1 Redefine group results and strategic review for the year ended 31 August 2018
Our conversation 2 Section Salient features 1 Section Property portfolio overview 2 Section Financial performance 3 Section Wrap up 4 Section Supplementary information 5 Section International review 6 Redefine group results and strategic review for the year ended 31 August 2018
Salient features 3 Salient features Section 1 Redefine group results and strategic review for the year ended 31 August 2018
The essence of Redefine Salient features 4 To create sustained value you must do it from a place of purpose Our strategy is not Our purpose is to Our mission is to Our primary goal is about what we do – manage and create create sustained to grow and it is a matter of value for all our spaces in a way that improve cash flow being different at stakeholders changes lives what we do Our values are what connects us Redefine group results and strategic review for the year ended 31 August 2018
Our strategy Salient features 5 Operating context, risks and stakeholder needs, create an agile strategy to remain relevant Our strategy is aligned with long-term trends and is tweaked for opportunities and risks Our focus is on real estate and related investments – not a particular sector Placing people at the heart of what we do We are value seekers and invest where we believe the best market opportunities lie Investors Communities We will continue to build an asset platform that sustains organic growth through We’re not - Continuously improving, expanding and protecting our domestic portfolio landlords. We’re people. - Recycling capital through the sale of assets at the end of their investment life cycle Employees Suppliers and Brokers - Unlocking value from active asset management opportunities in offshore markets - Broadening sustainability to remain relevant Tenants We continue to deepen stakeholder engagement We drive initiatives to embrace emerging technologies and innovate solutions Redefine group results and strategic review for the year ended 31 August 2018
Key outcomes Salient features 6 Embedding integrated thinking to execute strategy Acquired remaining 50% Property assets under Expanded into logistics Development activity totalled Invest NTAV growth of 7% management expanded by of 115 West Street for R5.3 billion strategically sector in Poland R7.2 billion to R91.3 billion R751 million Recycling of capital realised Cost of debt reduced by Interest rates hedged on Updated Domestic Medium Optimise LTV lowered to 40.0% R8.9 billion 100bps to 6.3% 81.2% of total debt capital Term Note programme Active portfolio operating 497 491 m 2 at an average Recurring income growth of Overall occupancy Tenant retention rate at Operate margin improved 6.9% improved to 95.5% 90.4% reversion of -1.5% renewed efficiently to 82.3% Launched internal Launched tenant Certified as a Progress made on 151 learners completed Engage mentorship and experience change Top Employer 2019 transformation talent programme since 2013 innovation challenge management programme Leader in corporate 2 nd in EY excellence Broadened the board’s Launched the Invigorated focus Grow reporting in property sector diversity and skills base Challenge Revolution on ethics reputation in Integrated Reporting 2018 for 2017 Redefine group results and strategic review for the year ended 31 August 2018
Redefine’s primary strategic differentiator Salient features 7 Fostering a values-driven, service culture that is underpinned by innovation Our culture a key differentiator Employee engagement initiatives to drive culture Employee engagement levels above benchmark Certified as a Top Employer Values-driven Strong alignment to brand Investing in our people Reward and recognition programme to encourage performance Upskilling for future challenges Succession model reviewed Career development strategy in place Transforming our people AIC* at senior management level improved from 7% to 22% Redefine workforce: 54% female and 64% AIC* Board gender balanced and diversity improved Transformation at executive and senior management remains a top priority * African, Indian and Coloured Redefine group results and strategic review for the year ended 31 August 2018
Environmental, Social and Governance Salient features 8 Embracing the mandates from our stakeholders that support sustainability Participate in Dow Jones 3 000 smart meters being installed – Sustainability Index , Global Real REIT with largest solar all buildings in Cape Town have water Estate Sustainability benchmark, footprint in South Africa metering and control devices Environment FTSE4 Good Emerging Market Index First Challenge Convention Progress on integrated Level 4 BBBEE held at Maponya Mall with a stakeholder engagement participation of 262 key contributor status strategies Social stakeholders Audit and risk oversight Improved perceived board Independent non-executive responsibilities split into separate chairman to be appointed independence board committees Governance Redefine group results and strategic review for the year ended 31 August 2018
Property portfolio overview 9 Property portfolio overview Section 2 Redefine group results and strategic review for the year ended 31 August 2018
Redefine’s diversified property asset platform Property portfolio overview 10 Allocating capital to ensure sustained value creation Portfolio valued at R91.3 billion Direct local property portfolio Direct international properties International listed securities Property portfolio 100.0% R68.6bn 95.0% R3.9bn EPP N.V. 39.0% R7.0bn Logistic platform Retail R27.8bn 90.0% R1.4bn RDI REIT PLC 29.4% R4.0bn Journal Student Accommodation Fund Office R25.9bn Industrial R13.1bn 25.0% R1.0bn Cromwell Property Group 3.0% R0.7bn Chariot Top Group BV Specialised R1.8bn Loans receivable 100.0% R2.6bn Oando Wings Development Limited 38.9% R0.7bn GRIT Real Estate Income Group 3.7% R0.2bn Respublica 53.6% R1.2bn R11.9bn R7.0bn R72.4bn Carried at fair value Equity accounted Capital allocated to developments and capex Geographic spread by value Capital deployed of R11 billion 158 Rm 1 240 210 13% Office Development activities and capex 451 5 287 5% Retail 1% Offshore logistics 3 107 Local 480 Industrial 2% Chariot 910 Australia Rm AUS student accommodation EPP shares 829 Africa 115 West Street (Alex Forbes) 751 Local student accommodation UK 887 RDI shares* 138 Poland Offshore logistics Working capital 104 79% Residential 1 074 787 Northpoint redevelopment * Partial settlement for IHL sale Redefine group results and strategic review for the year ended 31 August 2018
Local portfolio game plan Property portfolio overview 11 Centred on optimising risk and reward Investment criteria Continued expansion across traditional sectors Exposure to key economic nodes Locations that have solid infrastructure to reduce leasing risk Our focus Continue to expand and improve existing well-located properties through development On younger (more efficient), well-located and better quality properties with longer leases and A-Grade tenants To recycle non-core assets to position the portfolio for sustained organic growth Continued implementation of long term strategy on an asset-by-asset basis Selective acquisitions in under represented regions and to complement existing assets Redefine group results and strategic review for the year ended 31 August 2018
Local portfolio profile Property portfolio overview 12 A well-located, high-value, high-quality and efficient portfolio Carrying value Retail 40% R72.4bn (2017 | 41%) (2017 | R68.1bn) Impact of portfolio restructure R # 333 327 312 315 20 000 350 270 300 14 382 15 000 12 870 73% located in 250 11 096 Office 37% 10 903 10 093* 200 Gauteng 10 000 (2017 | 36%) 150 (2017 | 73%) 100 5 000 50 0 0 2014 2015 2016 2017 2018 Average value per m² (R) Number of properties (#) 17% located in Industrial 19% Western Cape (2017 | 17%) (2017 | 18%) *Acquisition of Macsteel portfolio at R4 674/m ² Redefine group results and strategic review for the year ended 31 August 2018
Local portfolio highlights Property portfolio overview 13 A focus on organic growth Exit cap rate per sector Student accommodation 9.95% Average value Active portfolio capital Specialised 9.62% per property of R222m growth of 5.5% (2017 | R182m) Industrial 9.33% Office 8.66% Developments in progress Completed developments Retail 8.30% total R3bn at average totalling R1.7bn at projected yield of 7.8% average yield of 7.3% 7% 8% 8% 9% 9% 10% 10% 11% Lease expiry profile by GLA 32% 1 600 Disposals totalling Total active Thousands R2.7bn vacancy of 4.5% 1 200 yield 8.4% (2017 | 4.6%) 800 14% 13% 12% 11% 8% 7% 400 3% Total letting Solar PV capacity at 942 102 m² increased to 22 448kWp 0 (2017 | 942 716 m²) from 7 807kWp Monthly 2019 2020 2021 2022 2023 Beyond Vacancy 2023 Redefine group results and strategic review for the year ended 31 August 2018
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