Sa Corporate Real Estate Ltd. · JSE:SAC
Sa Corporate Real Estate — H1 2021 Earnings Presentation
55 slides from Sa Corporate Real Estate's earnings presentation, Sep 17, 2021
Slide 1: SA Corporate June 2021 Interim Results Presentation
SA Corporate June 2021 Interim Results Presentation 17 September 2021
Slide 2: Agenda
AGENDA Introduction & Overview 01 Rory Mackey 02 Strategy Update Rory Mackey 03 Portfolio Rory Mackey Performance 04 Financial Performance Antoinette Basson Outlook 05 Rory Mackey
Slide 3: Introduction & Overview
INTRODUCTION & OVERVIEW RORY MACKEY
Slide 4: Overview
Overview Portfolio Interim distribution performance Interim distributable income of Total net property income of R344.5 million or 13.70 cps R589.8 million (June 2020: R311.1 million or 12.37cps) (June 2020: R542.4 million) Total like-for-like net property income of Distribution declared of 10.27 cp
Slide 5: Overview
Overview Property activity Capital structure Contracted and executed disposals Loan-to-value ratio of 38.4%* R1 849.3 million (December 2020:38.6%) (H1 2021 transferred: R545.7 million; 2021 contracted: R1 303.6 million; of which R210.7 million transferred post June 2021) Weighted average cost of fu
Slide 6: Strategy Update
STRATEGY UPDATE RORY MACKEY | SA CORPORATE fo ssse0 f REAL ESTATE eee
Slide 7: Enablers and portfolio focus
ENABLERS Financial Sustainability Human Capital Development Operational Optimisation Execution Discipline + PORTFOLIO FOCUS Convenience Oriented Retail Portfolio Quality Industrial Property Portfolio Quality Residential Rental Portfolio Divesting from Commercial = SUSTAINABLE DISTRIBUTION
Slide 8: Enablers: divestments and debt settlement
ENABLERS ACTIONS Financial Sustainability • DIVESTMENTS SINCE 1 JAN Human Capital Development 2021 TO DATE - R1.849 bn: Operational Optimisation • Transferred in 2021 – R756.4m Execution Discipline (R210.7m post 30 June 2021) + • Contracted R1 092.9m • Includes 20m SAR shares sold @ R6/share = 22.7%
Slide 9: Enablers: asset management team
ENABLERS ACTIONS Financial Sustainability • ASSET MANAGEMENT TEAM Human Capital Development ESTABLISHED & FOCUSSED Operational Optimisation • PERFORMANCE MEASURED Execution Discipline AGAINST BUSINESS PLAN + ANNUAL TARGETS Convenience Oriented Retail Portfolio Quality Industrial Property Portfolio Q
Slide 10: Enablers: leasing and collections
ENABLERS ACTIONS Financial Sustainability • LEASING: Human Capital Development • 2021 H1 Afhco leasing averaged Operational Optimisation 468 units per month Execution Discipline • 2021 H1 retail leasing 44 646 + m2 with almost 60% of renewals completed with less than 10% of all expiring leases antic
Slide 11: July riots damage reinstatement
ENABLERS ACTIONS Financial Sustainability • BUSINESS PLANS FOR EVERY Human Capital Development PROPERTY UPDATED MONTHLY Operational Optimisation • JULY RIOTS DAMAGE Execution Discipline REINSTATEMENT: + • 4 shopping centres significantly damaged • SASRIA insurance sufficient to cover damage & loss o
Slide 12: Improving portfolio through redevelopment: Morning Glen
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO Human Capital Development THROUGH REDEVELOPMENT Operational Optimisation • Morning Glen Execution Discipline • New access off Kelvin Road to + be completed by end September 2021 • Improvements to existing Kelvin Road access to be Conven
Slide 13: Redevelopment: Morning Glen, Montana Crossing
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO Human Capital Development THROUGH REDEVELOPMENT Operational Optimisation • Morning Glen Execution Discipline • Montana Crossing + • Planning of access improvements progressing positively with favourable negotiations with affected Conven
Slide 14: Redevelopment: Northpark Mall
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO Human Capital Development THROUGH REDEVELOPMENT Operational Optimisation • Morning Glen Execution Discipline • Montana Crossing + • Northpark Mall • Grocer (OBC) 7-year lease with improved parking to trade Q1 2022 Convenience Oriented R
Slide 15: Tenant covenant: Musgrave Centre
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Food Lovers Market new 10- year lease to commence November 2021 (delayed by Co
Slide 16: Tenant covenant: Bluff Towers
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • Clicks replacing Edgars to commence September Convenience Orien
Slide 17: Tenant covenant: EastPoint
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • EastPoint • Dischem repositioning to Convenience Oriented Retai
Slide 18: Tenant covenant: 51 Pritchard Street
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • EastPoint • 51 Pritchard Street Convenience Oriented Retail • W
Slide 19: Tenant covenant: Umlazi Mega City
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • EastPoint • 51 Pritchard Street Convenience Oriented Retail • U
Slide 20: Tenant covenant: important renewals
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • EastPoint • 51 Pritchard Street Convenience Oriented Retail • U
Slide 21: Tenant covenant: increased convenience offer
ENABLERS ACTIONS Financial Sustainability • IMPROVING PORTFOLIO THROUGH Human Capital Development REDEVELOPMENT Operational Optimisation • CONTINUE TO STRENGTHEN Execution Discipline TENANT COVENANT: + • Musgrave Centre • Bluff Towers • EastPoint • 51 Pritchard Street Convenience Oriented Retail • U
Slide 22: Industrial: quality refinement through disposals
ENABLERS ACTIONS Financial Sustainability • QUALITY REFINEMENT THROUGH Human Capital Development DISPOSALS: Operational Optimisation • Divested from all leasehold Execution Discipline properties & remaining portfolio + comprises 54 properties being 74% logistics & 85% > 4 000 m2 • CONTINUE TO STRENG
Slide 23: Residential: disposals and suburban exposure
ENABLERS ACTIONS Financial Sustainability • QUALITY REFINEMENT THROUGH Human Capital Development DISPOSALS & INCREASED Operational Optimisation SUBURBAN EXPOSURE: Execution Discipline • Strategy to be invested in + Johannesburg inner-city precincts in which Afhco can ensure accessibility, security &
Slide 24: Residential: reinstating stable tenant base
ENABLERS ACTIONS Financial Sustainability • QUALITY REFINEMENT THROUGH Human Capital Development DISPOSALS & INCREASED Operational Optimisation SUBURBAN EXPOSURE Execution Discipline • REINSTATING STABLE TENANT + BASE: • Occupancy in 2021 H1 increased to 91.6% with collections exceeding 100% in Q2 (
Slide 25: Afhco Marketing - Traditional
Afhco Marketing - Traditional Whilst we continue to deploy traditional marketing interventions of billboards, flyer distribution, activations & radio advertising … 25
Slide 26: Afhco Marketing - Digital
Afhco Marketing - Digital … we are increasing our use of digital targeted campaigns Portfolio focus: 91% of leasing & sales leads are from digital marketing interventions (e.g. website, social media, search engine advertisements) 26
Slide 27: Afhco Marketing – On Time Payment Discount
Afhco Marketing – On Time Payment Discount • Monthly on time payment discount – 5% • Consecutive 6 months on time payment discount – additional 5% Examples of statement stickers subsequent to tenant letters marketing on time payment discount programme 27
Slide 28: Commercial: divestment and leasing
ENABLERS ACTIONS Financial Sustainability • DIVESTMENT Human Capital Development • 3 The Terrace transferred, 12 Operational Optimisation Sookhai Place & 21 Fricker Road Execution Discipline anticipated to transfer by end + October 2021 totalling R54.2m • LEASING: • 102 Essenwood 100% occupied • Gre
Slide 29: Portfolio Performance
PORTFOLIO PERFORMANCE RORY MACKEY
Slide 30: SA Portfolio: Retail
Value of South African portfolio SA Portfolio: Retail 44.6% (2020 H1: 44.5%; 2020 FY: 43.7%) Like-for-like NPI growth Trading density growth WALE 19.7% 7.5% 3.6 Years (2020 H1: -14.2%; (2020 H1: -7.8%; (2020 H1: 3.6 years; 2020 FY : -18.8%) 2020 FY : 3.2%) 2020 FY : 3.6 years) Vacancy1 ECL and rent
Slide 31: SA Portfolio: Industrial
Value of South African portfolio SA Portfolio: Industrial 22.8% (2020 H1: 25.0%; 2020 FY : 24.6%) Like-for-like NPI growth ECL and rent relief 8.3% -138.3% (2020 H1: -19.5%; (2021 H1: -R6.6 m; 2020 H1: 2020 FY: -7.9%) R17.1 m;2020 FY: R12.4 m) Vacancy Collections 0.6% 103.4% (2020 H1: 3.9%; (2020 H1
Slide 32: SA Portfolio: Commercial
Value of South African portfolio SA Portfolio: Commercial 2.6% (2020 H1: 3.0%; 2020 FY : 2.9%) Like-for-like NPI decline ECL and rent relief -7.8% -12.8% (2020 H1: -35.6%; (2021 H1: R3.2 m; 2020 H1: 2020 FY: -15.9%) R3.7 m; 2020 FY : R5.3 m) Vacancy Collections 25.1% 90.5% (2020 H1: 16.5%; (2020 H1:
Slide 33: SA Portfolio: Afhco
Value of South African portfolio SA Portfolio: Afhco 30.0% (2020 H1: 27.5%; 2020 FY : 28.8%) TOTAL RESIDENTIAL RETAIL (83.9% of portfolio) (16.1% of portfolio) Like-for-like NPI decline Vacancy – Residential 1 Vacancy - Retail -6.1% 8.4% 5.5% excl. management, IT & -3.1% marketing costs (2020 H1: 12
Slide 34: Zambian Portfolio: Zambian JV
Zambian Portfolio: 50% Property value: Zambian JV R789.4m (2020 H1: R1 104.4m; 2020 FY: R879.6m) 50% NPI Growth -18.8% (USD) -29.1%(ZAR) 2020 H1: -21.6% (USD) -8.2% (ZAR) 2020 FY: -29.0% (USD) -19.1% (ZAR) East Park Mall Vacancy Rental escalation (USD) Retention rate Rental reversion (USD) 19.7% 2.7
Slide 35: SA Portfolio LFL NPI Indexed
SA Portfolio LFL NPI Indexed Like-for-like NPI Indexed (100% = 2019 NPI/12) 35
Slide 36: Financial Performance
FINANCIAL PERFORMANCE ANTOINETTE BASSON
Slide 37: H1 2021 Distribution analysis
H1 2021 Distribution analysis Like-for-Like LFL NPI § Reduced rental relief and deferment – R56.0m R44.7m § Reduced ECL – R21.5m 8.9% § Vacancies & expenses – (R32.0m) § Negative reversions – (R0.8m) Developments, Disposals & Acquisitions § Reduced rental relief – R3.5m Total NPI R47.4m § Reduced EC
Slide 38: Net Asset Value (cps)
Net Asset Value (cps) 425 NAV (cps) 1 8 400 (3) (2) (4) (7) 375 350 401 393 325 300 Opening NAV 1 Reval of inv MTM swap Foreign adj. Other Net decrease in Closing NAV 30 January 2021 properties derivatives i.r.o. Zambian movement distributable June 2021 JV income 1 Based on shares in issue 38
Slide 39: SA REIT NAV (cps)
SA REIT NAV (cps) 400 SA REIT NAV (cps) 1 8 8 (3) (2) 0.2 375 (7) (4) 350 383 383 325 300 Opening SA Reval of inv MTM swap Foreign adj. Other Net Net Deferred tax Closing SA REIT NAV 1 properties derivatives i.r.o. movement decrease in decrease in REIT NAV January Zambian JV distributable DPS 30 Jun
Slide 40: Investment properties analysis
Investment properties analysis 16 500 105 16 000 15 500 ( 546 ) ( 177 ) 15 000 14 500 14 000 13 500 13 000 15 955 15 336 12 500 12 000 * 11 500 11 000 10 500 10 000 Investment Improvements / Disposals Fair value Investment Properties December Development costs adjustment Properties June 2020 2021 40
Slide 41: Debt & interest rate swap facilities
Debt & interest rate swap facilities Debt facilities Term debt Unutilised RCF facilities Average tenor WAR excluding swaps R7.3bn R700.0m 1.9 years 5.4% (2020 FY: R7.4bn) (2020 FY: R700.0m) (2020 FY: 2.4 years) (2020 FY: 5.2%) Swap profile Hedged % Swap margin Average tenor WAR including swaps 71.5%
Slide 42: SA REIT loan to value and net interest cover
SA REIT loan to value and net interest cover Net debt FV Int. SA REIT loan LTV excl. 38.4% FV CCR’s 38.5% Rate 40.0% swap (2020: R31.2m (2020: Swaps (2020: to value derivatives 38.6%) 38.7%) R278.0m 41.2%) June 2020 Variance June 2021 Net interest cover Distributable income before 576 061 554 429 21
Slide 43: Outlook
OUTLOOK SA CORPORATE AFHCO REAL ESTATE De) estonia
Slide 44: Outlook
Outlook Our plan to return from the pandemic to robust performance is in place Ø Past weather patterns don’t predict the future - well-positioned for rapidly changing real estate sector § Convenience oriented retail portfolio § Logistics focussed industrial portfolio § Residential portfolio in acces
Slide 45: Appendices
APPENDICES af SA CORPORATE AFHCO REAL ESTATE fea Hosing
Slide 46: Distributable income at a glance for the period ended June 2021
Distributable income at a glance for the period ended 30 June 2021 Jun 2021 Jun 2020 % Rm Rm Variance Net property income - Like for Like 545.367 500.706 8.9 Net property income - Developments 25.474 17.228 47.9 Net property income - Acquisitions 9.607 5.505 74.5 Net property income - Buildings sold
Slide 47: Group debt structure – at June 2021 (excl. fixes)
Group debt structure – at 30 June 2021 (excl. fixes) 500 Term Loan, 5.63% Dec 2021 550 Term Loan, 5.53% Dec 2021 300 Term Loan, 5.23% May 2022 300 Revolving credit, 5.28% May 2022 300 629 Term Loan, 5.32% May 2022 200 Revolving credit, 5.15% Jun 2022 200 1 000 Term Loan, 5.69% Dec 2022 - 120 Cross C
Slide 48: Group debt structure – swaps at June 2021
Group debt structure – SWAPS at 30 June 2021 Jan-22 594 7.05% Jan-23 150 6.83% May-23 300 7.38% Jul-23 290 6.98% Jul-23 120 6.97% Aug-23 150 4.10% Sep-23 295 7.04% Feb-24 150 7.50% Feb-24 340 8.19% Mar-24 250 7.61% May-24 100 7.51% Jul-24 350 7.37% Jul-24 100 7.00% Oct-24 150 7.60% Nov-24 386 1.41%
Slide 49: Group debt structure – at June 2021 (incl. fixes)
Group debt structure – at 30 June 2021 (incl. fixes) 500 Term Loan, 8.11% Dec 2021 550 Term Loan, 8.01% Dec 2021 300 Term Loan, 7.71% May 2022 300 Revolving credit, 7.76% May 2022 300 629 Term Loan, 7.80% May 2022 200 Revolving credit, 7.63% Jun 2022 200 1 000 Term Loan, 8.17% Dec 2022 - 120 Cross C
Slide 50: Debt repayment profile – at June 2021
Debt repayment profile – at 30 June 2021 3 500 7.0% 3 000 5.8% 6.0% 5.6% 5.5% 5.3% 5.1% 2 500 5.0% 500 2 000 4.0% 1 500 3.0% 200 1 000 2.0% 500 1.0% 1 050 1 929 1 172 1 535 908 - 0.0% 2021 2022 2023 2024 2025 Total Drawn R'm Total Undrawn R'm Rate 50
Slide 51: Interest rate swap expiry – June 2021
Interest rate swap expiry – 30 June 2021 2 500 8.0% 7.1% 7.4% 6.7% 7.0% 6.4% 2 000 6.0% 5.0% 1 500 4.0% 1 000 3.0% 2.0% 500 1.0% 594 1 305 1 976 740 - 0.0% 2022 2023 2024 1 2025 Total swaps at Jun 21 Rate at Jun 21 51 1 Includes $27m swap at a rate of 1.41%
Slide 52: Retail portfolio overview
Retail portfolio overview Portfolio1,2 Portfolio value R6.8bn 42 Properties Top 10 tenants National exposure GLA 34.8% 56.6% GLA 381 432m2 20.2% Grocer GLA Rental 27.1% 53.9% of total Tenant retention success rate 81.0% Cost to revenue (Like-for-like) 40.2% (H1 2020: 47.1%) Lease Expiries 40.0% 120.
Slide 53: Industrial portfolio overview
Industrial portfolio overview Portfolio Portfolio value R3.5bn 57 Properties GLA 457 822m2 34.9% GLA of total portfolio Cost to revenue (Like-for-like) 25.0% (H1 2020: 25.9%) Lease Expiries 40.0% 120.0% 35.0% 100.0% 30.0% 80.0% % of GLA 25.0% 20.0% 60.0% 15.0% 40.0% 10.0% 20.0% 5.0% 0.0% 0.0% Vacanc
Slide 54: Commercial portfolio overview
Commercial portfolio overview Portfolio Portfolio value R0.4bn 7 Properties GLA 37 890m2 2.9% GLA of total portfolio Cost to revenue (Like-for-like) 61.8% (H1 2020: 60.6%) Lease Expiries 30.0% 120.0% 25.0% 100.0% % of GLA 20.0% 80.0% 15.0% 60.0% 10.0% 40.0% 5.0% 20.0% 0.0% 0.0% Vacancy Monthly 2021
Slide 55: Afhco portfolio overview
Afhco portfolio overview Portfolio1 Portfolio value R4.5bn 64 Properties GLA Apartments 363 657m2 Retail 69 833m2 Cost to revenue (Like-for-like) 48.6% (H1 2020: 46.5%) By GLA 16.1% 83.9% Residential Retail / Commercial 55 1 Excludes bulk of 53 958m2 being developed, valued at R61.2m.
SA Corporate Real Estate — H1 2021 Earnings Presentation on 6ix