SA Corporate June 2019 Results Presentation September 2019 - PowerPoint PPT Presentation

SA Corporate June 2019 Results Presentation September 2019 INDUSTRIAL | RETAIL | OFFICE | RESIDENTIAL | REST OF AFRICA

Agenda High Level Overview Rory Mackey • Strategic Initiatives Update Rory Mackey • Financial Performance Antoinette Basson • Portfolio Review Rory Mackey • Prospects Rory Mackey • Acknowledgements Rory Mackey • Questions Team • 2

HIGH LEVEL OVERVIEW RORY MACKEY 3

High Level Overview • 6.1% lower than H1 2018 impacted by 2018 H2 effects Distribution • The LFL NPI increased by 0.8% • Afhco portfolio NPI growth of 11.2% Theme underpinned by a LFL NPI growth of 4.1% • Residential vacancies reduced from 9.4% to 5.1% • Retail portfolio LFL NPI growth of 1.3% • Industrial tenant retention 98.6% • Industrial portfolio LFL NPI retracted by 2.3% • Executed acquisitions and pipeline Investment totalling R840.9m • Executed & contracted disposals of Strategy R1.1bn • Committed developments and current projects R1.1bn • LTV of 36.6% • 72.2% of debt fixed through a Capital combination of fixed rate debt and interest rate swaps for a period of Structure 2.4 years • R4.7bn debt refinanced increasing tenor from 0.8 to 3.9 years 4

STRATEGIC INITIATIVES UPDATE RORY MACKEY 5

Strategic Initiatives Establish platform for sustainable distribution growth by: • Refreshing & re-tenanting shopping centres and concentrating retail portfolio on food services & convenience • Consolidating a quality industrial property portfolio • Divesting from remaining commercial properties • Establishing a quality residential rental portfolio 6

Refreshing & re-tenanting shopping centres and concentrating retail portfolio on food services & convenience Morning Glen Migration to convenience • Grocer variety • Food Lovers Market • Pick ‘n Pay upgrade • Niche convenience offer • Speciality convenience (5,525m 2 ) • Food (2,073m 2 ) • Automotive service (600m 2 ) • Destination retail (4,077m 2 ) Phase 1: 28 Nov 2019 90% let Trading Phase 2: July 2020 7

Refreshing & re-tenanting shopping centres and concentrating retail portfolio on food services & convenience (cont’d) East Point Introducing destination retail to increase foot traffic Game downsized (11,000m 2 to 6,000m 2 ) • • Decathlon value sports (2,000m 2 ) • Crazy Pets (1,000m 2 ) • “Back of House” & Mezzanine converted to self storage (3,000m 2 ) Phase 1: Dec 2019 100% let Trading Phase 2: June 2020 8

Refreshing & re-tenanting shopping centres and concentrating retail portfolio on food services & convenience (cont’d) 51 Pritchard Conversion to dominant urban shopping centre • 2x National grocer offering (3,300m 2 ) • National apparel (5,400m 2 ) • Banking (420m 2 ) • Line shops (900m 2 ) • Gym (2,200m 2 ) 83 % let Trading Mar – Jun 2020 9

Refreshing & re-tenanting shopping centres and concentrating retail portfolio on food services & convenience (cont’d) Other Shopping Centres Improving food & destination retail tenant mix 2019 H1 examples Shopping Centre Re-Tenanting Northpark Mall Cambridge food (3,000m 2 ) Springfield Value Centre Sedgars Home (1,250m 2 ) Umlazi Mega City The Hub (1,300m 2 ), Career Box (435m 2 ) Comaro Crossing Car Care Clinic (352m 2 ), Best Drive (435m 2 ) Celtis Ridge Car Service Centre (250m 2 ) Midway Mews Self storage (1,460m 2 ) 10

Retail Property Income Enhancement • Advertising & exhibitions – 2019 FY income R7.0m • 11 solar installations being added to current 8 to generate 10.5MW by Dec 2019 to achieve savings of R33.1m in the 2020 FY • WiFi & website advertising being rolled out – 21 properties implemented • Experiential campaigns – UMC foot count growth 6.1%; East Point foot count growth 8.5% WiFi roll out UMC community engagement 11 Springfield Value Centre solar Stellenbosch Square solar

Consolidating a Quality Industrial Property Portfolio – Transition to Focus on Logistics 2016 2017 2018 2019 2020 H1 % Logistics 57.3% 58.3% 58.1% 61.4% 68.9% % Non Logistics 42.7% 41.7% 41.9% 38.6% 31.1% Total GLA 741,387m 2 738,446m 2 733,992m 2 657,161m 2 585,684m 2 12

Consolidating a Quality Industrial Property Portfolio Industrial Low Growth Properties Divested from since 1 January 2018 Sale Exit GLA (m 2 ) Property Price Yield Status Rationale (Rm) (%) 21 Pomona Road, Pomona Transferred Vacant property, re-tenanting risk 4,585 18.3 8.0 9/15 Lanner Road, New Germany Transferred Multi-tenanted property, low growth prospects 6,960 36.0 7.9 1/5 Stockville Road, Westmead Transferred Sale to owner occupier, low growth prospects 8,078 53.6 7.7 11 Coconut Grove, Shakashead Transferred Small property, low growth prospects 453 2.4 7.6 Single tenant vacating, re-tenanting risk, exit 6 Cedarfield Close, Springfield Transferred 10,063 57.0 12.1 yield in year 2 is 6.77% 24 Westmead Road, Westmead Transferred Small property 3,542 26.0 6.7 1 Marconi Street, Montague Gardens Transferred Small property, reducing Steinhoff exposure 3,970 45.0 8.2 Table Bay Industrial Park, Paarden Transferred Significant capex required, property over-let Eiland 16,169 118.4 8.3 14/24 Mahoganyfield Way, Springfield Transferred Small property, re-tenanting risk Park 4,986 36.0 8.0 40 Electron Avenue, Isando Transferred Long term vacancy due to poor quality 13,172 59.7 9.0 Low growth prospects, reducing motor 89 Flanders Drive, Mount Edgecombe Transferred 8,473 53.5 8.4 showroom exposure Contracted & Cnr Bridge Str & Molecule Rd, Bellville Re-tenanting risk, significant capex required 8,558 56.2 9.5 Unconditional Contracted & 530 Nicholson Road, Denver Poor node, low growth prospects 24,880 40.0 10.2 Conditional Contracted & Property over-let, non logistics tenant (exit Beryl Street, Jetpark 27,681 351.0 8.1 Conditional yield based on early renewal rental negotiated) Contracted & 55% GLA offices, property over-let, re- 96 15 th Road, Randjespark 10,443 77.5 9.0 Conditional tenanting risk TOTAL 152,013 1,030.6 8.6 13

Divesting from Remaining Commercial Properties • 44% Divested in 18 months • Sale emphasis on poorer quality properties • B Grade reduced by 53% • C Grade reduced by 50% • Hospitals divested • Greenpark Corner (A Grade) 44% of remainder • Focus on tenanting prior to disposal • Efforts to sell balance at best pricing 14

Divesting from Remaining Commercial Properties Commercial Properties Divested from since 1 January 2018 Sale Price Exit Yield GLA (m 2 ) Property Status (Rm) (%) Transferred 22 Voortrekker Road, Vredenburg 3,067 78.5 8.8 Transferred Lebombo Road (Portion 1), Garsfontein 1,703 12.0 6.2 Transferred 28 Durham Street, Mthatha 4,198 86.5 8.8 Lebombo Road (Remaining portion), Transferred Garsfontein 1,637 27.1 9.3 Transferred Cnr Handel and Crownwood Roads, Ormonde 6,131 60.0 9.3 Contracted and 1 Holwood Park, Umhlanga Ridge 7,504 113.5 9.0 Unconditional Contracted and Conditional 31 Allen Drive, Bellville 3,255 30.0 9.3 Total 27,495 407.6 8.9 Remaining Commercial Properties Dec 18 2019 NPI GLA (m 2 ) Property Valuation (Rm) (Rm) GreenPark Corner, Morningside 15,660 349.0 18.7 3 The Terrace, Westway 2,278 23.0 1.5 Nobel Street Office Park, Bloemfontein 6,713 83.0 10.1 102 Essenwood Road, Berea 4,670 59.7 4.9 12 Sookhai Place, Westville 2,513 24.4 1.3 21 Fricker Road, Illovo 2,800 52.0 4.9 34 Mangold Street, Port Elizabeth 968 6.7 0.5 Total 35,602 597.8 41.9 15

Establishing Quality Residential Rental Portfolio Inner-City portfolio 1,589 of total 5,935 apartments have been developed in the last 4 years  Continued recycling from old to new in Afhco dominated prime nodes  Calgro M3 joint initiative restructured South Hills and Jabulani apartments 96% tenanted  Benefiting from being in Afhco property management close reach  9.8% initial yield with sustainable growth  Consolidation of suburban pipeline Etude Phases 1, 2 & 3 acquisitions cancelled but retaining Phases 4, 5 & 6.  Acquisition value reduced from R252m to R165m Founders Hill M&T JV investment of R286m between September 2019 and June  2021 Menlyn East End M&T JV Phase 1 investment of R212m in 2021  Northgate Heights and 252 Montrose capital recycling  Northpark Mall office to residential conversion to be sold targeting Finance  Linked Individual Subsidy Programme 16

Afhco History LFL NPI Growth 12.0% 10.0% 10.0% 8.0% 6.3% 5.9% 6.0% 4.1% 4.0% 2.0% 0.9% 0.0% FY FY FY FY H1 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 H2 FY FY FY FY H1 Residential Vacancies including tenanting up 7.9% 5.6% 10.4% 7.3% 13.4% 5.1% Vacancies excluding tenanting up 7.9% 5.6% 10.4% 5.7% 7.1% 5.1% 0.0% 1 Rental increases 9.0% 8.5% 8.5% 4.0% 4.1% Retail Vacancies 1.8% 4.8% 3.4% 2.1% 4.8% 4.0% Escalations 9.5% 8.8% 9.0% 9.0% 8.9% 8.5% Renewals 16.2% 11.2% 7.8% 0.2% 7.7% 1.0% Cost to Revenue 41.7% 40.1% 36.4% 35.9% 39.5% 36.8% 1 Rebasing of rentals including marketing interventions and the introduction of a loyalty program 17

FINANCIAL PERFORMANCE ANTOINETTE BASSON 18