Redefine Properties Limited · JSE:RDF
Redefine Properties — H1 2011 Earnings Presentation
71 slides from Redefine Properties's earnings presentation, April 2011
Slide 1: Interim results
Interim results For the six months ended 28 February 2011 We have all the ingredients
Slide 2: Redefine Properties
> RepDerine PROPERTIE S
Slide 3: Profile
Profile • Redefine Properties Limited is a listed property loan stock company with a diverse range of property assets exceeding R29 billion Company name: Redefine Properties Limited Share code: RDF JSE sector: Financial Services – Real Estate Listing date: 23 February 2000 Total linked units in issu
Slide 4: Second largest in the sector as at 28 February 2011
Second largest in the sector as at 28 February 2011 Property Premium / Share Market portfolio (discount) price capitalisation value to NAV Company R Rm Rm % Growthpoint 17.50 27 502 38 594 10.0 Redefine 7.35 19 773 29 077 (8.2) Hyprop 55.70 9 253 11 011 (6.7) Resilient 29.44 7 592 7 980 8.8 SA Corpo
Slide 5: Management philosophy
Management philosophy • Redefine is committed to being the landlord of choice and to achieving sustainable growth in distributions through: Continuous improvement of the quality of the property portfolio - Acquisitions to grow the portfolio and minimise risk - Disposals of properties that no longer
Slide 6: Investments
Investments • Total assets under management valued at R29 billion: – Direct property portfolio of R19 billion – Listed property securities of R5 billion – Geographically diversified with R5 billion of offshore assets controlled through Redefine Properties International Limited (RI Ltd) 3.2% SA Prope
Slide 7: Revised structure
Revised structure Redefine Properties Limited 100% 45.7% 57.2% 76% Hyprop Redefine Direct Property Redefine Investments Properties Portfolio International Limited International Fund Managers Limited 81.5% Redefine International plc 7
Slide 8: Strategy and objectives for first six months
Strategy and objectives for first six months Commenced In progress Complete Improve the quality of property portfolio - Acquisitions - Disposals - Developments Offshore - Geographical diversification - Expansion Funding and cost of debt - Increase hedging levels - Renewal of facilities Internalise p
Slide 9: Redefine Properties
> RepDerine PROPERTIE S
Slide 10: Financial highlights
Financial highlights • Half year distributions totalling 31 cents per unit – Distributions marginally up on the same period last year on a like-for-like recurring income basis, after excluding 3.19 cents per unit from the prior period’s distribution • Total tangible assets of R31.6 billion • Market
Slide 11: Distributable income statement extract
Distributable income statement extract 28 Feb 2011 28 Feb 2010* 31 Aug 2010* Rm Rm Rm Gross revenue 1 630 1 443 2 981 Property portfolio 1 395 1 185 2 502 Listed securities 148 122 266 Property trading 3 18 20 Fee income 83 117 193 Property expenses (319) (277) (538) Property expense ratio (%) 22.8%
Slide 12: Distributions
Distributions • At the Annual General Meeting held on 31 January 2011, unitholders voted in favour of changing distributions from quarterly to twice a year 2011 2010 Cents per Cents per Period linked unit linked unit Quarter ended Nov 15.00 16.75 Quarter ended Feb 16.00 16.75 Total distribution 31.0
Slide 13: Distribution analysis
Distribution analysis Distributable % of total Distribution income distributable Cents Rm income per unit Net property income (excluding straight-line rental accrual) 1 077 129 40.1 Listed security portfolio 148 18 5.5 Recurring fee income 82 10 3.1 Recurring distributable income 1 307 157 48.7 Prof
Slide 14: Segmental analysis for the six months ended 28 Feb 2011
Segmental analysis for the six months end 28 Feb 2011 Office Retail Industrial Foreign Total R000 R000 R000 R000 R000 Revenue (excluding straight line rental income accrual) 644 577 431 437 173 815 145 409 1 395 238 Operating costs (160 192) (101 417) (39 482) (17 570) (318 662) Net property income
Slide 15: Balance sheet extract
Balance sheet extract 28 Feb 28 Feb 31 Aug 2011 2010 2010 R000 R000 R000 Direct and listed assets 28 406 833 25 884 599 27 101 373 Property portfolio 23 320 132 21 130 171 22 001 888 Listed securities 5 086 701 4 754 428 5 099 485 Total assets 36 136 162 32 094 302 34 972 121 Capital and reserves 16
Slide 16: Listed securities portfolio
Listed securities portfolio 28 February 2011 31 August 2010 Interest Interest Value held Value held R000 % R000 % Local listed securities 4 131 321 4 248 279 Hyprop 3 976 827 45.7 3 959 361 45.7 Oryx 154 494 26.4 144 851 26.4 Sycom - - 144 067 3.1 Foreign listed securities Cromwell 955 380 19.8 851
Slide 17: Funding
Funding Feb 2011 Aug 2010 Rm Rm Fixed1 5 475 3 920 Floating 2 161 4 234 Borrowings in JVs 251 251 Local debt 7 886 8 405 Non-recourse foreign debt2 3 835 3 144 Total borrowings 11 722 11 549 Loan to value of local debt3 32% 34% Weighted average cost of borrowings 9.6% 9.3% % of debt fixed 72% 56% Av
Slide 18: Redefine Properties
> RepDerine PROPERTIE S
Slide 19: Unitholder profile
Unitholder profile Top 10 institutional holders Number of units % Stanlib Asset Management 202 278 394 7.52 Government Employees Pension Fund 169 423 314 6.30 Old Mutual Investment Group 163 002 483 6.06 Investec Asset Management 131 494 387 4.89 Investment Solutions 99 026 680 3.68 Clearwater Prope
Slide 20: Liquidity
Liquidity 12.8% 7.2% Free float Strategic holders Below 200 000 units 79.9% 20
Slide 21: Country classification
Country classification Beneficial shareholders South Africa USA USA Singapore Namibia 4.9% UAE Canada UK Ireland Switzerland Swaziland Israel China Luxembourg Japan Australia Channel Islands Netherlands Germany France Sweden Saudi Arabia Isle of Man Italy Cayman Islands Oman Bermuda South Africa New
Slide 22: Redefine closing prices and volumes traded
Redefine closing prices and volumes traded 8.50 25 000 000 8.30 8.10 20 000 000 7.90 7.70 15 000 000 7.50 7.30 10 000 000 7.10 6.90 5 000 000 6.70 6.50 - Mar-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 RDF Volumes RDF Close 22
Slide 23: Redefine Properties
> Reperine PROPERTIES
Slide 24: South African property portfolio snapshot
South African property portfolio snapshot Office Retail Industrial Total Number of properties* 153 144 85 382 Gross lettable area (m²) 1 393 917 1 143 266 1 047 868 3 585 051 Vacancy (m²) 166 562 73 874 65 306 305 742 Vacancy (%) 11.9 6.5 6.2 8.5 Valuation at end Feb 2011 (Rm) 8 922 7 100 3 021 19 0
Slide 25: Top office properties by value and GLA
Top office properties by value and GLA Feb 2011 Gross valuation lettable area Property Location R000 m² Standard Bank Cape Town 402 591 60 739 Poyntons Pretoria 304 182 72 714 Convention Tower Cape Town 275 084 18 122 11 Diagonal Street Johannesburg 254 306 33 260 Foretrust Building Cape Town 247 76
Slide 26: Top retail properties by value and GLA
Top retail properties by value and GLA Feb 2011 Gross valuation lettable area Property R000 m² Golden Walk Johannesburg 664 960 45 036 Cleary Park Shopping Centre Port Elizabeth 363 669 37 997 Park Meadows Johannesburg 356 160 27 665 The Village @ Horizon Johannesburg 188 042 20 562 Maynard Mall Cap
Slide 27: Top industrial properties by value and GLA
Top industrial properties by value and GLA Feb 2011 Gross valuation lettable area Property R000 m² Wingfield Park Jet Park 193 871 56 576 Pepcor Isando 174 025 40 438 Premier Milling Durban 148 807 89 000 Premier Milling Waltloo Pretoria 137 678 27 664 Home Affairs Waltloo Pretoria 129 603 31 176 8
Slide 28: Portfolio sectoral spread
Portfolio sectoral spread Number of properties Value Gross lettable area 22% 40% 16% 47% 29% 39% 38% 37% 32% Office Retail Industrial
Slide 29: Geographical spread
Geographical spread Number of properties Value Gross lettable area 50% 17% 59% 19% 56% 17% 15% 13% 10% 4% 4% 5% 4% 2% 1% 2% 3% 2% 3% 3% 5% 1% 1% 1% 2% 1% Gauteng Western Cape KwaZulu Natal Mpumalanga North West Eastern Cape Limpopo Free State Northern Cape 29
Slide 30: Gross lettable area and vacancy movement
Gross lettable area and vacancy movement Gross Vacant lettable area area Vacancy m² m² % Balance at 1 Sep 2010 3 592 707 366 069 10.2 GLA adjustments 32 049 (10 362) Acquisitions - - Disposals (39 705) (11 237) 28.3 Leases expired during the period 306 603 Renewals of expired leases (73%) (246 412)
Slide 31: Sector vacancy by region
Sector vacancy by region Office Retail Industrial Total Province m² m² m² m² Gauteng 81 180 19 011 38 528 138 719 Western Cape 16 602 13 215 10 049 39 866 KwaZulu Natal 41 113 18 760 11 249 71 122 Mpumalanga 8 682 9 264 - 17 946 North West 7 154 3 147 - 10 301 Eastern Cape 4 265 4 261 1 564 10 090 L
Slide 32: Letting activity for six months
Letting activity for six months Renewals New leases Ave Ave Ave Ave Area expiry achieved Renewal Area achieved portfolio renewed rental rental growth let rental rental Sector m² R/m² R/m² % m² R/m² R/m² Office 109 235 82.57 84.83 2.7 37 240 84.26 85.42 Retail 52 842 62.46 68.60 9.8 74 444 63.99 66.0
Slide 33: Lease expiry profile by let area
Lease expiry profile by let area Office Retail Industrial Total Year to 31 Aug m2 % m2 % m2 % m2 % 2011 290 214 24 106 208 10 165 972 17 562 394 17 2012 241 339 20 206 553 19 174 414 18 622 306 19 2013 245 881 20 204 635 19 281 750 28 732 266 22 2014 138 830 11 114 974 11 129 163 13 382 967 12 Beyon
Slide 34: Tenant profile by area occupied
Tenant profile by area occupied Gross Gross Area occupied lettable area monthly rental Number m2 m2 R000 of leases 0 - 150 158 755 21 804 2 995* 151 - 300 168 272 15 551 775 301 - 500 176 672 13 692 460 501 - 1 000 305 445 19 391 439 1 001 - 2 000 277 604 18 350 212 2 001 - 5 000 582 700 31 852 179
Slide 35: Property management
Property management • In December 2009, Redefine made the decision to move from an outsourced to an in house property management model • State-of-the-art and fully integrated property management and business process system commissioned and implemented • Internalisation of property management functio
Slide 36: Acquisitions
Acquisitions • No acquisitions were transferred in the period under review • Transfers expected by 31 August 2011: Purchase Initial GLA price yield Price Property Location Sector m² R000 % R/m² Commerce Sandhurst Office 15 786 350 000 9.3 22 172 Square Esher Place Sandhurst Office 9 006 150 000 9.3
Slide 37: Commerce Square
»> Commerce Square gu LL I tt il yl | HH 37
Slide 38: Esher Place
Esher Place 38
Slide 39: 22 Fredman Drive
Ive »> 22 Fredman Dr 39
Slide 40: Nashua building
Nashua building wes Bo 0 ———— 40
Slide 41: Disposals in six months to 28 Feb 2011
Disposals in six months to 28 Feb 2011 Number of properties 12 Gross lettable area 39 705m² Vacancy 11 237m² Selling price R189 925 000 Average yield 9.06% 41
Slide 42: Disposals subsequent to 28 Feb 2011
Disposals subsequent to 28 Feb 2011 Number of properties 3 Gross lettable area 12 224m² Selling price R52 710 000 Average yield 8.38% 42
Slide 43: Acquisition and disposal scenario
Acquisition and disposal scenario • In addition to the transactions concluded, further acquisitions and disposals are under negotiation. If all are successfully completed: Ave value / Value Number of property Rm properties Rm At 28 Feb 2011 19 043 382 50 Acquisitions awaiting transfer 500 2 250 Acqu
Slide 44: Current developments
Current developments Projected Projected Initial completion Property Location Description total cost Yield date 82 on Maude Gauteng Refurbishment R4m Mar 2011 Jewel City Gauteng New building for R30m 10% Jul 2011 Diamond Board and State Trader Kopanong Gauteng Development for R36.6m 9% Nov 2011 Shop
Slide 45: Future developments
Future developments Anticipated Projected start Property Location Description total cost date Pimville Gauteng Refurbishment R9m Jul 2011 Park Meadows Gauteng Alterations and additions R11.5m Jul 2011 90 Rivonia Rd Gauteng Refurbishment ±R175m Oct 2012 Shoprite Parow W Cape Alterations and additions
Slide 46: Redefine Properties
> Reperine PROPERTIES
Slide 47: Redefine International
Redefine International • The offshore strategy provides diversification, expansion and a Rand hedge • Redefine continues to support management with a proven track record through providing funding and strategic input • Good acquisition opportunities offshore, which in many instances provide better re
Slide 48: Company profile
Company profile • Redefine Properties International Limited is a JSE listed property loan stock company which owns 82% of AIM Listed Redefine International plc Company name: Redefine Properties International Limited Share code: RIN JSE sector: Financial Services – Real Estate Listing date: 7 Septemb
Slide 49: Group structure
Group structure 54.1% (57.2%)* 45.9% SA Shareholders 372 305 640 linked units (£95.5m) (42.8%)* (market cap £208m) 82.3% (81.5%)* 17.7% LSE Shareholders 452,182,183 shares (£41.6m) (18.5%)* (market cap £235m) UK Stable UK Shopping European Listed Hotels Income Centres Portfolio Securities • Wichford
Slide 50: Investments
Investments • Total assets under management as at 28 February 2011*: £m UK Stable Income 70.3 UK Retail Portfolio 151.4 Hotels 110.6 European Portfolio 80.5 Wichford P.L.C. 16.7 Cromwell Group (Australia) 85.1 Total 514.6 50 * Assumes RI plc proportionate ownership of JV and associate properties
Slide 51: Cromwell overview
Cromwell overview • Current yield 10% • Focus on quality tenants • 52% of next rent reviews are fixed, with an average increase of 3.95% • 27% of next rent reviews are CPI • Minimal future impact from softening rentals - only 17% subject to market reviews 51
Slide 52: Ranking in sector and objective
Ranking in sector and objective RIN JSE RDF LSE Market Cap Current 12 / 17 36 / 149 £235m After Wichford merger 12 / 17 26 / 149 £292m After merger and Capital Raising 12 / 17 20 / 149 £392m • Medium term objective – to be a Top 10 LSE Real Estate Investment Company with a market capitalisation of £
Slide 53: Unique positioning
Unique positioning • Focus on high yielding properties as an asset class, with significant expertise across sub-sectors in this space • UK listed universe has limited players with scale focused in this area - Majority of closer peers are specialised (self-storage, student accommodation) - Many peers
Slide 54: Corporate highlights
Corporate highlights • Successful listing on the JSE Limited and raising of £84 million of new equity • Agreement in principle reached for RI plc to merge with Wichford P.L.C. • Favourable long-term restructuring of shopping centre senior debt • Successful R207 million capital raising post interim p
Slide 55: Financial highlights
Financial highlights • Distributable earnings of £6.8 million • Distribution of 2.02 pence per linked unit, on track to achieve prospectus forecast for the year ending 31 August 2011 • Net asset value of 47.03 pence per linked unit (31 August 2010: 43.48 pence per linked unit), an increase of 8.16%
Slide 56: Acquisitions
Acquisitions • 50% of Grand Arcade Shopping Centre, Wigan • Completion of acquisition of £106 million Hotel Property Portfolio • 2 OBI properties in Germany • Non-controlling shareholding in Swiss Portfolio • St Georges Shopping Centre in Harrow, United Kingdom post interim period 56
Slide 57: Distributable income statement extract
Distributable income statement extract 28 Feb 2011 31 Aug 20101 £000 £000 Gross revenue 16 588 1 947 Property portfolio 11 719 1 499 Listed securities 3 875 - Fee income 994 448 Property and investment management expenses (3 523) (397) Administration expenses (288) (37) Profit from associates 1 206
Slide 58: Pro forma balance sheet extract
Pro forma balance sheet extract 28 Feb 31 Aug 2011 2010 £’000 £’000 Direct and listed assets 514 624 515 194 Property portfolio* 412 765 421 493 Listed securities 101 859 93 701 Capital and reserves 158 278 73 261 Interest-bearing liabilities 325 071 346 157 NAV per linked unit (pence) 47.03 43.48 5
Slide 59: Funding
Funding 28 Feb 2011 31 Aug 2010 £’000 £’000 Fixed 239 004 270 521 Floating 11 917 - Borrowings in JVs* 74 150 75 636 Total debt 325 071 346 157 Loan to value ratio of total debt 61.6% 63.9% Weighted average cost of borrowings 5.27% 5.51% % of debt fixed 96% 99% Weighted average maturity of debt 13.4
Slide 60: Tenant profile by gross lettable area
Tenant profile by gross lettable area Gross lettable area Sector (square feet) % National tenants 2 407 897 62 Regional tenants 866 530 22 Local tenants & other 632 272 16 Total 3 906 699 100 16% National tenants Regional tenants Local tenants & other 62% 22% 60
Slide 61: Lease expiry profile by GLA (square feet)
Lease expiry profile by GLA (square feet) Retail Commercial Offices Hotels Other Total 0-5yrs 574 842 18 974 60 372 - 41 525 695 713 5-10yrs 475 951 - 79 726 - 90 527 646 204 10-15yrs 428 581 596 710 55 402 233 867 20 066 1 334 626 15+ yrs 658 825 170 097 65 218 - 336 016 1 230 156 TOTAL 2 138 199 7
Slide 62: Sectoral profile by gross lettable area
Sectoral profile by gross lettable area Number GLA Sector of properties (square feet) % Retail 38 2 138 99 55 Commercial 51 785 781 20 Offices 3 260 718 7 Other 2 488 134 12 Subtotal 94 3 672 832 94 Hotels 5 233 867 6 TOTAL 99 3 906 699 100 12% 6% Retail Commercial 7% Offices Hotels Other 20% 55% 62
Slide 63: Closing prices and volumes traded
Closing prices and volumes traded Volume Month End Closing Price Average Volume 700 10 000 690 9 000 680 670 8 000 660 7 000 650 Share Price (cents) 640 6 000 Volume (000's) 630 5 000 620 610 4 000 600 3 000 590 580 2 000 570 1 000 560 550 0 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Key Stati
Slide 64: Unitholder profile
Unitholder profile Top 10 unitholders * Number of units % Redefine Properties Limited 201 432 988 54.10 RMB Securities 38 722 676 10.40 Computershare Nominees 8 447 928 2.27 Inv Sol Ltd Balanced Fund (AG) 7 588 879 2.04 Stanlib Property Income Fund 5 939 704 1.60 Agulhas Nominees 5 335 714 1.44 Dome
Slide 65: Wichford merger structure and transaction overview
Wichford merger structure and transaction overview Key transaction terms • 7.2 Wichford shares for each Redefine share • Wichford shares valued at a premium of c. 7% to their closing price on 22 March • Redefine Properties’ commitment to support a fully pre-emptive capital raise of up to £100 millio
Slide 66: Combined company highlights
Combined company highlights Focus on yielding assets across sectors and regions 66
Slide 67: Redefine Properties
> Reperine PROPERTIES
Slide 68: Strategy
Strategy Strategy Detail Improve the quality of property portfolio - Acquisitions R2.9bn in higher quality properties - Disposals R2.9bn in lower grade properties - Developments R0.6bn in building extensions / enhancements Offshore - Expansion Wichford merger Funding and cost of debt - Prudent manag
Slide 69: Prospects
Prospects • 2011 is Redefine’s year of refocus – Challenging trading conditions, rates / electricity tariffs, renewal escalations under pressure – Internalisation of property management – Continued repositioning of core portfolio • Of 66.5 cents per linked unit (distribution at 31 August 2010), core
Slide 70: Redefine Properties
> Reperine PROPERTIES
Slide 71: Redefine Properties
> Reperine PROPERTIES