Redefine Properties Limited · JSE:RDF
Redefine Properties — Investor Day (August 2022)
145 slides from Redefine Properties's investor day presentation, August 2022
Slide 1: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 1
Slide 2: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 2
Slide 3: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 3
Slide 4: Our approach is driven from a place of purpose
In this decade to Our PURPOSE is to Our VISION is to deliver the create and manage be the BEST SMARTEST spaces in a way South African REIT and most that changes lives SUSTAINABLE SPACES the world has ever known Our approach is driven from a place of purpose Putting people at the heart of what we do
Slide 5: Pathways to bring our moonshot to reality
Delivering Creating Being a force Being explorers diversity, equity Being bionic ecosystems for good and innovators and inclusion We are enhancing our We have shifted our To create the smartest Creating smart and Our ESG strategy is customer service model focus from spaces, it is imperative sustaina
Slide 6: Emerging risks and opportunities
Emerging risks High 1 Increase in cyberthreats and incidents 2 § Diversify funding through 9 3 sustainable finance framework 2022 RISKS ON THE RISE Stabilisation of EPP § Expand logistics exposure Effect on business strategy 4 in Poland Stagflation Opportunities 8 § Repurpose space in alignment Poli
Slide 7: Our short-to medium-term strategy
What holds us together? How we operate Execution of strategic priorities Stakeholder-centric Purpose-driven Agile and resilient Data-centric Innovative and Creating inclusive maximum impact Grow reputation Invest strategically Optimise capital Operate efficiently Engage talent DELIVERING SUSTAINED V
Slide 8: Execution of short-term strategy
Strategic priorities Anticipated outcomes § Inclusive corporate culture at all levels § Focus on diversity in our operations § Embed climate risk management in our ERM and Grow reputation § Formalise a climate resilience framework investment decision-making processes § Enter into sustainable partner
Slide 9: The essence of Redefine
Redefine’s investment proposition Redefine’s business construct Highly cash Simplified, Target return of Sustainable generative high-quality asset Rf +200bps funding profile with business model platform which is solid credit metrics diversified Focused on people and SA 68% and Investing in purpose p
Slide 10: A simplified, focused and diversified asset platform
Geographic and sectoral capital allocation Pre-pandemic asset platform – valued at R95 billion Post-pandemic asset platform – valued at R87 billion 10% EPP 28% EPP Retail UK Poland 6% Polish logistics Poland 1% EPP Office 3% RDI REIT PLC 1% Chariot Top Group 3% Polish logistics South Africa Australi
Slide 11: Strategic themes that will emerge from today
§ Creating a platform for ecosystems of talent, technology and information § Continuously improving, expanding and protecting our property portfolio § Recycling capital through the disposal of non-core assets § Unlocking value through active asset management and development opportunities § Driving i
Slide 12: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 12
Slide 13: Stakeholder influence
Align engagement High engagement High Key stakeholders Stakeholder goal Involve Collaborate Provider of differentiated and Tenants relevant space Suppliers Tenants Funders Source of sustained growth Investors Stakeholder influence in total returns Property brokers Employees Investors Employees Emplo
Slide 14: ESG underpins value creation
Our ESG strategy is based on the UN SDGs and Our primary UN SDGs maps out what we want to achieve by 2030 Good health and Sustainable cities § Our strategy is supported by a comprehensive set of targets well-being and communities in the short to medium term, which we monitor internally Responsible G
Slide 15: ESG benchmarks and frameworks
We use the international frameworks, standards and benchmarks that are most relevant to real estate as guidance on current and forward-looking developments on ESG and gauge how they will affect us as a REIT Frameworks Standards Benchmarks Sustainable finance A set of principles-based guidance A set
Slide 16: How ESG contributes to value creation
Sustainable Risk and opportunity Operations finance management LED lighting retrofit projects in progress during FY22 will result Our sustainable finance framework allows us 14.4% of our assets are in areas with in an estimated direct saving of 4 439 776 kWh of energy to access sustainable finance m
Slide 17: ESG progression: short- to long-term goals
Risk and opportunity Net zero Tenants Suppliers management Tenant awareness campaign Supplier sustainability audits R 40 Green Star SA certifications R R TCFD framework finalised (reaching 10% of tenants (15 qualifying suppliers) (including recertifications) (2023) by GMR) (2023) (2023) Green lease
Slide 18: Our green building programme
We apply Green Star best practice principles at design phase We aim to achieve at least 4 Star as-built ratings on all new Office developments Office portfolio that is Top Green Star SA rated assets considered green by GLA Black River Office Park Commercial 90 Rivonia Road Commercial 26 Observatory
Slide 19: Responsible investment journey
Development phase Use phase Recovery phase Development Acquisition Ownership/use Disposal Recovery § New builds and major § Comprehensive § Projects that optimise energy and § Impact of disposal § Ability of the building refurbishments ESG due water efficiency, reduce waste to on the company’s to be
Slide 20: Environmental priorities
Energy Water Waste (Scope 1/2/3 GHG emissions) (included in Scope 3 GHG emissions) (included in Scope 3 GHG emissions) Energy Water Waste § Energy performance efficiency Installing water- efficiency Waste stream audits efficiency certificates efficient toilets and taps, § Energy-efficient HVAC, and
Slide 21: Our long-term environmental focus
“Net zero entails companies reducing their generated emissions as much as possible and negating the remainder by funding carbon removal projects in clean energy, reforestation, and more.” – GRESB, 2020 Phase 3 | 2030 goal Phase 4 | 2050 goal All new buildings are net zero All existing buildings are
Slide 22: Social priorities
Long-term goals Investors Funders Suppliers Mitigating ESG risks and Providing access to a Contributing towards Sustainability awareness to mitigate upstream identifying opportunities low-risk investment mitigating the climate risk in sustainability risks within the supply chain Upstream from an ESG
Slide 23: Our governance focus
Embed enterprise-wide corporate governance ESG governance Management’s responsibility How governance is supported Board of directors Approve selection of UN SDGs High-performing thought leadership Grow Compliance with statutory, regulatory and Trusted corporate governance advisors reputation governa
Slide 24: ESG external rating levels
We continue to participate in the following indices We are taking steps to incorporate the § FTSE4Good Emerging Index [current rating: 3.6/5] following reporting frameworks into our disclosure § S&P Global Corporate Sustainability Assessment [current rating: 56/100] § GRESB Index [current rating: 65
Slide 25: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 25
Slide 26: Balance sheet management plan
Strong balance sheet with a diversified funding base and stable tenor Focusing on efficient capital allocation that supports our repositioning for growth Continue to improve optionality and flexibility § Broaden funding sources and manage the cost of debt in a rising interest rate environment § LTV
Slide 27: Disposals
Broad sources of funding and high Capital allocation driven by Value creation that aims to deliver cost of equity opportunity set and market conditions risk-adjusted returns for shareholders Issued 287 million shares at R4.35 for the DRIP Raised R1.2 billion in cash preserving liquidity Avoided tax
Slide 28: Capital management
Sources of cash flow of R8.1 billion* Return profile Net vendor loan received 572 29 Capital Income Operational cash flows (net of tax) 2 473 % 71 Net disposals 5 037 R’million Total return# Uses of cash flow R8.1 billion* Target 9.9% Net debt repaid 2 620 RDF 9.6%## Cash retained 401 # Total return
Slide 29: Debt refinancing
Group facilities expiry profile (including EPP) 45% 39.9% 40% 35% 30% 28.5% 25% Target 20.8% <25% 20% 17.6% 15.7% 16.0% 15% 13.5% 13.4% 9.7% 9.5% 9.1% 10% 5% 2.3% 1.0% 1.2% 1.5% 0.3% 0.0% 0.0% 0% FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 31-Jul-22 Projected 31 August 2022 post refinances § Credit
Slide 30: Group's debt profile since the pandemic
Sources of debt FY22 Sources of debt FY20 Standard Bank 14% Standard Bank 20% Listed DCM 14% Listed DCM 19% Nedbank 12% Unlisted DCM* 11% RMB 15% RMB 11% Nedbank 14% Santander 7% ABSA 6% Unlisted DCM* 12% PKO BP 5% ABSA 10% Liberty 4% Helaba 4% Standard Chartered 4% Erste 4% Liberty 4% Standard Char
Slide 31: Interest rate hedging
8 82.4% 90% 80.5% 81.2% 7 80% 70% 6 54.1% 60% 5 50% 4 40% R'billion 3 27.6% 30% 2 20% 9.6% 1 10% - 0% FY22 FY23 FY24 FY25 FY26 FY27 SA swaps Fx swaps Projected hedge % § Inflation risk coupled with rising interest rates will impact funding costs § 80.5% of total debt hedged for average term of 1.6 y
Slide 32: Sustainable funding
Sustainable finance framework overview: § A group wide sustainable finance framework has been developed and was launched in July 2022 § The framework has been developed in line with our ESG strategy and appeals to both local and international investors § Launched maiden R1.0 billion sustainability l
Slide 33: Efficient use of collateral
“Pooled” arrangement Flexibility to manage to improve collateral at a strategic § Quality and diversification of collateral is pooled allowing for relaxed level of collateral utilisation portfolio level portfolio LTVs § Creates a sustainable diversified funding vehicle and reduces market shadowing I
Slide 34: Group see-through LTV
Forecast Reverse Proportionate share of JV Forecast RDF Impact of JV retained earnings RDF FY22 investments FY22 See- SA REIT LTV in JV through LTV R'million EPP ELI FY22 FY23 Sustainable Asset 87 934 (10 502) 17 294 6 129 100 855 Deploy JV Capex 89 174 141 Debt net cash 35 911 - 9 249 2 240 47 400
Slide 35: LTV reduction interventions
45% 42.4% 4.6% 40.8% 40% 2.6% 0.8% 1.2% 35% -3.4% 0.1% 0.1% -2.3% 30% -2.0% -1.9% -0.9% -0.5% 25% 20% FY21 REIT LTV cashflows Operational Local disposals Derivatives disposals International acc Associates equity Vendor loans Forex adjustments Valuation Marki acquisition Capex EPP balance sheet DRIP)
Slide 36: LTV sensitivity analysis
LTV Risks Risk level Liquidity LTV ICR impact Rental relief during lockdown period and rental deferments Low X X Investment property valuation South African property value increase/decrease by 1% ± 0.2% Increase in bad debts and Medium-to-low X X tenant failures South African property value increase
Slide 37: Healthy cash generation
37 101,2% Jul-22 99,9% Jun-22 107,8% May-22 98,6% Apr-22 98,8% Mar-22 110,0% Feb-22 98,7% Jan-22 101,9% Dec-21 103,8% Nov-21 Receipts vs. gross billing (before discounts and deferrals) 99,5% Oct-21 95,6% Sep-21 99,7% Aug-21 94,8% Jul-21 102,0% Jun-21 Strong cash collection with an average of 101.4%
Slide 38: Key outcomes
SA REIT LTV Total weighted reduced to 40.8% average cost (FY21 | 42.4%) of debt at 5.8% Target: 38% to 41% (FY21 | 6.2%) Interest cover ratio Weighted average increased to 2.9x cost of ZAR debt at (FY21 | 2.6x) Target: >2x 8.3% (FY21 | 8.1%) Access to R6.5 billion committed undrawn Weighted average
Slide 39: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 39
Slide 40: Local portfolio profile
Impact of portfolio repositioning 25 000 315 302 296 350 Carrying value of 272 267 300 properties R56.9 billion 20 000 15 854 14 447 250 14 382 13 702 14 010 (HY22 | R58.6bn) 15 000 200 10 000 150 100 5 000 Number of tenants 4 092 50 (HY22 | 4 189) 0 - FY18 FY19 FY20 FY21 HY22 Average value per m² (
Slide 41: Local portfolio operational update
Weighted average lease escalation 6.4% (HY22 | 6.6%) Weighted average rental Lease expiry profile by GMR renewal growth of -12.3%## Total GMR: R461.0 million (HY22 | -12.3%) 160 000 30% 140 000 Renewal success rate by GLA 62.2%# 120 000 (HY22 | 55.9%) 100 000 19% 18% 17% Active portfolio 80 000 occu
Slide 42: Local portfolio relative performance
Five-year average return Portfolio weighting by value 10,0% 9,1% 8,7% 8,6% 8,8% 8,2% 8,3% 8,2% RDF 7,9% 7,7% 8,0% 7,4% 7,4% 6,2% 6,1% 21 6,0% 6,0% 5,4% 4,8% 42 % 4,0% 37 2,0% RDF MSCI 0,0% MSCI RDF MSCI -0,5% -0,3% -0,5% RDF MSCI -2,0% -1,3% 16 -1,7% -2,0% -4,0% Total Retail Office Industrial -3,3%
Slide 43: Local portfolio asset management plan
§ Continuously improving and protecting ‒ Focus on improving the respective sector investment metrics of underperforming buildings (margin, WAULT, tenant quality, vacancy etc.) § Opportunistically expanding the local portfolio through development and acquisition − Massmart (49.9%) – R285 million, yi
Slide 44: Leveraging real estate
LED network expansion Tenant ISP solutions In-mall gamification Brand goes here § Current network includes 25 large format § Alignment with IT in place and ISP § Reward-based mobile game roadside/in mall LED screens across SA partner selected § In-game advertising § 14 new sites/in progress § Pilot
Slide 45: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 45
Slide 46: Local office portfolio profile
Carrying value of properties R21.6 billion (HY22 | R21.7bn) Portfolio composition 100% Average value per property R214.0 million 90% 23% (HY22 | R214.0 million) 80% 35% 49% Weighted average lease 70% escalation 7.0% 60% (HY22 | 7.3%) 46% 50% 34% Total GLA 1.1 million m2 40% 25% (HY22 | 1.2 million m
Slide 47: Local office portfolio operational update
Active portfolio occupancy at 84.6% (HY22 | 83.6%) Lease expiry profile by GMR Total GMR: R168.8 million Weighted average 45 000 25% renewal growth of -17.0%## (HY22 | -17.4%) 40 000 22% 35 000 Renewal success rate 17% 30 000 16% by GLA 47.9%# (HY22 | 33.5%) 25 000 20 000 11% Average gross rent 8% 1
Slide 48: Vacancy
Premium Grade A Grade Secondary Grade Total Vacant GLA (m²) 31 520 m2 77 574m2 62 163m2 171 257m2 Vacancy (%) 9.0% 15.2% 24.4% 15.4% Ave (R/m²) R240 R158 R125 R179 GMR (R’000) R7 565 R12 257 R7 770 R27 592 Value (%) 31% 41% 28% Significant vacancy per grade Rosebank Towers – 7 637m² Constantia Kloof
Slide 49: Local office portfolio strategy
IMPROVE DRIVE GROW CREATE ROLLOUT § Grow our exposure to § Net zero targets § Green lease footprint § Smarter buildings § Energy Performance P-Grade and § Target-based green and improve existing through digital Certificates AAA-Grade properties leases green building ratings twin technologies § Energ
Slide 50: Looking ahead
SMART BUILDING WORK FROM HOME SPACE EFFICIENCY SEMIGRATION Indoor air quality has moved to the forefront Flexible working hours and working Virtual meetings have dramatically during the pandemic Residential sector reports large from home one or two days a week improved time efficiency and increase i
Slide 51: Sandton overview
Sandton market comparison Grade MSCI/SAPOA Redefine GLA % GLA % P-Grade 107 804 11.6 5 785 5.5 A-Grade 159 938 25.1 24 305 27.1 Secondary Grade 142 249 38.3 4 672 23.9 Property Grade Demand is driven by 1 150 Rivonia § Public transport remains easily accessible to the majority 2 90 Grayston of the w
Slide 52: Developments
Phase 2 § A-Grade building § 15 869m² § 100% pre-let to Santam § Development cost R186.0 million at a yield of 9% § Backup power generation and water storage § Building specifications are in line with 4 Star Green Star rating requirements § Installation of a solar system ‒ System size: 546 kWp ‒ Sol
Slide 53: Refurbishments
§ To date – Completed (FY22) R44.8 million In progress § R115.7 million § Under review – Future (24-month pipeline) R234.6 million Refurbishments Successful completion – consistency Redefine Properties | Capital Markets Day 53
Slide 54: Sustainability in action
Completed and commissioned 3 868 kWp Installation in progress 368 kWp Wheeling proposal and private partnership agreement (PPA) under negotiation to secure approximately 20 Megawatts of green energy 123 certifications New 21 certifications in FY22 145 buildings contain offices measuring 2 000m² and
Slide 55: Redefine Properties | Capital Markets Day
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Slide 56: Local retail portfolio profile
Top 10 tenants Carrying value of GLA GMR %* %* properties R23.6 billion m2 (R) (HY22 | R24.2bn) Shoprite 78 680 7% 10 705 981 5% Pick n Pay 78 447 7% 9 580 504 5% Pepkor 77 343 7% 11 769 654 6% Average value per property Woolworths 60 413 5% 5 435 987 3% R379.9 million Foschini 50 488 4% 12 197 530
Slide 57: Local retail portfolio operational update
Weighted average renewal growth of -9.0%## (HY22 | -8.4%) Lease expiry profile by GMR Total GMR: R199.6 million Renewal success rate 60 000 by GLA 75.4%# 26% (HY22 | 63.4%) 50 000 23% Average gross rent 40 000 19% 17% R186/m² (HY22 | R178/m2) 30 000 10% Tenant retention 20 000 by GMR 93.0% 4% (HY22
Slide 58: Key performance indicators
Turnover and Footfall recovery % 110% KPI Pre-COVID Post-COVID 98% 100% Vacancy 5.6% 7.0% 97% 90% WAULT (years) 3.1 3.1 90% 82% 80% Annualised trading R29 348 R31 200 density 70% Rent to sales 8.0% 7.6% 60% Reversion rates -2.5% -9.0% 50% Renewal success Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY
Slide 59: Local retail portfolio strategy
IMPROVE DRIVE IMPLEMENT INVEST COMBAT ROLLOUT REDUCE § Operating mix § Store refurbishments § Alternative usage of § Develop § Early-lease § Community § Carbon footprint and upgrades vacant space such available bulk renewals for integration § Exposure to § Convenience as colleges and key retailers i
Slide 60: Looking ahead
TRADING PERFORMANCE TENANT MIX ONLINE Reduction of disposable income and down trading benefit Online trends Footfall remains below pre-pandemic levels value retailers § Online sales projected to be 5% of total retail sales § Store upgrades, ESG initiatives will improve § Recalibrate tenant mix and G
Slide 61: Developments
DEVELOPMENT IN PROGRESS | COMPLETED DEVELOPMENTS § Cost – R1.1bn Year FY19 FY20 FY21 FY22 Completed § Yield – 7.0% § Four projects Property count 4 2 2 4 In Progress § Cost – R 286m § Yield – 8.2% CAPEX R959m R66m R46m R270m § Six projects Future § Estimate capex – R536m Total GLA added 18 585m2 - 9
Slide 62: Developments
Chris Hani Kwena Square Centurion Lifestyle Centre Oakfields Mall Developments Improving to remain relevant Redefine Properties | Capital Markets Day 62
Slide 63: Sustainability in action
Completed and commissioned 19 700 kWp yielding 19% Installation in progress 21 178 kWp yielding 22% Once completed, the Matlosana solar PV plant will be the third largest rooftop plant in South Africa Feasibilities in progress 7 100 kWp Wheeling opportunities for retail is an off-taker instead of a
Slide 64: Redefine Properties | Capital Markets Day
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Slide 65: Local industrial portfolio
Carrying value of properties R11.2 billion (HY22 | R12.2bn) Top 10 tenants GLA GMR %* %* m2 (R) Average value per property R114.3 million Macsteel 550 138 34% 27 241 229 31% (HY22 | R126.0 million) Hirt and Carter (SA) (Pty) Ltd 47 718 3% 5 436 448 6% Isuzu Motors SA (Pty) Ltd 38 515 2% 2 351 849 3%
Slide 66: Local industrial portfolio operational update
Lease expiry profile by GMR Weighted average renewal growth of -7.5%## 53% 50 000 (HY22 | -10.5%) 45 000 40 000 Renewal success rate 35 000 by GLA 60.8%# 30 000 (HY22 | 33.5%) 25 000 20 000 18% 15 000 13% Average gross rent R59/m2 10 000 9% (HY22 | R60/m2) 4% 3% 5 000 0% 0 Mo nthly 2022 2023 2024 20
Slide 67: Active portfolio
Value by TYPE Value by LOCATION Valuation (R'000) % Valuation (R'000) % Warehousing 1 995 730 18 Gauteng 7 488 256 67 Light manufacturing 835 282 7 Western Cape 1 541 097 14 Heavy Grade industrial 2 615 400 23 KwaZulu-Natal 1 521 115 13 Industrial units 900 504 8 Other 654 864 6 Modern logistics 2 1
Slide 68: Developments
DEVELOPABLE LAND INFRASTRUCTURE DEVELOPABLE LAND PIPELINE Year FY19 FY20 FY21 FY22 FY23 Property count 4 1 3 1 1 CAPEX R604 million R127 million R440 million R27 million R196 million Total GLA added 62 114m2 18 568m2 81 972m2 4 213m2 22 341m2 Yield – consolidated % 8.8% 8.9% 9.3% 9.0% 8.6% FY19 GLA
Slide 69: S&J Industrial Estate EcoDistrict
§ Located within the City of Ekurhuleni metropolitan area, a C40 City committed to limiting global temperature rise to below 1.5˚C § EcoDistrict certified on 14 June 2022 § The integrated objectives of the S&J EcoDistrict are promoting sustainable development, social equity as well as reducing the e
Slide 70: Sustainability in action
Feasibilities in progress 7 241 kWp Completed and commissioned 887 kWp Installation in progress 2 383 kWp City of Cape Town wheeling project at Massmart DC, Brakengate 2 Targeted carbon neutral project producing sustainable green energy to Redefine owned properties within the City of Cape Town metro
Slide 71: Redefine Properties | Capital Markets Day
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Slide 72: Medium-term DIPS outlook
Normalised distributable income per share Sustainable Key value drivers that support income 0,7 FY23 yield in the medium term as we navigate post- 65.0c pandemic uneven recovery with some upside +3.0% +7.2% 60.0c 0,6 51.5c 56.4c 52.6c 52.6c 54.2c § SA active portfolio organic growth rate 0,5 of 3% t
Slide 73: SA operating margin
85,0% 85% 83,1% 80% 78,7% 77,8% 75,5% 75% 70% 2018 2019 2020 2021 2022 § Our target is to stabilise operating margin (after administration and before funding costs) at 80% level in SA § Post-pandemic recovery impacted by above-inflation increases on administered costs and weak economic recovery § Re
Slide 74: Margin improvement plan
1 2 3 4 5 Maximise return on Optimise expenditure Optimise Strategically Improve revenue new investments across the group working capital reduce funding and through innovative hedging costs ideas § Review capex spend on § Improve cost of property § Improve management § Dispose of non-core and § Opti
Slide 75: Solar power generation
Solar power generation Current capacity (September 2021) Jul 2022 Aug 2022 Dec 2022 To be finalised § Production capacity = 25.0 MW 50 60 § Capex spend = R262 million 45 50 § 12-month savings = R58 million 40 § Initial yield = 22.1% 35 40 30 25 30 Brought online (August 2022) 20 § Production capacit
Slide 76: Being bionic
Tenant journey Smart building journey People journey OBJECTIVE: OBJECTIVE: OBJECTIVE: Transforming the client Delivering smart buildings Blending human experience via IOT potential with technology § Re-imagine the tenant experience § Smart, connected buildings § Amplify human potential § Measure cus
Slide 77: Leveraging cloud capabilities
Capability Pre-cloud Current Target Disaster Recovery is cloud-based Disaster Recovery was offsite and Automatic failovers. We aim to create LEVERAGING CLOUD CAPABILITIES Resilience and takes less than four hours on took three days to enable Sustainable solutions critical systems Security built into
Slide 78: Digital transformation
Delivering an end-to-end lead management solution that enables improved work flow and better conversion. Formal enquiry Redefine’s responses to the prospective tenant’s enquiries are automated and pre-filled with information provided during their search. Responses are immediate, through the prospect
Slide 79: Smart real estate transformation journey
Transformation of the business to be customer-centric, data-driven and platform-enabled involves a number of core capabilities to enable Year 1 Year 2 to 5 Year 5 onwards Digital lease Digital Digital Data management operations Ecosystem twin engineering management Smart New business Digital New bus
Slide 80: Robust digital ratio framework
Total Actual % Process 1 243 62 3.5 10.3% Technology 16 2 2.5 Digital ratio Culture 20 6 3 Digital maturity 5 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Digital Digital vision Risk appetite Agilie product Innovation Transparency Governance Measurement Discovery People Benefits leadership and strategy management
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Slide 82: People strategy delivering value
To be the leading skills development To become the most diverse and To be the most collaborative and REIT in South Africa inclusive REIT in South Africa innovative REIT in South Africa Where people grow Where everyone matters Where you make the difference Individual Organisation Society Create an em
Slide 83: Where people grow
Creating and delivering mutual, sustained value through Meaning Development Recognition Wellness Remuneration (We connect) (We equip) (We inspire) (We support) (We motivate) Where people grow Employee value proposition Redefine Properties | Capital Markets Day 83
Slide 84: A strategy is only as good as its execution
A strategy is only as good as its execution We have embraced diversity to turn strategy into action Redefine Properties | Capital Markets Day 84
Slide 85: A strategy is only as good as its execution
A strategy is only as good as its execution We have embraced diversity to turn strategy into action Redefine Properties | Capital Markets Day 85
Slide 86: Creating a pipeline of property professionals
We’re always excited to welcome a new wave of young professionals into what has been an extraordinarily successful programme since it started nine years ago The programme offers young aspiring South Africans invaluable REIT experience, alongside some of the best professionals in the business and the
Slide 87: Where everyone matters
Where everyone matters Creating an environment where talented people do their best work Redefine Properties | Capital Markets Day 87
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Slide 90: Healthy macroeconomic situation
2019 2020 2021 2022 (F) 2023 (F) 2024 (F) 2025 (F) GDP 3.6% -2.1 % 5.9% 5.7% 1.0% 3.6% 2.7% Private 4.0% -3.1 % 6.2% 3.8% 1.9% 4.0% 4.0% consumption Fixed 6.6% -3.7% 3.2% 5.4% 2.6% 8.5% 4.2% investment Unemployment 5.4% 6.0% 6.0% 5.2% 5.3% 5.0% 4.9% rate Central bank 1.5% 0.1% 1.8% 7.5% 7.0% 5.2% 3.
Slide 91: Polish economy return to above-average growth
§ Independent experts forecast the Polish macroeconomic indicators will start improving already in 2023 with a drop in inflation and interest rates § In 2024 GDP is expected to grow by a healthy 3.6% coupled with a substantial increase in fixed investments as well as inflation falling to 6.3% and in
Slide 92: Poland outperforms the EU
2018 2019 2020 2021 2022 (F) 2023 (F) 2024 (F) 2025 (F) 5,9% 5,8% 5,3% 5,3% 4,7% 3,1% 2,8% 3,0% 2,4% 2,1% 1,7% 2,4% 1,8% 1,7% -2,1% -6,0% European Union Poland Source: Oxford Economics, June 2022 Note: Forecasts for the European average are made on a quarterly basis, so the above figures are for the
Slide 93: Continuously healthy macroenvironment
GDP per capita (US$ thousands, PP) Retail sales CAGR 2019-22 80 6,40% 6% 60 43 4% 40 2% 20 0% 0 FRA DEU ITA NLD POL ESP SWE GBR K S EN Y E D N Y U D AL C AN N AI N ED AN LA SP IT M LA PO SW FR ER Average credit rating ER G H N ET (Fitch/S&P’s/Moody’s) 20 GDP CAGR 2019-22 14 3,10% 15 3,50% 2,50% 10 1
Slide 94: Unemployment rate (June 2022)
14% Spain Greece 12% Unemployment rate (June 2022) 10% Ireland European Union Sweden Euro area Italy 8% Finland France Lithuania Latvia Croatia Belgium Portugal 6% Estonia Denmark Slovakia Austria Bulgaria Cyprus Romania 4% Netherlands Slovenia Luxembourg UK* Hungary 2% Norway** Malta Czechia German
Slide 95: Retail spending growth stronger than EU average
12,0% 10,9% 10,0% 9,0% 8,0% 6,4% 6,0% 4,7% 5,5% 4,2% 4,3% 4,0% 2,8% 2,0% 2,7% 2,1% 1,5% 1,8% 1,9% 1,6% 1,1% 0,0% -0,6% 2018 2019 2020 2021 2022 (F) 2023 (F) 2024 (F) 2025 (F) -2,0% European Union Poland Source: Oxford Economics, July 2022 Retail spending growth consistently stronger than EU average
Slide 96: Inflation likely through the peak already
Customer price index YoY for Poland Customer price index YoY for Poland 0,16 0,16 14,2% 13,6% 0,14 0,14 12,3% 0,12 0,12 10,1% 0,1 0,1 0,08 6,3% 0,08 0,06 5,2% 0,06 5,1% 4,3% 4,1% 3,4% 3,4% 0,04 0,04 2,3% 2,0% 1,6% 1,6% 0,02 0,02 0 0 2018 2019 2020 2021 2022 (F) 2023 (F) 2024 (F) 2025 (F) 2018 2019 2
Slide 97: Economic impact of the war in Ukraine
New purchasing power of Ukrainians offsets 5 million refugees have crossed the Polish higher inflation and interest rates affecting border since the war outbreak disposable income of Polish consumers 370 000 Ukrainians* have been employed in Poland Ukrainian entrepreneurs relocate service since the
Slide 98: FDI forecast to return to its peak in 2023
250 000 203 381 200 000 214 553 212 500 201 000 201 500 175 933 150 000 EUR'm 100 000 50 000 - 2018 2019 2020 2021 2022 (F) 2023 (F) *Source: National Bank of Poland, August 2022 and Poland Foreign Direct Investment – 2022 Data – 2023 Forecast – 1996-2021 Historical (tradingeconomics.com) FDI foreca
Slide 99: Key takeout
§ Strong historical performance of the Polish economy compared to EU peers bodes well for the future § Internal consumption affected by inflation and interest rates offset by population growth and disposable income of Ukrainian newcomers § Continued strong economic fundamentals Key takeout COVID and
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Redefine Properties | Capital Markets Day 100
Slide 101: Polish retail market at a glance
§ Limited number of new shopping centres in the pipeline § Rapid expansion of retail parks (even in towns <5 000 inhabitants) recently slowed due to rising construction costs and interest rates § Investment activity in the retail sector over the past 24 months focused on retail parks, redevelopments
Slide 102: Limited new retail space supply
§ Approximately 100 500m2 of new retail GLA added to the stock in Q2 2022, the vast majority delivered in retail parks – 62 800m2 (62% of new supply) § At the end of June 2022, the total stock of modern retail space in Poland, including large format and convenience centres, amounted to a total of 16
Slide 103: Mature shopping centre market
Source: JLL, July 2022 Mature shopping centre market Ensuring stable operational environment Redefine Properties | Capital Markets Day 103
Slide 104: Retail stock density in agglomerations
Source: JLL, July 2022 Retail stock density in agglomerations Marginal new stock development (mainly extensions) Redefine Properties | Capital Markets Day 104
Slide 105: E-commerce share and retail sales development
15,0% 1st lockdown 2nd lockdown 3rd lockdown 4th lockdown 11,9% 11,4% 11,4% 11,1% 10,8% Share of e-commerce 10,2% 10,0% 9,8% 9,5% 10,0% 9,1% 9,1% 9,1% 9,4% 8,6% 8,9% 8,9% 8,6% 8,1% 8,1% 8,4% 8,4% 7,7% 7,9% 7,3% 7,4% 6,5% 6,8% 6,1% 5,6% 5,6% 5,0% 0,0% I 2020 II 2020 III 2020 IV V 2020 VI VII VIII IX
Slide 106: Retail sales dynamics
April 2022 May 2022 June 2022 Dynamic of retail sales vs April 2021 vs May 2021 vs June 2021 Fixed prices Motor vehicles, motorcycles -12.0% -10.6% -10.5% Solid, liquid and gaseous fuels +11% -0.3% -12.6% Food, beverages, tobacco products +10.5% +11.9% +7.9% Pharmaceuticals, cosmetics, orthopaedic a
Slide 107: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 107
Slide 108: Key development determining factors
§ No significant new shopping centres planned or under construction § Reduced supply of retail space in shopping centres due to the withdrawal of non-performing stock (Sukcesja, Łódź; Kraków Plaza) § Redevelopment of shopping centres into various other formats (Galeria Bemowo, Warsaw; Manhattan, Gda
Slide 109: Omnichannel appears to be the future of retail
Current ways of shopping ROPO (Research online, ROTOPO (Research online, Purchase offline) Test offline, Purchase online) Halo effect (customers whose Reversed ROPO (Research first contact with the new brand is offline, Purchase online) in physical store spend more on that brand both offline and onl
Slide 110: Growing consumer awareness drives change in retail
Consumers concerned about climate change are more proactive and expect the same from companies and brands: § Quality, durability and sustainability of products § Giving a second life to goods (second-hand stores, exchange of products) § Saving resources (water, energy) § Choosing local products to r
Slide 111: Other leading trends shaping the future of Polish retail
VALUE RETAILERS NEW DEFERRED AGEING POPULATION RAPIDLY EXPANDING PAYMENTS OPERATORS forces new offers and solutions In all retail formats: new brands dedicated to the silver generation, (Woolworth), existing chains multiplying (PayPo, Twisto, Klarna) enabling faster the young people looking for shop
Slide 112: Retailers constantly evolving
§ Shop in shop (Żabka in Decathlon, Decathlon in Carrefour) § Smaller, stockless, digitally integrated formats § Self-service stores (Żappka Store) § Omnichannel and digitisation § Online solutions implemented offline § Shopping as entertainment § Increasing the attractiveness of shop design § Focus
Slide 113: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 113
Slide 114: New EPP
§ Following the EPP delisting and restructuring, two new JVs were formed: Horse JV and Communities JV § EPP remained asset, property and leasing manager for all properties in the JVs, retaining its number one position on the Polish market § Management of JVs conducted as fee-based contracts § Board
Slide 115: EPP structure and joint ventures
Communities JV portfolio Core portfolio Galeria Młociny JV 1. Amber – 33 546m2 1. Echo Kielce – 72 500m2 1. Galeria Młociny – 84 700m2 2. Olympia– 32 480m2 2. Galaxy – 57 500m2 3. Sudecka – 31 246m2 3. Pasaż Grunwaldzki – 50 600m2 4. Zakopianka – 27 327m2 4. King Cross Marcelin – 44 900m2 EPP owners
Slide 116: Retail portfolio performance
Property GLA Vacancies Vacancy level Avg base rent WAULT Turnover YTD Footfall YTD [m2] [m2]* [%]* [EUR/m2]* [yrs]* [%]** [%]*** Core portfolio 249 773 13,447 5% 18.6 5.3 4% -20% Subportfolio PP 92 933 0 0% 5.6 6.4 n/a n/a Horse JV**** 391 605 9 592 2.5% 9.2 4.4 12% -12% Communities JV 255 533 13 75
Slide 117: Retail portfolio performance
Turnover Footfall Property GLA Vacancies Vacancy level Avg base rent WAULT (June 2022 (July 2022 vs June 2019) vs July 2019) [m2] [m2]* [%]* [EUR/m2]* [yrs]* [%] [%] Młociny 80 765 2 071 2.6% 18.7 4.3 15% 14% *Data concerning vacancy, average base rent, WAULT as per 31 July 2022 Retail portfolio per
Slide 118: Office portfolio performance
Property GLA Vacancies* Vacancy level* Avg base rent* WAULT* [m2] [m2]* [%]* [EUR/m2*] [years]* Community JV 62 628 4 402 7% 13.0 3.9 Office JV 104 430 4 272 4% 13.9 3.1 Total office 167 058 8 675 5% 13.6 3.4 *Data concerning vacancy, average base rent, WAULT – Community JV as per 31 May 2022 and fo
Slide 119: Overall portfolio performance
Footfall and turnover 2022 vs 2019 month on month comparison 30,00% 22% 20,00% 13,30% 11% 10,00% 3,00% 0,00% -3,00% -5,00% -11% -10,00% -14,00% -15% -19,00% -20,00% -25,00% -25,00% -30,00% Jan Feb Mar Apr May Jun Turnover Footfall Overall portfolio performance Turnovers consistently exceed 2019 leve
Slide 120: Performance of retail by space type and collection ratio
Space type Turnover YTD Cafe 9% DIY 37% Electronics 13% Entertainment -27% Fashion & accessories -1% Food/groceries/supermarkets 13% Health & beauty 10% Household appliances & accessories 21% Restaurants & food court 8% Collection rate* Services 13% [%]* Speciality goods -4% Office 98% Value retaile
Slide 121: New leases signed in the last six months
Asset Area (m2) Brand Tenant category M1 Częstochowa 7 734 OBI DIY Galeria Solna 2 472 Half Price Value retailer Amber Kalisz 2 125 Half Price Value retailer Amber Kalisz 1 718 Carrefour Supermarket Echo Kielce 1 507 JYSK Household & appliances Veneda 1 218 Carrefour Supermarket Galeria Solna 1 027
Slide 122: New retail park in Twierdza Zamość
Twierdza Zamość Retail park City population/ agglomeration 63 477/106 112 residents population GLA added 4 171m2 Planned opening December 2022 date Tenants Average rent 7.7 EUR/m2 Occupancy 100% WAULT 6.5 yrs NOI (EUR) 384 100 New retail park in Twierdza Zamość Development within the existing shoppi
Slide 123: Responding to customers' and retailers' expectations
§ In retail assets directly managed by EPP a loyalty application is implemented to engage with digitally native consumers and respond to the dynamic development of omnichannel § The tool is used for enhancing customer loyalty, personalisation of communication, data collection and processing § In 202
Slide 124: Responding to customers' and retailers' expectations
EPP ESG strategy implemented in autumn 2021 with the first ESG report published in June 2022 Focus is on reducing company’s environmental impact, acting for the society, and increasing transparency in corporate governance Key initiatives § Reducing energy and water consumption and waste generation §
Slide 125: Responding to growing energy costs
Due to the war in Ukraine, the energy prices have spiked and continue at very high levels § EPP has commenced installation of solar panels in the centres as the first stage of EPP long-term solar panel installation strategy – the first stage will provide necessary energy for lighting the parking are
Slide 126: Operational matters
Operating costs § Energy costs and salary inflation have pushed up operating costs § EPP recovers majority of those costs through service charges § EPP has undertaken operating cost saving exercise throughout the entire portfolio § EPP proceeds with energy-saving programme to reduce energy costs in
Slide 127: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 127
Slide 128: EPP's top priority is to refinance its debt
Refinancing the debt portfolio § Corporate (CPPIB) debt of EUR250 million, due in October 2022, was fully repaid by end of July 2022 from the disposal proceeds (EUR196 million, including Towarowa and PP Opole) and loan received from Redefine (EUR50 million) § Mezzanine loan in Młociny of EUR76 milli
Slide 129: Improving the liquidity profile
Debt maturity at the delisting Current debt maturity 1 000 1 000 900 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 - - 2022 2023 2024 2025 2026 2027 2022 2023 2024 2025 2026 2027 EPP Core debt Share in JV debt EPP Core debt Share in JV debt EUR’m 2022 2023 2024 2025 2026 2027 T
Slide 130: Funding costs are rising
Current cost of debt amounts to 3.0%, at Euribor rate of 0%. 5 year EUR IRS curve EPP expects this cost to increase in the medium term to 2,5 3.5% to 4.0%, due to: § Potential increase of bank margins (by 50bps on average, from 1.7% 2,0 to 2.2%) for loans to be refinanced in 2023 (two facilities/ as
Slide 131: Snapshot of the EPP restructure
Balance sheet Circular Actuals Bridge EUR’m June 2021 Community CPPIB debt Pro-forma March 2022 Community Towarowa Loan from CPPIB debt Młociny mezz Senior debt August 2022 prior restruct. & M1 HoldCo repayment post restruct. prior restruct. & M1 HoldCo & PP Opole Redefine repayment repayment reduct
Slide 132: EPP's earnings are stabilising
Vacancies in retail are expected to decrease from current 5% to 2% in August 2023, mainly due to finalisation of reletting of vacant spaces after supermarkets (mainly post-Tesco that left Poland) and to 1% in the medium term. Vacancies in offices (which are held exclusively in Community and Henderso
Slide 133: Key factors impacting sustainable earnings
In case of JVs, the estimates for earnings include only cash dividends actually received by EPP, post-capex, debt amortisation and application of distribution waterfalls if applicable In case of Community JV, EPP receives in principle the whole cash flow generated by the JV and iGroup receives new s
Slide 134: EPP undertakes actions to improve pay out ratio
EURm H2 2022 FY 2023 Stabilised Significant capex in 2023 is related mostly to rearranging and renting vacant EPP Core NOI 27.2 56.3 60.8 spaces post-supermarkets, especially Tesco that left Poland. Capex past 2023 is EPP Core general costs (3.9) (7.7) (7.7) expected to stabilise at the level of app
Slide 135: Redefine Properties | Capital Markets Day
Redefine Properties | Capital Markets Day 135
Slide 136: Polish logistics market overview
§ E-commerce remains the significant driver, supported by Prime logistics yields a strong demand from 3PL operators, courier companies and retailers § Availability of space reduced significantly, while high construction costs and supply chain disruptions are delaying new projects § There is an upwar
Slide 137: ELI overview
§ Established in 2018 with the acquisition of nine operating logistics assets Geographical spread § ELI, incorporated in the Netherlands, is a JV between Redefine Europe (46.5%), Madison International Realty (46.5%) and Griffin Partners (7%) § Joint control sits with Redefine and Madison Tricity § R
Slide 138: Strategic milestones in FY22
Utilised attractive bank Maintaining Platform growth Realised significant Well-timed completion of funding opportunities strong leasing with key land capital gains for developments to meet before change in momentum in acquisitions reinvestment strong tenant demand market conditions the portfolio Sev
Slide 139: ELI leasing
§ Strong leasing momentum with further rental growth prospects Vacancy § All leases are EUR denominated 600 000 18,0% § ELI benefits from inflation-linked rent adjustments performed 16,5% 16,0% on an annual basis 500 000 § 87% of income from signed leases benefit from full indexation 14,0% § Average
Slide 140: Creating value through developments
Portfolio values driven by yield spread and quality of the assets Total market valuation of Average yield spread between Average capital uplift of Loan to income-producing portfolio developments/acquisitions and 51% based on current value of 45% EUR663 million market valuations 2.6% market valuation
Slide 141: Development pipeline
Targeted ELI portfolio Developments currently under construction 1 400 000 117 758 1 291 210 Development cost EUR151 million GLA 213 477m² 1 200 000 288 234 No of projects 8 Development yield 6.2% 1 000 000 213 447 Pre-letting 67% Completion By Feb 2023 800 000 GLA (m²) 671 771 Development pipeline
Slide 142: Capital funding requirements
Redefine's share of capital commitments Completion of development pipeline 160 000 107 116 250 000 149 925 231 898 150 000 140 000 130 000 120 000 200 000 184 809 110 000 100 000 158 375 90 000 150 000 80 000 GLA (m²) 70 000 60 000 50 000 17 433 47 211 100 000 40 000 36 315 30 000 22 765 20 000 10 0
Slide 143: Strategy
Take advantage of Potential disposals Successfully Secure Maintain the Retain yield spread positive market dynamics complete and let to crystalise further value (robust tenant demand) pre-letting headroom between development creation in ELI, but timing by letting available space and the developments
Slide 144: Disclaimer
This presentation may include forward-looking statements which statements are not based on historical information, but rather premised on certain assumptions, risks, estimates and/or uncertainties (“risks and uncertainties”), which are taken into consideration as at date of this presentation. All fi
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