INTERIM RESULTS PRESENTATION FOR THE HALF YEAR ENDED 31 DECEMBER - - PowerPoint PPT Presentation
INTERIM RESULTS PRESENTATION FOR THE HALF YEAR ENDED 31 DECEMBER 2017 AGENDA Strategic Milestones South Africa 01 V&A Waterfront Portfolio Update 02 GOZ Capital Management 03 Globalworth Financial Results 04 Conclusion 05
INTERIM RESULTS PRESENTATION
FOR THE HALF YEAR ENDED 31 DECEMBER 2017
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AGENDA
01
Strategic Milestones
02
Portfolio Update
03
Capital Management
04
Financial Results
05
Conclusion
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Annexures
South Africa V&A Waterfront GOZ Globalworth
Oxford Corner, Rosebank
STRATEGIC MILESTONES
M1 Place, Eastgate, Sandton
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STRATEGIC MILESTONES
Optimising & Streamlining RSA Portfolio
▪ c. 5% of the RSA portfolio by value assembled for sale in four portfolios and submitted to the market for expressions of interest with a deadline of 13 February
various parties, incl. BEE consortiums and property funds, which we are evaluating ▪ In line with our strategy to recycle capital, individual assets of c. R3.2bn have been sold but not yet transferred, post December 2017
Turbine Square ▪ Further EUR113.8m invested into GWI ▪ GWI acquisition of 71.7% of Griffin Premium RE (GPRE) ▪ Romanian and Polish presence focused on the
▪ The contribution to the Group from offshore is 24.0% of the book value of the Group’s property assets and 19.6% of EBIT ▪ The strategy is to grow the offshore contribution to 30%, for both the above numbers, over three years. Requiring c. R10bn
Internationalisation
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Introducing New Revenue Streams
Africa Fund ▪ USD210m committed for investment from Growthpoint and third parties, with first close scheduled for 31 March 2018 Healthcare Fund ▪ Five hospital assets valued at R2.4bn ▪ R275m committed from institutions, targeting c. R1.5bn for first close ▪ Awaiting the opportunity to present to the Investment Committees of many of the large pension funds; this is a lengthy process ▪ Further acquisition and development opportunities of
3rd Party Development Fees and Trading Profits ▪ Good progress has been made with this element of the strategy given the skills, capacity and capital available ▪ 1% - 2% of distributable income is expected to come from development fees and trading profits going forward
Delivering on our strategic initiatives in line with our vision:
To be a
leading international
property company providing space to thrive
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PERFORMANCE HIGHLIGHTS
6.5% distribution growth from HY17 to 101.2 cents per share 10.6% increase in distributable income from HY17 to R2.9bn 4.4% increase in Group property assets from FY17 to R127.7bn
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Group LTV down 0.5% from FY17 to 34.5% 3.9% increase in Group NAV from HY17 to 2 593 cents per share Group vacancies well contained at 4.6%, albeit they have increased 0.9% from FY17
PORTFOLIO UPDATE
V&A Waterfront, Cape Town
PORTFOLIO UPDATE
SOUTH AFRICA Key West, Krugersdorp
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SOUTH AFRICA
▪ Whilst sentiment has changed with President Ramaphosa’s victory, the operating environment remains very tough with lots of uncertainty ▪ We are still at the bottom of the property cycle ▪ Client retention is under pressure ▪ The lack of business confidence is translating into shorter lease terms generally, which means leases are reverting back to market more frequently ▪ It is costly to attract and retain tenants in a fiercely competitive environment where supply exceeds demand in all 3 sectors ▪ Arrears are generally under control and actively managed, as such they have decreased 7.5% to R76.6m vs. R82.8m at HY17, representing 7.8% of collectables vs. 8.8% at HY17 ▪ Vacancies at 5.2% have marginally increased from 4.4% at FY17 but remain below national benchmarks ▪ Over 500 000m² of space was let in the period
Domestic Economy & Property Market Remains Challenging
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▪ We are seeing a slowdown in new supply, with Fourways Mall being the largest project currently under
we believe there is excess capacity in the market ▪ Renewal success rate at 84.3% which is below our target of 90.0% ▪ The rate of deterioration in the renewal growth rate has been faster than expected, from 4.2% at HY17 to 3.2% at FY17 and currently 0.4%. This statistic was however negatively affected by defensive renewals at Bayside Mall, coupled with retailers consolidating space ▪ 1.3% portfolio average trading density growth, weighted by GLA, consistent with FY17 ▪ Vacancies improved from 3.6% at FY17 to 3.0% with the expectation that there will be a slight decline to FY18 ▪ Core retail vacancy, excluding unlettable ex-cinema and office space, constant at 1.5% ▪ Due to once off anomalies raised before half year end, arrears increased to R45m from R41m at HY17 and increased to 11.3% as a percentage of collectables from 10.7% over the same period. Arrears subsequently reduced to 10.0% in January 2018 ▪ We acquired the remaining 58% of N1 City Mall for R922m (8.0% yield) to further strengthen our exposure in the Western Cape which out performs other provinces ▪ Two retail assets were sold which were no longer considered core to the portfolio ▪ We are upgrading and reconfiguring space at Brooklyn and Walmer and are in advanced planning stages for extensions to Paarl and Waterfall Malls to address specific demand
Retail
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Office
▪ The office sector is still weak but has generally not deteriorated further in the last six months ▪ High incentives are still the order of the day to attract and retain tenants ▪ The environment is hugely competitive with renewal success at c.47% for the period ▪ Clients remain reluctant to commit for long periods as is evidenced by the weighted average lease renewal period dropping below 3 years for the first time ▪ On a positive note, the historic negative reversion rates considered endemic for the sector are now flat to slightly positive ▪ Vacancies deteriorated from 6.8% at FY17 to 8.4%, mainly as a result of BCX vacating c. 13 000m² in Midrand ▪ Arrears are well contained at R15.3m vs R25.2m at HY17, representing 3.9% of collectables vs 6.5% at HY17 ▪ With a desire to keep our product relevant we have continued to develop as GDP has stagnated. We continue to see demand for new P grade green buildings in specific nodes incl. Cape Town, Rosebank, Bryanston, Sandton and Umhlanga ▪ 86 office buildings, valued at R18.7bn have been certified by GBCSA with the intention to have all long term investments certified by 2020 ▪ On the development side, Discovery was delivered on time and within budget, with the income positively impacting the second half of FY18 ▪ Asset management strategy focused on disposing of non-core properties, development of new P grade and green certified, well located buildings, whilst acquisition opportunities offering value remain in short supply ▪ In line with this strategy, two office properties were sold during the period, but not yet transferred, and none were acquired
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Industrial
▪ The portfolio is diversified with a bias towards modern logistics warehouse facilities, with the majority of new developments focused on this asset type ▪ 11 assets were sold in the period that did not meet our long term investment strategy and one strategic asset was acquired ▪ Yield compression is evident, as the understanding of the asset class improves, along with the quality of the underlying assets ▪ Vacancies increased by 1% from FY17 to 4.1%. The stubborn c. 18 000m² vacancy at Paul Smit Anderbolt was let post HY18, bringing vacancies back to FY17 levels ▪ The renewal success rate has declined to 63.9% vs. 78.5% at FY17, with renewal growth now in negative territory at -2.5% vs. 2.3% at FY17. Renewal growth deteriorated as a result of three renewals totalling 25 700m² with a -4.3% drag on renewal growth ▪ The glut of industrial land, coupled with a development overhang is placing pressure
▪ Arrears are consistent with HY17 levels at R16m representing 9.4% of collectables vs. 10.0% at HY17 ▪ The weighted average lease period is in line with the market at 3.2 years ▪ Durban and Cape Town, with their access to the ports and limited supply of land, continue to perform well with vacancies virtually non-existent, low arrears and with real demand and growth ▪ We own strategic land parcels which we believe will offer good value in the future as
facilities between 5 000m² and 20 000m² ▪ We are cautiously optimistic that positive sentiment will start to translate into renewal growth, rental growth, reduced vacancies and longer lease periods
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Western Cape Water Crisis
▪ 91 of the 463 RSA properties are located in the Western Cape ▪ Growthpoint’s main focus up until 2018 has been on the reduction of water consumption: − 41% for office − 27% for retail ▪ Our current focus is developing alternative water sources: − Retail will have operational boreholes by “Day Zero” across all sites − Within the industrial portfolio, we are focusing on sites where water is needed for production processes − Office properties have a mix of borehole and sump water available, which will be distributed via water tanks ▪ Other augmentation plans include: − Procurement of water from the Liesbeek River, with approval having been obtained − Installation of water purification plants where sump pumps yield substantial amounts
− Atmospheric water generation − Procurement of water tankers to distribute alternatively sourced water ▪ Chemical toilets are being procured at sites without water security
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HY18 Rm HY17 Rm INCREASE/ (DECREASE)
Gross property revenue 4 188 3 937 6.4% Retail 1 612 1 544 4.4% Office 1 871 1 739 7.6% Industrial 705 654 7.8% Property expenses (1 006) (933) 7,8% Retail (420) (395) 6.3% Office (426) (395) 7.8% Industrial (160) (143) 11.9% Net property income 3 182 3 004 5.9% Adjustments (481) (431) Acquisitions and developments (295) (182) Disposals (25) (94) Healthcare (26) (24) Investec rent (135) (131) Adjusted “like-for-like” net property income 2 701 2 573 5.0% Retail 1 009 967 4.3% Office 1 204 1 137 5.9% Industrial 488 469 4.1%
NET PROPERTY INCOME ANALYSIS
PORTFOLIO UPDATE
V&A WATERFRONT V&A Waterfront, Cape Town
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V&A WATERFRONT
Silo District
▪ Now complete ▪ Zeitz MOCAA opened its doors in September 2017 to just over 70 000 visitors in the opening month ▪ The museum adds to the list of attractions at the V&A and has been the recipient of numerous international awards and accolades ▪ The 252 bedroom Radisson Red Hotel opened its doors in the same month, and is already benefitting from high occupancies
Canal District
▪ The Waterway House development is complete with blue chip office tenants incl. BAT and E&Y and signature retail tenants incl. Porsche, Ducati and Ferrari ▪ The Battery Park, 1 400 bay parking garage is expected to open in the second quarter of 2018. The three acre urban park situated above the garage will be a family friendly green space which will be activated by “destinational” retail pockets ▪ Dock Road Junction, at the entrance to the V&A, has secured letting
▪ The adjacent Queens building is awaiting heritage approval for a “vibey” retail offering
Marine
▪ The second phase of the passenger cruise terminal was completed in time for the season, with c. 45 000 passengers and crew members processed
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Property Fundamentals
▪ Strong demand for office space from blue chip corporates ▪ Vacancies across the sectors below benchmarks ▪ Favourable tenant retention rates continue which is a key strategic pillar in the office sector ▪ Retail sales are marginally down 0.7%, due to both the local trading environment and strength of the ZAR relative to the previous year. Whilst the tourists spent similar amounts in foreign currency it was substantially less in ZAR terms. In addition, the H&M effect being such a large proportion of overall sales, pulled the overall performance down, with additional stores openings across the country ▪ Average trading densities c. R5 500, ahead of the super-regional benchmark categories, but have declined by 1.79%, due to new retail areas at the Silo District and Waterway House dragging down the overall average ▪ Footfall at Victoria Wharf remained consistent at c. 24m visitors but showing marginal signs of decline with an uplift in the Watershed, Food Market & Silo District ▪ New retail offerings and tenant churn is part of the strategy to keep the retail sector competitive and relevant ▪ 21% growth in international passengers through Cape Town International Airport had a favourable impact on both hotels and retailers ▪ Hotels tracking ahead of the trend on average room revenue levels, but first signs of a drop in occupancy levels are visible, relating to “Day Zero” publicity ▪ The residential “to let” offering is stable with vacancy levels well within benchmark statistics ▪ The marine and industrial portfolio is stable, with the film studios having consolidated and found home at the V&A
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“Day Zero”
▪ The drought has been amplified in recent months and the V&A’s priority is to ensure it can trade through the transition from a water abundant region to a water scarce region ▪ Much work has been done with tenants to decrease consumption levels and elevate awareness about responsible water usage ▪ A site has been provided to the City of Cape Town to locate their 2 mega litre (ML) per day desalination plant expected to be
▪ The V&A has committed to build its own 5ML per day plant with an estimated completion date in 2019 to meet current and future normal needs
Sustainability
▪ A leading developer of green buildings ▪ Radisson Red and Waterway House both received 5 star ratings from the GBCSA ▪ Renewable energy production continues to increase with the roll out
▪ Commitment to drive reduction in single usage plastics, due to the negative impact on the ocean
PORTFOLIO UPDATE
GOZ 5 Murray Rose Ave, Sydney Olympic Park, NSW, Australia
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GOZ
▪ Track record of growth in assets, profit and shareholder returns continues ▪ 3.8% increase in dividend per share over HY17 to 11cps ▪ 17.0% average total shareholder return vs. 13.4% S&P/ASX 300 A-REIT index over 5 years ▪ Book value of property portfolio increased 4% over FY17 ▪ 6.9% increase from FY17, on a like for like basis, in net tangible asset value per share to AUD3.08
Shareholder Return Capital Management
▪ Gearing reduced 270bps to 35.8% from 38.5%, which is the revised FY17 number due to a change in the gearing calculation. Reduction mainly due to strategic asset sales, in line with the strategy to divest assets considered non- core to the group, or which have reached their peak value to GOZ, or which have higher alternative use value e.g. residential ▪ 522-550 Wellington Road was sold for AUD90.8m. The sales price represented a 38% premium to book value
Industria REIT (IDR)
▪ 18.2% interest acquired at a DPS yield of 7.2% which represented good value compared to the direct property market ▪ IDR ASX price trading well above acquisition price
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Guidance
▪ Guidance for FY18 dividend growth of 3.3% to 22.2 cps
Property Fundamentals
▪ 66% office and 34% industrial − higher vacancies generally but also due to one large industrial vacancy − shorter weighted average lease period − increased property expense ratio ▪ Further cap rate compression in the direct property market ▪ 87% of properties are located on the Eastern seaboard with Sydney & Melbourne showing improvements in market rentals ▪ The renewal success rate of 35.1% was negatively impacted by few renewals in the current period, some which were unsuccessful, with more success letting previously vacant space ▪ 42 741m² of new lets and renewals since FY17 ▪ Lease incentives have decreased 3% in office from 29% to 26% but have increased significantly in industrial, from 9% to 23% from HY17 to HY18. The industrial number is negatively impacted by low leasing activity, meaning one large lease can have a significant impact
PORTFOLIO UPDATE
GLOBALWORTH Globalworth Tower , Bucharest, Romania
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GWI
Initial Investment Dec 2016 31 Dec 2017 Growth % Ownership 26.8% 29.0% 8% Total Invested (EURm) 186.4 300.2 61% Total distribution received since acquisition (EURm)
Share price of investment (EUR) 7.37 8.75 Share price (EUR) 5.05 8.98 78% Market capitalisation (EURm) 325 1 187 265% Property value 100% (EURm) 976 1 815 86% ▪ December 2016 - EUR200m equity raise at EUR8.00 per share with Growthpoint investing EUR186.4m ▪ June 2017 - EUR550m Eurobond issued ▪ December 2017 - EUR340m equity raise at EUR8.75 per share with Growthpoint investing an additional EUR110m
Recapitalisation to Fund Accretive Acquisitions
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Portfolio Update
▪ 39 properties, 19 in Romania and 20 in Poland, vs. 16 Romanian properties in June 2017 ▪ c. 791 000m² vs c. 499 000m² in June 2017 ▪ Occupancy at 93.3% from 91.3% in June 2017 ▪ 5.3 years weighted average lease period ▪ Accretive acquisition and development opportunities in Romania: − Completion of c. 8 000m² industrial facility for Litens at Timisoara Airport Park (TAP) − 30 hectares of land adjacent to the TAP logistics complex acquired to facilitate further phases of light industrial/ logistics projects of up to c. 140 000m² − Globalworth Campus
half of 2018 − Acquisition of c. 16 000m² Green Court C which is 98% let − Renault Bucharest Connected (RBC) 42 300m² development under construction with expected delivery Q1 2019 leased to Group Renault Romania for 11 years − Two land plots acquired in Bucharest’s new CBD, allowing for the development of c. 40 000m² of predominantly office space ▪ GPRE acquisition and Polish pipeline: − Six office properties − Three mixed use properties comprising office and retail − Three office properties acquired from Echo Polska Properties (EPP) for EUR160m with world renowned tenants incl. Intel, IBM and Nokia − Four development projects in various stages of completion. One forward funded, and 25% stakes in a further three properties, with right to acquire remaining 75% on completion
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GWI continues to surpass Growthpoint’s due diligence expectations and deliver on distribution guidance
▪ Delivered EUR 0.44 dividend per share since initial investment ▪ 22.7% increase in dividend per share for FY18 over FY17, based
▪ GRT to support GWI in achieving its mission of becoming a leading international investor in CEE commercial real estate, by investing further capital as opportunities arise
CAPITAL MANAGEMENT
1 Charles Street, Paramatta, NSW, Australia
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RSA CAPITAL MANAGEMENT
Total Debt R31.5bn
▪ Unsecured debt increased by R1.8bn from FY17 ▪ Two new listed bonds issued at margins of 144 and 170 basis points with terms for 5 and 7 years respectively ▪ CCIRS for EUR110m raised for further investment in GWI ▪ Funded from: − R1.1bn equity DRIP proceeds − R2.2bn net new borrowings − R0.5bn property disposals
Investment Activities Moody’s Rating
▪ Our Baa3 Global Scale Rating is capped at the sovereign rating due to our operational concentration in SA and as with the sovereign rating, is currently under review ▪ We are one of only 3 corporates with a national scale rating of AAA.za
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AUD & EUR Cross Currency Interest Rate Swaps (CCIRS)
▪ Total AUD700m representing 48% of market value of GOZ with a dividend cover of 4.3x ▪ Total EUR196.4m together with the EUR100m direct loans representing 100% of the historical cost of GWI with a dividend cover of 3.9x
Exchange Rate Risk
▪ The ZAR weakened to both the AUD and EUR for the majority of HY18 with subsequent strengthening post the ANC Elective Conference on 16 Dec 2017 ▪ 82% of GOZ dividends are currently hedged for FY18 ▪ 47% of GWI dividends are currently hedged for FY18
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HY18 FY17
Unutilised committed facilities (Rbn) 3.0 4.5 Weighted average term of liabilities (years) 2.8 3.0 Weighted average term of fixed interest rate profile (years) (Incl. AUD & EUR CCIRS and IRS) 3.7 3.9 Weighted average interest rate (%) 9.1 9.2 Weighted average interest rate (%) (Incl. AUD & EUR CCIRS and EUR debt) 7.5 7.4 % debt at fixed interest rate 78.4 85.6 Unencumbered assets (Rbn) (incl. equity accounted and listed investments) 48.5 44.2 Unsecured debt (Rbn) 14.3 12.5
RSA Facilities
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14 880 15 276 15 737 1 803 1 540 1 540 4 286 5 248 6 619 3 284 6 824 7 133 400 400 500
FY16 FY17 HY18
RSA DIVERSIFIED BORROWINGS — NOMINAL VALUE
Debt capital market 14.9% Traditional bank debt 85.1% Unsecured 32.3% Secured 67.7% Debt capital market 24.2% Traditional bank debt 75.8% Unsecured 45.2% Secured 54.8% Debt capital market 24.7% Traditional bank debt 75.3% Unsecured 42.6% Secured 57.4%
R29 288m R24 653 R31 529m
Secured bank debt Secured institutional financier Unsecured bank debt and institutional financier Corporate bonds Commercial paper
FINANCIAL RESULTS
Waterway House, V&A Waterfront
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HY18 Rm HY17 Rm INCREASE/ (DECREASE)
Gross property income 5 487 5 178 6.0% RSA 4 188 3 937 6.4% GOZ 1 299 1 241 4.7% Property expenses (1 192) (1 103) 8.1% RSA (1 006) (933) 7.8% GOZ (186) (170) 9.4% Net property income 4 295 4 075 5.4% Other operating expenses (213) (196) 8.7% RSA (150) (135) 11.1% GOZ (63) (61) 3.3% Net property income after operating expenses 4 082 3 879 5.2% Finance costs (1 308) (1 254) 4.3% RSA (1 015) (963) 5.4% GOZ (293) (291) 0.7% Finance income 360 311 15.8% Investment income from V&A Waterfront 287 256 12.1% Other finance income (1) 73 55 32.7% Investment income from GWI 128
Adjustment for NCI, foreign exchange profit /(loss) and normal taxation (319) (274) 16.4% Distributable income 2 943 2 662 10.6% Dividend for the period 2 943 2 662 10.6%
CONSOLIDATED DISTRIBUTION CALCULATION
* Average exchange rate at R10.45/AUD (HY17: R10.55/AUD) for GOZ.
34 73 655 77 031 80 057 7 027 7 965 8 660 19 083 20 341 20 342 3 813 7 739 450 382
HY16 HY17 HY18
2 754 2 870 3 032 198 256 287 510 649 684 128 11
HY16 HY17 HY18
Book Value of Property Assets EBIT
OFFSHORE CONTRIBUTION
R109 532m 18.6% 7.3% 70.3% R100 215m 19.0% 7.0% 73.6% 0.4% R116 798m 17.4% 7.4% 68.6% 6.6% 24.0% Offshore 19.6% Offshore R3 774m 17.2% 6.8% 76.0% R3 473m 14.7% 5.7% 79.3% 0.3% R4 131m 16.5% 6.9% 73.4% 3.1% RSA V&A Waterfront GOZ Globalworth (1) Stenham 0.3% 3.5%
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23.7% 23.5% 24.0% 3.4% 3.6% 3.6%
HY17 FY17 HY18
13.7% 13.0% 14.3% 4.9% 4.8% 4.8%
HY17 FY17 HY18
SOUTH AFRICA GOZ
27.2% 28.1% 28.8% 2.6% 3.3% 2.9%
HY17 FY17 HY18
V&A WATERFRONT
EXPENSES REMAIN UNDER CONTROL EXPENSE TO INCOME RATIOS (IFRS)
27.1% 27.1% 27.6% 31.4% 29.8% 31.7% 17.8% 18.6% 19.1%
Operating Expense Ratio Property Expense Ratio Operating Expense Ratio Property Expense Ratio Operating Expense Ratio Property Expense Ratio
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HY18 Rm FY17 Rm HY17 Rm HY18-FY17 INCREASE/ (DECREASE)
Property portfolio(1) 111 305 109 442 108 663 1.7% RSA 80 057 76 906 77 032 4.1% GOZ(2) 31 248 32 536 31 631 (4.0%) Equity Investments 12 142 9 920 9 627 22.4% 50% Investment in V&A Waterfront 7 196 7 110 6 610 1.2% 29% Investment in GWI 4 909 2 769 2 783 77.3% Other Investments (Ferguson Place, Storage, Open) 37 42 234 (11.2%) Other property related investments
382 (100.0%) Nominal borrowings(3) 43 512 42 364 44 517 2.7% RSA 31 529 29 288 30 764 7.7% GOZ(2) 11 983 13 076 13 753 (8.4%) Shareholders interest (NAV) 75 371 72 045 69 922 4.6%
CONSOLIDATED BALANCE SHEET (EXTRACTS)
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34.7% 33.4% 33.8%
1 2 3 4 5 6 7
0% 10% 20% 30% 40% 50%
HY17 FY17 HY18
36.7% 35.0% 34.5%
1 2 3 4 5 6 7 0% 10% 20% 30% 40% 50%
HY17 FY17 HY18
SOUTH AFRICA GROUP
42.3% 39.4% 36.5%
1 2 3 4 5 6 7 0% 10% 20% 30% 40% 50%
HY17 FY17 HY18
GOZ(2)
CONSERVATIVE GEARING LEVELS LOAN TO VALUE AND INTEREST COVER RATIOS
3.4x 3.4x 3.9x 3.5x 3.5x 3.4x 3.6x 3.5x 3.4x
LTV (1) Interest cover ratio (incl V&A) LTV (1) Interest cover ratio (incl V&A) LTV (1) Interest cover ratio (incl V&A)
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PROPERTY INVESTMENT AND DEVELOPMENT
RSA (Rm) GOZ (Rm) V&A (Rm)
Development and capex Opening balance Acquisitions Disposals Fair value adjustment Total 76 906 1 054 (479) 1108 1 468 80 057 Fair value adjustment Opening balance Disposals Development and capex Foreign currency translation reserve Total Acquisitions 32 536 518 (1 701) 1 043 (1 213) 31 248 65 Development and capex Opening balance Disposals Total 8 705 8 660 (232) (1) 187
Commitments (Rm) 2 253 147 100
1. Disposal relates to the sale of the bulk along with the sale of the Silo 3 apartments and the reclassification of the Radisson Red Hotel, as it is now owner occupied.
CONCLUSION
Illovo, Umhlanga Ridge, Durban
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PROSPECTS
South Africa
▪ Sentiment has improved but property fundamentals remain under pressure ▪ We estimate a one to two year lag before we start to see a change in property fundamentals, assuming we start to see GDP growth, coupled with private sector investment and foreign direct investment ▪ Moody’s decision on the Sovereign rating is scheduled for 23 March 2018 ▪ The negative yield spread environment remains ▪ Our strategy focuses on streamlining the SA portfolio and growing internationally ▪ We do not believe that the reference amongst analysts and reporters about the listed property sector being sold
those counters that have historically traded at excessive premiums to NAV, or have company specific issues, such as lower distribution growth forecasts communicated to the market ▪ Growthpoint, Redefine, Vukile and Investec Property Fund are all trading at 12 month highs
V&A Waterfront
▪ We expect strong growth to continue in the office and hotel sectors with steady growth in the retail, marine and residential sectors ▪ The key risk identified is the impact of the water crisis on the Western Cape and Cape Town tourism ▪ The development pipeline is expected to meet demand with strong property fundamentals in place
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GOZ
▪ Whilst the Australian domestic economic conditions remain supportive, the property market is competitive. In line with this backdrop, GOZ: − continues to evaluate opportunities to sell assets at premium to book value − continues to evaluate direct asset opportunities, focusing on offices in Sydney & Melbourne, with a preference for listed market acquisitions − is investigating development opportunities − is targeting 3-4% distribution growth − has balance sheet capacity ▪ The dividend withholding tax is expected to be higher coupled with the ZAR strength, negatively impacting distributions to SA ▪ We will continue to support the growth of GOZ going forward, by providing capital as opportunities arise, in line with our internationalisation strategy
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▪ Dividend growth for FY18 should be similar to that achieved for FY17
Dividend Guidance GWI
▪ The economic backdrop is strong and supportive for the property market in both Romania and Poland ▪ GDP estimates for 2018: − Romania 4.1% − Poland 3.8% ▪ Large multi-national tenants continue to be attracted to the region due to the young, educated, affordable and ambitious labour force ▪ Ongoing expansion and diversification of the GWI portfolio is expected to further improve cost
▪ GWI considering moving its listing to the main market
▪ GWI continues to look at further opportunities in Romania and Poland in the office and industrial sectors
THANK YOU
Hilltop Industrial Park, Elandsfontein
ANNEXURES
Growthpoint Business Park, Midrand
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ANNEXURE CONTENTS
02 03 04 05 06 07 08 01 Company highlights Growth in tangible assets and market capitalisation Long bond yield vs. GRT forward yield Contribution to distributable income Portfolio overview Property investment activities Expense to income ratios (gross) Loan exposure per financier RSA Debt expiry profile per financier RSA Fixed interest rate expiry profile RSA Wealth created & distributed to stakeholders Shares issued & beneficial shareholders holding >2% at HY18 Portfolio overview RSA (excl. V&A) 10 11 12 13 14 15 09 16 Key performance indicators RSA Split of RSA property portfolio Growth in dividend per share (cents)
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ANNEXURE CONTENTS
17 18 19 20 21 22 23 25 26 27 28 29 30 31 24 Developments & capital expenditure RSA Commitments RSA Non-current assets held for sale RSA Retail overview RSA Office overview RSA Industrial overview RSA Key performance indicators V&A Waterfront (50%) Portfolio overview V&A Waterfront (50%) Split of V&A Waterfront property portfolio Developments & commitments V&A Waterfront (50%) Net property & distributable income analysis V&A Waterfront (50%) V&A Waterfront overview GLA & vacancy reconciliation V&A Waterfront (50%) 32 GLA & vacancy reconciliation RSA Key performance indicators GOZ Acquisitions & disposals RSA
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ANNEXURE CONTENTS
34 35 36 37 38 39 Split of GOZ property portfolio Acquisitions & disposals GOZ Developments & commitments GOZ Net property income analysis GOZ GOZ overview GLA & vacancy reconciliation GOZ 33 Portfolio overview GOZ
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Company Highlights
▪ Largest South African primary listed REIT ▪ 21st largest company in the FTSE/JSE Top 40 Index ▪ Gross market capitalisation R80.4bn (at R27.66 per share) ▪ Liquid and tradeable with R4.5bn average value of shares traded per month ▪ 8th year inclusion in FTSE/JSE Responsible Index ▪ 1st year inclusion in the FTSE4Good Emerging Index ▪ Top 10 constituent of FTSE EPRA/NAREIT Emerging Index
Investment Proposition
▪ Sustainable quality of earnings ▪ 14 year track record of uninterrupted dividend growth ▪ Underpinned by high-quality physical property assets ▪ Diversified across international geographies and sectors ▪ Dynamic and proven management track record ▪ Best practice corporate governance ▪ Transparent reporting ▪ Level 3 BEE contributor
ANNEXURE 01: COMPANY HIGHLIGHTS
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500 1000 1500 2000 2500 3000 20 40 60 80 100 120 140 HY12 FY12 HY13 FY13 HY14 FY14 HY15 FY15 HY16 FY16 HY17 FY17 HY18
ANNEXURE 02: GROWTH IN TANGIBLE ASSETS AND MARKET CAPITALISATION
Rbn cents 3 000 2 500 2 000 1 500 1 000 500 2 766c 2 597c Tangible assets (Rbn) Market cap (Rbn) Share price (cents) NTAV per share (cents)
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4% 5% 6% 7% 8% 9% 10% 11%
12/30/2011 6/30/2012 12/31/2012 6/30/2013 12/31/2013 6/30/2014 12/31/2014 6/30/2015 12/31/2015 6/30/2016 12/31/2016 6/30/2017GRT Forward Yield SA Long Bond Yield
8.6%
ANNEXURE 03: LONG BOND YIELD VS. GRT FORWARD YIELD
Dec 2011 June 2012 Dec 2012 June 2013 Dec 2013 June 2014 Dec 2014 June 2015 Dec 2015 June 2016 Dec 2016 June 2017
7.8%
Dec 2017
Greencourt “A” & “B”, Bucharest, Romania Source: Anchor Stockbrokers
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78.5 84.4 89.5 95.0 101.2 44.5 82.8 44.5 94.3 100.8 FY14 FY15 FY16 FY17 FY18
ANNEXURE 04: GROWTH IN DIVIDEND PER SHARE (cents)
195.8 161.3 173.4 183.8 101.2
7.5% 6.0% 6.5% 6.5%
The Place, Sandhurst, Sandton
Interim dividend Special dividend Final dividend
52
1 862 2 001 2 119
198 235 279 361 426 417 10 128 HY16 HY17 HY18
ANNEXURE 05: CONTRIBUTION TO DISTRIBUTABLE INCOME
R2 662m 16.0% 8.8% 75.2% R2 431m 14.8% 8.1% 76.7% 0.4% R2 943m 14.2% 9.5% 72.0%
Anslow, Bryanston
RSA V&A Waterfront GOZ Stenham Globalworth 4.3%
53
RETAIL OFFICE INDUSTRIAL RSA TOTAL GOZ (1) (3) V&A (1)
Number of properties 54 182 227 463 56 1 GLA (m²) 1 423 816 1 757 898 2 244 535 5 426 249 1 003 529 229 315 Vacancy (m²) (5) 42 572 147 101 92 696 282 369 24 477 2 723 Vacancy (%) (5) 3.0 8.4 4.1 5.2 2.1 1.2 Valuation (Rm) 31 245 35 824 12 988 80 057 31 248 8 660 Value per m² (excl. bulk) (R) 21 931 18 770 5 342 14 045 AUD3 222 35 838 Average gross rental (per m²/month) (R) (5) 184.8 160.0 52.0 121.2 AUD239 (2) 231.0 − Average annualised yield (%) (5) 7.7 8.8 9.1 8.4 6.9 − 7.8 − Average in force escalations (%) (5) 7.2 − 8.1 − 8.2 7.7 3.3 − 8.3 Weighted average lease period (years) (5) 3.2 3.7 3.2 3.5 5.6 8.0 − Renewal success rate (%) (5) 84.3 46.9 63.9 61.9 35.1 91.9 Weighted average renewal lease period (years) (5) 4.0 2.8 3.3 3.3 − 4.3 8.0 − Weighted average renewal growth (%) (5) 0.4 0.3 (2.5) (0.5) (7.8) 4.9 Weighted average future escalations on renewals (%) 7.2 8.6 8.3 7.9 3.4 7.5 Total letting success rate (%) (5) 70.0 47.7 74.3 64.0 38.5 85.8 Arrears (Rm) (4) 44.9 15.3 16.4 76.6 7.9 36.4 Provision for bad debts (Rm) (4) 12.1 5.3 11.5 28.9
Bad debts (I/S) (Rm) (4) 2.9 0.8 3.4 7.1
PORTFOLIO OVERVIEW
4. Arrows indicate increase / decrease from HY17 to HY18. 5. Arrows indicate increase / decrease from FY17 to HY18.
54
ANNEXURES RETAIL Rm OFFICE Rm INDUSTRIAL Rm RSA TOTAL Rm GOZ(1) Rm TOTAL Rm V&A(1) Rm
Opening balance – 1 July 2017 29 588 34 732 12 586 76 906 32 536 109 422 8 705 Purchase price of acquisitions 17,35 922
1 054 518 1 572
17,35 (211)
(479) (1 701) (2 180) (232) (2) Developments and capex 18,28,36 196 571 341 1 108 65 1 173 187 Fair value adjustment 750 521 197 1 468 1 043 2 511
(1 213)
31 245 35 824 12 988 80 057 31 248 111 305 8 660 Long-term property assets 31 245 35 698 12 954 79 897 31 248 111 145 8 660 Classified as held for sale 20
34 160
19,28,36 67 1 489 697 2 253 147 2 400 100
ANNEXURE 07: PROPERTY INVESTMENT ACTIVITIES
55
35.6% 35.0% 35.6% 3.2% 3.0% 3.0%
HY17 FY17 HY18
14.5% 13.9% 14.9% 4.9% 4.8% 4.8%
HY17 FY17 HY18
SOUTH AFRICA GOZ
33.2% 35.6% 34.6% 2.4% 2.9% 2.6%
HY17 FY17 HY18
V&A WATERFRONT
ANNEXURE 08: EXPENSE TO INCOME RATIOS (GROSS)*
* This ratio is presented where expense recoveries have been reclassified as revenue as per SA Reit Association Best Practice guidance.
38.0% 38.8% 38.6% 38.5% 35.6% 37.2% 18.7% 19.4% 19.7%
Operating Expense Ratio Property Expense Ratio Operating Expense Ratio Property Expense Ratio Operating Expense Ratio Property Expense Ratio
56
ANNEXURE 09: LOAN EXPOSURE PER FINANCIER RSA
22% 24% 24% 14%
5%
4%
4%
2%
1%
RMB Standard Bank Omsfin LibFin Absa Investec China Construction Bank JSE (Corporate Bonds) Nedbank
57
0% 5% 10% 15% 20% 25% HY19 HY20 HY21 HY22 HY23 HY24 HY25
ANNEXURE 10: DEBT EXPIRY PROFILE PER FINANCIER RSA
19% 19% 21% 16% 12% 4% 9%
Absa China Construction Investec JSE (Corporate Bonds) LibFin Nedbank Omsfin RMB Standard Bank
58
0% 5% 10% 15% 20% 25% Floating HY19 HY20 HY21 HY22 HY23 HY24 HY25 HY26 HY27 HY28 HY29
ANNEXURE 11: FIXED INTEREST RATE EXPIRY PROFILE RSA
22% 9% 18% 12% 4% 5% 0% 2% 8% 16% 2% 2%
59
259 277 312 2 444 2 688 2 969
180
226 268
1 293 1 426 1 318 471 516 587 1 500 3 000 4 500 6 000 HY16 HY17 HY18
ANNEXURE 12: WEALTH CREATED & DISTRIBUTED TO STAKEHOLDERS (1)
R5 133m R4 647m R5 454m
Rm
1. Wealth created based on a look-through principle and therefore includes RSA, GOZ and V&A Waterfront.
10.1% 27.8% 3.9% 52.6% 5.6% 27.8% 4.4% 52.4% 5.3% 10.1% 10.8% 24.2% 4.9% 54.4% 5.7%
Employees Shareholders Minority interest holders Providers of debt Governments – direct taxes
60
SHARES
Opening balance 1 July 2017 2 888 462 582 Dividend reinvestment (September 2017) 45 739 890 Closing balance 31 December 2017 2 934 202 472 Treasury shares held for staff share scheme (27 248 384) Shares in issue (net of treasury shares) 2 906 954 088
% HOLDING SHARES HELD
Government Employees Pension Fund 12.4 364 342 177 Stanlib Asset Management Ltd 5.7 166 199 403 Southern Palace Properties (Pty) Ltd 5.4 159 442 921 Coronation Fund Managers Ltd 5.2 151 833 345 Investec Asset Management (Pty) Ltd 4.5 132 738 874 Old Mutual Group 4.3 127 171 359 The Vanguard Group 4.0 117 025 871 Prudential Portfolio Managers 3.6 104 359 282 Sesfikile Capital 3.1 89 606 134 Momentum Asset Management 3.0 89 108 180 Sanlam Investment Management 3.0 86 420 163 BEE Consortium 2.6 77 666 667 Meago Asset Managers 2.4 70 181 286 Blackrock Institutional Trust Company 2.2 65 453 278 State Street Global Advisors 2.0 57 868 159 Total shareholders holding >2% 63.4 1 859 417 099 Other 36.6 1 074 785 373 Total 100.0 2 934 202 472 Foreign shareholding: 28% of institutional ownership and 22% of total shares issued
ANNEXURE 13:
SHARES ISSUED & BENEFICIAL SHAREHOLDERS HOLDING >2% AT HY18
61
HY18 FY17 HY17
Vacancies (%) 5.2 4.4 5.4 Total arrears (Rm) 76.6 60.4 82.8 Provision for bad debts (B/S) (Rm) 28.9 26.1 34.2 Bad debts (I/S) (Rm) 7.1 13.2 12.0 Average in force escalations (%) 7.7 7.8 7.6 Renewal success rate (%) 61.9 73.6 70.3 Total letting success rate (%) 64.0 85.3 72.5 Weighted average renewal growth (%) (0.5) 1.0 0.8 Weighted average future escalations on renewals (%) 7.9 7.8 7.6 Number of employees 620 630 649 Net property income per employee (R) 5 132 258 9 806 349 4 628 659
ANNEXURE 14: KEY PERFORMANCE INDICATORS RSA
The Towers, Sandton
62
HY16 HY17 HY18 16.4% 45.9% 37.7% 17.1% 45.4% 37.5% 17.0% 44.7% 38.3% HY17 FY17 HY18 15.9% 45.1% 39.0% 16.2% 44.7% 39.1% 16.4% 45.2% 38.4%
NET PROPERTY INCOME PROPERTY PORTFOLIO VALUE
HY17 FY17 HY18 49.2% 38.5% 49.0% 39.3% 11.7% 49.5% 38.6% 11.9%
NUMBER OF PROPERTIES
ANNEXURE 15: PORTFOLIO OVERVIEW RSA (EXCL.V&A)
R2 865m R3 004m R3 182m 473 471 463 R77 032m R76 906m R80 057m
12.3% Retail Office Industrial Retail Office Industrial Retail Office Industrial
63
45% 39% 16% 54% 23% 9% 7%
4%
2% 1%
32% 27% 41% 57% 22% 11% 5%
3%
1% 1%
VALUE VALUE GLA GLA
ANNEXURE 16: SPLIT OF RSA PROPERTY PORTFOLIO
Office Retail Industrial Greater JHB Western Cape Kwazulu-Natal Pretoria Eastern Cape North West Other
64
ACQUISITIONS SECTOR DATE PURCHASE PRICE Rm YIELD
Remaining 58% of N1 City Mall, Goodwood, Cape Town Retail October 2017 922.1 8.0% Lascelles, Meadowbrook, Germiston Industrial November 2017 132.0 9.3% Total 1 054.1
ANNEXURE 17: ACQUISITIONS & DISPOSALS RSA
DISPOSALS SECTOR DATE SELLING PRICE Rm PROFIT/(LOSS) ON COST Rm PROFIT/(LOSS) ON BOOK VALUE Rm YIELD
OK Empangeni, Empangeni, Durban Retail July 2017 172.5 111.3 (2.5) 9.3% Jet Bloemfontein, Bloemfontein Retail September 2017 38.3 14.5 3.0 9.6% Pine Industrial Park, New Germany Industrial July 2017 76.8 28.4 1.7 8.3% Anchor Industrial Park, Jetpark, Boksburg Industrial October 2017 70.0 31.4 3.8 9.6% Meadowbrook, Meadowbrook, Germiston Industrial December 2017 38.5 8.8 (0.7) 11.3% Neon, Fulcom Park, Springs Industrial December 2017 28.0 18.1 (1.0) 9.1% Whitworth, Heriotdale Ext 8, Johannesburg Industrial August 2017 16.0 7.5 (0.2) 8.3% Bardene, Bardene, Boksburg Industrial October 2017 14.0 4.1 1.7 11.2% Greenhills Centre, Elandsfontein Industrial July 2017 13.4 2.1
Northreef, Elandsfontein Industrial December 2017 11.1 4.6 0.9 9.3% Total 478.6 230.8 6.7
65
DEVELOPMENTS & CAPITAL EXPENDITURE (1) SECTOR ESTIMATED COMPLETION DATE HY18 Rm
Greenacres, Greenacres, Port Elizabeth Retail December 2017 39.2 Other, below R20m Retail 156.3 Total Retail 195.5 Discovery Head Office (55%), Sandhurst, Sandton Office November 2017 275.7 Lakeside 1, Centurion, Pretoria Office May 2019 79.3 144 Oxford Road, Rosebank Office September 2019 53.4 Sandton Summit, Sandton Office Vacant Land 28.1 Other, below R20m Office 134.3 Total Office 570.8 Samrand Erf 5437, Midrand Industrial December 2017 73.7 Growthpoint Industrial Estate, Erf 307, Meadowdale, Germiston Industrial January 2018 46.4 Runway Park, Mobeni, Durban Industrial July 2018 44.5 Samrand Erf 5456, Midrand Industrial November 2017 23.1 Mill Road Park, Bellville, Cape Town Industrial September 2018 22.5 Other, below R20m Industrial 130.5 Total Industrial 340.7 Total RSA 1 107.0 Development Expenditure 815.3 Capital Expenditure 291.7
ANNEXURE 18: DEVELOPMENTS & CAPITAL EXPENDITURE RSA
66
COMMITMENTS SECTOR ESTIMATED COMPLETION/ TRANSFER DATE HY18 Rm
Developments(1) 2 017.9 River Square Shopping Centre, Three Rivers, Vereeniging Retail January 2018 37.8 144 Oxford Road, Rosebank Office September 2019 600.2 Exxaro Head Office and AECOM, Centurion Office May 2019 408.5 Discovery Head Office (55%), Sandhurst, Sandton Office April 2018 123.3 Draper on Main, Cape Town Office March 2019 112.5 Boulevard Phase 3, Umhlanga Ridge, Umhlanga Rocks, Durban Office April 2018 57.4 32 on Kloof, Cape Town Office June 2018 42.5 GZI, Wadestone Park, Wadeville, Germiston Industrial December 2018 156.5 Runway Park, Mobeni, Durban Industrial July 2018 152.8 Mill Road Park, Bellville, Cape Town Industrial September 2018 110.2 Midrand Central Business Park, Midrand Industrial November 2018 52.4 Other below R30m Various Various 163.8 Acquisitions 235.0 Exxaro Corporate Centre & vacant land, Pretoria (2) Office March 2018 130.0 Mount Edgecombe land Industrial March 2018 105.0 Total 2 252.9
ANNEXURE 19: COMMITMENTS RSA
67
PROPERTIES HELD FOR SALE SECTOR HY18 Rm
Salga House, Cape Town Office 91.0 Dunkeld Office Park, Dunkeld West, Johannesburg Office 35.0 Laser Commercial Erf 65, Clayville, Midrand Industrial 19.4 Laser Commercial Erf 2 & 3, Clayville, Midrand Industrial 9.2 Equitable Dev Co, Florida, Roodepoort Industrial 5.3 Total RSA 159.9
ANNEXURE 20: NON-CURRENT ASSETS HELD FOR SALE RSA
68
TOP 10 PROPERTIES BY VALUE FAIR VALUE Rm GLA m²
Brooklyn Mall and Design Square (75%), Brooklyn, Pretoria 2 327 55 989 Geenacres, Greenacres, Port Elizabeth 1 649 50 453 Festival Mall, Kempton Park, Johannesburg 1 644 83 362 N1 City Mall (100%), Goodwood, Cape Town 1 604 63 442 Waterfall Mall, Rustenburg 1 546 49 681 Lakeside Mall, Benoni, Johannesburg 1 493 65 366 Vaal Mall (66.6%), Vanderbijl Park, Johannesburg 1 315 44 257 La Lucia Mall, La Lucia, Durban 1 282 37 296 Kolonnade (50%), Montana Park, Pretoria 1 225 38 317 Bayside Mall, Table View, Cape Town 1 164 45 218 Sub Total 15 249 533 381 Balance of the sector 15 996 890 435 Total for the sector 31 245 1 423 816
TOP 10 TENANTS GLA(1) m²
Edcon Holdings Ltd 119 437 The Foschini Group Ltd 60 908 Steinhoff Africa Retail Ltd 73 182 Shoprite Holdings Ltd 141 340 Mr Price Group Ltd 57 865 Pick n Pay Stores Ltd 115 971 Truworths International Ltd 33 536 Woolworths Holdings Ltd 89 700 Massmart Holdings Ltd 66 785 Clicks Group Ltd 28 839 Sub Total 787 563 Balance of the sector 593 681 Total for the sector (excluding vacancies) 1 381 244
15.8 6.4 14.1 19.8 20.7 15.9 4.3 3.0
HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant
10.0 7.4 14.9 20.8 21.5 19.0 3.9 2.5
HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant
LEASE EXPIRY (% OF GLA) LEASE EXPIRY (% OF GROSS MONTHLY RENTAL)
ANNEXURE 21: RETAIL OVERVIEW RSA
69
TOP 10 PROPERTIES BY VALUE FAIR VALUE Rm GLA m²
Investec, 100 Grayston Drive, Sandton, Johannesburg 2 200 70 945 Discovery 1 & 2 (55%), Sandton, Johannesburg (2) 1 830
1 762 125 715 Constantia Office Park, Roodepoort, Johannesburg 1 105 73 033 Inanda Greens, Wierda Valley, Sandton, Johannesburg 996 40 774 The Place, Sandton, Johannesburg 977 34 679 MontClare Place, Claremont, Cape Town 636 29 645 Country Club Estate, Woodmead, Johannesburg 557 33 142 Inyanda 1,3 and 4, Parktown North, Johannesburg 489 23 196 Golf Park, Bellville, Cape Town 479 30 021 Sub Total 11 031 461 150 Balance of the sector 24 793 1 296 748 Total for the sector 35 824 1 757 898
TOP 10 TENANTS GLA(1) m²
Investec Bank Ltd 83 781 Deloitte (South Africa) 47 680 Absa Bank Ltd 21 484 Transnet 31 535 EOH Holdings Ltd 40 799 Anglogold Ashanti Ltd 19 381 Firstrand Bank Ltd 17 372 Edward Nathan Sonnenbergs Inc 14 889 Nestle South Africa (Pty) Ltd 11 986 Norton Rose SA 7 969 Sub Total 296 876 Balance of the sector 1 313 921 Total for the sector (excluding vacancies) 1 610 797
17.9 9.0 10.2 19.0 16.7 16.5 2.3 8.4 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant 23.0 8.5 9.2 18.7 15.6 16.1 2.6 6.3 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant
LEASE EXPIRY (% OF GLA) LEASE EXPIRY (% OF GROSS MONTHLY RENTAL)
ANNEXURE 22: OFFICE OVERVIEW RSA
70
TOP 10 PROPERTIES BY VALUE FAIR VALUE Rm GLA m²
Growthpoint Business Park, Midrand 622 68 685 Montague Business Park (25%), Montague Gardens, Cape Town 364 32 487 Hilltop Industrial Estate, Elandsfontein, Johannesburg 345 76 283 Isobar, Isando, Kempton Park, Johannesburg 229 50 219 Central Park, Cape Town, Elsiesrivier, Cape Town 212 49 135 Adcock Ingram, Midrand 205 21 536 Omni Park, Aeroton, Johannesburg 198 41 331 Rivonia Crossing 2, Sunninghill, Sandton 185 19 778 Runway Park, Mobeni, Durban 179 12 160 N1 Business Park (20%), Midrand 176 21 576 Sub Total 2 715 393 181 Balance of the sector 10 276 1 851 354 Total for the sector 12 991 2 244 535
TOP 10 TENANTS GLA(1) m²
The Bidvest Group Ltd 58 590 Adcock Ingram Holdings Ltd 27 280 Consolidated Steel Industries (Pty) Ltd 60 267 Scania SA (Pty) Ltd 23 717 Allied Electronic Corporation Ltd 30 413 Distell Ltd 45 636 Pioneer Foods Ltd 20 122 Heneways Freight Services (Pty) Ltd 25 573 Barloworld Ltd 18 238 Nestle South Africa (Pty) Ltd 16 255 Sub Total 326 091 Balance of the sector 1 825 748 Total for the sector (excluding vacancies) 2 151 839
12.4 11.0 11.1 18.0 19.0 22.2 2.2 4.1 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant 12.7 10.0 13.1 15.0 18.3 24.4 2.5 4.0 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Monthly Vacant
LEASE EXPIRY (% OF GLA) LEASE EXPIRY (% OF GROSS MONTHLY RENTAL)
ANNEXURE 23: INDUSTRIAL OVERVIEW RSA
71
TOTAL GLA m² VACANT AREA m² VACANCY %
Balance as at 1 July 2017 5 425 006 240 978 4.4 GLA adjustments 3 804 (461) Disposals (79 757) (174) Acquisitions 53 124 17 442 Developments and extensions 24 072 24 072 Leases expired in the period (1) 424 477 Renewals of expired leases (2) (262 770) New letting of vacant space (238 560) Leases terminated 77 365 Balance as at 31 December 2017 5 426 249 282 369 5.2
ANNEXURE 24: GLA & VACANCY RECONCILIATION RSA
72
HY18 FY17 HY17
Vacancies (%) 1.2 0.8 1.1 Total arrears (Rm) 36.4 35.5 30.5 Provision for bad debts (B/S) (Rm) 6.2 5.6 8.3 Bad debts (I/S) (Rm)
8.3 8.0 7.8 Renewal success rate (%) 91.9 98.2 97.1 Total letting success rate (%) 85.8 98.3 93.9 Weighted average renewal growth (%) 4.9 7.9 6.0 Weighted average future escalations on renewals (%) 7.5 7.9 8.1 Number of employees (100%) (1) 204 188 192 Net property income per employee (R) 2 931 373 5 553 191 2 645 833
ANNEXURE 25: KEY PERFORMANCE INDICATORS V&A WATERFRONT (50%)
V&A Waterfront, Cape Town
1. An additional 97 staff are employed in terms of management contract with the Radisson Red Hotel.
73
51.9% 50.4% 21.2% 22.1% 17.0% 18.1% 9.9% 9.4%
HY16 HY17 HY18
47.5% 51.7% 50.5% 51.1% 24.7% 24.5% 26.0% 11.8% 12.5% 10.6% 5.8% 6.8% 7.0% 6.0% 5.7% 5.3%
HY17 FY17 HY18
NET PROPERTY INCOME PROPERTY PORTFOLIO VALUE
ANNEXURE 26: PORTFOLIO OVERVIEW V&A WATERFRONT (50%)
R254m R211m R299m R7 965m R8 660m R8 705m
23.7% 20.1% 8.7%
Retail Office Hotel & Residential Fishing & Industrial Retail Office Hotel & Residential Fishing & Industrial Bulk
74
51% 26% 11% 7% 5% 47% 24% 20% 9% 21% 31% 23% 25% 95% 5%
Retail Office Fishing & Industrial Hotel & Residential Bulk
PROPERTY PORTFOLIO BY VALUE NET PROPERTY INCOME PROPERTY PORTFOLIO BY GLA DEVELOPED VS. UNDEVELOPED BY VALUE
ANNEXURE 27: SPLIT OF V&A WATERFRONT PROPERTY PORTFOLIO
Developed Undeveloped
75
SECTOR ESTIMATED COMPLETION DATE HY18 Rm
DEVELOPEMNETS & CAPITAL EXPENDITURE (1) Battery Parkade Office May 2018 65.0 No 6 Silo - Radisson Red Hotel Hotel July 2017 21.0 Cruise Liner terminal Office November 2017 16.0 Other below R30m Various Various 85.0 Total 187.0 COMMITMENTS Dock Road Junction Parking December 2018 35.1 Battery Parkade Office May 2018 23.8 Waterway House (2) Office May 2017 (2) 18.6 Other below R15m Various Various 22.2 Total 99.7
ANNEXURE 28: DEVELOPMENTS & COMMITMENTS V&A WATERFRONT (50%)
76
HY18 Rm HY17 Rm INCREASE/ (DECREASE)
Gross property revenue 420 349 20.3% Property related 397 349 Radisson Red Hotel 19
4
(121) (95) 27.4% Property related (107) (95) Radisson Red Hotel (11)
(3)
299 254 17.1% Other operating expenses (12) (9) 33.3% Net finance costs (7) (9) (22.2%) Other non-distributable amounts (1) (1) 0.0% Distributable income 279 235 18.7% Adjustments (27) (5) Waterway House (7) (2) Virgin Active (4) (1) Radisson Red Hotel (7)
(9) (2) Adjusted “like-for-like” distributable income 252 230 9.6%
ANNEXURE 29: NET PROPERTY & DISTRIBUTABLE INCOME ANALYSIS V&A WATERFRONT (50%)
77
TOP 10 TENANTS (100%) GLA(1) m² Allan Gray (Pty) Ltd 18 520 Nedbank Group Ltd 25 432 Legacy Hotels 16 226 Edcon Holdings Ltd 7 518 Tourvest Holdings Ltd 3 052 PWC 9 418 Sun International Hotels 17 100 Newmark Hotels 7 564 The Foschini Group Ltd 3 014 Woolworths Holdings Ltd 7 682 Subtotal 115 526 Balance of V&A 337 658 Total for V&A Waterfront (excluding vacancies) (100%) 453 184 48 8 12 4 13 14 1 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Vacant
LEASE EXPIRY (% OF GLA)
33 10 10 8 18 21 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Vacant
LEASE EXPIRY (% OF GROSS MONTHLY RENTAL)
ANNEXURE 30: V&A WATERFRONT OVERVIEW
78
TOTAL GLA m2 VACANT AREA m2 VACANCY %
Balance as at 1 July 2017 223 016 1 734 0.8 GLA adjustments (10) (10) Developments and extensions 6 309 6 309 Leases expired in the period (1) 10 462 Renewals of expired leases (2) (9 618) New letting of vacant space (6 791) Leases terminated 637 Balance as at 31 December 2017 229 315 2 723 1.2
ANNEXURE 31: GLA & VACANCY RECONCILIATION V&A WATERFRONT (50%)
79
HY18 FY17 HY17
Vacancies (%) (1) 2.1 1.3 1.3 Total arrears (Rm) 7.9 3.4 7.0 Provision for bad debts (B/S) (Rm)
35.1 81.4 95.0 Total letting success rate (%) 38.5 85.2 76.6 Weighted average renewal growth (%) (7.8) (7.7) (4.9) Weighted average future escalations on renewals (%) (2) 3.4 3.3 3.8 Number of employees 24 23 22 Net property income per employee (R) 46 375 000 99 695 652 48 681 818
ANNEXURE 32: KEY PERFORMANCE INDICATORS GOZ
not material for the portfolio, it is a big percentage increase at c. 50%. The portfolio occupancy has been c. 98% for the last 5 years.
Green Square Close, Fortitude Valley, QLD, Australia
80
47.1% 53.4% 62.2% 52.9% 46.6% 37.8% 9.84 10.55 10.45 9.4 9.6 9.8 10.0 10.2 10.4 10.6 10.8
0.00 200.00 400.00 600.00 800.00 1000.00 1200.00HY16 HY17 HY18 Office Industrial average exchange rate 26 26 25 33 31 31 HY17 FY17 HY18
NET PROPERTY INCOME NUMBER OF PROPERTIES
65.6% 66.0% 65.2% 34.4% 34.0% 34.8% 9.9 10.04 9.66 9.4 9.5 9.6 9.7 9.8 9.9 10.0 10.1
0.00 5000.00 10000.00 15000.00 20000.00 25000.00 30000.00 35000.00HY17 FY17 HY18 Office Industrial closing exchange rate
PROPERTY PORTFOLIO VALUE
ANNEXURE 33: PORTFOLIO OVERVIEW GOZ
R1 071m R826m R1 113m 57 59 56 R32 536m R31 631m R31 248m
NUMBER OF PROPERTIES
AUD/ZAR AUD/ZAR Office Industrial Office Industrial Office Industrial
81
66% 34% 29% 26% 27% 6%
6%
5%
1%
29% 71% 42% 17% 15% 12%
11%
2%
1%
VALUE (AUD) VALUE GLA GLA
ANNEXURE 34: SPLIT OF GOZ PROPERTY PORTFOLIO
Office Industrial Victoria Queensland New South Wales South Australia Western Australia ACT Tasmania
82
ACQUISITIONS (1) SECTOR DATE HY18 Rm HY18 AUDm
2 Hugh Edwards Drive, Perth Airport, Western Australia Industrial October 2017 185.7 17.4 58 Tarlton Crescent, Perth Airport, Western Australia Industrial October 2017 157.6 14.8 10 Hugh Edwards Drive, Perth Airport, Western Australia Industrial October 2017 92.3 8.7 36 Tarlton Crescent, Perth Airport, Western Australia Industrial October 2017 82.2 7.7 Total 517.8 48.6
ANNEXURE 35: ACQUISITIONS & DISPOSALS GOZ
DISPOSALS
1231-1241, Sandgate Road, Nundah, Queensland (2) Office July 2017 1 054.1 103.5 522-550 Wellington Road, Mulgrave, Victoria (2) Industrial December 2017 646.8 65.9 Total 1 700.9 169.4
83
DEVELOPMENT & CAPITAL EXPENDITURE SECTOR ESTMATAED COMPLETION DATE HY18 Rm HY18 AUDm
Building 1 & 3, 572-576 Swan Street, Richmond, Victoria Office December 2017 18.4 1.7 333 Ann Street, Brisbane, Queensland Office December 2017 13.1 1.2 5 Viola Place, Brisbane Airport, Queensland Industrial May 2018 14.7 1.4 Other Various 18.5 2.1 Total 64.7 6.4
ANNEXURE 36: DEVELOPMENTS & COMMITMENTS GOZ
COMMITMENTS (1)
1 Charles Street, Paramatta, New South Wales Office June 2019 59.4 6.0 Building 2, 572-576 Swan Street, Richmond, Victoria Office June 2019 37.6 3.8 120-132 Atlantic Drive, Keysborough, Victoria Industrial December 2028 24.8 2.5 1 500 Ferntree Gully Road, Knoxfield, Victoria Industrial August 2024 24.8 2.5 Total 146.6 14.8
84
HY18 AUDm HY17 AUDm ICREASE / (DECREASE)
Gross property revenue 126.0 131.5 (4.2%) Property expenses (19.6) (18.0) (8.9%) Net property income 106.4 113.5 (6.3%) Adjustments (20.4) (26.2) Acquisitions and developments (18.0) (8.1) Disposals (2.4) (12.2) GMF distribution
Adjusted “like-for-like” net property income 86.0 87.3 (1.7%) Office 48.9 49.3 (1.0%) Industrial 37.1 38.0 (2.5%)
ANNEXURE 37: NET PROPERTY INCOME ANALYSIS GOZ
85
TOP 10 PROPERTIES BY VALUE FAIR VALUE Rm GLA m²
1 Charles Street, Parramatta, NSW Office 3 069 32 356 70 Distribution Street, Larapinta, QLD Industrial 2 129 76 109 75 Dorcas Street, South Melbourne, VIC Office 1 822 23 811 20 Colquhoun Road, Perth Airport, WA Industrial 1 584 80 374 Optus Centre, 15 Green Square Close, QLD Office 1 376 16 442 Building C, 219 - 247 Pacific Highway, Artarmon, NSW Office 1 227 14 375 333 Ann Street, Brisbane, QLD Office 1 189 16 394 3 Murray Rose Avenue, Sydney Olympic Park, NSW Office 995 13 423 5 Murray Rose Avenue, Sydney Olympic Park, NSW Office 990 12 386 CB1, 22 Cordelia Street, South Brisbane, Queensland Office 942 11 529 Sub Total 15 323 297 199 Balance of GOZ 15 925 706 330 Total for GOZ 31 248 1 003 529
TOP 10 TENANTS GLA(1) m²
Woolworths 282 041 NSW Police Department 32 356 Commonwealth of Australia 24 370 Linfox 58 077 GE Capital Finance Australasia(²) 15 957 Samsung Electronics 13 423 Lion 12 317 Australia and New Zealand Banking Group 13 744 Jacobs Group 8 207 Central SEQ Distributor Retailer Authority 7 663 Sub Total 468 155 Balance of GOZ 510 897 Total for GOZ (excluding vacancies) 979 052 56 20 6 12 2 2 2 HY24 and beyond By HY23 By HY22 By HY21 By HY20 By HY19 Vacant
LEASE EXPIRY (% OF INCOME)
ANNEXURE 38: GOZ OVERVIEW
86
TOTAL GLA m2 VACANCY(1) %
Balance as at 1 July 2017 1 053 148 1.3 GLA adjustments (442) Disposals (81 124) Acquisitions, developments and extensions 31 947 Balance as at 31 December 2017 1 003 529 2.1
ANNEXURE 39: GLA & VACANCY RECONCILIATION GOZ
THANK YOU
Deloitte, La Lucia Ridge, Durban