Delta Property Fund Limited · JSE:DLT
Delta Property Fund — H1 FY2016 Earnings Presentation
47 slides from Delta Property Fund's earnings presentation, Oct 26, 2015
Slide 1: Interim Results Presentation
Interim Results Presentation for the 6 months ended 31 August 2015
Slide 2: Proceedings
Proceedings Introduction Sandile Nomvete Highlights Unitholder profile Delta Africa Financial review Greg Booyens Investment portfolio Bronwyn Corbett Leasing Capex Headwinds Sandile Nomvete Prospects Embassy Building, Durban 2
Slide 3: Introduction
Introduction Unisa House, Johannesburg 3
Slide 4: Introduction to Delta
Introduction to Delta Black managed REIT Predominantly invested in office buildings in Durban and Pretoria with diversifying investments in other sectors and Delta Africa Secure long term sovereign underpin, with sovereign tenants occupying 60% of total GLA Average property value of R106.8 m
Slide 5: Snapshot
Snapshot Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: Delta Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% 31 August 2015 28 February 2015 Shares in issue 543 558 733 458 409 836 Market capitalisation R4.5 billion
Slide 6: Management structure
Management structure Executive directors Non-Executive directors Sandile Nomvete Bronwyn Corbett Greg Booyens JB Magwaza Jorge Da Costa Nooraya Khan Chief Executive Chief Investment Officer & Chief Financial Officer Non-Executive Independent Lead Independent Officer Chief Operating Officer (outgoing
Slide 7: Highlights
Highlights Delta Towers, Durban 88 Field Street, Durban Sleepy Hollow, Pietermaritzburg 7
Slide 8: Highlights
Highlights 7.2% increase in interim distribution to 42.89 cents (Aug 2014 - 40.01 cents) More than quadrupled total investment portfolio to R9.47 billion* in 34 months since listing in Nov 2012 Gearing ratio reduced from 49.9% to 46.0% Level 2 B-BBEE rating achieved Capital raise of R780.3
Slide 9: Unitholder profile
Unitholder profile Mayor’s Walk, Pietermaritzburg 9
Slide 10: Unitholder profile
Unitholder profile As at 31 Aug 2015 Units held Holding Coronation Fund Managers 84 232 877 15.50% Public Investment Corporation 76 388 306 14.05% Stanlib Asset Management 70 368 154 12.95% Sanlam Investment Management 45 282 259 8.33% Grindrod Asset Management 41 144 741 7.57% Kagiso Asset Manageme
Slide 11: Delta Africa
Delta Africa Vodacom Building, Maputo KPMG / Hollard Building, Maputo Samora House, Durban 11
Slide 12: Delta Africa
Delta Africa In line with investment strategy, rebranded Delta International to Listed on main board of JSE and Stock Exchange of Mauritius Delta’s shareholding of 31.78% valued at R386 million Second distribution of US$ 4.65 cents per share declared in August 2015 Zimpeto Square transferr
Slide 13: Financial Review
Financial Review Samora House, Durban 13
Slide 14: Financial review
Financial review Growth in distributions of 7.20% Cost to Income ratio well contained at 11.63% Total acquisitions of R492.3 million completed in the period First disposal concluded with process underway to dispose of other non-core assets Gearing reduced to 46.0%, and expected to decrease
Slide 15: Financial overview
Financial overview 31 Aug 2015 31 Aug 2014 28 Feb 2015 Distribution per share (cents) 42.89 40.01 84.071 Cost to income ratio (net) 11.4% 10.2% 10.2% Cost to income ratio (gross) 27.3% 26.4% 26.0% Gearing level 46.0% 48.2% 49.9% Weighted average interest rate 8.09% 8.07% 8.10% Average debt expiry pe
Slide 16: Distributable income statement (extract)
Distributable income statement (extract) Change % 31 Aug 2015 31 Aug 2014 28 Feb 2015 (Aug 2015 (R’000) (R’000) (R’000) vs Aug 2014) Net property income 420 484 325 590 696 300 29.15% Rental income 578 502 442 291 940 623 30.80% Property operating expenses (158 018) (116 701) (244 323) 35.40% Admini
Slide 17: Statement of financial position (extract)
Statement of financial position (extract) 31 Aug 2015 31 Aug 2014 28 Feb 2015 Change % (R’000) (R’000) (R’000) (Aug‘15 vs Feb’15) Assets Non-Current assets 9 227 782 7 701 707 8 396 823 9.90% Investment property 8 816 434 7 180 373 8 393 900 5.03% Fair value of property portfolio 8 633 026 7 030 190
Slide 18: Debt summary
Debt summary As at 31 Aug 2015 Type R'm 1 Weighted Ave. Rate Revolving / Liquidity Bank Facilities 637 8.03% Floating Bank Facilities 1,478 7.79% Fixed Bank Facilities 1,676 8.29% Total Bank Facilities 3,791 8.05% DMTN Programme 738 7.85% Total Drawn Facilities 4,529 8.02% Accrued Interest 43 N/A TO
Slide 19: Debt maturity profile
Debt maturity profile 28-Feb-16 28-Feb-17 28-Feb-18 28-Feb-19 28-Feb-20 28-Feb-21 28-Feb-22 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 R’ millions DMTN Programme Fixed Bank Facilities Floating Bank Facilities Revolving / Liquidity Bank Facilities Swap Contracts 19
Slide 20: Portfolio growth analysis
Portfolio growth analysis Comparison of market cap, investment portfolio value and LTV R’bn LTV % 10,00 80% 9,47 8,90 9,00 8,00 70% 7,18 6,97 7,00 6,00 60% 5,00 4,80 4,46 4,08 4,00 3,54 50% 3,39 46,0% 40,0% 38,7% 3,00 3,00 49,9% 41,0% 48,2% 2,10 2,12 47,5% 2,00 40% 1,35 1,00 1,39 - 30% Nov-12 (Listi
Slide 21: Investment portfolio
Investment portfolio Block G, DTI Campus, Pretoria 21
Slide 22: Portfolio breakdown
Portfolio breakdown Property portfolio by sector (building)* Office - Office - Industrial Retail Total Government Other Number of properties 50 29 2 4 85 Gross lettable area (m2) 389 948 266 606 39 955 27 420 723 929 Vacancy (%) 5.9% 8.9% 31.6% 5.4% 8.4% Value R 5.41 billion R 3.00 billion R 0.14 bi
Slide 23: Property portfolio analysis
Property portfolio analysis SECTORAL PROFILE: GLA* GEOGRAPHIC PROFILE: GLA OFFICE BUILDING GRADE: GLA 6% 37% 5% 76% 34% 5% 6% 4% 4% 3% 1% 0,8% 54% 41,1% 24% Gauteng (41.1%) Kwazulu-Natal (33.9%) Office - Government (53.9%) Office - Other (36.8%) Limpopo (6.2%) Northern Cape (5.4%) Western Cape (4.6%
Slide 24: Delta's performance per IPD
Delta’s performance per IPD1 Listed Fund All Fund Delta Portfolio Percentile Percentile Benchmark2 Benchmark3 Total Return (%) 17.9 13.9 0 12.8 6 Income Return (%) 9.3 9.0 44 8.4 31 Capital Growth (%) 7.9 4.6 11 4.1 19 Basic Rental Growth (%) 6.1 7.0 38 6.6 40 Capital Value per sqm 11 971 10 802 33
Slide 25: Pipeline
Pipeline Delta to continue to focus on sovereign underpin. Acquisition of 15 properties from Orthotouch Limited (as announced on SENS 02 June 2015) is expected to transfer by the end of November 2015. Orthotouch Portfolio Chambers of Change Barrack House Description 15 government tenanted office
Slide 26: Disposals
Disposals Management has embarked on a disposal programme Rationale is that certain assets are viewed as non-core, or that the capital from the core assets (where strong offers have been received) can be better deployed in higher yielding assets Proceeds will primarily be used to reduce gearin
Slide 27: Leasing
Leasing Hallmark Building, Pretoria ThePietermaritzburg Mayor’s Walk, Marine, Durban 27
Slide 28: Leasing
Leasing Total leases concluded since 1 March 2015 Weighted Ave. Weighted Ave. No of Leases Total Area Rate / m2 Escalation Renewals 75 24,666 m2 (3.4%1) R 99.32 8.12%2 Historic exit rentals R92.62 New Deals 45 6,566 m2 (1%1) R 97.97 7.01% Top 3 deals by area Property Tenant Type Total Area Term Rate
Slide 29: Capex
Capex CMH Redevelopment, Durban 29
Slide 30: Significant Capex projects
Significant Capex projects Property CMH Commission Embassy 88 Field The Forum Total Dealership House Building (All figures in Rands) Approved budget 156,000,000 85,000,000 28,250,000# 21,843,000 - 291,093,000 Spent in FY2015 37,976,214 - - - - 37,976,214 Spent in H1 2016 93,541,892 34,847,997 - - -
Slide 31: Headwinds
Headwinds Capital Towers, Pietermaritzburg 31
Slide 32: Headwinds
Headwinds Risks / Challenges Mitigants Treasury Directive - 3 year, 5.5% escalation Market seeing renewals at 7.5% Level 2 B-BBEE status allows the ability to renew leases Discussions on 10 - 20 year lease terms Interest rate environment Fixed rate instruments Liquidity in Debt Capital
Slide 33: Prospects
Prospects NPA Building, Cape Town 33
Slide 34: Potential upside in DLT
Potential upside in DLT Historic share price, NAV and distribution per share cpu R billion 8% 12 90,00 15.6% 90,78 11 80,00 84,06 10,05 70,00 72,69 10 10,05 9,62 9,62 9,62 60,00 8,87 8,90 8,87 9 8,67 9,08 9,08 8,32 8,40 8,90 8,30 8,20 50,00 7,90 7,90 7,85 47,89 8 8,06 7,89 7,96 44,05 40,00 42,89 40,
Slide 35: Positioning against peers
Positioning against peers Historic yield comparison and weight in SAPY index Sector Weighted Average - 5,8% N/A 1.3% % Weight in SAPY index 12,1% 1.5% 11,4% 10,6% N/A 9,7% N/A 1.3% 3.5% 2.5% 1.4% 1.1% 3.2% 8,2% 8,0% 15.2% 20.1% 7,9% 7,8% 7,8% 7,7% 7,6% 7,0% 6,9% Information from Catalyst Fund Manage
Slide 36: DLT vs R186 Long term bond
DLT vs R186 Long term bond 11,0% 10,5% 10,0% 9,5% 9,0% 8,5% 8,0% 7,5% 7,0% 6,5% Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 DLT Yield R 186 Yield 36
Slide 37: Priorities going forward
Priorities going forward Replacement of CFO Disposal of non-core assets Short term Strengthening of balance sheet • Reduce gearing • Improve credit rating “Inward” focused asset management of existing portfolio • Deployment of CAPEX improve quality and lower costs • Improving cost to income
Slide 38: Q&A
Q&A 38
Slide 39: Annexure 1 - Directors of Delta Property Fund
Annexure 1 - Directors of Delta Property Fund Sandile Hopeson Nomvete – Chief Executive Officer Exec Dep. & Prop Dev. Prog. (Wits & UCT Business Schools) He co-founded Motseng Investment Holdings which eventually became the empowerment partner to Marriot Property Group. A series of mergers and acqui
Slide 40: Directors of Delta Property Fund (cont.)
Directors of Delta Property Fund (cont.) Johannes Bhekumuzi Magwaza – Non-Executive Chairman BA, MA (UK) JB has many years’ experience as a board representative for various JSE listed and non-listed entities including chairmanships at Tongaat Hullet Limited, Pamodzi Investment Holdings Proprietary L
Slide 41: Directors of Delta Property Fund (cont.)
Directors of Delta Property Fund (cont.) Nooraya Khan – Independent Non-Executive Director CA (SA) Nooraya is a Chartered Accountant and a highly – experienced and successful private equity transactor. She has vast experience in negotiating, implementing and managing private equity and black economi
Slide 42: Annexure 2 – Top 10 Properties (by value)
Annexure 2 – Top 10 Properties (by value) Forum Building Liberty Towers Hallmark Building Delta Towers Location Pretoria Location Durban Location Pretoria Location Durban Office - Office - Office - Office - Sector Sector Sector Sector Government Other Government Other GLA 41,003 m2 GLA 40,465 m2 GLA
Slide 43: Top 10 Properties (cont.)
Top 10 Properties (cont.) Hensa Towers Manaka Heights Phomoko Towers The Marine Location Polokwane Location Pretoria Location Polokwane Location Durban Office - Office - Office - Office - Sector Sector Sector Sector Government Government Government Other GLA 13,675 m2 GLA 19,122 m2 GLA 13,058 m2 GLA
Slide 44: Top 10 Properties (cont.)
Top 10 Properties (cont.) Embassy Building Beacon Hill King Williams Location Durban Location Town Office - Office - Sector Sector Government Government GLA 31,129 m2 GLA 13,648 m2 Vacancy 20.81% Vacancy 0% Valuation R236 mil Valuation R228 mil 44
Slide 45: Annexure 3 - Property operating expenses
Annexure 3 - Property operating expenses Municipal expenses (69.5%) BREAKDOWN OF PROPERTY OPERATING EXPENSES Service contracts (11%) (R'000s) Property management fees (7%) Repairs and maintenance (3.5%) 17 481 10 842 5 639 Staff costs - onsite (2.4%) 3 821 Rental paid - parking rental (2.2%) 3 492 I
Slide 46: Annexure 4 - Admin expenses
Annexure 4 - Admin expenses Asset Management fees (43.7%) BREAKDOWN OF ADMIN EXPENSES Directors fees (20.4%) (R'000s) Professional fees (10.2%) 1 610 Rental paid (5.2%) 1 903 3 701 1 344 Corporate social responsibility (4.4%) 860 Depreciation (3.7%) 849 Bank charges (2.4%) 7 408 742 Travel and enter
Slide 47: Annexure 5 - Detailed tenant analysis
Annexure 5 - Detailed tenant analysis BREAKDOWN OF TENANT TYPE (By Revenue) 0,4% 17,8% 14,8% Provincial Government (29.4%) National Government (28.1%) 8,0% 1,5% Local Government (0.4%) State-Owned Enterprise (14.8%) 28,1% General Office (17.8%) Retail (8.0%) 29,4% Industrial (1.5%) Total sovereign (
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