SA Corporate June 2017 Interim Results Presentation Final
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SA Corporate June 2017 Interim Results Presentation August 2017 Agenda • Highlights Rory Mackey • Financial Performance Antoinette Basson • South African Portfolio Review Rory Mackey • Unlocking Value in the Retail Portfolio Rory Mackey • Re-Inventing C&I Rory Mackey • Zambian Portfolio Performance Rory Mackey • Building the Afhco Business Rory Mackey • Storage Genie Rory Mackey • Strategy & Prospects Rory Mackey • Acknowledgments Rory Mackey • Questions Team 2 HIGHLIGHTS RORY MACKEY 3 High Level Review • Distribution Themes • Anticipated weaker H1 vs 2017 FY together with challenging economic conditions • H1 2017 distribution growth of 4.4% higher than June 2016 • NPI growth of 13.8%; LFL increasing by 4.1%; acquisitions contributed 8.3% • Industrial portfolio - strong retentions (82.1%); low vacancies (1.6%); LFL NPI growth of 4.0% • Retail portfolio NPI growth of 19.7%; LFL increasing by 6.0%; strong retentions of 92.0%; positive reversions of 6.6% and escalations of 7.6% • Decisive interventions in the Afhco portfolio to address challenges in the Joburg inner-city residential portfolio to position for future sustainable growth; Afhco LFL NPI growth of 4.2% • Commercial LFL NPI declined by 0.5%; reduction in exposure decreased vacancies to 6.7% • Investment Strategy • Executed acquisitions and pipeline increased to R3.2bn • Executed & contracted disposals of R746m; R312m in addition to those reported at end February 17 • Developments in progress outstanding expenditure of R813m in completing retail, industrial and residential redevelopments • Capital Structure • Equity issuance of R600m • Debt well hedged at 81.0% with expiring swaps renegotiated to improve tenors 4 FINANCIAL PERFORMANCE ANTOINETTE BASSON 5 Distribution History 45.00 43.02 40.00 39.57 35.70 35.00 30.15 32.75 30.00 21.58 19.91 25.00 18.02 14.98 16.47 20.00 15.00 10.00 15.17 16.28 5.00 17.68 19.66 21.44 22.38 - 2012 2013 2014 2015 2016 2017 Interim Final 6 Distribution Growth 25.0% 20.0% 10.5% 15.0% 9.4% 8.4% 9.9% 10.0% 3.5% 11.2% 5.0% 8.6% 9.1% 7.3% 5.7% 4.4% 0.0% 2012 2013 2014 2015 2016 2017 Interim Final 7 Distribution at a Glance Jun 2017 Jun 2016 % Rm Rm Variance Net Property Income - Like for Like 439.07 421.59 4.1 Net Property Income - Developments 164.24 124.19 32.2 Net Property Income - Acquisitions 58.45 9.14 539.5 Net Property Income - Buildings sold/held for sale PY lease 12.19 37.13 (67.2) cancellation Net Property Income 673.95 592.05 13.8 set-off against Investment in Joint Venture 30.73 31.77 (3.3) transactional income Distribution related income 10.67 - 100.0 Net finance costs (153.25) (109.72) 39.7 Dividends from fixed property companies 0.37 - 100.0 Distribution related expenses (21.45) (23.61) (9.1) Distributable earnings 541.02 490.49 10.3 Distribution per share (cents) 22.38 21.44 4.4 8 Investment Properties Growth Analysis Portfolio growth underpinned by acquisitions, development expenditure and upward revaluation 16,400 16,200 16,000 15,800 237 15,625 (450) 332 15,600 371 15,400 15,200 113 15,022 15,000 14,800 14,600 14,400 Investment Acquisitions and Acquisitions Improvements / Disposals Fair value Investment Properties improvements development costs adjustment Properties June December 2016 through business 2017 combination 9 Growth in Assets and Market Capitalisation R’bn cents 25.0 600 500 20.0 400 15.0 300 10.0 200 5.0 100 0.0 0 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Total Assets (Rbn) Market Cap (Rbn) NAV per share (cents) Share Price (cents) 10 Net Asset Value 550 11.45 0.19 22.38 525 (0.08) (0.74) 500 (21.58) 475 499.28 450 510.90 425 400 375 350 325 300 Opening NAV Distributable Revaluation of Net exposure Net Other Non- Distributions Closing NAV 1 January earnings for Investment to Zambian JV repurchase of distributable paid to 30 June 2017 2017 the period Properties, treasury income shareholders Shares and shares statement Interest Rate items Swaps 11 Capital Structure Sources of Capital Debt finance sources are diversified between banks and institutional borrowings. 3.1% 3.3% 1.1% 3.2% Absa 9.4% Nedbank Syndicated Loans Standard Bank 20.1% State Bank of India Investec Bank Revolvers 0.9% Institutional and DFI Debts 3.6% Bank Term Debts 4.8% Equity 70.6% Equity Bank Term Debts Institutional and DFI Debts Bank Revolvers Syndicated Loans 12 Group Debt Structure – at 30 June 2017 (excl. fixes) Maturity and interest rate profile of interest-bearing debt WAR of 8.5%, weighted average tenor of 2.2 years, and WAM of 1.7%. Loan type: * Apr 2024 121 - 6.88% Amortising Dec 2021 550 - 9.17% Term Loan (Syndication) 2.97% Term Loan (US$) Nov 2020 353 - 9.10% Term Loan (Syndication) Jun 2020 950 - Dec 2019 848 - 9.12% Term Loan (Syndication) Mar 2019 159 41 8.79% Revolving credit Jan 2019 500 - 8.78% Term Loan Nov 2018 - 300 8.72% Revolving credit 8.99% Term Loan Sep 2018 30- 8.99% Term Loan Sep 2018 270 - 9.04% Term Loan Aug 2018 200 - # 8.82% Term Loan (Syndication) Dec 2017 1,152 - 0 200 400 600 800 1,000 1,200 Amount Drawn Available * - AFD Fixed Rate Debt # - Maturing Q4 2017 13 Group Debt Structure – at 30 June 2017 (incl. fixes) Maturity and interest rate profile of interest-bearing debt – WAR inclusive of fixes of 8.5%. Current LTV 31.1% Loan type: Apr 2024 121 - 6.88% Amortising 9.15% Term Loan (Syndication) Dec 2021 550 - 3.59% Term Loan (US$) Nov 2020 353 - Jun 2020 950 - 9.08% Term Loan (Syndication) Dec 2019 848 - 9.10% Term Loan (Syndication) Mar 2019 159 41 8.77% Revolving credit Jan 2019 500 - 8.76% Term Loan Nov 2018 - 300 8.70% Revolving credit 8.97% Term Loan Sep 2018 30- 8.97% Term Loan Sep 2018 270 - 9.02% Term Loan Aug 2018 200 - 8.80% Term Loan (Syndication) Dec 2017 1,152 - 0 200 400 600 800 1,000 1,200 Amount Drawn Available 14 Group Swap Profile – 30 June 2017 Tenor and interest rate swaps profile – weighted average tenor – 3.3 years and rate of 6.8% (weighted swap margin -0.025%). 81.0% of variable rate debt hedged by swaps. 81.5% of effective debt fixed (incl fixed rate debt) 2023 240 8.45% 2022 1,234 7.45% 2021 650 7.60% 2020 753 4.72% * 2019 240 6.35% 2018 705 7.27% 2017 240 5.89% - 500 1,000 1,500 Swap amount * Includes $27m swap at 1.79% (based on US LIBOR) 15 Group Net Cash Flow 1,000 643 559 452 500 191 158 - (3) (16) (11) (2) (9) (178) (225) (500) (522) (721) (1,000) Rm Net finance costs finance Net Distributions paid Distributions installations assets Balance 30 June 2017 June 30 Balance Equipment Investment Property Investment Balance 31 December 2016 December 31 Balance Investment in Joint Venture Joint in Investment Letting commissions and tenant and commissions Letting Cash generated from operations from generated Cash Disposal of investment properties investment of Disposal Acquisitions and Improvements to Improvements and Acquisitions Interest bearing borrowings -local borrowings bearing Interest and movements in other financial other in movements and Interest bearing borrowings -foreign borrowings bearing Interest Net Acquisition of Property, Plant and Plant of Property, Acquisition Net Prepayments/Advances to developers to Prepayments/Advances Repurchase/Vesting of treasury shares treasury of Repurchase/Vesting 16 Trading Volumes and Liquidity SAC: closing price v monthly volume traded Value traded as % of market capital 580 120,000,000 90% 570 80% 100,000,000 560 70% EMI 550 80,000,000 FFA GRT 60% 540 RDF 60,000,000 HYP 50% 530 FFB 520 40,000,000 40% SAC 510 30% VKE RES 20,000,000 500 20% IPF 490 - 10% Jul-16 Jan-17 Jun-17 Oct-16 Apr-17 Sep-16 Feb-17 Dec-16 Aug-16 Nov-16 Mar-17 May-17 0% Volume Traded Closing Price ( c ) - 20,000 40,000 60,000 80,000 100,000 17 SOUTH AFRICAN PORTFOLIO REVIEW RORY MACKEY 18 Overview – Sectoral Analysis (excl. Rest of Africa JV) Sectoral Profile (% of GLA) 20% 13% 5% 55% Industrial 4% June Retail June SA Corporate excluding 2017 51% 2016 Commercial Zambian JV • 188 Properties 27% AFHCO • Total GLA 1,455,239m 2 25% • Total Portfolio R15.6bn (Dec-16: R15.0bn) Sectoral Profile (% of Market Value) 19% 15% 34% Zambian JV 30% • 3 Properties 2 8% Industrial • GLA 57,649m • Portfolio Value R856.8m 7% Retail June June (Dec-16: R860.8m) 2017 2016 Commercial AFHCO Traditional standing Portfolio: • Weighted Average discount rate 15.0% 44% 43% • Weighted average capitalisation rate 9.0% Market Value per m² 18,699 18,047 16,803 15,798 15,294 20,000 14,890 11,554 10,559 10,511 10,260 9,690 9,260 6,379 6,231 10,000 5,989 - Industrial Retail Commercial AFHCO Average June 2016 December 2016 June 2017 19 Property Portfolio Acquisitions, Disposals and Developments 3,000 12.00% 2,500 10.00% 2,000 8.00% 1,500 6.00% 10.4% 10.7% 9.5% 8.8% 9.1% 1,000 8.1% 4.00% 500 2.00% 2,147 507 2,711 459 287 - 0.00% Committed Acquisitions Contracted Disposals Contracted and Group WACC Developments Acquisitions unconditional disposals Cost / Carrying Value (Rm) Selling Price (Rm) Yield forecast 1st 12 months Exit yield on sales price 20 Executed Acquisitions Forward Purchase price Transfer Property Sector Yield % (R000) date Steelport Residential, Steelport Residential 10.3 79,781 Jan-17 Friendship Town, Midrand Residential 11.0 72,047 Feb-17 Long Street Precinct Bulk, Jeppestown Residential # 29,658 Feb-17 -Apr-17 Reef Acres, Springs Residential 10.0 43,456 Feb-17 Andrea Close & Dennehof and Bloekomhof, Vereeniging Residential 11.0 40,580 Mar-17 51 Pritchard Street, Johannesburg CBD Retail 10.3 178,026 Mar-17 Erf 286, Erand (storage land) Land # 12,247 Apr-17 Indirect investment in Phase 3A, Zambia Retail 9.0^ 23,152 Apr-17 Cnr of Rockey and Davies Streets, Doornfontein Retail # 5,500 May-17