Slide 1: Results Presentation for the year ended 30 September 2018
Results Presentation for the year ended 30 September 2018
Slide 2: Our Highlights
OUR HIGHLIGHTS 106,91 cents 78,70 cents R728,5m dividend per A share for of property acquisitions dividend per B share the year concluded during for the year. the year 26,81% Vacancies R549m loan to 2018: 7,6% of acquisitions that were transferred in value 2017: 7,7% the current year strong balance
Slide 3: Company Capital Structure
COMPANY CAPITAL STRUCTURE R4,84bn A SHARE B SHARE in assets 47m in issue 405m in issue Preferential dividend Enhanced when R3,3bn 7 times cash cover growth exceeds 5% market cap Growth capped at 5% Dual class share structure B share trading at 17% discount to NAV 02
Slide 4: About Gemgrow
ABOUT GEMGROW Scarce A and B Creating long-term share structure shareholder value Pure property fund Yield-accretive acquisitions on a Focused on sustainable basis repositioning the portfolio Focused on balance sheet strength 03
Slide 5: Gemgrow at a Glance
GEMGROW AT A GLANCE 135 SECTORAL SPLIT POST ACQUISITIONS AND properties BY REVENUE (%) DISPOSALS BY REVENUE (%) R4,84bn 23 23 portfolio value 27 40 751 981m 2 total GLA Diversified 37 across the country 50 23 Retail 40 Retail 50 Office 37 Office 27 Industrial 23 Industrial 04
Slide 6: Strategy
STRATEGY 1 Reduce vacancies and focus on tenant retention 2 Build strong relationships with national tenants 3 LTV reduction and balance sheet strengthening 4 Explore initiatives to enhance liquidity of A and B shares 05
Slide 7: Repositioning Gemgrow
REPOSITIONING GEMGROW Disposal programme totalling R1bn of majority outlying CBD office and government stock: Gemgrow’s smaller assets have demonstrated demand → and are reasonably liquid R324m sold to date → → Additional R660m earmarked for disposal 06
Slide 8: Repositioning Gemgrow Continued
REPOSITIONING GEMGROW CONTINUED Focusing on: R1,3bn acquisitions → Income sustainability of outlying lower LSM → Tenant demand retail – strong tenant demand and high-traffic → Pure property fundamentals commuter nodes → Improved leasing profile → Maintain/improve cost to income ratio → Balance sheet
Slide 9: Acquisitions
ACQUISITIONS R1,3bn to date: lower-LSM, high-growth nodes, commuter networks Retail assets Mostly national retailers Strong lease length profile Strong tenant demand 08
Slide 10: Where We Are Improving
WHERE WE ARE IMPROVING Actively implementing asset management interventions New broker Improved Faster deal flow division tenant service and execution Building relationships 09
Slide 11: Portfolio Spread by Revenue (%)
PORTFOLIO SPREAD BY REVENUE (%) 12 provinces 55 3 55 Gauteng <1 1 Free State <1 North West 3 Mpumalanga 1 10 12 Limpopo 5 Eastern Cape 2 10 KwaZulu-Natal 12 Western Cape 2 Northern Cape 5 12 10
Slide 12: Property Portfolio Overview as at September 2018
PROPERTY PORTFOLIO OVERVIEW AS AT 30 SEPTEMBER 2018 SECTORAL PROFILE BY m² (%) SECTORAL PROFILE BY REVENUE (%) 23 22 27 45 33 50 22 Retail 23 Retail 33 Office 50 Office 45 Industrial 27 Industrial 11
Slide 13: Average Gross Rental per Sector
AVERAGE GROSS RENTAL PER SECTOR AS AT 30 SEPTEMBER 2018 providing value for tenants with attractive rental rates R92/m2 R118/m2 R44/m2 Retail Office Industrial 12
Slide 14: Renewals and Expiries
RENEWALS AND EXPIRIES AS AT 30 SEPTEMBER 2018 72% ONTRACTUAL LEASE C EASE RENEWAL STEP L of all lease expiries ESCALATIONS (%) UP ESCALATIONS (%) were renewed Portfolio: 3 Retail: 8,1 Retail: 2 9% Office: 8,1 Office: 3 of the balance Industrial: 8,2 Industrial: 2 was re-tenanted 81% NEW DEALS IN REL
Slide 15: Combined Lease Expiry Profile by Revenue
COMBINED LEASE EXPIRY PROFILE BY REVENUE (R) AS AT 30 SEPTEMBER 2018 7 761 318 9 000 000 6 083 978 8 000 000 7 000 000 4 834 117 6 000 000 3 866 180 3 505 711 3 261 604 5 000 000 2 916 243 2 899 115 2 541 757 4 000 000 2 194 876 1 499 655 1 655 311 1 514 924 1 445 736 3 000 000 720 794 547 039 502 4
Slide 16: Combined Lease Expiry Profile by GLA
COMBINED LEASE EXPIRY PROFILE BY GLA (m2) AS AT 30 SEPTEMBER 2018 1 29 777 140 000 120 000 94 525 100 000 73 819 80 000 48 537 60 000 38 250 37 570 35 966 35 686 29 225 27 976 25 085 24 300 23 482 22 141 40 000 18 637 19 637 18 1 01 14 806 15 711 14 231 20 000 1 331 Vacancy: 8% Monthly: 5% 2019: 29%
Slide 17: Letting and Vacancies
LETTING AND VACANCIES AS AT 30 SEPTEMBER 2018 SEPTEMBER 2018 Sector Total (m2) Let (m2) Let (%) Vacant (m2) Vacant (%) Retail 164 471 150 241 91,3 14 231 8,7 Office 248 693 220 717 88,7 27 976 11,3 Industrial 338 816 324 011 95,6 14 806 4,4 Total 751 980 694 968 92,4 57 012 7,6 16
Slide 18: Our Financial Performance
OUR FINANCIAL PERFORMANCE CONDENSED CONSOLIDATED FINANCIAL RESULTS R’000 2018 2017 Revenue (excluding straight line rental income) 768 916 687 109 Property expenses (286 703) (264 669) Net property income 482 213 422 440 Administration and corporate costs (13 361) (8 531) Finance charges (122 827) (
Slide 19: Our Financial Position
OUR FINANCIAL POSITION Unaudited at 31 March At 30 September R’000/unaudited 2018 2017 Assets Non-current assets 4 938 077 4 723 204 Investment property 4 772 341 4 438 238 Other non-current assets 165 736 284 966 Current assets 208 039 220 466 Total assets 5 146 116 4 943 670 Equity and liabilities
Slide 20: How We Structured Our Debt
HOW WE STRUCTURED OUR DEBT 79% Weighted average debt expiry profile: 3,9 years (2017: 3,4 years) ffective interest rate: E 10% (2017: 9,33%) Debt hedged: 110% (2017: 94%) Loan to value: 26,8% (2017: 20,7%) 11% 10% R139m R1 036m R127m 2019 2022 2023 Note: Post the Moolman transaction and the disposal
Slide 21: Prospects
PROSPECTS Negative growth forecast of 10% Aggressively repositioning the portfolio to produce future sustainable earnings Balance sheet strength 20
Slide 22: Thank You
Gemgrow Properties Ltd THANK YOU Registration number: 2007/032604/06 JSE Share code: GPA ISIN: ZAE0000223269 GPB ISIN: ZAE0000223227 Directors Registered Office Transfer Secretaries Company Secretary Mark Kaplan (CEO) Gemgrow Properties Limited Link Market Services South Gillian Prestwich Junaid Lim