Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — H1 2022 Earnings Presentation
51 slides from Fairvest Limited Class A's earnings presentation, 2022
Slide 1: Interim Results Presentation
Interim Results Presentation for the period ended 31 March 2022
Slide 2: Overview
OVERVIEW Agenda – Darren Wilder CEO Fairvest Interim Results 2022 // 2
Slide 3: Agenda
AGENDA • Business update Darren Wilder • Office update Alon Kirkel • Industrial update Alon Kirkel • Retail update Riaz Kader • Financial update Jacques Kriel • E.S.G. Darren Wilder Fairvest Interim Results 2022 // 3
Slide 4: Business Update
BUSINESS UPDATE Darren Wilder CEO Fairvest Interim Results 2022 // 4
Slide 5: Fairvest at a Glance
FAIRVEST AT A GLANCE Diverse portfolio Market Cap 1 160 585 m2 of R11.77bn R5.74bn of GLA Investments Effective date of merger Gearing levels 26 January 2022 61.0% in Indluplace 39.2% 8.6% in Dipula Fairvest Interim Results 2022 // 5
Slide 6: Key Highlights
KEY HIGHLIGHTS 61.52 cps Disposals of 21.33 cps 4 assets distribution 100% distribution per transferred at per A share Pay-out ratio B share value of R61.6m Like for like Solar investments produced 9.79% of Loan-to-Value 88.5% increase of 2% overall tenant in net property the portfolio’s of 39.2% re
Slide 7: Merger Update
MERGER UPDATE What did we achieve • Effective date of the merger 26 January 2022 • Commercial effective date 1 October 2021 • Value enhancing transaction for shareholders • Share register diversification • Validation of swap ratio • Business integration in progress • Introduction of bottom-up strate
Slide 8: Key Focus Areas 2022/23
KEY FOCUS AREAS 2022/23 Creating a strong platform of growth Strategic objectives • To maintain collectable arrears below 2% of gross income • Weighted average growth on lease expiry to between 2% to 6% • Ensure that our weighted average lease term remains above 36 months • Determined focus on leasi
Slide 9: Civil Unrest and KZN Floods
CIVIL UNREST • 21 properties affected by social unrest in July 2021 • Has recovered R48.9m to date (R8.4m claims still pending) • Expect >95% of claims to be settled • All assets are trading again • Security became a strong focus area KZN FLOODS • Limited effect on the portfolio Fairvest Interim Res
Slide 10: Fairvest Property Portfolio
FAIRVEST PROPERTY PORTFOLIO Fairvest Interim Results 2022 // 10
Slide 11: Fairvest Portfolio at a Glance
FAIRVEST PORTFOLIO AT A GLANCE Diverse portfolio of R11.77bn 143 assets 1 160 585m2 Average value (excl. Indluplace) of GLA per property R82.3m Sectoral split by GLA Retail Office Industrial Vacancy of Tenant retention 7.2% 88.5% 49% 27% 24% Weighted average Weighted average WALE rental per m2 R113.
Slide 12: Leasing Activity
LEASING ACTIVITY Lease expiry profile by GLA New deals 25% 300 000 Number of leases 209 250 000 20% Total GLA m2 35 268 200 000 Weighted average gross rental achieved (R/m2) 102.82 150 000 11% 12% 9% 11% Weighted average escalations 6.50% 100 000 7% 5% WALE 28 mths 50 000 Renewals 0 Vacancy Current
Slide 13: Regional & Sector Split
REGIONAL & SECTOR SPLIT Total GLA per region Total GLA per Sector 3% 3% 1% 5% 24% 6% 8% 49% 50% 11% Gauteng Western Cape 27% KwaZulu-Natal 13% Eastern Cape Retail Limpopo Office Total revenue per region North West Total Revenue per Sector Industrial 4% 1% Northern Cape 11% 5% 6% Free State 35% Mpuma
Slide 14: Fairvest Interim Results 2022 // 14
Fairvest Interim Results 2022 // 14
Slide 15: Office Update
OFFICE UPDATE Alon Kirkel Office & Industrial COO Fairvest Interim Results 2022 // 15
Slide 16: Fairvest Office Portfolio at a Glance
FAIRVEST OFFICE PORTFOLIO AT A GLANCE % of total portfolio by: 317 294m2 38 assets GLA – 27.3% of GLA Revenue – 24.2% Capex Vacancy steady at Tenant retention Capital expenditure (R’m) 24.5 16.73% 83.18% Property value (R’bn) 2.8 % of Value spend 0.9 Weighted average Weighted average WALE rental per
Slide 17: Office Leasing Activity
OFFICE LEASING ACTIVITY Office Lease expiry profile by GLA New deals 100 000 28% Number of leases 49 80 000 Total GLA m2 7 745 60 000 17% 18% Weighted average gross rental achieved (R/m2) 80.53 14% Weighted average escalations 8.00% 40 000 10% 6% WALE 20 mths 20 000 5% 2% Renewals 0 Vacancy Current
Slide 18: Office Geographic Location of Properties
GEOGRAPHIC LOCATION OF PROPERTIES 2 BY NUMBER Limpopo 1 24 Mpumalanga North West Gauteng 4 Free State KwaZulu-Natal Northern Cape 1 Eastern Cape 6 OFFICE Western Cape Fairvest Interim Results 2022 // 18
Slide 19: Office Regional Split
OFFICE REGIONAL SPLIT Office GLA per region Office revenue per region Office vacancy per region (GLA) 2% 3% 1% 1% 6% 1% 2% 2% 13% 12% 17% 13% 16% 60% 70% 1% 81% Gauteng Free State KwaZulu-Natal Western Cape Limpopo Eastern Cape North West Fairvest Interim Results 2022 // 19
Slide 20: Industrial Portfolio
INDUSTRIAL PORTFOLIO Fairvest Interim Results 2022 // 20
Slide 21: Fairvest Industrial Portfolio at a Glance
FAIRVEST INDUSTRIAL PORTFOLIO AT A GLANCE % of total portfolio by: 278 192m2 27 assets GLA – 24.0% of GLA Revenue – 10.8% Capex Vacancy decreased to Tenant retention Capital expenditure (R’m) 18.8 1.04% 100% Property value (R’bn) 1.2 % of Value spend 1.6 Weighted average Weighted average WALE rental
Slide 22: Industrial Leasing Activity
INDUSTRIAL LEASING ACTIVITY Industrial Lease expiry profile by GLA New deals 100 000 32% Number of leases 29 30% 80 000 Total GLA m2 10 128 60 000 Weighted average gross rental achieved (R/m2) 41.73 Weighted average escalations 7.27% 40 000 9% 8% 9% 7% WALE 16 mths 20 000 4% 1% Renewals 0 Vacancy Cu
Slide 23: Industrial Geographic Location of Properties
GEOGRAPHIC LOCATION OF PROPERTIES 3 BY NUMBER Limpopo 22 Mpumalanga North West Gauteng 1 Free State KwaZulu-Natal Northern Cape Eastern Cape 1 INDUSTRIAL Western Cape Fairvest Interim Results 2022 // 23
Slide 24: Industrial Vacancy
INDUSTRIAL VACANCY Industrial GLA per region Industrial by revenue Industrial vacancy per region (GLA) 6% 5% 6% 5% 6% 10% 44% 56% 82% 80% Gauteng KwaZulu-Natal Western Cape Limpopo Fairvest Interim Results 2022 // 24
Slide 25: Fairvest Interim Results 2022 // 25
Fairvest Interim Results 2022 // 25
Slide 26: Operational Update
OPERATIONAL UPDATE Riaz Kader Retail COO Fairvest Interim Results 2022 // 26
Slide 27: Fairvest Retail Portfolio at a Glance
FAIRVEST RETAIL PORTFOLIO AT A GLANCE Tenant grading: A Grade B Grade C Grade 565 100m2 78 assets of GLA 64% 13% 23% Capex % of total portfolio by: Vacancy Tenant Capital expenditure (R’m) 43.1 GLA – 48.7% steady at retention Property value (R’bn) 7.8 Revenue – 65.0% 4.86% 86.44% % of Value spend 0.
Slide 28: Retail Leasing Activity
RETAIL LEASING ACTIVITY Retail Lease expiry profile by GLA New deals 120 000 20% Number of leases 131 100 000 17% 16% 15% Total GLA m2 17 394 14% 80 000 Weighted average gross rental achieved (R/m2) 146.89 60 000 10% Weighted average escalations 6.17% 40 000 5% WALE 36 mths 20 000 3% Renewals 0 Vaca
Slide 29: Top 10 Retail Tenant Exposure
25.62% TOP 10 RETAIL TENANT EXPOSURE 5.58% 5.43% 4.46% 2.60% 2.07% 1.80% 0.81% 1.26% 0.88% 0.73% 65 581 57 454 44 238 29 897 17 796 11 804 10 297 8 507 7 509 3 776 1 107 255 % of portfolio revenue GLA (m2) Fairvest Interim Results 2022 // 29
Slide 30: Significant New Retail Deals and Lease Renewals
SIGNIFICANT NEW RETAIL DEALS for the past 6 months Frontbuild Mad Price Hardware Fashion 1 990m2 1 122m2 1 130m2 1 170m2 676m2 446m2 SIGNIFICANT RETAIL LEASE RENEWALS for the past 6 months - Retail 4 811m2 4 326m2 3 051m2 1 770m2 1 206m2 2 052m2 1 256m2 1 500m2 1 374m2 470m2 Fairvest Interim Results
Slide 31: Way Forward
WAY FORWARD • The sector with the lowest renewal negative reversions and looking to further improve • Rentals rates are market related and further value extraction to be implemented • Positioning the portfolio for growth, ensuring each retail asset remains relevant within the node • Retail portfolio
Slide 32: Retail Geographic Location of Properties
GEOGRAPHIC LOCATION OF PROPERTIES 11 BY NUMBER Limpopo 6 20 3 Mpumalanga North West Gauteng 5 11 Free State KwaZulu-Natal 5 Northern Cape 9 Eastern Cape 8 RETAIL Western Cape Fairvest Interim Results 2022 // 32
Slide 33: Retail Regional Split
RETAIL REGIONAL SPLIT Retail GLA per region Retail revenue per region Retail vacancy per region (GLA) 8% 9% 9% 3% 2% 18% 23% 11% 32% 15% 15% 6% 4% 6% 9% 8% 13% 21% 2% 13% 7% 7% 11% 16% 22% 4% 6% Gauteng Free State KwaZulu-Natal Western Cape Northern Cape Limpopo Eastern Cape Mpumalanga North West Fa
Slide 34: Fairvest Interim Results 2022 // 34
Fairvest Interim Results 2022 // 34
Slide 35: Financial Update
FINANCIAL UPDATE Jacques Kriel CFO Fairvest Interim Results 2022 // 35
Slide 36: Distributable Income per B Share
DISTRIBUTABLE INCOME PER B SHARE Comparable 6 months ended 6 month period 31 March 2022 2021*# Unaudited Cents per share Cents per share Total distributable income Fairvest’s operations – core portfolio 37.31 36.57 Fairvest’s operations – income attributable to assets disposed of 0.20 3.41 Net finan
Slide 37: Distributable Income Analysis for the Period Ended 31 March 2022
DISTRIBUTABLE INCOME ANALYSIS FOR THE PERIOD ENDED 31 MARCH 2022 6 months ended Comparable 6 month R’000 Unaudited 31 March 2022 period 2021* Revenue (excluding straight line rental income) 1 214 603 1 270 348 Sundry income 15 200 3 123 Property expenses (553 989) (548 888) Administration and corpor
Slide 38: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2022 R’000 31 March 2022 31 December 2020 30 June 2021 Assets Investment property 15 252 566 3 407 376 3 421 961 Financial assets 200 013 4 545 4 533 Trade and other receivables 273 040 89 760 69 597 Loan receivable 180 061 306 657 2
Slide 39: Conservative Debt Management
CONSERVATIVE DEBT MANAGEMENT March 2022 June/September 2021 Loan to value ratio % 39.2% 36.2% % of interest-bearing debt fixed % 69.0% 73.8% Weighted average cost of funding % 8.4% 8.1% Interest cover times 2.4 2.3 Weighted average maturity of debt months 13 15 Weighted average maturity of fixes/swa
Slide 40: Debt and Hedge Maturity Profile
DEBT AND HEDGE MATURITY PROFILE 60.0% 55.8% 50.0% 48.5% 40.0% 30.0% 28.9% 23.2% 20.0% 17.5% 15.3% 10.8% 10.0% 0.0% 0.0% FY 2022 FY 2023 FY 2024 FY 2025 Debt expiry Hedge expiry Fairvest Interim Results 2022 // 40
Slide 41: Arrears and Bad Debt
ARREARS AND BAD DEBT % of revenue on an R’000 Total arrears Total provision Total net arrears annualised basis Retail 55 107 (19 287) 35 820 2.62% Office 26 755 (11 800) 14 955 2.75% Industrial 22 549 (10 142) 12 407 5.27% Residential 13 440 (8 780) 4 660 0.72% 117 851 (50 009) 67 842 2.43% Fairvest
Slide 42: Price to Book
PRICE TO BOOK Merged Group – combined price to book 12 000 -22% -23% -31% -42% -30% 10 000 -63% 9 919 10 131 8 787 -80% 8 656 8 000 8 108 7 768 6 657 -130% 6 000 5 922 5 616 -180% 4 000 3 231 -230% 2 000 0 -280% FY 2018 FY 2019 FY 2020 FY 2021 March 2022 Market price R’m NAV R’m Discount Fairvest In
Slide 43: Fairvest Interim Results 2022 // 43
Fairvest Interim Results 2022 // 43
Slide 44: E.S.G. Environment
E.S.G. ENVIRONMENT Darren Wilder CEO Fairvest Interim Results 2022 // 44
Slide 45: Solar and Water Projects at 31 March 2022
SOLAR AND WATER PROJECTS AT 31 MARCH 2022 Solar Water • 33 Solar plants fully operational resulting in 14.2 Megawatt • 8 ground water harvesting plants in operation at (Qumbu, capacity Empangeni, Bara, Macassar, Libode, Cleary Park, Metalbox, 1 Sturdee) • 6 Solar plants in construction resulting in
Slide 46: Disposals
DISPOSALS Fairvest Interim Results 2022 // 46
Slide 47: Sales for the 2022 Financial Year
SALES FOR THE 2022 FINANCIAL YEAR • For the period 1 October 2021 to 31 March 2022 • Group disposed of 4 assets for R61.6 million • 10.2% forward yield Total transferred to date: Asset Sales value Book value Discount to Average price Class Number (R) (R) book value Average Yield per asset Vacancy %
Slide 48: Prospects
PROSPECTS Fairvest Interim Results 2022 // 48
Slide 49: Prospects
PROSPECTS • On track to deliver earnings in line with guidance • Continue with internal focus • Remain conservatively geared • Continue to simplify the business • Strong focus on leasing and maintaining tenant retention at 85% • Contain arrears to 2% to protect the balance sheet • LTV below 40% • Co
Slide 50: Q&A Session
Q&A SESSION Fairvest Interim Results 2022 // 50
Slide 51: Thank you
Interim Results for the 6 months ended 30 June 2022 Thank you