GROWTHPOINT PROPERTIES LIMITED DIFFERENTIATING OURSELVES BY ADOPTING SUSTAINABLE BUSINESS PRACTICES THAT ARE ENVIRONMENTALLY FRIENDLY AND SOCIALLY RESPONSIBLE – THE FIRST MOVER ADVANTAGE NORBERT SASSE 18 OCTOBER 2013
AGENDA Introduction to Growthpoint • • South African Listed Property • Growthpoint’s business model Our approach to sustainability • • Growthpoint, a good corporate citizen Conclusion • FAST & FURIOUS, Meadowdale, Gauteng
INTRODUCTION TO GROWTHPOINT 3 • The largest listed property company on the JSE with property assets valued at R59,8 billion including 100% of Growthpoint Properties Australia ("GOZ") and 50% of the V&A Waterfront in Cape Town Market capitalisation of R49,9 billion at 30 June 2013 (R26.39 per share) • • Diversified property portfolio comprising 393 properties in RSA, 44 properties in Australia, which is 65.8% owned, and 50% interest in the properties of the V&A Waterfront representing a combined total of almost 5,2 million square meters of GLA • Fully integrated internally managed property company employing 457 staff V&A Office Retail Waterfront Australia Industrial R15,1 billion R5,6 billion R14,9 billion R8,0 billion R16,2 billion AUD 1,7 billion
HIGHLIGHTS FOR THE 2013 FINANCIAL YEAR 4 Income yield Capital growth 21.2% Return to investors for the year 6.5% 14.7% 149,0 cents 7.2% growth Distribution per share Average annual growth in distributions over 7.0% last 5 years Total cost Market value R380,2 million additional investment in June 2013 June 2013 Growthpoint Properties Australia R3,4 billion R5,7 billion Income yield Capital growth 35.2% Return on R3,4 billion Australian investment for the year 11.8% 23.4% New equity raised via Distribution Re- Investment Plan (supported by 58.2% of R1,5 billion unitholders) New equity raised via placement R2,5 billion Successful conversion to Growthpoint Properties REIT
PROPERTY INVESTMENT ACTIVITIES 5 Retail Office Industrial RSA Total GOZ Total V&A Opening balance 13 145 14 592 7 251 34 988 13 118 48 106 4 950 Purchase price of acquisitions 13 435 44 492 748 1 240 - Selling price of disposals (180) (545) (144) (869) (688) (1 557) - Developments and capex 197 432 275 904 681 1 585 227 Fair value adjustment 1 740 1 297 616 3 653 112 3 765 372 FCTR - - - - 1 092 1 092 - Total 14 915 16 211 8 042 39 168 15 063 54 231 5 549 Long-term property assets 14 565 16 086 7 972 38 623 15 063 53 686 5 549 Reclassified as “Held for Sale” 350 125 70 545 - 545 - Commitments 169 102 131 402 229 631 226 No.1 Silo - Allan Gray Head Office in the Silo District, V&A Waterfront Lakeside, Centurion 1st large scale office Green Star submission in SA to achieve 6 Stars Lakeside Office Park redevelopment 4 Green Stars • • Recipient of SAPOA 2013 Overall Green Award •
SOUTH AFRICAN LISTED PROPERTY V&A WATERFRONT, Cape Town
SOUTH AFRICAN REAL ESTATE 7 • The South African listed property sector has experienced significant growth over the past 10 years • A total of 5 listed property companies have a market capitalisation of greater than R14 billion today, which is greater than the total market capitalistion of the entire property sector 10 years ago 300 South African Listed Sector 250 239 Market Cap -R Billions 200 184 150 132 117 94 100 86 85 62 46 50 31 20 14 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: INET Bridge
SOUTH AFRICAN REAL ESTATE (CONT’D) 8 • Listed property sector continues to grow: Sector approx. 3.8% of JSE All Share vs 6.4% (c.10% at peak) for Australia Listed Sector as % of All Share Index 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Source: INET Bridge
SOUTH AFRICAN REAL ESTATE (CONT’D) 9 • The sector is dominated by a few large entities, with the top 10 accounting for approximately 80% of the sector market capitalisation 26 listed property entities Sector market capitalisation of c.R239 billion South African Listed Property Companies 50 45 40 Market Cap -R billions 35 30 25 20 15 10 5 0 GROWTHPOINT REDEFINE HYPROP RESILIENT NEPI ATTACQ FOUNTAINHEAD ACUCAP VUKILE SA CORPORATE EMIRA SYCOM REDEFINE INT REBOSIS DELTA HOSPITALITY PREMIUM OCTODEC ASCENSION SYNERGY VIVIDEND ANNUITY CAPITAL FORTRESS INVESTEC ARROWHEAD DIPULA VUNANI Source: INET Bridge
SOUTH AFRICAN REAL ESTATE (CONT’D) 10 • Attractiveness of the sector keeps improving, especially following the conversion to the new REIT structure Attracting new listings to the sector (9 new listings in the last 18 months) Equity raising well supported by local institutions (value of new listings and equity over the past 18 months exceeds R46bn) Increase in interest from offshore investors Increase in liquidity and tradability Sector Liquidity 80% 70% Growthpoint 60% FPT Liquidity % (year) 50% Hyprop Emira SAC Redefine 40% Acucap Vukile 30% Capital Resilient 20% Sycom 10% 0% 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Market Cap -R (billion) Source: INET Bridge
SOUTH AFRICAN REAL ESTATE (CONT’D) 11 • Historically the sector has delivered strong returns Growthpoint’s total return (distributions reinvested) for the past 10 years was 787%, an average • rate of 79% and a compounded growth rate of 24.4% per annum 60% SA listed property returns 10% 50% 40% 9.3% 9% 30% 8% 8% 20% 38% 9% 26.4% 8% 10% 7% 20% 6.3% 19% 19% 4% 0% -1.3% 2005 2006 2007 2008 2009 2010 2011 2012 2013 0% -12% -10% -20% Capital Income Source: INET Bridge
SOUTH AFRICAN REAL ESTATE (CONT’D) 12 • The escalating nature of leases underpins income growth • Income growth of 4% - 9% can be expected annually 10.0% Sector Forward Yields 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Resilient Hyprop Redefine Int Investec Growthpoint Sector Avg Fountainhead Acucap Capital Sycom Redefine Vukile Fortress A Emira Octodec Premium Rebosis SA Corp Hospitality A Arrowhead A Arrowhead B Source: Avior Research
GROWTHPOINT’S BUSINESS MODEL LAKESIDE, Centurion
THE GROWTHPOINT BUSINESS MODEL 14 It is within this context that Growthpoint seeks to To own a well-located, quality portfolio of Retail, Office and OWN differentiate itself by being Industrial properties the leading property company To own a well-located, quality portfolio in South Africa, not only in of Retail, Office and Industrial properties terms of its size and the value To earn sustainable rental income by providing quality EARN of it’s property portfolio, but accommodation to a large and diverse base of financially RENTAL sound tenants secured by long leases also by: Adopting sustainable • To manage our properties as owners and to invest the capital MANAGE business practices that necessary to ensure our properties are well maintained, and are environmentally that they operate at optimum efficiency friendly INVEST Being a good corporate • To make investments which improve the quality of the citizen portfolio and ensure long-term capital appreciation To access all available sources of funding in order to minimise FINANCE the cost of capital while maintaining appropriate gearing levels To grow our distributions per share and to distribute 100% of DISTRIBUTE distributable earnings half-yearly to our shareholders EARNINGS
ADOPTING SUSTAINABLE BUSINESS PRACTICES THAT ARE ENVIRONMENTALLY FRIENDLY THE PLACE, Sandton
OUR STAKEHOLDERS 16 For Growthpoint, sustainability impacts all our stakeholders: Our employees • • Our clients • Our suppliers Our shareholders • • Our funders Our communities that we operate and invest in •
OUR SUSTAINABILITY STRATEGY 17 • Our focus has been on savings of energy, water , waste and carbon emission reduction Primary area of impact is our value chain and we have engaged with our suppliers and tenants • on a variety of issues effecting them • Pressure from tenants to go green as they are starting to perceive the benefit to themselves, both from a utility management perspective, as well as having an impact on their reputation The business drivers have been reducing risk, minimising cost and maximising growth • opportunities • At Growthpoint, governance, social, environmental and financial considerations are all considered in conducting our business
SOME OF OUR SUCCESSES TO DATE 18 Office Portfolio Lighting Retrofit • R43 million project including all 134 buildings spanning over a million square metres of office space, will get new, energy efficient light fittings, designed specifically for Growthpoint Positive impact on the environment and will directly profit businesses occupying Growthpoint’s • office buildings • The savings on occupants’ utility bills will be shared equally between Growthpoint and the leaseholder with the common objective to reduce energy and water consumption Growthpoint’s 50% share of savings will then go to funding and continuing future green • initiatives • R20 million on sustainability projects within its portfolio of buildings, resulting in an impressive reduction of over 14 million kilowatts in energy. This translates to a saving of nearly R12 million in annual utility costs • Green Addendum signed by 75% of our office tenants
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