Sa Corporate Real Estate Ltd. · JSE:SAC
Sa Corporate Real Estate — FY2023 Earnings Presentation
55 slides from Sa Corporate Real Estate's earnings presentation, Mar 28, 2024
Slide 1: SA Corporate 2023 Year End Results Presentation
SA Corporate 2023 Year End Results Presentation 28 March 2024 1
Slide 2: Agenda
AGENDA 01 Introduction Rory Mackey & Overview Strategy Update 02 Rory Mackey Portfolio Performance 03 Rory Mackey Financial Performance 04 Sam Moodley Outlook 05 Rory Mackey
Slide 3: Introduction & Overview
INTRODUCTION & OVERVIEW RORY MACKEY
Slide 4: Overview: Distribution
OVERVIEW DISTRIBUTION DISTRIBUTABLE INCOME DISTRIBUTION 5.5% 4.0% Declared 23.18 cps vs six months to vs twelve months to 31 December 2022 at 90% payout ratio 31 December 2022 (2022: 24.15 cps at 90% payout ratio) R647.8 million or 25.76 cps (2022: R674.8 million or 26.83 cps) 4
Slide 5: Overview: Portfolio Performance
OVERVIEW PORTFOLIO PERFORMANCE TOTAL NET PROPERTY INCOME (“NPI”) TRADITIONAL PORTFOLIO VACANCIES % of gross lettable area (“GLA”) R1.3 billion 2.0% (2022 : R1.2 billion) (2022: 2.3%) TOTAL LIKE-FOR-LIKE NPI INCREASED BY RESIDENTIAL PORTFOLIO VACANCIES % of total units 4.6% to R1.01 billion Afhco 202
Slide 6: Overview: Property Activity and Capital Structure
OVERVIEW PROPERTY ACTIVITY CAPITAL STRUCTURE DISPOSAL PIPELINE LOAN TO VALUE (“LTV”) RATIO SINCE 1 JANUARY 2023 R1.4 billion 41.9%* (Transferred to 31 December 2023: R1 013.8 million; Contracted not yet transferred: (2022: 38.1%) R192.2 million, of which R13.2 million has transferred after 31 Decemb
Slide 7: Strategy Update
STRATEGY UPDATE RORY MACKEY if SA CORPORATE AFHCO f REAL ESTATE Afilea Housing Company
Slide 8: Strategy Update
STRATEGY UPDATE Convenience Financial Orientated Sustainability Retail Portfolio Logistics Quality Focussed Residential Industrial Portfolio Portfolio 8
Slide 9: Convenience Orientated Retail Portfolio
CONVENIENCE ORIENTATED RETAIL PORTFOLIO LFL REVENUE + 7.8% & LFL NPI + 5.3% 70,0% WALE: 4.0 years Convenience Financial Orientated WALE: 4.1 years Sustainability Retail 2023 Portfolio 65,0% 2023 Logistics Quality Focussed 2022 Residential Industrial Portfolio Portfolio Vacancy: 2.7% National Tenancy
Slide 10: Increasing National Tenancy
INCREASING NATIONAL TENANCY Occupation of National Tenants since 2020 on the SA Corporate Portfolio Number of new national tenants 2020 - 2023 97 GLA of new nationals (m2) 34 306 Bluff Towers Musgrave Centre 51 Pritchard Street Comaro Crossing Northpark Mall Coachmans Crossing July 2021 December 202
Slide 11: Development Projects Increasing Food Exposure
DEVELOPMENT PROJECTS INCREASING FOOD EXPOSURE Increased size of New 544m2 bespoke supermarket anchor by Food Market: R9m 30% to 1 981m2.Aesthetic refurbishment of the June centre and improved 2024 access – R40m July 2024 September 2023 October 2023 Supermarket: 2 225m2 New 790m2 Woolworths Food stor
Slide 12: Logistics Focussed Industrial Portfolio
LOGISTICS FOCUSSED INDUSTRIAL PORTFOLIO LFL + 5.3% 120,0% 100,0% 91,3% 89,7% 93,0% 89,7% 85,9% 84,7% 90,0% Convenience 100,0% Financial Orientated Sustainability Retail 80,0% 80,0% % > 5,000m2 Portfolio Logistics % 70,0% Quality Logistics 60,0% 60,0% Residential Focussed Portfolio Industrial 50,0% 4
Slide 13: Industrial Escalations and Reversions
INDUSTRIAL ESCALATIONS AND REVERSIONS 10,0% 7,4% 7,1% 7,2% 6,7% 6,4% 6,4% 5,0% 5,9% 6,4% 6,0% 5,3% 3,1% 3,1% 0,3% 0,1% 0,0% -0,9% -3,1% -5,0% -7,0% -10,0% -12,7% -15,0% 2019 2020 2021 2022 2023 2024 Escalation Renewal Reversion Inflation 13
Slide 14: Quality Residential Portfolio
QUALITY RESIDENTIAL PORTFOLIO 98% 2023 2022 Arrears : R4.7m 96% 1.1% 2022 2023 Convenience Arrears : R7.9m Average annual occupancy Financial Orientated 94% 1.9% Sustainability Retail Portfolio 2021 Logistics Quality 92% Focussed Residential Industrial Portfolio Portfolio 90% 2021 2020 88% 2020 Arre
Slide 15: Refinement of Residential Portfolio
REFINEMENT OF RESIDENTIAL PORTFOLIO 1 018 1 018 1 018 1 018 1 000 58 800 491 R 000 000’s 600 867 904 Afhco 960 non-core 400 527 Properties 200 151 113 - DISPOSAL OF 2021 2022 2023 2024 NON-CORE Unsold Sold (contracted or transferred) NON- PRECINCT 600 536 536 ASSETS 500 225 400 Indluplace R 000 000’
Slide 16: Afhco Building Tenant Loyalty
AFHCO BUILDING TENANT LOYALTY Loyalty Rewards & Initiatives: Tenants in Good Students Long Standing Tenants Standing Lunch in the Sky Sun City Resort Movers Hunt Happy Island Waterworld Game Drive Movers Market Increasing: ▪ Collections ▪ Term of occupancy lowering tenant churn costs ▪ Brand awarene
Slide 17: Residential Digitisation & Artificial Intelligence Initiatives
RESIDENTIAL DIGITISATION & ARTIFICIAL INTELLIGENCE (AI) INITIATIVES Digitisation ▪ Business intelligence – scoping of tenant and property information/analysis complete ▪ Building management – Afhco 50% complete and Indluplace commenced ▪ Customer relationship management – WhatsApp BOT implemented ▪
Slide 18: Increasing Sales IP
Increasing sales IP SIMS | Sales Information Management System Leads | Sales Administration | Management | Communication Integration of a leads management systems (lead journey to conversion) Increased Partnerships with Track, manage and Betterbond – Bond Originator Access to data and administer pro
Slide 19: Unlisted Residential Fund Update
UNLISTED RESIDENTIAL FUND UPDATE Restructuring Progress • Corporate restructuring completed in December 2023 • Debt restructuring lender pricing obtained Investor Progress • Engagement with potential investors continues • Terms with initial cornerstone investors must reflect unique SRI opportunity &
Slide 20: Financial Sustainability
FINANCIAL SUSTAINABILITY Debt Refinancing • Successful conclusion of the refinance of R1.2 billion facilities which were meant to expire in 2024 as well as new facilities amounting R500.0 million • Debt margin reduced by 1.63 bps on refinanced facilities • Improved debt tenor post the refinance with
Slide 21: Capital Structure Strategy Update
CAPITAL STRUCTURE STRATEGY UPDATE Strategic Focus Financial Sustainability Disposals update 2023 Disposal Pipeline R1.4 billion Previously Contracted in 2022 R850.2 million Transferred R803.0 million Conditional R2.7 million Unconditional R44.5 million Newly Contracted in 2023 R355.8 million Transfe
Slide 22: Zambia Portfolio Update
ZAMBIA PORTFOLIO UPDATE Zambia Macro ❑ GDP growth forecast to accelerate from an estimated 3.5% in 2023 to 4.8% in 2024 ❑ 2025 economic growth forecast at 4.1%, supported by mining investment & moderating inflation ❑ Recent discovery of one of the world’s largest high-grade copper deposits expected
Slide 23: Zambia Distributions Since 2019
ZAMBIA DISTRIBUTIONS SINCE 2019 6 000 20,00% 5 514 17,3% 18,00% 17,54% 5 000 15,7% 16,00% 14,1% 14,00% 4 000 12,00% Percentage USD 000's 5,1% 3 000 9,3% 10,4% 10,00% 5 291 4 827 0,3% 8,00% 4 571 2 000 4 116 3 441 6,00% 3 371 3 397 2 714 4,00% 1 000 2,00% 0 0,00% 2019 2020 2021 2022 2023 2024 - Forec
Slide 24: Energy Sustainability Update
ENERGY SUSTAINABILITY UPDATE Solar PV Rollout Cumalative Industrial Retail Residential 20,00 18,44 18,00 16,33 16,00 14,00 13,23 12,00 11,01 10,42 MWP 10,00 9,10 8,00 6,00 4,00 2,00 - 2019 2020 2021 2022 2023 2024 YEAR Retail portfolio % electricity consumption generated by Solar PV 18,00% Negative
Slide 25: Portfolio Performance
PORTFOLIO PERFORMANCE RORY MACKEY
Slide 26: Overview: Sectoral Analysis of South African Portfolio
OVERVIEW – SECTORAL ANALYSIS OF SOUTH AFRICAN PORTFOLIO 26
Slide 27: New Group Structure
NEW GROUP STRUCTURE SAC R17.75bn Unlisted SAC 100% Residential Fund R11.44bn R6.31bn Inner City Non-core Suburban Traditional Residential & Residential Estates Mixed use R10.64bn R0.80bn R1.78bn R3.57bn Retail incl. Students Industrial Commercial Afhco Indluplace Storage R0.96bn R7.10bn R3.28bn R0.2
Slide 28: SA Portfolio: Retail
VALUE OF SOUTH AFRICAN PORTFOLIO SA PORTFOLIO: RETAIL 38.7% (2022: 45.1%) LIKE-FOR-LIKE 5.3% COLLECTIONS 97.4% NPI GROWTH (2022: 6.7%) (2022: 99.2%) VACANCY1 2.7 % ARREARS 5.8% (2022: 3.2%) (2022: 5.0%) RENTAL 6.4% 4.0 years WALE2 ESCALATION (2022: 6.5%) (2022: 4.1 years) RENTAL 2.6% 85.2% TENANT GR
Slide 29: Retail Trading Density Growth
RETAIL TRADING DENSITY GROWTH 3500 10,0% 9,4% 3266 9,0% 3000 3072 3049 2901 8,0% 2786 2500 2606 Trading Density Growth (%) 7,0% Trading Density (R/m2) 6,9% 6,9% 6,0% 2000 6,3% 5,9% 5,0% 1500 4,8% 4,0% 3,0% 1000 2,0% 500 1,0% 0 0,0% 2021 2022 2023 Trading density excluding developements Tading desity
Slide 30: 2023 Trading Density Y-O-Y Growth
2023 TRADING DENSITY Y-O-Y GROWTH Trading Density - R/m2 6.3% 2023 RSA 3 266 Inflation – 6.0% 3 049 3 072 9.4% 2 786 Including Developments Excluding Developments 2022 2023 Trading Density Y-O-Y Growth by Category 10 000 17,2% 16,2% 20,0% 15,7% 16,1% 8 000 15,0% 11,9% 6 000 7,5% 7,8% 8,1% 10,0% 4 00
Slide 31: Pick n Pay Exposure
PICK N PAY EXPOSURE Exposure of Total South African Portfolio Revenue All stores (supermarkets & others) = 2.45% Excluding clothing & liquor = 2.32% All PnP stores and Boxer = 2.59% All corporate leases Opportunities East Point downsizing for waiting list of national apparel/athleisure tenancy Sprin
Slide 32: SA Portfolio: Industrial
VALUE OF SOUTH AFRICAN PORTFOLIO SA PORTFOLIO: INDUSTRIAL 18.5% (2022: 23.1%) LIKE-FOR-LIKE 5.3% COLLECTIONS 101.5% NPI GROWTH (2022: 2.4%) (2022: 99.4%) VACANCY 0.2% ARREARS 2.4% (2022: 0.2%) (2022: 3.8%) RENTAL 6.4% WALE 2.3 years ESCALATION (2022: 6.4%) (2022: 4.1 years) RENTAL -0.9% TENANT GRADE
Slide 33: SA Portfolio: Afhco
VALUE OF SOUTH AFRICAN PORTFOLIO SA PORTFOLIO: AFHCO 41.3% (2022: 29.9%) TOTAL RESIDENTIAL INNER CITY RETAIL (91.5% of portfolio) (8.5% of portfolio) VACANCY VACANCY RENTAL NPI GROWTH RESIDENTIAL 1 RETAIL ESCALATION AFHCO LIKE FOR LIKE AFHCO AFHCO AFHCO 3.3% 4.2% 4.4% 6.5% (2022: 13.1%) (2022: 2.9%)
Slide 34: Zambian Portfolio
50% PROPERTY VALUE ZAMBIAN PORTFOLIO R1.8 bn ZAMBIAN JV (2022: R1.4 bn) JV Distributable Income: 4.5% y-o-y (ZAR) LFL NPI Growth 6.3% (USD) East Park Mall 68 302 m2 (71.3% of Zambian Portfolio Value) Rental escalation Renewal Vacancy Expiry renewals (USD) reversions (USD) 0.7% 2.8% 100% 2.3% (2022:
Slide 35: Financial Performance
FINANCIAL PERFORMANCE SAM MOODLEY
Slide 36: 2023 Full Year Distributable Income Analysis
2023 FULL YEAR DISTRIBUTABLE INCOME ANALYSIS Like-for-like NPI Like-For-Like NPI • Improved rental largely due to reduced vacancies, positive reversions and escalations 4.6% ↑ R40.3m • Improved recoveries due to reduced vacancies ↑ R51.5m or • Improved turnover rental, parking and other income ↑ R6.
Slide 37: Net Asset Value (cps)
NET ASSET VALUE (CPS)1 450,0 28 425,0 1 4 (1) (3) 400,0 375,0 439 410 350,0 325,0 300,0 Opening NAV 1 Revaluation of MTM swaps Foreign Other Indluplace Closing NAV 31 January 2023 investment derivatives adjustment i.r.o. movements December 2023 properties Zambian JV The SA REIT defined NAV is calcul
Slide 38: Investment Property Analysis
INVESTMENT PROPERTY ANALYSIS 2 445 334 641 18 000 17 000 (2) (831) 16 000 15 000 14 000 13 000 12 000 11 000 10 000 17 721 9 000 15 135 8 000 7 000 6 000 5 000 4 000 3 000 2 000 Investment Indluplace Improvements / Disposals Fair value Owner occupied Investment Properties acquisition 1 Development a
Slide 39: Debt & Interest Rate Swap Facilities
DEBT & INTEREST RATE SWAP FACILITIES Debt Facilities Unutilised revolving Weighted average rate Term debt Average tenor credit facilities (“RCF”) (“WAR”) excluding swaps R8.8bn R640.0m 2.6 years 10.2% (2022: R7.1bn) (2022: R597.1m) (2022: 3.0 years) (2022: 8.8%) Swap profile Hedged % Swap margin Ave
Slide 40: SA REIT Loan to Value and Net Interest Cover
SA REIT LOAN TO VALUE AND NET INTEREST COVER SA REIT loan to Net debt LTV excl. swap 41.9% FV int rate 41.6% derivatives ( 2022: ( 2022: value 38.1%) Swaps (Asset) R58.3m 37.8%) December December Variance 2023 2022 Net interest cover Distributable income before 1 254 562 1 151 294 103 268 interest (
Slide 41: Outlook
OUTLOOK gf sA.corporare P® arnco | REAL ESTATE ing
Slide 42: Outlook
OUTLOOK 2024 LFL NPI Retail ▪ Vacancy to reduce marginally from 2023 below sector ▪ Above inflation escalations are contracted for 88.5% of leases ▪ Renewals to be flat due to negative reversions of certain national tenants in areas undergoing reconfiguration ▪ Without negative reversions referred t
Slide 43: Questions
QUESTIONS gf SAcoRporaTe AFHCO f REAL ESTATE Arcs Housing Company
Slide 44: Appendices
APPENDICES gf SAcoRPoRaTE AFHCO f REAL ESTATE Arcs Housing Company
Slide 45: Distributable Income at a Glance for the Year Ended December 2023
DISTRIBUTABLE INCOME AT A GLANCE FOR THE YEAR ENDED 31 DECEMBER 2023 Dec 2023 Dec 2022 % Rm Rm Variance Net Property Income – Like-for-like 1 008.438 964.407 4.6 Net Property Income – Developments 89.399 86.488 3.4 Net Property Income – Acquisitions 158.146 3.254 4 759.9 Net Property Income – Held f
Slide 46: Group Debt Structure – Excl Fixes
GROUP DEBT STRUCTURE – AT 31 DECEMBER 2023 (EXCL FIXES) 46
Slide 47: Group Debt Structure – Incl Fixes
GROUP DEBT STRUCTURE – AT 31 DECEMBER 2023 (INCL FIXES) 47
Slide 48: Group Debt Profile at December 2023
GROUP DEBT PROFILE AT 31 DECEMBER 2023 4 500 11,5% 10,2% 10,3% 10,3% 4 000 10.2% 9,9% 9,5% 3 500 3 000 7,5% 2 500 217 160 5,5% 2 000 300 1 500 3,5% 10 2 234 2 154 1 000 1 458 1,5% 500 1 098 1 149 0 -0,5% 2024 2025 2026 2027 2028 Total Drawn R'm Total Undrawn R'm Rate 48
Slide 49: Group Debt Structure Swaps at December 2023
GROUP DEBT STRUCTURE SWAPS AT 31 DECEMBER 2023 Jul/2024 350 7,37% Jul/2024 100 7,00% Oct/2024 150 7,60% Oct/2024 275 7,07% Oct/2024 275 7,07% Oct/2024 28 7,13% Oct/2024 28 7,13% Oct/2024 145 7,68% Oct/2024 145 7,68% Nov/2024 502 1,41% Dec/2024 150 7,65% 150 6,90% Jan/2025 Jan/2025 400 6,93% Jan/2025
Slide 50: Interest Rate Swap Expiry at December 2023
INTEREST RATE SWAP EXPIRY AT 31 DECEMBER 2023 2 500 8,0% 7,7% 6,9% 7,0% 2 225 2 149 2 000 6,0% 6,0% 5,0% 1 500 1 300 4,0% 1 000 3,0% 2,0% 500 1,0% 0 0,0% 2024 2025 2026 Total swaps at Dec 23 Rate at Dec 23 50
Slide 51: Retail Portfolio
RETAIL PORTFOLIO Portfolio1,2 Top 10 tenants National exposure Portfolio value R6.9bn 40 Properties GLA 38.8% 66.8% Rental 34.1% 66.3% GLA 374 810m2 22.4% Grocer GLA of total Tenant retention success rate 87.7% Cost to revenue (Like-for-like) 44.2% (2022: 42.4%) Lease E piries 30.0% 120.0% 25.0% 100
Slide 52: Industrial Portfolio
INDUSTRIAL PORTFOLIO Portfolio Portfolio value R3.3bn 45 Properties GLA 381 840m2 22.3% GLA of total portfolio Cost to revenue (Like-for-like) 29.2% (2022: 29.3%) ease xpiries 35.0% 120.0% 30.0% 100.0% 25.0% 80.0% % of GLA 20.0% 60.0% 15.0% 40.0% 10.0% 5.0% 20.0% 0.0% 0.0% Va ca ncy Monthl y 2024 20
Slide 53: Afhco Portfolio
AFHCO PORTFOLIO Afhco Portfolio Indluplace Portfolio Portfolio value R4.2bn 53 Properties Portfolio value R3.1bn 124 Properties GLA Apartments 342 520m2 Retail 62 020m2 GLA Apartments 481 351m2 Retail 14 470m2 Cost to revenue (Like-for-like) 54.6% (2022: 54.5%) 1 Excludes bulk of 5 187m2 being devel
Slide 54: Commercial Portfolio
COMMERCIAL PORTFOLIO Portfolio Portfolio value R260.4m 2 Properties GLA 21 756m2 1.3% GLA of total portfolio Cost to revenue (Like-for-like) 67.3% (2022: 72.0%) Lease E piries 25.0% 120.0% 20.0% 100.0% 80.0% % of GLA 15.0% 60.0% 10.0% 40.0% 5.0% 20.0% 0.0% 0.0% Va ca ncy Monthl y 2024 2025 2026 2027
Slide 55: SA Portfolio: Commercial
VALUE OF SOUTH AFRICAN PORTFOLIO SA PORTFOLIO: COMMERCIAL 1.5% (2022: 1.9%) LIKE-FOR- TENANT LIKE NPI 26.9% RETENTION 78.0% WALE 2.5 years (2022: -27.8%) (2022: 56.0%) (2022: 4.8 years) GROWTH SUCCESS RATE VACANCY 15.1% COLLECTIONS 107.4% BUILDINGS 1 SOLD (2022: 1 (2022: 17.7%) (2022: 97.5%) Buildin
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