Emira Property Fund Ltd. · JSE:EMI
Emira Property Fund — FY2015 Earnings Presentation
57 slides from Emira Property Fund's earnings presentation, June 2015
Slide 1: Results for Year Ended 30 June 2015
RESULTS FOR YEAR ENDED 30 JUNE 2015
Slide 2: Agenda
AGENDA Overview Financials Portfolio Outlook › Highlights › Distribution › Portfolio statistics › Commercial › 5-year track record statement › Capex projects, property outlook › Organisational › Balance sheet acquisitions › REITCo conversion redevelopment and disposals › Summary and financial outloo
Slide 3: Highlights
HIGHLIGHTS Distributions NAV Vacancies Tenant per PI per PI at Jun 15 at Jun 15 retention at Jun 15 +15.9% 76% +9% to 1 751c 4.0% Acquisitions Disposals of Capex DPS outlook projects Similar growth to R1 375m R681m R186m FY15 3
Slide 4: 5-Year Track Record
5-YEAR TRACK RECORD 1 900 1 900 140 140 1 700 1 698 1 751* 1 700 130 1 500 1 496 1 470 1 511* 130 1 500 1 333 1 325 120 1 300 1 300 1 275 120 1 150 1 153 1 100 1 100 110 110 900 900 100 100 700 700 500 500 90 90 Jun1111 Jun Jun12 Jun 12 Jun 13 Jun 13 Jun Jun 14 14 Jun Jun15 15 PI Price (LHS) NAV (LH
Slide 5: Organisational Redevelopment
ORGANISATIONAL REDEVELOPMENT CA(SA) CEO 21 years experience Coronation Capital Geoff Jennett Nedbank Capital ABSA Capital COO/Fund CFO Manager To be announced Ulana van Biljon Geoff Jennett natural, Ulana van Biljon New CFO to logical choice as CEO significant operational be appointed designate expe
Slide 6: Financials
Financials Geoff Jennett CFO 6
Slide 7: Distribution Statement
DISTRIBUTION STATEMENT R’000 Jun 14 Jun 15 % ch Revenue 1 448 914 1 686 670 16.4 Property expenses (563 474) (580 756) 3.1 Gross property expenses to revenue ratio % 38.9 34.4 Net property expenses to revenue ratio % 15.8 13.1 Asset management fee (27 980) (32 865) 17.5 Admin expenses (fund expenses
Slide 8: Distribution Statement continued
DISTRIBUTION STATEMENT continued R’000 Jun 14 Jun 15 % ch Net income from property portfolio 803 597 1 023 318 27.3 Income from listed property investment 44 225 47 388 7.2 Interest cost (260 074) (396 023) 52.3 Investment income 13 363 10 833 (18.9) Distribution payable 601 111 685 516 14.0 Number
Slide 9: Balance Sheet
BALANCE SHEET Rm Jun 14 Jun 15 % ch Investment properties 10 759.0 12 741.1 18.4 Investment in Growthpoint Australia 666.0 796.9 19.6 Other assets 214.0 303.1 41.6 Total assets 11 639.0 13 841.1 18.9 PI holders equity 7 312.8 8 941.0 22.3 Interest-bearing debt 3 953.8 4 510.4 14.1 Other liabilities
Slide 10: Net Asset Value per PI
NET ASSET VALUE PER PI 1 800 26 6 1 751 215 (5) (2) 70 1 700 1 681 1 600 1 511 1 500 Cents 64 1 400 1 447 1 300 1 200 1 100 Jun 14 Revaluation of Revaluation of New PIs Issued Other/IFRS Change in Jun 15 Properties GOZ Distribution Liability 15.9% growth in NAV per PI 10
Slide 11: Debt Funding Mix
DEBT FUNDING MIX 700 Utilised Undrawn 600 500 400 Rm 300 200 100 - Aug Nov Feb Jul Sep Nov Mar Jul Jul Jul Jul Nov May May Aug Aug Aug Mar Aug Sep 15 15 16 16 16 16 17 17 17 17 17 17 18 18 18 18 18 19 19 20 R1.1bn of Diversified sources R1.5bn refinanced debt maturing of debt and in FY15 in FY16 mat
Slide 12: Swap Profile
SWAP PROFILE 800 700 600 500 400 Rm 300 200 100 0 Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 Hedged Weighted Weighted average debt duration all in interest rate 85% 3.6 years 8.7% 12
Slide 13: Portfolio
Portfolio Ulana van Biljon Executive Director 13
Slide 14: Property Portfolio Summary
PROPERTY PORTFOLIO SUMMARY 200 180 167 167 161 160 149 146 145 141 140 120 100 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Number of properties VALUE SPLIT PER SECTOR (R12.7bn) GLA SPLIT PER SECTOR (1.2m m²) 41% 35% retail retail 15% 44% industrial 33% 32% industrial office office 14
Slide 15: Property Portfolio Summary continued
PROPERTY PORTFOLIO SUMMARY continued VALUE PER m² +15% 20 000 15 000 14 310 13 899 10 824 R/m2 9 429 10 000 7 138 5 199 5 000 0 Office Urban Retail Rural Retail Industrial Total Jun 14 Jun 15 AVERAGE VALUE 210 198.5 +16% 180 Rm 150 120 92.8 87.9 90 76.0 60 37.7 42.2 30 0 Office Urban Retail Rural Re
Slide 16: Year-on-Year Like-for-Like Growth in Net Income
YEAR-ON-YEAR, LIKE-FOR-LIKE GROWTH IN NET INCOME (STATIC PORTFOLIO) 14% 12.1% 12% 10.3% 10% 8.6% 8.5% 8% 6.0% 6% 5.1% 3.8% 4% 2% 0% -2% -4% -2.3% Offices Retail Industrial Total Jun 14 Jun 15 Significant improvement y-o-y 16
Slide 17: Year-on-Year Like-for-Like Growth in Net Income
YEAR-ON-YEAR, LIKE-FOR-LIKE GROWTH IN NET INCOME (STATIC PORTFOLIO) 15% 12.1% 10.3% 10% 8.6% 8.5% 4.6% 3.8% 3.8% 5% 3.1% 0% -0.5% -5% -4.6% -5.7% -10% -10.1% -15% Offices Retail Industrial Total Gross Income Expenses Net Income Reduction in expenses: › Municipals › Leasing expenses › Depreciation 17
Slide 18: Vacancy Profile by GLA
VACANCY PROFILE BY GLA 20% 18% 16% 14% 12% 10.7% 10% 8.8% 7.8% 8% 5.6% 6% 4.5% 4.0% 4% 2.8% 2.7% 2.8% 2.2% 2% 1.0% 1.4% 0% Office Retail Industrial Total Jun 13 Jun 14 Jun 15 Office well below Well below SAPOA levels Weighted average per SAPOA levels (10.6%) for retail (5.2%) and SAPOA levels indust
Slide 19: Tenant Retention: FY15
TENANT RETENTION: FY15 81% 80% 80% 79% 78% 78% 77% 77% 77% 76% 76% 75% 74% 74% 73% 72% 71% m² No. of leases Jun 13 Jun 14 Jun 15 Expiries of 317 079m² comprising 857 leases 19
Slide 20: Major Lease Expiries: FY15
MAJOR LEASE EXPIRIES: FY15 Property Tenant Lease end GLA (m²) Status Wonderpark Pick n Pay Jun 15 13 983 Renewed Universal Times Media Jun 15 12 756 Re-let to various tenants Industrial Park Cambridge Park Itec SA Dec 14 5 615 Renewed 500 Smuts Drive SMADA Dec 14 5 201 Renewed Morgan Creek Simba Sep
Slide 21: Major Lease Expiries: FY16
MAJOR LEASE EXPIRIES: FY16 Property Tenant Lease end GLA (m²) Status Defy Appliances Defy Sep 15 10 100 Renewed Mitek South Africa Mitek Jan 16 6 604 Renewed The Studios CIPLA Nov 15 6 441 Vacating Atlas Gardens Menlyn SALGA Oct 15 5 939 Renewed Corporate Park Spoor & Fisher S&F Management Aug 15 5
Slide 22: Lease Expiry Profile
LEASE EXPIRY PROFILE 40% 35.5 35% 34.0 29.9 30% 26.8 26.8 25% 22.2 21.1 20% 18.7 17.1 17.5 15.4 15% 13.7 10% 5.6 5.2 5% 4.5 4.0 0.7 1.3 0% Vacancy Expiries Rolled Over Year 1 Year 2 Year 3 Year 4+ Jun 13 Jun 14 Jun 15 22
Slide 23: Reversions: Total (Gross Rentals)
REVERSIONS: TOTAL (GROSS RENTALS) Avg. Avg. new Increase/ Sector Area expiry rental lease rental (decrease) Office 70 148 111.24 107.11 -3.7% Retail 53 584 129.21 134.38 4.0% Industrial 77 197 50.26 49.71 -1.1% Total FY15 200 929 92.50 92.33 -0.2% Total FY14 338 950 79.87 78.58 -1.6% 23
Slide 24: Portfolio
Portfolio James Templeton CEO 24
Slide 25: Wonderpark Shopping Centre
WONDERPARK SHOPPING CENTRE Wonderpark Book Value Jun 12 Book Value Jun 15 Practical Completion Shopping R652m R1.57bn Oct 14 Centre Capital Spend PRETORIA GLA 89 985m² R561m 25
Slide 26: Knightsbridge
KNIGHTSBRIDGE Knightsbridge Book Value Jun 15 Practical Completion BRYANSTON Proposed GLA 29 352m² R84.5m Apr 19 Capital Spend R794.6m 26
Slide 27: Kramerville Corner
KRAMERVILLE CORNER Kramerville Corner Book Value Jun 15 Practical Completion KRAMERVILLE, SANDTON GLA 19 544m² R107.5m Jan 16 Capital Spend Bakos Brothers 1 031m² (5 yrs) Paco 1 107m² (5 yrs) R57.8m Collaro Designs 770m² (5 yrs) 27
Slide 28: Kramerville Corner
(5 kramervitte CORNER EMIRA PROPERTY FUND a a Bakos Brothers ~_
Slide 29: Capex Projects in Progress
CAPEX PROJECTS IN PROGRESS Value (Rm) Completion Kramerville Corner (refurbishment and new GLA) 57.8 Jan 16 Menlyn Corporate Park (King Price extension) 24.6 Aug 15 267 West (additional parking) 18.1 Mar 16 Market Square (re-tenanting) 12.1 Oct 15 9 Long (façade refurbishment) 9.8 Feb 16 Central Squ
Slide 30: Acquisitions Transferred
ACQUISITIONS TRANSFERRED 9 buildings R896.5m Yield 9.4% 30
Slide 31: Acquisitions Not Yet Transferred/Unconditional
ACQUISITIONS NOT YET TRANSFERRED/UNCONDITIONAL Emira Price Yield Avg. lease No of Property Location Sector GLA (Rm) (%) length (yrs) tenants Summit Place (50%) Menlyn Office & Retail 15 239 403.5 8.1% 7.5 7 Shoprite Mall Cape Town Retail 8 333 75.3 9.3% 3.0 33 Mitchells Plain (50%) Total 23 572 478.
Slide 32: Disposals Transferred
DISPOSALS TRANSFERRED 8 buildings Forward yield Premium to R361.5m 7.1% book value +20.3% 32
Slide 33: Disposals Not Yet Transferred
DISPOSALS NOT YET TRANSFERRED 4 buildings Forward yield Premium to R319.5m 6.9% book value +40.2% 33
Slide 34: Outlook
Outlook James Templeton CEO 34
Slide 35: Commercial Property Outlook
COMMERCIAL PROPERTY OUTLOOK Office Supply Vacancies Outlook SAPOA SAPOA Currently fundamentals are linked to quality of 800 000m2 10.6% space and specific nodes, with prime offices or 4.7% showing encouraging growth Retail SACSC 2015 SAPOA average Top performing sector, but retailers’ costs of 1 947
Slide 36: REITCo Conversion
REITCO CONVERSION Converted to a Effective date Costs of REIT 1 Jul 15 R10m, Company benefits of structure 36
Slide 37: Summary and Financial Outlook
SUMMARY AND FINANCIAL OUTLOOK › Excellent operational performance › Strong growth in DPS +9% › Significant growth in NAV +15.9% › Meaningful acquisitions and sales R2.1bn › CEO replacement announced › Well established structure in place › Continued positive DPS outlook 37
Slide 38: Thank you
Thank you 38
Slide 39: Annexures
Annexures 39
Slide 40: Financials: Debt Covenants
FINANCIALS: DEBT COVENANTS Value of Amount Amount Actual LTV ICR properties available drawn LTV covenant Actual covenant Facility Rm Rm Rm % % ICR times Nedbank Synthesis 554.9 200.0 200.0 33.4* 40.0 2.7 2.0* Nedbank Loan (unsecured) – 614.0 577.7 – 40.0 – 2.0 Standard Bank 354.2 200.0 200.0 33.4* 5
Slide 41: Financials: Cost-to-Income Ratio
FINANCIALS: COST-TO-INCOME RATIO 45% 40% 39% 37% 35% 34% 30% 25% 20% 17% 16% 15% 13% 10% 5% 0% Gross Net Jun 13 Jun 14 Jun 15 41
Slide 42: Financials: Properties Excluded from Like-for-Like
FINANCIALS: PROPERTIES EXCLUDED FROM LIKE-FOR-LIKE The following are excluded from FY14 and FY15 numbers: › Purchases » Ben Fleur Shopping Centre (60%), Assegaai Place, Waterside Place, Makro Selby, The View Tygervalley, Parklands Health Care, The Studios Atlas Gardens, Steelpark Industrial Park, Br
Slide 43: Portfolio: Geographic Spread by Value and Number
PORTFOLIO: GEOGRAPHIC SPREAD BY VALUE AND NUMBER GEOGRAPHICAL SPREAD BY VALUE (%) n Pretoria 5 n Johannesburg n Durban 31 n Cape Town n Bloemfontein 41 11 12 43
Slide 44: Portfolio: Vacancy by Category and Grade by GLA
PORTFOLIO: VACANCY BY CATEGORY AND GRADE BY GLA 25% 20% 15% 11.6% 10.0% 10% 9.2% 9.1% 7.6% 6.8% 5.6% 5% 4.5% 4.0% 2.8% 2.7% 2.8% 2.2% 1.0% 1.4% 0% Prime + Office A Office B Retail Industrial Total Jun 13 Jun 14 Jun 15 44
Slide 45: Reversions: Renewals (Gross Rentals)
REVERSIONS: RENEWALS (GROSS RENTALS) Avg. Avg. new Increase/ Sector Area expiry rental lease rental decrease Office 54 503 109.03 107.33 -1.6% Retail 32 589 141.47 145.66 3.0% Industrial 53 093 50.34 49.83 -1.0% Total FY15 140 185 94.32 94.46 0.1% Total FY14 230 131 84.43 84.61 0.2% 45
Slide 46: Reversions: New Leases (Gross Rentals)
REVERSIONS: NEW LEASES (GROSS RENTALS) Avg. Avg. new Increase/ Sector Area expiry rental lease rental decrease Office 15 646 118.84 106.37 -10.5% Retail 20 994 109.73 116.86 6.5% Industrial 24 104 50.08 49.44 -1.3% Total FY15 60 744 88.29 87.40 -1.0% Total FY14 108 819 69.94 65.82 -5.9% 46
Slide 47: Portfolio: Lease Expiry Profile (by GLA)
PORTFOLIO: LEASE EXPIRY PROFILE (BY GLA) Sector Office Retail Industrial Total Vacancy 2.6% 1.0% 0.4% 4.0% Expiries rolled over 0.2% 0.5% 0.6% 1.3% Year 1 11.4% 5.8% 9.6% 26.8% Year 2 7.4% 4.7% 6.5% 18.7% Year 3 5.8% 4.9% 3.1% 13.7% Year 4+ 6.2% 17.9% 11.4% 35.5% Total 33.6% 34.7% 31.7% 100.0% 47
Slide 48: Portfolio: Escalations
PORTFOLIO: ESCALATIONS 9.0% 8.6% 8.5% 8.5% 8.4% 8.1% 8.0% 8.0% 7.9% 7.9% 7.7% 7.7% 7.7% 7.7% 7.6% 7.5% 7.0% Office Retail Industrial Total Jun 13 Jun 14 Jun 15 48
Slide 49: Portfolio: Emira Net Rentals
PORTFOLIO: EMIRA NET RENTALS (EXCL. PARKING, STORES AND VACS) No. of Occupied Avg. net rental buildings GLA (R/m²) Office: P Grade 3 48 076 156.37 Office: A Grade 30 161 488 115.67 Office: B Grade 28 155 060 97.01 Retail: Urban 23 318 598 110.36 Retail: Rural 15 78 441 91.39 Industrial 46 368 008 46
Slide 50: Portfolio: Potential New Capex Projects
PORTFOLIO: POTENTIAL NEW CAPEX PROJECTS Major projects being considered Type m² Value (Rm) Construction time Knightsbridge, Bryanston Office 30 000 794.6 60 months 1 West Street, Centurion Office 22 500 561.0 18 months Harbour Place, Cape Town Office/Retail 19 000 329.6 24 months Podium Phase 2, Men
Slide 51: Sustainability Planning
SUSTAINABILITY PLANNING Water Green buildings Reporting and targets › Recent restrictions noted as › Podium at Menlyn awarded › Carbon Footprint 15.55% risk to operations 4-Star GreenStar SA Existing yr-on-yr increase: › Water footprint audit underway Building Performance (Pilot) » 3% due to emissio
Slide 52: Portfolio: Acquisitions – Office
PORTFOLIO: ACQUISITIONS – OFFICE GLA (m²) Value (Rm) Yield Transfer Tygervalley Healthcare, Tygervalley 6 719 149 11.1% Jul 14 Waterside Place, Tygervalley 4 955 84 9.4% Jul 14 Auditor General, Brooklyn 3 432 76 10.3% Jul 14 Total 15 107 309 10.5% 52
Slide 53: Portfolio: Acquisitions – Retail
PORTFOLIO: ACQUISITIONS – RETAIL GLA (m²) Value (Rm) Yield Transfer Ben Fleur Shopping Centre, Emalahleni (60% undivided share) 5 144 66 9.4% Aug 14 Makro, Selby 19 708 346 8.0% Jul 14 Parklands Healthcare, Parklands 2 531 56 10.5% Jul 14 Total 27 383 468.5 8.5% 53
Slide 54: Portfolio: Acquisitions – Industrial
PORTFOLIO: ACQUISITIONS – INDUSTRIAL GLA (m²) Value (Rm) Yield Transfer Atlas Gardens, Durbanville 9 006 65 10.4% Jul 14 Steelpark Industrial, Steelpark 9 362 34 9.8% Jul 14 Roelcor, Kraaifontein 3 106 20 8.4% Jul 14 Total 21 474 119 9.9% 54
Slide 55: Portfolio: Disposals
PORTFOLIO: DISPOSALS Property Location Sector GLA Price (Rm) Yield (%) Transfer date Executive City Johannesburg Industrial 4 558 11.2 10.8 Jul 2014 Woodmead Office Park (50%) Johannesburg Office 8 162 60.0 5.1 Jul 2014 Kya Sands (Cnr Precision & Staal Streets) Johannesburg Industrial 1 452 5.1 14.1
Slide 56: Portfolio: Disposals Not Yet Transferred
PORTFOLIO: DISPOSALS NOT YET TRANSFERRED Property Location Sector GLA Book Value (Rm) Price (Rm) Yield (%) Tokai Shopping Centre Randburg Retail 2 603 15.4 16.0 12.5 500 Smuts Drive Midrand Office 5 201 43.5 43.5 7.4 Brandwag SC + Kosmos Flats Bloemfontein Retail 12 328 159.0 250.0 6.5 1289 Heuwel A
Slide 57: Portfolio: Top Ten by Value
PORTFOLIO: TOP TEN BY VALUE Property Node Classification GLA Rm Major tenants Wonderpark Pretoria Regional 89 985 1 570 Pick n Pay (12 867m²), Game (5 292m²), Checkers Shopping Centre S/Centre (4 708m²), Woolworths (4 135m²), Edgars (3 998m²) Virgin Active (3 508m²) Menlyn Menlyn Offices 25 767 674