Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — Arrowhead Properties — Investor Presentation (March 2018)
29 slides from Fairvest Limited Class A's investor presentation, March 2018
Slide 1: Arrowhead Properties
Arrowhead Properties
Slide 2: Arrowhead's Mission
• Opportunistic ARROWHEAD’S MISSION • Diversified • Sustainable value for our shareholders • Trusted • South African focused
Slide 3: South African Focus
• Only assets in South Africa SOUTH AFRICAN FOCUS • New optimism will translate into better deal flow • Increased interest in vacant space from beginning of year • Perfectly positioned to benefit from SA bounce
Slide 4: Arrowhead
• Diverse commercial (office, retail and industrial) ARROWHEAD • Portfolio: value R5,6bn • 66% interest in Indluplace: R2bn • 55% interest in Gemgrow valued at R1,8bn • 11% interest in Dipula: R507m • 19% interest in Rebosis: R1,1bn • Gearing R3,6 billion, company LTV of 28% (group LTV of 34%)
Slide 5: Delivering on Commitments
• Forecast for year end September 2017 6-8% growth DELIVERING ON • Achieved 6% in difficult environment • Said would start with Gemgrow – high growth fund COMMITMENTS • Gemgrow maiden year under belt and positive outlook • Conserve balance sheet • Balance sheet well positioned with LTV of 28%
Slide 6: Successes So Far in 2018
• 1 Sturdee SUCCESSES SO FAR IN 2018 - soft refurb - white boxed selective space - Arrowhead moved in (confidence & visibility) • Interest in Owl Street • Busy with negotiations to renew large leases • Good tenant retention • Selling properties
Slide 7: Further Successes: Hill Street
FURTHER SUCCESSES Hill Street (13 347m2) • Building sold • Buyer is converting to residential
Slide 8: Further Successes: Kwela Logistics
FURTHER SUCCESSES Kwela Logistics (15 450m2) • Blackheath CT • Declined few offers to sell • Re-let 14 000m2 at higher rate (3 tenants)
Slide 9: Debt
• Arrowhead loans of R3,5 billion and group of R5,5 billion DEBT • Arrowhead LTV of 28%, group of 34% • Loans fixed, Arrowhead 71% and group 84% DEBT EXPIRY 2018 R826 million 2019 R681 million 2020 R1 108 million 2021 R276 million 2022 R672 million Total R3,5 billion
Slide 10: NAV at December 2017
• NAV including minorities R11,34 NAV at 31 December 2017 • NAV excluding minorities R8,31
Slide 11: Core Holdings
• 40 assets CORE HOLDINGS • Indluplace Properties • Gemgrow Properties
Slide 12: Top Five Properties
TOP FIVE PROPERTIES Access Park Western Cape Retail R776 005 000 20 456m2
Slide 13: Top Five Properties
TOP FIVE PROPERTIES Cleary Park Eastern Cape Retail R521 227 000 36 294m2
Slide 14: Top Five Properties
TOP FIVE PROPERTIES Westgate Mall Western Cape Retail R332 400 000 28 951m2
Slide 15: Top Five Properties
TOP FIVE PROPERTIES Midtown Mall Western Cape Retail R260 100 000 17 456m2
Slide 16: Top Five Properties: Offices
TOP FIVE PROPERTIES 158 Offices Gauteng Office R253 661 000 13 350m2
Slide 17: Trading Densities
4000 18% 3% 3500 TRADING DENSITIES 8% 3000 2500 14% 10% 2000 5% 1500 1000 500 0 Access Park Montclair Cleary Park Westgate Midtown Mall KWT September 2016 vs September 2017
Slide 18: Rent to Sales Ratio
4% 4% 12% RENT TO SALES RATIO 15% 2% 2% Access Park Montclair Cleary Park Westgate Midtown Mall KWT September 2016 vs September 2017
Slide 19: As at 30 September 2017
• 50 commercial (retail, office & industrial) properties AS AT 30 SEPTEMBER 2017 • 56% retail, 36% office and 8% industrial (sectoral by value) • Overall vacancy 12% (retail 5%, office 22%, industrial 9%) • Average gross rent per sector (R131/m2 retail, R114/m2 office, R45/m2 industrial) • Escalatio
Slide 20: Indluplace
• Indluplace to be dominant residential fund in South Africa INDLUPLACE • Defensive investment opportunity offers good returns in a difficult environment if managed properly • Growth of 5,6% for year end Sept 2017 • Dividend growth of 4 – 7 % for year end Sept 2018 • Portfolio growth to R4,3bn with
Slide 21: Gemgrow
• High yield high growth fund GEMGROW • Manage risk by diversification • Achieved maiden forecast for year end Sept 2017 • Dividend growth of 7 – 9% on the Gemgrow B share for year end Sept 2018 • R580m worth of acquisitions at 11,85% yield
Slide 22: Non-Core Holdings
• 10 assets to sell NON-CORE HOLDINGS • Dipula Income Fund • Rebosis Property Fund
Slide 23: Dipula
• Dipula B growth of 6,7% to August 2017 DIPULA • Dividend growth of 5 – 6 % on the Dipula B shares for year end Aug 2018 • Currency to Arrowhead • Constant constructive engagement with management to explore various ideas – no clear path forward
Slide 24: Rebosis
• Rebosis growth of 7,4% to August 2017 REBOSIS • Dividend growth of 4 – 6% on the Rebosis B shares for year end August 2018 • Currency to Arrowhead • Recent shareholder and property fund engagement – detailed evaluation of opportunity set from buying to selling
Slide 25: Sustainable Dividends
• Risk of non-sustainable dividends SUSTAINABLE DIVIDENDS • This risk heightened in negative environment • Risk of over rented buildings (i.e Sasol) • Only pay out sustainable dividends • We believe will create greater shareholder value over the long term
Slide 26: Reposition Portfolio for Growth in 2019
REPOSTION PORTFOLIO FOR GROWTH IN 2019
Slide 27: Arrowhead: 12 Months to 30 September 2018
• Re-invest unsustainable income proceeds into debt, Gemgrow and ARROWHEAD Indluplace depending on where there is more value • Continue managing lease expiries in advance especially single tenanted 12 MONTHS TO • New hungry commission based leasing division to focus on letting vacant space • Improve
Slide 28: So Where Is the Upside in 2018
• Encouraging political changes SO WHERE IS THE UPSIDE • Want to have most sustainable portfolio positioned for South African bounce IN 2018 • Reducing vacancies • Selling non-core properties
Slide 29: Thank you
Thank you
Arrowhead Properties — Investor Presentation (March 2018) on 6ix