Octodec Investments Limited · JSE:OCT
Octodec Investments — FY2024 Earnings Presentation
45 slides from Octodec Investments's earnings presentation, Nov 25, 2024
Slide 1: Annual results 2024
2024 Annual results Octodec Investments Limited 0 Annual Results for the 12 months ended 31 August 2024
Slide 2: Agenda
Agenda Octodec at a glance 1 Jeffrey Wapnick, CEO Our portfolio performance: residential 2 Charlene Conradie, COO Our portfolio performance: commercial 3 Charlene Conradie, COO Our commitment to operating 4 responsibly Anabel Vieira, FD Financial results and capital management 5 Anabel Vieira, FD Ou
Slide 3: Octodec at a glance
Octodec at a glance LOUIS PASTEUR
Slide 4: Octodec at a glance
Octodec at a glance WHAT HOW Octodec’s diverse We aim to serve a thriving tenant-base of residents, professionals, government property portfolio employees, students, and entrepreneurs, all of whom live, eat, work, or play within the consists of market- Octodec ecosystem. leading residential, retail,
Slide 5: Salient Features
Salient Features Increase in revenue of Distributable income after tax (REIT Dividend per share Distributable income per share 4.1% funds from operations) 158.5 cents 125.0 cents to R2 076.4 million R421.9 million (2023: R1 995.1 million) (2023: R455.8 million) (2023: 171.2 cents) (2023: 135.0 cents
Slide 6: Rental income analysis
Rental income analysis A well-diversified portfolio in Gauteng CBD vs non-CBD rental income (%) 45.9% Rental income by sector 31 August 2024 CBD (2023: 54.6%) Residential 4.4% (2023: 34.0%) Non-CBD 7.1% (2023: 45.4%) Retail – street shops 54.1% (2023: 23.5%) 12.3% 34.6% Offices (2023: 18.7%) Tshwane
Slide 7: Our portfolio performance: Residential
Our portfolio performance: Residential KEMPTON PLACE
Slide 8: Residential portfolio overview
Residential portfolio overview Demand strong but rate of churn and rental income growth impacted by economic pressures on tenants As at As at Enhanced offerings to meet market needs 31 August 2024 31 August 2023 GLA (m2) 422 558* 418 094 − Strong demand for Octodec’s well-located, secure, and Number
Slide 9: Our 'Place' brand
Our ‘Place’ brand A well-recognised brand for clean, safe, and well-maintained accommodation − Digitally enhanced customer service excellence, ensuring efficient communication and resolution of enquiries − Apartment sizes range between bachelor and three-bedroom − Rentals range between R4 000 and R6
Slide 10: The Fields
A-GRADE NSFAS ACCREDITED The Fields Our competitive student offering − Design enhanced in line with the students’ needs and competitive nature of the area − Shared and furnished units with kitchen, bathroom, and lounge − Amenities include: Event space for student wellness workshops, entertainment,
Slide 11: Yethu City
Yethu City Innovative thinking to meet market needs − Pilot of a new product, offering quality co-living accommodation − Key features of the ‘Yethu City’ brand: Well designed co-living spaces; kitchens, lounges, work areas, rooftop gym, and leisure area Lower rental entry point compared to our ‘
Slide 12: Our portfolio performance: Commercial
Our portfolio performance: Commercial RENTMEESTER PARK
Slide 13: Retail – shopping centres overview
Retail – shopping centres overview Active management of tenant mix and portfolio to grow future value As at As at 31 August 2024 31 August 2023 GLA (m2) 97 545 97 700 Rental income (R’million) 189.2 183.4 Rental income growth (%) 3.2 5.3 Total vacancies (% of GLA) 10.3 7.0 Core vacancies (% of GLA)
Slide 14: Retail – shopping centres
Retail – shopping centres Our best-performing asset class, located in the suburbs of Gauteng Pretoria: Waverley Plaza Pretoria: The Park 2024 2024 GLA (m2) 9 510 GLA (m2) 10 695 Vacancy (%) 11.2 Vacancy (%) 0.1 Average rent per m2 R197.2 Average rent per m2 R183.9 Occupied by national tenants (%) 76
Slide 15: Retail – shopping centres [continued]
Retail – shopping centres [continued] Pretoria: Blaauw Village (50% interest in JV) Johannesburg: Woodmead Value Mart 2024 2024 GLA (m2) 7 310 GLA (m2) 17 168 Vacancy (%) 0.5 Vacancy (%) 13.6 Average rent per m2 R171.8 Average rent per m2 R262.3 Occupied by National tenants (%) 73.0 Occupied by Nati
Slide 16: Retail – shops overview
Retail – shops overview An attractive ecosystem for retail traders but growth hampered by lacklustre economy and unrepaired damage on Lilian Ngoyi Street As at As at 31 August 2024 31 August 2023 GLA (m2) 339 983 342 712 Rental income (R’million) 356.9 352 Rental income growth / (decrease) (%) 1.4 (
Slide 17: Some of the top national retailers across our portfolio
Some of the top national retailers across our portfolio SHOPRITE, TSHWANE SHOPRITE, TSHWANE Octodec Investments Limited 16 Annual Results for the 12 months ended 31 August 2024
Slide 18: Offices overview
Offices overview Portfolio broadly stable despite challenging macroenvironment and offers opportunities for disposals or conversions As at As at 31 August 2024 31 August 2023 GLA (m2) 453 809 456 790 Number of tenants 1 575 1 532 Let to Government (% of total rental income 56.1 53.8 from offices) Ot
Slide 19: Industrial Overview
Industrial Overview Experienced steady demand with smaller operators affected by the challenging economic conditions As at As at 31 August 2024 31 August 2023 Total GLA (m2) 210 584 213 665 Number of tenants 341 348 Rental income (R’million) 108.6 106 Rental income growth (%) 2.5 3.8 Rental income g
Slide 20: Lease expiry profile in line with historic trends
Lease expiry profile in line with historic trends Expiries by rental income and GLA m2 Length of stay 100 The average stay of a residential tenant is 25.2 months, excluding 90.8 Hatfield tenants who are traditionally students leasing for 10 months during the academic year. The average length of stay
Slide 21: Material leases concluded during the period
Material leases concluded during the period to 31 October 2024 Building Tenant New lease expiry GLA (m²) Renewal status The Fields City Lodge August 2026 9 709 Renewal lease concluded for two years effective from September 2024. The tenant has agreed to an increase on the basic rental plus turnover
Slide 22: Material expired / expiring leases > 3 000m²
Material expired / expiring leases > 3 000m² at 31 August 2024 Building Tenant Lease expiry GLA (m²) Renewal status Capitol Towers City of Tshwane Metropolitan – 12 086 Tenant remains on a monthly tenancy and indications North Municipality are that they will be moving to a Municipality-owned buildin
Slide 23: Collections remain strong
Collections remain strong Total Collections at 31 August 2024 Collected R2.3 billion Collected to billed (%) (2023: R2.2 billion) Billed R2.3 billion 100.8 100.7 (2023: R2.2 billion) Collected to billed % 100.7% Commercial Residential (2023: 98.9%) ONE ON MUTUAL Octodec Investments Limited 22 Annual
Slide 24: Our commitment to operating responsibly
Our commitment to operating responsibly BLAAUW VILLAGE
Slide 25: Integration of sustainability principles into all our operations
Integration of sustainability principles into all our operations Approach to ESG aligned to the United Nations (UN) Sustainable Development Goals (SDGs) Environmental Social Governance − Robust methods to manage, measure, and − Social impact initiatives focus on investing in − Approach built on ethi
Slide 26: Focus on environmental stewardship
Focus on environmental stewardship Class 2024 2023 % Change Emissions Octodec carbon footprint in 2024 121 112 172 545 (29.81) 3 127 883 kWh (tCO2e) Solar power generated Energy use covering 6.3% of GLA 117 653 845 120 113 006 (2.06) (kWh) Waste (kg) 5 386 225 9 849 746 (45.69) 20 Smart water meters
Slide 27: Financial results and Capital management
Financial results and Capital management TOM’S PLACE
Slide 28: Distributable earnings (SA REIT FFO)
Distributable earnings (SA REIT FFO) Revenue growth of 4.1% with the Residential and Retail – Shopping Centres portfolios showing the % 31 August 2024 31 August 2023 highest growth change R’000 R’000 Revenue 4.1 2 075 848 1 995 095 Doubtful debts at 2.0% of rental income, due to tenant failures, and
Slide 29: Distributable earnings [continued]
Distributable earnings [continued] Property expenditure spread Administration cost spread 277 (R’m) (R’m) 246 69 63 162 160 153 146 124 125 124 121 84 79 22 77 72 21 56 50 40 44 12 12 38 37 9 6 Assessment Collection Cleaning Electricity Security Salaries Water, Repairs Bad debts Other Asset B-BBEE/
Slide 30: Abridged condensed consolidated statement of financial position
Abridged condensed consolidated statement of financial position 31 August 2024 31 August 2023 Assets R’000 R’000 Fair value decrease of 1.4% Non-current assets Investment property 10 515 700 11 040 600 Investment in joint ventures 46 749 44 356 Disposal of six properties for a net consideration Furn
Slide 31: Abridged condensed consolidated statement of financial position [continued]
Abridged condensed consolidated statement of financial position [continued] 31 August 2024 31 August 2023 Equity and Liabilities R’000 R’000 Borrowings stable at R4.409 billion compared to prior year, with the increase representing the Equity 6 416 238 funding of HealthConnect and Yethu City 6 559 6
Slide 32: Approach to dividends
Approach to dividends Octodec’s dividend policy is based on: – retaining sufficient funds for maintenance as well as for development and acquisition opportunities as and when these arise; – maintaining a strong balance sheet with an acceptable loan to value ratio; – maintaining a distribution of at
Slide 33: Stable investment property valuations
Stable investment property valuations Investment property R11.2 billion (2023: R11.2 billion) – Valuations were generally stable, with Killarney Mall reflecting the most significant change in its fair value due to weak property fundamentals – External valuations performed in line with JSE Listings R
Slide 34: Cash generated from operations
Cash generated from operations Cash flow bridge for the year ended 31 August 2024 (R’000) 835.0 (396.0) (7.0) 114.0 (359.0) 69.0 59.0 3.0 14.0 0.0 (194.0) Cash and bank Cash generated Net finance Taxation Dividend paid - Developments, Payments Proceeds Lease liability Borrowings Cash and bank balanc
Slide 35: Prudent capital management
Prudent capital management Weighted average interest 31 August 2024 rate per annum Debt carefully managed within internal targets set Assets R’billion % – LTV at 39.8% – Interest cover ratio (ICR) at 2.1x Bank loans – secured 4 029 10.3 Bank covenants: Domestic Medium-Term Note (DMTN) Programme – 38
Slide 36: Diversified sources of funding
Diversified sources of funding Successful refinancing of expiries 31 August 2024 31 August 2023 Successful refinancing of facilities: – Refinance of two ABSA credit facilities with tenures of five years 8.6% 7.0% (total R350 million) – Refinance of R50 million corporate bond with R100 million corpor
Slide 37: Funding expiry profile
Funding expiry profile Hedging strategy considers interest rate cycle Loan expiry profile – Interest rate derivatives expiry profile – R’million and % R’million and % The weighted average term to expiry of the loans and interest rate derivatives is currently 2.4 years (FY2023: 1.7 years) and 1.0 yea
Slide 38: Outlook
Outlook BANK TOWERS
Slide 39: Tempered optimism in outlook
Tempered optimism in outlook Succession planning Prospects Riaan Erasmus appointed executive financial Increase in business confidence, following the creation of the Government of National Unity and halt to director and debt officer, as well as deputy loadshedding chief executive officer of Octodec
Slide 40: Questions and Answers
Questions and Answers YETHU CITY
Slide 41: Appendices
Appendices CHAMBERS ON MUTUAL
Slide 42: A Strategy for growth
A Strategy for growth Octodec’s strategy directs our business activities in Our vision is to innovate and create sustainable economic value through our investment in a multi-sector pursuit of our vision. property portfolio. We are dedicated to addressing the community’s needs and collaborating towar
Slide 43: Top 10 properties
Top 10 properties Account for 30% of the investment property portfolio by value 2 Property Location Sector Size (m ) The Fields Tshwane, Hatfield Mixed use 60 305 Killarney Mall Johannesburg, Killarney Shopping centre 47 470 Kempton Place Kempton Park Mixed use 35 437 Centre Walk Tshwane CBD Mixed u
Slide 44: Vacancies as percentage of lettable GLA
Vacancies as percentage of lettable GLA* Total Vacancies (%) Core Vacancies (%)* 39.1 38.5 24.3 23.7 16.6 21.5 21.4 14.0 10.0 10.0 8.7 9.2 10.3 10.8 6.8 6.5 9.2 9.2 7.0 6.5 Offices Retail: Retail: Industrial Residential Offices Retail: Retail: Industrial Residential street shopping street shopping s
Slide 45: Our Vision
Our Vision To innovate and create sustainable economic value by investing in a multisector property portfolio. We remain cognisant of our role as a responsible corporate citizen and aim to achieve our vision, ambition and purpose in a manner that takes the interests of all our stakeholders into acco