DIFFERENTIATING OURSELVES BY ADOPTING SUSTAINABLE BUSINESS PRACTICES - - PowerPoint PPT Presentation

GROWTHPOINT PROPERTIES LIMITED

DIFFERENTIATING OURSELVES BY ADOPTING SUSTAINABLE BUSINESS PRACTICES THAT ARE ENVIRONMENTALLY FRIENDLY AND SOCIALLY RESPONSIBLE – THE FIRST MOVER ADVANTAGE

NORBERT SASSE 18 OCTOBER 2013

AGENDA

• Introduction to Growthpoint
• South African Listed Property
• Growthpoint’s business model
• Our approach to sustainability
• Growthpoint, a good corporate citizen
• Conclusion

FAST & FURIOUS, Meadowdale, Gauteng

• The largest listed property company on the JSE with property assets valued at R59,8 billion

including 100% of Growthpoint Properties Australia ("GOZ") and 50% of the V&A Waterfront in Cape Town

• Market capitalisation of R49,9 billion at 30 June 2013 (R26.39 per share)
• Diversified property portfolio comprising 393 properties in RSA, 44 properties in Australia,

which is 65.8% owned, and 50% interest in the properties of the V&A Waterfront representing a combined total of almost 5,2 million square meters of GLA

• Fully integrated internally managed property company employing 457 staff

INTRODUCTION TO GROWTHPOINT

3

Industrial Retail Office Australia V&A Waterfront

R15,1 billion

AUD 1,7 billion

R8,0 billion R16,2 billion R14,9 billion R5,6 billion

HIGHLIGHTS FOR THE 2013 FINANCIAL YEAR

4

21.2% Return to investors for the year Capital growth 14.7% Income yield 6.5% Distribution per share 7.2% growth 149,0 cents Market value June 2013 R5,7 billion Total cost June 2013 R3,4 billion R380,2 million additional investment in Growthpoint Properties Australia Capital growth 23.4% Income yield 11.8% 35.2% Return on R3,4 billion Australian investment for the year New equity raised via Distribution Re- Investment Plan (supported by 58.2% of unitholders) R1,5 billion Average annual growth in distributions over last 5 years 7.0% New equity raised via placement R2,5 billion Successful conversion to Growthpoint Properties REIT

PROPERTY INVESTMENT ACTIVITIES

5

Retail Office Industrial RSA Total GOZ Total V&A Opening balance 13 145 14 592 7 251 34 988 13 118 48 106 4 950 Purchase price of acquisitions 13 435 44 492 748 1 240

• Selling price of disposals

(180) (545) (144) (869) (688) (1 557)

• Developments and capex

197 432 275 904 681 1 585 227 Fair value adjustment 1 740 1 297 616 3 653 112 3 765 372 FCTR

• 1 092

1 092

• Total

14 915 16 211 8 042 39 168 15 063 54 231 5 549 Long-term property assets 14 565 16 086 7 972 38 623 15 063 53 686 5 549 Reclassified as “Held for Sale” 350 125 70 545

• 545
• Commitments

169 102 131 402 229 631 226 Lakeside, Centurion

• Lakeside Office Park redevelopment 4 Green Stars
• Recipient of SAPOA 2013 Overall Green Award

No.1 Silo - Allan Gray Head Office in the Silo District, V&A Waterfront

• 1st large scale office Green Star submission in SA to achieve 6 Stars

SOUTH AFRICAN LISTED PROPERTY

V&A WATERFRONT, Cape Town

SOUTH AFRICAN REAL ESTATE

7

• The South African listed property sector has experienced significant growth over the past 10

years

• A total of 5 listed property companies have a market capitalisation of greater than R14 billion

today, which is greater than the total market capitalistion of the entire property sector 10 years ago

Source: INET Bridge 14 20 31 46 62 86 85 94 117 132 184 239 50 100 150 200 250 300 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Market Cap -R Billions

South African Listed Sector

SOUTH AFRICAN REAL ESTATE (CONT’D)

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• Listed property sector continues to grow:

 Sector approx. 3.8% of JSE All Share vs 6.4% (c.10% at peak) for Australia

Source: INET Bridge

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

Listed Sector as % of All Share Index

SOUTH AFRICAN REAL ESTATE (CONT’D)

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• The sector is dominated by a few large entities, with the top 10 accounting for approximately

80% of the sector market capitalisation  26 listed property entities  Sector market capitalisation of c.R239 billion

Source: INET Bridge 5 10 15 20 25 30 35 40 45 50 GROWTHPOINT REDEFINE HYPROP CAPITAL RESILIENT NEPI ATTACQ FOUNTAINHEAD ACUCAP VUKILE SA CORPORATE FORTRESS EMIRA SYCOM REDEFINE INT INVESTEC REBOSIS DELTA HOSPITALITY ARROWHEAD PREMIUM DIPULA OCTODEC ASCENSION SYNERGY VUNANI VIVIDEND ANNUITY Market Cap -R billions

South African Listed Property Companies

SOUTH AFRICAN REAL ESTATE (CONT’D)

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• Attractiveness of the sector keeps improving, especially following the conversion to the new

REIT structure  Attracting new listings to the sector (9 new listings in the last 18 months)  Equity raising well supported by local institutions (value of new listings and equity over the past 18 months exceeds R46bn)  Increase in interest from offshore investors  Increase in liquidity and tradability

Source: INET Bridge Growthpoint Capital Resilient Hyprop FPT Acucap SAC Redefine Emira Sycom Vukile

0% 10% 20% 30% 40% 50% 60% 70% 80% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Liquidity % (year) Market Cap -R (billion)

Sector Liquidity

SOUTH AFRICAN REAL ESTATE (CONT’D)

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• Historically the sector has delivered strong returns
• Growthpoint’s total return (distributions reinvested) for the past 10 years was 787%, an average

rate of 79% and a compounded growth rate of 24.4% per annum

Source: INET Bridge

38% 19% 19%

• 12%

4% 20% 0% 26.4%

• 1.3%

10% 8% 8% 7% 9% 9% 8% 9.3% 6.3%

• 20%
• 10%

0% 10% 20% 30% 40% 50% 60% 2005 2006 2007 2008 2009 2010 2011 2012 2013

SA listed property returns

Capital Income

SOUTH AFRICAN REAL ESTATE (CONT’D)

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• The escalating nature of leases underpins income growth
• Income growth of 4% - 9% can be expected annually

Source: Avior Research 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Resilient Hyprop Redefine Int Investec Growthpoint Sector Avg Fountainhead Acucap Capital Sycom Redefine Vukile Fortress A Emira Octodec Premium Rebosis SA Corp Hospitality A Arrowhead A Arrowhead B

Sector Forward Yields

GROWTHPOINT’S BUSINESS MODEL

LAKESIDE, Centurion

THE GROWTHPOINT BUSINESS MODEL

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To own a well-located, quality portfolio

• f Retail, Office and Industrial properties

To grow our distributions per share and to distribute 100% of distributable earnings half-yearly to our shareholders DISTRIBUTE EARNINGS To access all available sources of funding in order to minimise the cost of capital while maintaining appropriate gearing levels FINANCE To make investments which improve the quality of the portfolio and ensure long-term capital appreciation INVEST To manage our properties as owners and to invest the capital necessary to ensure our properties are well maintained, and that they operate at optimum efficiency MANAGE To earn sustainable rental income by providing quality accommodation to a large and diverse base of financially sound tenants secured by long leases EARN RENTAL To own a well-located, quality portfolio of Retail, Office and Industrial properties OWN

It is within this context that Growthpoint seeks to differentiate itself by being the leading property company in South Africa, not only in terms of its size and the value

• f it’s property portfolio, but

also by:

• Adopting sustainable

business practices that are environmentally friendly

• Being a good corporate

citizen

ADOPTING SUSTAINABLE BUSINESS PRACTICES THAT ARE ENVIRONMENTALLY FRIENDLY

THE PLACE, Sandton

For Growthpoint, sustainability impacts all our stakeholders:

• Our employees
• Our clients
• Our suppliers
• Our shareholders
• Our funders
• Our communities that we operate and invest in

OUR STAKEHOLDERS

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• Our focus has been on savings of energy, water

, waste and carbon emission reduction

• Primary area of impact is our value chain and we have engaged with our suppliers and tenants
• n a variety of issues effecting them
• Pressure from tenants to go green as they are starting to perceive the benefit to themselves,

both from a utility management perspective, as well as having an impact on their reputation

• The business drivers have been reducing risk, minimising cost and maximising growth
• pportunities
• At Growthpoint, governance, social, environmental and financial considerations are all

considered in conducting our business

OUR SUSTAINABILITY STRATEGY

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Office Portfolio Lighting Retrofit

• R43 million project including all 134 buildings spanning over a million square metres of office

space, will get new, energy efficient light fittings, designed specifically for Growthpoint

• Positive impact on the environment and will directly profit businesses occupying Growthpoint’s
• ffice buildings
• The savings on occupants’ utility bills will be shared equally between Growthpoint and the

leaseholder with the common objective to reduce energy and water consumption

• Growthpoint’s 50% share of savings will then go to funding and continuing future green

initiatives

• R20 million on sustainability projects within its portfolio of buildings, resulting in an impressive

reduction of over 14 million kilowatts in energy. This translates to a saving of nearly R12 million in annual utility costs

• Green Addendum signed by 75% of our office tenants

SOME OF OUR SUCCESSES TO DATE

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Lincoln on the Lake - KZN’s prestigious Umhlanga Ridge

• Awarded a 4 Star Green Star SA Office As Built v1 Rating
• ±R97 million development
• Additional cost of going Green – approximately 10%
• GLA – 6,740m²
• 1st Green Star submission in SA that pursued an As-Built submission without achieving a Design

Rating

• 1st 4-Star Green Star Rating for a Multi Tenant Office Building in SA
• 1st Solar photovoltaic installation in an office block in KZN
• Winner of Nedbank Capital Sustainable Business Awards 2013 – Lincoln on the Lake Solar

Photovoltaic Pilot in category: Infrastructure and Renewable Energy

• Largest rooftop solar photovoltaic array in KZN, a pioneering application of photovoltaic

electricity generation in SA

• Key areas contributing significant points to the Green Star Rating were:

 Efficient lighting and controls  Efficient HVAC systems  Water saving  Solar PV Systems

SOME OF OUR SUCCESSES TO DATE

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Mayfair on the Lake - KZN’s prestigious Umhlanga Ridge

• Awarded a 4 Star Green Star SA Office As Built v1 Rating, November 2011
• 1st Office Building in KZN to be designed and constructed to achieve the 4 Star Rating
• 3rd Office Building in SA to achieve both Office Design v1 and As Built v1 Ratings
• ±R104 million development
• Additional cost of going green – approximately 10%
• GLA – 6,552m²
• Key areas contributing significant points to the Green Star Rating were:

 Thermally-efficient envelope  Keeping cool in KZN – optimising buildings air conditioning  Water saving

SOME OF OUR SUCCESSES TO DATE

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Lakeside 3 – Centurion Lake

• Lakeside Office Park redevelopment 4 Green Stars
• Awarded a 4 Star Green Star SA Office Design Rating
• SAPOA Award, 2013 Overall Green Award for a redevelopment
• ±R74 million development
• Additional cost of going green – approximately 8%
• GLA – 6,152m²
• 4-Star Green Star Design Rating awarded
• 1st 4-Star Green Star Rating for a refurbishment of an office building

in SA

• Key areas contributing significant points to the Green Star Rating were:

 Efficient lighting and controls  New efficient HVAC system installed  Water saving low flow taps  Waterless urinals  Etics lightweight walling system introduced to the structure  Recycling of building rubble to accommodate a vehicle ramp  All surface storm water run-off is captured into water tanks and filtered before its released into a natural water course  Intelligent architectural design principles used to make use of natural light  Louvered shading introduced  Performance and double glazing used to windows  Low VOC paints and materials used (no release of toxic fumes)  Close to public transportation (Gautrain)  Cyclist facilities available

SOME OF OUR SUCCESSES TO DATE

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No.1 Silo - Prestigious new head office for Allan Gray in the Silo Precinct, V&A Waterfront

• Awarded a 6 Star Green Star SA Office Design v1 Rating
• As Built v1 Rating currently being compiled
• Additional cost of going green – approximately 6%
• GLA – 18,400m²
• 1st large scale office Green Star submission in SA to achieve 6 Stars
• Adjacent to No.2 Silo which was awarded a 4 Star Green Star rating for v1 Multi Unit

Residential for Design; the first to be accredited under the official v1 tool

• Key areas contributing significant points to the Green Star Rating were:

 Efficient DALI lighting system and controls  Efficient underfloor displacement ventilation HVAC systems  Double skin high performance façade  Grey water recycling  Sea water cooling  Green roof  Solar hot water

SOME OF OUR SUCCESSES TO DATE

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Grundfos – New South African Head Quarters, Industrial development

• Application submitted for a 4 Star Green Star Rating for the office block
• ± R90 million development
• GLA – 9,700m² (Warehouse – 6,100m²; Office – 3,600m²)
• 1st submission in South Africa for a Green Star Rating of an office block for an industrial facility
• Key areas contributing to the Green Star Rating application

 Renewable energy sources include photovoltaic panels and wind turbines  Water purification system that cleans storm water to potable water  Efficient lighting and controls  Efficient HVAC systems  Water saving

SOME OF OUR SUCCESSES TO DATE

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Waterfall Mall – providing a breath of fresh air to SA’s shopping centres

• Installing a 0,57 Mega Watt Solar Power Plant on the rooftop of Waterfall Mall
• Solar plant project cost of R10m
• GLA - 49,274 m2 mall is Rustenburg’s only Regional Shopping Centre, attracting over 680 000

shoppers a month

• Mall value R1,2bn
• This is our first ‘utility scale’ renewable energy development, being some 13 times the size of

the first rooftop solar plant that we have been testing. The plant will generate power equivalent to the requirements of around 570 average sized homes about 15% -30% of the Malls peak energy requirements, contributing towards an offset of 928 tons of Carbon Dioxide

• Andrew Etzinger, Senior General Manager and acting spokesperson for Eskom, commented on

the project, stating that “Growthpoint’s visible leadership in the energy efficiency and renewable energy arena is inspiring. We hope to see many more projects of this nature from property owners across the country.”

• Other green features at Waterfall Mall to the value of R2,5 million include:

 Energy efficient lighting  Thermoregulation enhancing paint on the façade and rooftop  Landscaping

SOME OF OUR SUCCESSES TO DATE

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Ellerines, Port Elizabeth

• Winner of the SAPOA award for Innovative Excellence in Property development in the category

Industrial developments in 2013

• ± R90 million development
• Total GLA approximately 13,200m² (Warehouse – 12,000m²; Office – 1,500m²)
• No Green Start Rating tool available in South Africa for industrial properties, but green

principles were applied in the design and construction stages

• Green Principles include:

 Energy efficient lighting and controls  Dimmable fluorescent lighting with motion sensors to warehouse  Energy saving  Efficient HVAC systems

SOME OF OUR SUCCESSES TO DATE

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44 on Grand Central – Midrand

• 4 Star Green Star SA Office Design Rating pending 2nd

round evaluation in October 2013

• 4 Star Green Star SA Office As Built Rating –

Documentation process in progress

• ±R111.2 million development
• Additional cost of going green – approximately 8%
• GLA – 6,105m²
• Key areas contributing significant points to the Green

Star Rating were:  Efficient lighting and controls  Smart elevator system control with solar powered internal lights  Locally sourced materials and concrete during construction  New efficient HVAC system installed  Water saving low flow taps  Waterless urinals  Use of re-cycled building timber formwork during construction  Underground water is captured into underground tanks and pumped into the building for use in toilet flushing  Intelligent architectural design principles used to make use of natural light  Louvered shading introduced  Performance and double glazing used to windows  Low VOC paints and materials used (no release of toxic fumes)  Close to public transportation (Gautrain)

SOME OF OUR SUCCESSES TO DATE

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Bridge Park, Century city, Cape Town

• Targeting a 5 Star Green Star SA Office As Built v1 Rating
• ±R425 million development
• Additional cost of going green – approximately 3%
• GLA – 17,889m²
• After completion Bridge Park hopes to be the second 5 Star Green Star Office As Built v1 Rated

building in the Century City precinct

• Key areas contributing significant points to the Green Star Rating were:

 Efficient lighting and controls  Efficient HVAC systems  Water saving  Proactive waste management  Cyclist and jogger facilities  Local connectivity  Reuse of land

SOME OF OUR SUCCESSES TO DATE

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Tshedimosetso House - Hatfield

• Appending 4 Star Green Star SA Office Design

Rating

• R273 million Development
• Additional cost for going green in +/- 2% (Base =

Corporate Spec)

• GLA - 16,500 m²
• Key areas contributing significant points to the

Green Star Rating were:  Building integrated photovoltaic installed in façade of building  Building – integrated photovoltaic (BIPV) provides shading and generates power from sunlight  Solar Façade Laboratory with world first Tropiglas innovation  Water efficient fittings and fixtures  Integrated Building Management Systems  Alternative fuel and hybrid vehicles with preferred parking locations  Cyclist Facilities  Recycle water and general waste storage  Movement sensors installed in office light fittings and step down transformers to basement lighting

SOME OF OUR SUCCESSES TO DATE

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• Eskom rebates to erect solar photovoltaic electricity plant on rooftops with capacity of 0.5MW

and 1MW

• 2nd joint venture with Eskom for 96KWp rooftop Solar PV system at Infotech in Hatfield
• We have chosen to combine Scope 1 and 2 emissions in our target of reducing Scope 1 and 2

emissions by 10% by 2016 (base year of 2011).

GROWTHPOINT’S ENVIRONMENTAL PERFORMANCE

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Direct Carbon emissions In the last year 1 927t CO2e Scope 1 and Scope 2 Water efficiency 13 750 KL saved in the last financial year By maintenance efforts e.g. leak detection; pilot programme to install AME meters Energy efficacy 23 858 MWh saving per year in the last 3 years 23 620 tCO2e saved (lease holders) Saving lease holders R28,6 million in utility costs a year R 1,1m carbon tax offset per annum Recycling efficacy 1.2 million kg 1 228t CO2e saved Cans, glass, cardboard, paper , plastic

European Community Support Award for Growsmart

SOME OF OUR SUCCESSES TO DATE

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2013 Innovative Excellence Awards for Green Development and Industrial Property Development 2013 Overall Green Award for Lakeside Office Park Redevelopment in Centurion

BEST REPORTING AND COMMUNICATION AWARDS 2012 FINANCIAL YEAR - FINANCIAL; FINANCIAL SERVICES SECTOR

Excellence in Integrated Reporting Awards 2012

Lakeside Office Park redevelopment 4 Green Stars Lincoln on the Lake 4 Green Stars Mayfair on the Lake - 4 Green Stars V&A No.1 Silo - 6 Green Stars 44 on Grand Central – 4 Green Stars Tshedimosetso House - 4 Green Stars

• First property company to be included in the JSE SRI (Social Responsible Investment) since 2009
• Dow Jones Sustainability Index 2013
• 2013 IAS Awards for Best Reporting and Communication in the Financial Services category
• Participate in the Carbon Disclosure Project and included in the leadership index 2012
• Received two international awards for our innovative CSI project called Growsmart which

focuses on improving literacy at schools in the Western Cape

AWARDS, INDICES INCLUSION AND OTHER EFFORTS

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BEING A GOOD CORPORATE CITIZEN

WOODMEAD RETAIL PARK, Johannesburg

• Our key focus areas are entrepreneurship development, education and infrastructure development, with a

total CSI spend of R12 million The Property Point

• Is our entrepreneurship development programme, aimed at giving small, medium and micro enterprises

(SMMEs) operating in South Africa’s listed property sector a toehold in a highly competitive marketplace

• Been in place for the last five years
• In 2012/13 a realisable 17.5% year-on-year revenue growth for businesses on the programme
• More diversified client and market structures for enterprises on the programme
• More stable relationships with procurement, especially Growthpoint Properties
• Better facilitation of access to finance for struggling businesses
• Enhanced skills, standards and capacity of entrepreneurs
• Increased employment and wealth creation by enterprises on the programme

SUSTAINABILITY & CSI

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2013 CSI Expenditure

Entrepreneurship Education Subsidies Infrastructure Other 28% 40% 24% 6% 2%

Key indicator 2009/10 Achieved 2010/11 Achieved 2011/12 Achieved 2012/13 Achieved Cumulative Total Value of contracts accessed by SME’s (R’million) 13 24 82 67 186 Cumulative number of direct full time and sustained jobs created 200 216 421 492

Education and learnerships

• Growsmart is an award winning innovative literacy programme in partnership with the Western

Cape Education Department, delivering measureable impact with over 130 000 learners reached in the Western Cape since its inception

• Pursuing potential of future property leaders by offering student bursaries within the property

field worth over R490 000 Staff development

• Training is key to improving employee performance and productivity. In the best interests of
• ur teams, our employee development approach gives employees the chance to achieve

formal, recognised qualifications. In the last financial year we invested over R2.2 million on training and development Community involvement

• Staff Community Involvement Projects (HALO) - staff commit to the upliftment of their local

communities through various needs-focused projects

SKILLS DEVELOPMENT

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CONCLUSION

V&A WATERFRONT, Cape Town

We take Sustainability, the Environment and our Social Duty seriously

36

THANK YOU

MONTCLARE PLACE, Cape Town