Annual results - 31 March 2014 - Investec Property...Mar 31, 2014 · Bigen Africa . 15 . Office...
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Annual Results Presentation Year ended 31 March 2014 May 2014
Transcript of Annual results - 31 March 2014 - Investec Property...Mar 31, 2014 · Bigen Africa . 15 . Office...
Annual Results Presentation Year ended 31 March 2014 May 2014
Section 1 Highlights
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FY14 highlights
Second half distribution growth
+8.6%
Full year growth
+8.2%
Total portfolio growth – R1.7bn of acquisitions and investments
+45%
Share of IAPF - investment into Australian property market (4.4% of IPF asset base)
+18.6%
Gearing remains low - headroom for growth
16.8%
Normalised funding costs on average debt and swap expiry of 3 and 4 years respectively
8.5%
Vacancy improved from already low position
2.6% Positive reversions achieved
on 69 000 m2 GLA let / renewed; 8.5% escalations
+11.1%
Weighted average lease expiry (by revenue)
4.3 years
Growth in NAV per share
+12.5%
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Consistent returns since listing, underpinned by property fundamentals
Distribution growth
First half Second half Full year
2012 2013 2014
+7.1%
+7.5%
+8.2%
+8.6% +7.9% +7.7%
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Portfolio grown 3.6x since listing in April ’11; 45% growth YOY
Asset growth
IAPF
Mar '12 Sep '12 Mar '13 Sep '13 Mar '14
R2.1 bn
R6.1 bn
R4.4 bn R4.2 bn
R2.3 bn
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Market Market capitalisation Share price Forward yield NAV per share
R5.3 bn R14.49 8.2% R13.98
Portfolio Office Retail Industrial Aus Number of properties Asset value GLA Vacancy
69 R6.1 bn 693 256 2.6%
R2.4 bn 132 780 5.1%
R2.1bn 226 476 2.0%
R1.3 bn 334 400 2.0%
R0.3 bn
Balance sheet Gearing 16.8%
Fund snapshot - at 31 March 2014
Section 2 Market overview
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Share price performance vs. sector – since listing
Source: INET Bridge as at 12 May 2014
Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14
IPF SA Listed Property
Incorrect trade booked on JSE, reversed the following day
52%
37%
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Based on rolling 12-month forward yields
Property sector valuations 5.
8%
6.3%
7.1%
7.2%
7.7%
7.8%
7.8%
7.9%
7.9%
8.0%
8.1%
8.3%
8.3%
8.4%
8.6%
8.7%
9.0%
9.0%
9.2%
9.2%
9.3%
9.5%
9.7%
9.9%
10.1
%
10.6
%
10.8
%
Res
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Forward yield on clean price PUT Weighted Average (8.2%) PLS Weighted Average (7.6%) Sector Weighted Average (7.7%)
Section 3 Acquisitions
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R’m GLA Transfer Acqn Yield Office Investec, K101 Midrand 119 5,870 May 2013 8.4% Minolta, Belville 25 2,166 May 2013 9.5% Office portfolio 386 20,890 Mar 2014 8.5% - Braes office park, Bryanston 84 4,372 - Wellness centre, Bryanston 28 1,497 - Greenhill Village, Lynwood 92 4,713 - Clover, Constantia Kloof 141 8,011 - Vinebridge, Tyger Valley 41 2,297 Bigen Africa, Innovation Hub 125 5,412 Oct 2013 8.2% Nicol Main, Bryanston 178 6,616 Mar 2014 8.0%
833 40,954 8.4%
Acquisition summary
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5 Bond Street K101, Midrand
Investec
Carrying value R118 million GLA – 5 870m² Yield – 8.4% Lease expiry – 9.1years
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Carrying value R60.8 million GLA – 5 121m² Through yield – 8.7%* WALE – 6.0 years *Includes both Minolta properties
Minolta Belville & Highveld Bidvest subsidiary
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Carrying value R125.1 million GLA – 5 412m² Yield – 8.2% Lease expiry – 9.6years
Bigen Innovation Hub
Bigen Africa
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Office portfolio Bryanston, Constantia Kloof, Lynwood Road, Tyger valley Clover, Econet, Pepkor
Carrying value R465 million* GLA –29 810m² Yield – 8.7% Lease expiry – 3.0years *Office and Industrial assets combined
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Carrying value R179 million GLA – 6 616m² Yield – 8% Lease expiry – 4.5years
Nicol Main Bryanston
Continental Outdoor Media, Yum, Boogertman
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R’m GLA Transfer Acqn Yield Industrial Minolta Highveld, Hi-tech park 36 2,955 May 2013 8.2% SA Ladder, Alrode 75 25,000 Apr 2013 10.0% 2 Industrial assets (portfolio acqn) 79 8,923 Mar 2014 9.5% Martin & Martin, Isando 89 19,972 Dec 2013 8.5%
279 9.1% Retail Big Box retail portfolio 209 38,475 Oct 2013 8.4% - Boxer Cofimvaba 6 1,045 - Cashbuild Nongoma 8 2,202 - Devland Oudtshoorn 14 2,742 - Devland Silverlakes 76 12,492 - Masscash Kimberley 27 5,850 - Zenth Park, East Rand 78 14,144 Kayelitsha 2 32 2,911 Mar 2014 8.8%
241 8.5% Total acquisitions 1,353 139,187 8.6%
Acquisition summary cont...
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Martin & Martin Isando
Bob Martin
Carrying value R88.5 million GLA – 19 972m² Yield – 8.5% Lease expiry – 9.7years
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Big box portfolio East Rand Mall node, Silverlakes
Devland, Fruit & Veg City, Liqour City, Boxer
Carrying value R208.6 million GLA – 38 475m² Yield – 8.4% Lease expiry – 7.3years
Section 4 Property portfolio
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Portfolio map
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Property portfolio performance
Growth in base portfolio net income (R2.1bn in size)*
+5.5%
Total prior year and current year acquisitions performed ahead of acquisition yields
R3.7bn
Long lease expiry profile (by revenue)
4.3 years
Vacancy improved from already low position
2.6% Positive reversions achieved
on 69 000 m2 GLA let / renewed
+11.1%
Weighted average escalations achieved on renewals and new lets
+8.5%
Leases expiring after 5 years
38%
Initial savings from sustainability pilot programme
R7.5m
Gross cost to income ratio up 260 bps from 27.5% - portfolio mix
30.1%
* Base portfolio (R2.1bn) small relative to size of total portfolio. Growth distorted by 1 vacant building (6 800m2) – on a normalised basis growth would have been 7.9%.
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Expiries Renewals
and new leases
Expiry rental
Average reversion
Average escalation
Vacancy 31 Mar 13
Vacancy 31 Mar 14
GLA GLA R/m2 % % % % Office* - - - - - 7.3 5.1 Industrial 60 765 59 503 32.23 16.8 8.8 1.8 2.0 Retail 8 494 9 664 145.80 3.3 8.1 2.5 2.0 Total 69 726 69 168 48.08 11.1 8.5 2.9 2.6
Letting activity
* 2 762 m2 of office space was renewed / let with a 16.4% positive reversion and 8.2% escalation over rent guarantees (Firs and 345 Rivonia).
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Vacancy levels - GLA
7.3%
1.8%
2.5% 2.9%
5.1%
2.0% 2.0% 2.6%
Office Industrial Retail Total
2013 2014
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WALE of 4.3 years by revenue – one of the strongest in the sector
Lease expiry profile
11.1% 11.0%
17.2%
12.3% 10.1%
38.3%
2015 2016 2017 2018 2019 2019 onwards
Office
Industrial
Retail
Total
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Office portfolio
KPI’s 2014 2013 +\-
Net income (R’m) 146.8 116.6 25.9%
Cost to income ratio 23.9% 23.8% (0.1%)
Vacancy 5.1% 7.3% 2.2%
Arrears as % of collectibles 0.04% 0.28% 0.24%
Average escalations 8.0% 8.1% (0.1%)
WALE (yrs) 5.6 6.7 (16.4%)
R833m of acquisitions – 71% triple net, long term leases
A-grade tenants by income – 83%
Single tenanted – 47% with WALE of 7.1 years (by revenue)
Multi-tenanted – quality portfolio by tenancy and location
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Industrial portfolio
Renewals New lets Total
GLA (m2) 5 983 53 520 59 503
Reversions 11.3% 17.7% 16.8%
Escalations 8.6% 8.9% 8.8%
KPI’s 2014 2013 +\-
Net income (R’m) 113.1 96.4 17.3%
Cost to income ratio 30.2% 28.0% (2.2%)
Vacancy 2.0% 1.8% 0.2%
Arrears as % of collectibles 0.23% 0.30% 0.07%
Average escalations 8.7% 8.2% 0.5%
WALE (yrs) 3.5 2.7 29.6%
R279m of acquisitions – 100% triple net, long term leases
Significant letting – 60 000m2 let and renewed (99% of expiring space)
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Retail portfolio
KPI’s 2014 2013 +\-
Net income (R’m) 170.4 58.8 190%
Cost to income ratio 34.7% 33.3% (1.4%)
Vacancy 2.0% 2.6% 0.6%
Arrears as % of collectibles 0.64% 1.05% 0.41%
Average escalations 7.8% 7.7% 0.1%
WALE (yrs) 3.7 3.8 (2.6%)
Retail sectoral split - GLA
51%
38%
11%
Shopping centers Bix box Dealerships
R241m of acquisitions – 87% big box retail
Minimal vacancy and expiry (4.2%) – focus to tenant quality
Shopping centers – performing exceptionally well
•Kriel Mall •Balfour Mall •Nonkqubela Mall •Great North Road Plaza
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69%
12%
6%
4%
9%
Gauteng Western Cape Mpumalanga KZN Other
Portfolio composition - geographic
By GLA By revenue
75%
13%
3% 1%
8%
30
45%
30%
25%
Retail Office Industrial
Portfolio composition – by sector
By asset value By revenue
41%
37%
22%
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53%
47%
Multi Single
Tenant composition – by revenue
Tenant profile Multi / Single
71%
16%
13%
A B C
Section 5 Financials
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2014 2013 +/- R’m R’m % Net property income (excl. straight lining) 430.3 271.7 Operating expenses (5.7) (3.0) Asset Management fee (26.4) (17.8) Net finance costs (46.6) (14.1) Income from associate 7.4 - Net fair value adjustments* 211.6 (82.9)*
Profit before debenture interest and tax* 626.6 236.8
Profit after taxation 506.7 0.2
Distribution 392.1 248.2 Full year distribution per share 108.2 99.99 8.2%
Simplified income statement
* Prior year – debenture structure
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Distribution reconciliation
2014 2013 +/- R‘m R’m Profit before debenture interest and tax 626.6 236.8 Less: Fair value adjustments (211.6) 82.9
Profit on disposals (11.0) (39.0) Straight-lining adjustment (45.1) (43.8)
Antecedent interest* 33.2 11.5 Distributable earnings 392.1 248.3 Less: Interim dividends paid (181.0) (79.6) Final distributable earnings 211.1 168.6
* Antecedent interest relating to book build and Office portfolio transaction
Shares in issue and to be issued 365.6 317.2
Final distribution per share 57.74 53.16 8.6% Interim dividend per share 50.46 46.83 7.7% Total distribution per share 108.20 99.99 8.2%
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NAV reconciliation
NAV Per share ‘+/-
R’m cents % Prior year NAV per share 3 943 1 243 Equity to be issued – Office portfolio 100 Equity issued – book build 594 Revaluation of property (incl. straight lining) 231 MTM of IAPF investment 45 MTM of swaps 9 Dividends not yet paid (excl. antecedent dividends) 199 Other (8) NAV per share 5 113 1 398 12.5%
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Capital management
March 2014 Pro forma* March 2013
Low gearing
16.8% 21.0% 10.7%
All-in cost of funding
9.2% 8.5% 8.2%
Well hedged
110% 84% 75%
Long-dated expiry profiles - debt - swaps
2.8 years 4.0 years
3.0 years 4.0 years
2.3 years 3.0 years
* Post issue of CP on 15 April 2014 and R300m of announced acquisitions
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Debt and swap maturity profiles
8%
13%
28% 27% 24%
5%
32%
63%
FY15 FY16 FY17 FY18 FY19
Debt Swaps
Long-dated and low risk
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Funding facilities
Facility Drawn Expiry Rate R’m R’m DMTN – tranche 1 134 April ’15 JIBAR + 140 bp DMTN – tranche 2 DMTN – tranche 3 DMTN – tranche 6
40 50
226
April ’16 April ’17 April ‘17
JIBAR + 155 bp JIBAR + 165 bp
Fixed at 8.8% Total DMTN 3 000 450
Nedbank term debt 250 250 October ’18 JIBAR + 170 bp Standard Bank term debt 250 250 October ’16 JIBAR + 155 bp Investec bridge facility 500 80 April ’15 JIBAR + 225 bp Total bank debt 1 000 580
Total 4 000 1 030
Commercial paper 200 200 July ’14 JIBAR + 27 bp
Post year end:
Section 6 Conclusion
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Conclusion
• 3.6x growth in quality assets since listing
• Increased growth in distribution on underlying property portfolio
• Conservative balance sheet management
• Prospects
o Well positioned to pursue acquisitions
o Remain committed to quality and sustainable assets
o Will compete aggressively for quality assets
o Appropriate ongoing spend on maintaining asset base – keep clients
o Anticipated growth substantially in line with historical growth
Thank you
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Disclaimer
The information contained herein is for information purposes only and readers should not rely on such information as advice in relation to a specific issue without taking financial, banking, investment or professional advice. Although information has been obtained from sources believed to be reliable, Investec Property Fund Limited (Reg. No.2008/011366/06) and or any affiliates (collectively “Investec Property”), do not warrant its completeness or accuracy. Opinions and estimates represent Investec’s view at the time of going to print and are subject to change without notice.
Past performance is not indicative of future returns. The information contained herein does not constitute an offer or solicitation of investment, banking or financial services by Investec Property. Neither Investec Property nor Investec Bank Limited shall be held liable in respect of any claim, damages or loss of whatever nature arising in connection with such information. Investec Property accepts no liability for any loss or damage of whatsoever nature including but not limited to loss of profits, goodwill or any type of financial or other pecuniary or direct or special indirect or consequential loss however arising, whether in negligence or for breach of contract or other duty as a result of use of or reliance on the information contained in this document whether authorised or not.
This document/publication may not be reproduced in whole or in part or copies distributed without the prior written consent of Investec Property.
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