Dipula Properties Limited Class B · JSE:DIB
Dipula Properties Limited Class B — FY2019 Earnings Presentation
50 slides from Dipula Properties Limited Class B's earnings presentation, August 2019
Slide 1: Annual Results for the Year Ended 31 August 2019
ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019
Slide 2: Agenda
AGENDA 01 S T R AT E GIC BUSINESS REVIEW 02 F I N A N C I AL REVIEW 03 FUTURE PROSPECTS SUSTAINABLE STABLE CONSISTENT RESOURCEFUL DIVERSIFIED DISCIPLINED ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 02
Slide 3: Strategic Business Review: Consistent
01 STRATEGIC BUSINESS REVIEW IZAK PETERSEN CEO CONSISTENT STRATEGY FY2019 O U T C O M E S PORTFOLIO HUMAN C A P I T A L SUSTAINABILITY
Slide 4: Strategy
STRATEGY Remaining Buying Managing SHAREHOLDER VALUE CREATION disciplined well brilliantly ▪ Geographically diversified OUR VALUE PROPOSITION SA ▪ Economically active locations focused ▪ Sectorally diversified ▪ Predominantly retail (convenience, rural & township) ▪ A diversified REIT that is growin
Slide 5: Strategic Capital Allocation to De-risk Portfolio
STRATEGIC CAPITAL ALLOCATION TO DE-RISK PORTFOLIO AT LISTING CURRENT FUTURE 10% Retail 20% 29% 20% Office 54% By income 66% By income 60% By income 14% Industrial 10% 17% Residential ▪ Allocation of capital into areas of core competency ▪ Build capacity for operational excellence STRATEGIC GROWTH DR
Slide 6: Strategic Business Review: Stable
01 STRATEGIC BUSINESS REVIEW IZAK PETERSEN CEO S TA B L E STRATEGY FY2019 O U T C O M E S PORTFOLIO HUMAN C A P I T A L SUSTAINABILITY
Slide 7: FY2019 Outcomes
FY2019 OUTCOMES Objective: Manage our Improve our portfolio Good balance sheet Reduce vacancies Distributions business efficiently and operations management Outcome Net property Improved credit rating: cost-to-income ratio ▪ R78m worth of revamps completed ▪ Long term BBB+ (ZA) 20% y-o-y (2018: BBB)
Slide 8: Strategic Business Review: Diversified
01 STRATEGIC BUSINESS REVIEW IZAK PETERSEN CEO DIVERSIFIED STRATEGY FY2019 O U T C O M E S PORTFOLIO HUMAN C A P I T A L SUSTAINABILITY
Slide 9: Total Portfolio - Key Indicators
TOTAL PORTFOLIO ‒ KEY INDICATORS SECTORAL SPLIT BY GROSS INCOME Portfolio Total GLA Average WALE by value property size GLA / income 66% 66% Retail R8.6 bn * 923 679m² 4 761m² 3.7 / 3.0 Aug Aug years 2019 20% 2018 19% Office 2018: R8.3bn 2018: 930 644m² 2018: 4 584m² 2018: Industrial 3.2 years by GL
Slide 10: Total Portfolio - Key Indicators
TOTAL PORTFOLIO ‒ KEY INDICATORS GROSS PROPERTY COST TO INCOME MUNICIPAL CHARGES RELATIVE TO INCOME 40% 35% 32% 35% 37% 30% 29% 35% 25% 30% 33% 33% 33% 24% 23% 25% 31% 21% 21% 30% 19% 25% 20% 22% 20% 15% Retail Office Industrial Total Retail Office Industrial Total Dipula SAPOA* Municipal Charges (%
Slide 11: Total Portfolio - Leasing
TOTAL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2018 – 31 AUG 2019) GLA (000 m²) Rental (Rm) 400 30 NEW LEASES 21 300 16 15 16 20 7 326 Number of leases 187 200 10 Value of leases R422m 100 164 148 155 0 Total GLA (m²) 83 595 55 66 Weighted average gross rental (R/m²) 82.60 0 -1
Slide 12: Retail Portfolio - Key Indicators
RETAIL PORTFOLIO ‒ KEY INDICATORS Average WALE by Portfolio value* Total GLA property size GLA / income R5.5 bn 456 421m² 4 266m² 3.1 / 3.0 years 2018: 2018: R5.4bn 2018: 464 914m² 2018: 4 043m² 3.4 years by GLA Average Average value Weighted average Weighted average property value per m² by GLA gro
Slide 13: Retail Portfolio - Leasing
RETAIL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2018 – 31 AUG 2019) GLA (000 m²) Rental (Rm) NEW LEASES 200 15 20 10 9 10 Number of leases 134 150 6 10 Value of leases R134m Total GLA (m²) 26 050 100 116 0 Weighted average gross rental (R/m²) 106.24 80 76 85 50 -10 Weighted ave
Slide 14: Office Portfolio - Key Indicators
OFFICE PORTFOLIO ‒ KEY INDICATORS Average WALE by GLA / Portfolio value* Total GLA property size income R1.8 bn 129 214m² 3 800m² 2.2 / 2.3 years 2018: 2018: R1.7bn 2018: 131 037m² 2018: 3 744m² 2.2 years by GLA Average Average value property value per m² by GLA Tenant retention Vacancy ▪ Highest co
Slide 15: Office Portfolio - Leasing
OFFICE PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2018 – 31 AUG 2019) GLA (000 m²) Rental (Rm) NEW LEASES 60 6 4 4 Number of leases 29 50 3 4 2 Value of leases R178m 40 1 2 Total GLA (m²) 11 878 30 35 35 0 Weighted average gross rental (R/m²) 161.78 28 Weighted average escalation
Slide 16: Industrial Portfolio - Key Indicators
INDUSTRIAL PORTFOLIO ‒ KEY INDICATORS Average Average Portfolio value Total GLA property size property value R1.3 bn 338 043m² 6 378m² R24m 2018: R1.2bn 2018: 334 693m² 2018: 6 315m² 2018: R23m WALE by GLA / Average value income Tenant retention Vacancy per m² by GLA 4.9 / 3.6 R3 714 94% 2.3%* years
Slide 17: Industrial Portfolio - Leasing
INDUSTRIAL PORTFOLIO ‒ LEASING LEASE EXPIRY PROFILE LEASE ACTIVITY (1 SEP 2018 – 31 AUG 2019) GLA (000 m²) Rental (Rm) NEW LEASES 250 5 6 Number of leases 24 200 3 4 Value of leases R111m 2 2 197 150 2 Total GLA (m²) 45 666 Weighted average gross rental (R/m²) 47.63 100 0 0.3 Weighted average escala
Slide 18: Residential Portfolio
RESIDENTIAL PORTFOLIO URBAN VILLAGES ▪ Launched in 2019 ▪ Dipula's unique brand for residential ▪ To give the tenant consistent experience across all our developments ▪ Build strong brand recognition ▪ Build a marketing platform for residential ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 18
Slide 19: Residential Portfolio - Cosmo City
RESIDENTIAL PORTFOLIO Update on turnkey development COSMO CITY ▪ Phase 1 completed (180 units) ▪ Substantially let ▪ Expected transfer - January 2020 ▪ Achieved rentals in line with feasibility ▪ Cost of R235 million ▪ 428 units ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 19
Slide 20: Residential Portfolio - Norwood
RESIDENTIAL PORTFOLIO Update on mixed-use revamp NORWOOD ▪ Completion - end Nov 2019 ▪ Project on budget ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 20
Slide 21: Strategic Business Review: Resourceful
01 STRATEGIC BUSINESS REVIEW IZAK PETERSEN CEO RESOURCEFUL STRATEGY FY2019 O U T C O M E S PORTFOLIO HUMAN C A P I T A L SUSTAINABILITY
Slide 22: 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 84 Multi-skilled Internships Deal Exceptional Team
Slide 23: Strategic Business Review: Sustainable
01 STRATEGIC BUSINESS REVIEW IZAK PETERSEN CEO S U S TA I N A B L E STRATEGY FY2019 O U T C O M E S PORTFOLIO HUMAN C A P I T A L SUSTAINABILITY
Slide 24: 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
Slide 25: Financial Review: Disciplined
02 FINANCIAL REVIEW RIDWAAN ASMAL CFO DISCIPLINED
Slide 26: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue Distributable (excl. IFRS entries) Earnings DIVIDEND PER SHARE 15.4% 1.3% Combined (6.1%) DIA 4.2% Total assets Total liabilities DIB (17.0%) 2.7% 3.3% Previous guidance was 5% decrease on combined share ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 26
Slide 27: 5-Year Distribution History
5-YEAR DISTRIBUTION HISTORY cps A-share B-share Total 4.4% (6.1%) 5.8% 200 205.5 8.0% 196.8 193.0 186.0 172.2 150 4.2% 5.0% 4.5% 5.0% 4.4% 100 6.7% 110.3 11.5% 105.8 (17%) 101.3 99.7 96.5 95.5 91.9 89.5 80.3 82.7 50 0 Aug 2015 Aug 2016 Aug 2017 Aug 2018 Aug 2019 ANNUAL RESULTS FOR THE YEAR ENDED 31
Slide 28: 5-Year Combined Market Price to NAV
5-YEAR COMBINED MARKET PRICE TO NAV cents Market price NAV Premium / Discount 3 000 40% 22% 2 500 -2% 0% 0% -10% 2 286 -22% -30% 2 000 2 092 -40% 2 042 2 020 2 026 2 006 2 050 2 050 1 868 1 805 1 500 1 598 -80% 1 429 1 000 -120% 500 -160% -200% Aug 2015 Aug 2016 Aug 2017 Aug 2018 Aug 2019 12 Nov 201
Slide 29: 5-Year Market Price and Historic Dividend Yields
5-YEAR MARKET PRICE AND HISTORIC DIVIDEND YIELDS cents DIA DIB 1 400 1 172 1 142 1 200 995 1 050 1 049 960 1 000 1 114 800 1 025 900 845 600 400 548 200 380 Aug 2015 Aug 2016 Aug 2017 Aug 2018 Aug 2019 12 Nov 2019 Percentage DIA DIB Combined 22% 20% 15% 15% 14% 11% 12% 11% 12% 10% 10% 10% 11% 11% 8%
Slide 30: Distribution Statement
DISTRIBUTION STATEMENT 31 Aug 2019 31 Aug 2018 R 000 R 000 Variance Revenue 1 288 789 1 116 334 15.4% Rental and recoveries 1 260 969 1 077 584 17.0% Other income 27 820 38 750 -28.2% Property expenses (411 249) (362 824) 13.3% Net property income 877 540 753 510 16.5% Administration and corporate c
Slide 31: Sectoral Performance
SECTORAL PERFORMANCE RENTAL INCOME & RECOVERIES PROPERTY EXPENSES NET PROPERTY INCOME 14% 13% 10% 11% 16% 14% 19% 19% 17% 19% 20% 20% 67% 68% 71% 72% 66% 64% AUG 2019 AUG 2018 AUG 2019 AUG 2018 AUG 2019 AUG 2018 Retail Office Industrial ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 31
Slide 32: Statement of Financial Position (Extracts)
STATEMENT OF FINANCIAL POSITION (EXTRACTS) 31 Aug 2019 31 Aug 2018 Variance R 000 R 000 Investment property and held-for-sale 8 888 251 8 637 872 2.9% Trade and other receivables 160 323 209 468 -23.5% Loan receivable 201 171 194 279 3.5% Goodwill / Intangible assets 75 000 112 500 -33.5% Cash and c
Slide 33: Cash Flow - Rm
CASH FLOW ‒ Rm 31 AUGUST 2019 31 AUGUST 2018 69 Opening balance 130 834 Cash generated from operations 714 - 312 Net finance cost - 237 - 571 Dividend paid - 491 - 87 Acquisitions and capex -1 986 Manco internalisation - 47 58 Disposals 201 0.5 Non-controlling interest 203 -7 Net movement in vendor
Slide 34: Debt Profile
DEBT PROFILE 30% Debt expiry Hedge expiry 22.0% 23.0% 21.8% 20.6% 20.4% 20% 19.0% 17.0% 17.6% 10% 8.2% 8.8% 0% FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Weighted average Weighted average Weighted average Debt facilities concluded Debt hedged cost of debt debt expiry hedge expiry during the year 78% 9.
Slide 35: Future Prospects: Stable
03 FUTURE PROSPECTS IZAK PETERSEN CEO S TA B L E
Slide 36: Prospects
PROSPECTS Upside in SA – linked to economic growth and job creation Tough trading conditions expected to persist To further reduce vacancies Keep an eye on arrears Operate in-line with strategic objectives Dividend growth of 2% for 2020 ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 36
Slide 37: Questions & Answers
04 QUESTIONS &ANSWERS IZAK PETERSEN CEO CONSISTENT
Slide 38: Annexures
05 ANNEXURES DIVERSIFIED
Slide 39: Key Corporate Information
KEY CORPORATE INFORMATION JSE sector Real Estate Investment and Services: Diversified REITS Date listed 17 August 2011 Closing price (30 Aug 2019) DIA R10.50 | DIB R5.48 Market capitalisation NTAV per share Portfolio size Gearing Debt (31 Aug 2019) R10.11 R4.2 billion R8.6 billion* 40.4% R3.7 billio
Slide 40: Geographic Spread by Sector
GEOGRAPHIC SPREAD BY SECTOR TOTAL OF 194 PROPERTIES Retail 107 Gauteng Limpopo Office 34 North West 65 29 33 18 15 3 Mpumalanga Industrial 53 7 1 8 127 7 Northern Cape 3 2 2 6 KwaZulu-Natal 1 1 14 7 7 Western Cape 9 Free State 4 1 1 2 Eastern Cape 3 2 1 5 4 ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUS
Slide 41: Geographic Profile - Total Portfolio
GEOGRAPHIC PROFILE – TOTAL PORTFOLIO No of Average Value Value GLA m² Properties Rm Rm Gauteng 526 496 127 42 5 366 Eastern Cape 106 011 9 82 740 Limpopo 92 845 18 49 886 KwaZulu-Natal 88 914 14 51 709 North West 31 584 8 33 261 Mpumalanga 28 791 7 26 180 Western Cape 27 033 4 77 308 Free State 19 9
Slide 42: Geographic Profile - Retail
GEOGRAPHIC PROFILE – RETAIL No of Average Value Value GLA m² Properties Rm Rm Gauteng 247 488 65 48 3 148 Limpopo 58 478 15 44 662 Eastern Cape 48 534 5 112 561 KwaZulu-Natal 46 621 7 90 631 North West 26 178 7 36 253 Free State 13 164 3 31 92 Mpumalanga 11 175 3 43 129 Western Cape 2 685 1 22 22 No
Slide 43: Geographic Profile - Office
GEOGRAPHIC PROFILE – OFFICE No of Average Value Value GLA m² Properties Rm Rm Gauteng 112 726 29 55 1 594 Western Cape 8 370 1 174 174 Mpumalanga 4 244 2 16 31 Free State 3 874 2 12 23 Total 129 214 34 54 1 822 ANNUAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2019 43
Slide 44: Geographic Profile - Industrial
GEOGRAPHIC PROFILE – INDUSTRIAL No of Average Value Value GLA m² Properties Rm Rm Gauteng 166 282 33 19 624 Limpopo 34 368 3 75 224 Eastern Cape 57 477 4 45 178 Western Cape 15 978 2 56 112 KwaZulu-Natal 42 293 7 11 79 Mpumalanga 13 372 2 10 20 Free State 2 866 1 12 12 North West 5 407 1 7 7 Total 3
Slide 45: Top Ten Properties
TOP TEN PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 866 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25
Slide 46: Top Ten Retail Properties
TOP TEN RETAIL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 866 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25 342 Nquthu Plaza KwaZulu-Natal
Slide 47: Top Ten Office Properties
TOP TEN OFFICE PROPERTIES Value Value Building name Region GLA m² Rm R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Avanti Office Park Western Cape 8 370 174.3 20 824 SAPS IJS Gauteng 7 874 133.7 16 980 Firestation Rosebank Gauteng 4 259 123.4 28 974 Carnation Place Gauteng 4 541 105.8 23 299 Valley View
Slide 48: Top Ten Industrial Properties
TOP TEN INDUSTRIAL PROPERTIES Value Value Building name Region GLA m² Rm R/m² Corporate Park II Polokwane Limpopo 28 058 190.2 6 778 New Brighton PE Eastern Cape 24 516 129.4 5 278 Range Road Blackheath Western Cape 12 905 96.1 7 447 Renaissance Park (Crownwood Place) Gauteng 10 680 66.7 6 245 Sterk
Slide 49: Tenant Profile
TENANT PROFILE TENANT GRADING TOP 10 TENANTS BY INCOME DPW and Government 10% Shoprite Group 8% 14% 16% Woolworths 5% Pepkor Group 4% 16% 13% Local Government 3% By GLA By income Reclamation Holdings 3% 70% 71% Pick 'n Pay 3% Massmart 2% A B C Cashbuild 2% Spar Group 1% ANNUAL RESULTS FOR THE YEAR E
Slide 50: Building and Tenant Profile
BUILDING AND TENANT PROFILE OFFICE GRADING SPACE EXPOSURE RETAIL GLA 15% 38% 34% 16% 62% 69% 66% A grade Single tenanted Urban (Incl. urban townships) B grade Multi tenanted Small Town Rural RETAIL BY GLA OFFICE BY GLA INDUSTRIAL BY GLA 10% 39% 48% 52% 61% 90% Single tenanted Single tenanted Single