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Annual Results for the period 31 May 2016
TOWER PROPERT Y FUND TPF 2016
CROATIA
Annual Results for the period 31 May 2016
TOWER PROPERT Y FUND TPF 2016
CROATIA
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Annual Results Presentation TPF 2016 CROATIA 1 Annual Results for - - PowerPoint PPT Presentation
Annual Results Presentation TPF 2016 CROATIA 1 Annual Results for - - PowerPoint PPT Presentation
TOWER PROPERT Y FUND Annual Results Presentation TPF 2016 CROATIA 1 Annual Results for the period 31 May 2016 TOWER PROPERT Y FUND Presentation Outline Page Financial Highlights 1 Operational Highlights 2 Tower Strategy 3 Tower At A
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Annual Results for the period 31 May 2016
- Full distribution of 92 cents per share in line
with guidance
- Revenue up 52% to R376 million
- Headline earnings up 32% to R164 million
- Distributable earnings up 61% to R221 million
- Portfolio expanded to 50 properties*
- Portfolio value R5.1 billion*
- Market capitalisation R2.7 billion*
- R740 million raised through book build*
- Net asset value of R9.85 per share
*30 June 2016
Financial Highlights
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Annual Results for the period 31 May 2016
- Vacancies at 4%*
- R1.6 billion of property acquired in Croatia
accounting for 31% of company assets*
- Management company internalised*
- Debt risk reduced through exposure
to low European interest rates
- Portfolio value increased by 65%
to R5.1 billion*
*30 June 2016
Operational Highlights
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Annual Results for the period 31 May 2016
TPF 2016
CROATIA
Tower Strategy
Tower aims to generate competitive investment performance by adding value through property asset management and the cost effective greening of its property portfolio resulting in lower operational expenditure and increased tenant retention. Tower aims to expand its portfolio through management’s network of contacts throughout South Africa and abroad.
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Annual Results for the period 31 May 2016
R5.1bn
Property portfolio value
313 000m2 Rentable area (GLA) 96%
Occupancy rate (GLA)
7.46%
Existing portfolio escalations
R101/m2
Average gross rental
39%
Gearing (LTV)
Tower At A Glance
Sectoral Profile
(June 2016)
Revenue
Industrial Office Retail
8% 49% 43%
(June 2016)
Revenue
Gauteng KZN W.Cape Croatia
10% 26% 31% 33%
Geographic Profile
Listing
Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Tower Asset Growth
Valuation Purchase Price
4 5 6 3 2 1
as at 30 June 2016
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Annual Results for the period 31 May 2016
Management Team
Keith Craddock*
Executive Director
Financial, Administration, and Property Management
Marc Edwards
Chief Executive Officer
Strategy, Acquisitions, Debt and Capital Raising
Bruce Kerswill*
Executive Director
Strategy, Marketing and Greening
Johan Malherbe
Asset Manager
Western Cape
Bruce Rogerson
Asset Manager
Gauteng and KwaZulu-Natal
Joanne Mabin
Chief Financial Officer
Financial Controls and Management * No longer executive directors from 1 July 2016, however remain non-executive directors of the company
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Annual Results for the period 31 May 2016
Audited year Audited year ended 31 May 2016 ended 31 May 2015 R'000 R'000 Revenue 376,451 247,721 Net property operating expenses (30,733) (34,928) Net property rental income 345,718 212,793 Administration expenses (23,946) (14,952) Other income 10,377 2,914 Foreign exchange loss (30,519)
- Net operating profit
301,630 200,755 Fair value adjustments on investment properties (10,604) 101,740 Fair value adjustments on interest rate derivatives (7,533) 762 Profit from operations 283,493 303,257 Net finace costs (115,040) (76,683) Indirect capital raising expenses (894) (206) Profit before tax 167,559 226,368 Taxation
- Profit for the period
167,559 226,368 Other comprehensive income - items that may subsequently be reclassified to profit and loss Exchange difference on foreign operations 42,968
- Total comprehensive profit for the period
210,527 226,368 Basic and diluted earnings per share - weighted average shares in issue (cents) 67,1 149,9 Headline and diluted headline earnings per share - weighted average shares in issue (cents) 73,8 82,6 Condensed consolidated statement of profit and loss and other comprehensive income
Financial Results
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Annual Results for the period 31 May 2016
Financial Results
Audited year Audited year ended 31 May 2016 ended 31 May 2015 R'000 R'000 Assets 3,945,530 3,140,990 251,673 98,795 4,197,203 3,239,785 2,236,244 1,518,389 89,390 146,650 41,949
- 2,367,583
1,665,039 20,228
- Total equity
2,387,811 1,665,039 Liabilities 1,054,748 857,341 754,644 717,405 4,197,203 3,239,785 Condensed consolidated statement of financial position Non-current assets Current assets Total assets Equity and liabilities Stated capital Retained income Foreign currency translation reserve Shareholders' interest Non-controlling interest Non-current liabilities Current liabilities Total equity and liabilities
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Annual Results for the period 31 May 2016
- Maximum targeted loan to value - 40%
- LTV - 39%
- Total borrowings - R2.1 billion
- Fixed debt - 64%
- Weighted average rate - 6.11%
Prior to the Agrokor transaction, Tower’s debt was 80% exposed to South Africa. Post the transaction, Tower’s exposure to South African debt reduced to 41% with 59% being through Euro dominated loans where most of the loans are at fixed interest rates for five years.
Borrowings
2016
31 May
79% Standard Bank of South Africa (Rand) 1% Nedbank (Rand) 10% Standard Bank of South Africa (Euro) 10% Privredna Banka Zagreb (Euro)
81% exposed to South Africa
10% 10% 1% 79%
2016
31 July
40%
40% Standard Bank of South Africa (Rand) 1% Nedbank (Rand) 32% Standard Bank of South Africa (Euro) 20% Privredna Banka Zagreb (Euro) 7% Zagrebacka Banka (Euro)
37% exposed to South Africa
7% 20% 1% 32%
as at 31 July 2016
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Annual Results for the period 31 May 2016
Operational Performance
- Over 70 000m2 of space let in the period
- 29 534m2 of new space let
- 40 812m2 of renewable space let
- 5 non-core properties currently for sale with
expected sales value of circa R200 million. Proceeds to be used to reduce debt
- 2 properties sold at a value of R116.5 million
Monthly <May 2017 Industrial Office Retail <May 2018 <May 2019 <May 2020 <May 2021 <May 2022 >May 2023
Lease expiry profile by Revenue per sector (Rmillion)
10 20 30 40 50 Vacant Monthly <May 2017 Industrial Office Retail <May 2018 <May 2019 <May 2020 <May 2021 <May 2022 >May 2023
Lease expiry profile by GLA per sector
5 10 15 20 25 30 35 40
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Annual Results for the period 31 May 2016
Top 10 Properties By Value
Property Sector Value Location Cape Quarter Square Mixed use R653m Cape Town VMD KVART Office R452m Zagreb, Croatia Link Hills Shopping Centre Retail R228m Waterfall, KZN Sunclare Office R232m Claremont De Ville Shopping Centre Retail/Office R232m Durbanville Upper Grayston Office R175m Sandton Cape Quarter Piazza Retail/Office R160m Cape Town 6 - 8 Sturdee Avenue Office R137m Rosebank Medscheme Office R120m Florida North Evagold Shopping Centre Retail R99m Evaton, Gauteng
as at 31 May 2016
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Annual Results for the period 31 May 2016
- Total of 1300kWh’s per annum being
generated from solar
- 1.9 million kWh’s of lighting saved per annum
- Circa 3 million kg’s of carbon off set per year
- R4 million per annum saved as a result of green
initiatives
- Cape Quarter currently undergoing an assessment
to qualify as a Green Star “existing building” rating through the Green Building Council of South Africa
Greening
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Annual Results for the period 31 May 2016
- Ubuntu Trust achieving great success - first
South African player selected
- BEE Trust through Ubuntu under negotiation
- The Ubuntu Football Academy offers intensive
coaching, quality education and holistic mentorship to exceptional young players over a sustained period of 6 years (13-18 years)
- Ubuntu currently seeking additional corporate
sponsorship of R2 million per annum to fund expanded program
Corporate Social Responsibility
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Annual Results for the period 31 May 2016
SunClare
- Fully let
- Tigers Milk opening 1 September 2016
- Common area refurbishment
- Space not owned by Tower under negotiation
to acquire
Success Stories
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Annual Results for the period 31 May 2016
Cape Quarter
- Fully let
- Refurbishment of restaurant area
- Excellent new brands in Jenny Morris & Bootleggers
- 19 Residential apartments - development begun
Success Stories
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Annual Results for the period 31 May 2016
Cape Quarter Residential Development Napier Street
- 19 Apartments
- Cost of R31 000/m
- Modeled on R40 000/m selling price
- Current asking prices in the area - R65 000/m
- 119 Parking bays being let @R2500 per bay
Piazza
- 58 Apartments
- Holding yield daily lets of 10%
- Ability to sell off units at R65 000/m if required
- Sales profit of circa R120 million anticipated
New Development
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Annual Results for the period 31 May 2016
VMD KVART Block B
- Fully let
- Value increased by R150 million in 10 months
(cap rate reduced by 75 bpts)
- National and international tenants
- Anticipated rentals achieved
(currently letting at Euro 14/m)
- ZAR weakness boosts distributable income
and value (Euro 13.50/m at acquisition)
Success Stories
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Annual Results for the period 31 May 2016
Portfolio
- Total value – Euro 66 million
- 40% debt from local banks at circa 4.4% interest rate
- 60% equity raised in South Africa
- 12 year head lease – triple net
- Escalating base rental plus turnover to ensure growth
- Tenant is the strongest company in the Adria region
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Agrokor and Konzum
- Agrokor is the leading food producer and retailer
in South Eastern Europe (SEE)
- Annual turnover approximately Euro 6.5 billion
(in excess of R110 billion) - total asset value of circa Euro 6.7 billion
- 76% of turnover derived from retail and
wholesale operations
- 20% of turnover derived from food manufacturing
and distribution
- Employs approximately 65 000 people
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Agrokor and Konzum
- Controlling shareholder in Konzum
(Croatia’s equivalent of SA’s Pick ‘n Pay)
- Konzum is the largest supermarket retailer in
Croatia, Serbia, Slovenia, Montenegro, Bosnia and Herzegovina, employing over 14 000 people in 740 stores in Croatia alone
- Agrokor recently acquired Mercator, Konzum’s
biggest competition in the region and are undertaking this transaction to deleverage the Mercator balance sheet
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Konzum Superstore, Velika Gorica
PURCHASE PRICE: €8 810 000 (13% of portfolio value) CONSTRUCTED: 2006 GLA: 5 510/m ANCHOR: KONZUM GLA 5 272 (95%) LOCATION: Velika Gorica is the most populous town in ‘Zagreb County’ and is situated 16km South of
- Zagreb. The centre is located on a busy intersection
in a residential, business and industrial area with excellent visibility and accessibility
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Konzum Superstore, Vukovarska, Zagreb
PURCHASE PRICE: €13 152 000 (20% of portfolio value) CONSTRUCTED: 1996 GLA: 3 223/m ANCHOR: KONZUM GLA 2 858 (89%). This particular store produces an annual turnover of €10 000/m per annum which is equivalent to R15 000/m per month LOCATION: The property is located at a busy intersection in a commercial and industrial node in the South East of Zagreb. The node is close to a residential area with good access to public transport
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Meridijan 16, Shopping Centre, Zagreb
PURCHASE PRICE: €15 668 000 (24% of portfolio value) CONSTRUCTED: 2014 GLA: 9 362/m ANCHOR: KONZUM GLA 2 943 (56% of the retail component), situated on the ground floor OTHER TENANTS: DM, Ghetaldus, Intersport, Mana, Farmacia, Zoo City, coffee bars, gym, outdoor football court and a ballet school LOCATION: Gracani is an up market residential area located in the northern part of the City with approximately 30 000 residents. Access and visibility is excellent from Gracanska Street, the main arterial road that passes the centre
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Sub City, Dubrovnik
PURCHASE PRICE: €28 746 000 (43% OF PORTFOLIO) CONSTRUCTED: 2015 GLA: 12 259/m ANCHORS TENANTS: 8 915/m (73%)
- KONZUM: GLA 2 834/m (23%)
- H&M: GLA 2137/m (17%)
- MULLER: GLA 2 410/m (20%)
- NEW YORKER: GLA 1 071/m (9%)
- DM: GLA 463/m (4%)
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Sub City, Dubrovnik
LOCATION: The shopping centre is located on the Adriatic Highway that links Dubrovnik airport and the world renowned Old City of Dubrovnik approximately 10km from the city. The centre is situated alongside the newly opened Sheraton Hotel on the coast of Croatia and borders on residential and commercial nodes with excellent visibility and access.
Croatia Retail Acquisition
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Annual Results for the period 31 May 2016
Top 10 Beneficial Shareholders
% Holding 1 Coronation 12.79 2 STANLIB 11.53 3 Allan Gray 11.13 4 Nedbank 10.00 5 Sabre Trust 5.29 5 Prescient 4.31 6 Grindrod 2.93 8 HBW 2.08 9 Sanlam 2.02 10 Parimate 1.93 64.01
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Annual Results for the period 31 May 2016
- Tough local conditions anticipated however core
earnings expected to grow by greater than 10%
- Key focus on core earnings - once off earnings
to be reviewed and used to best effect
- R2 billion local pipeline
- R2 billion off shore pipeline
- Focus on redevelopment opportunities
- Will continue off loading non-core properties
- Exciting opportunities in Croatia & South Eastern
Europe
Prospects
TPF 2016
CROATIA
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TOWER PROPERT Y FUND TPF 2016
CROATIA