Accelerate Property Fund Ltd. · JSE:APF
Accelerate Property Fund — FY2022 Earnings Presentation
37 slides from Accelerate Property Fund's earnings presentation, Mar 31, 2022
Slide 1: Consolidated financial results for the year ended 31 March 2022
Consolidated financial results for the year ended 31 March 2022
Slide 2: Contents
Contents 2 Introduction 5 Focus areas 9 Financial performance 15 Operating performance 19 APF treasury overview 25 Portfolio update 32 Conclusion 1
Slide 3: Introduction
2 INTRODUCTION
Slide 4: Major factors that impacted the fund over the last 24 months
Major factors that impacted the fund over the last 24 months Factor Impact Positive Appointment of TT Mboweni and JWA Templeton to the APF board Improved corporate governance and board experience Disposal of APF Europe portfolio R1,4 billion of debt repaid leading to the LTV reduced by approximately
Slide 5: Finalisation of related party transactions approved by the APF board
Finalisation of related party transactions approved by the APF board Number Transaction Rationale for transaction 1 Settlement of R300 million Fourways Mall rebuilt claim Settlement of developer for remaining purchase price on Fourways Mall through the issue of APF equity* 2 Acquisition of additiona
Slide 6: Focus areas
5 FOCUS AREAS
Slide 7: Focus area 1: Fourways Mall
Focus area 1 FOURWAYS MALL GOALS Year-on-year • Accretive capital spend growth in trading • Filling of vacancy and improving revenue streams densities • Improving and diversifying food offering 16% • Activating the Kidzania offering • Servicing a broader LSM • Enhanced shopping experience Vacancy •
Slide 8: Focus area 2: Strengthening the balance sheet
Focus area 2 STRENGTHENING THE BALANCE SHEET GOALS • Improvement of overall portfolio quality through capital spend • Prudent risk management and hedging LTV • Reducing overall debt 42,8% • Reduction in carbon footprint • Developing bulk to income producing assets ICR 2,1x LEVERS Sale of Retention o
Slide 9: Focus area 3: Capital and treasury management
Focus area 3 CAPITAL AND TREASURY GOALS MANAGEMENT Funding split (%) • Increase liquidity buffers (Approximately R223 million currently) Blended 4,6 • Ensure adequate covenant headroom interest rate • Improved debt rating 8,1% • Increasing the weighted average term of debt 95,4 • Diversifying our fu
Slide 10: Financial performance
9 FINANCIAL PERFORMANCE
Slide 11: Consolidated statement of financial position
Consolidated statement of financial position 31 March 2022 31 March 2021 (R’000) (R’000) ASSETS Non-current assets 10 024 018 11 791 005 HIGH-LEVEL OVERVIEW OF POSITION Investment property 9 983 936 11 633 782 Derivatives 38 693 36 341 • Total devaluation of Investment Right-of-use asset 330 120 676
Slide 12: Consolidated statement of profit or loss
Consolidated statement of profit or loss 31 March 2022 31 March 2021 (R’000) (R’000) Continuing operations Revenue, excl. straight-line rental revenue 897 376 881 057 HIGH-LEVEL OVERVIEW OF adjustment COVID-19 rental assistance (35 127) (177 299) PERFORMANCE Straight-line rental revenue adjustment 5
Slide 13: Discontinued operations (Accelerate Europe)
Discontinued operations (Accelerate Europe) 31 March 2022 31 March 2021 DISPOSAL OF THE ACCELERATE (R’000) (R’000) EUROPE SINGLE TENANT RETAIL PORTFOLIO Discontinued operations Revenue 95 904 122 548 • The disposal transferred on 8 February 2022 COVID-19 rental assistance - (5 216) Revenue 95 904 11
Slide 14: Distribution analysis
Distribution analysis 31 March 2022 31 March 2021 (R’000) (R’000) DISTRIBUTABLE EARNINGS DIVIDEND REINVESTMENT (DRIP) Loss after taxation attributable to equity holders 61 984 (705 703) Accelerate remains committed to (Less)/Add: Straight-line rental revenue strengthening its financial position. adj
Slide 15: Valuations
Valuations 2020 2021 2022 VALUATION WRITE-DOWN OF ADDITIONAL VALUATION R1 BILLION WITH POTENTIAL COVID-19 WRITE-DOWN VALUATIONS STABILIZED EFFECTS AT TOP OF MIND R660 MILLION (31 MARCH 2021) ACCELERATEPROPERTY ACCELERATE PROPERTYFUND FUNDAnnual Results 31 March 2022 14
Slide 16: Operating performance
15 OPERATING PERFORMANCE
Slide 17: Lease expiry profile and escalations
Lease expiry profile Lease expiry profile by revenue and escalations 30,0% 25,0% KEY TAKE AWAYS 20,0% ü WALE decreased due to the sale of 15,0% APF Europe 10,0% ü Downward pressure on contractual 5,0% escalations subsiding 0,0% March 23 March 24 March 25 March 26 > March 26 Industrial Office Retail
Slide 18: Tenant retention and rental reversions
Tenant retention and rental reversions KEY TAKE AWAYS Tenant arrears (R’000) 120+ days 90 days 60 days 30 days Total ü Retail rental beginning to stabalise 31 March 2022 21 595 10 155 14 182 15 421 61 353 ü Strong retail tenant retention ü B- and C-grade office remains under Expired New avg avg Rent
Slide 19: Vacancy profile
Vacancy profile Vacancy % by GLA 70,00% 60,00% KEY TAKE AWAYS 50,00% ü Overall vacancy % increased primarily 40,00% due to the sale of the APF Europe portfolio which was fully let 30,00% 20,00% VACANCIES 10,00% 0,00% Industrial Office# Retail Fourways Mall (50%)* 21,2% 9,1% March 2021 March 2022 by
Slide 20: APF treasury overview
19 APF TREASURY OVERVIEW
Slide 21: Debt facilities (overall fund level)
Debt facilities (overall fund level) SHORT-TERM Funding split (%) TOTAL PORTION OF LONG DEBT DEBT TERM DEBT HEDGED LTV* 4,6 95,4 R4,5 billion R648 million 70,8% 42,8% (Sept 2021: (Sept 2021: (Sept 2021: (Sept 2021: Other capital market R5,9 billion) R1,64 billion) 86,9%) 47,8%) funders Relationship
Slide 22: Debt facilities (Security SPV – Accelerate listed debt SPV)
Debt facilities (Security SPV 1 – Accelerate listed debt SPV) WEIGHTED TOTAL AVERAGE DEBT DEBT DEBT TERM HEDGED LTV Funding split (%) 4,6 R3,1 billion 1,7 years 70,8% 42,8% (Sept 2021: (Sept 2021: (Sept 2021: (Sept 2021: 95,4 R3,3 billion) 1,5 years) 86,9%) 44,9%) Other capital market funders Relati
Slide 23: Debt expiry and hedging
Debt expiry and hedging Debt expiry profile (R’m) 600 KEY TAKE AWAYS 500 • R1,3 billion of capital market debt refinanced 400 during the period 300 • Undrawn facilities of approximately R223 million 200 • Debt expiry profile has compressed due to 100 shorter term lending as a result of COVID-19 - •
Slide 24: Funding goals
Funding goals No. Goal Actions Timing 1 ICR uplift through increasing income streams Detailed capital spend and leasing plan per asset To be implemented over the next 12 to and improving collections 18 months 2 Improvement of LTV and ICR through non-core Non-core assets identified for disposal and b
Slide 25: Increased cost of funding and impact of reduction
Increased cost of funding and impact of reduction Current average cost of funding Average margin 3.0% Pre -COVID Average margin 2.0% Potential saving (50 bps) (100 bps) Interest saving if funding costs decrease 22,868,990.79 45,737,981.59 ICR impact (50 bps) (100 bps) SPV 1 0.16x 0.32x Overall 0.15x
Slide 26: Portfolio update
25 PORTFOLIO UPDATE
Slide 27: Portfolio overview post sale of APF Europe
Portfolio overview post sale of APF Europe GLA Value Revenue Retail 60,1% 70,9% 70,0% Office 31,0% 27,6% 27,4% Industrial 8,9% 1,5% 2,6% ACCELERATE PROPERTY FUND Annual Results 31 March 2022 26
Slide 28: Retail portfolio
Retail portfolio KEY DEVELOPMENTS AND FOCUS AREAS • Disposal of non-core assets. R284 million of non-core retail assets held for sale (over and above WALE sales already concluded) 3,6 years • The disposal of these assets will have an ICR impact of 0,1x and an LTV impact of 1,6% • Leaping Frog sale c
Slide 29: Cedar Square
Cedar Square KEY DEVELOPMENTS 1. Pick n Pay: Major upgrade to a blue spec store supported by a new 10 year lease. This will WALE have a significant impact on activating the surrounding area 2. Refurbishment of Virgin Active to new spec 3,8 years 3. Paddle court discussions far advanced 4. Williams H
Slide 30: Eden Meander
Eden Meander KEY DEVELOPMENTS • Clicks opened in April 2022 – vacancy to almost zero WALE FOCUS AREAS 3,1 years • Development of adjacent land (under negotiation) • Activating all areas in the centre with the strategic placement of anchor tenants Fair value • APF exploring expanding footprint in thi
Slide 31: Fourways Mall
Fourways Mall TRADING • Consistent improvement in trading densities (16% year-on-year) WALE LEASING 3,9 years • Tenants that recently opened, include House & Home, Pep Home, Factorie, PQ among others • JB Active (2 742 m2) to open August 2022 • Kidzania Mexico delegation visited FWM in June 2022, pl
Slide 32: Office portfolio
Office portfolio OVERVIEW AND KEY DEVELOPMENTS % of total office Core office portfolio WALE net income • 87,5% of office portfolio consists A- and P-grade by revenue – performing well Oceana House 4,60 7,3% • Vacancies predominantly in B- and C-grade offices – many of Thomas Pattullo Building 1,50 4
Slide 33: Conclusion
32 CONCLUSION
Slide 34: Conclusion
Conclusion COVID-19 • We have seen our smaller regional and neighbourhood/ convenience centres trading return to pre-COVID-19 rental levels • Minimal COVID-19 relief to tenants is expected going forward • B- and C-grade office space and the “new normal” for office demand remains a concern FOURWAYS M
Slide 35: Conclusion
Conclusion STRENGHTENING OUR FINANCIAL POSITION • Remaining R763 million of non-core assets still to be disposed of • Proceeds to be utilised to reduce debt and reinvest in core assets TREASURY • Improving revenue streams as well as non-core asset sales remain key to improving overall treasury metri
Slide 36: Thank you
THANK YOU CEO Executive director Michael Georgiou Dawid Wandrag Tel: 083 705 5555 Tel: 082 770 9260 Email: michaelg@acceleratepf.co.za Email: dawid@acceleratepf.co.za COO Head of finance and treasury Andrew Costa Pieter Grobler Tel: 083 459 1511 Tel: 082 453 4175 Email: andrew@acceleratepf.co.za Ema
Slide 37: 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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