Accelerate Property Fund Ltd. · JSE:APF
Accelerate Property Fund — FY2021 Earnings Presentation
48 slides from Accelerate Property Fund's earnings presentation, 2021
Slide 1: Annual Results for the year ended 31 March 2021
ANNUAL RESULTS for the year ended 31 March 2021
Slide 2: Contents
Contents 02 COMPANY OVERVIEW 03 Accelerate at a glance 04 Our strategy 05 Our investment strategy 07 OPERATING LANDSCAPE 08 Market trends 09 COVID-19 23 OPERATING PERFORMANCE 24 Leasing 11 FOCUS AREAS 26 Vacancy profile 12 Strengthening the balance sheet 13 Capital and treasury management 27 PORTFOL
Slide 3: Company Overview
Overview COMPANY 03 Accelerate at a glance 04 Our strategy 05 Our investment strategy
Slide 4: Accelerate at a glance
Accelerate Geographic profile by value 2020 (%) 2021 (%) at a glance South Africa 85,6 86,7 Austria 11,0 10,1 Slovakia 3,4 3,2 FOCUSED NODAL INVESTMENT APPROACH Geographic profile 2020 2021 IN LEADING ECONOMIC HUBS by GLA (%) (%) Slovakia South Africa 87,6 86,8 Average Number of Austria 7,8 8,2 Asse
Slide 5: Our strategy
Our strategy Building cities of the future, by focusing on property fundamentals within specifically identified nodes. Enhancing Growing Strengthening our Delivering value to returns on assets quality nodes balance sheet stakeholders • Develop existing bulk • Concentrating on existing • Diversifying
Slide 6: Our investment strategy
Our investment strategy NODAL STRATEGY We choose locations for their resilience and growth potential and seek opportunities to leverage economies of scale and unlock further value. WHY NODAL? • Diversification in property types • Proximity to assets enables economies of scale and the ability to stra
Slide 7: Our investment strategy continued
Our investment strategy continued OFFSHORE STRATEGY Our European portfolio has remained resilient throughout the pandemic and delivered solid returns. We own a portfolio of long-term single-tenanted properties which house OBI – the largest DIY retailer in Central and Eastern Europe. WHY EUROPE? • Fo
Slide 8: Operating Landscape
Landscape OPERATING 08 Market trends 09 COVID-19
Slide 9: Market trends
Market trends NEGATIVE IMPACT ON PROPERTY SECTOR • Pressure on trading levels • Increased retail and office vacancies 1 The macroeconomic environment impacted by COVID-19 • Withdrawal of international retailers from South Africa • Recession exacerbated by COVID-19 • COVID-19 rental concessions • Lan
Slide 10: COVID-19 impact
COVID-19 impact THE COVID-19 PANDEMIC SA REITs CHALLENGED GLOBAL STABILITY Split between discounts AND UPENDED THE SOUTH AFRICAN and deferrals (%) ECONOMY. 20 1,75% • Discounts relate to non- -8,2% refundable outright rental reduction in Growth of SA’s credits. interest rates 80 2020 real GDP • Defe
Slide 11: COVID-19 impact continued
COVID-19 impact continued OUR RESPONSE IMPACT ON ACCELERATE The Fund’s approach to COVID-19 has been clear, concise and well executed. It is focused R182 million WALE increased to on the long-term stability of the Fund and its COVID-19 relief 6,1 years tenants. (31 March 2021) (2020 5,6 years) Respo
Slide 12: Focus Areas
Areas FOCUS 12 Strengthening the balance sheet 13 Capital and treasury management 14 Property management 14 Fourways Mall
Slide 13: Focus area: Strengthening the balance sheet
Focus area 1 STRENGTHENING GOALS THE BALANCE • Increase liquidity SHEET • Reduction of debt to ensure adequate headroom to covenants and REIT LTV requirements • interest rate swaps rolling off to March 2022 replaced at current market rates has a positive ICR impact of 0,3x LEVERS LTV Unlocking Sale
Slide 14: Focus area: Capital and treasury management
Focus area 2 CAPITAL AND TREASURY Funding split (%) MANAGEMENT FOCUS AREAS Proactively optimising our debt 10,5 • Reducing our debt • Diversifying our funding sources 89,5 Blended • Pre-emptively refinancing debt interest rate • Optimising our hedging Other capitalUnlocking market funders 7,4% • Man
Slide 15: Focus area 4: Property management
Focus area 3 PROPERTY GOALS / FOCUS AREAS MANAGEMENT Delivering value to stakeholders Operating cost Vacancies reduction • Unlocking value through strategic capex spend 15,0% • Long-term sustainability: R11 million by GLA • Re-assessing tenant mix in a changed world • Assisting tenants and locking i
Slide 16: Financial Performance
Performance FINANCIAL 16 Consolidated statement of financial position 17 Consolidated statement of profit or loss 18 Valuations 19 Treasury
Slide 17: Consolidated statement of financial position
Consolidated statement of financial position 31 March 2021 31 March 2020 (R’000) (R’000) ASSETS Non-current assets 11 791 005 12 373 281 Investment property 11 633 782 12 231 279 Derivatives 36 341 – Right-of-use asset 120 676 141 676 Equipment 206 326 Current assets 644 256 564 671 Trade and other
Slide 18: Consolidated statement of profit or loss
Consolidated statement of profit or loss 31 March 2021 31 March 2020 (R’000) (R’000) Revenue, excl. straight-line rental revenue adjustment 1 003 605 1 054 228 COVID-19 rental assistance (182 515) – HIGH-LEVEL OVERVIEW OF Straight-line rental revenue adjustment (78 425) 31 393 PERFORMANCE Revenue 74
Slide 19: Valuations
Valuations PROPERTY VALUATION BRIDGE Rm Fair value adjustments Rm Fair value adjustments 12 827 11 761 IN ORDER TO GIVE OUR INVESTORS 2020 MORE ASSURANCE WE HAVE VALUATION 2021 ELECTED TO HAVE IN EXCESS OF WRITE-DOWN ADDITIONAL 90% OF OUR INVESTMENT R1 BILLION WITH VALUATION WRITE-DOWN PROPERTY PORT
Slide 20: Debt facilities (overall fund level)
Debt facilities (overall fund level) Proactively optimising our debt WEIGHTED TOTAL AVERAGE DEBT DEBT DEBT TERM*** HEDGED LTV** Funding split (%) R6,0 billion 1,8 years 81,4% 48,5% (2020: R6,2 billion) (2020: 2,5 years) (2020: 72,6%) (2020: 46,0%) 10,5 WEIGHTED 89,5 AVERAGE BLENDED INTEREST UNDRAWN
Slide 21: Debt facilities (security SPV 1 – Accelerate listed debt SPV)
Debt facilities (security SPV 1 – Accelerate listed debt SPV) Proactively optimising our debt WEIGHTED TOTAL AVERAGE DEBT DEBT DEBT TERM** HEDGED LTV Funding split (%) R3,3 billion 1,8 years 78,4% 46,1% (2020: R3,3 billion) (2020: 1,8 years) (2020: 68,1%) (2020: 43,0%) 16,7 WEIGHTED 83,3 AVERAGE BLE
Slide 22: Long-term debt
Long-term debt Debt expire (Rm) KEY TAKE AWAYS 1 000 ✓ All expiries post year-end have been 800 refinanced 600 ✓ R660 million of capital market debt raised 400 within the last 12 months in the midst of 200 the COVID-19 pandemic 0 May Jun Jul Oct Dec Feb Mar May Jun Aug Sep Nov Jan Feb Jun Jul Aug Se
Slide 23: Covenant changes
Covenant changes To create headroom in case of temporary income and property valuation fluctuations due to COVID-19 TEMPORARY COVENANT CHANGES NEGOTIATED AND APPROVED IN SEPTEMBER 2020 The changes are as follows: Existing 30 September 31 March 30 September 31 March Measurement period ending covenant
Slide 24: Operating Performance
Performance OPERATING 24 Leasing 26 Vacancy profile
Slide 25: Leasing – Lease expiry profile and escalations
Leasing – Lease expiry profile and escalations Lease expiry profile by gross rental (%) KEY TAKE AWAYS 25 ✓ Lease expiry in excess of six years 20 ✓ APF Europe WALE significantly improved 15 ✓ Downward pressure on contractual 10 escalations 5 0 Mar 2022 Mar 2023 Mar 2024 Mar 2025 > Mar 2025 WALE (SA
Slide 26: Leasing – Tenant retention and rental reversions
Leasing – Tenant retention and rental reversions Tenant arrears KEY TAKE AWAYS (R’000) 120+ days 90 days 60 days 30 days Total ✓ Ensured tenant sustainability and 31 March 2021 49 602 1 296 10 390 27 329 88 617 business survival by accommodating rental concessions and other support ✓ Strong tenant r
Slide 27: Vacancy profile
Vacancy profile Vacancies as at 31 March 2021 (% of GLA) #* KEY TAKE AWAYS 40 ✓ Office vacancies slightly reduced 30 ✓ Industrial vacancy increased due to one 20 industrial client going into liquidation 10 ✓ Offshore portfolio at 0% vacancy 0 Industrial Office Retail European Total retail VACANCIES
Slide 28: Portfolio Performance
Performance PORTFOLIO 28 Portfolio overview 29 Office 30 Retail 35 European retail
Slide 29: Portfolio overview
Portfolio overview GLA Value Revenue Retail 49,2% (2020: 46,8%) 61,1% (2020: 60,4%) 61,7% (2020: 61,6%) Office 25,9% (2020: 24,4%) 23,5% (2020: 21,2%) 21,7% (2020: 22,3%) Industrial 11,7% (2020: 16,4%) 2,1% (2020: 4,0%) 4,5% (2020: 5,9%) European retail 13,2% (2020: 12,4%) 13,3% (2020: 14,4%) 12,1%
Slide 30: Office portfolio
Office portfolio Properties: Our P-grade and A-grade offices are situated Vacancy by in strategic nodes in Sandton and Fourways 16 GLA (2020: 16) in Gauteng, and on the Foreshore in the 29,5% Western Cape. PERFORMANCE OVERVIEW GLA • Quality office portfolio in prime locations 129 093 m2 (2020: 129 0
Slide 31: South African Retail portfolio overview
South African Retail portfolio overview Properties: Our retail portfolio includes a diverse selection Vacancy by of malls and shopping centres nationwide, 15 GLA (2020: 19) differentiated through our shoppertainment 8,5% offering. PERFORMANCE OVERVIEW GLA • Super regional malls trading densities suf
Slide 32: Retail Fourways Mall
Retail Fourways Mall Tenants A landmark super-regional shopping centre at the heart of our Fourways node 340 VALUE PROPOSITION • Recently redeveloped with extensive tenant GLA offering 89 619 m2 • Shoppertainment destination (APF 50%) • Diverse and above average LSM customer base within a 15 km radi
Slide 33: Retail Fourways Mall continued
Retail Fourways Mall continued HIGHLIGHTS FOURWAYS MALL PARKING AND BULK • Opening of a new La Liga flagship store • During the development of FWM excess parking was built and bulk unlocked by the developer for future development • Opening of Wickleys steakhouse not yet owned by APF on a 50/50 basis
Slide 34: Retail Cedar Square
Retail Cedar Square Stores A lifestyle and family centre 83 VALUE PROPOSITION • Located in the densely populated residential Fourways node • Open layout preferred in COVID-19 world GLA • Family, lifestyle, shopping and entertainment 44 418 m2 PERFORMANCE OVERVIEW • Trading density returned to pre-CO
Slide 35: Retail Eden Meander
Retail Eden Meander Stores A multi-tenanted lifestyle shopping centre serving the residential hub of George in the Western Cape 46 VALUE PROPOSITION • Popular location GLA • Growth potential in a growing residential node 30 817 m2 • Accelerate also owns bulk for future development. PERFORMANCE OVERV
Slide 36: European retail
European retail Properties 100% Our European portfolio has remained resilient occupied by throughout the pandemic and delivered solid 9 (2020: 9) nine returns. big box OBI stores PERFORMANCE OVERVIEW GLA • The portfolio was externally valued at € 89,05 million in June 2021 65 893 m2 (2020: 65 893 m2
Slide 37: Outlook
AMOOTLNO
Slide 38: Outlook
Outlook DISTRIBUTION The Fund formally communicated to the market via the JSE Limited Stick Exchange News Service (“SENS”) on 7 September 2020 that the board of directors had resolved that it would be in the best interest of the company to retain cash and accordingly, not to pay distributions for th
Slide 39: Annexures
ANNEXURES 39 ANNEXURE 1 Property portfolio summary 41 ANNEXURE 2 Our Fourways exposure 42 ANNEXURE 3 Our leadership
Slide 40: Property portfolio summary
Property portfolio summary SECTOR AND GEOGRAPHIC SUMMARY Sector profile by revenue (%) Sector profile by GLA (%) 12,1 13,2 21,7 25,9 4,5 11,7 49,2 61,7 Office Industrial Retail European retail Office Industrial Retail European retail Geographic profile by revenue (%) Geographic profile by GLA (%) 9,
Slide 41: Property portfolio summary continued
Property portfolio summary continued TENANT PROFILE Tenant profile by GLA (%) Single vs multi-tenanted by GLA (%) 13,2 32,6 19,6 67,2 67,4 A B C Single Multi A: Large national tenants, large listed tenants and major franchises, including Absa Bank, Capitec Bank, Dis-Chem, Edcon, FNB, Foschini, Jet S
Slide 42: Our Fourways exposure
Our Fourways exposure OUR FOURWAYS FOOTPRINT PROPERTIES 1 Fourways Mall 11 2 Leroy Merlin (not owned by APF) 3 Cedar and BMW bulk 6 2 4 4 Cedar Square Shopping Centre 3 1 5 BMW Fourways 5 8 6 Valleyview Centre 7 10 9 7 The Buzz Shopping Centre 8 The Buzz bulk 9 Waterford 10 FORD Fourways 11 The Leap
Slide 43: Our leadership
Our leadership OUR BOARD OF DIRECTORS Our board’s extensive experience in Executive Directors property and business management and, particularly, corporate governance serves as the foundation of our value-creation I I SET TG I TG strategy. Mr Michael N Georgiou Mr Andrew Costa (50) Mr Dimitri Kyriak
Slide 44: Our leadership continued
Our leadership continued Non-Executive Directors N R AR N SET I N R Mr Timothy J Fearnhead (72) Ms Kolosa Madikizela (41) Associate Prof François M Viruly (61) Independent Director and Independent Director Chairman Independent Director Committees Appointed: Audit and Risk Committee Appointed: 1 June
Slide 45: Our leadership continued
Our leadership continued Non-Executive Directors AR SET AR I Mr Abel M Mawela (59) Jacobus Frederick (“Derick”) van Resignations and appointments der Merwe (67) Independent Director Appointments Committees Independent Director Appointed: Mr Derick van der Merwe, effective Audit and Risk Committee 1
Slide 46: Our leadership continued
Our leadership continued Board demographics Age (years) 7 4 6 5 3 4 2 3 2 1 1 0 0 White Males Black Males Black Females 40 – 49 50 – 59 60 – 69 >70 Independence Tenure (years) Sector experience (%) Property 5 Retail Independent 3 Operations Non-executive Directors Marketing 7 Treasury Development Di
Slide 47: Thank you
THANK YOU INVESTOR RELATIONS Articulate Capital Partners: Morné Reinders Tel: 082 480 4541 Email: morne@articulatepartners.com ACCELERATE PROPERTY FUND ANNUAL RESULTS 2021 46
Slide 48: Disclaimer
Disclaimer This presentation is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published in whole or in part for any other purpose. This presentation does not constitute an offer or invitation to subs
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