61 slides from Dipula Properties Limited Class B's earnings presentation, November 2020
Slide 1: Annual Results Presentation for the year ended 31 August 2020
A N NUAL R E S U LTS P R E S E N TA TI O N FOR THE YEAR ENDED 31 AUGUST 2020
Slide 2: Agenda
AGENDA 01 FINANCIAL OVERVIEW 02 B US I N E S S UPDATE 03 OUTLOOK CONSISTENT STABLE RESOURCEFUL DISCIPLINED DIVERSIFIED SUSTAINABLE Annual Results for the year ended 31 August 2020 2
Slide 3: Key Corporate Information
KEY CORPORATE INFORMATION JSE sector Real Estate Investment Date listed Closing price and Services: 17 August (31 Aug 2020) Diversified REITS 2011 DIA R5.59 | DIB R1.24 Market capitalisation Portfolio size Gearing Debt NTAV per share (31 Aug 2020) R9.93 R1.8 billion R9.1 billion* 38.9% R3.5 billion
Slide 4: Financial Overview
01 FINANCIAL OVERVIEW RIDWAAN ASMAL CFO
Slide 5: Financial Highlights
FINANCIAL HIGHLIGHTS REVENUE DISTRIBUTABLE DISTRIBUTABLE EARNINGS DISCOUNT TO NAV EARNINGS PER SHARE (CENTS) R1.2 billion* R447 million 168.95 (2019: R1.3 billion) (2019: R511 million) Combined (2019: 192.96) Combined 66% 12.4% 3.1% 12.4% 114.49 INVESTMENT INTEREST-BEARING PROPERTIES LIABILITIES DIA
Slide 6: Distribution Statement
DISTRIBUTION STATEMENT 31 Aug 2020 31 Aug 2019 R 000 R 000 Variance Revenue 1 248 199 1 288 789 -3.1% Rental and recoveries 1 248 199 1 260 969 -1.0% Other income - 27 820 -100.0% Property expenses (440 922) (411 249) 7.2% Net property income 807 277 877 540 -8.0% Administration and corporate costs
Slide 7: Sectoral Performance
SECTORAL PERFORMANCE RENTAL INCOME & RECOVERIES PROPERTY EXPENSES NET PROPERTY INCOME 8% 10% 15% 14% 18% 16% 20% 19% 20% 19% 20% 20% 67% 72% 71% 65% 62% 64% AUG 2020 AUG 2019 AUG 2020 AUG 2019 AUG 2020 AUG 2019 Retail Office Industrial Annual Results for the year ended 31 August 2020 7
Slide 8: Statement of Financial Position (Extracts)
STATEMENT OF FINANCIAL POSITION (EXTRACTS) 31 Aug 2020 31 Aug 2019 Variance R 000 R 000 Investment properties* 9 107 990 8 888 251 2.5% Trade and other receivables 164 203 160 323 2.4% Loans receivable 206 612 201 171 2.7% Intangible assets 37 500 75 000 -50.0% Cash and cash equivalents 49 357 119 0
Slide 9: Cash Flow
CASH FLOW ‒ Rm 31 AUGUST 2020 31 AUGUST 2019 119 Opening balance 70 799 Cash generated from operations 834 - 281 Net finance cost - 312 - 280 Dividends paid - 571 - 128 Acquisitions and capex - 87 62 Disposals 58 Non-controlling interest 1 -5 Loans advanced -7 -7 Repayment of lease liability - 228 D
Slide 10: Debt Profile
DEBT PROFILE 30% 24,8% 24,6% 24,6% Debt expiry Hedge expiry 21,4% 19,9% 19,4% 20% 18,7% 10% 8,0% 2,7% 3,4% 0% 0% 0% FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 >FY 2025 Debt facilities Weighted average Weighted average Weighted average New Debt hedged renewed during cost of debt debt expiry hedge expiry
Slide 11: Business Update
02 BUSINESS UPDATE IZAK PETERSEN CEO PORTFOLIO COVID-19
Slide 12: FY2020 Outcomes
FY2020 OUTCOMES Objective Growth in dividends Improvement of Solidify Maintain gearing at SAPY inclusion per share share liquidity Management FY2019 levels Outcome ▪ Stable management Earnings negatively team DIAs and DIBs ▪ Achieved affected by Covid-19 ▪ Low staff turnover Dual share structure rem
Slide 13: Business Highlights
BUSINESS HIGHLIGHTS SALIENT FEATURES – TRADING FUNDAMENTALS 5-YEAR GROWTH TREND ▪ Unprecedented tough trading conditions persist R billion GLA (000 m²) ▪ Robust response to Covid-19 10 930 924 924 1 000 807 757 ▪ Weathered the storm reasonably well, thanks to defensive portfolio 8 9,1 800 8,6 8,8 ▪
Slide 14: Portfolio Leasing
PORTFOLIO LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 31 AUG 2020) GLA (000 m²) Rental (Rm) NEW LEASES 300 24 30 18 14 Number of leases 136 12 13 200 10 Value of leases R157m 220 253 Total GLA (m²) 39 710 168 100 -10 Weighted average gross rental asking (R/m²) 87.80 104 107 60 Weighted
Slide 15: Portfolio Valuation
PORTFOLIO VALUATION 2020 % of total Average Exit portfolio by Discount Rates Cap Rates Average Value Year on Year Sector value (%) (%) (R/m²) (% Change) Retail 63 14.2 10.1 12 140 -0.3 Office 21 14.4 10.3 13 790 -0.8 Industrial 14 14.9 10.9 3 682 -1.5 Residential 2 n/a n/a 13 449 n/a Total Portfolio
Slide 16: Retail Portfolio
RETAIL PORTFOLIO MARKET TRENDS PORTFOLIO TRENDS ▪ Pent-up consumption demand for goods and services ▪ Growing unemployment ▪ Increase in business rescue and liquidation activity ▪ Portfolio vacancy increased to 8.6% (2019: 8.4%) ▪ Declining tenant capex commitments ▪ Weighted average rentals per m²
Slide 17: Retail Portfolio
RETAIL PORTFOLIO LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 31 AUG 2020) GLA (000 m²) Rental (Rm) NEW LEASES 125 13 15 Number of leases 112 10 9 10 9 100 10 Value of leases R112m 102 Total GLA (m²) 24 835 75 85 5 Weighted average gross rental asking (R/m²) 102.29 79 50 67 61 0 Weighted averag
Slide 18: Office Portfolio
OFFICE PORTFOLIO MARKET TRENDS PORTFOLIO TRENDS ▪ Portfolio vacancy increased to 8.9% ▪ Demand for smaller space driven by an increase in remote working (2019: 7.8%) ▪ Demand for shorter more flexible leases ▪ Weighted average rentals per m² increased by 4.3% to R138.24 (2019: R132.47) ▪ Uncertainty
Slide 19: Office Portfolio
OFFICE PORTFOLIO LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 31 AUG 2020) GLA (000 m²) Rental (Rm) NEW LEASES 6 Number of leases 15 50 5 6 49 Value of leases R25m 40 3 4 Total GLA (m²) 4 327 39 30 1 1 2 Weighted average gross rental asking (R/m²) 101.19 Weighted average gross rental achieved (
Slide 20: Industrial Portfolio
INDUSTRIAL PORTFOLIO MARKET TRENDS PORTFOLIO TRENDS ▪ Portfolio vacancy increased to 3.3% (2019: 2.3%) ▪ Demand for logistics and warehousing ▪ Weighted average rentals per m² increased by 12.2% to R38.29 (2019: R34.10) ▪ Lacklustre demand for manufacturing space ▪ Sideways rentals in mini units ▪ T
Slide 21: Industrial Portfolio
INDUSTRIAL PORTFOLIO LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2019 – 31 AUG 2020) GLA (000 m²) Rental (Rm) NEW LEASES 200 4 4 5 Number of leases 9 Value of leases R20m 150 2 2 168 3 Total GLA (m²) 10 548 1 100 1 Weighted average gross rental asking (R/m²) 48.36 Weighted average gross rental achiev
Slide 22: Residential Portfolio
RESIDENTIAL PORTFOLIO RESIDENTIAL UNIT PROFILE NORWOOD PALM SPRINGS# Average Average Average Average Average Average Unit type rental rental unit size rental rental unit size (R) (R/m²) (m²) (R) (R/m²) (m²) Studio 5000 192 26 - - 1 Bed 6000 158 38 4725 139 34 2 Bed 8713 118 74 5250 114 46 3 Bed 9800
Slide 23: Business Update
02 BUSINESS UPDATE IZAK PETERSEN CEO PORTFOLIO COVID-19
Slide 24: Impact of Covid-19
IMPACT OF COVID-19 STAFF FINANCIAL ▪ Operational remote working infrastructure ▪ Modest op costs savings due to lower shopper numbers in April and May ▪ Strict hygiene measures ▪ Open centres an advantage as opposed to malls ▪ Daily screening and sanitising at entry points ▪ Cleaning and hygiene cos
Slide 25: Tenant Profile
TENANT PROFILE RETAIL OFFICE By Income By GLA (%) (%) By Income By GLA Tenant Type / Grade (%) (%) Supermarket, Groceries & Food 30 30 Other 15 17 A Grade 26 23 Fashion & Footwear 13 14 B Grade 19 19 Banking & Financial Services 10 7 Restaurants, Fast Food & Coffee Shops 6 4 Government 50 49 Hardwar
Slide 26: Covid-19 Tenant Relief
COVID-19 TENANT RELIEF RENTAL DISCOUNTS (APR 2020 – AUG 2020) RENTAL DEFERRALS (APR 2020 – AUG 2020) Exposure Discount Discount Exposure Deferral Deferral Retail (%) (Rm) (%) Retail (%) (Rm) (%) Essential 44 1.6 6 Essential 44 0.2 6 Government 3 - 0 Government 3 - 0 Non-essential medium 11 8.0 29 No
Slide 27: Rental Collections During Covid-19 Pandemic
RENTAL COLLECTIONS DURING COVID-19 PANDEMIC RETAIL April May June July Aug Sep Oct Average for the period 160% 105% 120% 97% 97% 94% 140% 90% 100% 120% 134% 79% 125% 100% 119% 119% 120% 113% 118%123% 118% 115% 117% 80% 111% 110% 107% 111% 100% 103% 98% 99% 80% 91% 96% 95% 60% 88% 89% 87% 88% 88% 85%
Slide 28: Outlook
03 OUTLOOK IZAK PETERSEN CEO
Slide 29: Outlook
OUTLOOK Focus on balance sheet, cashflows and debt renewal Resolve our structural issues Avoid further bad debts Keep our team motivated No guidance provided for 2021 Annual Results for the year ended 31 August 2020 29
Slide 30: Questions & Answers
04 QUESTIONS & ANSWERS Annual Results for the year ended 31 August 2020
Slide 31: Annexures
05 ANNEXURES Annual Results for the year ended 31 August 2020
Slide 32: Strategy
STRATEGY Remaining Buying Managing SHAREHOLDER VALUE CREATION disciplined well brilliantly ▪ Geographically diversified SA OUR VALUE PROPOSITION ▪ Economically active locations focused ▪ Sectorally diversified ▪ A diversified REIT that is growing, improving and ▪ Predominantly retail (convenience, r
Slide 33: Strategic Capital Allocation
STRATEGIC CAPITAL ALLOCATION AT LISTING CURRENT FUTURE 10% 20% Retail 29% 20% Office 54% By income 64% By income 60% By income 15% Industrial 10% 17% 1% Residential ▪ Allocation of capital into areas of core competency STRATEGIC GROWTH DRIVERS ▪ Build capacity for operational excellence ▪ Tactically
Slide 34: Geographic Snapshot
GEOGRAPHIC SNAPSHOT TOTAL OF 190 PROPERTIES Retail 100 Gauteng Limpopo Office 35 North West 62 29 33 2 18 15 3 Industrial 53 Mpumalanga 7 1 Residential 2 126 8 7 Northern Cape 3 2 2 6 KwaZulu-Natal 1 1 12 5 7 Western Cape 8 Free State 4 1 1 2 Eastern Cape 3 2 1 3 1 4 Annual Results for the year ende
Slide 35: Total Portfolio - Key Indicators
TOTAL PORTFOLIO ‒ KEY INDICATORS Portfolio Total GLA Average WALE by SECTORAL SPLIT BY GROSS INCOME value property size Income / GLA Retail R8.6 bn * 923 964m² 4 863m² 64% 66% 2.5 / 3.3 Aug Aug 20% Office years 20% 2020 2019 Industrial 2019: R8.6bn 2019: 923 679m² 2019: 4 761m² 2019: 3.0 / 3.7 15% 1
Slide 36: Retail Portfolio - Key Indicators
RETAIL PORTFOLIO ‒ KEY INDICATORS Average WALE by Portfolio value Total GLA property size income / GLA R5.4 bn* 442 596m² 4 426m² 2.7 / 2.9 years 2019: R5.5bn 2019: 456 421m² 2019: 4 266m² 2019: 3.0 / 3.1 Average Average value Weighted average Weighted average property value per m² by GLA gross rent
Slide 37: Office Portfolio - Key Indicators
OFFICE PORTFOLIO ‒ KEY INDICATORS Average WALE by Portfolio value* Total GLA property size income / GLA R1.8 bn 132 628m² 3 789m² 1.8 / 1.7 years 2019: R1.8bn 2019: 129 214m² 2019: 3 800m² 2019: 2.3 / 2.2 Average Average value Tenant retention Vacancy property value per m² by GLA R52m R13 790 93% 8.
Slide 38: Industrial Portfolio - Key Indicators
INDUSTRIAL PORTFOLIO ‒ KEY INDICATORS Average Average Portfolio value Total GLA property size property value R1.2 bn 338 037m² 6 378m² R23m 2019: R1.3bn 2019: 338 043m² 2019: 6 378m² 2019: R24m WALE by Average value income / GLA Tenant retention Vacancy per m² by GLA 3.2 / 4.4 R3 682 77% 3.3% years
Slide 39: Top Ten Properties
TOP TEN PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 388 18 070 Gillwell Mall Eastern Cape 22 090 341 15 414 Chilli Lane Gauteng 13 607 294 21 569 Seshego Circle Limpopo 15 229 272 17 879 Umzimkhulu Mall KwaZulu-Natal 15 863 243 15 312 Nquthu Plaza KwaZulu-Natal
Slide 40: Top Ten Retail Properties
TOP TEN RETAIL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Gillwell Mall Eastern Cape 22 090 341 15 414 Chilli Lane Gauteng 13 607 294 21 569 Seshego Circle Limpopo 15 229 273 17 951 Umzimkhulu Mall KwaZulu-Natal 15 759 243 15 413 Nquthu Plaza KwaZulu-Natal 14 912 228 15 263 Gezina Ga
Slide 41: Top Ten Office Properties
TOP TEN OFFICE PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 388 18 070 Avanti Office Park Western Cape 8 370 180 21 541 Firestation Rosebank Gauteng 4 259 124 29 068 SAPS IJS Gauteng 7 874 124 15 723 Valley View Office Park Gauteng 6 793 100 14 706 Carnation Pla
Slide 42: Top Ten Industrial Properties
TOP TEN INDUSTRIAL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Corporate Park II Polokwane Limpopo 28 058 192 6 847 New Brighton PE Eastern Cape 24 515 137 5 588 Range Road Blackheath Western Cape 12 905 96 7 470 Renaissance Park Gauteng 10 680 62 5 758 Sterkolite Hangar Gauteng 12 78
Slide 43: Residential Property
RESIDENTIAL PROPERTY Value Value Building name Region GLA m² Rm R/m² Urban Village Palm Springs* Gauteng 9 398 122 12 953 Urban Village Norwood Gauteng 1 304 22 16 871 Total 10 702 144 Percentage of total portfolio 1% 1% * Excluding NCI Annual Results for the year ended 31 August 2020 43
Slide 44: Geographic Profile - Total Portfolio
GEOGRAPHIC PROFILE – TOTAL PORTFOLIO No of Average Value Value GLA m² Properties Rm Rm Gauteng 532 987 126 43 5 398 Limpopo 92 765 18 50 894 Eastern Cape 104 408 8 91 729 KwaZulu Natal 84 391 12 57 689 Western Cape 27 033 4 79 316 North West 31 585 8 32 254 Mpumalanga 28 791 7 25 172 Free State 19 9
Slide 45: Geographic Profile - Retail
GEOGRAPHIC PROFILE – RETAIL No of Average Value Value GLA m² Properties Rm Rm Gauteng 243 278 62 50 3 073 Limpopo 58 398 15 44 667 KwaZulu Natal 42 098 5 122 612 Eastern Cape 43 522 3 175 525 North West 26 179 7 35 246 Mpumalanga 11 175 3 41 124 Free State 13 164 3 31 93 Western Cape 2 685 1 23 23 N
Slide 46: Geographic Profile - Office
GEOGRAPHIC PROFILE – OFFICE No of Average Value Value GLA m² Properties Rm Rm Gauteng 112 729 29 54 1 576 Western Cape 8 370 1 180 180 Mpumalanga 4 244 2 14 27 Free State 3 875 2 12 24 Eastern Cape 3 410 1 21 21 Total 132 628 35 52 1 828 Annual Results for the year ended 31 August 2020 46
Slide 47: Geographic Profile - Industrial
GEOGRAPHIC PROFILE – INDUSTRIAL No of Average Value Value GLA m² Properties Rm Rm Gauteng 166 277 33 18 605 Limpopo 34 368 3 76 227 Eastern Cape 57 476 4 46 183 Western Cape 15 978 2 56 113 KwaZulu-Natal 42 293 7 11 77 Mpumalanga 13 372 2 11 21 Free State 2 866 1 12 12 North West 5 407 1 7 7 Total 3
Slide 48: Geographic Profile - Residential
GEOGRAPHIC PROFILE – RESIDENTIAL No of Average Value Value GLA m² Properties Rm Rm Gauteng 10 702 2 72 144 Total 10 702 2 72 144 Annual Results for the year ended 31 August 2020 48
Slide 49: Vacancy by Province
VACANCY BY PROVINCE PORTFOLIO VACANCY CONTRIBUTION VACANCY % Vacant sector Free State 13.4% North West 10.2% Gauteng 9.5% Eastern Cape 3.1% Mpumalanga 3.0% Limpopo 1.8% Gauteng 79% KwaZulu-Natal 2% KwaZulu-Natal 1.5% Eastern Cape 5% Mpumalanga 1% Western Cape 1.1% North west 5% Northern Cape 0% Free
Slide 50: Portfolio Sectoral Split
PORTFOLIO SECTORAL SPLIT Sector By Income By GLA Retail 64% 48% 64% 14% Office 20% 14% 48% Industrial 15% 37% 20% 37% Residential 1% 1% 1% Total 100% 100% 1% 15% Annual Results for the year ended 31 August 2020 50
Slide 51: Retail Portfolio by Type of Centre
RETAIL PORTFOLIO BY TYPE OF CENTRE Sector By Income By GLA 38% Rural Centre 25% 26% 27% 4% Rural Strip 4% 7% 7% 19% Urban Center 38% 27% 11% 26% 25% Urban Strip 11% 19% 21% Urban Township Centre 22% 21% 22% Total 100% 100% Annual Results for the year ended 31 August 2020 51
Slide 52: Office Portfolio Grading
OFFICE PORTFOLIO GRADING Office Grading By Income By GLA 72% A-Grade 72% 61% 61% B-Grade 28% 39% Total 100% 100% 39% 28% Annual Results for the year ended 31 August 2020 52
Slide 53: Industrial Portfolio by Type
INDUSTRIAL PORTFOLIO BY TYPE By Income By GLA 66% General industrial 66% 74% 74% Mini units 6% 7% 6% Warehousing & 7% 28% 19% Logistics 19% 28% Total 100% 100% Annual Results for the year ended 31 August 2020 53
Slide 54: Tenant Profile
TENANT PROFILE TENANT GRADING BY INCOME TOP 10 TENANTS BY INCOME DPW and Government 14% 16% Shoprite Group 8% Woolworths 5% A Pepkor Group 4% 13% B Reclamation Group 3% Pick 'n Pay 3% C Cashbuild 2% Residential 2% 71% DSV Solutions 2% Massmart 2% 43% TENANT GRADING BY GLA TOP 10 TENANTS BY GLA Recla
Slide 55: Portfolio Space Exposure
PORTFOLIO SPACE EXPOSURE By Income By GLA 71% Mult-tenanted 71% 61% 61% Single-tenanted 29% 39% Total 100% 100% 39% 29% Annual Results for the year ended 31 August 2020 55
Slide 56: Sector Space Exposure
SECTOR SPACE EXPOSURE BY INCOME Retail Office Industrial Residential Total Multi tenanted 88% 42% 37% 100% 71% Single tenanted 12% 58% 63% 0% 29% Total 100% 100% 100% 100% 100% BY GLA Retail Office Industrial Residential Total Multi tenanted 89% 49% 28% 100% 61% Single tenanted 11% 51% 72% 0% 39% To
Slide 57: 5-Year Dividend Per Share History
5-YEAR DIVIDEND PER SHARE HISTORY cps A-share B-share Total 4.4% (6.1%) 5.8% 200 205,5 196,8 193,0 (12.4%) 186,0 169,0 150 4.2% 3.8% 5.0% 4.5% 6.7% 4.4% 114,5 100 110,3 105,8 (17%) 101,3 99,7 96,5 95,5 89,5 82,7 (34.2%) 50 54,5 0 Aug 2016 Aug 2017 Aug 2018 Aug 2019 Aug 2020* * Represents distributab
Slide 58: 5-Year Combined Market Price to NAV
5-YEAR COMBINED MARKET PRICE TO NAV cents Market price NAV Premium / Discount 3 000 40% 2 500 -2% 0% 0% -10% -22% 2 000 2 092 -40% 2 042 2 020 2 026 2 006 2 050 2 000 2 000 1 805 -66% -72% 1 500 1 598 -80% 1 000 -120% 500 683 -160% 565 -200% Aug 2016 Aug 2017 Aug 2018 Aug 2019 Aug 2020 12 Nov 2020 A
Slide 59: 5-Year Market Indicators
5-YEAR MARKET INDICATORS 5-YEAR MARKET PRICE HISTORY cents DIA DIB 1 500 1 142 1 050 995 960 1 000 1 025 548 559 900 455 500 845 124 110 Aug 2016 Aug 2017 Aug 2018 Aug 2019 Aug 2020 12 Nov 2020 5-YEAR DIVIDEND YIELD HISTORY Percentage DIA DIB Combined 60% 51% 50% 44% 40% 30% 30% 25% 25% 21% 20% 15%
Slide 60: Human Capital: Lead, Co-operate, Win
HUMAN CAPITAL: • LEAD • CO-OPERATE • WIN Total no. of Ongoing Focus Asset Our employees at training and on managers service head office development operational with is our and in the of staff competence entrepre- differentiator regions neurial flair 81 Multi-skilled Internships Deal Exceptional Team
Slide 61: Sustainability
SUSTAINABILITY ELECTRICITY B-BBEE ▪ Planned solar project of 7 500 kWp, 12 sites at a total ▪ Top management and board substantially transformed cost of R60m ▪ Focus on sale of assets to previously disadvantaged ▪ Rolling out smart meters at various sites individuals ▪ LED lights used in all revamps