Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — H1 2024 Earnings Presentation
45 slides from Fairvest Limited Class A's earnings presentation, March 2024
Slide 1: Interim Results for the six months ending 31 March 2024
Interim Results for the six months ending 31 March 2024
Slide 2: Agenda
Agenda Business overview Fairvest portfolio Office portfolio Industrial portfolio Retail portfolio Financial update Prospects for 2024 Q&A
Slide 3: Business overview
Business overview Darren Wilder CEO
Slide 4: Strategic focus areas
Strategic focus areas Recycle out of industrial Continue to build a Acquisitions only and office platform to produce at the right price assets into retail sustainable growth Financial focus areas ▪ Disciplined, conservative financial management ▪ Strategic capital allocation ▪ Continue to target a f
Slide 5: Key operational metrics
Key operational metrics ▪ To maintain collectable arrears below 2% of gross income ▪ Weighted average growth on lease expiry between 2% to 6% ▪ Target a weighted average lease term remains above 36 months ▪ Determined focus on leasing of vacant space – strong leasing team ▪ Strong focus on tenant re
Slide 6: Fairvest at a glance
Fairvest at a glance Diverse portfolio of Market Cap 1 050 003 m2 R11.8bn R6.5bn of GLA Retail Office Industrial Sectoral split by revenue 69.2% 18.8% 12.0% Sectoral by GLA 52.2% 20.6% 27.2% Investments Gearing at 5.0% in Dipula 32.6% Fairvest for the six months ending 31 March 2024 6
Slide 7: March 2024 highlights
March 2024 highlights 67.83 cps distribution 21.24 cps distribution 100% per A share per B share Pay-out ratio Vacancy of Overall tenant retention Average value per property 5.3% / 55 187 m² 87.1% R90.5 million (Sep’23 – 4.5% / 51 081 m²) (Sep’23 – 86.5%) (Sep’23 – R89.6 million) Positive rental rev
Slide 8: Back up power, solar and water management update
Back up power, solar and water management update ▪ Total diesel cost for the period of R5.5 million of which 84.7% has been recovered from tenants. ▪ Total of 63 Fairvest owned generators installed with 16.4 MVA of capacity. ▪ 7 generators currently under construction. ▪ 152 generators installed by
Slide 9: Disposals
Disposals Total disposals since merger Class Date Sales value Book value Premium to Average Asset GLA (m²) transferred (R'm) (R'm) book value yield 2022 Financial Year Office, Retail, Property disposals (4) 41.4 39.1 5.9% 11.1% 11 184 Industrial 2023 Financial Year Property disposals (7) Office, Ret
Slide 10: Fairvest portfolio
Fairvest portfolio Darren Wilder CEO
Slide 11: Fairvest portfolio highlights
Fairvest portfolio highlights Tenant retention 1 050 003 m² 87.1% 131 assets of GLA (Sep’23 – 86.5%) Vacancy of Reversions positive at Capex 5.3% / 55 187 m² 3.1% Expenditure of R113.9m (Sep’23 – 4.5% / 51 081 m²) (Sep’23 – 2.8%) 1.0% of value spend Average gross Weighted average WALE rental per m2
Slide 12: Vacancy %
PORTFOLIO COMPOSITION 100% Retail Office Industrial 16.7% of the total office portfolio vacancy GLA Avg Avg Avg arises from 2 small property property property Total 90% Vacancy value Value % of value Value % of value Value % of value office properties valued Band # (R'm) (R'm) Total # (R'm) (R'm) To
Slide 13: Portfolio leasing activity
Portfolio leasing activity New deals Mar ’24 Mar ‘23 Fairvest Lease expiry profile by GLA 250,000 22.4% 22.1% Number of leases 257 188 20.4% Total GLA m2 80 092 49 430 200,000 Average gross rental achieved (R/m2) 85.55 100.19 150,000 11.7% 10.4% Weighted average escalations 7.0% 6.7% 100,000 7.7% WA
Slide 14: Regional & sectoral split
REGIONAL & SECTORAL SPLIT Total GLA per region Total revenue per region 49% Gauteng 34% 14% Western Cape 22% 9% KwaZulu-Natal 11% 9% Eastern Cape 10% 7% Limpopo 8% 5% North West 6% 3% Free State 4% 3% Northern Cape 4% 1% Mpumalanga 1% Total GLA per sector Total revenue per sector 52% Retail 69% 21%
Slide 15: Office portfolio
Office portfolio Riaz Kader COO
Slide 16: Office portfolio highlights
Office portfolio highlights Tenant retention 216 741 m² 78.5% 29 assets of GLA (Sep’23 – 86.4%) Vacancy at % of total portfolio Capex 12.6% / 27 352 m² GLA – 20.6% Expenditure of R42.2m (Sep’23 – 9.7% / 28 331 m²) Value – 17.9% 2.0% of value spend Average gross Weighted average WALE rental per m2 bu
Slide 17: Office leasing activity
Office leasing activity New deals Mar ’24 Mar ’23 Fairvest Lease expiry profile by GLA 60,000 Number of leases 72 46 24.6% 50,000 Total GLA m2 18 503 21 336 19.6% 40,000 Average gross rental achieved (R/m2) 123.36 87.01 14.9% 12.6% 13.1% 30,000 Weighted average escalations 7.3% 6.9% 20,000 7.8% 7.4%
Slide 18: Office renewals
Office renewals Significant lease renewals over the past 6 months GLA Mae West Building 2 922 m2 Rosebank Quarter 1 224 m2 Metalbox 835 m2 Bridge on Bond 460 m2 Bridge on Bond 448 m2 Tijger Park 328 m2 Sunwood Park 282 m2 Tijger Park 237 m2 The District 213 m2 Tijger Park 171 m2 Fairvest for the six
Slide 19: Office new deals
Office new deals Significant lease new deals over the past 6 months GLA Rosebank Quarter 1 463 m2 MetalBox 1 253 m2 1 Sturdee 995 m2 Tijger Park 793 m2 Crownwood Office Park 710 m2 353 Festival St 693 m2 Rosebank Quarter 691 m2 Sanlynn 615 m2 MetalBox 500 m2 Sandton Sunninghill Place 440 m2 Fairvest
Slide 20: Office strategic objectives
Office strategic objectives ▪ Extracting a slightly longer lease length and higher built-in escalations, as we move into a more sustainable environment. ▪ Various office nodes are starting to reflect a rebalancing of demand and supply, with older assets being repurposed. ▪ Successful “retailing” of
Slide 21: Industrial portfolio
Industrial portfolio Riaz Kader COO
Slide 22: Industrial portfolio highlights
Industrial portfolio highlights Tenant retention 285 551 m² 91.8% 28 assets of GLA (Sep’23 – 84.3%) Vacancy at % of total portfolio Capex 2.3% / 6 580 m² GLA – 27.2% Expenditure of R12.7m (Sep’23 – 0.95% / 2 735 m²) Value – 11.4% 0.9% of value spend Average gross Weighted average WALE rental per m2
Slide 23: Industrial leasing activity
Industrial leasing activity Fairvest Lease expiry profile by GLA New deals Mar ’24 Mar ’23 80,000 23.8% Number of leases 53 28 70,000 21.3% 21.4% 60,000 Total GLA m2 41 502 13 860 50,000 13.7% Average gross rental achieved (R/m2) 46.64 53.31 40,000 30,000 9.4% Weighted average escalations 7.0% 7.4%
Slide 24: Industrial renewals
Industrial renewals Significant lease renewals over the past 6 months GLA Kolbenco 8 291 m2 Trador 6 246 m2 1 Range Road 4 280 m2 Simgold 2 485 m2 1 Range Road 2 250 m2 Germiston Route 24 1 752 m2 Germiston Route 24 1 331 m2 Pinetown Westmead Kyalami Park 1 134 m2 Germiston Route 24 960 m2 Pinetown
Slide 25: Industrial new deals
Industrial new deals Significant lease new deals over the past 6 months GLA Selby Building 13 751 m2 Pretoria Silverton 294 Battery 5 787 m2 Beka Candela 4 616 m2 Simgold 1 675 m2 Urban Park 1 428 m2 Creston 1 100 m2 The Main Change 999 m2 Germiston Route 24 960 m2 Roodepoort Robertville 799 m2 Germ
Slide 26: Industrial strategic objectives
Industrial strategic objectives ▪ Tenant retention at 91.8%. ▪ Strong core portfolio growth. ▪ Continuously improving coverage of back up power and water across the portfolio. ▪ Engagement with CID / Council to maintain the sustainability of the node surrounding our asset. ▪ Target a 1% vacancy rate
Slide 27: Retail portfolio
Retail portfolio Riaz Kader COO
Slide 28: Retail portfolio highlights
Retail portfolio highlights Tenant retention 547 711m² 84.6% 74 assets of GLA (Sep’23 – 88.1%) Vacancy at % of total portfolio Capex 3.9% / 21 255 m² GLA – 52.2% Expenditure of R59.0m (Sep’23 – 3.7% / 20 015 m²) Value – 70.7% 0.7% of value spend Average gross Weighted average WALE rental per m2 buil
Slide 29: Retail leasing activity
Retail leasing activity New deals Mar ’24 Mar ‘23 Fairvest Lease expiry profile by GLA Number of leases 132 114 140,000 22.7% 22.2% 21.5% 120,000 Total GLA m2 20 087 14 234 100,000 Average gross rental achieved (R/m2) 131.13 165.59 80,000 12.2% Weighted average escalations 6.7% 6.7% 10.1% 60,000 7.4
Slide 30: Retail top 10 tenant exposure by GLA and revenue
Retail top 10 tenant exposure by GLA and revenue By revenue & GLA Total 38.4% 9.1% 7.1% 5.5% 3.7% 3.2% 3.1% 3.0% 1.9% 1.0% 0.8% 68 546 48 297 39 141 24 962 18 260 20 889 15 168 9 652 7 638 4 669 GLA m² Monthly revenue (% of total retail revenue) Fairvest for the six months ending 31 March 2024 30
Slide 31: Retail new deals and renewals
Retail new deals and renewals Significant lease renewals over the past 6 months 1 867 m2 1 689 m2 1 482 m2 1 105 m2 952 m² 933 m² GLA Significant lease new deals over the past 6 months YHL Furniture Home 1 297 m2 1 050 m2 815 m2 676 m2 GLA Fairvest for the six months ending 31 March 2024 31
Slide 32: Annual Trading Density (R/m2)
Annual Trading Density (R/m2) 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Building 1 5.4% Building 2 -7.4% Building 3 2.7% Building 4 0.2% Building 5 1.9% Building 6 10.4% Building 7 -2.7% Building 8 2.3% Fairvest for the six months ending 31 March 2024 Building 9 1.8% Trading d
Slide 33: Rent to sales ratio
Percentage 10% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Building 1 0.0% Building 2 1.1% Building 3 -0.0% Building 4 0.1% Building 5 0.2% Building 6 -0.2% Building 7 0.3% Building 8 0.2% Fairvest for the six months ending 31 March 2024 Building 9 0.2% -0.6% Rent to sales ratio Building 10 Building 11 0.3% Build
Slide 34: Retail strategic objectives
Retail strategic objectives ▪ Sustained low vacancy, with an imbedded secondary office component above the retail. ▪ Maintained community engagements around our centers. ▪ Extract letting opportunities from M&A, distressed tenants and unbundling within the SA retail environment. Brands looking to se
Slide 35: Financial update
Financial update Jacques Kriel CFO
Slide 36: Distributable income analysis
Distributable income analysis Six months Six months ended ended 31 March 31 March 2024 2023 R’000 Unaudited Revenue (excluding straight-line rental income) 998 432 953 286 Sundry income 5 641 2 783 Property expenses (421 188) (387 262) Administration and corporate costs (44 662) (43 786) Finance cha
Slide 37: Condensed consolidated statement of financial position
Condensed consolidated statement of financial position Unaudited at Audited at R’000 31 March 2024 30 September 2023 Assets Investment property 11 849 219 12 004 066 Financial assets 206 796 199 054 Trade and other receivables 184 585 185 579 Loans receivable and amounts owing by non-controlling int
Slide 38: NAV Bridge per B share
NAV Bridge per B share (cents per share) Shares vested As at Profit for Change in value As at Dividends paid under conditional 30 September 2023 the period of A Share NAV 31 March 2024 share plan Increase Decrease Total Fairvest for the six months ending 31 March 2024 38
Slide 39: Capital expenditure
Capital expenditure R’000 % of Value Capital expenditure Property Value Spend Total 113 892 11 849 219 1.0% Retail 59 034 8 368 368 0.7% Industrial 12 672 1 354 707 0.9% Office 42 186 2 126 144 2.0% Fairvest for the six months ending 31 March 2024 39
Slide 40: Debt and maturity hedge profile
Debt and maturity hedge profile 1 600 1 494 1 400 1 400 1 227 1 200 1 148 1 000 Millions 825 800 600 600 500 400 200 - - Expiring in the next Expiring in the next Expiring in the next Expiring in the next 12 months 24 months 36 months 48 months Debt Swaps Fairvest for the six months ending 31 March
Slide 41: Debt facilities
Debt facilities 31 March 30 September 2024 2023 Loan to value (SA REIT BP) 32.6% 33.3% % of debt fixed 76.9% 64.8% Weighted average cost of funding 9.63% 9.74% Interest cover Times 2.5 2.5 WA maturity of debt Months 23 26 WA maturity of swaps Months 16 20 Total Debt R’m 4 067.1 4 210.8 Total facilit
Slide 42: Prospects for 2024
Prospects for 2024 Darren Wilder CEO
Slide 43: Prospects
Prospects ▪ Differentiate ourselves by performance not size ▪ Distribution per B share for the full year expected at upper end of guidance of between 41.50 and 42.50 cents per share ▪ Maintain 100% pay-out ratio ▪ Simplify the business ▪ Maintain LTV at below 35% ▪ Conservative balance sheet ▪ Acqui
Slide 44: Thank you
THANK YOU
Slide 45: Q&A
Q&A