Slide 1: Interim Results 31 March 2018
Interim Results 31 March 2018
Slide 2: Green shoots starting to show
Interim Results 2018 Green Green shoots starting to show shoots Portfolio surprised on the upside Letting vacant space but with greater incentives Benefits in 2019 Remains tough environment 2
Slide 3: Arrowhead's mission
Interim Results 2018 Arrowheads’ mission Opportunistic Diversified Sustainable value for our shareholders Trusted South African focused 3
Slide 4: Arrowhead
Interim Results 2018 Diverse commercial (office, retail and industrial) portfolio: value R5.6 billion 60% interest in Indluplace: R1.9 billion Arrowhead 56% interest in Gemgrow: R1.6 billion as at 31 March 2018 19% interest in Rebosis: R1.1 billion 11% interest in Dipula: R509 million Gearing R3.5 b
Slide 5: Operational success
Interim Results 2018 Operational suc c ess Initially vacancies forecast to increase for 2018 Started year at 12.1% Vacancy at period-end 10.6% Vacancy expected to be below 9% by financial year-end Well positioned for defensive sustainable growth 5
Slide 6: 1 Sturdee
Interim Results 2018 1 Sturdee 11 343m2 of 13 350m2 let 3-5 year leases Strong demand at market related rentals around R135m2 Breakdown of tenants Eurasian Resources Group 3 298m2 SPARK Schools Head Office 1 794m2 Sizwe Medical Fund 1 692m2 Cool Ideas 1 250m2 Ombudsman for Short-Term Insurance 1 184
Slide 7: Interim Results 2018
Interim Results 2018 THIS WAY
Slide 8: Operational success: Kwela Logistics
Interim Results 2018 Operational suc c ess Kwela Logistics Kwela Logistics (15 450m2) Blackheath Cape Town Declined several offers to sell Re-let 14 484m2 at higher rate (3 tenants) 8
Slide 9: Operational success: Hill Street
Interim Results 2018 Operational suc c ess Hill Street Hill Street (13 347m2) Sold to Live/Easy (student development) R60 million (VAT inclusive) Transferred 24 April 2018 9
Slide 10: Operational success
Interim Results 2018 Operational suc c ess 3 000m2 let at Owl Street Working on large leads Major lease renewal with RCS in Cape Town 6% step up and 6% annual escalation Lease expiry was June 2018 and now is June 2021 SARS, the other major renewal Advanced discussions Expect a 4 year lease renewal 1
Slide 11: Total dividend March 2018
Interim Results 2018 T ot al dividend 31 March 2018 R’000 2018 2017 Revenue (excluding straight line rental income) 1 112 580 959 324 Listed securities income 109 980 95 893 Property expenses (408 359) (360 780) Administration and corporate costs (28 319) (23 809) Finance charges (273 936) (193 283)
Slide 12: Arrowhead statement of financial position
Interim Results 2018 Arrowhead Unaudited for the six Unaudited for the six as at 31 March 2018 months ended months ended R’000 31 March 2018 31 March 2017 Assets Non-current assets 17 698 905 15 560 960 Investment property 15 036 213 12 400 987 Fair value of property portfolio for accounting purpose
Slide 13: Debt
Interim Results 2018 Arrowhead loans of R3 482 million and group of R6 242 million Debt Arrowhead LTV of 31.3%, group of 36.75% Loans fixed, Arrowhead 73% and group 80% as at 31 March 2018 Arrowhead effective interest rate of 9.35% and group effective interest rate of 9.40% for Interim period ended
Slide 14: Indluplace Properties and Gemgrow Properties
Interim Results 2018 40 assets Indluplace Properties Gemgrow Properties 14
Slide 15: Top 5 properties: Access Park
Interim Results 2018 T o p 5 properties Access Park Western Cape R776 000 000 20 456m2 Retail 15
Slide 16: Top 5 properties: Cleary Park
Interim Results 2018 T o p 5 properties Cleary Park Eastern Cape R521 000 000 36 294m2 Retail 16
Slide 17: Excited Cleary Park residents
Interim Results 2018 Increase catchment due to new bus transport system Excited Cleary Park residents 17
Slide 18: Top 5 properties: Westgate Mall
Interim Results 2018 T o p 5 properties Westgate Mall Western Cape R332 000 000 28 951m2 Retail 18
Slide 19: Top 5 properties: Midtown Mall
Interim Results 2018 T o p 5 properties Midtown Mall North West R260 000 000 17 456m2 Retail 19
Slide 20: Top 5 properties: 158 Offices
Interim Results 2018 T o p 5 properties 158 Offices Gauteng R253 661 000 19 510m2 Office 20
Slide 21: Edcon: our exposure
Interim Results 2018 Our exposure GLA (m2) - 3.14% Revenue (R) - 2.64% Edcon Post Cleary Park (exited post period-end) GLA (m2) - 2.70% Revenue (R) - 2.16% as at 31 March 2018 Our Edcon exposure is broken down as follows: Edgars 53% Jet 47% 21
Slide 22: Letting success where Edcon has vacated
Interim Results 2018 Letting King Williams Town Replaced Jet Mart & Edgars Active with a local supermarket & national shoe retailer success Westgate Mall where Replaced Jet & Edgars with a national Gym & created a new wing which is now fully let to national tenants Edcon Cleary Park Replaced Edgars
Slide 23: Trading densities and rent to sales ratio
Interim Results 2018 6% 4000 3500 7% 3000 16% 4% 2500 3% T rad ing 2000 1500 1000 1% densities 500 0 Access Park Montclair Cleary Park Westgate Midtown Mall KWT September 2017 vs March 2018 3% 9.00% 8.00% 3% Rent 7.00% 6.00% 5.00% 2% 1% 14% to sal es 3% 4.00% 3.00% ratio 2.00% 1.00% 0.00% Access Par
Slide 24: As at 31 March 2018
Interim Results 2018 50 commercial (retail, office & industrial) properties 57% retail, 35% office and 8% industrial (sectoral by value) As at Overall vacancy 10.63% (retail 5%, office 21%, industrial 3%) 31 March Average gross rent per sector (R134/m2 retail, R107/m2 office, R45/m2 industrial) 2018
Slide 25: Indluplace
Interim Results 2018 Indluplace dominant listed residential fund in South Africa Defensive investment opportunity offers good returns in a difficult environment if managed properly Indluplace On track with 4% forecast for year-end 30 September 2018 Tough 6 months but proving defensive and diversifie
Slide 26: Gemgrow: high yield high growth fund
Interim Results 2018 High yield high growth fund Manage risk by diversification Performing well in tough environment Growth of 7-9% on track for year-end 30 September 2018 Acquisitions 26
Slide 27: Dipula Income Fund and Rebosis Property Fund
Interim Results 2018 10 assets to sell Dipula Income Fund Rebosis Property Fund 27
Slide 28: Rebosis
Interim Results 2018 Rebosis dividend growth of 4% to February 2018 Currency to Arrowhead, currently holding Positive engagement with management 28
Slide 29: Dipula
Interim Results 2018 Dipula B dividend growth to February 2018 Dipula B dividend forecast for year-ended August 2018 Dipula Positive engagement with management Dipula stake has performed well Looking to recycle shareholding responsibly 29
Slide 30: Current matters
Interim Results 2018 Sustainable income Transparency Current Constantly reviewing and improving reporting matters Re-evaluating remuneration policy and moving away from loan scheme Transformation 30
Slide 31: Arrowhead 6 months to 30 September 2018
Interim Results 2018 Arrowhead 6 mon th s to 30 September 2018 Manage lease expiries in advance especially single tenanted buildings Focus on letting vacant space Improve tenant retention Strategic and operational support for Indluplace and Gemgrow Extract value from Dipula and Rebosis stakes SA foc
Slide 32: Prospects
Interim Results 2018 Portfolio surprised on the upside Challenging environment Prospects Forecast on track Well positioned for growth in 2019 and going forward... 32
Slide 33: Thank you
Thank you