ANNUAL RESULTS for the year ended 31 March 2017
A LEADING PORTFOLIO CONTENTS
Accelerate since listing 1 Highlights for the period under review 4 Accelerate at a glance 6 Financial results 8 Like-for-like net property income and key indicators 12 Capital structure 17 Our strategic nodes 19 Looking forward 40 Annexure 1: Property portfolio summary 43 Annexure 2: Drive for quality since listing 47 Annexure 3: Accelerate’s positioning on the JSE 50 ACCELERATE SINCE LISTING
1 ACCELERATE SINCE LISTING
Total return since listing Asset growth (Rands per share) (Rbn) R11,6bn 69 properties Total return since listing (75%) 3.68 R8,4bn 31 March 2017 distribution 0.58 61 properties R6,7bn R6,1bn 52 properties 31 March 2016 distribution 0.54 R5,5bn 52 properties 51 properties 31 March 2015 distribution 0.49
31 March 2014 distribution (110 days) 0.14
Capital growth 1.93
0 1 2 3 4 At listing Mar 14 Mar 15 Mar 16 Mar 17 RSA properties APF Europe
Acquisition of Acquisition of Acquisition of KPMG portfolio Portside Eden Meander shopping centre 800 for R850m for R755m in George for R365m
700 APF lists at R4,88 600 Cents
500 Equalisation option (8%) on Acquisition of Fourways Super Regional agreed property portfolio in CEE (Austria and Slovakia) for €82,1m 400 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17
2 STRATEGY, FOCUS AND OUTCOMES
Strategy Retail focus Nodal strategy Drive for quality Geographic diversification
Active asset Quality enhancing Establishing future growth Key operational focus Reduce vacancies management acquisitions platforms and nodes
Outcomes Remained Average DPS Nodes Enhanced quality Successful launch retail focused growth 7,7% of European 67,4% of revenue Fourways Acquisitions: single tenant platform Vacancies reduced development KPMG from 10,01% at launched Portside Acquired 31 March 2014 Eden Meander initial portfolio to 6,85% at Strategic of R1,25bn 31 March 2017 acquisitions Disposal of non core assets On the ground Cost to income Development experienced ratio upside Developments management 16,9% team in line with market Synergies Reinvestment unlocked in core assets
3 HIGHLIGHTS FOR THE PERIOD UNDER REVIEW
4 HIGHLIGHTS FOR THE PERIOD UNDER REVIEW
• R1bn revenue mark achieved Financial milestones • R500m full year distribution achieved
• Acquisition of nine single tenant OBI retail properties for €82m at yield of 11,5% (Rand) Launch of European single • Scalable platform put in place tenant platform • Portfolio valued at €87m by CBRE
• Fourways Mall re-development well under way › Foodcourt and Bounce open › Kidzania concept signed › Leroy Merlin entering node Nodal strategy • Cedar square re-development: ongoing, exciting additional tenants signed • Portside: Premium grade office in Cape Town Foreshore acquired in June 2016 • Murray & Roberts building in the Cape Town Foreshore acquired in February 2017, large scale commercial and residential development opportunity
• Eden Meander 28 240 m² retail centre in George acquired in October 2016 Drive for quality • The CITI bank building in Sandton acquired in February 2017
5 ACCELERATE AT A GLANCE
6 ACCELERATE AT A GLANCE AS AT 31 MARCH 2017
A - Large National: 65,1% Property portfolio Asset value: R11,6bn Tenant profile B - National Listed/Franchises: 13,7% (% of revenue) C - Other: 21,2%
Fourways Precinct: 175 563 m² Charles Crescent – Kramerville: 44 380 m² Strategic nodes Market cap* R6,64bn Foreshore – Cape Town: 51 057 m² Somerset West – Cape Town: 19 281 m²
NAV per share R7,46 GLA 633 494 m²
Yield** 8,6%
Occupancy 93,1% (excl. structural vacancies & Portside) WA cost of funding 8,4%
WA term: 2,3 years WALE (revenue) 5,6 years Total debt: R4,87bn Debt LTV: 41,9% ICR: 2,6x Retail: 64,7% Office: 26,5% Portfolio split (revenue) Industrial: 6,1% 77,9% of debt hedged Hedging European retail: 2,7% WA term: 2,4 years
* Market cap calculated on a closing share price at 31 March 2017 of R 6,73 7 ** Actual Yield for the year ended 31 March 2017, calculated on an average share price of R6,70 FINANCIAL RESULTS
8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March 2017 31 March 2016 High level overview of performance Consolidated statement of financial position (R’000) (R’000) • Investment property: ASSETS The increase in the portfolio is due to acquisitions Non-current assets 11 900 199 8 496 381 of R2,8bn and R505m of upward valuations driven Investment property 11 860 689 8 422 776 by increased income Derivative financial instruments 38 134 73 086 Equipment 1 376 519 • Trade and other receivables: Current assets 483 688 278 605 Includes a R32m deposit paid to the transferring Trade and other receivables 350 070 207 177 attorneys for the remaining Noor properties which Cash and cash equivalents 133 618 71 428 are in the process of being transferred Investment property held for sale - 130 726 • Shareholders interest: Fair value of investment property assets - 130 726 Equity of R1,05bn raised Total assets 12 383 887 8 905 712 • Contingent purchase consideration: EQUITY AND LIABILITIES Expired in December 2016, no issuances made in Shareholders' interest 7 352 992 5 771 966 this financial year Share capital 5 156 011 4 105 211 Other reserves 52 944 20 045 • Long-term borrowings: Minority interest 12 421 - New debt of R1,9bn raised to fund acquisitions Retained earnings 2 131 616 1 646 710 and redevelopments Total equity 7 352 992 5 771 966 • Current portion of long-term borrowings: Non-current liabilities 3 887 257 2 597 181 R197m expiring in June 2017 fully refinanced post Long-term borrowings 3 887 257 2 569 905 year end Contingent liability on conditional purchase costs - 27 276 Current liabilities 1 143 638 536 565 Trade and other payables 151 619 114 209 Short-term portion of long-term borrowings 992 019 422 356 Total equity and liabilities 12 383 887 8 905 712
9 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 March 2017 31 March 2016 High level overview of performance Consolidated statement of comprehensive income (R’000) (R’000) • Revenue: Revenue, excl. straight-line rental revenue adjustment 1 062 999 818 700 Straight-line rental revenue adjustment 36 958 68 059 Revenue in excess of R1bn for the period Revenue 1 099 957 886 759 • Property expenses (286 314) (225 114) Foreign exchange losses: Net property income 813 643 661 645 Relates to unrealised losses on consolidation of Other operating expenses (74 022) (38 694) APF Europe Operating profit 739 621 622 951 Fair value adjustments 469 463 386 746 • Cost to income: Other income/(expenses) (1 509) (142) Cost to income ratio of 16,9% Unrealised foreign exchange gains/(losses) (47 367) - Profit on disposal of asset 7 038 - • Fair value adjustments: Finance income 34 094 14 247 Fair value adjustment of R475m comprises Profit before long-term debt interest and taxation 1 201 340 1 020 802 downward mark to market movement on swaps of Long-term debt interest (299 032) (215 770) Profit before taxation 901 308 805 032 R34,9m and an upward property re-valuation of Taxation (423) - R505m Profit after taxation 901 885 805 032 Attributable to equity holders of the holding company 898 372 805 032 Attributable to minority interest 3 513 - EARNINGS PER SHARE Basic earnings per share (cents) 101.47 107.53 Diluted earnings per share (cents) 99.96 105.92 Headline earnings per share (cents) 44.05 56.27 Diluted headline earnings per share (cents) 43.39 55.43 DISTRIBUTABLE EARNINGS Profit after taxation attributable to equity holders 898 372 805 032 Less: straight-line rental revenue adjustment (36 958) (68 059) Less: fair value adjustments (466 398) (383 746) Add: Unrealised gains/(losses) 55 804 - Add: distribution from reserves 52 297 42 863 Less: Profit from sale of properties (1 107) Distributable earnings 502 010 396 090
10 DISTRIBUTION BUILD-UP
Actual 31 March 2017 Actual 31 March 2016 (R’000) (R’000)
Distribution analysis
Distributable earnings 502 010 396 090
Less: Interim distribution 232 599 192 360
Final distribution 269 411 203 730
Shares qualifying for distribution
Number of shares at year –end 986 372 706 801 344 007
Less Noor transaction ceded shares - (13 290 135)
Shares issued after year end - 16 100 000
Less: bulk ceded shares to Accelerate* (51 070 184) (51 070 184)
Shares qualifying for distribution 935 302 522 753 083 688
Final distribution per share (cents) 28,80469 27,05277
Interim distribution per share (cents) 28,76627 26,61692
Total distribution per share for the year (cents) 57,57096 53,66969
* Note: the above distribution per share does not include 51 070 184 shares which do not qualify for distribution, as the distribution was ceded to the Fund, until the earlier of 31 December 2021 or such time that the bulk is developed
11 LIKE-FOR-LIKE NET PROPERTY INCOME AND KEY INDICATORS
12 LIKE-FOR-LIKE NET PROPERTY INCOME 2016 – 2017 CORE PORTFOLIO CONTINUES TO PERFORM Like-for-like net income growth 31 March 31 March (%) 2017 2016 R’000 R’000 % change 8.1% Gross property revenue 1 062 999 818 700 29,8 8.0% Office 280 523 173 262 61,9 Industrial 65 124 36 108 80,4 Retail 688 509 609 330 12,9 European – Single tenant 28 843 - 100,0 7.7% Property expenses (286 314) (225 114) 27,7 Office (70 333) (49 426) 42,3 Industrial (6 761) (4 743) 42,5 Retail (206 417) (170 945) 21,4 European – Single tenant (2 803) - 100,0 Industrial Office Retail Net property income 776 685 593 586 30,5 Office 210 190 123 836 69,7 Industrial 58 363 31 365 86,1 Portfolio movements 2016 to 2017: Retail 482 092 438 385 9,6 European – Single tenant 26 040 - 100,0 Acquisitions: Acquisitions (107 450) 33 576 • Portside – June 2016 Office (64 803) 10 750 • Eden Meander – October 2016 Industrial - 22 826 Retail (16 607)- • European single tenant portfolio – December 2016 European – Single tenant (26 040) - • Murray & Roberts and CITI bank – February 2017 Disposals 8 497 Disposals: Retail 8 497 - Like-for-like net property income 677 732 627 162 7,8 • Rietfontein – May 2016 Office 145 387 134 586 8,0 • Rock Cottage – June 2016 Industrial 58 363 54 191 7,7 • Venter Center – January 2017 Retail 473 982 438 385 8,1 • Centurion Highveld – February 2017 European – Single tenant - - 0,0
13 KEY INDICATORS
31 March 31 March Key indicator summary 2017 2016
Portfolio value (Rbn) 11,6 8,4
GLA (m²) 633 494 520 226
Number of properties 69 61
Weighted average lease expiry (years) 5,6 5,1
Lease escalations (6,9% incl offshore) 7,8% 8,0%
Vacancies (net of structural vacancies and Portside) 6,9% 7,1%
Listed/large national tenants (by revenue) 65,1% 57,2%
31 March 31 March Key ratios 2017 2016 Average net rental per m² 31 March 2017 31 March 2016 % change
Interest cover ratio 2,6 Ð 2,8 Retail 114,8 Ï 109,02 5,3
Loan to value 41,9% Ï 35,6% Office 131,5 Ï 110,9 18,7
Net asset value (Rbn) 7,4 Ï 5,7 Industrial 60,7 Ï 56,90 6,7
Market cap (Rbn) 6,6 Ï 4,8
Senior secured rating AA- (za) AA- (za)
Senior unsecured rating BBB+ (za) BBB+ (za)
14 LEASE EXPIRY PROFILE, ESCALATIONS & DEBTORS AGEING
Lease expiry profile by revenue* Contractual escalations 31 March 31 March Sectoral type 2017 2016 20% Industrial 7,7% 8,8%
Office 7,7% 7,7% 15% Retail 7,8% 8,1%
SA portfolio 7,8% 8,0% 10% European retail # 0% -
Total portfolio 6,9% 8,0% 5% # Offshore escalations: • For 65,4% (by revenue) of the European retail portfolio lease escalations are Index linked. From 2019 rentals escalate at 75% of CPI once a 10% CPI increase is reached 0% March 2018 March 2019 March 2020 March 2021 > March 2021 • For the remaining 34,6%, rentals will be adjusted to 8% of net sales with a floor of 84,3% and a cap of 102,5% of current fixed rent Industrial Office Retail Offshore
Letting Tenant arrears at 31 March 2017
Renewals/ Expired Rental 120+ days 90 days 60 days 30 days Current Total* Expired new lets rental New rental reversion Escalations Sectoral m² m² R/m² m² % % 4 619 187 1 507 662 1 654 785 3 993 603 19 146 657 30 921 893
Industrial 40 910 40 910 62,28 57,78 (7,2) 8,5 Arrears at 31 March 2017 are 2,9% of annual revenue Office 11 495 10 927 142,86 139,88 (2,1) 7,9 * Net of Oceana House and Checkers Fourways Mall
Retail 38 961 41 593 145,74 155,80 6,5 7,8
Total portfolio 91 366 93 430 108,01 111,02 2,8 8,0
* WALE by revenue at 31 March 2017 is 5,6 years. Of the 62 386 m² of retail space expiring during the 31 March 2018 year 26 425 m² has already been renewed 15 VACANCY PROFILE
Vacancies as at 31 March 2017 Total vacancies as at 31 March 2017 (net of structural vacancies* and Portside#) (m²) (m²) 24 966 34 250
18 822 26 160
Industrial Office Retail European retail Industrial Office Retail European retail
Sectoral type 31 March 2017 31 March 2016 Sectoral type 31 March 2017 31 March 2016
Industrial 0,0% 0,0% Industrial 0,0% 0,0%
Office 11,22% Ð 12,86% Office 15,60% Ï 12,86%
Retail 7,91% Ï 7,00% Retail 10,85% Ï 9,69%
European retail 0,0% - European retail 0,0% -
Total portfolio 6,91% Ð 7,13% Total portfolio 9,54% Ï 8,73%
* The structural vacancies relate to 9 193 m² due to the Fourways Mall development # Portside vacancy is 7 338 m² at 31 March 2017, this vacancy is however covered by a vacancy guarantee 16 CAPITAL STRUCTURE
17 LONG-TERM DEBT
Long-term debt funding maturity profile Long-term debt allocation (Rm) 31 March 31 March 2017 2016 Bank funding – SA portfolio (Rm) % (Rm) % 700
600 Debt capital markets 1 226 25,1 1 001 33,5
500 Bank funding 3 654 74,9 1 991 66,5 400
300 Total 4 880 100,0 2 992 100,0 200 Weighted average debt term (years) 2,3 2,7 100
0 Short-term portion of debt 992,0 20,3 422,3 14,3 Jun Aug Sep Dec May Aug Sep Dec Apr Jun Apr Jun Sep Jan Apr May Sep Dec Feb 17 18 19 19 20 21 Debt hedged 3 804 77,9 2 600 86,9 RMB Investec Standard bank DMTN Offshore
Interest rate swap maturity buckets – SA only Weighted average swap term (years) 2,4 2,4 (Rm)
1 800 1 600 Blended interest rate* 8,4 8,2 1 500
1 200 Interest cover ratio (x) 2,6 2,8
900 604 Loan to value 41,9 35,6 600 500 300 300 200 200 * Includes the effect of the interest rate swap 300 100 0 Feb 18 March 18 Jun 18 Mar 19 Jan 20 Mar 20 Mar 20 Dec 21
18 OUR STRATEGIC NODES
19 THE FOURWAYS NODE
20 THE FOURWAYS NODE AT 31 MARCH 2017
Fair value Fair value GLA 31 March 2017 31 March 2016 Description Sector m² (R) (R)
Fourways Mall Retail 61 617 2 601 046 888 2 417 200 000 Cedar Square Shopping Centre Retail 44 312 1 029 737 771 979 531 662 Fourways View Retail 12 731 358 531 788 328 386 292 The Buzz Shopping Centre Retail 14 108 296 640 689 287 449 933 BMW Fourways (Cedar) Retail 8 037 214 882 384 210 587 868 Fourways Game Retail 8 074 208 670 795 195 800 000 The Leaping Frog Centre Retail 11 027 155 100 000 161 249 711 Mazda Fourways Retail 3 388 98 593 625 69 470 000 Waterford Retail 6 682 53 700 000 64 084 756 Ford Fourways Retail 2 469 62 824 888 57 204 800 Regus Fourways Office 1 106 29 858 943 25 122 436 Valleyview Centre Retail 2 012 21 517 756 17 203 478 Total 175 563 5 131 105 527 4 813 290 936
Commentary on the Node Key statistics 31 March 31 March • Buzz bulk: to potentially be sold for residential development (negotiations underway) Description 2017 2016 • Motor dealership: Offer received for new motor dealership to be built next to BMW Fourways Net rental/m² 154,93 144,51
• Development creating greater tenant demand Average escalations (in force) 7,8% 7,7% • Normalised vacancies below market average • Attractive escalations and potential upside on net rentals Vacancy (net of structural vacancy) 4,0% 4,7% • Significant infrastructure spend ongoing • Increased commercial and residential development in the node
21 UPDATE ON FOURWAYS MALL DEVELOPMENT AND REFURBISHMENT
22 SELECTED INFRASTRUCTURE DEVELOPMENT IN THE FOURWAYS AREA
Cedar Road: approximately R80m spend by the Department of Roads and Transport and Steyn City to widen Cedar Road to two lanes Road William Nicol: total upgrade spend on William Nicol of approximately R422m, turning it from a single to a triple carriage way improving infrastructure access development Further planned spend of approximately R576m as part of the Gauteng infrastructure development plan
Infrastructure contribution by Upgrades in excess of R280m are underway including a flyover from Witkoppen Road directly into the new Fourways Mall multi level the Fourways Mall parking developer
Steyn City: Residential properties to the value of R1,6bn sold (stand alone properties). A further 198 apartments, 79 clusters and 278 stands have been put on the market Cedar Lofts – Summercon: Cedar Lofts, situated on Willow Road, just off Witkoppen in Fourways, comprises Developments 425 studio, one and two bedroom apartments and penthouses Century development: Refined country living estate, 202 stands, only 2 stands still left for sale Abland property development: Development of in excess of 7 000 m² of office space adjacent to Monte Casino
23 FOURWAYS MALL – TRADING STATISTICS
Trading density variances (R’000) 5 000
4 000
3 000
2 000
1 000
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave 2015 2016 2017
Notes: • Includes Checkers box of 10 233 m² larger than usual supermarket box • Trading densities demonstrate an expected negative trend given the redevelopment
24 CEDAR REFURBISHMENT
• Scope: Extension of Woolworths from 800 m² to 3 000 m² Upgrade of façade Overall revamp and refurbishment • Approximate cost: R100 million • Yield: 6,5% as some of the spend is defensive in nature • Additional lets: Escondido – 450 m² Tigers Milk – 667 m² Sorbet – 98 m² Petro Portia Cigar lounge – 244 m² Body 20 – 118 m² • Synergies between Fourways Mall and Cedar Square
25 FOURWAYS VIEW
• Scope: Upgrade of façade and interior look and feel
• Rationale: Tenant driven and to have the same look and feel as the rest of the Fourways development
• Costs: Approximately R50m (costing being finalised) on internal and external façade
• Approximate yield: 9%
• Timing: Preliminary funding is credit approved Completion 2018
26 THE FORESHORE NODE
27 THE FORESHORE NODE
Fair value Fair value 1 Murray & Roberts Acquisition (Erf 7 and Erf 8) GLA 31 March 2017 31 March 2016 Key indicator summary Type m² (R) (R) 2 Thomas Patullo, Oceana House 3 Mustek Ltd, City of Cape Town Traffic Dept. Portside Office 25 224 807 850 000 - 4 Portside Murray & Roberts Office 5 494 165 000 000 -
Oceana House Office 7 254 154 590 617 128 197 977
Thomas Patullo Building Office 4 965 106 125 484 81 465 552
99-101 Hertzog Boulevard Office 3 620 62 424 456 53 000 000
Mustek Office 4 500 46 299 844 42 091 143
Total 51 057 1 342 290 401 304 754 672
Commentary on the Node: Key statistics 31 March 31 March • Large scale mixed use development opportunities Description 2017 2016
• Sought after office space Net rental/m²* 160,78 113,48
• Easy access from major routes in and out of Cape Town Average escalations 7,3% 7,2% • Close to V&A waterfront Vacancy (net of structural vacancy and Portside) 0,0% 9,9% • Rentals competitive * Increase in net rentals per m² is due to the acquisition of Portside • Leases with strong covenants and the rental guarantee in place
28 PORTSIDE UPDATE
• Leasing update: 4 955 m² is under discussion/negotiation at an average gross rental of R185/m²: › Call centre tenant – 2 200 m² › Legal firm – 400 m² › Consultants – 785 m² › Media – 800 m² › Other – 700 m² • Current average rentals of R186/m² gross on office space and R224/m² for retail space Portside vacancy movement (m²) • WALE:
› 3,51 years at 31 March 2017 20 174 › Asset performing in line with modelling at acquisition • Portside website www.portsidecapetown.com 10 184 7 348
April 2015 June 2016 March 2017
29 DEVELOPMENT OPPORTUNITY
• Phase 1 – Commercial development 2017 Expected completion date 2020 Blue chip tenant WALE > 10 years Approximate yield 9%
• Phase 2 – Residential development Expected completion date 2020 Accelerate net profit > R100 million
30 CHARLES CRESCENT NODE
31 THE CHARLES CRESCENT NODE – ACCELERATE OWNERSHIP
Owned by APF
Under negotiation
Not owned by APF
32 THE CHARLES CRESCENT NODE (CONTINUED)
• The BRT (“Bus rapid transport”) system runs past Charles crescent via Katherine Street to the heart of Sandton • Kramerville has developed into an upmarket design hub • Development opportunities: The location of Charles Crescent is ideal for inter alia a large scale multi purpose development in future, comprising retail, office and residential • 2 kms away from Sandton Gautrain station • Major road infrastructure development spend • Access and high visibility from M1 highway between Johannesburg and Pretoria
33 ACCELERATE EUROPE
34 STRATEGY AND INVESTMENT PHILOSOPHY
• Single tenant long term net leased properties Strategy • Primary focus on Austria, Slovakia, Hungary, Poland and Czech Republic
• Deliver superior returns through quality acquisitions and developments • Strong covenant not negotiable • Utilise geographic and tenant diversification and low Investment leverage to mitigate portfolio risk philosophy • Create an independent listing for APFE (subject to market conditions) on a recognised stock exchange once appropriate scale and asset/country diversification is achieved
• Scalable structure already in place and fully operational • On the ground experienced executives in acquisitions, disposals and Scalable structure development • Ability to identify and source off market deals Poland Czech Austria Slovakia Hungary Republic
35 AUSTRIA AND SLOVAKIA ǀ UPDATE SINCE SEPTEMBER 2016
Robust economic environments supportive of property investment in Austria and Slovakia
AUSTRIA SLOVAKIA
Statistic September 2016 June 2017 September 2016 June 2017
Credit rating (S&P) AA+ AA+ A+ A+
GDP growth 1,8% 1,8% 3,2% 3,0%
GDP per capita (€) 40 470 42 406 15 101 15 780
Unemployment (% of labour force) 6,3% 6,4% 8,8% 8,6%
Inflation 1,5% 1,7% 0,3% 1,5%
Long term political risk rating (global ranking) 7 9 31 28
Private consumption growth 2,0% 2,0% 3,3% 3,1%
Fixed capital formation as % of GDP 20,6% 23,0% 22,9% 20,7%
1. Source: BMI international 36 AUSTRIA ǀ ATTRACTIVE FUNDAMENTALS
Low political risk and high GDP per capita are supportive of compressing cap rates in the region
MACROECONOMIC CONSUMER Short-term political risk 2017¹ Improving Austrian consumer confidence Austria is considered significantly low risk from a political perspective Consumer confidence is at its highest level in 2 years 100 88.3 160% 85.0 84.0 82.3 79.8 73.1 71.9 70.8 68.3 120% 75 65.0 64.2 59.0 80% 50 40% 25 0% 0 (40%) AT US UK GRY IRL SLK HUN POL SPN CRO ROM SA Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Gross Fixed Capital Formation (“GFCF”) 2017f Austrian real wage growth 2010-2017 (€) High GFCF as a % of GDP denotes increasing infrastructure investments Real wages continue to increase off a very high base 40% 42 500 29.7% 42 190 41 984 41 984 42 004 24.1% 23.0% 20.7% 20.2% 42 000 41 819 41 802 19.7% 19.7% 19.3% 18.7% 17.6% 20% 16.4% 16.2% 41 591 41 402 41 500
0% 41 000 IRL ROM AT SLK GRY SA SPN CRO POL HUN UK US 2010 2011 2012 2013 2014 2015 2016 2017f f GDP per capita 2017 (€) Property insights² GDP per capita in excess of UK and Germany • Yield compression continues given increased demand and tight supply of Austrian 75 000 59 143 property 54 162 • 42 406 Investment from local investors accounted for 54% of total investment volume in 2016 50 000 38 212 36 338 indicating the strength of the Austrian economy and continued support from local 24 402 investors 15 780 25 000 12 056 11 982 11 038 8 480 6 020 • Investment volume of €3,5bn is expected in the Austrian market for 2017 based on CBRE research (25% increase y.o.y) 0 IRL US AT GRY UK SPN SLK HUN POL CRO ROM SA 37 1. Source: BMI international 2. Source: CBRE 37 SLOVAKIA ǀ ATTRACTIVE FUNDAMENTALS
Strong fundamentals and high growth outlook of Slovakia makes it well positioned within the European markets
MACROECONOMIC CONSUMER Slovakian real GDP growth far exceeds the Eurozone average Private consumption 2017f ¹ 5% Private consumption % of GDP indicates high domestic demand 4.0% 3.8% 3.6% 69.5% 4% 3.3% 80% 63.5% 3.2% 3.0% 62.1% 60.2% 58.4% 58.0% 57.8% 55.0% 52.2% 3% 2.5% 60% 52.1% 51.4% 2.0% 1.8% 1.8% 1.7% 2% 1.5% 40% 33.0% 1.0% 1% 20% 0% 0% ROM IRL POL CRO HUN SLK SPN US AT GRY Euro- UK SA US ROM UK SA POL SPN CRO SLK AT GRY HUN IRL zone Gross Fixed Capital Formation (“GFCF”) 2017f Slovakian real wage growth 2010-2017 (€) High Fixed capital formation as a % of GDP 40% 11 000 10 411 29.7% 10 114 24.1% 23.0% 10 000 9 743 20.7% 20.2% 19.7% 19.7% 19.3% 18.7% 9 435 17.6% 16.4% 16.2% 9 228 20% 9 077 8 974 9 053 9 000
0% 8 000 IRL ROM AT SLK GRY SA SPN CRO POL HUN UK US 2010 2011 2012 2013 2014 2015 2016 2017f
GDP per capita 2017 (€) Property insights • Record investment volume was experienced in 2016 (€853m) 75 000 59 143 54 162 • Yield compression was experienced across sectors in 2016 42 406 50 000 38 212 36 338 • Investment by Jaguar Land Rover and other major automobile manufacturers is expected 24 402 to have a positive impact on the residential, industrial and retail markets and signals the 15 780 25 000 12 056 11 982 11 038 competitiveness of the Slovakian workforce 8 480 6 020 0 IRL US AT GRY UK SPN SLK HUN POL CRO ROM SA 38 1. Source: BMI international 38 OBI PERFORMANCE
OBI portfolio performance to date: • Properties › 9 OBI retail outlets (6 in Austria and 3 in Slovakia) acquired December 2016 › Net lease › Purchase price €82m › Externally valued at €87m › WALE: 12,6 years • Performance to date › Net yield back to SA for the period 21 December 2016 to 31 March 2017 of 12,0% – better than expected based on lower cost › Market trading conditions are in line with due diligence analysis › OBI store turnovers consistent with expectations › All rentals due received in full and no outstanding tenant payments › Quarterly site visits performed on all assets • Annual meeting with OBI executive scheduled for end June
39 39 LOOKING FORWARD
40 40 SHORT TO MEDIUM TERM PRIORITIES
GEOGRAPHY KEY PRIORITIES
• Investing in our nodes › Closing out on current and planned developments
• Letting › Tenant retention and reduction of vacancies
• Sale of non core properties › SOUTH AFRICA Reduce leverage › Reinvest in core portfolio
• Cost management
• Capital management
• Other initiatives › BEE, green initiatives, social investment
• Growing scale on single tenant long lease strategy › Additional acquisitions under consideration › Demonstrate quality, income accretion and potential yield compression › Exit strategy still anticipated to be a listing
EUROPE • Looking at new geographies › Retail in line with SA strategy › Unique opportunities in new markets › Immediate accretion with longer term growth potential › On the ground partner with proven track record
41 41 GUIDANCE
Distribution growth is expected to be flat for the year ending 31 March 2018 mainly due to the expected negative income effects of the Fourways Mall redevelopment, and the anticipated rental assistance and tenant installations For the year ended 31 March 2019 the negative income effects of the development are expected to continue, coupled with the dilutive effect of the equalisation at completion of the development will result in flat to marginal growth For the year ended 31 March 2020 distribution growth is expected to normalise to historical growth delivered The completed Fourways super regional mall will anchor the dominant Fourways Node, attracting top quality tenants in the retail and office segments This trend is already evident given the increased interest in the bulk, the head office development for international DIY retailer Leroy Merlin, new residential and commercial developments and the infrastructure spend by a number of parties including the municipality
42 42 ANNEXURE 1: PROPERTY PORTFOLIO SUMMARY
43 43 SECTOR AND GEOGRAPHIC SUMMARY
Sector profile by revenue Sector profile by GLA
64,7% 49,8%
Industrial 10,4% Industrial
2,7% Office Office
6,1% Retail Retail
European retail 13,3% European retail
26,5% 26,5%
Geographic profile by revenue Geographic profile by GLA 1,9% 2,6% Gauteng Gauteng 1,3% 1,9% KwaZulu-Natal 23,3% KwaZulu-Natal
Limpopo Limpopo
18,7% Western Cape 1,4% Western Cape 0,1% Eastern Cape Eastern Cape 0,8% 10,4% 0,1% Mpumalanga Mpumalanga 2,7% 74,5% 60,3% Europe Europe
44 44 TENANT PROFILE
Tenant profile by revenue Tenant profile by GLA 13,7% 10,56%
21,2% 17,0%
A-grade A-grade
B-grade B-grade
C-grade C-grade
65,1% 72,5%
Single vs multi-tenanted by GLA A: Large national tenants, large listed tenants and major franchises, including, Absa Bank, Capitec Bank, Dis-Chem, Edcon, FNB, Foschini, Jet Stores, 62,2% KPMG, Massmart, Medscheme, Nedbank, OBI, OK Furnishers, Pepkor, Pick n Pay, Shoprite, Standard Bank, Woolworths
B: National tenants, listed tenants, franchises and medium to large professional Single tenanted firms, including Fishmonger, KFC, Mugg & Bean, Nando’s, Spur, Steers, Wimpy Multi-tenanted C: Other
37,8%
45 * Exposure to the Edcon group is 3,3% of gross rentals billed. At 31 March 2017 APF has no exposure to Stuttafords 45 APF: PORTFOLIO SUMMARY
Total property Description portfolio Retail Office Industrial European Retail
Number of properties 69 31 22 7 9
Asset value (R’000) 11 628 506 6 502 070 3 230 105 644 621 1 251 710
Value per sector (%) 100,00 55,9 27,8 5,5 10,8
Average property value (R’000) 168,529 209,744 146,823 92,088 139 079
Total GLA (m²) 633 494 315 666 167 699 84 236 65 893
GLA as percentage of portfolio (%) 100,00 50,2 26,3 13,2 10,3
Net property income (excluding straight-lining) (R’000) 774 850 480 258 210 190 58 363 26 039
Forward yield (%) 7,5 6,9 7,8 9,3 7,0
46 46 ANNEXURE 2: DRIVE FOR QUALITY SINCE LISTING
47 47 DRIVE FOR QUALITY - ACQUISITIONS
KPMG acquisition Portside Eden Meander CITI Bank Murray & Roberts
• Purchase price: • Purchase price: • Purchase price: • Purchase price: • Purchase price: R850m R755m R365m R300m R165m
• Date of transfer: • Date of transfer: • Date of transfer: • Date of transfer: • Date of transfer: May 2015 June 2016 October 2016 February 2017 February 2017
• Yield: • Yield: • Yield: • Anticipated yield: • Yield: 7,5% 7,5% escalating 9,1% 8% 9,7% at 7% per annum (on acquisition 6,5%) • Lease: 15 year triple net lease • Rental guarantee: escalating at R100m 8% per annum
48 48 DRIVE FOR QUALITY - DEVELOPMENTS
Thomas Patullo/Oceana House Bosveld Bela Bela Cedar Square
• Cost of development: • Cost of development: • Cost of development: R45m R60m R100m
• Date of completion: • Date of completion: • Date of completion: July 2015 End 2015 June 2017
• Yield: • Yield: • Yield: 10% 10% 6,5% (some spend defensive)
• Rationale: • Rationale: • Rationale: Strategic Node with new long-term lease with Driven by Tenant demand Woolworths 3 000 m² anchor tenant Bytes Technology (5 year lease) – Conversion (Woolworths Clothing), strong anchor tenants into A-grade office (Pick n Pay, Liquor City, Nedbank and ABSA)
49 49 ANNEXURE 3: ACCELERATE’S POSITIONING ON THE JSE
50 50 PEER COMPARISON: SECTOR FORWARD YIELD BASED ON CLEAN PRICE AND ROLLING 12 MONTHS DISTRIBUTION
16% 14.2%
14% 13.5% 12.5% 12.4% 11.9%
12% 11.6% 11.3% 10.5% 10.4% 10.2% 9.9% 9.6% 10% 9.6% 9.2% 9.1% 8.9% 8.9% 8.8% 8.7% 8.6% 8.3% 8.0% 8% 7.2% 6.4% 6.4%
6% 4.6%
4%
2%
0% Delta Safari Emira Spear Vukile Tower Dipula Texton Hyprop Equites Fairvest Rebosis Fortress Octodec Stor-age Resilient Investec Redefine Gemgrow Indluplace Hospitality Accelerate Arrowhead Growthpoint SA Corporate Liberty 2Degrees Forward yield on clean price Sector Weighted Average (ex Fortress & Resilient) (9.0%) Sector Weighted Average (8.1%) 51 Source: I-Net Bridge, 5 June 2017 and company filings 51 PEER COMPARISON: SHARE PRICE SINCE LISTING
7.5
7.0
6.55 6.5
6.0
5.5
5.0
4.5
4.0 Jul 16 Jul Jul 15 Jul Jul 14 Jul Apr 17 Apr 16 Oct 16 Apr 15 Oct 15 Apr 14 Oct 14 Jun 16 Jun 17 Jan Jun 15 Jun 16 Jan Jun 14 Jun 15 Jan Jan 14 Jan Feb 17 Feb Mar 17 Feb 16 Feb Mar 16 Feb 15 Feb Mar 15 Feb 14 Feb Mar 14 Nov 16 Dec 16 Nov 15 Dec 15 Nov 14 Dec 14 Dec 13 Aug 16 Aug 16 Sep Aug 15 Aug 15 Sep Aug 14 Aug 14 Sep May 17 May 16 May 15 May 14
APF SAPY Index 52 Source: Bloomberg, 5 June 2017 52 PEER COMPARISON: MARKET CAP
80 000 72 789
70 000 62 190
60 000
50 000 48 729
40 000 37 581 Rm 29 883 30 000 20 014 20 000 13 820 13 538 11 835 9 372 8 721
10 000 7 194 6 867 6 412 6 411 5 969 5 958 4 644 3 009 2 881 2 585 2 492 2 491 2 231 2 030 994 1 509 1 387 476 0 Delta Emira Safari Spear Vukile Tower Texton Hyprop Equites Fairvest Rebosis Liberty Octodec Dipula B Dipula A Dipula Resilient Stor-age Investec Redefine 2Degrees Indluplace Fortress B Fortress A Fortress Hospitality Accelerate Arrowhead Gemgrow B Gemgrow Gemgrow A Gemgrow Growthpoint SA Corporate
53 Source: I-Net Bridge, 5 June 2017 53 PEER COMPARISON: LISTED PROPERTY SECTOR RATING ACCELERATE POSITIONING FROM A BUY-IN PERSPECTIVE
16% Weighted average price to NAV = 1,09 Tower
14% Delta Texton Safari
12% Rebosis Emira Indluplace Dipula A Arrowhead 10% Redefine Dipula B Accelerate Vukile Octodec Stor-age Investec SA Corporate 8% Fortress A Equites Weighted average distribution yield = 8,1% Growthpoint Hyprop Fortress B 6% 12-month rolling forward yield rolling forward 12-month (%)
Resilient 4%
2% 0.7 0.9 1.1 1.3 1.5 1.7 1.9
Price / NAV 54 Bubble sizes represent the market cap 54 THANK YOU
KEY DATES Declaration date Wednesday, 14 June 2017 Last day to trade cum distribution Tuesday, 11 July 2017 Shares commence trading ex distribution Wednesday, 12 July 2017 Record date Friday, 14 July 2017 Payment date Monday, 17 July 2017
INVESTOR RELATIONS Instinctif Partners Tel: 011 447 3030 The Firs, 302 3rd Floor, Email: [email protected] Cnr Craddock and Biermann Road,
Rosebank, Johannesburg, 2196 55 55 NOTES
56 GREYMATTER & FINCH # 11069 www.acceleratepf.co.za