Redefine Properties Limited · JSE:RDF
Redefine Properties — FY2011 Earnings Presentation
69 slides from Redefine Properties's earnings presentation, Aug 31, 2011
Slide 1: Group results for the year ended 31 August 2011
Group results For the year ended 31 August 2011 Redefining our business 1
Slide 2: Agenda
Agenda Company overview and Marc Wainer (CEO) strategy Financial highlights Andrew Konig (FD) Property portfolio David Rice (COO) Redefine International Mike Watters (CEO International) Prospects Marc Wainer (CEO) 2
Slide 3: Company overview and strategy
Company overview and strategy Marc Wainer 3
Slide 4: Profile
Profile Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Redefine Properties Limited is a listed property loan stock company with a diverse range of property assets exceeding R37 billion Company name : Redefine Properties Limited Share code : RDF
Slide 5: Second largest in the sector
Second largest in the sector Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Market Cap Portfolio Value Premium / Forward Top 10 Index Counters (R‟m) (R‟m) (Discount) to NAV Yield 31,118 45,163 14.23% 7.61% 21,790 37,395 3.3% 7.90% 14,141 16,707
Slide 6: Corporate structure
Corporate structure Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Redefine Properties Limited 100% 54% 76% Listed Securities Redefine Properties Redefine Direct Property Hyprop 45.7% International International Fund Portfolio Oryx 26.4% Limite
Slide 7: Investments
Investments Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Total assets under management 2.7% valued at R37 billion: • Direct property portfolio of R20 billion 29.7% • Listed property securities of R5 billion • Geographic diversification with
Slide 8: Insight into Redefine's Strategy
Insight into Redefine’s Strategy Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Macro economic outlook • Future acquisition strategy • “hotspots” • retail shopping centres • No-go areas • Funding strategy • Investing in our people • Customers
Slide 9: Management philosophy
Management philosophy Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Redefine is committed to being the property owner of choice and to achieving sustained growth in distributions through: • Continuous improvement of the quality of the property
Slide 10: Strategy and objectives
Strategy and objectives Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Strategy Work in progress Improve the quality of property portfolio - Acquisitions R4.0bn (R0.7bn in 2011) in higher quality properties - Disposals R3.3bn (R0.9bn in 2011) i
Slide 11: Financial highlights
Financial highlights Andrew Konig 11
Slide 12: 2011 Financial highlights
2011 Financial highlights Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Full year distributions totalling 68 cents per unit • Distributions marginally up on last year on a like-for-like recurring income basis, after excluding 4.6 cents and 5
Slide 13: Distributable income statement extract
Distributable income statement extract for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 Change (R‟m) (R‟m) % Net operating income from investment properties 1 925 1 876 2.6 Listed securities portfolio 347 24
Slide 14: Analysis of income from Investment Properties
Analysis of income from Investment Properties for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 Change (R‟m) (R‟m) % Property revenue 2 066 1 941 6.4 Property costs (509) (408) 24.8 Property income from core
Slide 15: Core property trading performance
Core property trading performance for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects To highlight the causes of the year-on-year margin decline, every R100 of property revenue converts into property income as follows: 2
Slide 16: Core property expenditure analysis
Core property expenditure analysis for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects The local property cost push on the prior year can be summarised as follows: 2011 2010 Change (R‟m) (R‟m) % Municipal charges net of
Slide 17: Net finance charges growth analysis
Net finance charges growth analysis for the year ended 31 August 2011 Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects (R‟m) Net finance charges 2010 492 Funding of additional Hyprop units 95 Funding of 2011 acquisitions 35 Breakage of costs of u
Slide 18: Distributions
Distributions for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 Period Cents per linked unit Cents per linked unit First half 31.0 33.5 Second half 37.0 33.0 Total distribution 68.0 66.5 Less non-recurring fe
Slide 19: Balance sheet extract
Balance sheet extract at 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 (R‟m) (R‟m) Direct and listed assets 37 364 27 101 Property portfolio * 31 494 22 002 Listed securities: Strategic investments 4 664 5 099 Interest in a
Slide 20: Listed securities
Listed securities at 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 Value Interest held Value Interest held (R‟m) (%) (R‟m) (%) Local listed securities 4 664 4 248 Hyprop 4 122 31.2 3 959 45.7 Oryx 156 26.4 145 26.4 Dipula 3
Slide 21: Funding
Funding at 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 (R‟m) (R‟m) Fixed1 5 440 3 920 Floating 1 873 4 234 Borrowings in JVs 75 251 Local debt (average term 37 months) 7 388 8 405 Non-recourse foreign debt2 10 936 3 144 T
Slide 22: Abridged group cashflow
Abridged group cashflow for the year ended 31 August Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 2011 2010 (R‟m) (R‟m) Opening cash 607 111 Generated by operations 2 819 2 180 Net interest paid (985) * (573) Linked unit distributions paid (1
Slide 23: Unitholder profile
Unitholder profile Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Top 10 beneficial shareholders Number of units % STANLIB 181 214 965 6.7 Government Employees Pension Fund 170 277 676 6.3 Old Mutual 155 506 798 5.8 Investec 125 910 378 4.7 Inv
Slide 24: Liquidity
Liquidity Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 13.2% 7.1% Free float Strategic holders Below 200 000 units 79.7% 24
Slide 25: Country classification
Country classification Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects BENEFICIAL SHAREHOLDERS South Africa USA Singapore UAE Namibia USA Switzerland 5.1% UK Ireland Canada China Swaziland Saudi Arabia France Israel Luxembourg Netherlands Austra
Slide 26: Redefine closing prices and volumes traded
Redefine closing prices and volumes traded Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects 8.60 20 000 000 8.40 18 000 000 8.20 16 000 000 8.00 14 000 000 7.80 12 000 000 7.60 10 000 000 7.40 8 000 000 7.20 6 000 000 7.00 4 000 000 6.80 6.60 2 0
Slide 27: Property portfolio
Property portfolio David Rice 27
Slide 28: South African property portfolio snapshot
South African property portfolio snapshot Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Projected Post Office Retail Industrial TOTAL 31 Aug „11 Number of properties* 141 130 87 358 258 Gross lettable area (m²) 1 329 263 1 064 191 1 125 318 3
Slide 29: Portfolio sectoral spread
Portfolio sectoral spread Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Number of properties Value Gross lettable area 16% 24% 39% 38% 46% 32% 38% 37% 30% Office Retail Industrial 29
Slide 30: Portfolio geographical spread
Portfolio geographical spread Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Number of properties Value Gross lettable area 9% 58% 10% 13% 50% 4% 57% 4% 5% 10% 13% 5% 17% 19% 16% Gauteng Western Cape Kwazulu Natal Mpumalanga Other 30
Slide 31: Sector vacancy by region
Sector vacancy by region Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Office Retail Industrial TOTAL Province m² m² m² m² Gauteng 80 582 18 290 53 094 151 966 Western Cape 19 711 7 362 8 225 35 298 KwaZulu Natal 43 924 4 289 11 249 59 462 Mpu
Slide 32: Gross lettable area and vacancy movement
Gross lettable area and vacancy movement Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Gross lettable area Vacant area Vacancy m² m² % Balance at 1 September 2010 3 592 707 366 069 10.2 GLA adjustments 67 905 13 324 Acquisitions 42 243 1 085 D
Slide 33: Letting activity for 12 months
Letting activity for 12 months Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Renewals New leases Ave Ave Ave Area Ave expiry achieved Renewal Area achieved portfolio renewed rental rental growth let rental rental Sector m² R/m² R/m² % m² R/m²
Slide 34: Lease expiry profile by let area
Lease expiry profile by let area Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Office Retail Industrial Total Year to 31 Aug m2 % m2 % m2 % m2 % 2012 433 282 37 232 334 23 262 071 25 927 688 29 2013 234 114 20 214 224 22 286 018 27 734 356 23
Slide 35: Major expiries for 2012
Major expiries for 2012 Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects List Or Trading As Name Property Name Expiry Date GLA m² Monthly Rental (R‟m) Vodacom (Pty) Ltd Pier Place 2012/03/31 14 407 R 2 489 City of Tshwane Isivuno House 2012/07/31
Slide 36: Top 10 properties by value
Top 10 properties by value Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Property Name Golden Walk Standard Bank Centre Sammy Marks Shopping Centre Commerce Square Cleary Park Shopping Centre Sub-region Name Germiston Cape Town CBD Pretoria CB
Slide 37: Top 10 properties by value
Top 10 properties by value Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Property Name Convention Tower Park Meadows Poyntons 90 Rivonia Road Foretrust Building Sub-region Name Foreshore Kensington Pretoria CBD Sandton Cape Town CBD GLA (m²) 1
Slide 38: Acquisitions
Acquisitions Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Transfers concluded by 31 August 2011: GLA Purchase price Initial yield Price Property Location Sector (m²) (R‟m) % R/m² Commerce Square Sandhurst Office 15 690 350 9.3 22 307 Esher
Slide 39: Disposals
Disposals Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Office Retail Industrial Total Number of properties 15 22 2 39 Gross lettable area 84 171 91 040 8 872 184 083 Vacancy (m²) 15 702 10 281 4 295 30 278 Selling price (R‟m) 498 423 16 938 G
Slide 40: Acquisitions post 31 August 2011
Acquisitions post 31 August 2011 Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects GLA Purchase price Initial yield Price Property Location Sector m² R‟m % R/m² GM Port Elizabeth Industrial 38 000 135 9.50 3 553 Dawn Gauteng Industrial 44 138 184
Slide 41: Disposals post 31 August 2011
Disposals post 31 August 2011 Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects GLA Purchase price Initial yield Price Property Location Sector m² R‟m % R/m² Arrowhead Various Office 109 346 519 10.5 4 750 Retail 189 556 919 10.5 4 850 Industrial
Slide 42: Potential acquisition and disposal scenario
Potential acquisition and disposal scenario Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Value Number of Ave value / property (R‟m) properties (R‟m) At 31 Aug 2011 19.498 358 54 Projected acquisitions: 3 229 26 124 Projected Disposals: (2 392
Slide 43: Projected top 10 properties by value
Projected top 10 properties by value (post 31 Aug 2011) Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Property Value Property Name Sub-region Name GLA (m²) (R‟m) Golden Walk Germiston 44 955 695 155 West Street (Discovery) Gauteng 24 238 510 S
Slide 44: Current developments
Current developments Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Projected total cost Initial Projected Property Location Description (R‟m) Yield (%) Completion Date Gauteng April 2012 Park Meadows Gauteng Re-Tenant & Mall Upgrade 32 7% 64 M
Slide 45: Future developments
Future developments Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects New developments Projected Projected total cost completion Property Location Description (R‟m) date 90 Rivonia Rd, Gauteng New Build 32000m2 700 Oct 2014 Sandown 90 Grayston Ave
Slide 46: Projected top 10 properties by value (including developments)
PROJECTED TOP 10 PROPERTIES BY VALUE (including developments) Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Approximate Sub-region Approximate Property Name Description Property Value Name GLA (m²) (R‟m) Matlosana Mall Klerksdorp 57 000 Develo
Slide 47: Redefine International
Redefine International Mike Watters 47
Slide 48: Redefine Properties International
Redefine Properties International Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Redefine Properties International Limited (“RIN”) is a JSE listed property loan stock company • RIN‟s sole asset is its 67% shareholding in Redefine Internationa
Slide 49: Highlights
Highlights Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects FY2011 results in line • Distributable earnings of £14.6m, 4.4% ahead of listing forecast with Prospectus • Second interim distribution of 2.09 pence per linked unit • Total distribution
Slide 50: Priorities and strategy
Priorities and strategy Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Completing identified acquisitions and investment opportunities Priorities for FY2012 • Structuring refinancing terms for the Delta and Gamma facilities • Exit legacy asse
Slide 51: Redefine International FY2011 Financial Results
Redefine International FY2011 Financial Results 51
Slide 52: Key Financial Results
Key Financial Results Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Financial results – key figures £‟000 • Distributable earnings ahead of FY 2011 listing forecast Profit after tax (IFRS) (3,612) • Distribution reflects 100% pay-out Distribut
Slide 53: Distributable Earnings
Distributable Earnings Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Distributable earnings 4.4% ahead Reconciliation of distributable earnings £‟000 FY 2011 Listing forecast Variance of listing forecast Loss after tax (3,612) n/a • Distribu
Slide 54: Financial position
Financial position Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Financial position £‟000 FY 2011 FY 2010 • Net asset value +2.3% to 44.50 Investment property 986,654 227,675 pence Investment in associates 1 104,680 18,923 • Wichford debt fair
Slide 55: Capital Structure
Capital Structure Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Facilities typically non-recourse to the Group • No LTV covenants on high proportion of debt including Delta and Gamma facilities and UK Debt maturity profile £m Retail portfoli
Slide 56: Defined Strategy to Reduce Gearing
Defined Strategy to Reduce Gearing Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Target gearing £‟000 FY 2011 Adjustments Proforma • Proposed £100m capital raising to secure identified investment Principal debt balances 863,149 863,149 opportu
Slide 57: Investment Portfolio
Investment Portfolio Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Portfolio summary UK Stable Income UK Retail Hotels Europe Cromwell Total Properties 135 6 6 37 n/a 184 Lettable area (sq ft 000‟s) 3,723 1,590 268 1,971 n/a 7,552 Market value
Slide 58: UK Stable income
UK Stable income Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Exceptional covenant strength across the portfolio • Government occupiers typically “core” central government services • Long leases on Kwik-Fit and petrol station portfolios (9-
Slide 59: UK Retail (Shopping Centres)
UK Retail (Shopping Centres) Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Locally dominant centres • Retailers consolidating into larger, better quality units • Vacancy less than 3% in a tough retailing environment • Key anchor tenants incl
Slide 60: Cromwell
Cromwell Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Australian A-REIT with high quality assets and management team • Attractive valuation metrics • high quality portfolio valued at +8% NIY • covered distributions yielding c10% on share pr
Slide 61: Hotels
Hotels Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Portfolio of five Holiday Inn and Holiday Inn Express hotels in Greater London and one Crowne Plaza (Reading) • Valued at £123m and yielding 7.1% • Rental growth through EBITDA based rent
Slide 62: Europe
Europe Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Focus on German discount retail and DIY sector • Typically long leases subject to indexation • Orderly exit from legacy Wichford assets • Near 100% occupancy 1 • Defensive portfolio – disc
Slide 63: Outlook
Outlook Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Consolidation and re-positioning of portfolio and Company • Disposals of non-core assets (and associated debt) including VBG portfolio • Structuring refinancing terms for a core portfolio
Slide 64: Valuation
Valuation Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects Proportion of Valuation Valuation Market value portfolio by movement movement 31 Aug 2011 value H2 12 months Valuation movement by business segment £m % % % UK Stable Income 498 40.3 (4.0
Slide 65: Top property investments
Top 15 property investments Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects By value Weighted average Ownership Annualised net unexpired lease Market value interest Lettable area rent Let area term Name Principal occupiers £m % Sector Sqft £m %
Slide 66: Prospects
DeFINe PROPERTIES Prospects Marc Wainer
Slide 67: Prospects: Redefine's distribution
Prospects Redefine’s distribution Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • For 2012: • Ongoing challenging trading conditions, municipal charges / electricity tariffs, renewal escalations under pressure expected • Repositioning of core
Slide 68: Prospects: Income attributable to Redefine's unitholders
Prospects: Income attributable to Redefine’s unitholders Company overview and Strategy Financial highlights Property portfolio Redefine International Prospects • Including Arrowhead income, total unitholder income anticipated to be: Distributable Income Per Linked Unit Y-o-Y (R‟m) (cents) (%) 2012 R
Slide 69: Thank you
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