Barwa Investor Presentation 2020
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INVESTOR PRESENTATION December 2020 DISCLAIMER The information contained herein has been prepared by Barwa Real Estate Company Q.P.S.C.(“Barwa”) relying on information obtained from sources believed to be reliable but Barwa does not guarantee the accuracy or completeness of such information. Except for statements of historical facts, information herein may contain projections or other forward-looking statements regarding future events or future financial performance of Barwa. These forward-looking statements are not guarantees or promises of future performance. The inclusion of such forward-looking statements shall not be regarded as a representation by Barwa, its management or any other person that the objectives or plans of Barwa will be achieved. Actual results and future events could differ materially from those anticipated in such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Risks and uncertainties arise from time to-time, and it is impossible to predict these events or how they may affect Barwa or cause its actual results, performance or achievements to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Barwa undertakes no obligation to update or revise any forward-looking statement contained herein, whether as a result of new information, future events or otherwise. Figures are being rounded, and that rounding differences may appear throughout the presentation. DISCUSSION SUMMARY Barwa At A Glance Investment Rationale Qatar Economy Financial Track Record Annexure BARWA AT A GLANCE We are one of the leading real estate developers headquartered in Doha, Qatar. We develop and manage properties that reflect the changing needs of the people living, working and visiting the country. Our Vision: To be a reliable Real Estate company, recognized for its strong values, excellence and sustainable returns to its stakeholders. Our Mission: To create better places in an efficient manner for people to live, work and enjoy. Our Values: • Entrepreneurship • Commitment • Reliability • Teamwork Our expertise in developing, leasing and managing our assets, • Integrity based on our understanding of the customer, drives incremental value for Barwa and our stakeholders MAJOR CONTRIBUTOR TO QATAR’S DEVELOPMENT Completed 8,148 3.6 mn sq. m. built-up Leadership in affordable residential units and area under operations housing more than 37,300 labour rooms Balanced product mix ~ 82% Op. Revenue2 is Positive Cash Profits1 resulting in stable rental recurring rentals since 2014 yield Land Bank of 5.4 mn QAR 4.6 bn dividend sq. m. in Qatar, Net Debt : Equity of 46% distributed in last 5 years 80% owned 1Cash profits = PAT + Depreciation + Impairments - Share of associates - FV on Invst Properties - FV of an asset - Misc Income - Property Sales 2 Op. Revenue and operating Profit is excluding profit from Property sales 2018: QAR 373mn, 2019: QAR 3.3mn, 2020: QR 8.6mn INVESTMENT RATIONALE Investing In Barwa 1 PRESENCE ACROSS REAL ESTATE MOVING UP THE 6 ECOSYSTEM VALUE CHAIN • Moving towards mid to high-mid residential • Affordable housing solution for families segment in newly developed Lusail city & blue-collared workers • Barwa selects its product offering in alignment • Commercial Properties including with tangible market demand offices, shops & warehouses to support • Developing according to the needs of the real industrial development of Qatar estate market and in partnership with the Proxy to government, through the projects offered by Qatar’s Real the Ashghal and MME. BALANCED PORTFOLIO MIX OF STRONG BALANCE 2 5 OPERATIONAL ASSETS Estate Market SHEET • 8,148 residential units; 37,340 labour rooms • Net Debt : Equity is 46% • 336,552 sq. m. of retail & offices • Recurring Cash flows • 445,779 sq. m. of workshops & • Distributed QAR 4.6 bn as warehouses dividend (2015-19) • 701 hotel keys RECURRING REVENUES 3 INHERENT STRENGTH BUILT OVER TIME AND PROFITS 4 • 3.6 mn sq. m. built-up area under • Recurring Rental Revenue operations comprises ~82% of total • Land bank 7.8 mn sq. m. (Qatar 5.4 mn operating revenue sq. m.; 80% owned) • 97% of operating profits from • Strong brand recognition net recurring rental BARWA REAL ESTATE– PORTFOLIO OVERVIEW RESIDENTIAL COMMERCIAL INDUSTRIAL LABOUR ACCOM. LAND BANK • 264,312 sq. m. retail (shopping & restaurant) • 8,148 residential • 68,973 sq. m. office • 445,779 sq. m. • 5.4 million sq. m. units & Villas • 701 hotel keys warehouses & • More then 37,300 domestic land • 3,267 sq. m. workshops labour rooms • 2.4 million sq. m. operating property international land in the UK BALANCED PORTFOLIO OF ASSETS Barwa Outperformed Qatar Residential Rental Index over 2016-2019 110 10.0% 100 100 8.0% 7.8% 90 6.0% #4.4% 80 4.0% 71.9 70 2.0% *Yield on operating assets is 8.7% as of Q4 FY19 60 0.0% Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 2016 2016 2017 2017 2018 2018 2019 2019 KPMG Residential Rental Index Rental Yield Current Mix Forward Mix • Residential assets with labour rooms offers predictable • Foray into Education and Healthcare assets recurring revenue development, delinking from economic cycle • Mixed use property leverages both commercial and • Building affordable residential units residential units effectively. • Increasing development in freehold areas like Lusail • Warehouse segment complements government thrust on industrialization Way Forward is to continue to modulate products based on market & stakeholder demand *Yield= Revenue/ Investment Properties (Operating Assets + Properties under development + Land bank) = at FV #Reduction in yield for FY19 is on account of significant increase in value of investment properties, majorly attributable to increase in value of land banks. However, the yield on operating assets is 8.7% as of Q4FY19. Inherent Strength built over time resulted in strong Brand Preference… Timeliness Quality • Proven developer and operator of a range of assets with • timely delivery Quality control is paramount despite tight cost measures • Routine quality checks at various stages of project life cycle • Barwa was able to conclude the construction of Madinat Al • Barwa ensures high quality of projects despite our Mawater phase 1 & phase 2 projects and Barwa Village keenness in controlling costs Extension projects two months ahead of schedule • Barwa continues to pursue high quality of construction in the future projects Cost efficiency Local Expertise • Private sector mindset- cost optimization, efficiency are the • Understanding of local preferences and effectively key focus areas built/enhanced private sector capabilities • Barwa strives to ensure that all projects are completed at • Customised delivery model to support government vision, a competitive construction costs without compromising on preferred partner for government initiatives the quality. SIGNIFICANT RECURRING REVENUES & OPERATING PROFIT RECURRING INCOME PROVIDES BETTER CASH FLOW VISIBILITY QAR mn 1,600 97% 160% 94% 1,400 89% 140% 83% # 82% 3.6 million sq. m. BUA under 1,200 1,334 120% 1,244 1,271 1,180 operation 1,000 100% 1,076 1,044 800 930 80% 906 860 Rental assets spread across 782 600 53% 60% residential, commercial and 42% 45% 43% 42% 400 40% retail verticals 200 20% Operating margin on - 0% 2016 2017 2018 2019 2020 recurring revenue remains stable at 66% despite Recurring Rental Revenue Recurring Rental Op.Profit challenging macro scenario % of Revenue % of Operating Profit Consistent high occupancy in residential ~53% ~97% Stable Recurring of Total Revenues Operating Profit Rental Income are from recurring from net rentals* recurring rentals *Revenue and operating Profit is excluding profit from Property sales 2018: QAR 373mn, 2019: QAR 3.3mn, 2020: QR 8.6mn # Built-Up Area PRUDENT GEARING, SUFFICIENT ROOM FOR LEVERAGED GROWTH Balance Sheet Strength provides an Opportunity for Leveraged Growth *Recurring cash profits have been generated Timely sale of properties have adequately supported consistently, providing sufficient liquidity liquidity Cash Profits 35 1.0 0.9 30 0.8 25 0.7 0.6 20 21 20 0.5 20 15 0.5 826 841 18 19 0.4 0.4 0.3 0.3 566 10 0.3 493 0.3 433 0.2 5 9 8 0.1 5 5 7 - - 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Net debt Equity Net Debt: equity Note: * Recurring Cash profits = PAT+ Depreciation+ Amortization-Share of associates- FV on Invst Properties-FV of an asset- Misc Income- Property Sales COMFORTABLE LIQUIDITY POSITION, FOR PRUDENT CAPITAL ALLOCATION Comfortable Debt Maturity Profile (QAR Mn) QAR Million Dec-20 Debt 10,083 2,500 2,254 2,162 Cash 746 1,615 1,616 1,618 1,575 1,351 1,324 1,383 1,383 1,384 Net Debt 9,337 Total Equity 20,513 Total Assets 33,155 2021 2022 2023 2024 2025 2026 & Beyond Before Refinance After Refinance* Liquidity – QAR 2,480 mn (Dec 2020) Key Ratio Dec-20 QAR 416 mn QAR 1,440 mn QAR 624 mn Net Debt/ Equity 0.5 Net Debt/ Assets 0.3 Cash Equivalents Trading Properties Investments Liquidity 2,480 * After refinance represents the loans’ portfolio repayment schedule after including the impact of the refinance deal of QR 1,925mn concluded during 2020. Barwa is currently working to refinance other facilities that are due early 2021 to positively manage the cashflow position. OPTIMISING SHAREHOLDER VALUE Consistency in Cash Profits, Low Leverage has given Consistent Shareholder Returns QAR Mn 8% 61% 8% 57% 57% 973 973 973 7% 856 51% 50% 51% 778 778 778 6% 6% 6% 584 5% 5% 389 31% 31% 28% 3% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018 2019 QAR 6.3 Bn Cumulative dividends Attractive Dividend Yield Healthy Dividend Payout Ratio declared over 2011-19 ENHANCING ASSET PORTFOLIO Well established Adding diversity Residential & Labour Housing & Education Healthcare Commercial Logistics Sector Sector .