Redefine Properties Limited · JSE:RDF
Redefine Properties — FY2006 Earnings Presentation
32 slides from Redefine Properties's earnings presentation, Aug 31, 2006
Slide 1: Annual Results
Annual Results Year Ended 31 August 2006 Presentation to the Investment Analysts Society
Slide 2: Refining REDEFINE
Refining REDEFINE Redefine’s strategy has delivered substantial benefits Redefine has now undergone a step change in its business model, focused on: ─ Development ─ Diversification Redefine is well positioned to outperform in the fast growing property marketplace The new focus will deliver significa
Slide 3: Financial highlights
Financial highlights Distribution per liked unit 16% NAV per linked unit to R5,66 in 2006 from R4,27 in 2005 33% Market cap (R859 million) to R3,1 billion 39% Property portfolio (R507 million) to R2,6 billion 24% Listed securities portfolio (R1,6 billion) to R3,4 billion (9 counters) 87% Total asset
Slide 4: Financial highlights
Financial highlights Total growth (income: 16% capital: 25%) 41% Total return 35% (R1.53 on a R4.40 linked unit) Gearing maintained below 45% 41% Weighted average linked units 66% in issue traded Year End Results - 31 Aug 2006
Slide 5: Property portfolio highlights
Property portfolio highlights Acquired Spearhead Property Group for R1,2 billion Disposed of 8 non-core properties for R53,8 million 30 151m2 of vacant space leased 97.3% of portfolio leased 55% of leases expire in 2010 and beyond Expenses as a % of contractual rental income have decreased to 19.1%
Slide 6: Listed securities performance
Listed securities performance R million Value at 1 Sep 2005 1 849 Sold during the year (86) Acquired during the year 1 229 Acquisition of CIREF 112 3 104 Value at 31 Aug 2006 3 498 Total gain 395 Year End Results - 31 Aug 2006
Slide 7: Market performance
Market performance Redefine vs PLS index (2 years) 240 Redefine PLS Index 220 200 180 160 140 120 100 80 Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug 2004 2005 2005 2006 2006 Year End Results - 31 Aug 2006
Slide 8: Market performance
Market performance Redefine vs Property index (2 years) 240 Redefine Property index 220 200 180 160 140 120 100 80 Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug 2004 2005 2005 2006 2006 Year End Results - 31 Aug 2006
Slide 9: Market performance
Market performance Redefine vs ALSI index (2 years) 240 Redefine ALSI index 220 200 180 160 140 120 100 80 Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug 2004 2005 2005 2006 2006 Year End Results - 31 Aug 2006
Slide 10: Income statement
Income statement 2006 2005 % R million R million Change Gross contractual revenue 500 411 22 Property portfolio: 59% 293 263 11 Listed securities: 41% 207 148 40 Expenses 56 61 (8) Operating profit 436 355 23 Net finance charges 182 146 25 Distribution to 226 181 linked unitholders Weighted No. of l
Slide 11: Growth outlook
Growth outlook 2006 2007 Cents Cents Broker consensus forecast 40.50 43.94 Redefine forecast 41.25 45.50 Achieved 42.70 Revised broker consensus forecast 48.40 Revised Redefine forecast 47.80 Current yield (price R5,50): 7.76% Forward yield (price R5,50): 8.69% A rating of 7.76% implies a price of R
Slide 12: Balance sheet
Balance sheet 2006 2005 % R million R million Change Non-current assets 6 044 3 939 53 Property portfolio: 43% 2 596 2 090 24 (2005: 53%) Listed securities: 57% 3 448 1 849 86 (2005: 47%) Capital and reserves 2 151 1 237 74 Interest-bearing liabilities 2 458 1 555 58 Gearing as % of assets 41.0 39.5
Slide 13: Direct Property
Direct Property Portfolio overview Total GLA 525 000m² A-grade 94% Leases expiring in 2010 and beyond 55% Current occupancy 97.3% Year End Results - 31 Aug 2006
Slide 14: Acquisition of Spearhead
Acquisition of Spearhead Significant portfolio expansion ─ 43 properties ─ 283 664m² of GLA ─ 5 developments for resale ─ 9 sites for development Geographic diversification to Western Cape Development pipeline ─ R600m under / future development Proven development expertise ─ Development team to join
Slide 15: Strategy – Direct properties
Strategy – Direct properties Development becoming a key focus: 50% of Southcoast Mall ─ 12% initial yield (cost: R94m) 100% of Makhado Centre ─ 10% initial yield (cost: R95m) Land for development: Land Developable Cost Location Size Bulk (serviced) R140/m² Isando 7,6ha 45 000m² (estimated) R2 100/m²
Slide 16: Strategy – Direct properties
Strategy – Direct properties Adding value to existing portfolio Identifying properties with potential for upgrading and refurbishment Unlocking value by redevelopment ─ Posthouse and Posthouse Link: • Additional parking • Increased GLA • Re-tenanting ─ Rosebank Arena: • Replaced ground floor offices
Slide 17: Strategy – Direct properties
Strategy – Direct properties Acquire properties: ─ With values above R30m ─ Across all sectors ─ In prime locations ─ Mainly A-grade covenants ─ Longer leases ─ Yield enhancing Focus on major centres which are growth nodes Continue to dispose of non-core properties: ─ 8 properties 10.2% yield ─ Moto
Slide 18: Strategy – Listed Securities
Strategy – Listed Securities Redefine actively pursues and supports corporate activity Larger counters ensure greater liquidity Offshore diversification ─ acquisition of 18% of CIREF Potential to grow offshore exposure by backing CIREF’s expansion Year End Results - 31 Aug 2006
Slide 19: Investment in CIREF
Strategy – Listed Securities Investment in CIREF Purchased May 2006 6,428,572 units Projected yield on 4.5% purchase Price (per unit) £1.40 Projected distribution per Total cost £9 million 6.3p unit (pence) Exchange rate at purchase R12.33 / £ At current exchange rate R14.71 / £ Purchase price (Rand
Slide 20: Gearing
Gearing Maintained below 45% target at 41% R2,458 billion total borrowings at average all-in rate of 9,99% (2005: 10.05%) R871 million re-financed through a debt capital market finance arrangement, achieving a saving of 55 bps Year End Results - 31 Aug 2006
Slide 21: Capital & funding
Capital & funding Issues for cash when opportunities to acquire assets arise ─ Rights issue in May raised R175m Dynamic approach to funding ─ Conduit (debt capital market) Redefine policy not to dilute existing unitholder interests Year End Results - 31 Aug 2006
Slide 22: Outlook for the industry
Outlook for the industry Further interest rate increases over next 12 months Rentals continuing to firm across all sectors Further increase in building costs Shortage of building materials Industrial rentals in prime locations above R35/ m2 for warehouse and R50/ m2 for offices Shortage of zoned and
Slide 23: Structure
Unit holders Structure Public 63% Wolf Cesman 13% Unitholders Marc Wainer 13% Clearwater Capital 11% Asset Managers Brian Azizollahoff Board of Directors Madison Property Fund CEO Managers Julie Herholdt PA Property Management contract Financial Michelle Mayers Yusuf Kara Property Managers CA(SA) Se
Slide 24: Board composition
Board composition Independent Non-Executive Directors Chairperson - Investment Committee: Liliane Barnard Listed Securities Chairman - Investment Committee: Direct properties Colin Clarke Member of Audit and Remuneration Committees Eric Ellerine Di Perton Member of Remuneration Committee Non-Executi
Slide 25: Empowerment
Empowerment Redefine is committed to the Property Sector Charter Actively negotiating BBBEE equity ownership Implemented Enterprise Development initiative in conjunction with Dijalo Property Services ─ Established Dipula Property Fund • 51% Dijalo • 49% Redefine ─ Initial portfolio R300m • R153m fro
Slide 26: Corporate Social Responsibility
Corporate Social Responsibility Year End Results - 31 Aug 2006
Slide 27: Unitholder profile
Unitholder profile Holders in excess of 5% of the total linked units in issue Marriott Funds Stanlib 5.7% Funds 14.7% 16.6% Old Mutual 8.2% The Standard Bank Group Year End Results - 31 Aug 2006
Slide 28: Listed portfolio
Listed portfolio Property Fund % % of Value fund type held portfolio R million Ambit PLS 23.4 4.5 157 ApexHi “A” PLS 6.5 6.2 216 ApexHi “B” PLS 17.8 19.3 677 CIREF CO 18.1 3.5 123 Hyprop PLS 28.6 39.0 1 363 Martprop PUT 5.3 3.5 124 Paramount PLS 23.2 9.7 340 Sycom PUT 13.7 11.9 416 Vukile PLS 18.1 3
Slide 29: Property portfolio by sector
Property portfolio by sector Commercial Industrial Retail Revenue GLA 23.4% 21.6% 42.8% 60.7% 15.9% 35.6% Year End Results - 31 Aug 2006
Slide 30: Tenant profile by grade
Tenant profile by grade A-grade B-grade C-grade Revenue GLA 4.3% 4.0% 7.9% 13.9% 88.1% 81.8% Year End Results - 31 Aug 2006
Slide 31: Summary
Summary Diversified & balanced Increased portfolio unitholder Proven history value of performance Experienced management team Since listing, Effectively managed debt Redefine has provided unitholders High liquidity an average 35% Dynamic expansion strategy annual return Year End Results - 31 Aug 200
Slide 32: Income is always the Outcome
Income is always the Outcome Refining REDEFINE