Slide 1: Results presentation
Results presentation For the year ended 30 September 2017
Slide 2: Company capital structure
Company CAPITAL STRUCTURE R4,5bn in assets R3,1bn A share B share 47m in issue market cap 400m in issue Preferential dividend Enhanced when 7x cash cover ratio growth exceeds 5% Dual class Growth capped at 5% Benefit from acquisitions share structure Discount to NAV: 24% on combined shares 28% on B
Slide 3: Gemgrow strategy
Gemgrow strategy ›› High yield and high growth fund ›› Sustainable yield-enhancing acquisitions ›› Diversify risk ›› Buy properties from R20m ›› South African focused ›› Maintain prudent gearing 02
Slide 4: Competitive advantage
Competitive advantage ›› Niche market for acquisitions ›› Low LTV of 20,65% ›› Dual class A and B structure ›› Cash cover of 7x on A share dividend ›› Arrowhead strategic and operational support and guidance 03
Slide 5: Highlights
Highlights Objectives Achieved Meet dividend forecast A share: 101,87c per circular B share: 73,51c (73,36c) Prudent gearing 20,65% Acquisitions R580m at 11,85% yield Successfully integrate Completed 129 properties Refinance 60% of debt Refinanced all debt expiring during the year that expired 04
Slide 6: Acquisitions
Acquisitions Value Post acquisition R580m impact Retail 90% Retail 25% Office 5% Office 49% Industrial 5% Industrial 26% Yield Transfer 1 December 2017 to 31 January 2018 11,85% National tenants: Absa, Ackermans, African Bank, Beaver Canoe, Boxer, Bradlows, Capitec, Checkers, Funded Chesanyama, Chop
Slide 7: How we do it
How we do it 06
Slide 8: Internalised asset management
Internalised asset management ›› Extract maximum value from core portfolio ›› Micromanage ›› Reduce vacancies ›› Ensure lease expiries, re-letting and renewals are managed with efficiency ›› Cost centres tightly managed ›› Aggressive letting strategies 07
Slide 9: Risk management
Risk management ›› No material single tenant exposure to income ›› Diversified by sector, geographical location and grading ›› Prudent gearing and hedging of borrowings ›› Realistic forecasting ›› Sound corporate governance 08
Slide 10: Optimising value
Optimising value Android app Billboard Virtual tours advertising Non-GLA space income stream User-friendly Drone footage corporate website 09
Slide 11: We're in the business of letting space
We’re in the business of letting space Extensive broker Personalise experience Isolate assets engagement with broker market Free sales offices for best brokers at Rapid communication Remove red tape crucial assets 48-hour broker commission 10
Slide 12: Impact – lower vacancies
Impact – lower vacancies ›› Perm Smith Street – reduced 40% to 10% ›› Sunninghill Place – reduced 2 000m2 ›› Tarry’s – reduced 40% to 0% to 500m2 ›› Simgold – reduced 40% to 20% ›› Parow Industrial Park – reduced 2 000m2 to zero ›› Grosvenor Crossing – reduced 20% to 0% ›› 105 Landdros – tenant vaca
Slide 13: Maiden results
Maiden results 12
Slide 14: 2017 Actual vs Circular
2017 Actual vs Circular 12-month 12-month R’000/Audited actuals circular forecast Rental income 528 496 531 821 Municipal recoveries 158 613 170 233 Total rental income and recoveries income 687 109 702 054 Municipal expenses 176 317 185 986 Gross income before building expenses 510 792 516 068 Cont
Slide 15: Debt funding
Company DEBT FUNDING ›› R919m in debt ›› LTV of 20,65% ›› Effective interest rate of 9,33% ›› Refinanced R525m of the R575m that expired in 2017 before year-end ›› R50m refinanced at time of issuing results Debt expiry 2017 R575m 2018 R201m 2019 R143m Total R919m 14
Slide 16: Debt funding continued
Company DEBT FUNDING CONTINUED ›› Existing debt at 30 September 2017 R919m ›› New debt (acquisitions) – October 2017 R600m ›› Total debt (including acquisitions) R1,52bn ›› LTV including acquisitions 30% Fixing of debt ›› Existing debt fixed from February 2019 to 30 September 2020 R300m ›› Fixed for
Slide 17: Our portfolio
Our portfolio 16
Slide 18: Property portfolio overview
Property portfolio overview 129 R4,5bn 690 263m2 7,71% properties in all diversifed total GLA vacancy nine provinces in SA portfolio value 17
Slide 19: Property portfolio overview
Property portfolio overview By GLA By property value 14% Retail 16% Retail 37% Office 55% Office 49% Industrial 29% Industrial 18
Slide 20: Tenant grading profile
Tenant grading profile By revenue A-Grade tenants approaching 50% of our leases 43% A-Grade 16% B-Grade 41% C-Grade 19
Slide 21: Letting and vacancies
Letting and vacancies AS AT 30 SEPTEMBER 2017 SEPTEMBER 2017 Sector Total (m2) Let (m2) Let (%) Vacant (m2) Vacant (%) Retail 96 389 90 829 94,2 5 560 5,8 Office 253 214 225 240 89,5 26 614 10,5 Industrial 340 661 319 596 93,8 21 065 6,2 Total 690 263 635 665 92,3 53 238 7,7 20
Slide 22: Average gross rental per sector
Average gross rental per sector Providing value for tenants with attractive rental rates Retail R83/m2 Office R107/m2 Industrial R42/m2 21
Slide 23: Renewals and expiries
Renewals and expiries YEAR ENDED 30 SEPTEMBER 2017 ›› 71% of all leases expired ›› Contractual lease escalations: were renewed Retail: 8,1% ›› 53% of the balance was re-tenanted Office: 8,1% Industrial: 8,4% ›› 86% tenant retention or re-let ›› Lease renewal step up escalations: Retail: 5% Office: 3
Slide 24: Lease expiry profile
Lease expiry profile AS AT 30 SEPTEMBER 2017 Average lease expiry profile of four years as at 30 September 2017. Lease expiry by GLA and income (%) 34 GLA 30 Income 26 23 17 16 10 10 10 8 5 4 7 0 Vacant Monthly 2018 2019 2020 2021 > 2021 23
Slide 25: Combined lease expiry profile by GLA
Combined lease expiry profile by GLA AS AT 30 SEPTEMBER 2017 91 000 85 000 Retail Office 70 000 69 000 Industrial 61 000 19 000 18 000 16 000 15 000 13 000 12 000 29 000 27 000 27 000 25 000 6 000 21 000 21 000 5 000 20 000 3 000 Vacancy: 8% Monthly: 5% 2018: 23% 2019: 30% 2020: 17% 2021: 7% >2021:
Slide 26: Conclusion
Conclusion 25
Slide 27: 2018 objectives/goals
2018 objectives/goals 30 SEPTEMBER 2018 ›› More yield-enhancing acquisitions ›› Extract additional value from core portfolio ›› Further dividend growth ›› Improve market presence and build company reputation 26
Slide 28: Company 2018 forecast
Company 2018 forecast Forecast growth of 7% to 9% Forecast assumptions Comprising the following: ›› No once-off income ›› Core portfolio 3% to 5% ›› No forecasting of letting of vacancies ›› Acquisitions of 4% ›› No new acquisitions (apart from the R580m) included in the forecast 27
Slide 29: Thank you
Gemgrow Properties Ltd Thank you Registration number: 2007/032604/06 JSE Share code: GPA ISIN: ZAE0000223269 Directors Registered Office Transfer Secretaries Company Secretary Mark Kaplan (CEO) Gemgrow Properties Limited Link Market Services South Gillian Prestwich Junaid Limalia (CFO) 3rd Floor, Af