Octodec Investments Limited · JSE:OCT
Octodec Investments — FY2015 Earnings Presentation
34 slides from Octodec Investments's earnings presentation, 2015
Slide 1: Urban Renewal: Annual Financial Results Presentation
URBAN RENEWAL ANNUAL FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 AUGUST 2015
Slide 2: Agenda
AGENDA BACKGROUND FINANCIAL OUR PROPERTY PROSPECTS AND QUESTIONS AND HIGHLIGHTS PORTFOLIO CONCLUSIONS AND ANSWERS INTRODUCTION AND RESULTS 1 2 3 4 5 OCTODEC RESULTS PRESENTATION 2 2015
Slide 3: Background and Introduction
BACKGROUND AND INTRODUCTION 3
Slide 4: Introduction
INTRODUCTION REIT status 1 Sep 2013 Listed on JSE 1990 Annual compounded return to shareholders over 10 years 23,0% Number of properties in portfolio (including joint ventures) 330 Octodec’s properties are managed by City Property Administration Strategic focus on Tshwane • Over 40 years property ma
Slide 5: Our Strategy
OUR STRATEGY • No change, continue with our focused strategy • Build a diversified portfolio in the Tshwane and Johannesburg CBDs and surrounding areas, with an exposure to the residential, office, retail and industrial sectors • Actively promote urban renewal in the CBDs, Tshwane and Johannesburg •
Slide 6: Corporate Structure
CORPORATE STRUCTURE Wapnick family Institutional investors Other 36% 39% 25% 100% 100% Premium Properties IPS Investments Limited Proprietary Limited OCTODEC RESULTS PRESENTATION 6 2015
Slide 7: Merger and Rationale
MERGER AND RATIONALE • Effective from 1 September 2014 • First year of reporting as a combined group • Premium delisted, wholly owned subsidiary of Octodec • IPS wholly owned subsidiary of Octodec RATIONALE: Free up management time Create a more sizeable company Favourable access to capital Stronger
Slide 8: Sustaining Tshwane City Life: Two Decades of Investment Bearing Fruit
SUSTAINING TSHWANE CITY LIFE: TWO DECADES OF INVESTMENT BEARING FRUIT Steynscor & Scott’s Corner 4 12 Building name Building name 1 Bosch Building 21 Pretoria Midtown 2 Central House 19 Tshwane House 22 Prinsben 3 Central Towers 23 Prinschurch 4 Centre Forum 24 Prinsproes 5 City Towers 25 Prinstrube
Slide 9: Our Property Portfolio
OUR PROPERTY PORTFOLIO 9
Slide 10: Geographical Analysis – Rental Income
GEOGRAPHICAL ANALYSIS – RENTAL INCOME Tshwane Central 31.7% Johannesburg Central 21.5% Johannesburg and surrounding areas 12.4% Hatfield 7.8% Tshwane Arcadia 5.5% Silverton and surrounding areas 4.4% Waverley, Gezina, Moot 3.8% Tshwane West 3.0% Centurion 2.2% Tshwane Other 2.2% Tshwane East 1.6% Su
Slide 11: Residential
RESIDENTIAL • Average monthly rentals › Bachelors – R3 200 per unit › One bedroom – R4 100 per unit › Two bedroom – R5 000 per unit • Core growth of 6,0% 8,5 • Mostly upgraded, well-located, secure accommodation 29,8 • Strong demand for residential accommodation 23,5 PORTFOLIO SECTORS: • Average cor
Slide 12: Retail: Non-Shopping Centres
RETAIL: NON-SHOPPING CENTRES • Average rentals – R88/m² (31 August 2014: R83/m²) • Growth in average rentals/m² of 5,4% • Strong demand from national retailers for well-located CBD retail space (e.g. Pick ′n Pay and Shoprite) • CBD retail offers more growth opportunities than 8,5 29,8 traditional ma
Slide 13: Retail: Shopping Centre
RETAIL: SHOPPING CENTRE • Average rentals – R140/m² (31 August 2014: R133/m²) • Growth in average rentals/m² of 5,8% • Relatively strong performance from most shopping centres • Vacancies at 0,7% of GLA 8,5 29,8 • Killarney Mall – DisChem taking occupation in 23,5 PORTFOLIO November 2015, Edgars vac
Slide 14: Offices
OFFICES • Average rentals – R77/m² (31 August 2014: R70/m²) • Growth in average rentals/m² of 10,9% • Slow take-up of non-government office space • Government tenants 8,5 › Lease renewals 2-3 years/net additional take up 29,8 of space 23,5 PORTFOLIO SECTORS: › 8% of total rental income RENTAL INCOME
Slide 15: Industrial
INDUSTRIAL • Average rentals – R36/m² (31 August 2014: R35/m²) • Growth in average rentals/m² of 2,5% • Low growth in rentals per m² • Decrease in vacancies 8,5 • Successful redevelopment of properties – demand 29,8 for upgraded properties 23,5 PORTFOLIO SECTORS: RENTAL INCOME (%) 10,0 28,2 RESIDENT
Slide 16: Top Properties by Value
TOP 10 PROPERTIES BY VALUE Value Percentage Property Location Sector R’million of portfolio Hotel, shops, offices and 765 The Fields Hatfield, Tshwane 727,8 6,1% flats Killarney Mall Killarney, Johannesburg Shopping centre 608,9 5,1% Kempton Place Kempton Park Shops, offices and 469 flats 291,5 2,5%
Slide 17: Vacancies by Sector
VACANCIES BY SECTOR 35% 30.9% Percentage of gross lettable area 30% 25% 20% 14.8% 15% 12.5% 12.4% 10.7% 9.3% 8.7% 8.8% 10% 5.3% 5% 3.5% 0.7% 0.7% 0% OFFICES RETAIL: SHOPS RETAIL: SHOPPING INDUSTRIAL RESIDENTIAL TOTAL CENTRES Total vacancies Core vacancies as at 31 August 2015 Note: Core vacancies ex
Slide 18: Vacancies Comments
VACANCIES COMMENTS • Total vacancies reduced to 14,8% (2014: 16,7%) • Core vacancies reduced to 8,8% of total GLA (previously 11,5%) • Core vacancies reduced in the office, industrial, residential and retail shopping centre sectors due to focused letting strategy and upgrades to improve properties •
Slide 19: Recent Acquisitions
RECENT ACQUISITIONS Total purchase Initial Rentable price yield Date of Property Location Details m² R’million % transfer City Block Corners Frederick, Eloff, Albert, Offices and shops for 4 074 6,1 7,1 18 Dec 2014 Joubert Streets, Johannesburg CBD redevelopment Bosch Building 363 and 365 Johannes P
Slide 20: Developments During the Year
DEVELOPMENTS DURING THE YEAR Total cost Completion Fully let Property Location Details R’million date yield % 1 On Mutual Tshwane CBD Residential development 146,4 April 2016 7,6 Frank’s Place Johannesburg Office conversion to 225 residential units 130,1 May 2015 8,1 CBD The Manhattan Sunninghill, 5
Slide 21: 1 On Mutual
1 ON MUTUAL • Tshwane CBD: R146,6m • Residential units: 154 • Retail: 1 317 m² • Parking OCTODEC RESULTS PRESENTATION 21 2015
Slide 22: Centre Forum
CENTRE FORUM • Tshwane CBD: R347,4m • Residential units: 400 • Retail: 5 903 m² • Parking OCTODEC RESULTS PRESENTATION 22 2015
Slide 23: Financial Highlights and Results
FINANCIAL HIGHLIGHTS AND RESULTS 23
Slide 24: Growth in Distribution
GROWTH IN DISTRIBUTION DISTRIBUTION OF • Growth in distribution per share of 7,7% or 189,2 cents per share › Exceeded initial guidance of 187,4 cents per share 189,2 CENTS PER SHARE › Current distribution diluted by new share issue on 22 July 2015 • Strong growth in earnings driven by › Core portfol
Slide 25: Distributable Earnings
DISTRIBUTABLE EARNINGS The following additional information is provided and is aimed at disclosing to the users the basis on which the distributions are calculated Reviewed¹ Audited R’000 Year to 31 August 2015 Year to 31 August 2014 Revenue – earned on contractual basis 1 634 159 540 359 Operating
Slide 26: Condensed Consolidated Statement of Financial Position
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Reviewed¹ Audited ASSETS (R’000) Year to 31 August 2015 Year to 31 August 2014 Non-current assets 11 644 922 4 588 352 Investment properties 11 449 157 3 508 365 Listed investment ̶ 405 698² Derivative financial instruments 34 451 ̶ Investment i
Slide 27: Capital Management
CAPITAL MANAGEMENT • DMTN programme increased to R3bn (previously R1bn) • Interest rates hedged – 94,2% of borrowings (1 September 2014: 61,0%) • Further interest rate swap contracts entered into for an amount of R1,25bn for a period of four years • R390m raised through oversubscribed equity bookbui
Slide 28: Funding at 31 August 2015
FUNDING AT 31 AUGUST 2015 31 August 2015 Interest • Prudent management of debt – R’million rate › LTV – at 37,3% (target – maximum Fixed borrowings – Banks 411,9 11,9% of 40%) Floating borrowings – Banks 3 288,3 7,8% › Interest rate hedging – maintain DMTN programme at current levels 680,6 7,2% (inc
Slide 29: Debt Maturity Profile as at 31 August 2015
DEBT MATURITY PROFILE AS AT 31 AUGUST 2015 2 000 DEBT MATURING IN THE NEXT 12 MONTHS: 1 500 • To date, R345m of the 669 corporate bonds have been refinanced for a 6 and 12- R’000 1 000 month period at an all-in cost of between 7,2% and 7,6% per annum 500 • Banks have agreed to refinance the secured
Slide 30: Prospects and Conclusion
PROSPECTS AND CONCLUSION 30
Slide 31: Prospects and Forecast
PROSPECTS AND FORECAST PROSPECTS Well positioned to continue to take advantage of opportunities in the CBDs: • Large number of property and land holdings ready for redevelopment to extract further value • Strong demand for affordable and secure, quality residential accommodation • Favourable market
Slide 32: Conclusion
CONCLUSION • Sustainable model – urban renewal and middle-class growth • Well-balanced portfolio – retail, residential and office; with significant synergies • Strong development pipeline – unlock value of current portfolio (new and redevelopments) • Proven track record – hands-on approach deliverin
Slide 33: Q&A
Q&A 33
Slide 34: Contact Details
CONTACT DETAILS JEFFREY WAPNICK ANTHONY STEIN Managing Director Financial Director Tel: +27 12 319 8708 Tel: +27 12 319 8780 e-mail: [email protected] e-mail: [email protected] Website: www.octodec.co.za OCTODEC RESULTS PRESENTATION 34 2015