Redefine Properties Limited · JSE:RDF
Redefine Properties — FY2007 Earnings Presentation
38 slides from Redefine Properties's earnings presentation, 2007
Slide 1: Presentation to the Investment Analysts Society
PRESENTATION TO THE INVESTMENT ANALYSTS SOCIETY
Slide 2: Redefine has delivered
Redefine Income Fund Redefine HAS delivered Redefine refocused its business model on: Development Diversification Adding value to its existing portfolio
Slide 3: Financial highlights
Redefine Income Fund Financial highlights Distribution per liked unit 51.25 cpu 20% (2006: 42.7 cpu) NAV per linked unit: 24% Excl. deferred tax R7.83 (2006: R6.30) Market cap up R3 billion to R6 billion 60% Property portfolio R5,2 billion 101% (2006: R2,6 billion) Listed securities portfolio R4,6 b
Slide 4: Financial highlights
Redefine Income Fund Financial highlights Total growth 55% (income: 20% capital: 35%) Total return 36% (R1.99 on a R5.50 linked unit) Gearing well below 45% 34% Linked units in issue traded 37% (weighted average)
Slide 5: Property portfolio highlights
Redefine Income Fund Property portfolio highlights Integration of Spearhead portfolio 61 300m² of vacant space leased 71 244m² of space renewed 97.8% of portfolio leased 44% of leases expire in 2011 and beyond Expenses: 20% (of contractual rental income)
Slide 6: Listed securities performance
Redefine Income Fund Listed securities performance R million Value at 31 Aug 2006 3 498 Sold during the year (573) Acquired during the year 406 Acquisition of additional CIREF 69 3 401 Value at 31 Aug 2007 4 188 Total gain 787
Slide 7: Distribution history
Redefine Income Fund Distribution history Quarterly income distributions Cents per linked unit 15.0 14.0 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 2007 Quarter
Slide 8: Market performance
Redefine Income Fund Market performance Redefine vs PLS index (J256) 170 160 Redefine PLS 150 140 130 120 110 100 90 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 2007
Slide 9: Market performance
Redefine Income Fund Market performance Redefine vs Property index (J253) 170 160 Redefine Property index 150 140 130 120 110 100 90 Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 2007
Slide 10: Income statement
Redefine Income Fund Income statement 2007 2006 % R million R million Change Gross contractual revenue 730 500 46 • Property portfolio: 59% 430 293 47 • Listed securities: 41% 300 207 45 • Property trading: 6% / 0% 40 - 100 (of operating income) Property expenses (87) (56) 55 Admin expenses (56) (36
Slide 11: Growth outlook
Redefine Income Fund Growth outlook 31 Aug 31 Aug % change 2007 2008 Gross property income 430 543 26 Property expenses (87) (111) 28 Net Property Income 343 432 26 Listed distributions 300 324 8 Trading income 40 49 23 Income from associates 6 23 283 – Dipula & Mergence Africa 689 824 20 Admin over
Slide 12: Balance sheet
Redefine Income Fund Balance sheet 2007 2006 % R million R million Change Direct & listed assets 9 848 5 961 65 • Property portfolio: 53% 5 223 2 596 101 (2006: 44%) • Listed securities: 47% 4 625 3 448 34 (2006: 56%) Total assets 9 877 6 133 61 Capital and reserves 5 517 3 153 75 Interest-bearing l
Slide 13: Direct property: portfolio overview
Redefine Income Fund Direct property Portfolio overview Total GLA 777 334m² A-grade 85% Leases expiring in 2011 and beyond 44% Current occupancy 97.8%
Slide 14: Property portfolio by sector
Redefine Income Fund Property portfolio by sector Revenue GLA Commercial Commercial 28% 24% Retail Retail 35% 53% 19% 41% Industrial Industrial
Slide 15: Geographic spread
Redefine Income Fund Geographic spread Revenue GLA W. Cape 48% W. Cape 48% Gauteng 42% Gauteng 43% KZN 6% KZN 5% Limpopo 3% Limpopo 3% Mpumalanga 1% Mpumalanga 1%
Slide 16: Expansion through development
Redefine Income Fund Expansion through development Development Initial % % Cost Yield % Expected Let / CURRENT DEVELOPMENTS owned GLA (R’000) (%) Complete completion sold INVESTMENT DEVELOPMENTS WESTERN CAPE Industrial CTX Freight Park Phase 1 100 21 305 42 000 9.0 79% Nov-07 44% Berg River Park 100
Slide 17: Development pipeline
Redefine Income Fund Development “pipeline” Development Initial % Cost Yield Expected owned GLA (R’000) (%) completion INVESTMENT DEVELOPMENTS WESTERN CAPE Industrial CTX Freight Park Phase 2 100 21 305 53 000 10 Dec-08 Mixed use Annandale Land - investment & trading 25 1 250 000 Dec-12 GAUTENG Reta
Slide 18: Strategy: Direct properties
Redefine Income Fund Strategy: Direct properties Acquire properties: With values above R30m Across all sectors In prime locations With longer leases Mainly A-grade covenants Yield enhancing Focus on major centres which are growth nodes
Slide 19: Strategy: Direct properties
Redefine Income Fund Strategy: Direct properties Properties acquired in F2007 Gross Purchase Initial Price Property lettable area price yield per m² (m²) (R’000) (%) (R) Makhado Shopping Centre 13 500 89 000 10 6 593 Pick ‘n Pay - Newcastle 5 866 33 500 7 5 711 Vacant Land - Isando 76 124 5 700 n/a
Slide 20: Listed portfolio
Redefine Income Fund Listed portfolio Fund % % of Value Property fund type held portfolio Rm PLS 20.5 5.1 198 “A” PLS 7.2 6.6 278 “B” PLS 17.9 19.5 817 “C” PLS 4.6 2.1 90 CO 17.5 5.1 215 PLS 28.6 46.1 1 779 PUT 13.0 11.7 450 PLS 11.1 9.4 361 TOTAL 100.0 4 188
Slide 21: Strategy: Listed securities
Redefine Income Fund Strategy: Listed securities Redefine actively pursues and supports corporate activity • Paramount / Growthpoint • CBS Larger counters ensure greater liquidity Offshore diversification • increased exposure to CIREF Potential to grow offshore exposure by backing CIREF’s further ex
Slide 22: Strategy: Listed securities - Investment in CIREF
Redefine Income Fund Strategy: Listed securities Investment in CIREF Total units (purchased in 2 tranches) 9 611 072 Total Purchase Price (Rand) R 180 million Closing price 31 August 2007 £1.59 Assume exchange rate at date of purchase (Tranche 1) R 12.33 / £ Assume exchange rate at date of purchase
Slide 23: Gearing
Redefine Income Fund Gearing Maintained below 45% target at 34% (2006: 41%) R3,04 billion total borrowings at average all-in rate of 9,99% (2006: 9.99%) R250m transferred to ABSA which has resulted in a saving of 50 bps p.a. Certain fixes extended to 10 years resulting in saving of 44 bps p.a. Short
Slide 24: Empowerment
Redefine Income Fund Empowerment • Committed to the Property Sector Charter • Implemented two enterprise development initiatives with Dijalo Property Services and Mergence Africa Dipula Properties (JV with Dijalo) ─ 21 properties ─ Value of properties: R305,3m Mergence Africa Properties (JV with Mer
Slide 25: BEE transaction (post-balance sheet)
Redefine Income Fund BEE transaction (post-balance sheet) • 80 m units (± 10% of total in issue) to be issued for R548m cash • 48 m units to strategic partners • 32 m units to broad-based BEE parties • ±15.5% of Redefine will be held by BEE parties post the transaction • Issue price is R6,85 per lin
Slide 26: Corporate social responsibility
Redefine Income Fund Corporate social responsibility
Slide 27: Unitholder profile
Redefine Income Fund Unitholder profile Holders in excess of 5% of the total linked units in issue Pre-BEE transaction Post-BEE transaction Investec Stanlib Funds Stanlib Funds 12% 11% 15% BEE 16% Standard Bank 5% 6% 14% Standard 15% Bank 14% Old Mutual Investec Old Mutual
Slide 28: Structure
Redefine Income Fund Public 63% Wolf Cesman 13% Structure Marc Wainer 13% Clearwater Capital 11% Asset Managers Unitholders Madison Property Fund Managers CEO Property Management Board of Directors contract Brian Azizollahoff Property Managers Broll Property Group PA Julie Herholdt Financial Board C
Slide 29: Board composition
Redefine Income Fund Board composition Independent Non-Executive Chairman Dines Gihwala Independent Non-Executive Directors Chairperson - Investment Committee Liliane Barnard (Direct properties & listed securities) Member of Audit Committee Neville Venter Chairman - Audit Committee Eric Ellerine Di
Slide 30: Outlook for the industry
Redefine Income Fund Outlook for the industry No further interest rate increases over next 12 months Rentals continuing to firm across all sectors • Industrial rentals in prime locations above R35 / m² for warehousing and R50 / m2 for offices Sustained increase in building costs Shortage of building
Slide 31: Outlook for the industry
Redefine Income Fund Outlook for the industry Shortage of zoned and serviced land in prime areas Conversion of listed sector to REIT structure Increasing foreign investment into South Africa Off-shore diversification by SA companies Further consolidation of the sector • Enhanced liquidity
Slide 32: Summary
Redefine Income Fund Summary Proven history Increased of performance unitholder Dynamic expansion value strategy Diversified & balanced portfolio Since listing, Experienced Redefine has management team provided unitholders Effectively managed debt an average 35% Liquidity annual return
Slide 33: Property showcase: Convention Towers
Redefine Income Fund Property showcase Convention Towers - Cape Town Usage: Commercial GLA: 13,000m² Cost: R230 million Completion: Feb 2008 These landmark offices are located on a prominent site adjacent to the Cape Town International Convention Centre on the vibrant Foreshore
Slide 34: Property showcase: Sable Square
Redefine Income Fund Property showcase Sable Square - Cape Town Usage: Retail GLA: 22,000m² Cost: R250 million Phase 1: Completed Phase 2: Dec 2007 Retail fashion village near Century City in Cape Town offering premium designer brands at no less than a 30% discount. Sable Square shopping hub provide
Slide 35: Property showcase: Pepkor Distribution Hub
Redefine Income Fund Property showcase Pepkor Distribution Hub - Isando Gauteng Usage: Industrial warehousing GLA: 40,000m² Cost: R110 million Completion: Oct 2007 This custom designed distribution hub will include a substantial warehousing area in addition to 2,000m2 of offices, canteens and staff
Slide 36: Property showcase: CTX Freight Park
Redefine Income Fund Property showcase CTX Freight Park - Cape Town Usage: Industrial GLA: 20,000m² Cost: R80 million Phase 1: Mid 2007 Located on a large site near Cape Town International Airport adjacent to the freight handling terminals, the development comprises a mix of mini units and some slig
Slide 37: Property showcase: Upper East Side
Redefine Income Fund Property showcase Upper East Side - Woodstock Cape Town Usage: Residential/ mixed-use Cost: R112 million Phase 1: Oct 2007 (140 apartments) A secure, fully-serviced lifestyle development which will consist of three buildings – the first derived from the refurbishment and redevel
Slide 38: Redefine Income Fund
Redefine Income Fund ReEDeFINE NCOME FUND