Spear Reit Ltd. · JSE:SEA
Spear Reit — Investor Presentation (June 2017)
49 slides from Spear Reit's investor presentation, June 2017
Slide 1: Capital Raise Presentation June 2017
Capital Raise Presentation June 2017 Capital Raise June 2017 1
Slide 2: Table of Contents
1. Spear REIT at a Glance Table of Contents 2. Highlights 3. Financial Performance 4 months ended 28 February 2017 4. Group Structure & Management 5. Portfolio Overview MISSION STATEMENT “To be the leading 6. Capital Raise Rationale Western Cape-focused REIT and to consistently grow our 7. Subsequen
Slide 3: Spear REIT at a Glance
Spear REIT at a Glance Capital Raise June 2017 3
Slide 4: Spear REIT at a Glance
Spear REIT at a Glance As at Post Transfer – 28 February 2017 Anticipated Transfer July 2017 Portfolio Value R1.44 billion R2.64 billion Rentable Area (Gla) 172 503m2 306 702m2 No Of Properties 25 31 Occupancy Rate 99% 99% Average Escalation % 8% 8% Average Portfolio Rental R91/m2 R85/m2 Wale 46 mon
Slide 5: Highlights – 4 months to 28 February 2017
Highlights – 4 months to 28 February 2017 Capital Raise June 2017 5
Slide 6: Highlights
Highlights *The above performance was measured against the PLS issued 4 months ended on 21 October 2016* 28 February 2017 DISTRIBUTION PER SHARE 23.51 cents 16.75% over forecast TANGIBLE NET ASSET VALUE PER SHARE 7.01% to R10.03 INVESTMENT PROPERTY 3.79% to R1.446 billion CAPITAL RAISED R369 000 000
Slide 7: Financial Performance to February 2017
Financial Performance to 28 February 2017 Capital Raise June 2017 7
Slide 8: Summary Income Statement
Summary Income Statement Group Audited 28 Feb 17 R’000 Total revenue 61 262 Property operating and management expenses (16 294) Net property-related income 44 968 Administrative expenses (4 558) Net operating profit 40 410 Consolidated Fair value adjustment – Investment properties 40 553 Statement of
Slide 9: Summary Balance Sheet
Summary Balance Sheet Group Audited 28 Feb 17 R’000 ASSETS Non-current assets 1 452 376 Current assets 41 136 TOTAL ASSETS 1 493 512 EQUITY AND LIABILITIES Shareholders’ interest 986 808 Non-current liabilities 478 453 Consolidated Current liabilities 28 251 Statement of TOTAL EQUITY AND LIABILITIES
Slide 10: Funding at February 2017
Funding at 28 February 2017 LTV Total Borrowings Average Cost of Funding Hedged Funding 33.09% R478 m 9.65% 59% Funding Maturity Capital Raise June 2017 10
Slide 11: Group Structure & Management Team
Group Structure & Management Team Capital Raise June 2017 11
Slide 12: Revised Group Structure
Revised Group Structure SPEAR HOLDCO Upper Eastside Retail & Commercial & Double Tree by Hilton Directly Held Subsidiary Sable Square Properties Companies Pembury Retirement Complex Burger King Strand 15 on Orange Hotel by Marriott 25 Assets No. 2 Long Street Capital Raise June 2017 12
Slide 13: Board of Directors
Board of Directors EXECUTIVE Mike Flax Quintin Rossi Christiaan Barnard CHIEF EXECUTIVE OFFICER MANAGING DIRECTOR FINANCIAL DIRECTOR NON-EXECUTIVE Abu Varachhia Jalal Allie NON-EXECUTIVE CHAIRMAN LEAD INDEPENDENT NON-EXECUTIVE DIRECTOR Brian Goldberg Name Surname INDEPENDENT TITLE NON-EXECUTIVE DIRE
Slide 14: Portfolio Overview
Portfolio Overview Capital Raise June 2017 14
Slide 15: Portfolio Overview at February 2017
Portfolio Overview at 28 February 2017 Active Asset Management Western Cape: 95.3% of assets Gauteng: 4.7% of assets Number of properties: 25 Portfolio Value: R1.446 billion Average property valuation per m2: R8 380/m2 Capital Raise June 2017 15
Slide 16: Tenant Profiles and Vacancy Profiles
Tenant Profiles at 28 February 2017 Proximity to Assets Tenant Profile Profile by Number by GLA of Tenants Vacancy Profiles at 28 February 2017 Total Vacancy Focused Tenant Retention 1 584m2 Vacant area m2 High Occupancy Rates Capital Raise June 2017 16
Slide 17: Top Tenants by Annual Rental
Top 10 Tenants by Annual Rental = R65.2 m The below-mentioned Top 10 Tenants by rental p.a. equate to 37.8% of the total portfolio annual contractual income FY 2018, being R174.9 million (excludes any new acquisitions after the period) Capital Raise June 2017 17
Slide 18: Lease Expiry Profile by GLA & Revenue
Lease Expiry Profile by GLA & Revenue Capital Raise June 2017 18
Slide 19: Capital Raise Rationale
Capital Raise Rationale Capital Raise June 2017 19
Slide 20: Capital Raise Rationale
Capital Raise Rationale INVESTMENT BENEFITS OF OPPORTUNITY GROWTH INVESTMENT PIPELINE OF OVER R1bn IMPROVING INCOME – THE NET INITIAL MANAGEMENT HAS A PROVEN ABILITY TO YIELD OF EACH NEW ACQUSITION IS EXECUTE ITS INVESTMENT STRATEGY IN ACCRETIVE TO THE FUND YIELD THE CAPE MARKET BETTER LIQUIDITY IN
Slide 21: Subsequent Transactions
Subsequent Transactions Capital Raise June 2017 21
Slide 22: Subsequent Transactions
Subsequent Transactions Expected Acquisition Debt Equity The Group entered into agreement transfer value funding funding to acquire the following properties date R’000 R’000 R’000 - 2 Long Street, Cape Town 1 Jul 17 389 000 210 000 179 000 - 15 on Orange, Cape Town 1 Jul 17 298 000 175 000 123 000 -
Slide 23: Werksmans, Edward Street, Tygervalley
Werksmans, Edward Street, 142 Edward Street, Tygervalley Tygervalley Main tenants: Werksmans Attorneys & Bigen Africa GLA: 2 609m2 Sector: Commercial Acquisition price: R41 200 000 Acquisition yield: 9.70% WALE: 2 years Capital Raise June 2017 23
Slide 24: 78 on Edward, Edward Street, Tygervalley
78 on Edward, Edward Street, Redevelopment Tygervalley Main tenant: TBC Physical address: 78 Edward Street, Tygervalley GLA: 1 980m2 Sector: Commercial Acquisition price: R13 200 000 Acquisition yield: 9.25% WALE: Redevelopment Capital Raise June 2017 24
Slide 25: 15 on Orange Hotel & Conference Facility, Cape Town
15 on Orange Hotel & Conference Facility, Cape Town Main tenant: Marriot Hotels International Physical address: 15 Orange Street, Cape Town GLA: 14 681m2 Sector: Hospitality Acquisition price: R298 000 000 Acquisition yield: 9.55% Hotel lease tenure: 16 years Capital Raise June 2017 25
Slide 26: Virgin Active, George
Virgin Active, George Main tenant: Virgin Active South Africa Physical address: No. 1A Witfontein Road, George GLA: 2 500m2 Sector: Specialised retail Acquisition price: R22 000 000 Acquisition yield: 9.22% WALE: 5 years Capital Raise June 2017 26
Slide 27: No. 2 Long Street, Cape Town
No. 2 Long Street, Cape Town Main tenants: DRA Projects SA, Fairheads Benefits, SAMSA Physical address: No. 2 Long Street, Cape Town GLA: 23 671m2 Sector: Commercial Acquisition price: R389 000 000 Acquisition yield: 9.32% WALE: 3 years Planned CapEx: R10 000 000 Capital Raise June 2017 27
Slide 28: Mega Park Industrial Estate, Bellville South
Mega Park Industrial Estate, Bellville South Main tenants: Massbuild, Consol Glass, Imperial, Tuffy Group & Storage Team Physical address: Cnr Pieter Barlow & Mill Road, Bellville South GLA: 85 748m2 Sector: Industrial logistics, manufacturing & warehousing Acquisition price: R375 157 000 Acquisitio
Slide 29: Sable Square - Retail & Office Additions
Sable Square - Retail & Office Additions Addition: Retail & office space Physical address: Cnr Bosmansdam & Ratanga Road, Milnerton New GLA: 3 000m2 Sector: Retail & Office Cost of additions: R54 000 000 Yield on additions: 9.25% Completion: December 2017 Capital Raise June 2017 29
Slide 30: Revised Portfolio Overview
Revised Portfolio Overview Active Asset Management Western Cape: 97% of assets Gauteng: 3% of assets Number of properties: 31 Portfolio Value: R2.64 billion Average property valuation per m2: R8 615/m2 Capital Raise June 2017 30
Slide 31: Revised Financial Forecast FY 2018
Revised Financial Forecast FY 2018 Capital Raise June 2017 31
Slide 32: Revised Financial Forecast – Income Statement
Revised Spear REIT Financial Forecast – Income Statement 12 months 12 months ending 18 Feb ending 18 Feb (Rm) Revised (Rm) TOTAL REVENUE 174.9 274.2 Property Operating Expenses (46.8) (69.2) NET PROPERTY RELATED INCOME 128.1 205.0 Head Office Costs (7.3) (11.9) OPERATING COSTS 120.8 193.1 Finance Cost
Slide 33: Revised Financial Forecast – Balance Sheet
Revised Spear REIT Financial Forecast – Balance Sheet Audited Unaudited R’000 R’000 ASSETS 28 Feb 17 Post Transactions Non-current assets 1 452 376 2 594 933 Current assets 41 135 41 135 TOTAL ASSETS 1 493 512 2 636 069 EQUITY AND LIABILITIES Capital and reserves 986 808 1 443 965 Non-current liabil
Slide 34: Revised Funding
Revised Funding LTV Total Borrowings Average Cost of Funding Hedged Funding 46% R1.163bn 9.41% 24% Funding Maturity Capital Raise June 2017 34
Slide 35: Capital Raise – Timing & Process
Capital Raise – Timing & Process Capital Raise June 2017 35
Slide 36: Capital Raise – Timing & Process
Capital Raise – Timing & Process Key Features of the Capital Raise AMOUNT TO BE PLACED R280 000 000 PLACING PRICE R9.60 REVISED FY 18 FORWARD YIELD 8.1% OPENING OF PRIVATE PLACEMENT 09HOO on Monday, 5 June 2017 CLOSING OF PRIVATE PLACEMENT 17H00 on Friday, 2017 NOTIFICATION OF ALLOTMENTS Monday 2017
Slide 37: Outlook
Outlook Capital Raise June 2017 37
Slide 38: Value Proposition & Prospects
Value Proposition & Prospects Cape Town - SA’s highest growth area Diversification across all property sectors Regionally specialised Favourable economic & property fundamentals Portfolio value R2,64 billion after anticipated July 2017 transfers High-quality real GLA of 306 702m2 estate portfolio Occ
Slide 39: Questions
Questions Capital Raise June 2017 39
Slide 40: Appendix – Top 15 Spear REIT Assets
Appendix – Top 15 Spear REIT Assets Capital Raise June 2017 40
Slide 41: Sable Square Shopping Centre - Century City area
Sable Square Shopping Centre - Century City area Main tenants: Pick n Pay, Spur, Clicks, China Town, Baby City Physical address: Cnr Bosmansdam & Ratanga Road, Milnerton GLA: 27 115m2 Sector: Retail & Commercial Zoning: General Business 1 Available bulk: 28 000m2 Stand size: 45 000m2 Parking ratio:
Slide 42: Double Tree by Hilton Cape Town at Upper Eastside
Double Tree by Hilton Cape Town at Upper Eastside Physical address: 31 Brickfield Road Phase 2 – UES Phase 2 Hotel GLA: 11 339m2 Commercial, Retail & Residential 4 771m2 Sector: Leisure, Commercial, Retail, Residential Zoning: Mixed use Stand size: 20 000m2 Parking ratio: 5/100m2 Independent valuati
Slide 43: Range Road DC Blackheath
Range Road DC Blackheath Main tenant: Liquor Runner SA Physical address: Cnr Range & Anfield Road, Blackheath GLA: 15 300m2 Sector: Industrial Zoning: General Business 1 Available bulk: 28 000m2 Stand size: 23 831m2 Parking ratio: N/A Independent valuation: R84 566 918 Capital Raise June 2017 43
Slide 44: Nampak Liquids, Hewett Avenue, Epping
Nampak Liquids 11 Hewett Avenue, Epping Physical address: 11 Hewitt Avenue, Bofors Circle, Epping GLA: 15 000m2 (Warehouse) Sector: Industrial Zoning: General Industrial FAR: 2.0 Unutilised bulk: 30 535m2 Total bulk: 45 934m2 Stand size: 22 967m2 Independent valuation: R70 648 365 Capital Raise June
Slide 45: Distell Distribution Centre - Parow
Distell Distribution Centre - Parow Physical address: 1 Beacon Way, Cnr Jan Smuts and Jan van Riebeeck Drive, Parow GLA: 16 170m2 Sector: Office & Warehouse Zoning: General Industrial Unutilised bulk: 7 100m2 Total bulk: 23 270m2 Stand size: 31 042m2 Independent valuation: R80 907 349 Capital Raise
Slide 46: Spear REIT - Tygervalley Portfolio
Spear REIT - Tygervalley Portfolio Main tenants: Naspers, City of Cape Town, Hyundai, Clickatell Physical address: Edward Street, Tygervalley, Bellville Total GLA: 16 182m2 Sector: Office & Retail Zoning: Secondary Business Total Independent valuation: R199 277 691 Capital Raise June 2017 46
Slide 47: 28 & 30 Marine Drive Paarden Eiland
28 & 30 Marine Drive Paarden Eiland Main tenants: ABSA, Bloomsbury Cars Physical address: 28 & 30 Marine Drive, Paarden Eiland Joint GLA: m2 Sector: Mixed Use – Majority Retail Zoning: General Industrial Height restriction None FAR: Max Max coverage: 100% Total bulk: +- 100 000m2 Joint stand size: 1
Slide 48: 142 Breë Street Cape Town
142 Breë Street Potential redevelopment site Cape Town Main tenants: IDM, Supa Quick Physical address: 142 Breë Street, Cape Town GLA: 3 024m2 Sector: Office Zoning: General Commercial C5 Height restriction 37m – Actual: 1 Storey FAR: 7.90 Max coverage: 100% Unutilised bulk: 18 188.5m2 Total bulk: 2
Slide 49: 5th Floor Double Tree by Hilton at the Upper Eastside
5th Floor Double Tree by Hilton at the Upper Eastside 31 Brickfield Road Woodstock 8010 Cape Town T 021 404 0580 www.spearprop.co.za Capital Raise June 2017 49