Redefine Properties Limited · JSE:RDF
Redefine Properties — FY2008 Earnings Presentation
35 slides from Redefine Properties's earnings presentation, 2008
Slide 1: Presentation to the Investment Analysts Society
PRESENTATION TO THE INVESTMENT ANALYSTS SOCIETY Grocers 2008 RESULTS FOR THE YEAR ENDED 31 AUGUST
Slide 2: Redefine has delivered
Redefine HAS delivered Redefine’s business model: Adding value to its existing portfolio Diversification Development
Slide 3: Financial highlights
Financial highlights Distribution per linked unit 56.63 cpu 10.5% (2007: 51.25 cpu) Property portfolio R5,8 billion 11.5% (2007: R5.2 billion) Total assets R10,7 billion 8.1% (2007: R9,9 billion) NAV per linked unit R7.58 (excl. deferred tax ) Market cap R6,2 b Listed securities portfolio R4,1 b Lin
Slide 4: Property portfolio highlights
Property portfolio highlights Added 131 383m of “new” space through development 93 940m of vacant space leased 51 036m of space renewed 95.2% of portfolio leased (96.6% as of October) 45% of leases expire in 2012 and beyond Expenses: 20% (of contractual rental income)
Slide 5: Distribution history
Distribution history Quarterly income distributions Cents per linked unit Quarter
Slide 6: Market performance: Redefine vs PLS index
Market performance Redefine vs PLS index (J256)
Slide 7: Market performance: Redefine vs Property index
Market performance Redefine vs Property index (J253)
Slide 8: Income statement (extract)
Income statement (extract) 2008 2007 % R million R million Change Gross contractual revenue 895 770 16 • Property portfolio: 60%/56% 539 430 25 • Listed securities: 37%/39% 332 300 11 • Property trading: 3%/5% 24 40 (40) (of operating income) Property expenses (106) (87) 21 Admin expenses (60) (55)
Slide 9: Distributable income analysis
Distributable income analysis 2008 2007 % R 000 R 000 Change Investment properties Core portfolio 264 233 13 Spearhead buildings 135 94 Acquired during the year 4 7 Completed developments transferred 23 - Sold during the period 4 9 Sold (to be transferred) 2 - Total investment properties 432 343 26
Slide 10: Distributable income analysis
Distributable income analysis % 2008 2007 Chang R 000 R 000 e Distribution Q1 13.3 11.8 13 Distribution Q2 13.8 12.2 13 Distribution Q3 14.0 12.6 11 Distribution Q4 15.53 14.65 6 Total 56.63 51.25 10.5
Slide 11: Growth outlook
Growth outlook 31 Aug 31 Aug % change 2008 2009 DISTRIBUTION PER LINKED UNIT 56.63 61.73 9 62.29 10 62.86 11 Current yield (price R5.70): 9.94% 61.73cpu 62.29cpu 62.86cpu Forward yield (price R5.70): 10.83% 10.93% 11.03% A rating of 9.94% implies a price of R6.21 R6.27 R6 32
Slide 12: Balance sheet (extract)
Balance sheet (extract) 2008 2007 % R million R million Change Direct & listed assets 10 301 9 848 5 • Property portfolio: 59% 6 112 5 223 17 (2007: 53%) • Listed securities: 41% 4 189 4 625 (9) (2007: 47%) Total assets 10 717 9 834 9 Capital and reserves 4 404 4 108 7 Interest-bearing liabilities 3
Slide 13: Direct property
Direct property Portfolio overview Total GLA 858 357m A-grade 85% Leases expiring in 2012 and beyond 45% Occupancy at 31 August 2008 95.2% Vacancy profile by sector (GLA) Vacancy 4.8% m2 Retail 10 315 Office 15 926 Industrial 14 685 Total 40 926 (Current occupancy 96.6%)
Slide 14: Property portfolio by sector
Property portfolio by sector Revenue GLA Offices Offices Retail Retail Industrial Industrial
Slide 15: Geographic spread
Geographic spread Revenue GLA W. Cape 50.5% Gauteng 40.9% Gauteng 44.76% KZN 4.7% KZN 5.4% Limpopo 2.5% Limpopo 2.2% Mpumalanga 1.1% Mpumalanga 0.9% W. Cape 46.8%
Slide 16: Strategy: direct properties
Strategy: direct properties Acquire properties: With values above R30m Across all sectors In prime locations With longer leases Mainly A-grade covenants Yield enhancing/ strategic importance/ development opportunity Focus on major centres which are growth nodes
Slide 17: Strategy: direct properties
Strategy: direct properties Properties acquired in F2008 Gross Purchase Initial Price Property Type lettable price yield per m area (m) (R’000) (%) (R) City Deep Industrial 13 400 47 000 8.9 3 507 Paarden Commercial/retai 16 203 70 000 7.8 4 184 Eiland Foreshore l Commercial 76 124 51 700 n/a n/a (5
Slide 18: Expansion through development
Expansion through development Developments completed during the year Project Projecte Developme d % nt Initial Owne GLA Cost Yield % Property Location d m2 (R’000) (%) Let WESTERN CAPE Industrial CTX Business Park Airport CT 100 8 941 44 694 9.7 75 1 Platinum Park 3 Montague 100 2 515 9 688 10.8 100
Slide 19: Expansion through development
Expansion through development Developments completed during the year Project Developmen t Projected % Cost Initial % Property Location Owned GLA m2 (R’000) Yield (%) Let WESTERN CAPE Retail China City Ottery 100 8 276 51 975 9.0 95 Sable Square 2 Century 100 8 900 110 409 7.5 57 City GAUTENG Industr
Slide 20: Expansion through development
Expansion through development Proposed investment developments Project Developme Projecte CURRENT % nt d Expected DEVELOPME Owne GLA Cost Initial Completio % NTS Location d m2 (R’000) Yield (%) n Date Let GAUTENG Retail Festival Town Kempto 100 19 593 196 254 9.7 Oct-09 56 Square n Park
Slide 21: Expansion through development
Expansion through development Trading developments Project Projecte Developme d Expecte % nt Initial d % Owne GLA Cost Return Completi Sol Location d m2 (R’000) (%) on Date d WESTERN CAPE Residential Oasis Phase 1 Century 50 N/A 156 500 14.3 Complet 67 City e Offices Newmarket & Woodsto 50 27 180 46
Slide 22: Development pipeline
Development “pipeline” Investment developments Project Developmen *Expected t Initial Expected % GLA Cost Yield Completio Location owned m2 (R’000) (%) n Date WESTERN CAPE Industrial CTX Freight Park Airport 100 2 307 53 000 10 Phase 2 Mixed- use Annandale Land - Annandale 25 277 1 250 000 10 invest
Slide 23: Listed portfolio
Listed portfolio Fund % % of Value Property fund type held portfolio Rm PLS 9.6 4.1 168 “A” PLS 7.2 6.3 256 “B” PLS 17.9 19.2 784 “C” PLS 4.6 2.0 83 CO 26.9 8.8 358 PLS 29.2 49.0 1 999 PUT 3.2 2.8 116 PLS 11.1 7.7 312 TOTAL 100.0 4 075
Slide 24: Strategy: Listed securities
Strategy: Listed securities Redefine actively pursues and supports corporate activity Larger counters ensure greater liquidity Offshore diversification • Increased exposure to CIREF Potential to grow offshore exposure by backing CIREF’s further expansion • Wichford
Slide 25: Gearing
Gearing Maintained below 45% target at 35% (2007: 34%) R3,5 billion total borrowings at average all-in rate of 10.71% (2007: 9.99%) Average length of fixed debt is 7 years (weighted) More than 80% of debt is fixed Debt is managed pro-actively and consultants utilised
Slide 26: Black economic empowerment
Black economic empowerment • Committed to the Property Sector Charter • Implemented two enterprise development initiatives with Dijalo Property Services and Mergence Africa • Issued 80 million linked units to BEE parties - Economic cost of 15% of Redefines market cap • Approximately 23% of issued un
Slide 27: Corporate social responsibility
Corporate social responsibility •Redefine Income Fund Western Cape Music Education project • Music classes for 120 learners •Located in Diepkloof and Soweto •International standards of teaching •www.buskaid.org.za
Slide 28: Unitholder profile
Unitholder profile Holders in excess of 5% of the total linked units in issue Post-BEE transaction BEE Holders 23% Stanlib Funds 15% Old Mutual 14% Investec 12%
Slide 29: Structure
Public 63% Structure Wolf Cesman Marc Wainer 13% 13% Clearwater Capital 11% Asset Managers Unitholders Madison Property Fund Managers Property CEO Board of Management Brian Azizollahoff Directors contract Property Managers Broll Property Group PA Julie Herholdt Financial Board Composition Michelle M
Slide 30: Board composition
Board composition Independent Non-Executive Chairman Dines Gihwala Independent Non-Executive Directors Chairperson - Investment Committee Liliane Barnard (Direct properties & listed securities) Member of Audit Committee Neville Venter Chairman - Audit Committee Eric Ellerine Di Perton Member of Remu
Slide 31: Outlook for the industry
Outlook for the industry Economic growth slowing to < 3% • Rentals firm • Low vacancies • Growth from portfolio >12% (includes developments completed during 2008 • Property trading revenue 3.4% of operating income (+/- R30 million) Costs of funding • Sustained high interest rates • Liquidity crisis
Slide 32: Outlook for Redefine
Outlook for Redefine Net income from portfolio • Growth from portfolio >12% (includes developments completed during 2008) • Expenses will remain at 20% of gross rental • New developments will be enhancing – full 12 months of income Development • Developments that will continue will be: • Festival To
Slide 33: Outlook for Redefine
Outlook for Redefine Listed securities portfolio • Expecting muted growth in distributions • Hyprop stake is strategic (30%) • Further corporate action? Off-shore expansion • Continue to grow via CIREF when opportune (exchange rate favourable) • Will consider other investments in light of market “me
Slide 34: Summary
Summary Proven history Increased of performance unitholder value Dynamic expansion strategy Diversified & balanced portfolio Since listing, Experienced Redefine has management team provided unitholders Effectively managed debt an average 26% Liquidity annual return
Slide 35: Questions?
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