforce on Climate Related Financial Disclosure (TCFD) recommendations. Whilst completing Phase 2, Management shared Phase 1 early lessons learned with the broader industry. This included sharing a case study with ANREV (Asian Association for Investors in non-listed real estate vehicles) Sustainability Committee, and joining several industry panels and forums. Publicly available online (accessible here), the case study aims to assist Funds in the Asia-Pacific region in their implementation of the guidelines, highlighting the methodologies used, challenges faced and opportunities identified via Investa’s market leading analysis.
The Phase 2 TCFD response expanded to consider climate change scenario modelling, through participation in the UN Environment Programme’s Finance Initiative’s (UNEP FI’s) TCFD Pilot Project for Investors.
Investa was one of twenty of the world’s leading asset managers and owners involved in the pilot, which aimed to provide a best practice standard for TCFD reporting. The project developed climate scenarios, models, metrics and, ultimately, a risk assessment tool that will enable investors to assess climate risk across their portfolio.
The Final Report (available here) was launched during the quarter and provides a state-of-the-art overview of approaches, tools, and providers available to investors today. Some key findings include:
• Green profits in a 2°C world are significant – approximately USD 2.1 trillion Green revenues generated from the sale and implementation of low carbon technologies which support the transition to a low carbon economy (including energy efficiency, renewable energy and electrification technologies), will assist companies to reduce costs associated with complying with carbon emissions reduction policies. Under the modelled 2°C scenario (keeping global temperatures to 2°C below pre-industrial levels), the sum of all green profits generated by this 30,000-company universe equals approximately USD 2.1 trillion. Management has begun to explore these opportunities by issuing multiple sustainable debt instruments. Management will continue to explore sustainable finance opportunities and is committed to realising green profits as the world transitions to a low carbon, resilient economy.
• Low carbon technology opportunities offset risk Aggregated technology opportunities across a portfolio could offset potential losses generated under the 3°C, 2°C and 1.5°C policy scenarios. Investa has a proud history of incorporating carbon reducing energy efficiency technology into business operations, with these technologies primarily responsible for the 51% reduction in carbon emissions intensity since 2007. The next phases of the UNEP FI partnership project will further investigate real assets, and opportunities under the three climate scenarios. For a full breakdown of the TCFD work, please see the Fund’s forthcoming Annual Report.
Investor Engagement; Annual ESG SymposiumsInvesta held its annual ESG briefings recently in Melbourne and Sydney. The briefings were an opportunity for our investors to hear from industry experts, and Investa’s Sustainability and Funds teams. The briefings presented Investa’s ESG results and strategy, high level insights into global ESG investor trends, Investa’s work on the Task Force on Climate Related Financial Disclosure (TCFD), next generation sustainable finance products and productivity in the workplace – a cutting edge research collaboration with consultants EY.
The briefings were composed of a series of short, sharp ‘bursts’ of information with different presenters, including external experts form Westpac, GRESB, Catalyze Consultants and EY. This allowed for maximum impact, with conversations in the room covering a diverse array of topics across the environmental, social and governance spectrum.
Please get in contact with the sustainability team for updates and to provide feedback as we seek to craft these briefings to best meet our investors’ needs.
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
27Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Debt Summary Quarter end 31 Mar 19
Quarter end 30 Jun 19
Change
Facility limit ($m) 1,476.2 1,376.2 -100.0
Debt drawn ($m) 959.2 989.2 30.0
Undrawn debt ($m) 517.0 387.0 -130.0
Key measure
IPG Gearing (%) (debt / total assets) 17.9 17.8 -0.1
Covenant compliance
ICPF Total Leverage Ratio % 20.1% 19.4% -0.7
Compliance (<50%) √ √
Interest Coverage Ratio (ICR)1 4.8x 4.9x 0.1
Compliance (2.5x covenant) √ √
DebtOverview
A summary of the Group’s debt profile as at 30 June 2019:
HedgeInterest rate derivatives
The Group uses derivative contracts to hedge interest rate exposures and protect earnings from volatile movements in interest rate markets.
Capital Management
Hedge Summary Quarter end 31 Mar 19
Quarter end 30 Jun 19
Change
Debt Hedged ($m)* 470.0 470.0 -
Debt Hedged (%) 49.0 47.5 -1.5
Hedging target range 30% - 80% 30% - 80%
Hedging compliance √ √
Value of hedging instruments ($m) -16.6 -11.7 4.9
FX position on foreign debt ($m) -15.5 -17.7 -2.2
1 USPP debt expressed at the original fully swapped rate for all debt and gearing statistics
* Includes fixed rate MTN issuances, hedging contracts in place and interest rate caps
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
28Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Quarter end 31 Mar 19
Quarter end 30 Jun 19
Change
Av. fixed cost (%) 5.0% 4.3% -0.6%
Variable cost (%) 3.9% 3.3% -0.6%
Weighted average cost (%) 4.5% 3.9% -0.6%
Cost of debtThe following table summarises the Group’s cost of debt as at 30 June 2019:
Debt maturityICPF’s debt maturity profile as at 30 June 2019 is shown below. The Fund’s WADM is 4.1 years as at 30 June 2019.
Capital Management
Note: includes margin and line. Excludes establishment, amendment and restructuring costs.
0
100
200
300
400
500
FY2
0
FY2
1
FY2
2
FY2
3
FY2
4
FY2
5
FY2
6
FY2
7
FY2
8
FY2
9
FY3
0
FY3
1
FY3
2
Debt Undrawn ($m)Debt Drawn ($m)
Expiry
13
4
206 200170
100 98 98
487
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
29Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Equity Quarter end 31 Mar 19
Quarter end 30 Jun 19
Change
Number of Securities on issue (m) 2,437.9 2,446.9 9.0
Number of Securityholders 54 56 2
New equity issued ($m) - - -
Equity issued under DRA ($m) 33.2 16.1 -17.2
New equity capacity for investment ($m) - - -
Secondary Securities available (m)(Units) 72.0 11.7 -60.3
Secondary Securities sales (m)(Units) 73.5 45.3 -28.2
New equity / Redemptions
No new equity was issued during the quarter.
Secondary securities
Approximately $82.4 million of secondary securities were transferred during the quarter. Following the recent 10 yearly liquidity offer, several redeeming Securityholders opted to seek liquidity via a pre-emptive offer process. As such, Management has facilitated the transfer of redemptions on an equitable (i.e. pro rata) basis through secondary trades. These have almost been satisfied with ~$20 million of securities remaining available for transfer.
Distribution reinvestment arrangements (‘DRA’)
The DRA participation decreased slightly over the quarter to 45.6% (March 2019: 48.0%).
10 Yearly Liquidity Offer
As previously reported, the Fund closed its 10 Yearly Liquidity Offer on 31 August 2018 and it has received redemption requests totalling 488.8 million units. The Fund has initiated a phased approach to satisfying these redemptions including a combination of secondary unit transfers and the use of proceeds from the sale of asset(s). At quarter end, there were approximately 180 million units remaining to be satisfied.
Capital Management
EquityOverview
The following table provides an overview of the equity position of the Group as at 30 June 2019:
This number is based on the ACTUAL CASH FLOW received one month prior to quarter end - from the ICPF Fund Model "equity Tab", based on dividend from PRIOR quarter
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
30Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
Current Assets
Cash Assets 18.2
Receivables (C) 12.7
Current Assets 30.9
Non-Current Assets
Receivables 8.1
Equity Accounted Investments 2,887.2
Investment Properties 2,690.2
Non-Current assets 5,585.5
Total Assets 5,616.4
Current Liabilities
Accrued Expenses and Other Liabilities 27.8
Provision for Distribution 36.2
Current Liabilities 64.0
Balance Sheet As at 30 June 2019
Non-Current Liabilities
Derivative financial liabilities 11.7
Borrowings 1,003.1
Non current liabilities 1,014.9
Total Liabilities 1,078.9
Net Assets 4,537.5
Equity
Contributed Equity 2,882.5
Retained Earnings 1,655.0
Total Equity 4,537.5
Number Of Units On Issue ** 2,446.9
NAV (Ex Div) 1.8544
NAV (Cum Div) 1.8692
Current Unit Value* 1.8809
* Note on Current Unit Value: Current Unit Value is quoted on cum-distribution basis on non-quarter ends (excluding any distribution relating to the prior quarter). On quarter end it is quoted on ex-distribution basis. CUV is defined in the ICPF Constitution dated 11 November 2002 (as amended).** Note on Number of Units on Issue: Number of units on issue is 2,446,945,676
31
ICPF Quarterly Report (Q4 FY19) | 30 June 2019
Contents
Quarterly Highlights
Portfolio Capital Management
Environmental, Social & Governance
Compliance & Disclaimer
Investment Returns
Investa Office Management
DisclaimerThe information in this quarterly report is current as at 30 June 2019. Quarterly report does not include all the disclosures of the annual or half-yearly financial reports, and is intended to provide general financial information only. Accordingly, it should be read in conjunction with the annual and half-yearly reports and any further announcements or communications by ICPF Holdings Limited and Investa Commercial Property Fund (together, ICPF). This Quarterly Report has been prepared by Investa Wholesales Fund Management Limited as a responsible entity for ICPF, without considering your objectives, financial situation or needs. You should consider the appropriateness of its contents having regard to your own objectives, financial situation and needs before making any investment decision.
While every effort is made to provide accurate and complete information, Investa does not warrant or represent that the information in this Report is free from errors or omissions. No person, including ICPF or any other member of Investa, accepts any responsibility for any loss or damage, however occurring, resulting from a use or reliance on the information given by any person.
Past performance is not a reliable indicator of future performance and no guarantee of future returns is implied or given.
Investors should consult the ICPF Unitholder Portal and all disclosures made by ICPF, for full details of any forecasts detailed and the assumptions upon which these forecasts are based. Investors should be aware that any forecasts may be affected by the accuracy of assumptions, risks and other uncertainties as set out in the disclaimer in the ICPF Unitholder Portal, which may cause the actual returns to differ.
Your investment in ICPF is subject to investment risk and other risks, including possible delays in repayment and loss of income and principal invested. None of ICPF or any other member of Investa guarantees any rate of return or the performance of the Fund, nor do they guarantee any repayment of capital from the Fund. Investments in ICPF are not investments, deposits or other liabilities of ICPF or any other member of the Group.
Compliance Statement
Investa Wholesale Funds Management Limited confirms that, to the best of its knowledge and belief, at all times during the quarter, ICPF (Fund) complied in all
material respects with all investment limitations, derivative policies, corporate governance policies and all other restrictions set out in the Compliance Plan and other documentation that govern the operation of the Fund.
Quarterly Distributions
The Fund distributes on a quarterly basis for the periods ending September, December, March and June.
Copyright and Confidentiality
The copyright of this document and the information contained therein is vested in ICPF. This document is supplied to the recipient on a confidential basis. This document (including the information) should not be reproduced, copied or redistributed without the prior written consent of ICPF.
Related Party Transactions
Whilst ICPF (Fund) and ICPF Holdings Limited are stapled, each of the two entities have fiduciary obligations and are required to act in the relevant entities best interest. The Investa Office Management (IOM) Platform is owned 50% through ICPF Holdings Limited. As IOM provides services to the ICPF (Fund) and transacts with the ICPF (Fund) in various ways, Investa has developed a “Resolution of Conflict of
Interest Policy” which aims to ensure fair dealings between IOM and the ICPF (Fund), and other funds managed by IOM.
Key features of the policy are that:
• IWFML must act independently for ICPF in all transactions between IOM and ICPF;
• A separate general manager is responsible for each of the funds management and office portfolio businesses of Investa who each report directly to the CEO of Investa;
• All related party transactions should be in the best interests of Unitholders and on arm’s length terms;
• Representatives of the parties to a proposed transaction must attempt to resolve potential conflicts, and unresolved matters must be referred to the CEO of Investa; and
• The Group General Counsel is responsible for implementing and monitoring adherence to the policy through staff education sessions and confirmation that the policy has been followed for all relevant transactions.
Compliance & Disclaimer
Contact
ICPF Team
Jason LeongGroup Executive & Fund Manager
P +612 8226 9308E [email protected]
Brendan LoobyAssistant Fund Manager
P +612 8226 9449E [email protected]
Anna ChangiziClient Support Associate
P +612 8226 9415E [email protected]
Tim Ingate Senior Fund Analyst
P +612 8226 9916
Amanda ValentiniPortfolio Analyst
P +612 8226 9936E [email protected]
Investa
A stapled security consisting of:> ICPF Holdings Limited (ABN 20 610 989 805); and
> Investa Commercial Property Fund (ARSN 103 041 505) – responsible entity Investa Wholesale Funds Management Limited
Level 30, 420 George Street Sydney NSW 2000 Australia
P +612 8226 9300
More information about ICPF can be accessed and downloaded from the Unitholder Portal
If you require login details, please email: [email protected]
Any questions about this Quarterly Report should be directed to:
Directors
David BaffskyChairman & Independent Director
P +61 419 200 608
James EvansIndependent Director & Chairman of Audit & Compliance Committee
P +61 414 889 071E [email protected]
Dennis WildenburgIndependent Director
P +61 412 420 788E [email protected]
Rebecca McGrathIndependent Director
P +61 423 574 299E [email protected]
Jonathan CallaghanCEO
P +612 8226 9419E [email protected]
Peter MenegazzoChief Investment Officer
P +612 8226 9367E [email protected]