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Final results presentation June 2015 Investment strategy - - PowerPoint PPT Presentation

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Mukuba Mall Kitwe, Zambia Final results presentation June 2015 Investment strategy Rockcastle is a hybrid, dual listed property investment company with primary listings on the Stock Exchange of Mauritius and the Johannesburg Stock

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June 2015 Final results presentation

Mukuba Mall – Kitwe, Zambia

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  • Rockcastle is a hybrid, dual listed property investment company

with primary listings on the Stock Exchange of Mauritius and the Johannesburg Stock Exchange. Its strategy is to invest in direct property in growing economies as well as listed real estate securities globally.

  • Listed real estate securities
  • Direct property portfolio

‒ Poland ‒ Zambia

  • Development pipeline

‒ Poland ‒ Zambia

Investment strategy

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  • Growth in dividend per share vs June 2014 (USD) 5.7%
  • Growth in annual dividend per share vs 2014 (USD) 5.5%
  • Operational office established in Warsaw
  • Direct property transactions undertaken

in the current year*

  • Listed security portfolio further consolidated to focus on core holdings in

developed markets with high-growth prospects

  • Introduction
  • f

scrip dividend election for semi-annual dividend for shareholders

Highlights

3 2 4 6 8 2014 2015 Poland Zambia

*Includes transactions concluded for which a VAT ruling is currently pending

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Summary of financial performance

June 2015 Dec 2014 June 2014 Dec 2013 Dividend per share 4.42 USD cents 4.28 USD cents 4.18 USD cents 4.07 USD cents Shares in issue 847 862 000 769 700 000 705 500 000 530 000 000 Net asset value USD 1.46 USD 1.50 USD 1.39 USD 1.16 Loan to value ratio* 46.4% 37.5% 38.3% 42.3%

* The loan to value ratio is calculated by dividing total interest-bearing borrowings by total assets.

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Listed Equity Portfolio

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Geographical spread

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USA Australia Europe Hong Kong

Singapore

Canada UK

June 2015

USA Australia Europe Hong Kong Singapore Canada UK

December 2014

43.3% 12.6% 12.1% 10.6% 9.8% 6.5% 5.1% 52.1% 17.0% 9.7% 9.0% 4.8% 4.2% 3.2%

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Sectoral split

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Retail Healthcare Other / Diversified Industrial Hotel Residential Mortgage

June 2015 December 2014

57.4% 11.4% 9.4% 7.5% 7.0% 5.5% 1.8%

Healthcare Other / Diversified Office Industrial Hotel Residential Mortgage Retail 59.9% 8.9% 7.5% 7.3% 6.4% 4.8% 3.3% 1.9%

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  • Focused on undervalued or dominant stocks offering high growth
  • Macro-economic conditions in different countries are diverging.

Some countries benefiting from monetary and fiscal stimulus and improving economic conditions while others are suffering from fiscal and structural deficits

  • Retail bias in developed markets particularly US and UK
  • No formal currency hedging of capital positions
  • Underlying distribution growth ahead of forecasts
  • Analysis of physical property of listed portfolio counters – site

inspections

Portfolio performance

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Top 10 real estate holdings

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Name Sector Jurisdiction Market value at 30 June 2015 (USD Million) Hammerson Retail UK 367.7 Simon Property Retail USA 288.9 Unibail Rodamco Retail Europe 166.0 Prologis Inc Industrial USA 161.4 Ventas Inc Healthcare USA 158.3

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Top 10 real estate holdings (continued)

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Name Sector Jurisdiction Market at 30 June 2015 value (USD Million) Avalonbay Communities Residential USA 153.5 CapitaMall Trust Retail Singapore 109.9 Host Hotels and Resorts Hotel USA 108.1 The Link REIT Retail Hong Kong 89.8 Ascendas REIT Industrial Singapore 85.6

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Funding and hedging

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  • Gearing

‒ Targeted gearing level for the company is 35 – 50%. ‒ Cost of borrowings for listed securities portfolio – consistent with prior period ‒ Introduction of asset level funding for direct properties in Poland and Zambia

  • Hedging strategy

‒ Interest rate swaps ‒ Distributions for next 12 months are hedged

  • Direct property funding

‒ Euro funding for Polish investments ‒ Dollar funding for Zambian investments

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Facilities

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Morgan Stanley Standard Bank BofAML Morgan Stanley BofAML Bond shorts 22.1% 55.0% 22.9%

June 2015 December 2014

60.0% 1.5% 38.5%

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Swap profile

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Expiry Nominal USD equivalent (million) Average rate 2020 80.21 0.79% 2021 44.17 0.53% 2022 55.21 0.57% 2025 292.79 1.79% 472.38 1.36%

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Direct Property Portfolio

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Kafubu Mall – Ndola, Zambia

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Kafubu Mall – Ndola, Zambia

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  • Opened on schedule in April 2014
  • GLA of 12 500m² (100% let)
  • Ownership 50%
  • Anchored by Shoprite
  • Tenants include:

‒ Foschini ‒ Edcon ‒ Innscor ‒ Pep

  • Acquired at a yield of 9.5% in US Dollars
  • Trading on budget

Kafubu Mall – Ndola, Zambia

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Mukuba Mall – Kitwe, Zambia

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  • Opened on schedule in April 2015
  • GLA of 28 235m² and 100% let
  • Ownership 50%
  • Anchored by Game, Pick n Pay and Shoprite
  • Tenants include:

‒ Ackermans ‒ Edgars ‒ Foschini ‒ Mr Price ‒ Truworths ‒ Woolworths

  • Acquired at a

yield of 9.5%

Mukuba Mall – Kitwe, Zambia

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Mukuba Mall – Kitwe, Zambia

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Cosmopolitan Mall – Lusaka, Zambia

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  • Scheduled for opening in March 2016
  • Proposed GLA of 26 000m²
  • Ownership 50%
  • Anchored by Shoprite and Game
  • Tenants include:

‒ Woolworths ‒ Mr Price ‒ Truworths ‒ Foschini

  • Acquisition yield of 9.5%

Cosmopolitan Mall – Lusaka, Zambia

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Cosmopolitan Mall – Lusaka, Zambia

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Cosmopolitan Mall – Lusaka, Zambia

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  • Operational office based in Warsaw
  • Leveraging off group skill base
  • Property opportunities
  • Many strategic assets currently owned by private equity

and developers

  • Indiscriminate pricing differentials
  • Attractive Euro yields with significant positive carry
  • Polish economy growing at 3%, 2015 forecast 4%
  • Retail sales growing faster than the economy
  • Switch between informal and formal retail – increase in

discretionary spending

Poland

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Solaris Shopping Centre – Opole, Poland

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  • Acquired March 2015
  • GLA of 18 000m² and 99.8% let
  • Ownership 100%
  • Tenants include:

‒ Alma ‒ C&A ‒ CCC ‒ RTV Euro AGD ‒ LPP Group ‒ New Yorker ‒ Zara

  • Acquired at a yield of 7.7%

yield of 9.5%

Solaris Shopping Centre – Opole, Poland

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Solaris Shopping Centre – Opole, Poland

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Solaris Shopping Centre – Opole, Poland

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Solaris Shopping Centre – Opole, Poland

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Karolinka Shopping Centre – Opole, Poland

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Karolinka Shopping Centre – Opole, Poland

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  • Transaction concluded with VAT ruling currently outstanding (expected

receipt in October 2015)

  • GLA of 69 997m²
  • Ownership 100%
  • Anchored by Auchan hypermarket, Leroy Merlin and Decathlon
  • Tenants include:

‒ Carry ‒ CCC ‒ Deichmann ‒ H&M ‒ New Yorker ‒ Pepco ‒ Reserved

  • Acquired at a

yield of 6.46%

Karolinka Shopping Centre – Opole, Poland

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Karolinka Shopping Centre – Opole, Poland

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Karolinka Shopping Centre – Opole, Poland

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Karolinka Shopping Centre – Opole, Poland

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Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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  • Transaction concluded with VAT ruling currently outstanding (expected receipt in

October 2015)

  • Proposed GLA of 36 705m²
  • Ownership 100%
  • Anchored by Auchan

hypermarket

  • Tenants include:

‒ Bershka ‒ Carry ‒ CCC ‒ Deichmann ‒ H&M ‒ Reserved ‒ Pull&Bear

  • Acquired at a

yield of 6.76%

Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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Level 1 Ground floor

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Pogoria Shopping Centre – Dabrowa Gornicza, Poland

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Fabryka Wolomin – Warsaw, Poland

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  • Company acquired in August 2015, opening schedule for Q3 2016
  • Proposed GLA of 23 500m²
  • Ownership 90%
  • Currently 50% let
  • Anchored by Carrefour hypermarket
  • Tenants to include:

‒ Carry ‒ CCC ‒ Cropp ‒ H&M ‒ Media Expert

  • Budgeted

yield of 7.8%

Fabryka Wolomin – Warsaw, Poland

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Fabryka Wolomin – Dabrowa Gornicza, Poland

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Fabryka Wolomin – Dabrowa Gornicza, Poland

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Tomaszow Mazowieki Gallery – Tomaszow Mazowieki , Poland

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  • Construction due to commence in October 2015
  • Proposed GLA of 16 500m²
  • Ownership 85%
  • Anchored by Intermarche
  • Tenants include:

‒ CCC ‒ Cropp ‒ Deichmann ‒ H&M ‒ Pepco ‒ Reserved ‒ Rossman

  • Scheduled opening

October 2016

Tomaszow Mazowieki Gallery – Tomaszow Mazowieki , Poland

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Tomaszow Mazowieki Gallery – Tomaszow Mazowieki , Poland

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Tomaszow Mazowieki Gallery – Tomaszow Mazowieki , Poland

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Transaction currently in progress

  • Due diligence complete
  • Commercial terms agreed
  • Preliminary

sale agreement expected to be signed mid September 2015

  • Dominant in town
  • Catchment area of 180 000
  • 25 336m2 anchored by Auchan (14 091m2)
  • National and international retailers including
  • Carry, CCC, Deichmann, GO Sport, KFC, LPP group,

Rossmann, RTV Euro AGD, Sephora

  • Acquisition yield approximately 6.77%
  • Average lease term over 4.9 years
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  • Migration to direct property – target of >50%
  • Further Polish acquisitions targeted
  • Polish

development

  • pportunities

and further strengthening

  • f

in-country development capacity

  • Listed securities portfolio consolidated further towards core holdings

in developed markets

  • Continued engagement with management of core listed security

holdings and asset inspections

  • Dividend growth of between 8% and 10%

Prospects

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Questions & Answers