Sa Corporate Real Estate Ltd. · JSE:SAC
Sa Corporate Real Estate — FY2021 Earnings Presentation
57 slides from Sa Corporate Real Estate's earnings presentation, Mar 18, 2022
Slide 1: SA Corporate 2021 Year End Results Presentation
SA Corporate 2021 Year End Results Presentation 18 March 2022
Slide 2: Agenda
AGENDA Introduction & Overview 01 Rory Mackey 02 Strategy Update Rory Mackey 03 Portfolio Rory Mackey Performance 04 Financial Sam Moodley Performance Outlook 05 Rory Mackey
Slide 3: Introduction & Overview
INTRODUCTION & OVERVIEW RORY MACKEY
Slide 4: Overview
Overview Portfolio Distribution performance Total net property income of 6.4% Distributable income R639.5 million or 25.43 cps R1.1 billion (2020: R1.1 billion) (2020: R601.1 million or 23.90 cps) Total like-for-like net property income increased by 27.7% Annual distribution 9.9% to R1.1 billion (20
Slide 5: Overview
Overview Property activity Capital structure Disposal pipeline contracted and still Loan to value (“LTV”) ratio of to transfer & divestments transferred 37.4%* since 1 January 2021 (2020:38.6%*) R1.8 billion * Net debt LTV excluding derivatives, which if (2021 contracted: R916.4 million) Transferred
Slide 6: 2021 H1 / H2 Comparative
2021 H1 / H2 Comparative 2021 H1 / H2 Comparative (R49.5m) 2021 H1 Distributable Income R344.5m 2021 H1 Once-offs (R15.7m) • Listed Investments – Actual 2020 distribution in excess of accrual (R4.9m) • COVID-19 deferments recovered relating to 2020 (R1.4m) • East Point / Town Square - Municipal elec
Slide 7: Strategy Update
STRATEGY UPDATE RORY MACKEY ❑ FINANCIAL SUSTAINABILITY ❑ PORTFOLIO FOCUS • Convenience-oriented Retail • Quality Industrial • Quality Residential Rental • Office Divestment
Slide 8: Strategy Update
Strategy Update R1.8bn divestment pipeline: • R853.6m has transferred. • R713.8m is unconditional. • R251.0m is conditional. • R92.2m failed (subsequently contracted again: 102 Essenwood R32m & Long Street Precinct R45m included in above). Financial • Purchaser of Safari shares has reneged on transa
Slide 9: Navigating Financial Sustainability during the COVID-19 Pandemic
Navigating Financial Sustainability during the COVID-19 Pandemic
Slide 10: Strategy Update
Strategy Update REDEVELOPMENT Convenience Oriented Montana Crossing increased Upgrade being planned Retail grocer presence Portfolio STRENGTHENING TENANT COVENANT 2 180m2 at Umlazi Mega City East Point reconfiguration to strengthen Eastern Entrance 2 200m2 - African City (JHB Inner-City) - East Poin
Slide 11: Restoration of Musgrave Centre during Ongoing Pandemic
Restoration of Musgrave Centre during Ongoing Pandemic with the Introduction of FLM and Dischem December Trading Density - Musgrave Centre December Trading Density Growth over 2019 3 500 3 197 35,0% 3 000 30,0% 2 596 2 458 25,0% 30,1% 2 500 2 232 20,0% 2 000 15,0% 1 500 R/m2 10,0% Growth over 2019 5
Slide 12: Resilient Performance of Bluff Shopping Centre through COVID-19
Resilient Performance of Bluff Shopping Centre through COVID-19 Pandemic Leveraging off Community Support December Trading Density – The Bluff Centre December Trading Density Growth over 2019 20,0% 5 000 4 402 15,0% 16,3% 3 583 3 785 10,0% 4 000 2 941 5,0% 3 000 0,0% Growth over 2 000 R/m2 -5,0% 202
Slide 13: Improvements to Morning Glen Mall
Improvements to Morning Glen Mall Improved Accesses SW Section Activation Improvement to existing Kelvin Drive entrance Serviced by new parkade accessed from improved with direct connectivity to new parkade Kelvin Drive access Upper level al fresco dining with views serviced New Kelvin Drive access
Slide 14: Pritchard Street: Convenience National Tenancy
51 Pritchard Street: Convenience National Tenancy in Primary Inner City Shopping Centre
Slide 15: North Park Mall Re-purposing
North Park Mall Re-purposing Offices Residential • Social Housing • FLISP Sales Furniture Convenience tenancy Grocer • OBC
Slide 16: Strategy Update
Strategy Update • Vacancy maintained below 1.0%. Quality • Logistics > 74%. Industrial Portfolio • WALE > 4 years. • Leasehold properties reduced to 1.
Slide 17: Strategy Update
Strategy Update Quality • Strategy to increase proportion of suburban portfolio to be achieved by a partial Residential divestment of non-precinct inner city properties. Portfolio • Inner city portfolio transaction unconditional as of 17 March 2022.
Slide 18: Afhco Divestment to Focus Inner City Investment in Precincts
Afhco Divestment to Focus Inner City Investment in Precincts 1 End Street 2 Jeppe Post Office 3 Pritchard 4 Newgate 5 Albert Divested Retail Afhco Head Office Student Building Apartment sales Non-core 1 4 2 3 5
Slide 19: Afhco JHB portfolio to be concentrated in mixed use precincts
“Afhco JHB portfolio to be concentrated in mixed use precincts in which it can ensure accessibility, good infrastructure, quality residential & retail product, a secure environment & lifestyle amenities …”
Slide 20: Strategy Update
Strategy Update Divesting • Sale of four properties transferred; sale of 102 Essenwood concluded. from • Partial storage repurposing at two offices initiated. Commercial • Vacancy at GreenPark Corner reduced by 10% in 2021. Reducing Office Exposure Decreasing Office Value Being Mitigated by Accelera
Slide 21: Portfolio Performance
PORTFOLIO PERFORMANCE RORY MACKEY
Slide 22: SA Portfolio: Retail
Value of South African portfolio SA Portfolio: Retail 43.4% (2020: 43.7%) Like-for-like NPI growth Trading density growth WALE 21.5% 4.6% 3.6 Years (2020: -18.8%) (2020: 3.2%) (2020: 3.6 years) Vacancy1 ECL and rent relief 4.6% -71.5% (2020: 4.6%) (2021: R28.0 m; 2020: R98.0 m) Rental escalation Col
Slide 23: Monthly Y-O-Y Retail Trading Density Growth
Monthly Y-O-Y Retail Trading Density Growth 23
Slide 24: SA Portfolio: Industrial
Value of South African portfolio SA Portfolio: Industrial 23.5% (2020: 24.6%) Like-for-like NPI growth ECL and rent relief 1.4% -145.2% (2020: -7.9%) (2021: -R5.6 m; 2020: R12.4 m) Vacancy Collections 0.7% 101.4% (2020: 1.5%) (2020: 100.9%) Rental escalation Arrears 6.7% 2.8% (2020: 7.1%) (2020: 7.3
Slide 25: SA Portfolio: Commercial
Value of South African portfolio SA Portfolio: Commercial 2.1% (2020: 2.9%) Like-for-like NPI decline ECL and rent relief -36.6% 13.2% (2021: R6.0 m; 2020: R5.3 m) (2020: -15.9%) Vacancy Collections 18.9% 89.2% (2020: 16.9%) (2020: 92.6%) Rental escalation Arrears 7.3% 21.7% (2020: 7.9%) (2020: 21.2
Slide 26: SA Portfolio: Afhco
Value of South African portfolio SA Portfolio: Afhco 31.0% (2020: 28.8%) TOTAL RESIDENTIAL RETAIL (83% of portfolio) (17% of portfolio) Like-for-like NPI increase Vacancy – Residential 1 Vacancy - Retail 7.4% 8.5% 5.8% (2020: -24.8%) (2020: 15.4%) (2020: 5.7%) 8.6% excl. management, IT & marketing c
Slide 27: Afhco Residential Leasing Performance
Afhco Residential Leasing Performance 27
Slide 28: LFL NPI Portfolio Performance
LFL NPI Portfolio Performance Sector LFL NPI Growth Industrial 1.4% Retail 21.5% Office -36.6% Afhco 7.4% Total 9.9% 28
Slide 29: Monthly Collections – Total SA Portfolio
Monthly Collections – Total SA Portfolio
Slide 30: 2021 COVID-19 Rental Relief
2021 COVID-19 Rental Relief Portfolio 2021 Actual Retail R11.7 million Industrial PY Deferments Received (R2.8 million) Commercial R0.3 million Afhco R1.6 million Total COVID Discounts R10.8 million Percentage (%) of Total Retail Category 2021 Actual Discount Given Gyms R4.0 million 34,4% Restaurant
Slide 31: Riots Restoration
Riots Restoration Trading recovery Total no. of Percentage of tenants Fully trading Shopping centre Tenants trading tenants trading by number target date Davenport Square Shopping 54 54 100.0% 01-Dec-21 Centre Pine Walk Centre 29 29 100.0% 01-Dec-21 50 Griffiths Mxenge Highway 4 2 50.0% 01-Feb-22 Um
Slide 32: Zambian Portfolio
50% Property value Zambian Portfolio Zambian JV R1.1 bn* (2020: R879.6m) 50% NPI Growth -9.8% (USD) -18.8%(ZAR) 2020: -29.0% (USD) -19.1% (ZAR) East Park Mall (73% of Zambian Portfolio Value) Vacancy Rental escalation (USD) Retention rate Rental reversion (USD) 9.4% 3.0% 100% 0.1% (2020: 16.4%) (202
Slide 33: Financial Performance
FINANCIAL PERFORMANCE SAM MOODLEY
Slide 34: 2021 Distribution Analysis
2021 Distribution Analysis Like-for-Like ▪ Improved rental due to lower relief & deferment – LFL NPI R85.6m R95.5m 9.9% ▪ Reduced ECL – R35.9m ▪ Maintenance cost increase due to 2020 only essential repairs – (R10.5m) ▪ Increase in expenses – (R15.5m) Developments, Disposals & Acquisitions Total NPI
Slide 35: Net Asset Value (cps)
Net Asset Value (cps) 1 425,0 11 2 400,0 10 (3) (2) 2 (17) 375,0 350,0 401 400 325,0 300,0 Opening NAV 01 Revaluation of MTM swap Foreign Insurance Distributable Closing NAV 31 January 2021 investment derivatives adjustments proceeds i.r.o income net of December 2021 properties i.r.o. Zambian capita
Slide 36: Investment Properties Analysis
Investment Properties Analysis 16 500 291 16 000 15 500 ( 845 ) 15 000 15 954 (431)* 14 500 14 969 14 000 Investment Properties Improvements / Disposals Fair value adjustment Investment Properties December 2020 Development costs December 2021 * Included in the fair value is an impairment in respect
Slide 37: Debt & Interest Rate Swap Facilities
Debt & Interest Rate Swap Facilities Debt facilities Unutilised Revolving Weighted average rate credit facilities (“RCF”) (“WAR”) excluding Term debt Average tenor swaps R6.8bn R615.0m 2.0 years 5.5% (2020: R7.4bn) (2020: R700.0m) (2020: 2.4 years) (2020: 5.3%) Swap profile Hedged % Swap margin Aver
Slide 38: 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. 37.4% FV CCR’s 37.4% (2020: Rate 38.5% swap (2020: R46.5m Swaps (2020: to value derivatives 38.6%) 38.7%) R167.9m 41.2%) 2020 Variance 2021 Net interest cover Distributable income before 1 106 024 1 075 465 30 559 i
Slide 39: Outlook
OUTLOOK gf sAcorporate qa AFHCO f REAL ESTATE Apes mig
Slide 40: Retail Outlook
Retail Outlook ▪ 81.1% Non-expiring rental revenue ▪ Contracted escalation 6.9% ▪ 60% of 2022 expiries already renewed ▪ Forecast negative renewal reversions ▪ Vacancy to reduce from 4.6% at 2021 YE by 1.0% to 1.5% over 2022 ▪ Rental relief to reduce from R11.7m in 2021 to circa R4.5m in 2022 ▪ Oper
Slide 41: Industrial Outlook
Industrial Outlook ▪ 87.5% Non-expiring rental revenue ▪ Contracted escalation 6.7% ▪ Forecast negative renewal reversions (see next slide) ▪ Vacancy to remain low but with downtime of circa 24 800m2 over 2 to 3 months ▪ Operational expenses to be well-controlled increasing less than inflation 41
Slide 42: Industrial Expiries
Industrial Expiries • 31 439m2 expiring in H1 2022 or 7.0% of the portfolio • 38% of the H1 lease expiry has already renewed at a reversion of -8.1%, a further 47% has been agreed and lease documentation is being finalised, renewal offers have been sent to the remaining 15% • 48% of all 2022 leases
Slide 43: Commercial Outlook
Commercial Outlook ▪ Minor exposure ▪ 77.5% Non-expiring rental revenue ▪ Contracted escalation 7.4% ▪ Forecast renewal reversion negative double digit ▪ Vacancy to remain relatively stable but with downtime of circa 3 100m2 over 4 to 5 months to allow for re-tenanting ▪ Operational expenses to be w
Slide 44: Afhco Outlook
Afhco Outlook Residential ▪ 12-month leases ▪ >50% of leases forecast to be renewed at annualised average increase of circa 1.5% ▪ Remainder of leases forecast to be relet with discounting ▪ Vacancy reduction of between 2 to 4% over the year Retail ▪ Escalation / renewal reversion circa 4% ▪ Vacancy
Slide 45: Outlook
Outlook ▪ Retail, Industrial & Afhco positive. Commercial continues to face headwinds. ▪ Like-for-like NPI forecast to almost increase by inflation in 2022. ▪ 2021 mismatch of two half years (H2 distributable income 14.4% less than H1) to be more even in 2022 with 2022 H1 distribution movement based
Slide 46: Questions
QUESTIONS { SA CORPORATE qa AFHCO | REAL ESTATE com”
Slide 47: Appendices
APPENDICES | SA CORPORATE qa AFHCO | REAL ESTATE Apes mig
Slide 48: Distributable income at a glance for the period ended December 2021
Distributable income at a glance for the period ended 31 December 2021 Dec 2021 Dec 2020 % Rm Rm Variance Net Property Income - Like for Like 1 059.905 964.408 9.9 Net Property Income - Developments 53.773 29.866 80.0 Net Property Income - Acquisitions 6.470 6.876 (5.9) Net Property Income - Buildin
Slide 49: Group debt structure – at December 2021 (excl. fixes)
Group debt structure – at 31 December 2021 (excl. fixes) Jan 2023 300 Term Loan, 5,23% - 300 300 Revolving credit, 5,28% Jan 2023 629 Term Loan, 5,51% Jan 2023 - Jan 2023 - 120 Cross Currency (ZAR), 5,69% - 159 Cross Currency (US$), 4,36% Jan 2023 - Jan 2023 200 15 Revolving credit, 5,15% 1 000 Mar
Slide 50: Group debt structure – at December 2021 (incl. fixes)
Group debt structure – at 31 December 2021 (incl. fixes) Jan 2023 300 Term Loan, 7,88% - 300 300 Revolving credit, 7,93% Jan 2023 629 Term Loan, 8,16% Jan 2023 - Jan 2023 - 120 Cross Currency (ZAR), 8,34% - 159 Cross Currency (US$), 4,36% Jan 2023 - Jan 2023 200 15 Revolving credit, 7,80% 1 000 Term
Slide 51: Debt repayment profile – at December 2021
Debt repayment profile – at 31 December 2021 4 500 6,5% 5,8% 5,9% 4 000 5,5% 5,5% 3 500 515 5,1% 4,5% 3 000 2 500 3,5% 2 000 2,5% 100 1 500 1,5% 1 000 0,5% 500 3 303 1 580 1 108 200 - -0,5% 2023 2024 2025 2026 Total Drawn R'm Total Undrawn R'm Rate
Slide 52: Group debt structure – SWAPS at December 2021
Group debt structure – SWAPS at 31 December 2021 Jan-22 594 7,05% Jan-23 150 6,83% May-23 300 7,38% Jul-23 290 6,98% 120 6,97% Jul-23 Aug-23 150 4,10% 295 7,04% Sep-23 150 7,50% Feb-24 Feb-24 340 8,19% Mar-24 250 7,61% 100 7,51% May-24 Jul-24 350 7,37% Jul-24 100 7,00% Oct-24 150 7,60% Nov-24 430 1,
Slide 53: Interest rate swap expiry – December 2021
Interest rate swap expiry – 31 December 2021 2 500 8,0% 8,0% 7,1% 7,0% 6,7% 6,9% 2 000 6,3% 6,0% 5,0% 1 500 4,0% 1 000 3,0% 2,0% 500 1,0% 594 1 305 2 020 400 340 - 0,0% 2022 2023 20241 2025 2026 Total swaps at Dec 21 Rate at Dec 21 1 Includes $27m swap at a rate of 1.41%
Slide 54: Retail portfolio overview
Retail portfolio overview Portfolio1,2 Portfolio value R6.5bn 42 Properties Top 10 tenants National exposure GLA 35.5% 57.6% GLA 379 715m2 26.9% Grocer GLA Rental 27.6% 56.1% of total Tenant retention success rate 75.9% Cost to revenue (Like-for-like) 42.7% (2020: 49.5%) Lease Expiries 30,0% 120,0%
Slide 55: Industrial portfolio overview
Industrial portfolio overview Portfolio Portfolio value R3.5bn 54 Properties GLA 450 207m2 35.3% GLA of total portfolio Cost to revenue (Like-for-like) 27.6% (2020: 25.6%) Lease Expiries 25,0% 120,0% 20,0% 100,0% 80,0% % of GLA 15,0% 60,0% 10,0% 40,0% 5,0% 20,0% 0,0% 0,0% Vacancy Monthly 2021 2022 2
Slide 56: Commercial portfolio overview
Commercial portfolio overview Portfolio Portfolio value R0.3bn 4 Properties GLA 30 298m2 2.4% GLA of total portfolio Cost to revenue (Like-for-like) 67.8% (2020: 55.7%) Lease Expiries 25,0% 120,0% 20,0% 100,0% 80,0% % of GLA 15,0% 60,0% 10,0% 40,0% 5,0% 20,0% 0,0% 0,0% Vacancy Monthly 2021 2022 2023
Slide 57: Afhco portfolio overview
Afhco portfolio overview Portfolio1 Portfolio value R4.6bn 64 Properties GLA Apartments 345 985m2 Retail 69 805m2 Cost to revenue (Like-for-like) 48.1% (2020: 50.2%) By GLA 16,8% 83,2% Residential Retail / Commercial 1 Excludes bulk of 53 958m2 being developed, valued at R74.4m.
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