Delta Property Fund Limited · JSE:DLT
Delta Property Fund — FY2015 Earnings Presentation
42 slides from Delta Property Fund's earnings presentation, 2015
Slide 1: Annual Results Presentation for the period ended 28 February 2015
ANNUAL RESULTS PRESENTATION for the period ended 28 February 2015
Slide 2: Proceedings
Proceedings Introduction Sandile Nomvete Highlights Unitholder profile Financial review Bronwyn Corbett Investment portfolio Leasing Capex Challenges Sandile Nomvete Prospects Delta Towers, Durban
Slide 3: Introduction
Introduction 3 Capital Towers, Pietermaritzburg
Slide 4: Introduction to Delta
Introduction to Delta Black managed REIT 23.6% growth in total investment portfolio to R8.9 billion* (Feb 2014 - R7.2 billion) Predominantly invested in office buildings in Durban and Pretoria with diversifying investments in other sectors and Africa-focused Delta International Level 2 BEE p
Slide 5: Snapshot
Snapshot Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: MPI Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% 31 August 2014 28 February 2015 Linked units / shares in issue 451 042 442 458 409 836 Market capitalisation
Slide 6: Management team
Management team Executive Non-Executive Sandile Nomvete Bronwyn Corbett JB Magwaza Jorge Da Costa Nooraya Khan CEO CFO/COO Non-Executive Independent Lead Independent Chairman Non-Executive Non-Executive Director Director Chairman of the Audit, Chairman of the Risk and Compliance Investment Committee
Slide 7: Highlights
Highlights Sleepy Hollow, Pietermaritzburg 7
Slide 8: Highlights
Highlights Growth in full year distribution 15.7% to 84.07 cents (Feb 2014 - 72.69 cents) Market capitalisation at Feb 2015 R4.08 billion (Feb 2014 – R3.39 billion) NAV per share of R10.02 (Feb 2014 - R9.28*) growth 8% R1 billion revenue milestone achieved Maiden US$ distribution received
Slide 9: Unitholder Profile
Unitholder Profile Mayor’s Walk, Pietermaritzburg 9
Slide 10: Unitholder profile
Unitholder profile As at 28 Feb 2015 Units held Holding Coronation Fund Managers 84 648 531 18.47% Stanlib Asset Management 68 366 413 14.92% Public Investment Corporation 67 070 701 14.63% Sanlam Investment Management 37 591 687 8.20% Grindrod Asset Management 31 061 061 6.78% Directors 25 646 826
Slide 11: Financial review
Financial review Block G, DTI Campus, Pretoria 11
Slide 12: Financial review
Financial review Debt • Diversified sources of funding • Net inflows of R138 million raised through debt capital markets at average rate of 6.84% • Maintained fixed debt at same levels as August 2014 at 70% • Surplus funds invested on access facility at 8.5% Temporary consolidation of Delta Inte
Slide 13: Financial overview
Financial overview 28 Feb 2015 28 Feb 2014 Distribution per linked share / unit (cents) 84.071 72.692 Cost to income ratio (gross) 26.0% 25.5% Cost to income ratio (net) 10.16% 10.77% Gearing level 49.9% 47.5% Weighted average interest rate 8.10% 7.5% Fixed vs. floating 70 : 30 32 : 68 Average debt
Slide 14: Distributable Income Statement (extract)
Distributable Income Statement (extract) 28 Feb 2015 28 Feb 2014 Change % (R’000) (R’000) Net property income 696 300 442 689 57.3% Rental income 940 623 594 209 58.3% Property operating expenses (244 323) (151 520) (61.2%) Administration expenses (excluding forex losses) (51 008) (48 090) (6.1%) Ne
Slide 15: Statement of financial position (extract)
Statement of financial position (extract) 28 Feb 2015 28 Feb 2014 (R’000) (R’000) Assets Non-Current assets 8 396 823 7 307 495 Investment property 8 393 900 6 965 730 Fair value of property portfolio 8 213 035 6 853 449 Straight line rental income accrual 180 865 112 281 Other non-current assets 2
Slide 16: Delta debt summary
Delta debt summary As at 28 Feb 2015 Type R'm 1 Weighted Ave. Rate Revolving / Liquidity Bank Facilities 1,042 7.92% Floating Bank Facilities 1,064 7.48% Fixed Bank Facilities 1,676 8.29% Total Bank Facilities 3,782 7.99% DMTN Programme 690 7.55% Total Drawn Facilities 4,472 7.90% Accrued Interest 3
Slide 17: Debt maturity profile
Debt maturity profile 28-Feb-16 28-Feb-17 28-Feb-18 28-Feb-19 28-Feb-20 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 R’ million DMTN Programme Fixed Bank Facilities Floating Bank Facilities Revolving / Liquidity Bank Facilities Swap Contracts 17
Slide 18: Capital raise
Capital raise Delta’s capital raise was oversubscribed, with Delta accepting R503 million at R8.90, of which c.R370 million came from new investors Further demand for Delta stock allowed Delta to place an additional R185 million at R8.90 through a vendor placement Proceeds to be used for the r
Slide 19: Consistent growth in assets
Consistent growth in assets Comparison of market cap, investment portfolio value and LTV R’bn LTV % 10.00 80% 9.33 8.90 9.00 8.00 70% 7.18 6.97 7.00 6.00 60% 4.98 5.00 4.80 4.08 4.00 3.54 50% 3.39 46.7% 40.0% 38.7% 3.00 3.00 49.9% 2.12 41.0% 48.2% 2.10 47.5% 2.00 40% 1.35 1.00 1.39 - 30% Nov-12 (Lis
Slide 20: Potential upside in DLT
Potential upside in DLT Historic share price, NAV and distribution per share cpu Rands 12 90.00 8% 90.78 11 80.00 84.06 15,6% 10.2 10.05 70.00 72.69 10 10.05 9.40 60.00 8.87 8.90 8.87 9 8.67 8.32 8.40 8.90 8.30 50.00 7.90 7.90 7.85 8 8.06 7.89 7.96 44.05 40.00 40.18 40.01 7 30.00 32.51 23.69 20.00 6
Slide 21: Investment portfolio
Investment portfolio Samora House, Durban 21
Slide 22: Property portfolio analysis
Property portfolio analysis TENANT PROFILE: GLA GEOGRAPHIC PROFILE: GLA BUILDING GRADE: GLA 6% 39% 6% 76% 5% 5% 35% 4% 6% 3% 1% 0.8% 50% 39.3% 24% Office: government (50,1%) Gauteng (39,3%) Kwazulu-Natal (35,0%) Office: other (39,3%) Limpopo (6,4%) Northern Cape (5,6%) Retail (4,9%) Western Cape (4,
Slide 23: Lease expiry profile
Lease expiry profile 30% 24.9% 25% 22.1% 21.0% 21.2% 20% 19.1% 17.7% 16.1% 15.8% 15% 11.4% 10% 8.2% 7.7% 7.8% 7.1% 5% 0.0% 0% Vacant Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Beyond Feb-20 Rental GLA 23
Slide 24: Delta's performance per IPD
Delta’s performance per IPD FY2015 is the second year that Delta has contributed to the IPD Listed Fund All Fund Portfolio Percentile Percentile Benchmark1 Benchmark2 Total Return (%) 17.9 13.9 0 12.8 6 Income Return (%) 9.3 9.0 44 8.4 31 Capital Growth (%) 7.9 4.6 11 4.1 19 Basic Rental Growth (%)
Slide 25: Acquisitions (post year-end)
Acquisitions (post year-end) Tembisa Megamart, Midrand Property Tembisa Megamart ABSA Florida Veritas & 142-144 4th Street Location Tembisa, Midrand Roodepoort, Gauteng PTA CBD and Sandton Description Community retail centre Office Office Purchase Price R230,316,000 R77,000,000 R185,000,000 GLA 14,1
Slide 26: Delta International
Delta International Maiden distribution of US$ 6.64 cents per share paid in February Capital raise of R474 million (US$39 million) completed in April 2015 The proceeds utilised to fund the acquisition of the Vodacom Building, Zimpeto Square and to retire a portion of debt associated with the c
Slide 27: Leasing
Leasing NPA Building, Cape Town 27
Slide 28: Leasing
Leasing Total leases concluded in FY2015 Weighted Ave. Weighted Ave. No of Leases Total Area Rate / m2 Escalation Renewals 81 93,682 (13.3%1) R 104.65 6.71% New Deals 33 8,148 (1.2%1) R 71.42 7.23% Top 5 deals by area Property Tenant Total Area Term Rate / m2 Escalation SARS Bellville SARS 16,005m2
Slide 29: Capex
Capex CMH Redevelopment, Durban 29
Slide 30: Significant Capex projects
Significant Capex projects Property CMH Commission Embassy The Forum 88 Field Total Dealership House Building (All figures in Rands) Approved in FY2015 156,000,000 71,300,000 - - - 227,300,000 Spent in FY2015 37,976,214 - - - - 37,976,214 Remainder of FY2015 118,023,786 71,300,000 - - - 189,323,786
Slide 31: Challenges
Challenges Unisa House, Johannesburg 31
Slide 32: Key focus areas
Key focus areas Risks / Challenges Mitigants Treasury Directive - 3 year, 5.5% escalation Directive has expired Market seeing renewals at 7.5% Level 2B-BBEE status allows the ability to renew leases Discussions on 10 - 20 year lease terms Interest rate environment Fixed rate instrument
Slide 33: Prospects
Prospects PWC, Polokwane 110 Hamilton, Pretoria 33
Slide 34: Prospects
Prospects Inner city focus • Delta is committed to investing in major CBD’s and contributing to urban renewal • Partnerships with developers, tenants, property owners and government to improve and maintain attractive and safe nodes Positive outlook on Government as a tenant Pipeline • Potentia
Slide 35: Q&A
Q&A 35
Slide 36: Annexure 1 - Directors of Delta
Annexure 1 - Directors of Delta Johannes Bhekumuzi Magwaza – Non-Executive Chairman BA, MA (UK) JB has many years’ experience as a board representative for various JSE listed and non-listed entities including chairmanships at Tongaat Hullet Limited, Pamodzi Investment Holdings Proprietary Limited, M
Slide 37: Directors of Delta Property Fund (cont.)
Directors of Delta Property Fund (cont.) Nooraya Khan – Independent Non-Executive Director CA (SA) Nooraya is a Chartered Accountant and a highly – experienced and successful private equity transactor. She has vast experience in negotiating, implementing and managing private equity and black economi
Slide 38: Directors of Delta Property Fund (cont.)
Directors of Delta Property Fund (cont.) Dumo Motua – Independent Non-Executive Director Bcom, Diploma in Advanced Banking, Certificate in Business Project Management (UNISA, RAU & Wits) Dumo has a wide experience gained from different environments and institutions, spanning the banking, regulatory
Slide 39: Annexure 2 – Top 10 Properties (by value)
Annexure 2 – Top 10 Properties (by value) Forum Building Liberty Towers Hallmark Building Delta Towers Location Pretoria Location Durban Location Pretoria Location Durban Office - Office - Office - Office - Sector Sector Sector Sector Government Other Government Other GLA 41,003 m2 GLA 40,465 m2 GLA
Slide 40: Top 10 Properties (cont.)
Top 10 Properties (cont.) Hensa Towers Manaka Heights Phomoko Towers The Marine Location Polokwane Location Pretoria Location Polokwane Location Durban Office - Office - Office - Office - Sector Sector Sector Sector Government Government Government Other GLA 13,675 m2 GLA 19,122 m2 GLA 13,058 m2 GLA
Slide 41: Top 10 Properties (cont.)
Top 10 Properties (cont.) Embassy Building Beacon Hill King Williams Location Durban Location Town Office - Office - Sector Sector Government Government GLA 31,129 m2 GLA 13,648 m2 Vacancy 20.81% Vacancy 0% Valuation R236 mil Valuation R228 mil 41
Slide 42: Annexure 3 – Dividend re-investment terms
Annexure 3 – Dividend re-investment terms Shareholders are being offered the opportunity to re-invest all or a part of their dividend back in Delta shares. Shareholders benefit by increasing their stake in Delta without incurring uncertificated securities tax or other dealing costs. Delta bene