Delta Property Fund Limited · JSE:DLT
Delta Property Fund — H1 2024 Earnings Presentation
35 slides from Delta Property Fund's earnings presentation, Nov 28, 2023
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 AUGUST 2023 TRANSFORMING TODAY, BUILDING
Slide 2: Agenda
1 Introduction 2 Strategy AGENDA 3 4 Portfolio Operations 5 Financial Results 6 Debt 1
Slide 3: Introduction
INTRODUCTION
Slide 4: Delta Property Fund: Our Commitment
DELTA PROPERTY FUND 91 properties total GLA of 837 956 valued at R6.9 billion with geographical diversification across all nine SA provinces OUR COMMITMENT: Specialist sovereign - underpinned property fund Exceptional tenant experience BEE level 1 listed REIT Superior sustainable Re-establishing a s
Slide 5: Operating Environment
OPERATING ENVIRONMENT The listed office sector continued to face significant challenges during the review period, driven predominantly by high interest rates, above-inflation municipal cost increases, low economic growth and an oversupply of space. This has resulted in intense competition in rental
Slide 6: Strategy
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Slide 7: Ongoing Delivery Against Strategic Pillars
ONGOING DELIVERY AGAINST STRATEGIC PILLARS We remain sovereign landlord of choice focusing on: • DISPOSING NON-CORE PROPERTIES • REDUCTION OF DEBT • STRENGTHENING THE BALANCE SHEET • NEGOTIATING LONGER TERM LEASES AND RETENTION OF HIGH-QUALITY • REDUCE INTEREST PAYMENTS • IMPROVE PROFITABILITY AND R
Slide 8: Strategy Milestones
FOR HALF YEAR ENDED 31 AUGUST 2023 STRATEGY MILESTONES CULTURE AND PORTFOLIO OPERATIONS DEBT PEOPLE’S JOURNEY R2.2bn non-core properties earmarked for disposal of 101.5% average successful Significant traction in disposal Strong ethical leadership to which R1.5bn is classified as rental collection o
Slide 9: Portfolio
PORTFOLIO
Slide 10: Portfolio Key Highlights
FOR HALF YEAR ENDED 31 AUGUST 2023 PORTFOLIO KEY HIGHLIGHTS Investment property Number of Properties Gross Lettable Area including held for sale 91 837 956 R6.9 billion Properties at advanced Properties expected to Properties earmarked negotiations stages transfer in six months for disposal 29 with
Slide 11: Properties Expected to Transfer Imminently
PROPERTIES EXPECTED TO TRANSFER IMMINENTLY SMARTXCHANGE (5 WALNUT ROAD) CAPE ROAD DIE MEENT Funder: Nedbank Funder: Nedbank Funder: Nedbank Disposal value: R46.0 million Disposal value: R33.0 million Disposal value: R 20.5 million Book value: R49.9 million Book value: R36.7 million Book value: R20 m
Slide 12: Properties Expected to Transfer Imminently
FOR HALF YEAR ENDED 31 AUGUST 2023 PROPERTIES EXPECTED TO TRANSFER IMMINENTLY SEDIBA, FOUNTAIN AND VLU BUILDINGS ENTERPRISE PARK Funder: Investec Funder: Investec Disposal value: R26.1 million Disposal value: R39.0 million Book value: R24.2 million Book value: R39.0 million GLA (m2): 10 947 GLA (m2)
Slide 13: Capital Expenditure (Capex)
CAPITAL EXPENDITURE (CAPEX) ► Major CAPEX Spend ► Poyntons, ► 13 Elliot, ► Block G, ► Parkmore, for the period relates to tenant installations R6.6m R3.5m R2.4m R1.6m upgrading of air conditions, lifts and fire equipment. ► Majority of the spend relates to displayed properties. ► R12.1m was spent on
Slide 14: Portfolio Key Focus Areas
FOR HALF YEAR ENDED 31 AUGUST 2023 PORTFOLIO KEY FOCUS AREAS Reducing portfolio vacancy Securing long term lease Improving on the Convert current active offers through leasing & disposal renewal with existing tenants Cost – To – Income ratio into disposal and accelerate activity and improving on the
Slide 15: Operations
OPERATIONS
Slide 16: Key Operations Highlights
KEY OPERATIONS 23 office leases with an aggregate GLA of 97 New leases with total GLA of 5 526m2 and 100 Collections for the 6 months were 101.5% on Reduction of R20.9m in arrears R120,0m Aug Core Portfolio vacancies of 10.4% HIGHLIGHTS 045 m² renewed parking bays awarded average and are 2023 R172.7
Slide 17: Lease Expiry
LEASE EXPIRY GLA Lease expiry profile by category 200 000 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 GLA Lease expiry profile - FY 2025 FY 2026 FY 2027 Beyond FY 2024 FY 2028 2028 300 000 Office - Sovereign 186 602 113 067 75 282 15 841 12 211 13 304 245 994 250 000 Office-O
Slide 18: Culture & People's Journey
CULTURE & PEOPLES JOURNEY Talent Management Change Performance Management Management and Culture CORE ELEMENTS OF THE STRATEGY Inclusion & Training and Diversity Development Employee Relations 17
Slide 19: Operations Key Focus Areas
OPERATIONS KEY FOCUS AREAS TENANT EXPAND CONTINUOUS RENEGOTIATE FOCUSING ON RETENTION BY PARTNERSHIPS NEGOTIATIONS LESS THAN 12- TENDER COLLECTING CONTINUOUS IMPROVE COST TO WITH COLLECTION MONTHS LEASES OPPORTUNITIES FROM HANDED FOR LEASE IMPROVEMENT INCOME RATIO AGENCIES TO TO LONGER WITHIN THE OV
Slide 20: Financial Results
FINANCIAL RESULTS
Slide 21: Salient Features
FOR HALF YEAR ENDED 31 AUGUST 2023 SALIENT FEATURES Investment Weighted average Weighted Average SA REIT property debt maturity lease expiry loan to value 10.9 months 15.8months 60.0% (incl. assets held for sale) R6.9bn Feb 2023: 6.3 months Feb 2023: 13.2 months Feb 2023: R6.9bn Feb 2023 : 61.4% SA
Slide 22: Financial Overview
FINANCIAL OVERVIEW Aug 2023 Aug 2022 Variance Group R’000 R’000 % Rental income including recoveries 573 752 631 747 (9%) Net operating income 350 818 380 356 (8%) Net finance costs 250 652 208 918 17% SA REIT Cost to income ratio 45.4% 47.4% (2%) SA REIT Loan to value (LTV) 60.0% 58.2% (1.8%) SA RE
Slide 23: Consolidated Statement of Comprehensive Income
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 AUGUST 2023 Unaudited 31 August 2023 Unaudited 31 August 2022 Audited 28 February 2023 GROUP R’000 R’000 R’000 Rental income 573 752 631 747 1 229 121 Straight-line rental income accrual (3 559) (11 958) (12 401) Total revenu
Slide 24: SA REIT Funds from Operations (SA REIT FFO)
SA REIT FUNDS FROM OPERATIONS (SA REIT FFO) GROUP Aug 2023 Aug 2022 Profit/(loss) attributable to the parent per IFRS statement A 67 517 (306 992) Accounting specific adjustments: Fair value adjustment loss/(gain) to: − Investment property - 374 467 − Debt and equity instrument held at fair value (1
Slide 25: Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2023 Unaudited 31 August 2023 Unaudited 31 August 2022 Audited 28 February 2023 GROUP R’000 R’000 R’000 ASSETS Non-current assets 5 499 765 6 567 752 6 172 162 Investment property 5 384 461 6 572 830 6 073 071 Fair value of investment prop
Slide 26: Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2023 Unaudited 31 August 2023 Unaudited 31 August 2022 Audited 28 February 2023 GROUP R’000 R’000 R’000 EQUITY AND LIABILITIES Equity attributable to owners of the parent 2 654 983 3 052 075 2 630 794 Share capital 4 868 462 4 868 461 4 86
Slide 27: Debt Management
FOR HALF YEAR ENDED 31 AUGUST 2023 DEBT MANAGEMENT Key debt management highlights Debt renewed Debt amortised Debt repaid from disposal R3.1 billion R60.4 million R31.5 million New debt funder engagements Base interest rates reduction are underway Release from the Grit Guarantee 50 basis points 26
Slide 28: Debt Management
DEBT MANAGEMENT To improve and maintain a healthy liquidity ratio for distribution resumptions FACILITY TYPE Aug 2023 Feb 2023 R’m LTV 60.0% 61.4% DEBT SPLIT ICR 1.3 times 1.4 times Cash and undrawn facilities (R’000) 65 753 34 746 Interest rate hedged of total debt 24.2% 44.3% 16% Weighted average
Slide 29: Lenders Confidence
Facilities COMMENTS Nedbank • Expected to be refinanced in April 2024 LENDERS State Bank of India • Expected to be refinanced in June 2024 CONFIDENCE Bank of China • Expected to be refinanced in January 2024 Funders are showing support throughout the • Expected to be refinanced in November 2024 Stan
Slide 30: Debt Key Focus Areas
Refinance Funder diversification Amortisation renegotiations DEBT KEY FOCUS AREAS Long term maturity Debt covenants monitoring 29 Interim Results 2023
Slide 31: Conclusion
CONCLUSION
Slide 32: Conclusion
FOR HALF YEAR ENDED 31 AUGUST 2023 CONCLUSION TRANSFORMING TODAY, BUILDING A BETTER FUTURE • The office sector, and especially B-grade offices are expected to remain under pressure as a result of oversupply and highly competitive rentals. • Notwithstanding these headwinds, Delta continues to positio
Slide 33: Questions & Answers
QUESTIONS & ANSWERS
Slide 34: Notes
FOR HALF YEAR ENDED 31 AUGUST 2023 NOTES 33
Slide 35: Thank You
THANK YOU