Octodec Investments Limited · JSE:OCT
Octodec Investments — HY2024 Earnings Presentation
44 slides from Octodec Investments's earnings presentation, May 14, 2024
Slide 1: Interim results for the six months ended 29 February 2024
INTERIM RESULTS Interim results for the six months ended 29 February 2024 OCTODEC INVESTMENTS LIMITED 0 Interim results for the six months ended 29 February 2024
Slide 2: Agenda
AGENDA 1 Octodec at a glance 2 Our portfolio performance: residential 3 Our portfolio performance: commercial 4 Financial results and capital management 5 Outlook 6 Questions and answers 7 Contact details 8 Appendices SHARON'S PLACE
Slide 3: Octodec at a glance
OCTODEC AT A GLANCE WAVERLEY PLAZA
Slide 4: Octodec at a glance: How, What, Why
OCTODEC AT A GLANCE How We aim to serve a What thriving tenant-base of residents, professionals, Government employees, Octodec’s diverse students, and entrepreneurs, property portfolio consists all of whom live, eat, work, or of market-leading residential, play within the Octodec ecosystem. retail,
Slide 5: HY2024 Performance Highlights
HY2024 PERFORMANCE HIGHLIGHTS Rental income Distributable income Distributable income (R’million) after tax (R’million) per share (cents) 3.1% (6.4%) (6.4%) R1 004.4 R219.5 82.47 (HY2023: R974.2) (HY2023: R234.5) (HY2023: 88.10) Distribution Net asset value per share (cents) (NAV) per share Loan to
Slide 6: Rental Income Analysis
RENTAL INCOME ANALYSIS Rental income by sector Rental income split 29 February 2024 29 February 2024 4.5% Residential 7.2% (HY2023: 32.8%) Retail – street shops 33.9% (HY2023: 24.1%) 33.9% 18.3% Retail – Residential shopping centres (HY2023: 32.8%) (HY2023: 12.3%) Commercial Offices (HY2023: 67.2%)
Slide 7: Rental Income Analysis: CBD vs non-CBD, Tshwane vs Johannesburg
RENTAL INCOME ANALYSIS CBD versus non-CBD rental income Tshwane versus Johannesburg rental income 29 February 2024 29 February 2024 30.0% Tshwane and surrounds CBD (HY2023: 69.2%) 45.4% (HY2023: 55.3%) Johannesburg Non-CBD and surrounds 54.6% (HY2023: 44.7%) (HY2023: 30.8%) 70.0% * The above propert
Slide 8: Our portfolio performance: Residential
STEYN’S PLACE OUR PORTFOLIO PERFORMANCE: RESIDENTIAL
Slide 9: Residential
RESIDENTIAL As at As at 29 Feb 2024 28 Feb 2023 GLA (m²)* 418 550 415 739 Number of properties 65 65 Number of residential units 9 243 9 243 Johannesburg (%) 36 36 Tshwane (%) 64 64 Rental income (R’million) 254 242 Rental income increase (%) 5.1 10.3 Rental income increase (like for like) (%) 5.1 1
Slide 10: Residential [continued]
RESIDENTIAL [CONTINUED] Occupancy Vacancies increased slightly from 6.9% to 8.0%, compared to the prior period, mainly due to the increase in vacancies in the Pretoria and Johannesburg portfolios: • These two portfolios contribute to 87% of the GLA in the residential portfolio • Johannesburg portfol
Slide 11: Residential [continued]
RESIDENTIAL [CONTINUED] Tenant profile analysis, for applications received during the period • 22.2% of residential applications are Government employees • 40.7% of occupants are students • Average net monthly salary per application of R24 028 (HY2023: R21 997), which is a strong indication of the c
Slide 12: Our portfolio performance: Commercial
OUR PORTFOLIO PERFORMANCE: COMMERCIAL HEALTH CONNECT
Slide 13: Retail – Street Shops
RETAIL – STREET SHOPS As at As at 29 Feb 2024 28 Feb 2023 GLA (m2) 340 488 348 045 Rental income (R’million) 179 177 Rental income increase (%) 0.6 0.7 Rental income increase (like for like) (%)* 1.7 3.2 Total vacancies (% of GLA) 22.3 22.3 Total core vacancies (% of GLA) 17.5 19.4 * Excludes the im
Slide 14: Offices
OFFICES As at As at 29 Feb 2024 28 Feb 2023 GLA (m2) 455 478 456 860 Office space held for 67 101 67 478 development/mothballed (opportunities to sell or re-develop) Rental income (R’million) 137 140 Rental income reduction (%) (2.1) (5.4) Rental income reduction (like for like) (%)* (1.4) (5.3) Tot
Slide 15: Industrial
INDUSTRIAL As at As at 29 Feb 2024 28 Feb 2023 Total GLA (m2) 213 271 218 146 Rental income (R’million) 54 54 Rental income increase (%) − 3.8 Rental income increase (like for like) (%)* 2.4 7.8 Total vacancies (% of GLA) 10.6 6.2 Core vacancies (% of GLA) 10.1 5.7 * Excludes the impact of disposed
Slide 16: Commercial Portfolio
COMMERCIAL PORTFOLIO Retail street shops • Finalised negotiations with a national retailer to occupy 951m² of retail space in a heritage building, previously occupied by Nedbank Offices • Concluded lease agreement with beneficial occupation date of 1 May 2024 for 2 689m² at an office building that w
Slide 17: Retail – Shopping Centres
RETAIL – SHOPPING CENTRES As at As at 29 Feb 2024 28 Feb 2023 GLA (m2) 97 700 97 525 Rental income (R’million) 93 90 Rental income increase (%) 2.7 3.6 Rental income increase (like for like) (%)* 2.7 10.4 Total vacancies (% of GLA) 6.8 6.7 Core vacancies (% of GLA) 6.6 6.4 * Excludes the impact of d
Slide 18: Retail – Shopping Centres [continued]
RETAIL – SHOPPING CENTRES [CONTINUED] Tshwane: The Park, Waverley Plaza, Gezina, and Blaauw Village (50% held JV) • Strong performance from all neighbourhood convenience shopping centres Blaauw Village • 99.4% combined occupancy • 100% occupied at 29 February • 4.9% combined rental income growth • T
Slide 19: Retail – Shopping Centres [continued]
RETAIL – SHOPPING CENTRES [CONTINUED] Johannesburg: Woodmead Value Mart Johannesburg: Killarney Mall • 6.2% rental income growth • Rental income decreased by 2.4% • Currently 100% occupied • Continued focus on tenant mix • A centre renowned for its high calibre tenant mix, authentic brands, and • Oc
Slide 20: Vacancies as Percentage of Lettable GLA
VACANCIES AS PERCENTAGE OF LETTABLE GLA* 29.1 27.8 18.4 17.5 16.2 15.1 29 February 2024 10.1 8.8 8.0 31 August 2023 6.6 6.8 6.5 Offices Retail: Retail: Industrial Residential Total street shops shopping centres * Vacancies exclude properties held for redevelopment or disposal, including mothballed s
Slide 21: Lease Expiry Profile
LEASE EXPIRY PROFILE By rental income % By GLA m² (%) February February February February February February 2029 and February February February February 2029 and 2025 2026 2027 2028 beyond 2025 2026 2027 2028 beyond Vacant Total Sector Residential 99.8 0.2 − − − 91.5 0.5 − − − 8.0 100.0 Commercial R
Slide 22: Significant Expired/Expiring Leases Under Negotiation
SIGNIFICANT EXPIRED/EXPIRING LEASES UNDER NEGOTIATION Building Tenant Lease expiry GLA (m²) Renewal status Capitol Towers City of Tshwane Metropolitan – 12 086 Tenant remains on a monthly tenancy and North Municipality indications are that they will be moving to a Municipality-owned building as prev
Slide 23: Significant Expired/Expiring Leases Under Negotiation [continued]
SIGNIFICANT EXPIRED/EXPIRING LEASES UNDER NEGOTIATION [CONTINUED] Building Tenant Lease expiry GLA (m²) Renewal status Marlborough CCMA May 2024 3 598 Lease terms for a three-year renewal concluded House and an award letter received. Conditions of the lease are under negotiation. CCMA Place CCMA Jun
Slide 24: Reversions by Sector
REVERSIONS BY SECTOR Renewal New lease Reversion Sector Area m2 % Area m2 % Residential (units) 3 259 (1.1) 54 5.2 Commercial Retail – street shops 9 546 (1.8) 49 224 (4.2) Retail – shopping centres 1 797 (0.8) 14 194 3.5 Offices 4 938 1.3 51 222 3.4 Industrial 16 373 3.3 52 309 5.4 Total commercial
Slide 25: Collections
COLLECTIONS Total collections as at 29 February 2024 Collected Collected to billed YTD (%) R1.1 bn (HY2023: R1.1 bn) 98% Billed R1.2 bn Commercial (HY2023: R1.1 bn) Residential 99% Collected to billed% 97.4% (HY2023: 97.9%) 24 NZUNZA HOUSE OCTODEC INVESTMENTS LIMITED Interim results for the six mont
Slide 26: Financial Results and Capital Management
THE FIELDS EVENT CENTRE FINANCIAL RESULTS AND CAPITAL MANAGEMENT
Slide 27: Distributable Earnings
DISTRIBUTABLE EARNINGS Unaudited Unaudited % 29 February 2024 28 February 2023 change R’000 R’000 Revenue 3.1 1 004 370 974 226 Sundry income 100.0 213 − Property operating expenses 8.1 544 054 (503 198) Net property income (2.2) 460 529 471 028 Administrative and corporate expenses 12.3 (52 581) (4
Slide 28: Distributable Earnings [continued]
DISTRIBUTABLE EARNINGS [CONTINUED] Property expenses spread Administration costs (R’m) (R'm) 122 113 111 111 86 81 79 78 74 70 HY2024 HY2024 37 35 HY2023 HY2023 31 34 34 28 14 12 6 1 Assessment Collection Electricity Cleaning, Security Water Other Asset CSI impact Other corporate rates fees and repa
Slide 29: Abridged Condensed Consolidated Statement of Financial Position
ABRIDGED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Audited Unaudited 29 February 2024 31 August 2023 ASSETS R’000 R’000 Non-current assets Investment property 11 083 800 11 090 700 Investment in joint ventures 47 708 44 356 Furniture, fittings and equipment 2 814 1 536 Derivative financ
Slide 30: Statement of Financial Position [continued]
ABRIDGED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION [CONTINUED] Audited Unaudited 29 February 2024 31 August 2023 EQUITY AND LIABILITIES R’000 R’000 Equity 6 458 956 6 559 626 Non-current liabilities 4 353 619 4 234 529 Interest-bearing borrowings 4 178 416 4 068 493 Deferred taxation 16
Slide 31: Cash Flow for the Period Ended 29 February 2024
CASH FLOW FOR THE PERIOD ENDED 29 FEBRUARY 2024 Unaudited Unaudited 29 February 2024 28 February 2023 SUMMARISED CASH FLOW R’000 R’000 Notes Opening cash balance 113 713 66 554 Cash generated from operations (net of tax) 404 639 428 621 Operational performance and increased debtors Net finance cost
Slide 32: Capital Management
CAPITAL MANAGEMENT Weighted average Unaudited interest rate 29 February 2024 per annum Prudent management of debt R’billion % • LTV at 38.5% Bank loans 3 999.7 10.4 • Maximum LTV Ratio – Domestic Medium-Term Note (DMTN) Group (50% – 55%) Programme – Unsecured 379.7 10.4 Interest cover ratio (ICR) 2.
Slide 33: Funding Split
FUNDING SPLIT 29 February 2024 31 August 2023 Successful refinancing of facilities • Refinance of two ABSA credit facilities with tenors of five 8.7% 7% years (total of R350 million) R1 520 million R1 515 million 34.7% Nedbank 35% Nedbank • Refinance of R50 million 22% 21.7% R1 532 million R1 551 mi
Slide 34: Borrowings and Cash Flow Management
BORROWINGS AND CASH FLOW MANAGEMENT Interest rate derivatives Loan expiry profile – expiry profile – R’billion and % Strategy is to extend swap maturities, taking into account R’billion and % potential rate cuts in the next 24 months 2025 14.3% 14.3% 7.9% R1 523 As at 29 February 2024, 79.8% of Octo
Slide 35: Environmental and Social Commitment
ENVIRONMENTAL AND SOCIAL COMMITMENT Octodec continues to place increasing focus on ESG. Social impact Education: ECD Centre, Cotlands • We recently launched the Kamane Educare Centre, a transformative ECD facility in Tshwane, underscoring our long-standing commitment to enhancing the CBD residential
Slide 36: Environmental and Social Commitment [continued]
ENVIRONMENTAL AND SOCIAL COMMITMENT [CONTINUED] Medical: Dis-Chem Community Clinic • We recently partnered with Dis-chem to launch a Community Clinic in Tshwane, emphasising our commitment to improving the quality of services for communities in and around Tshwane by providing accessible and affordab
Slide 37: Environmental and Social Commitment [continued]
ENVIRONMENTAL AND SOCIAL COMMITMENT [CONTINUED] Environmental • With environmental sustainability being a key area, we continue to roll out solar initiatives. A further nine buildings are being investigated for the installation of solar power • The current water infrastructure failures have necessit
Slide 38: Outlook
OUTLOOK YETHU CITY ON SISULU OCTODEC INVESTMENTS LIMITED 37 Interim results for the six months ended 29 February 2024
Slide 39: Outlook
OUTLOOK The period under review is reflective of the challenging macro-environment impacted by record unemployment and low economic growth, all of which negatively impacted Octodec. As such, we have adopted a cautious approach against the backdrop of the forthcoming general elections. Although we an
Slide 40: Q&A
Q&A THE FIELDS GREEN SPACE
Slide 41: Appendices
APPENDICES OCTODEC STAFF
Slide 42: Looking Ahead – Our Strategy for 2024
LOOKING AHEAD – OUR STRATEGY FOR 2024 Vision Strategy Our revised vision is: Octodec’s strategy guides our business activities in pursuit of our vision. TO INNOVATE AND CREATE SUSTAINABLE Short-term (one to five years) Medium to long term (five to ten years) Our aim is to create thriving communities
Slide 43: Top 10 Properties
TOP 10 PROPERTIES Account for 30% of the investment property portfolio by value Property Location Sector Size (m2) The Fields Tshwane, Hatfield Mixed use 56 404 Killarney Mall Johannesburg, Killarney Shopping centre 47 470 Kempton Place Kempton Park Mixed use 35 437 Centre Walk Tshwane CBD Mixed use
Slide 44: Octodec Investments Limited
OCTODEC INVESTMENTS LIMITED 43 Interim results for the six months ended 29 February 2024