SA Corporate 2018 H1 Pre-close Presentation 29 June 2018 - - PowerPoint PPT Presentation

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SA Corporate 2018 H1 Pre-close Presentation 29 June 2018 - - PowerPoint PPT Presentation

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SA Corporate 2018 H1 Pre-close Presentation 29 June 2018 INDUSTRIAL | RETAIL | OFFICE | RESIDENTIAL | REST OF AFRICA Agenda Traditional Portfolio Performance Afhco Portfolio Performance Afhco Suburban Residential Update

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INDUSTRIAL | RETAIL | OFFICE | RESIDENTIAL | REST OF AFRICA

SA Corporate 2018 H1 Pre-close Presentation

29 June 2018

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Agenda

  • Traditional Portfolio Performance
  • Afhco Portfolio Performance
  • Afhco Suburban Residential Update
  • Zambian JV Update
  • Disposal of Properties
  • Menlyn East End Development Transaction
  • Questions & Answers

Disclaimer: Information in this presentation has not been reviewed or reported

  • n by SA Corporate Real Estate Limited’s auditors
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Traditional Portfolio Performance

Sector Vacancy 30 Jun 2017 Vacancy 31 Dec 2017 Anticipated Vacancy 30 Jun 2018 Comments Industrial 1.6% 1.5% 1.2% Continued strong performance, resulting in vacancies below industry average. Office 6.7% 6.4% 5.3% Vacancy reduction at GreenPark Corner as a result of aggressive campaigns. Retail 3.9% 3.1% 3.5% Demand in the convenience retail asset class continues to perform. Sector Retention Rate 30 Jun 2017 Retention Rate 31 Dec 2017 Anticipated Retention Rate 30 June 2018 Comments Industrial 82.1% 83.9% 75.4% Continued strong tenant retention. 20.5% expiring in 2018. Office 79.3% 58.4% 83.5% 13.4% expiring in 2018. Retail 92.0% 79.9% 85.9% Redeveloped and refurbished centres continue to contribute to strong retentions Sector Renewal Reversion 30 Jun 2017 Renewal Reversion 31 Dec 2017 Anticipated Renewal Reversion 30 Jun 2018 Comments Industrial 0.4%

  • 2.4%
  • 3.4%

Continued trend of negative renewal reversions in the industrial sector, which will be further negatively impacted in H2. Office

  • 10.5%
  • 12.3%
  • 16.1%

Mainly attributable to a tenant retention strategy at GreenPark Corner. Retail 6.6% 5.5% 2.7% Big box users and national rentals reset to market, to retain occupancy.

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Afhco Portfolio Performance

Sector Vacancy 30 Jun 2017 Vacancy 31 Dec 2017 Anticipated Vacancy 30 Jun 2018 Comments Residential 8.9% 7.3% 5.7% 9.9% 5.5% Includes Calgro M3 units in tenanting phase Excluding development units in tenanting phase (excluding 2 Fashion Precinct buildings = 4.9%) Retail 1.4% 2.1% 4.2% Sector Anticipated Escalation 30 Jun 2018 Anticipated Retention Rate 30 Jun 2018 Anticipated Renewal Reversion Comments 30-Jun-18 Retail 8.9% 64% 7.9% Reflects continued demand for and growth

  • f inner-city retail

2018 H1 Anticipated Average Residential rental increase 4%

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Afhco Suburban Residential Update

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31 Dec 2017 30 June 2018 31 Dec 2018 2019 Units Acquired / to be Acquired in Period 1 603 456 953 1 604 Total Units 1 888 2 344 3 296 4 900

Reduced future exposure to Centurion West & Midrand to mitigate concern with competitor oversupply

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Zambian JV Update

  • Vacancy anticipated 30 June 18 = 3.6%
  • East Park Mall = 160 m2
  • Jacaranda mall = 964 m2
  • Acacia Office park = 1 078m2 (0% vacancy as of 1 July 2018)
  • Lease Escalations anticipated 30 June 18 (US$) = 3.1 %
  • Renewal Reversions anticipated 30 June 18 (US$) = Flat to 5%
  • Extension of East Park Mall
  • 15 150 m2 under development with

promising leasing prospects

  • SA Corporate has the option to

acquire a 50% interest in development at 9% USD yield adjusted for any movement in the 5 year USD Swap Rate

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Disposal of Properties

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  • Continued strategy of divesting from poor quality commercial and industrial

properties with re-tenanting risk:

  • 13 properties are in various stages of divestment:

Status

  • No. of Properties

Sale Consideration Exit Yield

Total 13 R629.4 million 8.6%

Transferred 3 R108.8 million 8.4% Unconditional 8 R439.6 million 8.8% Conditional 2 R81.0 million 8.1%

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Menlyn East End Development Transaction

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  • 1500 apartment high quality, high rise pipeline from end 2020 to end 2025 in the

M&T Development joint venture to be developed adjacent to Menlyn Maine

  • Afhco’s 60% share of the investment valued at circa R1,5 billion, forecast to

initially annually yield circa 10%

  • More details of the transaction to be provided at the interim results presentation
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Prospects

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  • Tracking previous guidance of flat distribution growth for 2018
  • H1 weak and H2 stronger with a spread of circa 5% between the two
  • Real distribution growth envisaged in 2019
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Q & A