Spear Reit Ltd. · JSE:SEA
Spear Reit — H1 2024 Earnings Presentation
47 slides from Spear Reit's earnings presentation, Oct 24, 2023
Slide 1: Unaudited Consolidated Interim Results
HY 2024 UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2023 PRESENTATION: 24 OCTOBER 2023
Slide 2: Table of Contents
Contents Table of Contents 01. INTRODUCTION AND ENVIRONMENTAL UPDATE 02. HY2024 CORPORATE PERFORMANCE AND SHARE REPURCHASE UPDATE 03. HY2024 SALIENT DETAILS 04. HY2024 FINANCIAL PERFORMANCE 05. PORTFOLIO OVERVIEW 06. ACQUISITIONS, DISPOSALS, DEVELOPMENTS AND PROPERTY VALUATIONS 07. ESG 08. OUTLOOK 0
Slide 3: Introduction and Environmental Update
01 Introduction and Environmental Update PRESENTERS: Quintin Rossi Christiaan Barnard Kim Pfaff-Karg CEO CFO CIO UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 3
Slide 4: Environmental Update
01. Introduction and Environmental Update Environmental Update The Mission To be the leading Western Cape-focused REIT and to consistently grow our distribution per share ahead of inflation and to operate within the top quartile of our peer group. HY2024 Operating environment HY2024 operating condit
Slide 5: Spear Operational Update
01. Introduction and Environmental Update Spear Operational Update HY2024 Operational Update HY2024 Operational Focus Areas Status Quo: Commercial Commercial vacancy Improved lease conversions with No.1 Waterhouse, Bloemhof and Vacancy creep mitigation Liberty Life fully let during HY2024 Vacancy Co
Slide 6: HY2024 Corporate Performance and Share Repurchase Update
02 HY2024 Corporate Performance and Share Repurchase Update UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 6
Slide 7: Spear Total Return HY2024
02. HY2024 Corporate Performance and Share Repurchase Update Spear Total Return HY2024 244.8m 24.2m GROSS NUMBER VOLUME TRADED OF SHARES DURING PERIOD ISSUED 10% R173m RATIO OF VOLUME RAND VALUE TRADED TO TRADED DURING SHARES ISSUED PERIOD 172k AVERAGE DAILY VOLUME UNAUDITED CONSOLIDATED INTERIM RES
Slide 8: Share Repurchase Programme
02. HY2024 Corporate Performance and Share Repurchase Update Share Repurchase Programme HY2024 purchases1 3 774 829 22 21.7m 20 (886 425) 21 669 576 TREASURY CSP issue 18 SHARES 18 781 172 16 14 Shares ('000 000) 12 10 8.85% 8 OF TOTAL 6 SHARES 4 2 0 28 February 2023 31 August 2023 Average repurchas
Slide 9: HY2024 Salient Details
03 HY2024 Salient Details UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 9
Slide 10: Portfolio Snapshot
03. HY2024 Salient Details Portfolio Snapshot 28 ASSETS NUMBER OF PROPERTIES R4.46BN 5.85% R157.5M R10 341/M2 PORTFOLIO PORTFOLIO AVERAGE AVERAGE PROPERTY VALUE VALUE INCREASE PROPERTY VALUE VALUATION (FY2023) LETTING 7.41% AVERAGE IN-FORCE ESCALATION 426 588M2 94.19% 27 MONTHS R103/M2/PM GLA OCCUPA
Slide 11: Financial Snapshot
03. HY2024 Salient Details Financial Snapshot DISTRIBUTION 3.21% 40.77 HY2024 DIPS CENTS 38.33 94% 43.32% 5.77% DPS GROWTH HY2024 DPS CENTS HY2024 SA REIT COST-TO- SA REIT ADMIN HY2024 PAYOUT RATIO INCOME RATIO COST-TO-INCOME TANGIBLE NET ASSET VALUE (TNAV) R11.62 1.31% R11.47 TNAV FY2023 INCREASE F
Slide 12: Total Collections
03. HY2024 Salient Details Total Collections (as at 6 October 2023) 97% R288 727 R283 994 98.36% BILLED (R'000) COLLECTED (R'000) COLLECTED TO BILLED HY2024 98% collected vs billed per Collections have been in line with management’s forecast sector Billings reflect revenue including recoveries Tenan
Slide 13: HY2024 Financial Performance
04 HY2024 Financial Performance UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 13
Slide 14: Consolidated Statement of Comprehensive Income
04. HY2024 Financial Performance Consolidated Statement of Comprehensive Income GROUP for the period ended 31 August 2023 UNAUDITED SIX MONTHS UNAUDITED SIX MONTHS AUDITED ENDED ENDED YEAR ENDED Spear REIT Limited Group AUGUST 2023 AUGUST 2022 FEBRUARY 2023 R’000 R’000 R’000 Contractual rental incom
Slide 15: Reconciliation Between Earnings and Distributable Earnings
04. HY2024 Financial Performance Reconciliation Between Earnings and Distributable Earnings for the period ended 31 August 2023 AUGUST 2023 AUGUST 2022 FEBRUARY 2023 SA REIT FUNDS FROM OPERATIONS (SA REIT FFO) PER SHARE R’000 R’000 R’000 Reconciliation of FFO to Profit or loss per IFRS Statement of
Slide 16: Consolidated Statement of Financial Position
04. HY2024 Financial Performance Consolidated Statement of Financial Position as at 31 August 2023 GROUP UNAUDITED UNAUDITED AUDITED SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED Spear REIT Limited Group AUGUST 2023 R’000 AUGUST 2022 R’000 FEBRUARY 2023 R’000 ASSETS Non-current assets 4 064 056 4 404
Slide 17: TNAV Bridge
04. HY2024 Financial Performance TNAV Bridge Profit for the year Acquisition IFRS 2 (excl. fair value Fair value of treasury expense for 14 adjustment) adjustment shares future CSP R0.41 R0.11 R0.05 R0.02 R11.62 12 R11.47 R11.24 (R0.39) (R0.06) (R0.38) 10 Distributions Issue of treasury HY2024 paid
Slide 18: Funding Maturity
04. HY2024 Financial Performance Funding Maturity 39.58% 9.59% FUNDERS AVERAGE COST OF 93 bps FUNDING Group net debt profile as at 31 August 2023 LOAN-TO-VALUE 42% FY2026 Debt expiry 6% Total net debt Fixed Variable FY2027 debt debt R1.77bn 5% 33% R1.77bn 67% 27-month weighted FY2028 Average cost 9.
Slide 19: Balance Sheet and Funding Update
04. HY2024 Financial Performance Balance Sheet and Funding Update COVENANTS AUGUST 2023 LTV 50% 39.58% R150M R326M R246M LIQUIDITY DEBT REFINANCING WITH AVAILABILITY REFINANCED CREDIT FOR FINAL APPROVAL 2.00 2.36 ICR TIMES TIMES SABLE SQUARE SHOPPING CENTRE, MILNERTON UNAUDITED CONSOLIDATED INTERIM
Slide 20: SA REIT LTV
04. HY2024 Financial Performance Balance Sheet and Funding Update SA REIT LTV 50 45 39.58% 2.19% 0.36% 0.15% 40 HY2024 Interim GTX Phase 1 GTX Phase 2 33.76% 35 dividend Civils Civils 30 (5.84%) Percentage Liberty disposal (2.68%) 25 Potential property disposal 20 15 10 05 0 SA REIT LTV 12 at Aug 20
Slide 21: Portfolio Overview
05 Portfolio Overview UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 21
Slide 22: Top 5 Properties by Value
05. Portfolio Overview R2.11BN 177 778M2 41.67% Top 5 Properties by Value TOTAL VALUE TOTAL GLA PORTFOLIO GLA Sable Square Mega Park Shopping Centre 2 Long Street Liberty Life Building Northgate Park BELLVILLE MILNERTON CAPE TOWN CENTURY CITY BROOKLYN VALUE INCL. LEASE ASSET (R’000) VALUE INCL. LEAS
Slide 23: HY2024 Sectoral Split by Value, Revenue and GLA
05. Portfolio Overview HY2024 Sectoral Split by Value, Revenue and GLA 34% 1% 9 34% 6 17% 16% R4.46bn 28 R288m 49% 49% 13 Value of properties Number of properties Property revenue (excluding smoothing) 98% 58% 88% 94.19% 426 588m 2 11% 93% 31% Property occupancy (%) Gross lettable area (m2) COMMERCI
Slide 24: HY2024 Sectoral Split: Industrial
05. Portfolio Overview HY2024 Sectoral Split by Sector Industrial 13% 9% 7% 99% 40% R1 529m 47% 43% 245 714m 2 49% 100% 97.52% 95% 38% R98 039 55% Property value Gross lettable area (m2) Property occupancy (%) Property revenue (R'000) LOGISTICS MANUFACTURING URBAN LOGISTICS UNAUDITED CONSOLIDATED IN
Slide 25: HY2024 Sectoral Split: Commercial
05. Portfolio Overview HY2024 Sectoral Split by Sector Commercial 7% 8% 100% 96% 11% 34% 37% 35% R2 175m 131 923m2 88% R142 300 17% 17% 88% 17% 78% 5% 7% 3% 22% 20% 81% 77% 20% 12% 14% 13% Property value Gross lettable area (m2) Property occupancy (%) Property revenue (R'000) CBD TYGER VALLEY PAROW
Slide 26: HY2024 Sectoral Split: Retail
05. Portfolio Overview HY2024 Sectoral Split by Sector Retail 80% R708m 20% 60% 48 951m2 40% 89% 93% 100% 82% R47 636 18% Property value Gross lettable area (m2) Property occupancy (%) Property revenue (R'000) CONVENIENCE RETAIL DESTINATION RETAIL UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX
Slide 27: HY2024 Letting Activity
05. Portfolio Overview HY2024 Letting Activity Gross rental Average Expiries and Gross rental Average gross Renewals/ at renewals/ Average gross rental cancellations at expiry expiry rental New lets New lets new rental reversion GLA R’000 R/m² GLA R’000 R/m² % Commercial 12 272 1 888 154 16 504 2 34
Slide 28: Tenant and Vacancy Profile
05. Portfolio Overview Tenant and Vacancy Profile Analysis of the property portfolio in respect of Analysis of the property portfolio as at 31 August 2023 NUMBER OF tenant profiles TENANTS GLA: 426 588m 2 444 GLA 426 588m 2 401 808 m 2 OCCUPIED TOTAL VACANCY: 24 780M =5.81% 2 Large national National
Slide 29: Sectoral Performance - HY2024
05. Portfolio Overview Sectoral Performance - HY2024 Operating environment remains tough amid macroeconomic headwinds RETAIL 48 951M2 GLA COMMERCIAL 131 923M2 GLA INDUSTRIAL 245 714M2 GLA Trading has been consistent within the Offices: Progress made in vacancy contraction Strong trading during HY202
Slide 30: Sectoral Performance - HY2024
05. Portfolio Overview Sectoral Performance - HY2024 GENERAL BUSINESS AND PORTFOLIO UPDATE Operating environment remains challenging Despite trading environment the core portfolio is trading well Office portfolio in recovery with numerous new leases concluded Ongoing implementation and roll-out of s
Slide 31: Lease Expiry by GLA
05. Portfolio Overview Lease Expiry by GLA Lease expiry profile based on GLA Total Total Total Total Total Total Total 100% 6% 3% 23% 13% 15% 11% 28% 90% 80% 70% 60% 50% 40% 30% 14% 20% 10% Average 0% Vacant Monthly Expiries Expiries Expiries Expiries Expiries 09/2023 – 09/2024 – 09/2025 – 09/2026 –
Slide 32: Acquisitions, Disposals, Developments and Property Valuations
06 Acquisitions, Disposals, Developments and Property Valuations UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 32
Slide 33: Spear Investment Strategy
06. Acquisitions, Disposals, Developments and Property Valuations Spear Investment Strategy 1. 2. ACQUISITIONS NON-CORE DISPOSALS • Exclusively invest in the Western Cape • Industrial and retail bias • Minimum asset size R100 million (unless strategic) • Quality over Quantity • Unlock embedded portf
Slide 34: Acquisitions: The Island
06. Acquisitions, Disposals, Developments and Property Valuations Acquisitions: Acquisitive Growth The Island ACQUISITION COST: R185 million PHYSICAL ADDRESS: 9 Milner Road, Paarden Eiland WALE: 27 months GLA: 21 774m2 SECTOR: Industrial/ Urban Logistics ACQUISITION YIELD: 9.75% STATUS: Transferred
Slide 35: Disposals: Rebalancing the Portfolio
06. Acquisitions, Disposals, Developments and Property Valuations Disposals: Rebalancing the Portfolio Property transactions concluded APPROXIMATE GLA BOOK VALUE SALE PRICE NET EXIT YIELD EFFECTIVE DISPOSAL PROCEEDS PROPERTY LOCATION SECTOR (M²) (R '000) (R '000) (%) DATE USE FY2024 12 Pickwick Salt
Slide 36: Bravo Park Extension
06. Acquisitions, Disposals, Developments and Property Valuations Development Growth (existing portfolio) Bravo Park Extension ESTIMATED DEVELOPMENT COST: R66.5 million PHYSICAL ADDRESS: Range Road, Blackheath LEASE PERIOD: TBA GLA: 7 000m2 SECTOR: Industrial TARGET YIELD: 10% STATUS: Planning phase
Slide 37: GTX Park
06. Acquisitions, Disposals, Developments and Property Valuations Development Growth GTX Park PHYSICAL ADDRESS: INDUSTRIAL PARK: R404 Airport Road, Phase 1 commencement George OWNERSHIP STAKE: 75.6% DEVELOPABLE GLA: ± 30 000m2 SECTOR: Industrial — warehousing, cold storage and urban logistics DEVELO
Slide 38: Marine Place
06. Acquisitions, Disposals, Developments and Property Valuations Development Growth Marine Place PHYSICAL ADDRESS: Marine Drive, Paarden Eiland GLA TO BE DEVELOPED: 52 000m2 SECTOR: Mixed use DEVELOPMENT COST: R1.4bn TARGET YIELD: 10% STATUS: Commencement TBA UNAUDITED CONSOLIDATED INTERIM RESULTS
Slide 39: Property Valuations
06. Acquisitions, Disposals, Developments and Property Valuations Property Valuations Valuation summary and assumptions August 2023 February 2023 Valuation excluding land (R'000) 4 411 300 4 165 000 Number of properties 28 28 % of portfolio valued externally (%) 0 48 Valuation rate Industrial (R/m²)
Slide 40: ESG
07 ESG UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 40
Slide 41: Sustainability Update
18 938 111 07. ESG Sustainability Update AMOUNT OF SOLAR AMOUNT OF Summary of solar PV PANELS ACROSS INVERTERS ACROSS PORTFOLIO PORTFOLIO Number of properties with solar 15 1 -1 2 16 total future Current 16 | Future 1 | Acquisition 0 | Disposal -1 | Site expansions 2 Self-funded 2 2 total Completed
Slide 42: Outlook
08 Outlook UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 42
Slide 43: Outlook
08. OUTLOOK Outlook Amid extremely tough trading conditions, Spear’s Western Cape-only portfolio remains well placed to benefit from a shift in real estate fundamentals geographically along with the continued tailwinds created by the effects of semigration and good governance Material cost creep rem
Slide 44: Outlook (continued)
08. OUTLOOK Outlook (continued) Spear will remain focused on its growth strategy into high-quality Western Cape assets that offer long-term sustainable cashflows and growing yields Material infrastructure investment across the Western Cape creates growth opportunities for Spear as urban edges expand
Slide 45: Guidance
09 Guidance UNAUDITED CONSOLIDATED INTERIM RESULTS / FOR THE SIX MONTHS ENDED 31 AUGUST 2023 45
Slide 46: Guidance
09. Guidance Guidance Assets The macro-economic climate remains challenging as the longer-term impact of loadshedding has not yet been fully felt by SA business. The negative impact of cost creep across the board will place further pressure on business margins, cost of occupancies and net property i
Slide 47: Questions?
10 Salient dates and times 2023 Declaration date Tuesday, 24 October Last day to trade cum-dividend distribution Tuesday, 14 November Shares trade ex-dividend distribution Wednesday, 15 November Record date Friday, 17 November Payment date Monday, 20 November Questions? Email questions to INFO@SPEAR