Slide 1: Arrowhead Properties Annual Results 2016
ARROWHEAD PROPERTIES ANNUAL RESULTS 2016
Slide 2: Who owns Arrowhead?
WHO owns Arrowhead? FUND MANAGER % Public Investment Corporation 10,2 Investec Asset Management 9,0 Prudential Investment Managers 7,8 Stanlib Asset Management 6,2 Visio Capital Management 5,6 Grinrod Asset Management 4,5 Arrowhead executive 4,5 Foord Asset Management 3,6 Sanlam Investment Managemen
Slide 3: The Arrowhead offering
THE Arrowhead offering • 5 years of superior growth • Strong balance sheet • Trusted management team • Deal making ability • Disciplined acquisition strategy • Active asset and property management • Improved liquidity since combining A and B shares
Slide 4: Five years of growth
FIVE years of growth 2016 2015 2014 2013 2012* Distribution per Arrowhead share (cents) 82,55 – – – – Distribution per A share (cents)§ – 75,15 66,62 60,00 60,00 Distribution per B share (cents)§ – 75,15 66,62 53,01 40,58 Distribution per combined A and B shares (cents)§ – 150,30 133,24 113,01 100,5
Slide 5: Five years of growth
FIVE years of growth 2016 2015 2014 2013 2012* Property portfolio value (R billion) 10,0 8,6 7,0 3,1 2,2 Investment in Indluplace (R billion) 1,3 1,2 0,5 – – Investment in Dipula (R billion) 0,4 0,5 0,3 – – Investment in Rebosis (R billion) 1,1 – – – – Commercial property portfolio (m ) 2 905 149 88
Slide 6: Arrowhead at 30 September 2016
ARROWHEAD at 30 September 2016 • Diverse commercial portfolio value R10,0 billion • Interest in Indluplace 60,1% • Gearing R3,1 billion • Interest in Rebosis 19% • Interest in Dipula 11%
Slide 7: Total dividend
TOTAL dividend R’000 2016 2015 Revenue (excluding straight line rental income) 1 531 560 1 217 913 Listed securities income 71 770 19 115 Property expenses (567 968) (411 883) Administration and corporate costs (38 094) (31 130) Finance expenses (237 292) (219 679) Finance income 53 360 32 650 Non-c
Slide 8: Core portfolio
CORE portfolio YEAR ENDED 30 SEPTEMBER 2016 30 SEPTEMBER 2015 GROWTH R’000 R’000 % Revenue 1 107 953 1 028 117 7,77 Property expenses (402 207) (362 685) 10,90 Net operating income 705 746 665 432 6,06 ASSUMING A GEARING RATIO ON THE PORTFOLIO OF 25% AND AN ANNUAL EFFECTIVE INTEREST RATE OF 9% THE T
Slide 9: Total acquisitions
TOTAL acquisitions R’000 Cleary Park shopping centre 466 027 Access Park (remaining 10%) 79 695 Rebosis shares 1 104 846 Dipula B shares 23 037 TOTAL 1 673 605 Indluplace acquired R630 million of property
Slide 10: Total sales
TOTAL sales R’000 Benoni Rynfield Shopping Centre 30 000 Beyers Naude (Blackheath) 27 200 Gradner Street (Roggebaai) 51 000 Witbank Vusani House 18 200 TOTAL 126 400
Slide 11: Sold but not transferred
SOLD but not transferred R’000 Business Centre 33 000 Pentagraph Building 26 500 Tyrwitt Avenue 36 000 TOTAL 95 500
Slide 12: Arrowhead as at 30 September 2016
ARROWHEAD AS AT 30 SEPTEMBER 2016 R’000 2016 2015 ASSETS Non-current assets 12 172 867 9 649 996 Investment property 9 877 538 8 538 107 Property, plant and equipment 985 284 Loans to participants of group share purchase and option schemes 540 558 433 886 Goodwill 176 830 176 830 Interest in subsidi
Slide 13: Debt
DEBT • Loans of R3,1 billion • 84,1% of loans fixed • LTV of 27,5% • Effective interest rate 9,35% for year ended 30 September 2016 DEBT EXPIRY 2017 R 200 million 2018 R 679 million 2019 R 831 million 2020 R 1 109 million 2021 R 277 million Total R 3 096 million
Slide 14: At 30 September 2016
AT 30 September 2016 • 154 commercial properties • 47% retail, 41% office and 12% industrial (sectoral by value) • Overall vacancy of 7,8%: retail 7,8%, office 9,4%, industrial 5,5%
Slide 15: At 30 September 2016
AT 30 September 2016 •A verage rental per sector: R114m2 retail, R116m2 office, R39m2 industrial • Escalation per sector: 7,99% retail, 8,41% office, 8,23% industrial •A verage lease profile 3,76 years • Reversions per sector: retail 8,75%, office 4,68%, industrial 11,25%
Slide 16: Indluplace
INDLUPLACE In June 2015 Arrowhead listed its wholly owned subsidiary Indluplace (formerly Arrowhead Residential) on the JSE. At year end Arrowhead had owned 60,1% of Indluplace. At 30 September 2016 Indluplace owned 5 447 residential units located in Gauteng and Mpumalanga valued at R2,4 billion and
Slide 17: Rebosis
REBOSIS As at 30 September 2016, Arrowhead owned 101 million Rebosis shares representing 19,02% of the issued share capital of the Company. The acquisition was made with the objective of being able to acquire a meaningful investment in a listed REIT with a sought after portfolio of properties. The i
Slide 18: Dipula
DIPULA Arrowhead owns 47,3 million Dipula B shares representing approximately 11,5% of the issued share capital of Dipula. The acquisitions were made with the objective of being able to acquire all or part of the property portfolio. Dipula is a REIT carrying on business as a long-term investor in re
Slide 19: The Gemgrow transaction
THE Gemgrow transaction Arrowhead has concluded an agreement which, subject to the fulfillment of certain conditions precedent will result in: 1. Gemgrow and its asset management company, owned by Vukile, being internalised with Vukile being issued with 22 945 522 Gemgrow B shares. 2. Gemgrow sellin
Slide 20: The Gemgrow transaction (continued)
THE GEMGROW transaction (continued) As a result of the above Gemgrow will own a portfolio of office, retail and industrial properties valued at R4,325 billion with gearing of R977,19 million. Arrowhead will own 55,2% of Gemgrow and Vukile 27,0%. Gemgrow has forecasted earnings of 101,87 cents per A
Slide 21: Arrowhead strategy after the Gemgrow transaction
ARROWHEAD strategy after the Gemgrow transaction • Maintain dividend out-performance. Better than SAPY. • Dividend predictable – no exposure to currency or interest rate movements. • South African focused. • Bigger and better “quality” properties but still revenue enhancing. • Consolidation with and
Slide 22: "New" Arrowhead properties
“NEW” Arrowhead 54 properties R5,679 billion property portfolio 5,95% vacancy overall Sector breakdown: Retail 53%, Office 39%, Industrial 8% R107 million average asset size
Slide 23: Top properties: Access Park
TOP 5 properties ACCESS PARK Western Cape R 711 000 000 20 456 m2 Retail
Slide 24: Top properties: Cleary Park
TOP 5 properties CLEARY PARK Eastern Cape R 490 000 000 36 294 m2 Retail
Slide 25: Top properties: Westgate Mall
TOP 5 properties WESTGATE MALL Western Cape R 316 520 000 28 951 m2 Retail
Slide 26: Top properties: Sasol Rosebank
TOP 5 properties SASOL ROSEBANK Gauteng R 265 772 000 13 350 m2 Office
Slide 27: Top properties: Midtown Mall
TOP 5 properties MIDTOWN MALL North West R 245 642 000 17 456 m2 Retail
Slide 28: Arrowhead twelve months to 30 September 2017
ARROWHEAD twelve months to 30 September 2017 •M anage lease expiries in advance •T enant retention & letting vacant space •P ro-active asset management •S ales •D edicated new business role – highly incentivised role in respect of leasing, sales and acquisitions
Slide 29: Arrowhead twelve months to 30 September 2017
ARROWHEAD twelve months to 30 September 2017 • Sasol assumed vacant from 1 January – 30 September 2017 • Images of soft refurbishment attracting interest • Live leads • Broken up into smaller pockets • Asking R159/m2 • Forecast excludes letting of Sasol (UPSIDE!) 17
Slide 30: Arrowhead twelve months to 30 September 2017
ARROWHEAD twelve months to 30 September 2017 • Indluplace • Gemgrow • Rebosis • Dipula 17
Slide 31: Arrowhead twelve months to 30 September 2017
ARROWHEAD twelve months to 30 September 2017 • Consolidation opportunities • 6% – 8% dividend growth •F orecast excludes letting of vacant space, yield enhancing acquisitions and letting of Sasol (UPSIDE!)
Slide 32: Thank you
www.arrowheadproperties .co.za THANK YOU