Fairvest Limited Class A · JSE:FTA
Fairvest Limited Class A — Arrowhead Properties — H1 2017 Earnings Presentation
32 slides from Fairvest Limited Class A's earnings presentation, 2017
Slide 1: Arrowhead Properties Interim Results 2017
ARROWHEAD PROPERTIES INTERIM RESULTS 2017
Slide 2: Who owns Arrowhead?
WHO owns Arrowhead? FUND MANAGER % Public Investment Corporation 10,1 Prudential Investment Managers 8,6 Investec Asset Management 8,0 Stanlib Asset Management 5,2 Bridge Fund Managers 5,1 Visio Capital Management 5,0 Arrowhead executive 3,5 Sanlam Investment Management 3,4 Sesfikile Capital 3,2 Old
Slide 3: Arrowhead group of listed property funds
ARROWHEAD 0OLLLSSSASSS SSDS SSS SA INDLUPLACE GEMGROW REBOSIS dipula [ELLING ON RESIDENTIAL properntics (ae WAR PNOPER TY Fund rT ——S ARROWHEAD PROPERTIES
Slide 4: The Arrowhead offering
THE Arrowhead offering • strong balance sheet • 23% NAV growth to R11,32 • 5 years of consistent growth • disciplined acquisition strategy • trusted hands in difficult economic conditions
Slide 5: Asset management – a cut above
ASSET management – a cut above • pro-active asset and property management • increase in vacancy & lease renewal drop • accurate forecasting • no surprises
Slide 6: Defensive and diversified
DEFENSIVE and diversified • diversified SA portfolio • Indluplace: residential • Gemgrow: smaller assets • Rebosis • Dipula • 51 assets spread across the sectors and country • well hedged and lowly geared
Slide 7: Core portfolio growth
CORE portfolio growth 31 MARCH 31 MARCH YEAR ENDED 2017 2016 VARIANCE R’000 R’000 % Revenue 409 973 392 005 4,58 Property expenses (150 038) (142 260) 6,87 Net operating income 257 935 249 745 3,28 ASSUMING A GEARING RATIO ON THE PORTFOLIO OF 25% AND ANNUAL EFFECTIVE INTEREST RATE OF 9,2% THE TOTAL
Slide 8: Total dividend
TOTAL dividend R’000 2017 2016 Revenue (excluding straight line rental income) 959 324 743 681 Listed securities income 95 893 20 097 Property expenses (360 780) (270 655) Administration and corporate costs (23 809) (15 333) Finance expenses (193 283) (111 003) Finance income 39 940 27 337 Pre-effec
Slide 9: Arrowhead statement of financial position as at 31 March 2017
ARROWHEAD as at 31 March 2017 Unaudited for the Unaudited for the R'000 6 months ended 6 months ended 31 March 2017 31 March 2016 ASSETS Non-current assets 15 560 960 11 253 554 Investment property 12 400 987 9 532 337 Fair value of property portfolio for accounting purposes 12 322 921 9 436 103 Str
Slide 10: Debt at 31 March 2017
DEBT at 31 March 2017 • loans of R4,2 billion • 86% of loans fixed (Arrowhead 90,4%) • LTV of 27,8% • effective interest rate 9,53% (Arrowhead 9,51%) DEBT EXPIRY ARROWHEAD GROUP ARROWHEAD COMPANY 2017 R 775 033 million R 200 000 million 2018 R 1 038 183 million R 837 509 million 2019 R 1 348 000 mil
Slide 11: Total sales
TOTAL sales R’000 Pentagraph building 26 500 Tyrwitt Avenue 36 000 Total 62 500
Slide 12: Portfolio
PORTFOLIO • 51 commercial properties • R5,6 billion property portfolio • R111 million average asset size • 53% retail, 39% office and 8% industrial (sectoral by value)
Slide 13: Average rentals and escalations
AVERAGE rentals and escalations • office 116 R\sqm & 8,25% • retail 124 R\sqm & 7,98% • industrial 44 R\sqm & 8,71% • 52% lease renewed (expected and forecast)
Slide 14: Vacancy
VACANCY • as expected and forecast • office 15,9% • retail 7,3% • industrial 9,2% • overall 10,8% • current overall 8,86% as of 11 May
Slide 15: Rental increases
RENTAL increases • office 0% • retail 13,5% • industrial -31% (small by value in portfolio) • overall increase 3% • average lease length 3,84 years
Slide 16: Sturdee (ex Sasol)
1 STURDEE (ex Sasol) • Sasol assumed vacant from 1 Jan – 30 Sep 2017 • soft refurbishment complete in May • live lead (2 offers received) • marketing as multi-tenanted building – Arrowhead moving in • broken up into smaller pockets • asking R149m2
Slide 17: Before
BEFORE ARROWHEAD PROPERTIES
Slide 18: After
AFTER
Slide 19: Top 5 properties: Access Park
TOP 5 properties ACCESS PARK Western Cape R 711 000 000 20 456 m2 Retail
Slide 20: Top 5 properties: Cleary Park
TOP 5 properties CLEARY PARK Eastern Cape R 490 000 000 36 294 m2 Retail
Slide 21: Top 5 properties: Westgate Mall
TOP 5 properties WESTGATE MALL Western Cape R 316 520 000 28 951 m2 Retail
Slide 22: Top 5 properties: Sturdee
TOP 5 properties 1 STURDEE Gauteng R 265 772 000 13 350 m2 Office
Slide 23: Top 5 properties: Midtown Mall
TOP 5 properties MIDTOWN MALL North West R 245 642 000 17 456 m2 Retail
Slide 24: Indluplace at March 2017
INDLUPLACE at March 2017 • listing portfolio size of 3796 Units valued at R1,6 billion • Indluplace owns 5 511 residential units valued to R2,4 billion and debt of R159 million • low vacancy 4,5% and arrears 0,5% • Arrowhead owns 60% of Indluplace valued at R1,486 billion
Slide 25: Indluplace highlights
INDLUPLACE highlights • acquisition of Diliculo portfolio (1 319 units) for R475m at 10,5% • sellers more realistic, strong pipeline • LTV under 7% • ungeared return of 5,5% to 6,5% will be improved once gearing brought up to 35% target • forecast excludes acquisitions
Slide 26: Gemgrow
GEMGROW • 129 properties valued at R4,3 billion • 23% LTV • market cap of R3,3 billion • dividend growth on track
Slide 27: Gemgrow highlights
GEMGROW highlights • attractive A & B unit structure • well positioned balance sheet • niche market • acquisition of 477 million at 11,85% yield • margin between cost of money & acquisition yield
Slide 28: Dipula
DIPULA • market cap of around R4,8 billion • Arrowhead owns 23% of the Dipula B shares which is around 11% of the company • expected dividend for Dipula B for the year end August 2017 between 7,1% – 9,2% • average cost per share R7,58 vs current price R12 • up 58% on investment excluding dividends •
Slide 29: Rebosis
REBOSIS • market cap of around R7,8 billion • Arrowhead owns 19% of Rebosis shares • dividend for Rebosis shares for the interim period end Feb 2017 was 60,08 cents per share • 7,1% up in line with our expectations • average cost per share R10,98 vs current price R11,50 • up 5% on investment after m
Slide 30: Arrowhead going forward
ARROWHEAD going forward • consistent dividend growth • proudly South African focused • focus on asset management • bigger and better “quality” properties but still revenue enhancing • consolidation with and investments in other listed REITS on revenue enhancing basis • defensive nature of portfolio
Slide 31: Arrowhead 6 months to 30 September 2017
ARROWHEAD 6 months to 30 September 2017 • Indluplace • Gemgrow • Dipula • Rebosis
Slide 32: Thank you
ARROWHEAD PROPERTIES