Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — Indluplace Properties — IPO Roadshow (June 2015)
30 slides from Fairvest Limited Class A's IPO roadshow presentation, June 2015
Slide 1: Investor Roadshow May / June 2015
INVESTOR ROADSHOW May / June 2015
Slide 2: Disclaimer
This document has been prepared and issued by and is the sole responsibility of the management of Indluplace Properties Limited (the “Company” or Indluplace) and its subsidiaries. Nor information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in
Slide 3: Residential REITs are significant components of developed REIT markets
1 Residential REITs are significant components of developed REIT markets Circa13.1% of the total listed USA REIT market and circa 15.6% of the MCSI Global Index SA at c. 2% has no focused residential funds 2 Strong investor support for a residential REIT Provides diversification from commercial prop
Slide 4: 'First to market' advantage
Proven track Strongly Strong record in the Proven ability Experienced independent Substantial incentivised property residential sector to acquire yield proven executive board with existing portfolio (as an unlisted enhancing management residential that is ungeared management team teams with subsidia
Slide 5: Arrowhead as 70% shareholder
INDLUPLACE anticipated to trade at a lower yield than Arrowhead resulting in a larger pool of yield enhanced margin on acquisitions INDLUPLACE better positioned for equity deals with existing residential portfolio owners who want to retain exposure to residential asset class Increased ability to do
Slide 6: Forecast income statement and pro forma balance sheet
4 months Year ending R’000 R’000 Pro forma Sep 2015 Sep 2016 Rental income 63 405 195 497 Investment property 1 598 619 Recoveries 7 940 24 588 Current assets 194 014 Trade and other receivables 5 551 Rental income and recoveries 71 345 220 085 Share scheme loans 175 794 Property operating expenses
Slide 7: Forward yield and upside from Honey Park
12 month forward yield from listing 8.2% FY2016 forward yield 8.4% Signific ant upside from Honey Park Current dispute with Monash, INDLUPLACE has cancelled the agreement No income from Honey Park in the forecast Net income of R16m from Honey Park for FY 2016, which equates to a property yield of 9.
Slide 8: Illustrative growth from doubling the property portfolio
If the property portfolio was doubled over two years, the acquisitions could be mainly debt funded which should result in significant double-digit growth in distributions: DPU of 88.3 cents for FY 2016 Equating to a yield of 8.8% compared Could result in (against 83.8 cents forecast) to the listing
Slide 9: Portfolio overview: valuation, units and vacancy
Portfolio valuation R1 607.8m Total residential units 3 690 Residential – normal units 3 139 Residential – student units 551 Vacant units 424 Vacant units attributable to Honey Park 333 Vacancy % excluding Honey Park units 2.5% Residential escalations assumed 7.5% - 8.0% Retail GLA 9 469m2 Weighted
Slide 10: Property portfolio by property and location
Residential Residential Total normal student residential Residential Retail Property Location Valuation units GLA units units units Rm Number Number Number % m² Jika 2 Various, Gauteng 522.3 1 495 - 1 495 40.5 3 894 Jika 1 Various, Gauteng 365.1 872 - 872 23.6 1 529 Highveld View Witbank, Mpumalanga
Slide 11: Residential normal units: unit types, rentals and lease expiries
― Unit type Average size Average rental Units Units Vacant units Vacancy m2 R per month Number % Number % Room 15 1 144 241 7.7% - - Bachelor 35 2 788 718 22.9% 18 2.5% One bedroom 45 3 563 615 19.6% 39 6.3% Two bedroom 62 5 153 1 440 45.9% 20 1.4% Three bedroom 75 5 274 107 3.4% 13 12.1% Other - -
Slide 12: Residential student units and Honey Park
― Unit type Beds per unit Average rental Units Units Vacant units1 Vacancy Beds R per month Number % Number % Two bedroom 4 5 886 435 78.9% 333 76.6% Three bedroom 6 11 262 116 21.1% - - Total 551 100.0% - - Honey Park The Honey Park property portfolio consists of three complexes comprising 333 resi
Slide 13: Retail overview
― Overview The spaces are mostly inner city street level retail rented to small A businesses and entrepreneurs 8,1% Although some longer leases have been entered into mostly with B more established businesses and franchises, 29% of GLA is let on a 13,2% month-to-month basis similar to the residentia
Slide 14: Property management approach
Approach INDLUPLACE follows a strategy of contracting property managers with high-levels of industry experience, efficient systems, a strong operating track-record and specific knowledge of the properties and the areas in which the properties are situated In most cases, this involves appointing the
Slide 15: Overview of property managers
Over view of p rop er ty m anagers Jika 1 & 2 2 residential portfolios were purchased from Jika (since renamed Citiq) who will manage the properties for at least the first two years Citiq has been active in the CBD and surrounds from 2005 and has built up a stellar track record of developing and man
Slide 16: Overview of property managers
Over view of p rop er ty m anagers Highveld View CSI, a subsidiary of the original developers, Zotec Developments (part of Cosmopolitan Projects / Central Developments), has been managing the property and tenants CSI will manage the letting and property management for the next two years on a guarant
Slide 17: Management team
Gerald is a chartered accountant with 50 years’ experience in the property industry, both in South Africa and abroad He is the CEO of INDLUPLACE and of Arrowhead which listed on the JSE in December 2011 and which made a foray into Gerald Leissner residential property in 2013 (73) Gerald was a non-ex
Slide 18: Executives will be issued 10% of the shares at listing price
Executives will be issued 10% Issue price will be 100% geared and of the shares in INDLUPLACE interest will be at a rate equivalent to the at listing price distributions on the shares Variable interest rate means that the Results in significant alignment between executives only benefit if the shares
Slide 19: Board of directors
Taffy Adler (64) Chairman CEO of the Housing Development Agency whose mission is fast-tracking the acquisition and release of state, private and BA, community owned land for human settlement developments BPhil in African Studies, Previously CEO of the Johannesburg Housing Company MSC in Building Sci
Slide 20: Offer terms and timing
Issuer Indluplace Properties Limited (“INDLUPLACE”) Private placement of approximately R400m Offer Indicative offer price of R10 per share Listing location “REITs Residential” sector of the Main Board of the JSE Financial year-end is September Quarterly distributions Year-end and distribution (for t
Slide 21: Annexures
Annexures D e ta i l e d fo re ca st I n d i v i d u a l p o r t fo l i o / b u i l d i n g p ro f i l e s
Slide 22: Detailed forecast
4 months ending Year ending 30 September 2015 30 September 2016 R 000 R 000 Contracted rental income1 19 663 37 550 Uncontracted rental income 40 523 150 913 Income from net income guarantee 3 219 7 034 Recoveries 7 940 24 588 Rental income 71 345 220 085 Straight lining of rental income adjustment
Slide 23: Jika 1 portfolio profile
― KPI Based Acquisition price R354.0m Acquisition date (effective date) April 2014 Sector residential – normal with retail Valuation R365.1m 1 Forward yield 10.6% Number of buildings 29 Description Number of units 872 The buildings in the portfolio provide a diverse range of accommodation options fr
Slide 24: Jika 2 portfolio profile
― KPI Location various, Gauteng Acquisition price R545.0m Acquisition date (effective date) April 2015 Sector residential – normal with retail Valuation R522.3m 1 Forward yield 10.7% Number of buildings 59 Description Number of units 1 495 Room 108 Consists of 59 mainly residential buildings predomi
Slide 25: Highveld View profile
― KPI Location Witbank, Mpumalanga Acquisition price R286.5m Acquisition date (effective date) April 2015 Sector residential – normal Valuation R290.5m 1 Forward yield 10.2% Number of buildings 1 Description Number of units 450 Room - The Highveld View complex comprises 450 residential units in a si
Slide 26: Honey Park profile
― KPI Location Honey Park, Gauteng Acquisition price R150.0m Acquisition date (effective date) February 2014 Valuation R164.0m Sector residential – student Forward yield - Number of buildings 3 Description Number of units 333 Room - The Honey Park property portfolio consists of three complexes (Redw
Slide 27: Park Village profile
― KPI Location Vanderbijlpark, Gauteng Acquisition price R85.3m Acquisition date (effective date) February 2015 Sector residential – student Valuation R89.1m 1 Forward yield 11.2% Number of buildings 1 Description 2 Number of units 116 Room - Park Village and Amberfield Village are complexes jointly
Slide 28: Germiston profile
― KPI Location Germiston, Gauteng Acquisition price R71.3m Acquisition date (effective date) March 2015 Valuation R71.0m Sector residential – normal with retail 1 Forward yield 10.6% Number of buildings 2 Description Number of units 228 Room 71 The Germiston property portfolio consists of two buildi
Slide 29: Bree Street Block profile
― KPI Location Johannesburg, Gauteng Acquisition price R55.7m Acquisition date (effective date) April 2015 Valuation R57.0m Sector residential – normal with retail 1 Forward yield 11.9% Number of buildings 6 Description Number of units 94 Room 4 This portfolio consists virtually of a full Johannesbu
Slide 30: Amberfield Village profile
― KPI Location Vanderbijlpark, Gauteng Acquisition price R46.6m Acquisition date (effective date) November 2014 Valuation R48.8m Sector residential – student 1 Forward yield 11.8% Number of buildings 1 Description Number of units 2 102 Room - Park Village and Amberfield Village are complexes jointly