Presentation June 2017 1 Capital Raise June 2017 1. Spear REIT at - - PowerPoint PPT Presentation

▶
presentation june 2017
SMART_READER_LITE
LIVE PREVIEW

Presentation June 2017 1 Capital Raise June 2017 1. Spear REIT at - - PowerPoint PPT Presentation

Oct 10, 2023 263 likes •768 views

Capital Raise Presentation June 2017 1 Capital Raise June 2017 1. Spear REIT at a Glance Table of Contents 2. Highlights 3. Financial Performance 4 months ended 28 February 2017 4. Group Structure & Management 5. Portfolio Overview MISSION

slide-1
SLIDE 1

Capital Raise June 2017

1 Capital Raise Presentation June 2017

slide-2
SLIDE 2

Capital Raise June 2017

2

“To be the leading Western Cape-focused REIT and to consistently grow our distribution per share ahead of inflation and within the top quartile of our peer group.”

Table of Contents

  • 1. Spear REIT at a Glance
  • 2. Highlights
  • 3. Financial Performance 4 months

ended 28 February 2017

  • 4. Group Structure & Management
  • 5. Portfolio Overview
  • 6. Capital Raise Rationale
  • 7. Subsequent Transactions
  • 8. Revised Financial Forecast

FY 2018-2019

  • 9. Capital Raise – Timing & Process
  • 10. Outlook
  • 11. Questions
  • 12. Appendix – Top 15 Spear Reit Assets

MISSION STATEMENT

slide-3
SLIDE 3

Capital Raise June 2017

3

Spear REIT at a Glance

slide-4
SLIDE 4

Capital Raise June 2017

4

Portfolio Value R1.44 billion Rentable Area (Gla) 172 503m2 No Of Properties 25 Occupancy Rate 99% Average Escalation % 8% Average Portfolio Rental R91/m2 Wale 46 months Gearing (Ltv) 33% Average Property Value R57.8m Average Property Valuation per m2 R8 380/m2 R2.64 billion 306 702m2 31 99% 8% R85/m2 51 months 45% R85.2m R8 615/m2 As at 28 February 2017 Post Transfer – Anticipated Transfer July 2017

Spear REIT at a Glance

slide-5
SLIDE 5

Capital Raise June 2017

5

Highlights –

4 months to 28 February 2017

slide-6
SLIDE 6

Capital Raise June 2017

6

4 months ended 28 February 2017

DISTRIBUTION PER SHARE 23.51 cents ⬆ 16.75% over forecast TANGIBLE NET ASSET VALUE PER SHARE ⬆ 7.01% to R10.03 INVESTMENT PROPERTY ⬆ 3.79% to R1.446 billion CAPITAL RAISED R369 000 000 during period GEARING (LTV) From 42.11% to 33.09% SIGNIFICANT TRANSACTIONS R1.08 billion in new acquisitions after period end *The above performance was measured against the PLS issued

  • n 21 October 2016*

Highlights

slide-7
SLIDE 7

Capital Raise June 2017

7

Financial Performance to 28 February 2017

slide-8
SLIDE 8

Capital Raise June 2017

8

Summary Income Statement

Consolidated Statement of Comprehensive Income for the 4-month period ended 28 February 2017

Total revenue Property operating and management expenses Net property-related income Administrative expenses Net operating profit Fair value adjustment – Investment properties Depreciation Formation and listing cost Share-based payment expense Profit from operations Net interest Profit before taxation Taxation Profit for the year Basic headline earnings per share (Cents) Diluted headline earnings per share (Cents) Distribution per share (Cents) Interest Cover Ratio 61 262 (16 294) 44 968 (4 558) 40 410 40 553 (4) (1 873) (3 939) 75 147 (16 662) 58 485 6 846 65 331 96.65 96.65 23.51 2.58 Audited 28 Feb 17 R’000 Group

slide-9
SLIDE 9

Capital Raise June 2017

9

Summary Balance Sheet

Consolidated Statement of Financial Position

ASSETS Non-current assets Current assets TOTAL ASSETS EQUITY AND LIABILITIES Shareholders’ interest Non-current liabilities Current liabilities TOTAL EQUITY AND LIABILITIES Number of ordinary shares in issue Treasury shares Net ordinary shares in issue Gearing ratio Net asset value per share (Cents) Tangible net asset value per share (Cents) 1 452 376 41 136 1 493 512 986 808 478 453 28 251 1 493 512 98 226 952 (464 591) 97 762 361 33.09% 1 009 1 003 Audited 28 Feb 17 R’000 Group

slide-10
SLIDE 10

Capital Raise June 2017

10 Funding Maturity

Funding at 28 February 2017

LTV

33.09%

Total Borrowings Average Cost of Funding Hedged Funding

R478 m 9.65% 59%

slide-11
SLIDE 11

Capital Raise June 2017

11

Group Structure & Management Team

slide-12
SLIDE 12

Capital Raise June 2017

12

SPEAR HOLDCO

Upper Eastside Retail & Commercial & Double Tree by Hilton Sable Square Pembury Retirement Complex Burger King Strand 15 on Orange Hotel by Marriott

  • No. 2 Long Street

Revised Group Structure

Directly Held Properties

25

Assets Subsidiary Companies

slide-13
SLIDE 13

Capital Raise June 2017

13

Board of Directors

NON-EXECUTIVE Mike Flax

CHIEF EXECUTIVE OFFICER

Quintin Rossi

MANAGING DIRECTOR

Christiaan Barnard

FINANCIAL DIRECTOR

EXECUTIVE Brian Goldberg

INDEPENDENT NON-EXECUTIVE DIRECTOR

Jalal Allie

LEAD INDEPENDENT NON-EXECUTIVE DIRECTOR

Abu Varachhia

NON-EXECUTIVE CHAIRMAN

Name Surname

TITLE

slide-14
SLIDE 14

Capital Raise June 2017

14

Portfolio Overview

slide-15
SLIDE 15

Capital Raise June 2017

15

Western Cape: 95.3% of assets Gauteng: 4.7% of assets Number of properties: 25 Portfolio Value: R1.446 billion Average property valuation per m2: R8 380/m2

Portfolio Overview at 28 February 2017

Active Asset Management

slide-16
SLIDE 16

Capital Raise June 2017

16

Proximity to Assets Focused Tenant Retention High Occupancy Rates

Tenant Profile by GLA Profile by Number

  • f Tenants

Vacant area m2

Tenant Profiles at 28 February 2017 Vacancy Profiles at 28 February 2017

Total Vacancy

1 584m2

slide-17
SLIDE 17

Capital Raise June 2017

17

The below-mentioned Top 10 Tenants by rental p.a. equate to 37.8%

  • f the total portfolio annual contractual income FY 2018, being

R174.9 million (excludes any new acquisitions after the period)

Top 10 Tenants by Annual Rental

= R65.2 m

slide-18
SLIDE 18

Capital Raise June 2017

18

Lease Expiry Profile by GLA & Revenue

slide-19
SLIDE 19

Capital Raise June 2017

19

Capital Raise Rationale

slide-20
SLIDE 20

Capital Raise June 2017

20

INVESTMENT PIPELINE OF OVER R1bn MANAGEMENT HAS A PROVEN ABILITY TO EXECUTE ITS INVESTMENT STRATEGY IN THE CAPE MARKET GROWTH WITH THE AIM OF ENHANCING INVESTOR RETURN AND LIQUIDITY 83 % INCREASE IN ASSET VALUE OF FUND 77% INCREASE IN RENTAL GLA OF FUND

Capital Raise Rationale

INVESTMENT OPPORTUNITY BENEFITS OF GROWTH

IMPROVING INCOME – THE NET INITIAL YIELD OF EACH NEW ACQUSITION IS ACCRETIVE TO THE FUND YIELD BETTER LIQUIDITY IN THE SHARES, RESULTING FROM LARGER MARET CAP AND BROADER INVESTOR UNIVERSE ECONOMIES OF SCALE IMPROVED PORTOFLIO DIVERSIFICATION

slide-21
SLIDE 21

Capital Raise June 2017

21

Subsequent Transactions

slide-22
SLIDE 22

Capital Raise June 2017

22

Subsequent Transactions

The Group entered into agreement to acquire the following properties

  • 2 Long Street, Cape Town
  • 15 on Orange, Cape Town
  • Mega Park, Bellville
  • Virgin Active George, George

1 Jul 17 1 Jul 17 1 Jun 17 1 Jul 17 Expected transfer date 389 000 298 000 379 157 22 000 1 088 157 Acquisition value R’000 210 000 175 000 224 000 12 000 621 000 Debt funding R’000 179 000 123 000 155 157 10 000 467 157 Equity funding R’000 Equity funding will consist of a capital raise by way of placing Spear REIT shares on the general market after Competition Commission approval is received; Approval expected May 2017

slide-23
SLIDE 23

Capital Raise June 2017

23

Main tenants: Werksmans Attorneys & Bigen Africa GLA: 2 609m2 Sector: Commercial Acquisition price: R41 200 000 Acquisition yield: 9.70% WALE: 2 years

Werksmans, Edward Street, Tygervalley

142 Edward Street, Tygervalley

slide-24
SLIDE 24

Capital Raise June 2017

24

Main tenant: TBC Physical address: 78 Edward Street, Tygervalley GLA: 1 980m2 Sector: Commercial Acquisition price: R13 200 000 Acquisition yield: 9.25% WALE: Redevelopment

78 on Edward, Edward Street, Tygervalley

Redevelopment

slide-25
SLIDE 25

Capital Raise June 2017

25

15 on Orange Hotel & Conference Facility, Cape Town

Main tenant: Marriot Hotels International Physical address: 15 Orange Street, Cape Town GLA: 14 681m2 Sector: Hospitality Acquisition price: R298 000 000 Acquisition yield: 9.55% Hotel lease tenure: 16 years

slide-26
SLIDE 26

Capital Raise June 2017

26

Virgin Active, George

Main tenant: Virgin Active South Africa Physical address:

  • No. 1A Witfontein Road,

George GLA: 2 500m2 Sector: Specialised retail Acquisition price: R22 000 000 Acquisition yield: 9.22% WALE: 5 years

slide-27
SLIDE 27

Capital Raise June 2017

27

  • No. 2 Long Street,

Cape Town

Main tenants: DRA Projects SA, Fairheads Benefits, SAMSA Physical address:

  • No. 2 Long Street,

Cape Town GLA: 23 671m2 Sector: Commercial Acquisition price: R389 000 000 Acquisition yield:

9.32%

WALE: 3 years Planned CapEx: R10 000 000

slide-28
SLIDE 28

Capital Raise June 2017

28

Mega Park Industrial Estate, Bellville South

Main tenants: Massbuild, Consol Glass, Imperial, Tuffy Group & Storage Team Physical address: Cnr Pieter Barlow & Mill Road, Bellville South GLA: 85 748m2 Sector: Industrial logistics, manufacturing & warehousing Acquisition price: R375 157 000 Acquisition yield: 9.30% WALE: 2 years

slide-29
SLIDE 29

Capital Raise June 2017

29

Sable Square

  • Retail & Office Additions

Addition: Retail & office space Physical address: Cnr Bosmansdam & Ratanga Road, Milnerton New GLA: 3 000m2 Sector: Retail & Office Cost of additions: R54 000 000 Yield on additions: 9.25% Completion: December 2017

slide-30
SLIDE 30

Capital Raise June 2017

30

Western Cape: 97% of assets Gauteng: 3% of assets Number of properties: 31 Portfolio Value: R2.64 billion Average property valuation per m2: R8 615/m2

Revised Portfolio Overview

Active Asset Management

slide-31
SLIDE 31

Capital Raise June 2017

31

Revised Financial Forecast FY 2018

slide-32
SLIDE 32

Capital Raise June 2017

32

Revised Spear REIT Financial Forecast – Income Statement

TOTAL REVENUE Property Operating Expenses NET PROPERTY RELATED INCOME Head Office Costs OPERATING COSTS Finance Costs NET PROFIT ANTECEDENT DIVIDEND DISTRIBUTABLE DIVIDEND TOTAL NUMBER OF SHARES (Million) DISTRIBUTION PER SHARE (Cents) 174.9 (46.8) 128.1 (7.3) 120.8 (50.9) 69.9 68.6 92.6 74 12 months ending 18 Feb (Rm) 274.2 (69.2) 205.0 (11.9) 193.1 (91.1) 102.0 9.8 111.8 144.5 77.37 12 months ending 18 Feb Revised (Rm)

*The above revised FY 18 Income Statements are unaudited and are based upon Management’s forecasts.

slide-33
SLIDE 33

Capital Raise June 2017

33

Revised Spear REIT Financial Forecast – Balance Sheet

ASSETS Non-current assets Current assets TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Non-current liabilities Current liabilities TOTAL EQUITY AND LIABILITIES Shares in issue at period end Gearing ratio Net asset value (Cents) Tangible net asset value (Cents) 28 Feb 17 1 452 376 41 135 1 493 512 986 808 478 453 28 251 1 493 512 97 762 361 33% 1 009 1 003 Audited R’000 Unaudited R’000 Post Transactions 2 594 933 41 135 2 636 069 1 443 965 1 163 853 28 251 2 636 069 144 542 148 45% 999 994

slide-34
SLIDE 34

Capital Raise June 2017

34 Funding Maturity

Revised Funding

LTV

46%

Total Borrowings Average Cost of Funding Hedged Funding

R1.163bn 9.41% 24%

slide-35
SLIDE 35

Capital Raise June 2017

35

Capital Raise – Timing & Process

slide-36
SLIDE 36

Capital Raise June 2017

36

AMOUNT TO BE PLACED PLACING PRICE REVISED FY 18 FORWARD YIELD OPENING OF PRIVATE PLACEMENT CLOSING OF PRIVATE PLACEMENT NOTIFICATION OF ALLOTMENTS ACCOUNTS AT CSDP’S OR BROKERS UPDATED AND DEBITED IN RESPECT OF THE SHARES AT THE COMMENCEMENT OF TRADE

Capital Raise – Timing & Process

Key Features of the Capital Raise

R280 000 000 R9.60 8.1% 09HOO on Monday, 5 June 2017 17H00 on Friday, 2017 Monday 2017 Monday, 12 June 2017

slide-37
SLIDE 37

Capital Raise June 2017

37

Outlook

slide-38
SLIDE 38

Capital Raise June 2017

38

Value Proposition & Prospects

Regionally specialised High-quality real estate portfolio

Cape Town - SA’s highest growth area Diversification across all property sectors

Favourable economic & property fundamentals

Portfolio value R2,64 billion after anticipated July 2017

transfers

GLA of 306 702m2 Occupancy rate - 99% Internally managed fund Led by industry veterans with a successful track record Proximity of management to assets is excellent Substantial shareholding by directors LTV of 45% Anticipated market capitalisation R 1,45bn TNAV per share R9.94 Revised distribution FY18 – 76c-78c (initially 74c forecast PLS)

Realisation of undeveloped bulk

Growth supported by accretive acquisitions

Strong management & shareholder alignment Capital structure Prospects

slide-39
SLIDE 39

Capital Raise June 2017

39

Questions

slide-40
SLIDE 40

Capital Raise June 2017

40

Appendix – Top 15 Spear REIT Assets

slide-41
SLIDE 41

Capital Raise June 2017

41

Sable Square Shopping Centre

  • Century City area

Main tenants: Physical address: GLA: Sector: Zoning: Available bulk: Stand size: Parking ratio: Independent valuation: Pick n Pay, Spur, Clicks, China Town, Baby City Cnr Bosmansdam & Ratanga Road, Milnerton 27 115m2 Retail & Commercial General Business 1 28 000m2 45 000m2 6/100m2 R259 248 706

slide-42
SLIDE 42

Capital Raise June 2017

42

Double Tree by Hilton Cape Town at Upper Eastside

Physical address: Phase 2 Hotel GLA: Commercial, Retail & Residential Sector: Zoning: Stand size: Parking ratio: Independent valuation: 31 Brickfield Road – UES Phase 2 11 339m2 4 771m2 Leisure, Commercial, Retail, Residential Mixed use 20 000m2 5/100m2 R229 211 982

slide-43
SLIDE 43

Capital Raise June 2017

43

Range Road DC Blackheath

Main tenant: Physical address: GLA: Sector: Zoning: Available bulk: Stand size: Parking ratio: Independent valuation: Liquor Runner SA Cnr Range & Anfield Road, Blackheath 15 300m2 Industrial General Business 1 28 000m2 23 831m2 N/A R84 566 918

slide-44
SLIDE 44

Capital Raise June 2017

44

Nampak Liquids 11 Hewett Avenue, Epping

Physical address: GLA: Sector: Zoning: FAR: Unutilised bulk: Total bulk: Stand size: Independent valuation: 11 Hewitt Avenue, Bofors Circle, Epping 15 000m2 (Warehouse) Industrial General Industrial 2.0 30 535m2 45 934m2 22 967m2 R70 648 365

slide-45
SLIDE 45

Capital Raise June 2017

45

Distell Distribution Centre

  • Parow

Physical address: GLA: Sector: Zoning: Unutilised bulk: Total bulk: Stand size: Independent valuation: 1 Beacon Way, Cnr Jan Smuts and Jan van Riebeeck Drive, Parow 16 170m2 Office & Warehouse General Industrial 7 100m2 23 270m2 31 042m2 R80 907 349

slide-46
SLIDE 46

Capital Raise June 2017

46

Spear REIT

  • Tygervalley Portfolio

Main tenants: Physical address: Total GLA: Sector: Zoning: Total Independent valuation: Naspers, City of Cape Town, Hyundai, Clickatell Edward Street, Tygervalley, Bellville 16 182m2 Office & Retail Secondary Business R199 277 691

slide-47
SLIDE 47

Capital Raise June 2017

47

SPEAR REIT IPO 2016

28 & 30 Marine Drive Paarden Eiland

Main tenants: Physical address: Joint GLA: Sector: Zoning: Height restriction FAR: Max coverage: Total bulk: Joint stand size: Parking ratio: Joint independent valuation: ABSA, Bloomsbury Cars 28 & 30 Marine Drive, Paarden Eiland m2 Mixed Use – Majority Retail General Industrial None Max 100% +- 100 000m2 11 000m2 N/A R51 000 000

slide-48
SLIDE 48

Capital Raise June 2017

48

142 Breë Street Cape Town

Potential redevelopment site Main tenants: Physical address: GLA: Sector: Zoning: Height restriction FAR: Max coverage: Unutilised bulk: Total bulk: Stand size: Parking ratio: Independent valuation: IDM, Supa Quick 142 Breë Street, Cape Town 3 024m2 Office General Commercial C5 37m – Actual: 1 Storey 7.90 100% 18 188.5m2 22 159.5m2 2 805m2 1.01/100m2 R73 500 000

slide-49
SLIDE 49

Capital Raise June 2017

49

5th Floor Double Tree by Hilton at the Upper Eastside 31 Brickfield Road Woodstock 8010 Cape Town T 021 404 0580 www.spearprop.co.za