Sa Corporate Real Estate Ltd. · JSE:SAC
Sa Corporate Real Estate — H1 2022 Earnings Presentation
54 slides from Sa Corporate Real Estate's earnings presentation, Sep 16, 2022
Slide 1: SA Corporate 2022 Interim Results Presentation
SA Corporate 2022 Interim Results Presentation 16 September 2022
Slide 2: Agenda
Agenda 01 Introduction Rory Mackey & Overview 02 Strategy Rory Mackey Update 03 Portfolio Rory Mackey Performance 04 Financial Sam Moodley Performance 05 Outlook Rory Mackey
Slide 3: Introduction & Overview
Introduction & Overview Rory Mackey
Slide 4: Overview
Overview Portfolio Distribution performance Total net property income (“NPI”) of 5.2% to Interim distributable income R362.3 million or 14.41 cps R594.8 million (June 2021: R589.8 million) (June 2021: R344.5 million or 13.70 cps) Total like-for-like NPI increased by 7.2% to R588.4 million (June 2021
Slide 5: Overview – LFL NPI Growth
Overview – LFL NPI Growth SAC STRATEGY Focus on 3 defensive sectors Sector Retail Industrial Residential Quality Inner City Convenience Oriented Focus Logistics Precincts and Suburban Shopping Centres Estates Like-for-like (“LFL”) 4.1% 2.3% 19.2% NPI Growth 5
Slide 6: Overview
Overview Property activity Capital structure Disposal pipeline contracted and still Loan to value (“LTV”) ratio of to transfer and divestments 37.9%* transferred since January 2022 (December 2021: 37.4%*) R1.3 billion * Net debt LTV excluding derivatives, which if (Transferred to 30 June 2022: R128.
Slide 7: 2022 H1 / 2021 H1 Comparative
2022 H1 / 2021 H1 Comparative 2021 H1 / 2022 H1 Comparative Rm Variance % Variance LFL NPI 39.4 7.2 Impact of Once-offs (6.5) 2021 H1 COVID-19 Deferments recovered relating to 2020 (1.4) 2021 H1 Municipal Electricity Credit (5.7) 2021 H1 Rates Accrual Reversal (3.7) 2022 H1 Municipal Credit 4.3 LFL
Slide 8: Strategy Update
Strategy Update Rory Mackey • Sectoral Analysis • Financial Sustainability • Bringing Life back to Property • Portfolio Focus • Convenience oriented Retail • Quality Industrial • Quality Residential Rental • Office Divestment
Slide 9: Overview – Sectoral Analysis of South African Portfolio
Overview – Sectoral Analysis of South African Portfolio SA Corporate Traditional like-for- Zambian JV excluding Zambian JV like Portfolio: 3 Properties 160 Properties Weighted Average GLA 92,920m2 Total GLA 1,365,366m2 discount rate 14.7% Portfolio Value R1.1bn Total Portfolio R15.1bn Weighted avera
Slide 10: Strategy Update
Strategy Update Strategic Focus Financial Sustainability YTD Collections: Retail: 98.3%; Industrial: 96.0%; Commercial: 98.5%; Afhco (excl. Student Accommodation): 98.6% SASRIA Claim: Received to date R211.7 million of which R130.6 million for reinstatement and R81.1 million for loss of income. Anti
Slide 11: Strategy Update
Strategy Update Strategic Focus Financial Sustainability Capital Management: 2022 Disposal Pipeline R1.3 billion Previously Contracted R960.2 million Transferred R127.5 million Unconditional R660.4 million (R317.7m transferred after 30 June 2022) Conditional R172.3 million Newly Contracted in 2022 R
Slide 12: Strategy Update
Strategy Update Strategic Focus Bringing Life Back to Property Retail: Morning Glen Children’s play area at family restaurant Padel tennis Golf bar Indoor Soccer Afhco Resi South Hills – courtyard landscaping South Hills – sports facilities Davies Street - pedestrianisation Offices: GreenPark Corner
Slide 13: Strategy Update
Strategy Update Strategic Focus Convenience Oriented Retail Portfolio 2022 H1 Leasing 36 891m2 Renewals 26 833m2 Vacancy 10 058m2 Major Leasing Categories 28 421m2 Grocers 9 937m2 Apparel & Shoes 9 432m2 Homeware, Furniture & Interior 2 704m2 Hardware 2 373m2 Food Specialty 2 320m2 Pharmacy 1 655m2
Slide 14: New Offer With Convenience Focus Update
New Offer With Convenience Focus Update OBC Fitout Musgrave Centre North Park Mall Bluff Towers Umlazi Mega City 51 Pritchard Street 14
Slide 15: New Offer With Convenience Focus
New Offer With Convenience Focus Artist impression: Checkers at Musgrave Centre ▪ Anchor grocers on ground and 4th levels to enhance cross shopping in intermediate levels ▪ Anticipated timeline • Commence base building works – February 2023 • Checkers beneficial occupation - August 2023 • Checkers t
Slide 16: Strategy Update
Strategy Update Strategic Focus Quality Industrial Property Portfolio Portfolio Refinement Through Disposals • 18 051m2 warehouse in Denver sold due to crime in node and high renewal risk. • Filling station in Jet Park with low litreage. • 81% logistics by GLA. Strengthening Tenant Covenant • Early
Slide 17: Strategy Update
Strategy Update Strategic Focus Quality Residential Portfolio Reinstating Robust Tenant Base Lead Type %’age • Vacancy reduced to 4.0%. Online listing platforms 59% • Students = 2.5%; Inner City = 3.9%; Suburban = 5.5%. Website 32% • 688 tenants in distress vacated since 1 January 2021. Social Media
Slide 18: Strategy Update
Strategy Update Strategic Focus Divesting from Commercial • Sale of 31 Allen Drive, Belville, contracted. • Partial repurposing of Nobel Street, Bloemfontein, for Storage design being finalised. • Musgrave Centre office space of 6 224m2 to be converted to residential apartments for sale through part
Slide 19: Portfolio Performance
Portfolio Performance Rory Mackey
Slide 20: SA Portfolio: Retail
Value of South African portfolio SA Portfolio: Retail 44.2% (2021 H1: 44.6%; 2021 FY: 43.4%) Like-for-like NPI growth Trading density growth WALE 4.1% 4.5% 3.9 Years (2021 H1: 19.7%; (2021 H1: 7.5%; (2021 H1: 3.6 years; 2021 FY: 21.5%) 2021 FY: 4.6%) 2021 FY: 3.6 years) Vacancy1 ECL and rent relief
Slide 21: Monthly Y-O-Y Retail Trading Density Growth
Monthly Y-O-Y Retail Trading Density Growth 21
Slide 22: SA Portfolio: Industrial
Value of South African portfolio SA Portfolio: Industrial 23.5% (2021 H1: 22.8%; 2021 FY: 23.5%) Like-for-like NPI growth ECL and rent relief 2.3% -122.6% (2021 H1: 8.3%; (2022 H1: R1.5m; 2021 H1: 2021 FY: 1.4%) -R6.6m; 2021 FY : -R5.6m) Vacancy Collections 0.7% 96.0% (2021 H1: 0.6%; (2021 H1: 103.4
Slide 23: SA Portfolio: Afhco
Value of South African portfolio SA Portfolio: Afhco 30.2% (2021 H1: 30.0%; 2021 FY: 31.0%) TOTAL RESIDENTIAL RETAIL (84% of portfolio) (16% of portfolio) Like-for-like NPI increase Vacancy – Residential 1 Vacancy - Retail 19.2% 4.0% 5.4% (2021 H1: -6.1%; (2021 H1: 8.4%; (2021 H1: 5.5%; 2021 FY: 7.4
Slide 24: Afhco Residential Leasing Performance
Afhco Residential Leasing Performance 24
Slide 25: Zambian Portfolio
50% Property value Zambian Portfolio R1.1bn Zambian JV (2021 H1: R789.4m; 2021 FY: R1.1bn) 50% NPI Growth 52.8% (USD) 61.5%(ZAR) 2021 H1: -18.8% (USD) -29.1% (ZAR) 2021 FY: -9.8% (USD) -18.8% (ZAR) East Park Mall (73% of Zambian Portfolio Value) Vacancy Rental escalation (USD) Expiries 3.9% 3.0% 100
Slide 26: Financial Performance
Financial Performance Sam Moodley
Slide 27: 2022 H1 Distributable Income Analysis
2022 H1 Distributable Income Analysis Like-for-like ▪ Improved rental largely due to reduced vacancies LFL NPI R39.4m and lower relief & deferment – R27.7m 7.2% ▪ Improved recoveries due to reduced vacancies – R23.3m ▪ Reduced ECL – R15.1m ▪ Increase in municipal expenses – (R15.3m) ▪ Increase in ex
Slide 28: Net Asset Value (cps)
Net Asset Value (cps) 1 425,0 8 2 3 (1) 400,0 375,0 412 350,0 400 325,0 300,0 Opening NAV 1 Revaluation of MTM swaps Other movements Distributable Closing NAV 30 January 2022 investment derivatives income net of June 2022 properties distributions paid 1 Based on IFRS and shares in issue The SA REIT
Slide 29: Investment Property Analysis
Investment Property Analysis 17 000 16 500 16 000 15 500 201 84 15 000 ( 129 ) * 15 125 14 500 14 969 14 000 Investment Properties Improvements / Disposals Fair value adjustment Investment Properties December 2021 Development costs June 2022 29
Slide 30: Debt & Interest Rate Swap Facilities
Debt & Interest Rate Swap Facilities Debt facilities Unutilised Revolving Weighted average rate credit facilities (“RCF”) (“WAR”) excluding Term debt Average tenor swaps R6.8bn R385.0m 1.5 years 6.3% (2021 FY: R6.8bn) (2021 FY: R615.0m) (2021 FY: 2.0 years) (2021 FY: 5.5%) Swap profile Hedged % Swap
Slide 31: SA REIT Loan to Value and Net Interest Cover
SA REIT Loan to Value and Net Interest Cover FV CCIRS FV Int. Rate (Liability) Swaps SA REIT loan Net debt LTV excl. swap 37.9% R46.8m 37.9% (2021: (Asset) 37.8% (2021: (2021: to value derivatives 37.4%) (Less: R43.0m notional value) 37.4%) R24.6m 38.5%) June 2021 Variance June 2022 Net interest cov
Slide 32: Debt Refinance update post June 2022
Debt Refinance update post 30 June 2022 R3.8 billion of Debt Refinancing concluded – R1.5 billion Sustainability Linked Improved Debt Expiry Profile Sustainability Performance Targets (“SPT”): Year Debt expiry % SPT 1 Dec SPT 2 Dec SPT 3 Dec Scenario 2022 2023 2024 2023 0.6% If all KPIs 2024 24.8% M
Slide 33: Outlook
Outlook gf sAcorporate qa AFHCO f REAL ESTATE Apes mig
Slide 34: Retail Outlook
Retail Outlook ▪ 82.0% Non-expiring rental revenue ▪ Contracted escalation 6.7% ▪ 87.5% of 2022 expiries already renewed @ 0.7% positive reversion ▪ Vacancy to reduce further by YE ▪ Operational expenses to increase greater than inflation – KZN rates & taxes increased by 28% ▪ Springfield Value Cent
Slide 35: Industrial Outlook
Industrial Outlook ▪ 87.3% Non-expiring rental revenue ▪ Contracted escalation 6.55% ▪ Forecast renewal reversions of -4.61% (see next slide) ▪ Vacancy to remain low but with downtime of circa 4 700m2 over 3 months ▪ Operational expenses to be well-controlled increasing less than inflation 35
Slide 36: Industrial Expiries
Industrial Expiries Renewal Progress Renewal Progress Expiry 2022 H1 YTD 2022 H2 Forecast % of % % Portfolio Reversion Reversion Extent Renewed Renewed GLA 2 Total 31 439m 7.08% 77.63% -4.94% 83.80% -4.61% 2 Gauteng 16 239m 5.10% 71.54% -9.15% 79.86% -6.21% Kwa-Zulu 2 15 200m 12.11% 83.37% -1.89% 87
Slide 37: Afhco Outlook
Afhco Outlook Residential ▪ Rental increases for the remainder of the year are to be similar to those in the first half. ▪ Vacancy to remain at current levels and increase marginally approaching the festive season being an annual occurrence Retail ▪ Escalation remains @ circa 7% with renewal reversi
Slide 38: Outlook
Outlook ▪ Wish to retain optionality and flexibility in respect of the use of divestment proceeds ▪ On the basis that proceeds are used to settle debt, distributable income growth for 2022 is forecast to be similar to that achieved for the first half 38
Slide 39: Questions
Questions { SA CORPORATE qa AFHCO | REAL ESTATE com”
Slide 40: Appendices
Appendices { SA CORPORATE qa AFHCO OED reat estate A og
Slide 41: Distributable income at a glance for the period ended June 2022
Distributable income at a glance for the period ended 30 June 2022 H1 2022 H1 2021 % Rm Rm Variance Net Property Income – Like-for-like 588.362 548.949 7.2 Net Property Income - Developments 3.229 12.298 (73.7) Net Property Income - Buildings sold 3.246 28.559 (88.6) Net Property Income 594.837 589.
Slide 42: Group debt structure – at June 2022 (excl. fixes)
Group debt structure – at 30 June 2022 (excl. fixes) 300 Term Loan, 5,95% Jan 2023 - Jan 2023 300 85 Revolving credit, 6,00% 629 Term Loan, 6,56% Jan 2023 - -120 Cross Currency (ZAR), 6.40% Jan 2023 - 162 Cross Currency (US$), 4,36% Jan 2023 - 200 Revolving credit, 5,87% Jan 2023 - 1 000 Term Loan,
Slide 43: Group debt structure – post refinancing (excl. fixes)
Group debt structure – post refinancing (excl. fixes) Jan 2023 -120 Cross Currency (ZAR), 6.40% - 162 Cross Currency (US$), 4,36% Jan 2023 - May 2024 585 - Term Loan, 6,18% May 2024 564 - Term Loan, 6,76% Sep 2024 100 100 Revolving credit, 6,64% 440 Term Loan, 4,91% Nov 2024 - May 2025 308 - Term Lo
Slide 44: Group debt structure – at June 2022 (incl. fixes)
Group debt structure – at 30 June 2022 (incl. fixes) 300 Term Loan, 7,77% Jan 2023 - Jan 2023 300 85 Revolving credit, 7,82% 629 Term Loan, 8,38% Jan 2023 - -120 Cross Currency (ZAR), 8,22% Jan 2023 - 162 Cross Currency (US$), 4,36% Jan 2023 - 200 Revolving credit, 7,69% Jan 2023 - 1 000 Term Loan,
Slide 45: Group debt structure – post refinancing (incl. fixes)
Group debt structure – post refinancing (incl. fixes) -120 Cross Currency (ZAR), 8,24% Jan 2023 - 162 Cross Currency (US$), 4.36% Jan 2023 - 585 Term Loan, 8,02% May 2024 - May 2024 564 - Term Loan, 8,60% Sep 2024 100 100 Revolving credit, 8,48% 440 Term Loan, 4,96% Nov 2024 - 308 Term Loan, 8,19% M
Slide 46: Debt repayment profile at June 2022
Debt repayment profile at 30 June 2022 4 500 7,5% 6,7% 6,9% 4 000 6.4% 6,5% 285 3 500 6,0% 5,5% 3 000 4,5% 2 500 3,5% 2 000 100 2,5% 1 500 1,5% 1 000 500 0,5% 3 536 1 589 1 108 200 - -0,5% 2023 2024 2025 2026 Total Drawn R'm Total Undrawn R'm Rate 46
Slide 47: Debt repayment profile – post refinancing
Debt repayment profile – post refinancing 3 000 8,5% 7,5% 7,5% 7,5% 6,9% 2 500 6,0% 6,5% 2 000 5,5% 100 100 4,5% 1 500 265 3,5% 1 000 2,5% 1,5% 500 0,5% 43 1 589 1 737 1 632 1 353 - -0,5% 2023 2024 2025 2026 2027 Total Drawn R'm Total Undrawn R'm Rate 47
Slide 48: Group debt structure SWAPS at June 2022
Group debt structure SWAPS at 30 June 2022 290 6,98% Jul 2023 120 6,97% Jul 2023 150 4,10% Aug 2023 295 7,04% Sep 2023 350 7,37% Jul 2024 100 7,00% Jul 2024 150 7,60% Oct 2024 440 1,41% Nov 2024 150 7,65% Dec 2024 150 6,83% Jan 2025 400 6,93% Jan 2025 300 7,38% May 2025 350 6,82% May 2025 150 7,50%
Slide 49: Interest rate swap expiry – June 2022
Interest rate swap expiry – 30 June 2022 1 500 8,0% 7,9% 7,0% 6,5% 7,0% 6,0% 1 000 5,2% 5,0% 4,0% 3,0% 500 2,0% 1,0% 855 1 190 1 200 1 180 - 0,0% 2023 2024 2025 2026 Total swaps at Jun 22 Rate at Jun 22 49
Slide 50: Retail portfolio overview
Retail portfolio overview Portfolio1,2 Portfolio value R6.7bn 39 Properties Top 10 tenants National exposure GLA 35.0% 59.6% GLA 372 423m2 24.3% Grocer GLA Rental 29.9% 58.0% of total Tenant retention success rate 89.4% Cost to revenue (Like-for-like) 41.3% (2021 H1: 41.3%) Lease Expiries 45,0% 120,
Slide 51: Industrial portfolio overview
Industrial portfolio overview Portfolio Portfolio value R3.6bn 53 Properties GLA 444 021m2 32.5% GLA of total portfolio Cost to revenue (Like-for-like) 28.3% (2021 H1: 24.8%) Lease Expiries 25,0% 120,0% 100,0% 20,0% 80,0% 15,0% % of GLA 60,0% 10,0% 40,0% 5,0% 20,0% 0,0% 0,0% Vacancy Monthly 2022 202
Slide 52: Afhco portfolio overview
Afhco portfolio overview Portfolio1 Portfolio value R4.5bn 60 Properties GLA Apartments 370 109m2 Retail 68 862m2 Cost to revenue (Like-for-like) 43.5% (2021 H1: 48.0%) By GLA 15,7% 84,3% Residential Retail / Commercial 1 Excludes bulk of 53 958m2 being developed, valued at R74.4m. 52
Slide 53: Commercial portfolio overview
Commercial portfolio overview Portfolio Portfolio value R0.3bn 4 Properties GLA 30 296m2 2.2% GLA of total portfolio Cost to revenue (Like-for-like) 66.1% (2021 H1: 65.2%) Lease Expiries 25,0% 120,0% 100,0% 20,0% 80,0% 15,0% % of GLA 60,0% 10,0% 40,0% 5,0% 20,0% 0,0% 0,0% Vacancy Monthly 2022 2023 2
Slide 54: SA Portfolio: Commercial
Value of South African portfolio SA Portfolio: Commercial 2.1% (2021 H1: 2.6%; 2021 FY: 2.1%) Like-for-like NPI decline ECL and rent relief -13.4% -63.0% (2022 H1: R1.2m; 2021 H1: (2021 H1: -7.8%; R3.2m; 2021 FY : R6.0m) 2021 FY: -36.6%) Vacancy Collections 18.7% 98.5% (2021 H1: 25.1%; (2021 H1: 90.
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