Dipula Properties Limited Class B · JSE:DIB
Dipula Properties Limited Class B — Dipula Income Fund — H1 2020 Earnings Presentation
53 slides from Dipula Properties Limited Class B's earnings presentation, May 18, 2020
Slide 1: Interim Results for the Six Months Ended 29 February 2020
Sustainable Property Returns INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020
Slide 2: Disclaimer
DISCLAIMER Certain statements contained in this document constitute forward-looking information. Forward-looking information may relate to Dipula Income Fund Limited (“the Company”) future outlook and anticipated events or results and may include statements regarding the financial position, business
Slide 3: Agenda
AGENDA 01 B US I N E S S REVIEW 02 F I N A N CI A L REVIEW 03 WA Y FORWARD INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 03
Slide 4: Key Corporate Information
KEY CORPORATE INFORMATION JSE sector Real Estate Investment and Services: Diversified REITS Date listed 17 August 2011 Closing price (29 Feb 2020) DIA R8.85 | DIB R2.05 NAV per share Market capitalisation Portfolio size Gearing Debt R10.18 R2.9 billion R8.9 billion 40% R3.6 billion Interest rate Wei
Slide 5: Geographic Spread by Sector
GEOGRAPHIC SPREAD BY SECTOR TOTAL OF 190 PROPERTIES Retail 103 Gauteng Limpopo Office 34 North West 63 29 33 18 15 3 Mpumalanga Industrial 53 7 1 8 125 7 Northern Cape 3 2 2 6 KwaZulu-Natal 1 1 12 5 7 Western Cape 9 Free State 4 1 1 2 Eastern Cape 3 2 1 5 4 INTERIM RESULTS FOR THE SIX MONTHS ENDED 2
Slide 6: Business Review
01 BUSINESS REVIEW IZAK PETERSEN CEO FY 2020 P R O G R E S S PORTFOLIO LI QUIDITY & V A L U A T I O N COVID-19
Slide 7: FY 2020 Progress
FY 2020 PROGRESS Objective: Growth in dividends Improvement of Maintain gearing Solidify management SAPY inclusion per share share liquidity at FY2019 levels Progress: ▪ Work in progress ▪ Additional staff ▪ Work in progress Distributable ▪ Negatively impacted employed ▪ Setbacks due to Gearing impr
Slide 8: Business Review
01 BUSINESS REVIEW IZAK PETERSEN CEO FY 2020 P R O G R E S S PORTFOLIO LI QUIDITY & V A L U A T I O N COVID-19
Slide 9: Total Portfolio - Key Indicators
TOTAL PORTFOLIO ‒ KEY INDICATORS SECTORAL SPLIT BY GROSS INCOME Portfolio Total GLA Average WALE by value property size GLA / income Retail R8.5 bn * 916 593m² 4 824m² 3.5 / 2.9 65% 66% Feb Feb years 2020 20% 2019 Office 20% 2019: R8.3bn 2019: 928 580m² 2019: 4 666m² 2019: Industrial 3.8 years by GL
Slide 10: Total Portfolio - Leasing
TOTAL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 29 Feb 2020) NEW LEASES GLA (000 m²) Rental (Rm) 400 30 Number of leases 78 25 Value of leases R94m 349 Total GLA (m²) 20 822 300 18 20 Weighted average gross rental (R/m²) 93.49 17 Weighted average escalation 7.4% WALE 3.3
Slide 11: Retail Portfolio - Key Indicators
RETAIL PORTFOLIO ‒ KEY INDICATORS Average WALE by Portfolio value* Total GLA property size GLA / income R5.5 bn 448 946m² 4 359m² 3.0 / 2.9 years 2019: 2019: R5.4bn 2019: 462 048m² 2019: 4 163m² 3.4 years by GLA Average Average value Weighted average Weighted average property value per m² by GLA gro
Slide 12: Retail Portfolio - Leasing
RETAIL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) GLA (000 m²) Rental (Rm) NEW LEASES 18 200 20 10 11 Number of leases 66 150 6 7 10 Value of leases R80m 132 Total GLA (m²) 16 594 100 0 Weighted average gross rental (R/m²) 92.74 89 50 77 -10 Weighted average e
Slide 13: Office Portfolio - Key Indicators
OFFICE PORTFOLIO ‒ KEY INDICATORS Average WALE by GLA / Portfolio value* Total GLA property size income R1.8 bn 129 245m² 3 801m² 2.0 / 2.1 years 2019: 2019: R1.7bn 2019: 131 010m² 2019: 3 743m² 2.0 years by GLA Average Average value Tenant retention Vacancy property value per m² by GLA R54m R14 102
Slide 14: Office Portfolio - Leasing
OFFICE PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) GLA (000 m²) Rental (Rm) NEW LEASES 60 5 6 4 Number of leases 9 50 3 4 Value of leases R8m 2 2 40 2 Total GLA (m²) 1 446 Weighted average gross rental (R/m²) 146.39 30 35 0 30 Weighted average escalation 8.3% 2
Slide 15: Industrial Portfolio - Key Indicators
INDUSTRIAL PORTFOLIO ‒ KEY INDICATORS Average Average Portfolio value Total GLA property size property value R1.3 bn 338 401m² 6 385m² R24m 2019: R1.2bn 2019: 335 522m² 2019: 6 331m² 2019: R23m WALE by GLA / Average value income Tenant retention Vacancy per m² by GLA 4.7 / 3.5 R3 710 82% 2.8% years
Slide 16: Industrial Portfolio - Leasing
INDUSTRIAL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) GLA (000 m²) Rental (Rm) NEW LEASES 250 5 6 Number of leases 3 200 3 4 2 2 202 Value of leases R6m 150 1 2 Total GLA (m²) 2 782 Weighted average gross rental (R/m²) 52.03 100 0 Weighted average escalation 7
Slide 17: Residential Portfolio
RESIDENTIAL PORTFOLIO Update on turnkey development COSMO CITY ▪ 428 units ▪ Substantially let ▪ 12-month rental guarantee ▪ Transfer expected in July 2020 ▪ Well located with strong leasing fundamentals INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 17
Slide 18: Business Review
01 BUSINESS REVIEW IZAK PETERSEN CEO FY 2020 P R O G R E S S PORTFOLIO LI QUIDITY & V A L U A T I O N COVID-19
Slide 19: Liquidity Analysis
LIQUIDITY ANALYSIS DEBT CAPACITY Rm 5 000 Debt Capacity (Rm) Additional Interest p.a (Rm) 4 000 3 000 Assumed interest rate 8.5% 4 476 4 923 7.7% 2 000 3 600 4 028 7.0% 113 68 1 000 30 876 1 324 0 429 LTV 40% 45% 50% 55% 45% 50% 55% VALUATION STRESS TEST: IMPACT ON LTV Borrowing Assumed NOI % Decrea
Slide 20: Valuation Benchmarking
VALUATION BENCHMARKING RETAIL R/m² 50 000 10,2% 11,4% 15% 8,2% 9,2% 8,9% 8,2% 6,8% 8,3% 7,5% 7,7% 7,0% 40 000 10% 40 590 30 000 0 5% 41 819 Avg Value R/m² 20 000 0% 20 593 21 596 0% 21 245 Yield 10 000 16 887 16 890 15 529 -5% 12 060 11 990 13 003 0 13 551 - -10% Dipula Dipula 1 2 3 4 5 6 7 8 9 10 1
Slide 21: Price to NAV Analysis
PRICE TO NAV ANALYSIS Current discount / NAV Current discount / NAV Current discount / NAV Current discount / NAV Current discount / NAV Combined DIA DIB ALPI SAPY -64% -48% -80% -50.58%** -49.93%** Combined Forward yield Forward yield Decrease in property valuation required forward yield DIA DIB fo
Slide 22: Business Review
011 BUSINESS REVIEW IZAK PETERSEN CEO FY 2020 P R O G R E S S PORTFOLIO LI QUIDITY & V A L U A T I O N COVID-19
Slide 23: COVID-19 Rental Exposure Analysis
COVID-19 RENTAL EXPOSURE ANALYSIS RETAIL BY GROSS RENTAL OFFICE BY GROSS RENTAL INDUSTRIAL BY GROSS RENTAL 4% Government A and B grade tenants Essential 44% Other A and B grade tenants C grade tenants 20% SOE/Government C grade tenants Non-essential Large 47% 48% 94% Non-essential medium 12% SMME hi
Slide 24: Operations
OPERATIONS Smooth remote operating platform No municipal relief to date Operational staff all on duty Collected 73% rental for April Full access to IT systems Collected 66% for May to date Continuously updating operation procedures in-line SMME business viability biggest concern with regulations No
Slide 25: Tenant Rent Remissions
TENANT RENT REMISSIONS Legal position complex for both landlord and tenant Property Industry Group facilitating dialogue No deal yet following many proposals and counter proposals Tenants split into categories based on size and whether essential or non-essential Office and Industrial tenants exclude
Slide 26: Bankers
BANKERS Dipula Bankers Ongoing discussions Good co-operation between the parties BASA Feedback Key discussion points involve Valuations, Covenants and Cashflow Framework for bilateral discussions between parties INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 26
Slide 27: REIT Regulation Relaxation
REIT REGULATION RELAXATION Good cooperation from JSE Deviations to be published on SENS JSE not to grant blanket dispensation JSE is still to canvas the attitude of asset managers All submissions to be processed on a case by case basis National Treasury feedback awaited Compliance with LR to be obse
Slide 28: Financial Review
02 FINANCIAL REVIEW RIDWAAN ASMAL CFO
Slide 29: Financial Highlights
FINANCIAL HIGHLIGHTS Maturing debt refinanced and covenants within DISTRIBUTABLE EARNINGS PER SHARE acceptable levels LTV 40% Combined DIA DIB ICR 2.74 (1.4%) 4.6% (9.1%) Due to the current market conditions as a result of the COVID-19 pandemic, the Company Net cost to income has deferred its decisi
Slide 30: Distributable Earnings per Share History
DISTRIBUTABLE EARNINGS PER SHARE HISTORY cps 120 A- share B- share Total 0.6% (1.4%) 100 4.6% 6.3% 96,75 97,33 95,97 92,49 80 87,02 60 4.1% 4.6% 5.0% 4.0% 5.4% 54,83 (3.6%) 57,36 7.9% 52,67 (9.2%) 48,24 50,65 40 44,08 41,84 42,50 38,78 38,61 20 0 Feb 2016 Feb 2017 Feb 2018 Feb 2019 Feb 2020 INTERIM
Slide 31: 5-Year Combined Market Price to NAV
5-YEAR COMBINED MARKET PRICE TO NAV cents Market price NAV Premium / Discount 3 000 50% 12% 3% -5% -3% 2 500 -47% -50% -65% 2 245 2 000 2 090 -150% 2 014 2 024 1 976 2 036 2 036 1 882 1 921 1 792 1 500 -250% 1 000 1 090 -350% 713 500 -450% -550% Feb 2016 Feb 2017 Feb 2018 Feb 2019 Feb 2020 Current 1
Slide 32: 5-Year Market Price
5-YEAR MARKET PRICE cents 1400 1195 DIA DIB 1200 1112 1070 1002 1000 1050 885 1020 800 790 809 600 513 400 200 205 200 0 Feb Feb Feb Feb Feb Current 2016 2017 2018 2019 2020 15 May 2020 INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 32
Slide 33: Statement of Comprehensive Income (Extracts)
STATEMENT OF COMPREHENSIVE INCOME (EXTRACTS) 29 Feb 2020 28 Feb 2019 R 000 R 000 Variance Revenue 661 404 652 397 1.4% Property expenses (219 096) (210 988) 3.8% Net property income 442 308 441 391 0.2% Administration and corporate costs (21 322) (18 805) 13.4% Net operating profit 420 986 422 586 -
Slide 34: Sectoral Performance
SECTORAL PERFORMANCE RENTAL INCOME & RECOVERIES PROPERTY EXPENSES NET PROPERTY INCOME 15% 14% 9% 9% 15% 18% 19% 19% 19% 19% 20% 19% 66% 67% 72% 72% 62% 65% FEB 2020 FEB 2019 FEB 2020 FEB 2019 FEB 2020 FEB 2019 Retail Office Industrial INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 34
Slide 35: Statement of Financial Position (Extracts)
STATEMENT OF FINANCIAL POSITION (EXTRACTS) 29 Feb 2020 28 Feb 2019 Variance R 000 R 000 Investment property and held-for-sale 8 953 135 8 665 421 3.3% Trade and other receivables 169 578 202 164 -16.1% Loan receivable 204 356 195 290 4.6% Goodwill / Intangible assets 56 250 93 750 -40.0% Cash and ca
Slide 36: Cash Flow
CASH FLOW ‒ Rm 1 SEPTEMBER 2019 TO 29 FEBRUARY 2020 1 SEPTEMBER 2018 TO 28 FEBRUARY 2019 119 Opening balance 69 419 Cash generated from operations 424 - 153 Net finance cost - 153 - 266 Dividend paid - 300 - 34 Acquisitions and capex - 80 49 Disposals 8 -0.04 Non-controlling interest -0.1 -3 Repayme
Slide 37: Debt Profile
DEBT PROFILE 30% Debt expiry 26,0% 25,2% 25,3% Hedge expiry 22,0% 20,5% 19,9% 19,3% 20% 9,9% 10% 8,3% 3,0% 0% FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Weighted average Weighted average Weighted average Interest hedged cost of debt debt expiry hedge expiry 79% 9.24% 2.3 years 2.0 years Feb 2019: 80% F
Slide 38: Way Forward
03 WAY FORWARD IZAK PETERSEN CEO
Slide 39: Way Forward
WAY FORWARD Survive COVID-19 Enhance defensive nature of portfolio (improved by 3%, A&B tenants now 89% of income) Adapt business to post-COVID-19 environment (e-commerce, flexible space - Residential & Office) Balance sheet strength critical for long-term sustainability INTERIM RESULTS FOR THE SIX
Slide 40: Questions & Answers
04 QUESTIONS & ANSWERS IZAK PETERSEN CEO
Slide 41: Annexures
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Slide 42: Strategy
STRATEGY Remaining Buying Managing SHAREHOLDER VALUE CREATION disciplined well brilliantly ▪ Geographically diversified OUR VALUE PROPOSITION SA ▪ Economically active locations focused ▪ Sectorally diversified ▪ Predominantly retail (convenience, rural & township) ▪ A diversified REIT that is growin
Slide 43: Strategic Capital Allocation to De-risk Portfolio
STRATEGIC CAPITAL ALLOCATION TO DE-RISK PORTFOLIO AT LISTING CURRENT FUTURE 10% Retail 20% 29% 20% Office 54% By income 65% By income 60% By income 15% Industrial 10% 17% Residential ▪ Allocation of capital into areas of core competency ▪ Build capacity for operational excellence STRATEGIC GROWTH DR
Slide 44: Human Capital: Lead, Co-operate, Win
HUMAN CAPITAL: • LEAD • CO-OPERATE • WIN Total no. of Ongoing Focus Asset Our employees at training and on managers service head office development operational with is our and in the of staff competence entrepre- differentiator regions neurial flair 84 Multi-skilled Internships Deal Exceptional Team
Slide 45: Geographic Profile - Total Portfolio
GEOGRAPHIC PROFILE – TOTAL PORTFOLIO No of Average Value Value GLA m² Properties Rm Rm Gauteng 523 877 125 43 5 351 Limpopo 92 845 18 49 886 Eastern Cape 105 985 9 82 740 KwaZulu-Natal 84 497 12 56 674 Western Cape 27 033 4 77 308 North West 31 561 8 33 261 Mpumalanga 28 791 7 26 180 Free State 19 9
Slide 46: Geographic Profile - Retail
GEOGRAPHIC PROFILE – RETAIL No of Average Value Value GLA m² Properties Rm Rm Gauteng 244 479 63 50 3 134 Limpopo 58 478 15 44 662 KwaZulu-Natal 42 204 5 119 596 Eastern Cape 48 509 5 112 561 North West 26 155 7 36 253 Mpumalanga 11 175 3 43 129 Free State 13 164 3 31 92 Western Cape 2 685 1 22 22 N
Slide 47: Geographic Profile - Office
GEOGRAPHIC PROFILE – OFFICE No of Average Value Value GLA m² Properties Rm Rm Gauteng 112 756 29 55 1 594 Western Cape 8 370 1 174 174 Mpumalanga 4 244 2 16 31 Free State 3 875 2 12 23 Total 129 245 34 54 1 822 INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 47
Slide 48: Geographic Profile - Industrial
GEOGRAPHIC PROFILE – INDUSTRIAL No of Average Value Value GLA m² Properties Rm Rm Gauteng 166 641 33 19 624 Limpopo 34 368 3 75 224 Eastern Cape 57 476 4 45 178 Western Cape 15 978 2 56 112 KwaZulu-Natal 42 293 7 11 79 Mpumalanga 13 372 2 10 20 Free State 2 866 1 12 12 North West 5 407 1 7 7 Total 3
Slide 49: Top Ten Properties
TOP TEN PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 865 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25
Slide 50: Top Ten Retail Properties
TOP TEN RETAIL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 866 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25 342 Nquthu Plaza KwaZulu-Natal
Slide 51: Top Ten Office Properties
TOP TEN OFFICE PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Avanti Office Park Western Cape 8 370 174.3 20 824 SAPS IJS Gauteng 7 874 133.7 16 980 Firestation Rosebank Gauteng 4 259 123.4 28 974 Carnation Place Gauteng 4 541 105.8 23 299 Valley View
Slide 52: Top Ten Industrial Properties
TOP TEN INDUSTRIAL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Corporate Park II Polokwane Limpopo 28 058 190.2 6 778 New Brighton PE Eastern Cape 24 516 129.4 5 278 Range Road Blackheath Western Cape 12 905 96.1 7 447 Renaissance Park (Crownwood Place) Gauteng 10 680 66.7 6 245 Sterk
Slide 53: Tenant Profile
TENANT PROFILE TENANT GRADING TOP 10 TENANTS BY INCOME DPW and Government 9% Shoprite Group 8% 11% 13% Woolworths 4% Pepkor Group 4% 20% 17% Local Government 3% By GLA By income Reclamation Holdings 3% 69% 70% Pick 'n Pay 2% Massmart 2% Cashbuild 2% A B C Spar Group 1% Total 38% INTERIM RESULTS FOR