Delta Property Fund Limited · JSE:DLT
Delta Property Fund — FY2021 Earnings Presentation
38 slides from Delta Property Fund's earnings presentation, Jul 1, 2021
Slide 1: Results Presentation for the Year Ended 28 February 2021
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021 1 July 2021 www.deltafund.co.za www.deltafund.co.za
Slide 2: Agenda
AGENDA 01 Introduction and interim CEO report 02 Financial Review 03 Conclusion 04 Questions & Answers 05 Annexures 2 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 3: Introduction and Interim CEO Report
INTRODUCTION AND INTERIM CEO REPORT Bongi Masinga
Slide 4: Introduction to Delta
INTRODUCTION TO DELTA Value of investment property Gross lettable area Sovereign underpinned JSE listed SA REIT R8.2bn 909 984 m2 81.3% (2020: R8.8bn) (2020: 928 531m2) by revenue (2020 : 81.0%) SA REIT net asset value Average property value of Dominant in per share R5.06 R82.7m Pretoria & Durban CB
Slide 5: Timeline of Events to Date – Stabilising the Business
TIMELINE OF EVENTS TO DATE – STABILISING THE BUSINESS First and second forensic reports completed within 5 months Focus on leadership stability, minimal operational disruption and financial restatements Former CEO & CFO resign. B Masinga & Disclosure on FY20 re-issued FY21 audited M de Lange finding
Slide 6: Addressing Governance and Process Challenges
ADDRESSING GOVERNANCE AND PROCESS CHALLENGES Board and Governance Management Business Reconstituted Stabilising leadership Successful delivery board committees against capex commitments Re-establishment Bolstering of key skills Focus on arrears of Governance and and competencies management Oversight
Slide 7: Return of Operational Excellence
RETURN OF OPERATIONAL EXCELLENCE Successful delivery on the strategic pillars Restructure and improvement of Rebuilding of brand and trust Key performance area skills and processes • Updating and streamlining • Positioning Delta as a partner of • Conclusion of DPWI leases processes and procedures ch
Slide 8: Business Update
BUSINESS UPDATE Leasing Progress • 15 472m2 of new leases concluded with a further 74 964m2 of leases renewed • Rental reversions are in line with expected market rentals • Post year-end, 26 858m2 of leases were renewed in Polokwane (5 year lease at R135m2 and a 9 year 11 month lease at R130m2) • To
Slide 9: Business Update continued: Capital Recycling and Debt Funding
BUSINESS UPDATE continued.. Capital recycling • Disposals are one of the mechanisms that will be employed to achieve the targeted reduction in LTV • The transfer of Broadcast House and Protea Coin Cape Town occurred on 31 May 2020 and on 6 August 2020 respectively. The proceeds of R40 million from t
Slide 10: Business Update continued: Capital Allocation
BUSINESS UPDATE continued.. Capital allocation • Capex remains a major focal point • Capex of approx. R183 million has been committed for projects in the new financial year • Various capex programmes underway • Poyntons – Phase 1 of 3 of the lift upgrades which commenced in the prior period is expec
Slide 11: Business Update continued: Capital Allocation and COVID-19
BUSINESS UPDATE continued.. Capital allocation continued… • With constrained headroom for borrowing and limited access to alternative resources, funding to date has been from working capital (Poyntons from debt). COVID-19 • Minimal impact as a result of Covid-19 due to the portfolio’s Sovereign natu
Slide 12: Financial Review
FINANCIAL REVIEW Marelise De Lange
Slide 13: Financial Performance 2021
FINANCIAL PERFORMANCE 2021 Loan to value of Average cost of debt 56.5% 8.2% (2020 : 55.7%) (2020 : 10.3%) SA REIT funds from operations Interest cover ratio (previously distributable earnings) R223.7 million 1.9 times (2020 : R249.8 million) (2020 : 1.75 times) 13 RESULTS PRESENTATION FOR THE YEAR E
Slide 14: Financial Overview
FINANCIAL OVERVIEW 2021 2020 Variance Rental Income including recoveries (R’000) 1 445 893 1 486 020 (2.7%) Net property income (R’000) 851 613 979 499 (13.1%) Net Finance costs (R’000) 413 612 551 067 (24.9%) Cost to income ratio - gross method 37.0% 32.04% (4.96%) Cost to income ratio - net method
Slide 15: Statement of Profit or Loss and Other Comprehensive Income
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2021 2020 Variance Revenue Rental income 1 445 893 1 486 020 (2.7%) Straight line rental income accrual (37 624) (30 383) 23.8% 1 408 269 1 455 637 (3.3%) Property operating expenses (556 656) (476 138) 16.9% Net property rental and related
Slide 16: SA REIT Funds From Operations
SA REIT FUNDS FROM OPERATIONS (R’000) R’000 Feb 2021 Feb 2020 Loss per IFRS statement (454 456) (935 800) Adjusted for: Accounting specific adjustments Fair value adjustment loss/(gain) to: - Investment property 517 137 1 017 357 Straight-line lease adjustment 37 624 30 383 Adjustment to dividends f
Slide 17: SA REIT Funds From Operations Bridge
SA REIT FUNDS FROM OPERATIONS BRIDGE R’000 17 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 18: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION R’000 Feb 2021 Feb 2020 Variance ASSETS Non-current assets Investment property 8 227 800 8 780 933 (6.3%) Investment in listed securities 157 072 277 734 (43.5%) Other non-current assets 11 228 13 566 (17.2%) Current assets 390 631 333 026 (17.3%) Total assets 8 786 7
Slide 19: Valuations
VALUATIONS • The valuations for the year ended February 2021 have been concluded at R8.2 billion • A combination of discounted cash flows and capitalisation rates were used in arriving at the values • Our independent valuers were as follows: • JLL • CBRE Excellerate • Real Insight • Real Worx • HD V
Slide 20: Debt Summary
DEBT SUMMARY As at 28 February 2021 Facility Type R’ m Weighted Ave. Rate Floating bank facilities 4 199 8.2% Revolving bank facilities 535 9.1% Total borrowings, net of accrued interest 4 734 8.2% Accrued interest 30 Debt structuring fees (9) Total borrowings including interest and fees 4 755 Inter
Slide 21: SA REIT NAV per Share Bridge
SA REIT NAV PER SHARE BRIDGE 21 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 22: Conclusion
CONCLUSION Bongi Masinga
Slide 23: Conclusion
CONCLUSION • Ongoing engagement with the JSE regarding the lifting of suspension • Appointment of a permanent CEO • Delivery on the following key aspects: • Remediation of LTV • Valuation uplift • conclusion of leases • reduction of vacancies • conclusion of capex projects • Reduction of debt via me
Slide 24: Thank You and Questions
DELTA QUESTIONS PROPERTY FUND E THANK YOU AND
Slide 25: Annexures
A NNEXURES 01 Top 10 properties by revenue 02 Lease Expiry Profile 03 Sectorial Split 04 GLA and vacancy reconciliation 05 Leasing Outlook 06 Portfolio Breakdown 25 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 26: Top 10 Properties by Revenue
TOP 10 PROPERTIES BY REVENUE POYNTONS FORUM BUILDING HALLMARK BUILDING ISIVUNO HOUSE HENSA TOWERS Location Pretoria Location Pretoria Location Pretoria Location Pretoria Location Limpopo Office - Office - Office - Office - Office - Sector Sector Sector Sector Sector Sovereign Sovereign Sovereign Sov
Slide 27: Top 10 Properties by Revenue
TOP 10 PROPERTIES BY REVENUE PHAMOKO TOWERS EMBASSY BUILDING DELTA TOWERS LIBERTY TOWERS NPA BUILDING Location Limpopo Location KwaZulu-Natal Location KwaZulu-Natal Location KwaZulu-Natal Location Cape Town Office - Office - Office - Sector Sector Sector Office – Other Sector Office – Other Sector S
Slide 28: Representation by Province and Major Tenants
REPRESENTATION BY PROVINCE AND MAJOR TENANTS BUILDINGS REPRESENTED BY PROVINCE South African properties Total GLA (m2) – 909 984m2 28 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 29: Lease Expiry Profile February 2021
LEASE EXPIRY PROFILE 28 FEBRUARY 2021 TOTAL PORTFOLIO - BY GLA TOTAL PORTFOLIO - BY RENTAL Vacant (23,6%) Month to Month (52,6%) Month to Month (32,6%) 28 Feb 22 (14,1%) 28 Feb 22 (9,9%) 28 Feb 23 (11,4%) 28 Feb 23 (11%) 29 Feb 24 (8,1%) 29 Feb 24 (9,4%) 28 Feb 25 (11,4%) 28 Feb 25 (10,4%) 28 Feb 26
Slide 30: Geographical and Sectoral Split
GEOGRAPHICAL AND SECTORAL SPLIT GEOGRAPHICAL BY GLA GEOGRAPHICAL BY RENTAL Gauteng, (41,9%) Gauteng, (52,3%) KwaZulu-Natal, (29,9%) KwaZulu-Natal, (20,7%) Free State, (9,1%) Limpopo, (8,0%) Limpopo, (4,9%) Western Cape, (5,9%) Northern Cape, (4,1%) Free State, (5,8%) Western Cape, (4,0%) Mpumalanga,
Slide 31: GLA and Vacancy Reconciliation
GLA AND VACANCY RECONCILIATION Properties (No.) Total GLA (m2) Vacant GLA (m2) Vacancy (%) As at 29 February 2020 102 928 531 195 237 21.8% Disposals (2) (10 634) (7 586) Leases terminated - - 50 240 New letting of vacant space - - (15 472) Adjustments: Capital Towers 1 - (2 382) (2 382) Protea Coin
Slide 32: Disposal of Assets
DISPOSAL OF ASSETS • During the 2021 financial year, Delta sold Broadcast House and Protea Coin Cape Town for R33 million and R7 million respectively Property Building classification Location GLA (m2) Sales price (R) Transfer date Transferred 10 634 40 000 000 Broadcast House Office - Sovereign Mtha
Slide 33: Leasing Update continued
LEASING UPDATE continued.. New leases concluded • 15 472m2 in new leases were concluded • The notable new leases concluded during the reporting period were: Building GLA (m²) Term - months Embassy Building 7 000 6 Protea Coin PTA 2 090 36 Liberty Towers 566 36 The Marine Building 554 12 10 210 RESUL
Slide 34: Leasing Update
LEASING UPDATE Lease renewals concluded • For the financial year ended 28 February 2021, lease renewals were concluded for a total GLA of 74 946m² • The notable renewals during the reporting period were: Building GLA (m²) Term - months Delta Heights 15 145 42 17 Harrison Street Building & Kay Street
Slide 35: Portfolio Breakdown
PORTFOLIO BREAKDOWN Office - Sovereign Office - Other Industrial Retail Total Number of properties 80 15 2 3 100* Gross lettable area (m2) 702 954 170 047 13 267 23 716 909 984 Vacancies (%) 25.5 18.3 52.1 13.8 23.6 Value (R billions) 6.5 1.3 0.3 0.1 8.2 Weighted average rental (R/m2) 138.0# 106.0 8
Slide 36: Notes
NOTES 36 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 37: Notes
NOTES 37 RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021
Slide 38: Results Presentation for the Year Ended 28 February 2021
RESULTS PRESENTATION FOR THE YEAR ENDED 28 FEBRUARY 2021 1 July 2021 www.deltafund.co.za www.deltafund.co.za