RESULTS PRESENTATION for the year ended 28 February 2018 - - PowerPoint PPT Presentation
88 Field Street, Durban RESULTS PRESENTATION for the year ended 28 February 2018 www.deltafund.co.za Sleepy Hollow, Pietermaritzburg 88 Field Street, Durban AGENDA 01 Introduction, Updates & Highlights 02 Financial Review 03
www.deltafund.co.za
RESULTS PRESENTATION
for the year ended 28 February 2018
Sleepy Hollow, Pietermaritzburg 88 Field Street, Durban
Introduction, Updates & Highlights Financial Review Portfolio Review Conclusion Questions & Answers Annexures
01 02 03 04 05 06
88 Field Street, Durban
INTRODUCTION, UPDATES AND HIGHLIGHTS
Sandile Nomvete
Liberty Towers, Durban
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
INTRODUCTION TO DELTA
4
Sovereign underpinned JSE listed REIT
Market capitalisation of
Dominant in
Average property value of
Assets under management of
sovereign tenants
Most empowered fund
as at 28 February 2018 by 100% black-owned asset manager
B-BBEE
Maintained on new sector codes
2017: R101.6M
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
UPDATE ON DELTA
5
Update on lease negotiations
Leasing policy promulgated in January 2018, favouring empowered landlords Bulk lease negotiations progressing in earnest with renewals expected before December 2018 Proactive and pragmatic engagement from the DPW and the user departments in structuring solutions
Year under review
21.6% of sovereign leases month-to-month (2017: 26.8%) Total exposure to sovereign leases: 77.9% (2017:76.4%) by rental income R941 million debt refinanced
Recapitalisation
Awaiting final funding terms from consortium Reduce debt funding, facilitate index inclusion and provide a platform for growth
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
UPDATE ON DELTA
6
Capital recycling
Disposal of non-strategic assets continued, portfolio down to 105 buildings from 112
as at 28 February 2017
Vacancies increased slightly Eskom consolidation in Sunninghill node Local supplier preferences impacting Free State portfolio
Short-term performance
Exogenous impacts to short-term performance and forecasts:
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
CORPORATE HIGHLIGHTS 2018
7
Distribution for FY2018
Distributable earnings for FY2018
Debtors well managed at Vacancy at
Renewed
Concluded
SAPOA: 11.2%
FINANCIAL REVIEW
Shaneel Maharaj
Delta Towers, Durban
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
FINANCIAL HIGHLIGHTS 2018
9
Loan to value of
Successfully refinanced and settled
Fixed debt of Debtors well managed at
Property operating margin at
Interest cover ratio (Feb 2017: 41.5%)
(Feb 2017: 85.1%)
(Feb 2017: 2.5)
in tough economic environment
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
FIVE YEAR REVIEW
2018 2017 2016 2015 2014
Revenue (R’000) 1 564 053 1 617 344 1 247 582 1 009 207 654 023 Net property income (R’000) 1 149 885 1 153 341 925 531 764 884 502 503 Finance costs (R’000) 482 179 470 580 412 713 316 380 151 149 Cost to income ratio - gross method 26.5% 28.8% 26.4% 26.0% 25.5% Cost to income ratio - net method 12.1% 12.4% 12.2% 10.2% 10.8% Investment property (R’000) 11 507 600 11 381 421 10 095 181 8 420 400 6 965 730 Investment in listed securities (R’000) 381 868 429 588 472 546 502 986 333 637 Borrowings (R’000) 4 952 690 5 099 227 5 094 310 4 508 565 3 197 742 Gearing level# 41.3% 41.5% 47.2% 49.9% 47.5% Weighted average interest rate 9.2% 9.2% 8.8% 8.1% 7.5% Average debt expiry period (years) 1.5 1.9 2.3 2.4 2.8 Average debt fix expiry period (years) 1.5 2.2 2.1 2.4 3.0 Fixed : floating debt (excluding revolvers) 85.4% 85.1% 83.5% 78.0% 36.0% Net asset value per share (exclusive of deferred tax) R10.06 R9.91 R10.61 R10.02 R9.28
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DISTRIBUTABLE INCOME STATEMENT- NON IFRS
11
28 Feb 2018 28 Feb 2017 29 Feb 2016
Net property income (excl. straight line accrual) 1,147,865 1,148,478 898,581 Administration expenses (53,329) (68,169) (82,744) Realised foreign exchange loss
Net finance costs (462,483) (443,412) (386,120) Dividend income - GRIT 35,666 37,990 36,779 Sundry income 20,287 6,215 7,266 Add back debt structuring fee
Antecedent interest 257
Distributable earnings paid/(retained) 3,378 (3,378) (912) Distributable income for the period 691,641 677,724 481,822 Number of shares in issue 711,844,486 710,632,182 533,097,436 Number of shares entitled to distribution 711,844,486 710,632,182 533,097,436 Distribution per share (cents) 97.24 97.24 90.79
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
GROWTH IN DISTRIBUTIONS
12
HISTORIC DISTRIBUTION PER SHARE (CENTS/SHARE)
23.7 32.5 40.2 72.7 40.0 44.1 84.1 42.9 47.9 90.8 45.9 51.3 97.24 46.4 50.8 97.24
FY2013 H1 Aug-13 H2 Feb-14 FY2014 H1 Aug-14 H2 Feb-15 FY2015 H1 Aug-15 H2 Feb-16 FY2016 H1 Aug-16 H2 Feb-17 FY2017 H1 Aug-17 H2 Feb-18 FY2018
7.1% 1.0% 0%
H1 – Interim H2 – Final Total – Full year
(1.0)% 15.6% 9.6% 7.2% 23.1% 8.7% 7.1% 7.1% 8.0%
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DISTRIBUTABLE EARNINGS BRIDGE
13
R’000
677 724 96 483 15 896 3 378 14 072 257 (2) (19 070) (97 096) 691 641
H2 Feb 2017 Existing portfolio Admin cost saving Prior year retained earnings distributed Other income Antecedent dividend Dividends received (GRIT) Net finance costs Disposals and non- core assets H2 Feb 2018 400,000 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000 850,000
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
LIKE-FOR-LIKE NET PROPERTY INCOME (NPI) ANALYSIS
Description Amount (R’000) %
NPI Feb 2017 (excl. straight line rental income accrual) 1 148 478 Increased NPI from base portfolio held at 28 Feb 2017 96 483 8.4% NPI attributable to disposals and non-core assets FY17 (97 096) (8.5)% NPI Feb 2018 (excl. straight line rental income accrual) 1 147 865 (0.1)% Increased NPI from base portfolio held at 28 Feb 2017 96 483 NPI attributable to disposals and non-core assets FY18 (36 304) Like-for-like increase in NPI 60 179 5.2%
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
SUMMARISED STATEMENT OF FINANCIAL POSITION
R’000 28 Feb 2018 28 Feb 2017 Change % ASSETS Non-Current assets 10 919 425 10 448 271 15,0% Investment property 10 535 000 10 053 921 15,8% Fair value of property portfolio 10 342 418 9 861 449 16,0% Straight line rental income accrual 192 582 192 472 4,3% Investment in associate 381 868 391 013 2.0% Other non-current assets 2 557 3 337 (81,2%) Current assets 543 256 583 563 12,4% Non-current assets held-for-sale 972 600 1 327 500 (6,0%) Total assets 12 435 281 12 359 334 12,2% EQUITY AND LIABILITIES Total equity 7 158 592 7 041 571 24,5% Liabilities 5 272 068 5 317 763 (0,8%) Non-current liabilities 2 720 230 4 142 269 14,7% Current liabilities 2 556 459 1 175 494 (32,8%) Total equity and liabilities 12 435 281 12 359 334 12,2%
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NET ASSET VALUE BRIDGE
RANDS
9.91 0.83 0.37 0.02 0.01 (0.98) (0.11) 10.06 28 Feb 2017 Contribution from
Fair value of investment property Fair value of financial instruments & forex gains Contribution of associate after impairment Dividend paid Disposals 28 Feb 2018 9.50 10.00 10.50 11.00 11.50 16
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DEBT SUMMARY
As at 28 February 2018 Facility Type R’ m Weighted Ave. Rate Floating bank facilities 3,483 9.2% Fixed bank facilities 796 8.9% Revolving bank facilities 629 9.1% Total borrowings, net of accrued interest 4,908 9.2% Accrued interest 64
(19)
4,953 Total fixed bank facilities 796 8.93% Interest rate swap contracts 2,720 7.83% Cross currency swaps 125 Libor + 2.89% Total fixed 3,641 Fixed % (excluding revolvers) 85.4% 9.2%
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
SOURCE OF DEBT TOTAL: R4,908M
97.1% 2.9% ZAR Banking Facilities (R4,767m) USD Banking Facilities (R141m)
DEBT CLASSIFICATION TOTAL: R4,908M
71.0% 16.2% 12.8% Floating Bank Facilities (R3,483m) Fixed Bank Facilities (R,796m) Revolving Bank Facilities (R,629m) 18
GRAPHICAL DEBT ANALYSIS
FINANCIER SPLIT TOTAL: R4,908M
65.4% 17.9% 13.8% 2.9% Nedbank (R3,213m) Standard Bank (R,878m) Investec (R,676m) Bank of China (R,141m)
FIXED DEBT BREAKDOWN TOTAL: R3,641M
74.7% 21.9% 3.4% Swap Contracts (R2,720m) Fixed Banking Facilities (R,796m) Cross Currency Swaps (R,125m)
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DEBT EXPIRY PROFILE
19
100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 28-FEB-19 28-FEB-20 28-FEB-21 28-FEB-22 Fixed Bank Facilities Floating Bank Facilities Revolving / Liquidity Bank Facilities Swap Contracts Rand (million)
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DEBT COMMENTARY
20
The weighted average all-in cost of funding is 9.2% (2017: 9.2%) 85.4% (2017: 84.1%) of borrowings fixed for an average period of 1.5 years (2017: 2.2 years). The average debt facility expiry period is 1.5 years (2017: 1.9 years) Interest cover ratio at 2.4 (2017: 2.5) Intention is to term out the debt expiry profile once the bulk lease renewals are implemented. R941 million was refinanced at a blended margin of 2.6% R125 million commercial paper settled
PORTFOLIO REVIEW
Otis Tshabalala
Embassy Building, Durban
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
OPERATIONS HIGHLIGHTS FY2018
22
A distinct focus on sovereign tenants
Vacancies of
being sovereign tenants (by GLA) Bulk lease renewal proposal to DPW (PMTE) 59 leases nationally
(SAPOA average 11.2%) Total lease renewals in a challenging environment
Total new leases concluded (GLA) Rental income attributed to sovereign tenants
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
BUILDINGS REPRESENTED BY PROVINCE REPRESENTATIVE TENANTS
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A STRATEGY DESIGNED TO MAXIMISE ON SECURE AND STABLE INCOME
North West Limpopo Mpumalanga Gauteng KwaZulu Natal Free State Eastern Cape Northern Cape Western Cape
No of Buildings GLA (m2) Gauteng 36 404 721 KwaZulu-Natal 17 278 404 Free State 17 85 507 Mpumalanga 11 30 251 Limpopo 7 44 885 Northern Cape 7 37 275 Western Cape 5 41 889 Eastern Cape 3 23 717 North West 2 5 780
Total 105 952 428
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
GOVERNMENT PRECINCT | PRETORIA
24
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
PORTFOLIO BREAKDOWN
Office - Sovereign * Office - Other Industrial Retail Total
Number of properties 77 21 4 3 105 Gross lettable area (m2) 637,246 251,208 40,258 23,716 952,428 Vacancy (%) 7.2% 23.0% 19.0% 3.1% 11.8% Value R8.3bn R2.7bn R0.2bn R0.3bn R11.5bn Average rental (R/m2) # 118.4$ 86.2 53.1 118.8 110.6 Weighted ave. escalation (%) # 5.8% 7.0% 3.0% 7.3% 6.0% Weighted ave. lease expiry (by revenue) - by building type 1.4years 1.6years 1.3years 5.4years 1.5years Weighted ave. lease expiry (by revenue) - tenant specific # 1.3years 1.7years 1.3years 3.2years 1.5years Cost to income ratio (net) 8.7% 22.9% 5.9% 23.7% 12.1% Cost to income ratio (gross) 22.5% 38.4% 25.4% 35.8% 26.5%
* Multi tenant buildings are classified according to majority tenant type. Office – Other buildings therefore contain a minority element of sovereign tenants # This classification looks specifically at the tenant type within each building $ Rental as at interim, renewals not yet in effect25
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
GLA - BY BUILDING
66.9% 26.4% 4.2% 2.5% Office - Sovereign (66.9%) Office - Other (26.4%) Industrial (4.2%) Retail (2.5%)
GLA - BY TENANT*
72.8% 16.4% 6.9% 3.9% Office - Sovereign (72.8%) Office - Other (16.4%) Retail (6.9%) Industrial (3.9%) 26
SECTORAL SPLIT
RENTAL - BY BUILDING
76.4% 19.5% 2.2%1.9% Office - Sovereign (76.4%) Office - Other (19.5%) Retail (2.2%) Industrial (1.9%)
RENTAL - BY TENANT
77.9% 12.8% 7.5% 1.8% Office - Sovereign (77.9%) Office - Other(12.8%) Retail (7.5%) Industrial (1.8%)
* Excludes vacancies. Analysis focuses on what category the specific tenant falls into, rather than the category of the building RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
TENANT PROFILE BY GLA
72.8% 16.4% 6.9% 3.9% 38.2% 16.0% 12.1% 6.6%
Office - Sovereign Office - Other Retail Industrial
TENANT PROFILE BY RENTAL
77.9% 12.8% 7.4% 1.9% 37.5% 21.6% 11.9% 6.9%
National Government Provincial Government Local Government State-Owned Enterprise
27
DETAILED TENANT BREAKDOWN
Excludes vacancies. Total occupied GLA = 840,203m2 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
UPDATE ON SOVEREIGN TENANTS
28
Update on the DPW Leasing Policy
The policy was signed by the Minister of DPW on 31st January 2018. The policy takes into account the following 3 axes - Ownership, Management and Board Control.
The Policy favours transformed companies and rewards them with longer term leases.
What does this mean for Delta
The Negotiating Team that will finalize the Bulk Lease Proposals with the Top 80 Landlords has been set up. The Delta Operations Team has had various meetings with the joint DPW & Treasury Negotiating Team
and had fruitful engagements i.r.o the 59 leases totalling 227,550m2.
Stage 2 - User Departments
Stage 3 - Bid Adjudication Committee 104 DPW leases already concluded which incudes 59 Delta leases
Changes in DPW
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
LEASING UPDATE
29
Major leases concluded
A total of 95 leases were renewed measuring 93,144m2 for the value of R309 million. Our most notable
renewals are :
29
Building Tenant GLA Rate/m² Escalation Term Capital Towers
13 484 m² R 100.00 6.0% 24 months Smart Exchange Durban Technology 7 940 m² R 69.28 8.0% 36 months Temo Towers
7 668 m² R 135.00 8.0% 36 months Treasury House
7 243 m² R 96.59 7.0% 24 months Std Bank Greyville Standard Bank 6 491 m² R 60.00 6.0% 60 months 88 Field
5 932 m² R 120.19 7.5% 12 months Liberty Towers Comit Technologies 5 550 m² R 110.66 7.0% 36 months SARS Sleepy Hollow SARS 4 022 m² R 120.00 7.5% 60 months Total 58 330 m²
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
LEASING UPDATE cont….
30
A total of 65 new leases were concluded measuring 53 774m2 for value of R 199million. Our most notable
new leases are : Tenant retention
Thanks to the hands on approach of the Delta team and the external property managers we have managed
to achieve a high tenant retention rate and to conclude the abovementioned deals
30
Building Tenant GLA Rate/m² Escalation Term Embassy & Delta Towers Ethekwini Municipality 14 680 m² R 80.00 7,5% 36 months Delta Heights Compensation Fund 14 229 m² R 114.57 7,5% 36 months Commission House
Enterprises 6 157 m² R 105.00 7,5% 36 months Liberty Towers Mr Price 2 667 m² R 80.00 6,5% 120 months plus 2 437m² from 01-Oct-18 TOTAL 37,733 m²
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
REVERSION
31
*All rentals quoted are gross rentalsRenewals by Sector
Sector No of Leases Total Area W.A. Term (months) W.A. Expiry Rate / m2 * W.A. Achieved Rate / m2 * Escalation / (Reversion) W.A. Esc. achieved National Government 2 7 808 23.53 106.56 113.16 6.19% 7.14% Provincial government 4 31 883 25.57 120.74 111.84 (7.37%) 7.99% State-owned enterprise 6 13 516 30.95 123.90 101.51 (18.07%) 7.81% Office - other 40 31 478 39.78 83.53 80.46 (3.68%) 6.57% Retail 43 8 457 46.95 118.50 125.35 5.78% 7.80% Total 95 93 142 33.07 107.46 101.36 (5.68%) 7.06%
Total leases concluded 1 March 2017 – 28 February 2018
No of Leases Total Area (m2) W.A Term (months) W.A. Expiry Rate (R / m2)* W.A. Achieved Rate (R / m2)* Escalation / (Reversion) W.A. Esc. achieved Renewed leases # 95 93 144 33.07 107.46 101.36 (5.68%) 7.06%
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
GLA - BY BUILDING
Gauteng (42.5%) Kwazulu-Natal (29.2%) Free State (9.0%) Limpopo (4.7%) Western Cape (4.4%) Northern Cape (3.9%) Mpumalanga (3.2%) Eastern Cape (2.5%) North West (0.6%)
RENTAL - BY BUILDING
Gauteng (44.2%) Kwazulu-Natal (24.6%) Limpopo (9.3%) Free State (6.6%) Western Cape (5.3%) Northern Cape (3.7%) Eastern Cape (3.0%) Mpumalanga (2.8%) North West (0.5%) 32
GEOGRAPHICAL AND GRADE SPLIT
OFFICE GRADE - BY GLA
A (13.7%) B (85.7%) C (0.6%)
OFFICE GRADE – BY RENTAL
A (20.8%) B (78.7%) C (0.5%)
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
ACQUISITIONS
33
Delta did not embark on any new acquisitions during the current year, choosing to rather focus inwardly on
acquisitions, filling up vacancies and renewal of leases Investment strategy
Strategy is to continue to focus on:
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
DISPOSAL OF NON-CORE ASSETS
Property Sector Location GLA Sales price (R) Transfer Date
Transferred 35 403 316 000 000 Samora House Office - Sovereign Durban 6 920 45 238 000 07-Mar-17 Damelin Building Office - Other Durban 3 933 55 000 000 05-Jul-17 1 Ferreira Street Office - Other Nelspruit 961 11 300 000 20-Jun-17 3 Ferreira Street Office - Other Nelspruit 2 282 26 700 000 20-Jun-17 Presidia Office - Other Pretoria CBD 12 656 115 000 000 13-Oct-17 14 New Street Office - Other Johannesburg CBD 2 463 16 762 000 28-Nov-17 Edcon Building Office - Other Johannesburg South 6 188 46 000 000 28-Jan-18 Sale agreements concluded 31 035 325 800 000 12 New Street Office - Sovereign Johannesburg CBD 2 368 17 000 000 End June 2018 Top Trailers site 1 Industrial Wadeville, Johannesburg 15 741 50 000 000 End June 2018 Broadcast House Office - Sovereign Mthatha, Eastern Cape 4 934 33 000 000 Early June 2018 Block G Office - Sovereign Pretoria CBD 7 992 225 800 000 End August 2018 7 other non-core assets 59 096 644 100 000#
34
# Total book value at Feb 2018
34
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
REDEVELOPMENT STRATEGY
35
Delta to deploy CAPEX into portfolio
Create value uplift to assets Securing long term stable returns Provide improved accommodation offering to tenants Long term benefit to portfolio
Lease driven to identify assets where greatest value can be added, through value enhancing developments, and activation of under-utilised area or available bulk Three tier approach to CAPEX
Defensive – compliance Tenant installation – new and renewed leases Project specific – value uplift
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
CAPEX | EXISTING PORTFOLIO
Property 88 Field Commission House Embassy Building Beacon Hill Sleepy Hollow Poyntons Fire Project 17 Harrison Street
Approved budget 89 400 000 12 340 750 28 000 000 40 000 000 4 500 000 32 500 000* 4 500 000 Spent in FY2017 85 628 700 19 194 559 1 232 000
3 771 300 6 619 950 6 296 862 12 702 969 4 500 000 3 932 935 830 108 Remaining budget Completed 5 720 800 2 508 579 26 065 031 Completed 28 567 065 3 669 892 Description Internal refurbishment of tenanted floors for DPW. Project complete. Tenant installation to all floors for new tenant secured Façade Upgrade, Lifts and Tenant Installation. Complex project. Weather dependant Internal refurbishment of tenant space Turnkey contractor appointed Façade Upgrade Creating fire lobbies, sprinklers, hydrant system and smoke detection compliance
* Fire compliance
Tenant installation and replacement of escalators
36
CONCLUSION
Sandile Nomvete
Harlequins, Pretoria
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
CONCLUSION
38
Focus on property fundamentals by renewing leases, reducing vacancies and refinancing debt Increase WALE, reduce gearing and improve credit rating Investment in both defensive and accretive capital – lease renewals and retention Recapitalise the business to inject much needed capital Create a healthier balance sheet with opportunities for growth Expect that the domestic-focused listed property market will continue to face head-winds up-to 2019 Board and management remain committed to Delta’s sovereign strategy
www.deltafund.co.za
THANK YOU
Questions & Answers
Sleepy Hollow, Pietermaritzburg 88 Field Street, Durban
www.deltafund.co.za
ANNEXURES
Sleepy Hollow, Pietermaritzburg 88 Field Street, Durban
Executive management Board of directors Shareholder Profile Snapshot Disposal of non-core assets Top 10 properties by value GLA and vacancy reconciliation Leasing Outlook Lease Expiry Profile Nodal Analysis
01 04
02
05
03
06 07 08 09 10
88 Field Street, Durban
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
EXECUTIVE MANAGEMENT
42
EXECUTIVE DIRECTORS
Sandile Nomvete
Chief Executive Officer Exec Dep. & Prop Dev.
Business Schools)
Otis Tshabalala
Chief Operating Officer Prop Dev. Prog, CCPP Appointed: 7 June 2016
Shaneel Maharaj
Chief Financial Officer BCom (Acc) (Hons) (Univ. of Natal), CA(SA), HDipTax
Sandile cofounded Delta Property Fund in 2002, which would go on to list on the Johannesburg Stock Exchange in 2012. He has since led the company to be a predominately sovereign under-pinned fund that is represented in all 9 of South Africa’s provinces, growing the value of its asset base from R2,1 billion at the time of listing to its current value
Through his leadership, Sandile has managed to position Delta as one
funds for government and state owned enterprises across South Africa. Sandile serves as a director on a number of other listed entities, including KAP Limited. He has more than a decade and a half of experience in executive and non-executive positions. He is a graduate of the Property Development Programme from the University of Cape Town Graduate School of Business. He also holds an Executive Development Programme and Finance for non-financial managers Diploma from the University of Witwatersrand’s Graduate School of Business. Mr Otis Tshabalala was appointed as COO and an executive director of Delta with effect from 7 June 2016. Otis is a graduate of the Property Development Programme from the University of Cape Town and holds a CCPP from the University of Pretoria and holds several certificates in real estate. Apart from heading up the task team that manages Deltas account with the Department of Public Works, Otis has over 25 years’ experience in the commercial property sector, with more than 12 years spent in the property finance space at Absa Property Finance where he excelled as a Top Dealmaker prior to joining Delta as a Senior Asset Manager. He has a thorough understanding of the business and its strategy. He is a key member of the team that grew Delta from listing with 20 properties to its current portfolio of 105 assets and has also been instrumental in assisting with Delta’s funding and capital raising. Shaneel completed his BCom (Honours) degree at the University of Natal and articled at Deloitte & Touche. He started his career with Imperial Fleet Services followed by JSE-listed Cargo Carriers Limited, where he was the Group Financial Manager for three years before assuming the role as CFO. He spent six years as CFO of Cargo, assuming a significant role in its overall management including its subsidiary companies within South Africa and sub-Saharan Africa. Shaneel joined Delta in December 2015 as CFO assuming a strategic role in Delta’s overall financial, procurement and IT management. He was appointed to the board at year end February 2016.
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
BOARD OF DIRECTORS
43
Independent Non-Executive Chairman Committees: NRC* (Nomination) Lead Independent Non-Executive Director Appointed 01 April 2017 Appointed LID 30 June 2017 Committees: ARC* Independent Non-Executive Director Appointed 01 June 2017 Committees: IC* Non-Executive Director Committees: NRC* (Remuneration), SETC Independent Non-Executive Director Committees: NRC, SETC* Independent Non-Executive Director Committees: IC, ARC Independent Non-Executive Director Committees: IC, ARC
JB Magwaza Mfundiso JJ Njeke Caswell Rampheri Nooraya Khan Dumo Motua Nombuso Afolayan Ian Macleod
Board Committees IC = Investment Committee, ARC = Audit, Risk and Compliance Committee, NRC = Nomination and Remuneration Committee, SETC = Social, Ethics & Transformation Committee * Denotes chairperson
Non-Executive directors
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
SHAREHOLDER PROFILE
As at Feb 2018 Units held Holding
Cornwall Crescent (Pty) Ltd 162 043 079 22.8% Bridge Fund Managers 84 077 968 11.8% Public Investment Corporation 70 435 240 9.9% Director's holdings 58 444 308 8.2% Coronation Fund Managers 50 645 566 7.1% Stanlib Asset Management 48 992 066 6.9% Kagiso Asset Management 36 261 026 5.1% Sanlam Investment Management 31 651 093 4.4% Mazi Capital 29 948 109 4.2% Investec Asset Management 18 390 135 2.6% Old Mutual Investment Group 12 235 830 1.7% Vunani Fund Managers 9 754 089 1.4% Sub Total 612 878 509 86.1% Other 98 965 977 13.9% Total 711 844 486 100.0%
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
SNAPSHOT
45
28 February 2018 31 August 2017 28 February 2017
Shares in issue 711,844,486 710,632,182 710,632,182 Market capitalisation R4.3 billion R5.3 billion R5.9 billion NAV per share R10.05 R9.74 R9.9
105 108 112 Valuation of property portfolio R11.5 billion R11.3 billion R11.4 billion Average value per property R109.6 million R104.9 million R101.6 million Gross lettable area 952,428 m² 973,431 m² 981,777 m² Tenant Sectorial profile (GLA) Office - Sovereign: 72.8% Office - Sovereign: 71.7% Office - Sovereign: 70.7% Office - Other: 16.4% Office - Other: 17.8% Office - Other: 19.4% Industrial: 3.9% Industrial: 3.8% Industrial: 3.1% Retail: 6.9% Retail: 6.7% Retail: 6.8% Vacancy rate 11.8% 11.3% 10.7% Weighted average rent (per m2) R110.6 R108.1 R105.2 Weighted Average Lease Expiry # (years) 1.5 1.8 1.7 Weighted average in force escalation* 6.0% 7.3% 6.9% Loan to value 41.3% 42.3% 41.5% Fixed % 85.4% 82.3% 81.5% Weighted Average Cost of Debt 9.2% 9.2% 9.2% Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: Delta Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% of enterprise value
# By revenue* Rate pre bulk renewals
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
Forum Building
Location Pretoria Sector* Office - Sovereign GLA 41 003 m2 Valuation R676 mil
Liberty Towers
Location Durban Sector* Office - Other GLA 40 093 m2 Valuation R422 mil
TOP 10 PROPERTIES
Poyntons
Location Pretoria Sector* Office - Sovereign GLA 73 396 m2 Valuation R535 mil
Hallmark Building
Location Pretoria Sector* Office - Sovereign GLA 40 080 m2 Valuation R409 mil
Delta Towers
Location Durban Sector* Office - Other GLA 41 707m2 Valuation R397 mil 46
* Building sector determined by majority occupation of a tenant type. Some buildings have different types in occupation
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
Embassy Building
Location Durban Sector* Office - Other GLA 32 788 m2 Valuation R336 mil
Hensa Towers
Location Durban Sector* Office - Sovereign GLA 13 675m2 Valuation R306 mil
TOP 10 PROPERTIES | Cont….
Isivuno House
Location Pretoria Sector* Office - Sovereign GLA 23 694 m2 Valuation R328 mil
Phomoko Towers
Location Pretoria Sector* Office - Sovereign GLA 13 058m2 Valuation R272 mil
The Marine
Location Polokwane Sector* Office - Other GLA 24 655 m2 Valuation R258 mil 47
* Building sector determined by majority occupation of a tenant type. Some buildings have different tenant types in occupation
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
GLA AND VACANCY RECONCILIATION
Properties (No.) Total GLA (m2) Vacant GLA (m2) Vacancy (%) As at 28 February 2017 112 981 777 105 119 10.7% Disposals (7) (36 013) (9 331) Acquisitions
New letting of vacant space
Adjustments – Commission House *
105 952 428 112 225 11.8%
48
* Commission House was previously moth-balled due to renovations, building now functional and occupied by DPW RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
LEASING | OUTLOOK
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Anticipated budgeted sovereign renewals
Sector No of Leases Total Area W.A. Expiry Rate / m2 * W.A. Proposed Rate / m2 * Escalation / (Reversion) Leases on month-to-month or expiring by 31 August 2018 National government 39 187 718 99.03 97.87 (1.17%) Provincial government 9 36 149 133.51 119.77 (10.29%) Local government 2 34 977 132.26 112.85 (14.68%) State-owned enterprise 9 13 988 98.58 93.84 (4.81%) TOTAL 59 272 833 105.64 100.43 (4.93%)
* All rentals quoted are gross rentals RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
TOTAL PORTFOLIO - BY GLA
Vacant (11.8%) Month to Month (16.8%) 28 Feb 19 (29.1%) 29 Feb 20 (12.2%) 28 Feb 21 (19.6%) 28 Feb 22 (5.4%) 28 Feb 23 (1.5%) Beyond 28 Feb 2023 (3.6%)
TOTAL PORTFOLIO - BY RENTAL
Month to Month (18.1%) 28 Feb 19 (33.9%) 29 Feb 20 (13.9.%) 28 Feb 21 (21.5%) 28 Feb 22 (7.0%) 28 Feb 23 (1.6%) Beyond 28 Feb 2023 (4.0%) 50
LEASE EXPIRY PROFILE AT 28 FEBRUARY 2018
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NODAL ANALYSIS | PRETORIA
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1 – 8 Delta owned properties 13 CGI Building (DPW Head Office) 9 ABSA Towers 14 AVN Building (DPW occupied) 10 Momentum building 15 State Theatre 11 Treasury 16 Sammy Marks Shopping Centre 12 Telkom Towers 17 Intended new municipal HQ
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NODAL ANALYSIS | DURBAN
1 – 12 Delta owned properties 17 SAHARA Park Kingsmead 13 Durban International Convention Centre 18 South Beach 14 Durban City Hall 19 Redefine Towers 15 Workshop Mall (Old Railway Workshop) 20 Commercial City Building 16 Durban Marina 21 Durban Bay House
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NODAL ANALYSIS | BLOEMFONTEIN
1 – 13 Delta owned properties 19 “Fourth” Raadsaal 14 Hoffman Square 20 Bloemfontein City Hall 15 Sand du Plessis Theatre 21: CR Swart Building 16 Waterfront Mall 22 Lebohang Building 17 Loch Logan 23 Bram Fisher Building 18 Appeal Court 24 Liberty Life Building
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RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NOTES
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2018
NOTES