Redefine Properties Limited · JSE:RDF
Redefine Properties — Debt Investor Presentation (July 2022)
49 slides from Redefine Properties's debt investor presentation, July 2022
Slide 1: Looking beyond
Please follow our LinkedIn page for more details Looking beyond Debt investor roadshow – July 2022 1
Slide 2: Disclaimer
Disclaimer This presentation may include forward-looking statements which statements are not based on historical information, but rather premised on certain assumptions, risks, estimates and/or uncertainties (“risks and uncertainties”), which are taken into consideration as at date of this presentat
Slide 3: Strategic Outlook
GR SO 1 Strategic Outlook Strategic OUTLOOK Our agility and adaptability will differentiate us Debt investor roadshow – July 2022 3
Slide 4: Building stakeholder centricity to create maximum impact
Building stakeholder centricity to create maximum impact GR SO Continued evaluation and refinement of the stakeholder engagement process Strategic Outlook → Created segmentable database for key stakeholders to enable meaningful engagement → Conducted stakeholder surveys to inform value expectations
Slide 5: Key strategic focus
Key strategic focus GR SO Focusing more intensely on the variables under our control Strategic Outlook → Creating a platform for ecosystems of talent, technology and information → Continuously improving, expanding and protecting our property portfolio → Recycling capital through the disposal of non-
Slide 6: Interim Results Recap
GR IR 2 Interim Results Recap Interim results RECAP Debt investor roadshow – July 2022 6
Slide 7: Key outcomes for the first half of 2022
Key outcomes for the first half of 2022 GR IR Building a quality, diversified portfolio that delivers sustainable risk-adjusted returns Interim Results Recap Property assets under Strategic Uses of cash flow of R5.0 billion management valued repositioning of at R71.0 billion asset platform FY21 dist
Slide 8: Local portfolio profile
Local portfolio profile GR IR A sizeable, well-diversified and high-quality portfolio Interim Results Recap Carrying value of Impact of portfolio repositioning Total GLA 4.2 million m2 properties R58.6 billion R # (FY21 | 4.3 million m2) (FY21 | R59.1bn) 327 25 000 315 302 296 350 272 267 20 000 300
Slide 9: Local portfolio key outcomes
Local portfolio key outcomes GR IR A challenging operating context, but well positioned for growth Interim Results Recap Weighted average exit cap rate per sector (core portfolio) Portfolio revaluation Active vacancy of 0.3% increased to 8.3% Industrial 9.0% (FY21 | -2.7%) (FY21 | 7.1%) Specialised
Slide 10: Local retail portfolio overview
Local retail portfolio overview GR IR Recovery continues but largely linked to discretionary spend Interim Results Recap Carrying value Building total 66 Contribution to vacancy by type (FY21 | 68) R24.2 billion 14.7% (FY21 | R24.4bn) Number of tenants 2 754 (FY21 | 2 786) 32.2% Vacancy by type 5.9
Slide 11: Local office portfolio overview
Local office portfolio overview GR IR A quality portfolio to withstand the downturn cycle Interim Results Recap Carrying value Building total 101 Contribution to vacancy by grade Vacancy by node 17.3% R21.7 billion (FY21 | 104) 37.5% Sandton: 14.6% (FY21 | R21.8bn) Number of tenants 1 104 Western Ca
Slide 12: Local industrial portfolio overview
Local industrial portfolio overview GR IR Location and efficiency remains key in a cost-sensitive market Interim Results Recap Carrying value Building total 97 Contribution to vacancy by type (FY21 | 97) 14.7% 0.7% R12.2 billion (FY21 | R12.3bn) Number of tenants 330 (FY21 | 334) Vacancy by type 4.4
Slide 13: Alternative income streams
Alternative income streams GR IR Broadening sources of income Interim Results Recap Redefine’s interests Platform profile Priorities → Provide loan funding to → Loans of R1.1 billion secure strategic partners Loans (FY21 | R2.0 billion) → Loans predominantly and provide transformation to various thi
Slide 14: International portfolio profile
International portfolio profile GR IR Exposure to Polish retail and logistics provides geographic diversification Interim Results Recap Value by sector (%) Platform carrying value# EPP carrying value 5% R11.5 billion R6.5 billion (FY21 | R12.6bn) (FY21 | R6.5bn) Retail 23% Industrial European logist
Slide 15: International portfolio key outcomes
International portfolio key outcomes GR IR Continued progress to simplify, de-risk and refocus the asset platform Economic risk: Poland vs emerging markets average Interim Results Recap Strong tenant demand Concluded takeover fueling logistics of EPP expansion Recycling of logistics M1 Marki acquire
Slide 16: European logistics platform overview
European logistics platform overview GR IR Lower cost of operation in Poland attracts users from the West seeking to expand their warehousing base Interim Results Recap GLA by tenant type (%) Value of income Tychy BTS completed 7% producing assets Production R8.1 billion and disposed for net 8% proc
Slide 17: Organisational restructure of EPP well-timed
EPP Organisational restructure of EPP well-timed GR IR Interim Results Recap Percentage of EPP’s GLA by retail category* Fashion and accessories 36.0% EPP was delisted on Redefine now holds Food/groceries/supermarkets 20.1% 8 March 2022 95.5% of EPP Electronics 13.5% Household appliances and accesso
Slide 18: Impact of the war in Ukraine from a Polish real estate perspective
Impact of the war in Ukraine from a Polish real estate perspective On the ground in Poland, it is business as usual with palpable humanitarian support extended to the people of GR IR Ukraine Interim Results Recap Higher inflation and interest rate impact on consumer Market rentals will lift due to i
Slide 19: Committed capital allocation priorities
Committed capital allocation priorities GR IR Allocating capital to position asset platform for sustained value creation Interim Results Recap Improving: R154 million Expanding: R719 million High → Revenue enhancing operational capital expenditure → European logistics platform developments → Solar P
Slide 20: Building the future-fit Redefine of tomorrow
Building the future-fit Redefine of tomorrow GR IR Creating smart and sustainable spaces Interim Results Recap Refocused property asset platform 2022 second half focus areas → Continuously improve, expand and protect asset South African assets 59% platform 24% Retail 22% Office 13% Industrial → Inte
Slide 21: Optimising Capital
GR OC 3 Optimising Capital Optimising CAPITAL Reshaping our funding sources within the confines of scarce and costly capital Debt Investor investor roadshow Roadshow––July July2022 2022 21 21
Slide 22: Key outcomes for the first half of 2022
Key outcomes for the first half of 2022 GR OC Robust balance sheet enables sustainable value creation Optimising Capital Sources of cash flow of R5.0 billion REIT LTV reduced to Interest cover ratio 41.9% improved to 2.7x (FY21 | 42.4%) (FY21 | 2.6x) Net disposals 3 142 Operational cash flow 1 275 A
Slide 23: Loan-to-value ratio back to acceptable level
Loan-to-value ratio back to acceptable level GR OC Targeted long-term LTV range 38% to 41% HY22 actual Pathway to target LTV Optimising Capital 42.4% 2.8% 41.9% 1.8% 40.0% 1.6% 0.7% 0.5% -2.1% -1.8% -1.0% -2.0% -1.4% -1.1% -0.3% -0.1% FY21 SA REIT LTV iniatives Reduction operations Cashflow from adj
Slide 24: Full year 2021 dividend absorbed
Full year 2021 dividend absorbed GR OC Stable liquidity profile maintained with unrestricted access to R5.7 billion Optimising Capital Cash generation remained strong with an average collection ratio of 101.3% Progress on FY23/24 maturities refinances advanced on back of continued healthy credit
Slide 25: EPP's funding challenge
EPP’s funding challenge GR OC Refinancing EPP is a top priority Optimising Capital Sources of liquidity of R6.4 billion Rbn Debt of R5.2 billion to be Loans maturing in FY22 and FY23 to be renewed Proceeds from corporate reorganisation 3.2 fully settled. R3.4 billion has already been repaid in 2023
Slide 26: Funding
GR F 4 Funding FUNDING Debt Investor investor roadshow Roadshow––July July2022 2022 26 26
Slide 27: Funding snapshot
Funding snapshot GR F Funding snapshot HY22 FY21 Funding SA REIT BPR – LTV 41.9% 42.4% Average term of debt 2.3 years 2.7 years % of debt secured 73.7% 69.6% % of asset secured* 65.6% 64.7% Weighted average cost of ZAR debt 8.4% 8.1% Weighted average cost of FX debt 1.9% 1.9% Weighted average cost o
Slide 28: Loan-to-value calculation
Loan-to-value calculation GR F HY22 FY21 SA REIT BPR LTV ratio Rm Rm Funding Property-related assets 71 019 73 087 Total assets 73 250 75 635 Less: Cash and cash equivalents (1 256) (1 356) Less: Derivative financial assets (288) (291) Less: Trade and other receivables (687) (901) Net debt 29 746 31
Slide 29: Analysis of secured and unsecured debt to property assets
Analysis of secured and unsecured debt to property assets GR F Assets Debt LTV Funding Rbn Rbn Secured 47.5 22.4 47.2% Local 40.9# 19.4 47.4% Offshore 3.0 45.5% 6.6## Unsecured 23.5 6.4 27.2% Local** 14.9 6.2 41.6% Offshore 8.6 0.2 2.3% Group LTV without CCS 71.0 28.8 40.6% Cross Currency Swaps (CCS
Slide 30: Debt funding profile
Debt funding profile GR F Funding Debt and hedging maturity profile Debt maturity profile post Secured debt and assets Rbn Rbn refinances in progress % 12 12 76% 74% 10.0 9.5 10 10 72% 70% 70% 8 6.0 6.1 5.7 8 6.8 68% 6.2 5.7 67% 6 4.9 68% 66% 67% 3.4 6 65% 67% 65% 4 2.5 2.7 4 3.1 2 0.7 0.1 1.5 1.0 6
Slide 31: Building the future fit Redefine of tomorrow
Building the future fit Redefine of tomorrow GR F Positioning the funding platform to cope with scarce and costly capital Funding % Drivers of the cost of capital 2022 second half focus areas 12 → Expand sustainability funding 10 → Resolve EPP’s funding challenges → Improve funding flexibility 8 6 4
Slide 32: Sustainability Strategic Approach
GR SS 5 Sustainability Strategic Approach Sustainability strategic APPROACH Our ESG strategy is part and parcel of our overall business strategy Debt Investor investor roadshow Roadshow––July July2022 2022 32 32
Slide 33: First half strategic outcomes
First half strategic outcomes GR SS Focusing on what matters most Sustainability Strategic Approach Ranked 36th out of Lifted tenant Created depth within 1 045 REITs globally by Stabilised asset values Improved credit metrics retention rate senior leadership team Sustainalytics Increased number of F
Slide 34: Building the future-fit Redefine of tomorrow
Building the future-fit Redefine of tomorrow GR SS “We’re people” is core to our stakeholder centricity Sustainability Strategic Approach We’re not landlords – We’re people 2022 second half focus areas Our relationship-centric approach enables us to create and → Deliver on our purpose sustain meanin
Slide 35: Key outcomes for first half of 2022
Key outcomes for first half of 2022 GR SS Our contribution to the achievement of the UN SDGs is a cornerstone of our ESG strategy Sustainability Strategic Approach Environmental Social Governance Green leasing frameworks on Humanitarian initiatives by Refreshed ESG strategy will a per-sector b
Slide 36: Net zero strategy
Net zero strategy GR SS “Net zero entails companies reducing their generated emissions as much as possible and negating the Sustainability Strategic Approach remainder by funding carbon removal projects in clean energy, reforestation, and more.” – GRESB, 2020 Phase 1 | Portfolio-wide milestone targe
Slide 37: Green Bond Offering
GR GB 6 Green Bond Offering Green bond OFFERING Debt Investor investor roadshow Roadshow––July July2022 2022 37 37
Slide 38: Green bond market and instrument overview
Green bond market and instrument overview GR GB South African green bond market is currently lagging the global market Definition Green Bond Offering Global green bond market South African green bond market → It’s a known use of proceeds bond, meaning 634 0.3 proceeds must be used to finance and/or
Slide 39: Sustainable finance framework
Sustainable finance framework GR GB → Redefine has recently published its sustainable finance (use of proceeds) framework (SFF) under which its subsidiaries intend to Green Bond Offering issue thematic debt (bonds and loans) instruments, such as green, social and/or sustainability bonds/loans → Alig
Slide 40: Sustainable finance framework overview
Sustainable finance framework overview GR GB Green Bond Offering Renewable energy Energy efficiency Green Green buildings Sustainable water bond/loan Pollution prevention and control Sustainable finance Sustainability framework bond/loan Access to essential Social services bond/loan Af
Slide 41: Sustainable finance framework | Second party opinion
Sustainable finance framework | Second party opinion GR GB Green Bond Offering Debt investor roadshow – July 2022 41
Slide 42: Green bond – indicative use of proceeds
Green bond – indicative use of proceeds GR GB Green buildings Office portfolio which is considered green by GLA Green Bond Offering → The intention going forward is to green certify retail and industrial assets using eligible green tools identified in 26% the sustainable finance framework R11bn* Gre
Slide 43: Green bond – indicative use of proceeds (continued)
Green bond – indicative use of proceeds (continued) GR GB Green buildings eligibility criteria and example → Certified greenfield, construction, reconstruction, retrofit, renovation, or operation of Green Bond Offering buildings to make them sustainable through improvements in resource efficiency an
Slide 44: Green Star rating tool overview
Green Star rating tool overview GR GB Green Bond Offering Green Star is a globally accepted green building certification tool → Aims to provide an objective green building measuring/certification tool for South Africa and Africa located green buildings → Original tool was licensed from the Australia
Slide 45: Green bond allocation
Green bond allocation GR GB Allocation of proceeds Green Bond Offering Any unallocated bond proceeds will be fully allocated to any green eligible loan/asset portfolio within 24 months from the date of each issuance New assets/projects are those which have been acquired, developed or for which disbu
Slide 46: Green bond reporting
Green bond reporting GR GB Allocation and impact reporting Green Bond Offering Redefine will prepare and publish an annual allocation and impact report with respect to the green bond issued under this framework and make publicly available via our website at least until full allocation Redefine will
Slide 47: Indicative term sheet and timing
Indicative term sheet and timing GR GB Issuer Redefine Properties Limited Green Bond Offering Issuer Rating Moody’s Aa2.za , affirmed on 13 April 2022 DMTN Programme Limit R30bn Volume Sought [R750m] Instrument Senior Unsecured Green Bond Auction Date and Time [11 August 2022] Settlement Date (T+3)
Slide 48: Contact details
Contact details Redefine Properties Lesley Baerveldt LesleyB@redefine.co.za (Head of corporate finance) Anelisa Keke AnelisaK@redefine.co.za (Chief sustainability officer) RMB DCM and sustainable finance Delia Patterson Delia.Patterson@rmb.co.za (DCM distribution) Trishalia Naidoo Trishalia.Naidoo@r
Slide 49: Thank you
Thank YOU Please follow our LinkedIn page for more details Debt investor roadshow – July 2022 49 49
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