Delta Property Fund Limited · JSE:DLT
Delta Property Fund — H1 2022 Earnings Presentation
45 slides from Delta Property Fund's earnings presentation, Nov 8, 2021
Slide 1: Results Presentation for Six-Months Ended 31 August 2021
RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021 08 November 2021 www.deltafund.co.za www.deltafund.co.za
Slide 2: Agenda
AGENDA 01 Introduction and interim CEO report 02 Financial Review 03 Conclusion 04 Questions & Answers 05 Annexures 2 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 3: Introduction and Interim CEO Report
INTRODUCTION AND INTERIM CEO REPORT Bongi Masinga
Slide 4: Introduction to Delta
INTRODUCTION TO DELTA Value of Gross Sovereign underpinned investment property lettable area JSE listed SA REIT R8.3bn 904 528 m2 81.6% (Feb 2021: R8.2bn) (Feb 2021: 909 984m2) by GLA (Feb 2021 : 81.3%) SA REIT net asset Collections Share value per share Price R5.23 93.3% R0.58 (Volume R25m) as at 2
Slide 5: Roadmap to Distribution Payment
ROADMAP TO DISTRIBUTION PAYMENT Strategic objectives Achieved KPIs Strengthen balance sheet and improve LTV to below Board approved strategy Conclude new leases and 50% and reduce vacancies to below industry norms reduce vacancies by Feb 2024. Stabilised leadership Ongoing capex delivery Targeting 1
Slide 6: Strategic Focus Areas
STRATEGIC FOCUS AREAS LTV and ICR targets CAPEX execution Human capital development • LTV target: • Outcomes: • Engaged team with aligned values − <50% by August 2022 − Reduction in vacancies − Employee survey and ethics questionnaire by February 2022 − <45% by February 2023 − Tenant retention − Per
Slide 7: Business Update
BUSINESS UPDATE Leasing= Progress • 9 109m2 of new leases concluded with a further 34 229m2 of leases renewed despite tough market conditions • Rental reversions are in line with expected market rentals • Continuing this trajectory will extend our portfolio WALE 7 RESULTS PRESENTATION FOR SIX-MONTHS
Slide 8: Business Update continued: Capital expenditure
BUSINESS UPDATE continued.. Capital expenditure • Delivery of the capex programme remains a priority to ensure assets meet tenants’ requirements • During the reporting period, capital expenditure on investment property totaled R62 million (R74.5 million as of 31 October 2021) • Management is well on
Slide 9: Poynton Building Upgrades
POYNTON BUILDING UPGRADES RECEPTION UPGRADE PROJECT Before In progress RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 9
Slide 10: Poynton Building Upgrades (continued)
POYNTON BUILDING UPGRADES (CONTINUED) LIFT LOBBY UPGRADE PROJECT Before In progress RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 10
Slide 11: Poynton Building Upgrades (continued)
POYNTON BUILDING UPGRADES (CONTINUED) GROUND FLOOR WALKWAY UPGRADE PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 11
Slide 12: Poynton Building Upgrades (continued)
POYNTON BUILDING UPGRADES (CONTINUED) FAÇADE UPGRADE PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 12
Slide 13: Commissioner House Upgrade Projects
COMMISSIONER HOUSE UPGRADE PROJECTS FIRST FLOOR, FIRE DAMAGE PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 13
Slide 14: Commissioner House Upgrade Projects (continued)
COMMISSIONER HOUSE UPGRADE PROJECTS(CONTINUED) BUILDING FAÇADE UPGRADE AND PAINTING PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 14
Slide 15: Veritas, Pretoria Upgrade Projects
VERITAS, PRETORIA UPGRADE PROJECTS PASSAGE FLOORING UPGRADE PROJECT Before After 15 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 16: 56 Barrack Street, Upgrades
56 BARRACK STREET, UPGRADES KITCHEN UPGRADE PROJECTS Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 16
Slide 17: 56 Barrack Street, Upgrades (continued)
56 BARRACK STREET, UPGRADES (CONTINUED) FIRST FLOOR FLOORING UPGRADE PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 17
Slide 18: 56 Barrack Street, Upgrades (continued)
56 BARRACK STREET, UPGRADES (CONTINUED) ABLUTION FACILITIES UPGRADE PROJECT Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 18
Slide 19: Servamus Building Upgrades
SERVAMUS BUILDING UPGRADES FIRST FLOOR FIRE DAMAGE Before After RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021. 19
Slide 20: Isivuno House, Die Meent, 88 Field Street, Devonshire
ISIVUNO HOUSE, PRETORIA DIE MEENT 88 FIELD STREET 2 DEVONSHIRE 20 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 21: SARS Kimberley, WB Centre Kimberley
SARS KIMBERLEY WB CENTRE KIMBERLEY 21 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 22: Disposal Strategy Gaining Traction Post Reporting Period
DISPOSAL STRATEGY GAINING TRACTION POST REPORTING PERIOD • Significant traction with capital recycling programme with four properties disposed of for an aggregate R150.5 million post the reporting period: (Discount)/ Net operating Disposal Fair value* premium to Weighted ave income / (loss) Asset Lo
Slide 23: Financial Review
FINANCIAL REVIEW Marelise De Lange
Slide 24: Financial Performance 2021
FINANCIAL PERFORMANCE 2021 Loan to Average cost value of of debt 55.7% 7.1% (Feb 2021 : 56.5%) (Aug 2020: 8.2%) SA REIT funds from operations Interest (previously distributable earnings) cover ratio R177.5 million 2.1 times (Aug 2020 : R116.4 million) (Feb 2021 : 1.9 times) 24 RESULTS PRESENTATION F
Slide 25: Financial Overview
FINANCIAL OVERVIEW Aug 2021 Aug 2020 Variance Rental Income including recoveries (R’000) 723 984 724 698 (0.1%) Net property income (R’000) 449 229 424 351 5.9% Net Finance costs (R’000) 193 874 228 142 (15%) Cost to income ratio - gross method 45.1% 45.9% (1.74) Cost to income ratio - net method 34
Slide 26: Statement of Profit or Loss and Other Comprehensive Income
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Aug 2021 Aug 2020 Variance Revenue Rental income 723 984 724 698 (0.1%) Straight line rental income accrual (1 965) (22 708) (91.4%) 722 019 701 990 2.9 Property operating expenses (272 790) (277 639) (1.8%) Net property rental and related i
Slide 27: SA REIT Funds from Operations (R'000)
SA REIT FUNDS FROM OPERATIONS (R’000) R’000 Aug 2021 Aug 2020 Profit/(Loss) per IFRS statement 147 920 (90 586) Adjusted for: Accounting specific adjustments Fair value adjustment loss/(gain) to: - Investment property - (1 580) - Debt and equity instrument held at fair value 37 310 56 079 Straight-l
Slide 28: SA REIT Funds from Operations Bridge
SA REIT FUNDS FROM OPERATIONS BRIDGE Rm 28 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 29: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION R’000 Aug 2021 Aug 2020 Variance ASSETS Non-current assets Investment property 8 258 438 8 716 082 (5.3%) Investment in listed securities 116 713 189 016 (38.3%) Other non-current assets 9 920 12 146 (18.3%) Current assets 420 979 431 118 (2.4%) Total assets 8 806 050
Slide 30: Debt Summary
DEBT SUMMARY As at August 2021 Facility Type R’ m Weighted Ave. Rate Floating bank facilities 4 615 7.2% Accrued interest 24 Debt structuring fees (5) Total borrowings including interest and fees 4 634 Interest rate swap contracts (3-month JIBAR linked) 1 860 7.0% Total fixed 1 860 Fixed % 40.1% 7.1
Slide 31: SA REIT NAV per Share Bridge
SA REIT NAV PER SHARE BRIDGE 31 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 32: Conclusion
< _ —_l Ly] fa) (a) Zz =) a > - a w a (e) a a CONCLUSION Bongi Masinga :
Slide 33: Conclusion
CONCLUSION • Strategic roadmap with clear deliverables focusing on: • Concluding leases and reducing vacancies • Continuing to focus on collections, including arrears • Strengthening the balance sheet through disposals, including Grit shares • Continued Reduction in LTV • Improving ICR to 2.5 times
Slide 34: Thank You and Questions
ff i ; os THANK YOU AND QUESTIONS
Slide 35: Annexures
A NNEXURES 01 Lease Expiry Profile 02 Sectorial Split 03 GLA and vacancy reconciliation 04 Disposals 05 Leasing Outlook 06 Portfolio Breakdown 35 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 36: Lease Expiry Profile August 2021
LEASE EXPIRY PROFILE 31 AUGUST 2021 TOTAL PORTFOLIO - BY GLA Lease Expiry Profile 35% 32% 30% 28% 25% 20% 15% 13% 12% 10% 6% 5% 4% 3% 2% 0% Vacant M-t-M 2022 2023 2024 2025 2026 Beyond 2026 36 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 37: Lease Expiry Profile August 2021 (Segmented)
LEASE EXPIRY PROFILE 31 AUGUST 2021 Segmented Lease Expiry: Office - Sovereign Lease Expiry: Office - Other 40% 38% 60% 35% 51% 50% 30% 25% 40% 19% 18% 20% 30% 22% 15% 12% 20% 13% 10% 5% 5% 4% 10% 1% 4% 1% 3% 5% 2% 2% 0% 0% Vacant M-t-M 2022 2023 2024 2025 2026 Beyond Vacant M-t-M 2022 2023 2024 202
Slide 38: Geographical and Sectoral Split
GEOGRAPHICAL AND SECTORAL SPLIT GEOGRAPHICAL BY GLA 38 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 39: GLA and Vacancy Reconciliation
GLA AND VACANCY RECONCILIATION Total GLA (m2) Vacant GLA (m2) Vacancy (%) Opening balance as at 28 February 2021 909 982 214 507 23.6% Disposals (5 454) (3 615) Vacancies - 35 426 GLA movement as at 31 August 2021 904 528 246 318 27.2% Disposal of Fort Drury (10 476) (1 921) Disposal of Sediba (2 74
Slide 40: Disposal of Assets
DISPOSAL OF ASSETS • During the period under review, Delta sold Domus for R25 million Property Building classification Location GLA (m2) Sales price (R) Transfer date Transferred Domus Office - Sovereign Pretoria, Gauteng 5 454 25 000 000 25 May 21 • Post reporting period Expected Property Building
Slide 41: Leasing Update
LEASING UPDATE Lease renewals concluded • For the financial year ended 31 August 2021, lease renewals were concluded for a total GLA of 34 229m² • The notable renewals during the reporting period were: Building GLA (m²) Term - months Delta Heights 1 643 60 17 Harrison Street Building & Kay Street Pa
Slide 42: Leasing Update continued
LEASING UPDATE continued.. New leases concluded • 9 109m2 in new leases were concluded • The notable new leases concluded during the reporting period were: Building GLA (m²) Term - months Liberty Towers 1 777 60 Block G 2 228 24 13 Elliott Street 2 266 6 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31
Slide 43: Portfolio Breakdown
PORTFOLIO BREAKDOWN Office - Sovereign Office - Other Industrial Retail Total Number of properties 79 15 2 3 99 Gross lettable area (m2) 683 779 183 767 13 267 23 716 904 528 Vacancies (%) 20.6 49.5 84.2 13.8 27.2 Value (R billions) 6.4 1.5 0.1 0.2 8.2 Weighted average rental (R/m2) 141.4# 108.1 83.
Slide 44: Notes
NOTES 44 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.
Slide 45: Notes
NOTES 45 RESULTS PRESENTATION FOR SIX-MONTHS ENDED 31 AUGUST 2021.