Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — Arrowhead Properties — H1 2016 Earnings Presentation
42 slides from Fairvest Limited Class A's earnings presentation, May 18, 2016
Slide 1: Arrowhead Interim results presentation
Arrowhead Interim results presentation 31 March 2016
Slide 2: Current position
Current position ARROWHEAD PROPERTIES Focused on distributable income
Slide 3: Top 10 shareholders
Top 10 shareholders Investec Asset Management 10,71% Public Investment Corporation 10,49% Stanlib Asset Management 6,93% Coronation Fund Managers 6,11% Prudential Investment Managers 5,67% Visio Capital Management 4,43% Grinrod Asset Management 4,32% Arrowhead executives 4% combined Foord Asset Mana
Slide 4: Arrowhead at 31 March 2016
ARROWHEAD AT 31 MARCH 2016 Commercial (retail, office & industrial) portfolio R 7 300 million 60,07% interest in Indluplace R 1 400 million 11,3% interest in Rebosis R 600 million 11,61% interest in Dipula R 456 million Gearing R 2 400 million
Slide 5: Arrowhead at 16 May 2016
ARROWHEAD AT 16 MAY 2016 Net asset value per share R8,76 Market value per share R8,23 Discount to NAV 6,1% Market capitalisation R8,2 bn
Slide 6: Financial performance
Financial performance R’000 31 MARCH 2016 31 MARCH 2015 Revenue (excluding straight line rental income) 743 681 555 644 Listed securities income 20 097 18 926 Property expenses (270 655) (177 732) Administration and corporate costs (15 333) (12 782) Finance expenses (111 003) (104 598) Finance incom
Slide 7: Core portfolio
Core portfolio 1 OCTOBER 2015 TO 1 OCTOBER 2014 TO 31 MARCH 2016 31 MARCH 2015 GROWTH R ‘000 R ‘000 % Revenue 549 946 508 210 8,21 Property expenses (198 441) (178 344) 11,27 Net operating income 351 505 329 866 6,56 Assuming a gearing ratio on the portfolio of 25% and an annual effective interest r
Slide 8: Acquisitions
Acquisitions REBOSIS SHARES R591 million CLEARY PARK R466 million INDLUPLACE SHARES R90 million INDLUPLACE PROPERTIES R488 million TOTAL: R1,6 BILLION
Slide 9: Sales
Sales OFFICE Beyers Naude (Blackheath) Gauteng R 27 200 000 RETAIL Benoni Rynfield Shopping Centre Gauteng R 30 000 000 OFFICE Gradner Street (Roggebaai) Western Cape R 51 000 000 TOTAL R 108 200 000 Potential sales of R700 million
Slide 10: Arrowhead debt
Arrowhead debt Fixed for 5 years from date of drawdown, effective cost of debt for 6 months ended 31 March 2016 9,05% (90% fixed). LTV is 23%. DEBT EXPIRY 2017 R 200 million 2018 R 750 million 2019 R 991 million 2020 R 482 million Total R 2,4 billion
Slide 11: Commercial portfolio highlights
Commercial portfolio highlights
Slide 12: Top 10 properties by value
Top 10 properties by value NAME PROVINCE VALUE M2 GLA SECTOR R Access Park Western Cape 607 842 224 20 481 Retail Cleary Park Eastern Cape 470 175 198 36 294 Retail Westgate Mall Western Cape 297 120 341 28 951 Retail Sasol Rosebank Gauteng 264 544 894 13 350 Office 158 Jan Smuts Gauteng 230 069 440
Slide 13: Leases renewed and vacancy
82% OF LEASES RENEWED 7,2% OVERALL VACANCY 3,12% INDUSTRIAL VACANCY 10,35% OFFICE VACANCY 7,04% RETAIL VACANCY
Slide 14: Average lease length and asset size
3,72years AVERAGE LEASE LENGTH R47 million AVERAGE ASSET SIZE
Slide 15: Escalation per sector
Escalation per sector AND AVERAGE GROSS RENTAL/M2 8,12% RETAIL R 113/m2 8,47% OFFICE R 111/m2 8,25% INDUSTRIAL R 38/m2
Slide 16: Sectoral profile by value
Sectoral profile by value 46% RETAIL 42% OFFICE 12% INDUSTRIAL
Slide 17: Sasol Rosebank
Sasol Rosebank • Lease expires on 31 December 2016 • In advanced discussions with tenant to take up majority of the building • Still marketing assuming the deal will not be concluded • Redevelopment of the site and all other opportunities are being examined
Slide 18: REIT investments
REIT investments ARROWHEAD PROPERTIES Focused on distributable income
Slide 19: Indluplace
Indluplace • Market cap of R2,28 billion • Arrowhead owns 60,07% • Ungeared • Acquisitions over R488 million in last 6 months • 5037 units • FD and dedicated asset manager appointed • Guidance for Sep 2016 on track
Slide 20: Dipula
Dipula • Market cap of R3,87 billion • 2 655 862 Dipula B shares acquired post period end • Arrowhead owns 23% of the Dipula B shares and 11,6% of the company • Look to increase stake on right terms
Slide 21: Rebosis
Rebosis • Market cap of R5,6 billion • Acquired 58 731 604 shares • Arrowhead owns 11,33% of Rebosis
Slide 22: Prospects
Prospects ARROWHEAD PROPERTIES Focused on distributable income
Slide 23: Guidance of 8-10% growth
PROVIDED GUIDANCE OF 8 - 10% GROWTH EXPECT TO ACHIEVE UPPER END OF GUIDANCE
Slide 24: September 2016
September 2016 ARROWHEAD PROPERTIES Focused on distributable income
Slide 25: Arrowhead at September 2016
Arrowhead at September 2016 R 5,4 billion 53 PROPERTIES R 101 million AVERAGE SIZE OF PROPERTY 3,84 years AVERAGE LEASE LENGTH
Slide 26: How is Arrowhead going to achieve this?
How is Arrowhead going to achieve this? • No additional properties acquired • Sell 100 properties to Synergy in exchange for Synergy B units • Arrowhead expects to own around 60% of the Synergy B units
Slide 27: Arrowhead\Vukile\Synergy deal
Arrowhead\Vukile\Synergy deal • Expected effective date of 1 Aug • Well incentivised CEO and FD • Arrowhead assumes management control • Grow portfolio by at least 30% per year • Strategy of buying revenue enhancing properties • Only acquire sustainable income streams • Experience and guidance of Ar
Slide 28: Arrowhead proposition
Arrowhead proposition ARROWHEAD PROPERTIES Focused on distributable income
Slide 29: Challenges and Arrowhead offering
CHALLENGES • Scarce equity capital ARROWHEAD OFFERING • Volatile local & global markets • Rising interest rate environment • Arrowhead has 5 years of superior growth • Ratings downgrade • Strong balance sheet • Trusted management team • Deal making ability • Disciplined acquisition strategy • Active
Slide 30: Trusted management team in turbulent times
Trusted management team in turbulent times
Slide 31: Arrowhead discipline
Arrowhead discipline • ONLY R606 million acquisitions in last 18 months • All quality enhancing retail • No dilutive deals in 5 years • Sustainable solid core growth without acquisitions
Slide 32: Distribution history
Distribution history YEAR TO SEPT INITIAL GUIDANCE ACTUAL PAID % GROWTH OVER (cents per share) (cents per share) PREVIOUS YEAR 2012 98,38 100,58 - 2013 111 113,01 12,4 2014 125,45 133,24 17,9 2015 148,81 150,3 12,8 2016 81,00 – 82,00* ?? ?? * Distribution after all the AWB shares converted to AWA or
Slide 33: New Arrowhead
New Arrowhead • 53 buildings • 552 331 m2 GLA • 4,94% vacancy • R5,4 billion market value • R101 million average property value • 3,84 years average lease length
Slide 34: Arrowhead offers value
Arrowhead offers value • South African focused (greater predictability) • Improved property portfolio • Diversification throughout country and sector • Further diversification through holdings in Indluplace, Dipula and Rebosis
Slide 35: Property portfolio: Access Park
Property portfolio TOP 5 PROPERTIES ACCESS PARK Western Cape R 607 842 224 20 481 m2 Retail
Slide 36: Property portfolio: Cleary Park
Property portfolio TOP 5 PROPERTIES CLEARY PARK Eastern Cape R 470 175 198 36 294 m2 Retail
Slide 37: Property portfolio: Westgate Mall
Property portfolio TOP 5 PROPERTIES WESTGATE MALL Western Cape R 297 120 341 28 951 m2 Retail
Slide 38: Property portfolio: Sasol Rosebank
Property portfolio TOP 5 PROPERTIES SASOL ROSEBANK Gauteng R 264 544 894 13 350 m2 Office
Slide 39: Property portfolio: Jan Smuts
Property portfolio TOP 5 PROPERTIES 158 JAN SMUTS Gauteng R 230 069 440 19 509 m2 Office
Slide 40: Arrowhead vs competitors
Arrowhead vs competitors AVERAGE EARNINGS GROWTH CURRENT FORWARD YIELD OVER 4 YEARS MARKET CAPITALISATION % % R bn Arrowhead 10,19 14,4 8,5 Emira 10,2 4,4 7,6 Investec 9,45 8,7 10,2 Octodec 9,33 10 5,7 Rebosis 12,16 8,9 5,4 SA Corporate 9,19 8,3 11,1 Vukile 9,52 6,1 11,0 Note: Info based on closing
Slide 41: Questions?
SL... GF ."_lw ARROWHEAD PROPERTIES Focused on distributable income Questions? il
Slide 42: Thank you
ARROWHEAD PROPERTIES Focused on distributable income Thank you