Slide 1: Annual Results for the year ended 30 September 2021
ANNUAL RESULTS for the year ended 30 September 2021
Slide 2: Highlights
Highlights Dividend increase of 4.1% per A-share and SOLD R2.9bn worth increase of 44.6% per B-share of assets LTV at 36.9% (38.2% incl. since 2018 derivatives) B-share price has increased by 216% y-o-y from R1.30 to R4.11 Transferred R1.047b in FY21 Collections of 96% for 12 months Vacancy @ 2.2% d
Slide 3: Highlights: Active investment
Highlights Active investment South African in solar power plants Group capex focus – proximity 6.7 megawatt installed with a further spend of R227m and control (excl. Indluplace) 2.3 megawatt in process Energy generation at 5.1% of Low risk gearing total energy cost (no cross currency Available Grou
Slide 4: Arrowhead team
Arrowhead team • Team increased by 2 • Highly skilled workforce o Continue to further develop skills and cross-skill • Committed to transformation o Team constitution: - 50% Female - 46% Black team members - 27% Black female - 15% African female - 50% Black Top management 4 Arrowhead Properties Annu
Slide 5: Culture building journey
Culture building journey What have we done What were the results / how was this achieved? • 94% very satisfied working for Arrowhead Internal anonymous • 88% of team feel cared for by the company surveys to assess team • 94% feel that they have a great platform to operate optimally satisfaction • 88
Slide 6: Culture building journey
Culture building journey What have we done What were the results / how was this achieved? • Implementation of training on diversity and transformation Making diversity, equity and • Execution of employment equity plans transformation a priority • Appointed 2 African Females in middle management for
Slide 7: Strategic successes
Strategic successes Goal to sell all properties which do not have strong tenant demand and are not capable of long-term income growth • Sell all properties which do not meet this criteria • Sold 37 properties in the financial year which moves us closer to our target portfolio • Since 2018 sold asset
Slide 8: Strategic successes
Strategic successes Goal to strengthen the balance sheet • Transferred R1.047bn worth of property • Debt reduced from R5.6bn to R4.6bn • Group’s LTV improved to 36.9% (excl. derivatives) • Renewed 4 loan facilities for the 2022 calendar year worth R859m • Group cash at R620.7m (excl. Indluplace) aft
Slide 9: Strategic successes
Strategic successes Goal to enhance ESG awareness • Arrow for change – completed 26 projects, 70% of which were in surrounding Arrowhead assets • Investment in outlying properties using locally sourced labour with skills transfer • Investment into utility management incl. solar and water projects •
Slide 10: An Arrow for Change: Sustainable change in action
An Arrow for Change Sustainable change in action • Continued sustainable, impact-driven projects • Projects in communities surrounding portfolio • Hands on involvement of employees, tenants and suppliers • Motivation and education focus at schools – focus on primary school mathematics tuitions • Ups
Slide 11: Hearts of Hope, Kelvin Drive, Gauteng
Hearts of Hope 138 Kelvin Drive, Gauteng Orphanage in Gallo Manor that takes care of approximately 60 children The following was completed for the project: Children and caregivers of Hearts of Hope • Thank-you gifts packs for all the caregivers and staff • Sporting equipment required • 3 Heat Pumps
Slide 12: Hannah's Place of Safety
Hannah’s Place of Safety Westgate Mall, Western Cape • Foster care facility for displaced and abandoned children. Westgate centre management, JHI Portfolio Items purchased and Manager (PM) complete handover handed over • Partnered with the tenants at Westgate Mall to purchase clothing, blankets, bab
Slide 13: Call to Care, Westgate Mall
Call to Care Westgate Mall, Western Cape • Partnered with Call to Care to plant a veggie garden at a primary school near to Westgate Mall Completed planting by Call to Care at the school • Further training to be conducted to ensure the upkeep of the gardens • Sustainable garden will assist the schoo
Slide 14: Woodhouse Community Care Base
Woodhouse Community Care Base Matsulu, Mpumalanga • Plastering and painting of the boundary wall for this orphanage • Food and stationery vouchers Woodhouse Community Painting of the wall in progress Care Base caregivers collecting items from the vouchers 14 Arrowhead Properties Annual Results 2021
Slide 15: Kids Haven
Kids Haven Purchased the following for this orphanage in Benoni: Mattresses being taken to the orphanage • Mattresses • Linen • Couches Delivered linen and mattresses 15 Arrowhead Properties Annual Results 2021 being assembled
Slide 16: Arrowhead summary
Arrowhead summary Diverse portfolio of 106 assets R8.3bn (excl. Indluplace) 939 486m2 Of GLA Sectoral split by revenue 61% In Indluplace Retail 50% Office 35% Industrial 15% 16 Arrowhead Properties Annual Results 2021
Slide 17: Sales program
Sales program • Sold 137 assets since the launch of our disposal program in 2018 totalling R2.9bn • 121 assets valued at R2.6bn has transferred up to 30 September 2021 • 16 assets of R331m still to transfer post year end 17 Arrowhead Properties Annual Results 2021
Slide 18: Sales
Sales Discount / Sector (premium) Asset Sales value Book value Breakdown to book Average GLA Vacant Vacancy Class Number (Rm) (Rm) in % value Yield disposed GLA % Retail 20 584 596 56% 2% 11.6% 66 237 1 136 2% Office 4 81 81 7% 0% 11.6% 13 266 1 644 12% Industrial 13 382 394 37% 3% 11.4% 109 879 1 0
Slide 19: What have we sold?
What have we sold? • At merger date 212 assets • 106 assets at 30 Sept 2021 Gaborone Gaborone Bloemfontein Bloemfontein Lesotho Lesotho Cape Town Port Elizabeth Cape Town Port Elizabeth Sold Assets 106 Assets 19 Arrowhead Properties Annual Results 2021
Slide 20: Did you know
Did you know • Our largest 7 retail assets 1. Access Park; 2. Cleary Park; 3. Westgate Mall; 4. Midtown Mall; 5. Transforum Centre; 6. Montclair Mall; and 7. Game Centre Thohoyandou make up more than 30% of our total property net income • Top 5 industrial assets are approximately 15 000m2 or bigger,
Slide 21: Property portfolio as at 30 September 2021
Property portfolio as at 30 September 2021 • 106 commercial (retail, office & industrial) properties • Sectoral GLA: 35% retail, 33% office and 32% industrial • Overall vacancy at 8.4% (6.0% retail, 14.6% office, 4.5% industrial) • Average gross (net) rent per sector R139/m2 retail (R128/m2), R115/m
Slide 22: Property portfolio as at 30 September 2021
Property portfolio as at 30 September 2021 • New deals concluded per sector Retail R3 637 468 monthly income (R103 Gross Rental R/m2) Office R3 331 179 monthly income (R89 Gross Rental R/m2) Industrial R1 668 973 monthly income (R39 Gross Rental R/m2) Overall R8 637 622 monthly income • Total number
Slide 23: Update on collections
Update on collections Gross Collections BEFORE relief April 2021 95% May 2021 97% June 2021 96% July 2021 93% August 2021 94% September 2021 96% Total Average Collections 2021 96% • R7.6m in total COVID-19 relief (R77m in the prior financial year) • R1m in deferral's and R6.6m in discounts 23 Arrowh
Slide 24: Portfolio challenges and way forward
Portfolio challenges and way forward TENANT SUSTAINABILITY • Tenant base post the COVID-19 lockdowns, more resilient and sustainable • Space rationalisation requests have decreased across all 3 sectors • Tenants have diversified their income streams • Relocation costs vs renewing a lease; tenants ar
Slide 25: Portfolio challenges and way forward
Portfolio challenges and way forward LEASING • More stability leading to better terms w.r.t. renewals and new deals • National retailers open to discussions along expansion, new market share and spreading of risk • More comfort amongst tenants to move away from short- to medium-term commitments • Wh
Slide 26: Portfolio challenges and way forward
Portfolio challenges and way forward SECURITY • An internal drive to use local labour and service providers • A heightened focus on property security post the riots • An increased use of technology vs labour • Introduction of new security protocols for any future similar riot related incidents • Inc
Slide 27: Portfolio challenges and way forward
Portfolio challenges and way forward JULY RIOTS • National retailers are using this opportunity to • Rental impact at the peak of the riots was further invest into their stores approximately 1% of our monthly billing • Very small portion using the opportunity to • Only 1 property, Montclair Mall, is
Slide 28: Office evolution
Office evolution • Shift in perception • Businesses realise the practicality of full time remote working isn’t feasible • Continued requirement to have an office base • A new hybrid office life is emerging – one that caters for a corporate identity / culture, yet offers flexibility • Tenants are now
Slide 29: Operational success: Suntyger
• Old façade in a prominent node Operational success • Business case supported a revamp to extract more value • All new deals and renewals concluded at new market rentals Suntyger • 97% let • Introducing a new retail element into the asset 29 Arrowhead Properties Annual Results 2021
Slide 30: Operational success: Eersterust
• The revamp is attracting better quality tenants Operational success • The external revamp pushed the anchor PNP to also invest Eersterust • Fully let • Massive involvement by the local community in the project 30 Arrowhead Properties Annual Results 2021
Slide 31: Operational success: Access Park
• The revamp assisted in refreshing the image post the pandemic Operational success • Rebound - Relet - Revamped • Tenants continue to invest large capex into their fitouts Access Park • Access Park entering a new phase of its lifecycle • 98% let 31 Arrowhead Properties Annual Results 2021
Slide 32: Operational success: Solar
• Phase 1 & 2 continues to generate anticipated yield • Various challenges – looting, theft and vandalism have been managed Operational success to ensure we meet and exceed the predicted yields • Phase 3 of the Solar programme well underway Solar • Over 5% of the portfolio electricity expense now ge
Slide 33: Operational success: Water
• Continually exploring water efficiency Operational success • 7 fully implemented projects Water • Backup water tanks, natural spring systems, borehole systems, smart monitoring Cleary Park 33 Arrowhead Properties Annual Results 2021
Slide 34: Significant lease renewals for the past 6 months
Significant lease renewals for the past 6 months Office Office Office Office Suntyger 1 124m2 1 Sturdee 3 297m2 Crownwood 1 060m2 Suntyger 1 015m2 Retail Retail Retail Retail Tsolo 2 051m2 Westgate 4 811m2 KWT 1 153m2 The Lane 968m2 New deals in progress 34 Arrowhead Properties Annual Results 2021
Slide 35: Current projects: Midtown Mall
Current projects Midtown Mall Phase 2 of the upgrade 35 Arrowhead Properties Annual Results 2021
Slide 36: Current projects: Town Centre
Current projects Town Centre Residential development 36 Arrowhead Properties Annual Results 2021
Slide 37: Current projects: New Pioneer
Current projects New Pioneer Ex Virgin Active 37 Arrowhead Properties Annual Results 2021
Slide 38: Current projects: Urban Park
Current projects Urban Park Ex McCarthy 38 Arrowhead Properties Annual Results 2021
Slide 39: Current projects: Jan Smuts
Current projects 158 Jan Smuts Soft external redevelopment 39 Arrowhead Properties Annual Results 2021
Slide 40: Current projects: Kelvin Drive
Current projects 138 Kelvin Drive 40 Arrowhead Properties Annual Results 2021
Slide 41: Trading densities
Trading densities SEPTEMBER 2020 VS SEPTEMBER 2021 RENT TO SALES RATIO Overall 0.9% Overall -4.7% 4 500 9,00% -28% 4 000 10.4% 4.7% 3.2% 8,00% -11% -11.9% 3 500 7,00% 2.9% -4% 19% 3 000 6,00% 2.7% 17% 2 500 -12.3% 5,00% -8% 2 000 4,00% 16.0% 1 500 3,00% 1 000 2,00% 500 1,00% 0 0,00% Access Westgate
Slide 42: Top 10 Retail tenant exposure
15.08% Top 10 Retail tenant exposure 3.68% 3.39% 2.73% 1.36% 1.10% 0.74% 0.69% 0.57% 0.49% 0.33% 34 605 31 837 25 630 12 822 10 297 6 955 6 472 5 339 4 602 3 130 141 687 % of portfolio revenue GLA (m2) 42 Arrowhead Properties Annual Results 2021
Slide 43: Foot count trends
Foot count trends 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Westgate Mall Cleary Park Montclair Mall Mall@theJunction 43 Arrowhead Properties Annual Results 2021
Slide 44: Combined lease expiry profile
Combined lease expiry profile BY REVENUE BY GLA 12 000 000,00 90 000,00 23% 24% 19% 27% 80 000,00 10 000 000,00 26% 70 000,00 8 000 000,00 20% 60 000,00 50 000,00 8% 6 000 000,00 8% 9% 7% 8% 40 000,00 7% 7% 4 000 000,00 30 000,00 4% 20 000,00 2 000 000,00 3% 10 000,00 0,00 - Monthly 2022 2023 2024 2
Slide 45: Solar plants: phases 1 to 4
Phase 1 – 100% owned plants: • 4 plants operational • 2.5 Megawatt installed capacity • Energy generation YTD R7 931 707 • 9 290 tonnes of CO2 emissions savings Phase 2 – 100% owned plants: • 6 plants operational and 1 under construction • 3.2 megawatt installed capacity • Energy generation YTD R2 1
Slide 46: Distributable income analysis for the year ended 30 September 2021
Distributable income analysis for the year ended 30 September 2021 R’000 2021 2020 Revenue (excl. straight line rental income) 2 000 708 2 189 241 Listed securities income 20 557 18 325 Property expenses (884 032) (954 869) Administration and corporate costs (135 600) (104 052) Finance charges (458
Slide 47: Distributable income and dividend reconciliation
Distributable income and dividend reconciliation Actual Actual Variance Total distributable income (cents) 2021 2020 Variance (%) Allocated to the A shares 1.20 1.15 0.05 4.1% Allocated to the B shares 47.72 32.99 14.73 44.6% Reconciliation of B share distributable income to forecast Arrowhead’s con
Slide 48: Consolidated Core portfolio 12 months
Consolidated Core portfolio 12 months Actuals Actuals Variance Variance 12 months 12 months 12 months 12 months October 2019 to October 2020 to October 2020 to October 2020 to September 2020 September 2021 September 2021 September 2021 R’000 R’000 R’000 (%) 2020 2021 Difference % movement Incl. COVI
Slide 49: Arrears and bad debts provision
Arrears and bad debts provision Credit Group arrears Group arrears provisions as a Description (Rm) provision (Rm) (%) of debtors 30 September 2019 76 29 38% 30 September 2020 81 42 53% 30 September 2021 78 33 43% Bad debt provision movement: 2021 2020 2019 Bad debts provided/written off – Income St
Slide 50: Condensed consolidated statement of financial position
Condensed consolidated statement of financial position at 30 September 2021 Audited for the Audited for the R’000 year ended year ended 30 September 2021 30 September 2020 Assets Investment property (incl. properties held for sale) 11 826 508 13 539 459 Loans to participants of Group share purchase
Slide 51: Property portfolio
Property portfolio Portfolio value group (excl. Indluplace) 8 288 255 (%) devaluation (4.0%) Commercial (11.4%) Industrial 1.7% Retail 0.1% Portfolio average cap rates 10.0% Commercial 10.5% Industrial 10.4% Retail 9.7% 51 Arrowhead Properties Annual Results 2021
Slide 52: Cap rates
Cap rates Arrowhead MSCI Benchmark September 2021 June 2021 Capitalisation rates Commercial 10.5% 8.9% Industrial 10.4% 9.2% Retail 9.7% 8.8% Discount rates Commercial 15.1% 13.2% Industrial 15.0% 14.0% Retail 14.4% 12.3% Rate per m2 Commercial 8 888 16 151 Industrial 4 119 6 448 Retail 13 740 21 83
Slide 53: Capex spend (Rm)
Capex spend (Rm) 2021 2020 Capital spend (Rm) Full year Full year Commercial 68 66 Industrial 23 39 Retail 97 75 187 180 Solar spend Commercial 2 - Industrial 5 - Retail 32 16 39 16 Total capital spend and solar Commercial 70 66 Industrial 28 39 Retail 129 91 227 196 53 Arrowhead Properties Annual R
Slide 54: Debt
Debt • Arrowhead loans of R3.2bn and Group of R4.6bn • Arrowhead Group LTV of 38.2% (36.9% excl. derivatives) • Loans fixed – Group 73.8% and 74.7% Company • Group ICR of 2.13 • Arrowhead Group weighted average interest rate of 8.5% (2020: 9.5%) Looking forward 12 months from 1 October 2021 Debt exp
Slide 55: Performance against portfolio level covenants
Performance against portfolio level covenants Interest Cover Ratio Loan to Value Funder Covenant Actual Covenant Actual Funder 1 2.0 3.2 45.0% 38.1% Funder 2 2.0 2.5 55.0% 40.1% Funder 3 2.0 4.0 45.0% 35.5% Funder 4 2.0 2.9 50.0% 34.4% 55 Arrowhead Properties Annual Results 2021
Slide 56: Listed investments
Listed investments (comparing position at September 2021 vs September 2020) Asset Balance sheet (Rm) Income (R’000) 2021 % 2020 % 2021 % 2020 % Arrowhead excl. listed investments 8 306 69 9 732 71 434 632 82 409 266 83 Indluplace 3 521 29 3 808 28 53 894 10 84 325 17 Listed investments 182 2 98 1 40
Slide 57: Indluplace
Indluplace • Currently own 9199 properties • Internalisation of property management completed 30 September 2021 • Currently employs 282 people • Paid final dividend of 28.13 cents per share with a 75% payout ratio • LTV of 37.0% excl. derivatives (38.6% incl.) • Cash on hand - R60.7m excl. tenant’s
Slide 58: Prospects
Prospects • Strong performance positioned fund for sustainable growth • Sales dilution result of successful sales program • Likely reduction in Dipula dividend • Fairvest merger • Update on merger timing 58 Arrowhead Properties Annual Results 2021
Slide 59: Thank you
THANK YOU Man. ARROWHEAD PROPERTIES Focused on sustainable value