Capital Raise June 2018
Table of Contents 1. Spear REIT at a Glance Appendix: 2. FY2018 Highlights Top 10 Assets 10. Questions 3. Financial Performance & Answers 9. Outlook 4. Group Structure & Directors 8. Capital Raise: 5. Portfolio Overview Timing & Process 7. Distribution Forecast FY2019 6. New Acquisitions Capital Raise 2 June 2018
MISSION STATEMENT “To be the leading Western Cape-focused REIT and to consistently grow our distribution per share ahead of infmation and within the top quartile of our peer group” 1. Spear REIT at a Glance Capital Raise 3 June 2018
Spear REIT at a Glance • JSE listing 11 November 2016 • Western Cape-focused real estate investor Active Asset Management • Successful tenant retention programme = High occupancy • Value creation through active asset management Portfolio Value R3.1 billion Average Escalation 8.38% Rentable Area (GLA) WALE 324 245m 2 30 months Number Of Properties 31 Gearing (LTV) 38.48% Occupancy Rate 98.1% Average Property Value R94 million [2017: R57 million] Average Property Value Per m 2 R9 665/m 2 Capital Raise 4 June 2018
2. FY2018 Highlights Capital Raise 5 June 2018
Highlights – 2018 Financial Year • Exceeded full year distribution forecast by 1.95% • TNAV per share growth of 15.4% • 117% asset growth in core portfolio • 68% growth in market capitalisation 78.50 cents 1.95% over revised forecast Distribution Per Share 15.4% to R11.57 (R11.15 post distribution) Tangible Net Asset Value Per Share to R3.1 billion from R1.5 billion Investment Property R461 million during period Capital Raised 165 190 689 65% from 98 226 952 Shares in Issue 38.48% Gearing (LTV) R1.35 billion in new acquisitions during period Signifjcant Transactions Capital Raise 6 June 2018
3. Financial Performance Capital Raise 7 June 2018
Summary Income Statement Group Group Audited Audited Year 4 months ended ended Consolidated 28 February 28 February 2018 2017 Statement of R’000 R’000 Comprehensive Total revenue 316 595 61 262 Income Property operating and management expenses (87 422) (16 294) Net property-related income 229 173 44 968 Administrative expenses (17 530) (4 558) Net operating profjt 211 643 40 410 Reporting periods are not comparable Fair value adjustment – Investment properties 252 535 40 553 Depreciation and amortisation (441) (4) Formation and listing cost (314) (1 873) Share-based payment expense (455) (3 939) Profjt from operations 462 968 75 147 Spear REIT Limited and its Net Finance costs (76 044) (16 662) Subsidiaries for the period – Finance costs (82 297) (20 487) ended 28 February 2018 – Finance income 6 253 3 825 Profjt before taxation 386 924 58 485 Taxation (695) 6 846 Profjt/(Loss) for the year 386 229 65 331 Attributable to: Equity owners of the parent 383 186 65 331 Non-controlling interest 3 043 – Total comprehensive income for the year 386 229 65 331 Distribution per share (cents) 78.50 23.51 Capital Raise 8 June 2018
Summary Balance Sheet Consolidated Statement of Group Group Financial Position Audited Audited Feb 2018 Feb 2017 R’000 R’000 ASSETS Reporting periods are not comparable Non-current assets 2 975 850 1 452 376 Current assets 251 488 41 136 TOTAL ASSETS 3 227 338 1 493 512 EQUITY AND LIABILITIES Spear REIT Limited and its Total attributable to owners 1 917 318 986 808 Subsidiaries for the period Non-controlling interest 54 155 - ended 28 February 2018 Shareholders' interest 1 971 473 986 808 Non-current liabilities 1 053 434 478 453 Current liabilities 202 431 28 251 TOTAL LIABILITIES 1 255 865 506 704 TOTAL EQUITY AND LIABILITIES 3 227 338 1 493 512 Number of ordinary shares in issue 165 190 689 98 226 952 Gearing ratio (%) 38.48 33.09 Tangible net asset value per share (Cents) 1 157 1 003 Capital Raise 9 June 2018
Funding R152 million Management successfully 13% refinanced R691 million of Funding borrowings and agreed new terms at year end with an Maturity expiry in February 2021 at a R100 million rate of prime less 1.30% 8% R1 205 bn LTV – 38.48% Total Borrowings – R1.205 billion R953 million 79% Average Cost of Funding – 9.25% 0.40% Hedged Funding – 57.58% FY2019 FY2020 FY2021 Capital Raise 10 June 2018
4. Group Structure & Directors Capital Raise 11 June 2018
Group Structure 3 Directly held Assets Spear REIT Limited 22 Directly held Assets Subsidiary Companies DoubleTree by Hilton Hotel, Cape Town at Upper Eastside incl. retail and commercial Spear HoldCo Sable Square Pembury Retirement Complex 15 on Orange Hotel by Marriott As at 28 February 2018 and no post No. 2 Long Street Balance Sheet transactions included Capital Raise 12 June 2018
Executive Management – Role Changes Quintin Rossi (37) Mike Flax (53) INCOMING CHIEF EXECUTIVE EXECUTIVE DEPUTY OFFICER CHAIRMAN Co-founder of Spear Co-founder of Spear Committees: Executive, Committees: Executive, Investment, Audit & Risk, Investment, Audit & Risk Social & Ethics Capital Raise 13 June 2018
Board of Directors ExECUTIVE Quintin Rossi Mike Flax Christiaan CEO Executive Deputy Barnard Chairman CFO NON- ExECUTIVE Abu Varachhia Jalal Allie Brain Goldberg Niclas Kjellström- Sean McCarthy Chairman Lead Independent Independent Non- Non-executive Matseke Non-executive executive Independent Non- executive Capital Raise 14 June 2018
5. Portfolio Overview Capital Raise 15 June 2018
Portfolio Overview Active Asset Management Western Cape 98% of assets Number of properties 31 Portfolio value R3.1 billion Average property rental rate R91/m 2 Average property valuation per m 2 R9 665/m 2 In force escalations 8.38% Cost to income ratio (Net) 18.51% Capital Raise 16 June 2018
Acquisitions & Disposals Acquisitions: The Group acquired the following properties during the year ending 28 February 2018: Transfer Acquisition Value Debt Funding Acquisition Yield date R’000 R’000 % 142 Edward Street, Tygervalley 1-Mar-17 41 200 23 200 9.70 Selective House, Tygervalley 14-Mar-17 13 200 13 200 9.92 15 on Orange, Cape Town 12-Jun-17 298 000 175 000 9.55 2 Long Street, Cape Town 22-Jun-17 389 000 220 000 9.32 Mega Park Industrial Estate, Bellville 28-Jul-17 379 157 224 000 9.30 Virgin Active George, George 8-Aug-17 22 000 12 000 9.22 Tyger Manor, Tygervalley 11-Oct-17 59 600 26 800 9.31 MWEB Head Offjce, Bellville 18-Jan-18 145 000 65 250 9.60 1 347 157 759 450 9.49 Disposals: The Group disposed of the following properties during the year ending 28 February 2018: Transfer Disposal Value Book Value Premium Book Disposal Yield date R’000 R’000 Value % % 12 Sandown Road, West Beach 21-Feb-18 5 739 4 600 25 8.00 08 Sandown Road, West Beach 21-Feb-18 10 478 8 544 23 8.00 142 Bree Street, Cape Town 1-Jun-18 150 000 73 800 103 3.00 Tyger Manor, Tygervalley 1-Jul-18 75 000 61 000 23 8.00 241 217 147 944 6.75 Capital Raise 17 June 2018
Top 5 Properties by Value Total Value Total GLA Portfolio R1 810 912 195 616m 2 57.89% Mega Park Industrial 2 Long Street, Sable Square, Upper Eastside, 15 on Orange, Estate, Bellville South Cape Town Milnerton Woodstock Cape Town Value (Rm) 426 000 Value (Rm) 418 400 Value (Rm) 358 300 Value (Rm) 305 914 Value (Rm) 302 298 Sector Industrial Sector Commercial Sector Mixed Use Sector Hospitality Sector Mixed Use GLA (m 2 ) 86 091m 2 GLA (m 2 ) 24 822m 2 GLA (m 2 ) 30 934m 2 GLA (m 2 ) 16 727m 2 GLA (m 2 ) 18 521m 2 Total Value (%) 13.59% Total Value (%) 13.35% Total Value (%) 11.43% Total Value (%) 9.76% Total Value (%) 9.65% Valuation (R/m 2 ) 4 948 Valuation (R/m 2 ) 16 856 Valuation (R/m 2 ) 11 583 Valuation (R/m 2 ) 18 289 Valuation (R/m 2 ) 16 322 Capital Raise 18 June 2018
Sectoral Split by Revenue & GLA Revenue (Rm) GLA (m 2 ) For the year ended 28 February 2018 R294 million 324 245 Residential Residential Hospitality 3% 2% Retail 9% Hospitality 23% 12% Commercial 30% Industrial Industrial 24% 47% Commercial 38% Retail 12% Industrial R70 326 Industrial 152 514m 2 Commercial R111 986 Commercial 97 060m 2 (Rm) (m 2 ) Retail R67 868 Retail 38 606m 2 Hospitality R36 935 Hospitality 28 065m 2 Residential R7 205 Residential 8 000m 2 Capital Raise 19 June 2018
Lease Expiry by GLA Lease Expiry Profjle based on GLA as at 28 February 2018 100% 90% 80% 70% 60% 50% 40% Average 30% 26% 20% 10% 0% Vacant Monthly Expires Expires Expires Expires Expires 3/2018 3/2019 3/2020 3/2021 3/2022 to 2/2019 to 2/2020 to 2/2021 to 2/2022 onwards Industrial Commercial Retail Hospitality Residential Total Capital Raise 20 June 2018
10K/m 2 15K/m 2 20K/m 2 25K/m 2 Top 10 Tenants by GLA – FY2018 : 139 000m 2 = 42.86% of Fund 0K/m 2 5K/m 2 Consol Glass Liquor June 2018 Capital Raise Runners Distell Limited Nampak Limited African Pride Imperial Cargo Multi Room Management MWEB Tanker Services Pembury Retirement 21 Lodge
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