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PRESENTATION TO INVESTORS, FEBRUARY 2013
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
December 2012 Results Presentation
AGENDA
Overview
• Highlights
• Recap on expectations after June 2012 results
Financials
• December 2012 Results
• Distribution statement
• Balance sheet
Portfolio
•
•
•
•
Outlook
• Commercial property market outlook
• Financial assumptions
• Investment case
Portfolio details
Capex projects, acquisitions and disposals
Growthpoint Australia
Property management tender
2
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
HIGHLIGHTS
› Increase in distributable income in 6 months of 3.5%
› Income return for the six months of +4.5%, capital return +14.4% and total return of +18.9%
› Vacancy decreased from 10.2% at June 2012 to 7.8% in December 2012 due to substantial letting
in office and retail vacancies and sale of non-core buildings, tenant retention at 66%
› Improved quality of portfolio through disposals (R85.9m) and refurbishments (R9.5m),
Wonderpark project commenced
› Further 3 non-core buildings sold unconditionally for a total of R117.6m
› Restructured debt swap profile by extending and cancelling swap contracts on unfavourable rates
and taking out new interest rate swaps at lower rates
› Issued short term unsecured commercial paper to take advantage of the lower interest rates
› Repurchased 3 564 599 PIs in the open market at a cost of R51.1m, an average of R14.33 per PI
3
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
RECAP ON EXPECTATIONS AFTER JUNE 2012 RESULTS
Gross income
Double digit percentage increase due to acquisitions and redevelopments; reducing
vacancies and double-digit increase in recoveries
Expenses
Municipals costs to rise sharply, maintenance and refurbishments to reduce after high
base in FY12, balance of costs well contained, prop mngmnt savings planned
Bad debts
Expected to remain at high levels similar to FY12
Listed investment
Marginal growth expected from GOZ in Rands
Disposals
Sale of non-core properties will slow down or stop in FY13 unless can be concluded at
earnings enhancing yields
Refurbishments
Pipeline has slowed, smaller refurbishments and extensions will continue, no material
projects approved by Board at this stage
Debt costs
Rising sharply due to increased absolute level of debt following acquisitions and
redevelopments; slight benefit due to recent CP issue
Asset management Cost cuts will result in asset management fees recovered from STREM rising at below
inflation rate
Expect distributions per PI for the twelve months to 30 June 2013 to show y-o-y growth
4
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
DECEMBER 2012 RESULTS
05
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
Jun
Dec
900
850
995
1 090
1 203
819
1 065
1 015
1 150
1 244
1 383
1 333
1 190
1 275
1458
Distribution 36.55 38.06
40.1
42.25 44.34
47.70 48.79 52.46
51.84 56.24
55.21 58.31 53.81
56.87 55.69
NAV
922
1 148
1 169
1 117
1 150
1 153
PI price
-
06
866
07
08
1 198
09
1 146
1 135
10
1 153
11
1 150
12
1 127
1 202
• Distribution of 55.69 cents per PI
• 6m-on-6m distribution growth = +3.5%
• 4.3% increase in NAV in six months
• +18.9% total return in six months (+14.4% capital return, +4.5% income return)
• Last day to trade cum distribution – Friday, 1 March 2013
• PIs trade ex-distribution
– Monday, 4 March 2013
• Record date
– Friday, 8 March 2013
• Payment date
– Monday, 11 March 2013
5
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
DISTRIBUTION STATEMENT
R ’000
1H13
1H12
% ch
Revenue
670 935
640 640
4.7
Property expenses
254 344
255 190
(0.3)
Property expenses to income ratio
37.9%
39.8%
–
Asset management fee
9 433
8 746
7.9
22 189
23 572
(5.9)
5 874
5 211
12.7
Admin expenses (fund expenses & coll. comm.)
Depreciation
• Revenue
Rental income higher due to acquisitions and
organic growth
• Admin expenses
Reduced collection commission negotiated
with Eris and fund expenses well managed
• Expenses
Decrease in leasing and refurb costs
• Depreciation
SARS depreciation allowances with increased
depreciable assets
• Asset management
Increase due to additional staff recruited
6
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
DISTRIBUTION STATEMENT
R ’000
Net income from property portfolio
Listed property investment
Interest cost
Investment income
Distribution payable
Number of PIs in issue
Distributions per PI (cents)
• Listed property investment
Benefited from increase in GOZ distribution
and depreciation of the Rand exchange rate
1H13
1H12
% ch
379 095
347 921
9.0
17 288
15969
8.3
(124 084)
(93 975)
32.0
4 647
2 615
77.7
276 946
272 530
1.6
497 299 883
506 466 288
(1.8)
55.69
53.81
3.5
• Investment income
Distribution received on PIs repurchased and
interest earned
• Interest cost
• PIs in Issue
Drawdown of available debt facilities for capital 3.6m PIs repurchased at cost of R51.1m in
expenditure and acquisitions
September 2012 with 10.7m being bought
in the past 12 months
7
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET
PI holders’ funds
increased from R5.78bn at June 2012 to R5.98bn at December 2012 as a result of the
appreciation of property values, the revaluation of the listed property investment, offset by the
repurchase of PIs, the unrealised deficit on the revaluation and the fee paid on cancellation of
interest rate swaps
Properties
from R8.81bn to R9.12bn, representing an increase of 3.4% - positively impacted by capex
during period (R111.8m), offset by disposals (R85.9m) and depreciation (R5.9m) and
revaluation upwards of (R282.3m)
Derivative financial R29.0m increase in interest rate swap liability
instruments
LT liabilities
increased from R2.62bn (incl. ST portion of LT debt) to R2.76bn as a result of capex spend and
acquisitions
Debt
debt (LT and ST debt) to total assets = 28.4%
Net asset value
1 153 cents to 1 202 cents representing an increase of 4.3%
1 196 cents to 1 249 cents excluding deferred tax, a rise of +4.4%
8
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET: FLOATING RATE FACILITIES
Facility
Date
Amount available (Rm)
Drawn down (Rm)
1
3 month CP issue
18 Feb 13
400.0
400.0
2
12 month CP issue
30 Nov 13
450.0
450.0
3
RMB Access Bond
31 May 14
250.0
50.0
4
RMB 7th Term Loan
30 Jun 14
500.0
500.0
5
Nedbank Term Loan
2 Feb 15
200.0
200.0
6
DMTN Notes
19 Aug 15
500.0
500.0
7
RMB 6th Term Loan
31 Mar 19
665.9
665.9
2 965.9
2 765.9
Total
• Existing facilities not yet fully drawn down of R200.0m
• R650m Emira Securitisation repaid using proceeds from commercial paper issue
9
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET: FACILITY EXPIRY DATES
700
6th Term Loan
600
7th Term Loan
Rand/Millions
500
400
DMTN Notes
12 month CP Issue
3 month CP Issue
300
Access Bond
Nedbank
200
100
0
Feb 2013
Nov 2013
May 2014
Jun 2014
Feb 2015
Aug 2015
Mar 2019
10
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET: DEBT SWAP PROFILE
350
Before
After
300
Rand/Millions
250
200
150
100
50
0
Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24
• Recent (i) extension of certain ST swaps and (ii) cancellation of LT/re-enter shorter-dated swaps
• As a result, weighted average duration of swaps has reduced from 6.6 to 6.4 years…
• …and weighted average debt cost has reduced from 9.3% to 8.9%
11
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET: SWAPS
Rate payable
Wtd Avg term of swap
Amount (Rm)
% of Total Debt
Debt – Swap
9.5%
6 years 4 months
2 216.6
80.1
Debt – Floating
6.3%
–
549.3
19.9
Total/average
8.9%
2 765.9
100.0
12
Refer to annexure for details
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
BALANCE SHEET: DEBT COVENANTS
Facility
Value of
properties
Amount
available
Amount
drawn
Actual
LTV
LTV
covenant
ICR
covenant
589.1
200.0
200.0
30.3%*
40%*
2.0
–
850.0
850.0
–
–
–
1
Nedbank Loan
2
Commercial Paper
3
DMTN Notes
1 574.0
500.0
500.0
31.8%
40%
–
4
RMB Loans
6 740.8
1 415.9
1 215.9
18.0%
40%
2.50
8 903.9
2 965.9
2 765.9
2 965.9
2 765.9
Total
Unbonded properties
Grand total
212.2
9 116.1
30.3%
* LTV covenant for Nedbank Loan is based on Emira’s total portfolio not only the secured portfolio.
13
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: SUMMARY AT 31 DECEMBER 2012
No of
buildings
GLA
(m²)
Valuation
(R ’000)
R/m²
Avg value
(Rm)
Office – Grade A
26
163 320
2 224 227
13 619
85.6
Office – Grade B
39
256 907
2 098 538
8 167
53.8
Office – Grade C
2
14 932
56 000
3 750
28.0
Urban Retail
22
299 597
2 798 832
9 342
127.2
Rural Retail
15
77 999
443 145
5 693
29.5
Industrial
42
339 330
1 495 140
4 406
35.6
146
1 152 085
9 115 882
7 913
62.4
Sector
Total
• Average discount rate = 14.8%
• Average residual cap rate = 10.0%
14
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: LIKE-ON-LIKE GROWTH (STATIC PORTFOLIO)
20%
17.0%
15%
10.0%
10%
6.4%
5.5%
5%
9.0%
8.7%
5.5%
3.5%
2.6%
0%
-5%
-1.5%
-3.5%
-10%
-9.1%
-15%
Offices
Retail
Industrial
Total
Gross income
Costs
Net income
• Offices top line impacted by reversions and vacancies, while costs rose due to substantial increases
in municipal expenses
15
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: VACANCY PROFILE
(UNADJUSTED, Dec 12 BY GLA)
25%
20%
Dec 2011
Jun 2012
Dec 2012
19.8%
18.6%
14.4%
15%
11.3%
10%
10.2%
8.2%
7.8%
6.5%
4.3%
5%
4.4%
3.2% 3.0%
0%
Office
Retail
Industrial
Total
• Reduction in vacancies attributable to aggressive leasing drive and sale of properties
• Sale and transfer of Mutual Mews, Midrand Business Park and unconditional sales of Fleetway
House and Montana Value Centre reduced vacancies by 0.9%
16
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: VACANCY PROFILE
(UNADJUSTED, Dec 12 BY CATEGORY & GRADE BY GLA)
25%
Jun 2012
Dec 2012
21.6%
20%
17.8%
16.0%
15%
13.2%
12.2%
11.8%
10.2%
10%
8.0%
7.8%
5.3%
5%
3.2% 3.0%
0.7% 0.7%
0%
Office A Grade Office B Grade Office C Grade
Urban Retail
Rural Retail
Industrial
Total
17
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: VACANCY INCOME LOSS
(MARKET RENT, Dec 12 )
8.6%
16.2%
7,899,326
12.5%
3,638,505
4.5%
2,293,646
9.9%
1,344,053
73,246
Office A Grade Office B Grade Office C Grade
1.2%
65,233
Urban Retail
Rural Retail
3.0%
478,542
Industrial
Total
• Rental loss calculation based on market rental
• Contractual rentals were taken into account to determine potential gross income per property
18
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: ADJUSTED VACANCY PROFILE
Sector
Total GLA
Vacant space
% Vacant
Office
435 159
62 873
14.4%
21 310
8 062
37.8%
Refurbishment
5 496
156
2.8%
Refurbishment
Office balance
408 353
54 655
13.4%
Retail
Wonderpark Shopping
Centre
Lynnridge Mall/Mews
377 596
16 260
4.3%
63 638
2 733
4.3%
Refurbishment
20 022
1 668
8.3%
Refurbishment
Retail balance
293 937
11 858
4.0%
Industrial
339 330
10 154
3.0%
Total
1 152 085
89 287
7.8%
Excluding adjustments
1 041 619
76 668
7.4%
Braamfontein Centre
East Coast Radio House
Comment
19
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: LETTING ACTIVITY
6 months to Dec 11
6 months to Dec 12
m²
No of leases
m²
No of leases
Expiring
169 178
344
140 060
339
Renewed
106 112
258
92 492
203
63%
75%
66%
60%
As a %
20
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: REVERSIONS – RENEWALS (GROSS RENTALS)
Sector
Area
Avg expiry rental
Avg new lease rental
Increase/(Decrease)
Office
45 519
106.26
100.20
(5.7%)
Retail
27 378
106.14
107.89
+1.6%
Industrial*
109 255
52.27
46.81
(10.4%)
Total
182 152
73.58
69.37
(5.7%)
* Includes early renewal of RTT ACSA Park (46 673m²), excluding this industrial renewals adjusts to -1.2% and overall reversions -2.2%.
• Office 14/31 buildings upwards: range +34% from R59/m² (821m² at Epsom Downs Office Park)
and -22% from R109/m² (1 886m² at Woodmead Office Park)
• Retail 25/31 buildings upwards: +14% from R80/m² (1 701m² at Flagstaff Shopping Centre)
and -24% from R107/m² (721m² at WorldWear Fashion Mall)
• Industrial 10/18 buildings upwards: +10% from R32/m² (12 756m² at Universal Print House)
and -19% from R61/m² (46 673m² at RTT ACSA Park)
21
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: REVERSIONS – NEW LEASES (GROSS RENTALS)
Sector
Area
Avg expiry rental
Avg new lease rental
Increase/(Decrease)
Office
14 089
94.91
87.09
(8.2%)
Retail
6 599
133.73
126.67
(5.3%)
Industrial
21 742
37.09
33.37
(10.0%)
Total
42 430
70.85
65.91
(7.0%)
• Office 7/26 buildings upwards: range +27% from R47/m² (250m² at 284 Oak Avenue)
and -26% from R142/m² (583m² at Faerie Glen Office Park)
• Retail 8/21 buildings upwards: +17% from R83/m² (667m² at Kokstad Shopping Centre)
and -56% from R142/m² (49m² at The Colony Centre)
• Industrial 4/10 buildings upwards : +11% from R32/m² (261m² at Industrial Village Rustivia)
and -22% from R61/m² (2 064m² at One Highveld)
22
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: REVERSIONS – NEW LEASES + RENEWALS (GROSS)
Sector
Area
Avg expiry rental
Avg new lease rental
Increase/(decrease)
Office
59 608
103.44
97.10
(6.1%)
Retail
33 977
111.43
111.53
0.1%
Industrial
130 997
49.67
44.58
(10.2%)
Total
224 582
73.05
68.71
(5.9%)
• Excluding RTT, Industrial reversions adjusts to -3.0% and overall reversions to -3.2%
• Bottom line – downward reversions in portfolio, but not as severe as had been expected
23
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: MAJOR LEASES CONCLUDED
Building name
Sector
Tenant name
GLA (m²)
Begin
Duration
New/Renewal
RTT Acsa Park
RTT Continental
20 Anvil Rd, Isando
Mitek
Cochrane Avenue
2 Sturdee Avenue
12 Baker Street
Waterkloof House
Fulcrum
Umgeni Road B
Tuinhof
Johnson & Johnson
Lincolnwood Office Park
HBP Commercial unit
Podium at Menlyn
16 Jan Smuts
Corporate Park
Total
Industrial
Industrial
Industrial
Industrial
Industrial
Office
Office
Office
Industrial
Industrial
Office
Industrial
Office
Industrial
Office
Office
Industrial
RTT Group
RTT Group
Little Green Beverages
Mitek SA
Auto Spares
Sasol Group Services
Sasol Group Services
SARS
Bateman Projects
RTT Medical
TCTA
Johnson & Johnson
Altech
Spero Sensors
SAFCOL
Venn & Milford
Serrol Ingredients Inc
46 673
12 921
12 248
6 603
5 870
5 603
4 636
4 094
3 805
3 600
3 520
3 472
2 628
2 428
2 378
2 328
2 299
125 106
Jan 13
Jan 13
Oct 12
Feb 13
Aug 12
Sep 12
Sep 12
Jul 12
Jul 12
Feb 13
May 13
Oct 12
Aug 12
Aug 12
Oct 12
Sep 12
Nov 12
6 years
4 years
7 years
3 years
1 year
5 years
5 years
5 years
5 years
1 year
5 years
5 years
5 years
5 years
5 years
5 years
5 years
Renewal
Renewal
New
Renewal
Renewal
Renewal
Renewal
New
New
Renewal
Renewal
New
New
New
New
New
New
24
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: EMIRA NET RENTALS (EXCL PARKING, STORES & VAC’S)
Sector
No of buildings
GLA
Avg net rental (R/m²)
Office: A Grade
26
163 320
100.48
Office: B Grade
39
256 907
81.91
Office: C Grade
2
14 689
46.93
Retail: Urban
22
299 597
94.54
Retail: Rural
15
77 999
64.16
Industrial
42
339 330
43.53
Total
146
1 152 085
73.87
25
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: LEASE EXPIRY PROFILE (BY GLA)
40%
37.2%
Jun 2012
Dec 2012
30%
26.8%
25.7%
22.3%
20.5%
20%
17.3%
15.4%
13.9%
10%
10.2%
7.8%
0%
Vacancy
Jun-13
Jun-14
Jun-15
> Jun-16
• RTT renewal expiry is beyond 2016 (±56 000m²)
26
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: ESCALATIONS
10%
Dec 2011
Jun 2012
Dec 2012
9%
8.9%
8.8%
8.7%
8.6%
8%
7.8%
7.8%
8.7%
8.0%
7.7%
7%
Office
Retail
Industrial
• RTT renewed with lower annual escalations (from 7.5% to 5% over 59 600m²)
• Industrial avg lease escalations excluding RTT = 8.78%
• Escalation of leases concluded in past six months
– Office 8.5%, Retail 8.4% and Industrial 8.1%
27
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
LEASING OUTLOOK
Building name
Tenant name
GLA (m²)
Expiry date
Status
Fluor
Fluor SA
7 383
May 13
Vacating – Offer received
on entire property
Technohub
Paramount
5 351
Oct 12
Renewing
Wesbank
Dept. Labour
4 462
Mar 13
Negotiating
Discovery Health
Discovery Health
3 863
May 13
Renewing
Kyalami Business
Park
RS Components
3 028
Dec 12
Renewing
Sandgate
Griffiths & Griffiths
3 013
Feb 13
Renewing
1059 Francis Baard
SABC
2 029
Jul 12
Renewing
Cambridge Park
Net Florist
1 528
Feb 13
Negotiating
28
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PROJECTS NOT YET COMPLETE
Major projects not yet complete
Value (Rm)
Completion
513.0
May 15
Hyde Park Lane
21.3
Aug 13
Braamfontein Centre
16.8
Mar 13
East Coast Radio House
10.0
Jul 13
20 Anvil, Isando
4.8
Mar 13
Lincolnwood Office Park
3.1
Mar 13
Epsom Downs Office Park
2.9
Dec 12
Wonderpark Shopping Centre
Total = Comprising 8 Projects
582.9
• Yield on completion all 8 projects = +8.2%
• Excluding non-yield enhancing projects = +8.4% (Lincolnwood, Epsom Downs & Braamfontein lifts
and 20 Anvil)
29
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
ACQUISITIONS
Name
Type
Location
GLA
Value (Rm)
Yield
Transfer
Corobay Corner
Office
Menlyn
13 782
311.5
9.0%
Jun 12
• Earnings enhancing acquisition
• Acquisition in line with fund’s policy of reducing exposure to B-grade office space and increasing
the quality of the portfolio
30
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
DISPOSALS
Name
Location
Sector
GLA
Selling
Price
(Rm)
Mutual Mews
Rivonia
Retail
1 596
11.9
11.9%
31 Jul 2012
33 Heerengracht
Cape Town Office
6 744
25.0
-1.4%
3 Aug 2012
Midrand Business Park
Midrand
13 373
49.0
10.9%
31 Aug 2012
85.9
7.1%
Office
Total
Yield
Transfer Date
• Earnings enhancing sale of non-core buildings, 6.5% forward yield excluding vacancy take up
• A further 3 properties, Montana Value Centre, WorldWear Mall and Fleetway House,
totalling R117.6m have been unconditionally sold at 31 Dec 2012 but not yet transferred
• Vacant space in these buildings incl. unconditional sales equates to 24 111m2, with a
GLA of 52 692m²
31
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
GROWTHPOINT AUSTRALIA
› Total stake in GOZ amounts to 24.78m securities (6.1%) at a cost of R313m, with current
market value of R548m
› Believe that GOZ has high quality portfolio, comprising only recurring income, with long
WALE, internalised management and restructured debt at yield equal to or better than SA
commercial property
› GOZ ranked 2 out of 36 A-REITs in a BDO survey for the period ended June 2012
› Ranking boosted by high occupancy and long WALE, above average total return and the share
trading at a premium to NAV
› Emira participated in the recent GOZ DRP, increasing its holding by 943,242 units at a price
of AU$2.18
32
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PROPERTY MANAGEMENT TENDER
› From 1 Jan 2013 property management of the office and industrial portfolios was awarded to
Eris and the retail portfolio to Broll (excluding Wonderpark)
› By value: Eris = 74% and Broll = 26%
› By number of tenants: Eris = 53% and Broll = 47%
› By collections: Eris = 69% and Broll = 31%
› Average collection commission from 3.0% to 2.6%
› Renewal fees between 25% and 30%
› Savings on staff costs
› Estimated savings in the first twelve months approximately R12m (2.4 cpu)
33
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
COMMERCIAL PROPERTY MARKET OUTLOOK
• National office development has increased to 697 000m², or 4.5% of total market
Supply side
fundamentals still • Industrial supply is currently limited, although poised to increase, while retail
appear to be mixed supply is mixed
• Building costs appear to be rising somewhat once more, debt finance is limited
Demand side
• Large office tenants looking, medium and smaller tenants have plenty of
alternatives, but slow to commit
• Industrial demand although still positive, appear to have slowed marginally
• National retailers still looking to expand, line shops under pressure
Prospects for
listed sector
• Office vacancies and rentals to remain under pressure, still a tenant’s market
• Costs are under control, except for municipals, which are rising in excess of inflation
• Interest rate cut will help, bank margins rising but debt capital markets and
equity markets are buoyant allowing for relatively cheap fund raising
• Growth prospects appear good
34
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
FINANCIAL OUTLOOK FY13
Gross income
Healthy growth due to acquisitions and redevelopments; reducing vacancies and
double-digit increase in recoveries
Expenses
Expected to rise less than gross income, municipals costs to rise sharply, maintenance
and refurbishments to reduce after high base in FY12, balance of costs very well
contained, prop mngmnt savings due to tender
Bad debts
Expected to remain at high levels similar to FY12
Listed investment
Good growth expected from GOZ in Rands
Disposals
Although there is interest, sale of non-core properties at earnings enhancing yields will
be difficult
Refurbishments
Wonderpark is the single largest project underway
Debt costs
Rising sharply due to increased absolute level of debt following acquisitions and
redevelopments; benefit due to recent CP issue and interest rate swap changes
Asset management Increased staff components will result in increase slightly in excess of inflation
Expect distributions per PI for the twelve months to 30 June 2013 to show similar growth to 1H13
35
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
INVESTMENT CASE
PI Price
1 472 cents
FY13 Forecast
I-Net consensus distribution forecast per PI to June 2013 = 113.9 cents (+2.9%)
and to June 2014 = 121.2 cents (+6.4%)
Forward yield
Forward yield to December 13 of 8.0%
Using “clean” price of 1 416 cents rolling 12-mth forward yield of 8.3%
Healthy income yield relative to rest of the sector
• At attractive yields, proceeds on sales will be reinvested by buying back PIs
36
Overview
Financials
Portfolio
Outlook
ANNEXURES
December 2012 Results Presentation
PAST PERFORMANCE: EMIRA VS SA LISTED PROPERTY INDEX
SA cps
Price relative
1,500
1,400
3.8
3.6
1,300
3.4
1,200
1,100
3.2
1,000
3
900
2.8
800
700
Jan 08
2.6
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Closing price
SA Property Index Relative
38
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PAST PERFORMANCE: MARKET CAP AND VOLUMES
Volume 000p/m
Rm
40,000
9,000
30,000
6,000
20,000
3,000
10,000
0
Dec 04
Dec 05
Dec 06
Dec 07
Dec 08
Dec 09
Dec 10
Dec 11
0
Dec 12
Market cap
Volumes
• Market cap of R6.6bn
39
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: TOP TEN BY VALUE
Name
Node
Classification
Wonderpark S/Centre
NW of Pretoria
Regional S/Centre
GLA
63 638
Rm Major tenants
662.6 Pick n Pay, Game, Builders Express, Virgin Active,
Chevron, Edgars, Cashbuild, Woolworths
RTT Solutions
East Rand
Warehouse
and Office
59 594
357.6 Fuel Logistics Group/RTT Group
Corobay Corner
Menlyn
Offices
13 865
322.5 Worley Parsons RSA, Eris Property Group
Quagga Centre
Pretoria West
Community
S/Centre
29 675
317.5 Shoprite Checkers, Pick n Pay, Woolworths, First
Community
S/Centre
22 582
Offices
13 566
Randridge Mall
Corporate Park 66
Randpark Ridge
Centurion
National Bank, ABSA, Edgars, Standard Bank
285.6 Pick n Pay, Woolworths, Dischem, Foschini, Mr
Price, Health Worx, Ackermans
238.0 Topexec, Waterworks, E + PC Engineering Projects,
Neil Harvey & Associates, Professional Medical
Scheme Administrators
Hyde Park Lane
Hyde Park
Office Park
15 546
186.3 Standard Bank, Tag Travel, Property Marketers,
Vistar, Eezee Dex Industrial, Willis RE
Lynnridge Mall/Mews
Lynnwood Ridge
Community
S/Centre
20 022
14 688
Market Square
Plettenburg Bay
Neighbourhood
S/Centre
Podium at Menlyn
Menlyn
Offices
178.7 Pick n Pay, Mr Price Home, SA National Tutor
Services, Jimnetts Arts & Crafts, Phakama Funeral
Society, Clicks, Truworths
9 090
167.8 Woolworths, Pick n Pay, Edgars, Clicks, Ackermans
165.7 South African Forestry Company (SAFCOL)
262 266 2 882.3 31.6% of the portfolio by value
40
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: SECTORAL AND GEOGRAPHIC SPREAD BY VALUE
Industrial
16%
Gauteng
Retail
36%
72%
KwaZulu Natal
11%
Western Cape
10%
Free State
Office
48%
5%
Eastern Cape
2%
0%
20%
40%
60%
80%
41
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: PROPERTIES EXCLUDED FROM LIKE-FOR-LIKE
The following are excluded from FY11 and FY12 numbers to get like-for-like growth
• Purchases
› Amadeus Place
› Corporate Park 66
› Corobay Corner
• Disposals
› Ciros House, Crocker Road, Dresdner House, Flexitainer, Georgian Place, Hurlingham Office
Park, Linkview, Umhlanga Centre, Gift Acres, Starsky House, Century Gate, Standard Bank
Glenwood, Nampak, Rinaldo, Barvic House, 8 Grader Rd, Howick Gardens, 33 Heerengracht,
Midrand Business Park, Mutual Mews
• Refurbishments
› 267 West, Podium at Menlyn, Albury Office Park, Park Boulevard, Market Square, East Coast
Radio House, Braamfontein Centre, Lynnridge Mall/Mews
42
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: LEASE EXPIRY PROFILE (BY GLA)
Office
Retail
Industrial
Total
Vacancy m²
5.5%
1.4%
0.9%
7.8%
6 months to Jun 13
6.7%
3.5%
3.7%
13.9%
June 14
8.6%
6.9%
10.2%
25.7%
June 15
4.6%
6.4%
4.4%
15.4%
>June 16
12.3%
14.2%
10.7%
37.2%
37.7%
32.4%
29.9%
100.0%
43
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: WONDERPARK SHOPPING CENTRE
Located
Middle-LSM market of Akasia, north-west of Pretoria between the Pretoria CBD
and Rosslyn/Soshanguve
Value@
31 December 2012
Size
No of tenants
R662.6m
63 638m²
140
Avg net rentals
R97.81/m²
Foot-count
9.3m pa
Major tenants
›
›
›
›
›
›
›
›
›
Pick ’n Pay (14 000m²)
Game (4 000m²)
Builders Express (3 950m²)
Virgin Active (3 500m²)
Chevron (3 460m²)
Edgars (3 450m²)
Cashbuild (2 226m²)
Woolworths (2 036m²)
Ster Kinekor (1 990m²)
44
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: RTT SOLUTIONS
Located
Located in Jet Park adjacent to OR Tambo International Airport just off
the N12 and R21
Value@
31 December 2012
Size
No of tenants
R357.6m
59 594m²
1
Avg net rentals
R55.97/m²
Foot-count
n/a
Major tenants
› Single, triple-net tenant
› RTT Solutions
45
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: COROBAY CORNER
Located
Menlyn, fronts onto Corobay, Dallas and Aramist arterial roads
Value@
31 December 2012
Size
No of tenants
Avg net rentals
Foot-count
R322.5m
13 865m²
2
R125.00/m²
n/a
Major tenants
› Worley Parsons RSA (10 903m²)
› Eris Property Group (4 640m²)
› Head Lease
46
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: QUAGGA CENTRE
Located
Pretoria West, within close proximity to Church Street and the Pretoria CBD
Value@
31 December 2012
Size
No of tenants
R317.5m
29 675m²
68
Avg net rentals
R93.14/m²
Foot-count
4.6m pa
Major tenants
›
›
›
›
›
›
›
Shoprite Checkers (5 715m²)
Pick ’n Pay (4 880m²)
Woolworths (1 800m²)
First National Bank (1 370m²)
ABSA (1 155m²)
Edgars (1 085m²)
Standard Bank (991m²)
47
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: RANDRIDGE MALL
Located
Randridge Park, just off Beyers Naude in a primarily residential area
Value@
31 December 2012
Size
No of tenants
Avg net rentals
Foot-count
R285.6m
22 582m²
111
R114.54/m²
3.4m pa
Major tenants
›
›
›
›
›
›
Pick ’n Pay (4 470m²)
Woolworths (2 124m²)
Dischem (2 035m²)
First National Bank (615m²)
Foschini (594m²)
Mr Price (581m²)
48
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: CORPORATE PARK 66
Located
Centurion, Corner Lenchen and Von Willich Street
Value@
31 December 2012
Size
No of tenants
Avg net rentals
Foot-count
R238.0m
13 566m²
10
R121.84/m²
n/a
Major tenants
› Professional Medical
Scheme (4 200m²)
› Topexec (3 350m²)
› Waterworks (2 704m²)
› E + PC Engineering
Projects (2 424m²)
› Neil Harvey & Associates
(1 942m²)
49
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: HYDE PARK LANE
Located
Hyde Park, corner of Jan Smuts Avenue and William Nichol Drive opposite
Hyde Park Shopping Centre
Value@
31 December 2012
Size
No of tenants
Avg net rentals
Foot-count
R186.3m
15 546m²
51
R101.03/m²
n/a
Major tenants
›
›
›
›
›
›
Standard Bank (1 770m²)
Tag Travel (1 114m²)
Property Marketers (846m²)
Vistar (762m²)
Eezee-Dex Industrial (740m²)
Deutsche Lufthansa (732m²)
50
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: LYNNRIDGE MALL/MEWS
Located
Lynnwood Ridge, in the eastern suburbs of Pretoria
Value@
31 December 2012
Size
No of tenants
R178.7m
20 022m²
55
Avg net rentals
R77.93/m²
Foot-count
2.8m pa
Major tenants
›
›
›
›
Pick ’n Pay (4 142m²)
Jimnetts Arts & Crafts ( 1 937m²)
Mr Price Home (1 700m²)
SA National Tutor
Services (1 081m²)
› Bakers Bin Wholesalers (915m²)
› Phakama Funeral Society (750m²)
› Pep Home (556m²)
51
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: MARKET SQUARE
Located
Plettenberg Bay in Beacon Way, close to the N2
Value@
31 December 2012
Size
No of tenants
R167.8m
14 688m²
50
Avg net rentals
R93.67m²
Foot-count
n/a
Major tenants
›
›
›
›
›
›
›
Woolworths (2 052m²)
Pick n Pay (2 000m²)
Edgars (1 763m²)
Mr Price Group (980m²)
Clicks (700m²)
Plett Movie House (557m²)
Ackermans (500m²)
52
Overview
Financials
Portfolio
Outlook
December 2012 Results Presentation
PORTFOLIO: PODIUM AT MENLYN
Located
Menlyn, corner Atterbury Road and Lois Street
Value@
31 December 2012
Size
No of tenants
Avg net rentals
Foot-count
R165.7m
9 090m²
5
R112-115/m²
n/a
Major tenants
› South African Forestry Company
(SAFCOL) (2 425m²)
› Rennies Travel (551m²)
› DWT Pumps Motors and
Electronics (300m²)
› L Sig Management
Services (250m²)
› Zurich Insurance (220m²)
53
Overview
Financials
Portfolio
Outlook

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