SA Corporate Year End 2016 Results Presentation March 2017
Agenda Highlights Rory Mackey • Financial Performance Antoinette Basson • South African Portfolio Review Rory Mackey • Unlocking Value in the Retail Portfolio Rory Mackey • Zambian Portfolio Performance Rory Mackey • Building the Afhco Business Rory Mackey • Strategy & Prospects Rory Mackey • Acknowledgments Rory Mackey • Questions Team • 2
HIGHLIGHTS RORY MACKEY
High Level Review • Distribution Themes • Full year distribution growth of 8.7% vs 2015 • Standing portfolio NPI growth of 5.9% (excluding developments) • Investments contributed 6.4% of the 13.7% increase in total NPI • Industrial portfolio achieved strong retentions of 75.7% • Retail portfolio secured strong retentions of 79.6%, positive reversions of 6.0% and escalations of 7.7% • Investment Strategy • Acquisition of 2 retail properties for R314m and 8 largely residential properties for R497m • Contracted and unconditional acquisitions of R1,676m • Contracted and conditional acquisitions of R274m • Disposal of 6 properties, as well as 25% interest in 50 Mangosuthu Highway, Umlazi, for R292m • Contracted and unconditional disposal of 3 properties for R434m • Developments in progress - Retail R853m, Industrial R370m and primarily Residential R535m • Efficient Operations • Property expense ratio excluding municipal expenses reduced from 13.7% to 12.3% • Retail portfolio had improved recoveries as green initiatives started to bear fruit • Capital Structure • Well hedged with expiring swaps renegotiated to improved tenors • Use of derivatives to lock in funding cost i.r.o. developments 4
FINANCIAL PERFORMANCE ANTOINETTE BASSON
Distribution History 45.00 43.02 40.00 39.57 35.70 28.83 30.15 32.75 35.00 30.00 21.58 25.00 19.91 18.02 16.47 14.48 14.98 20.00 15.00 10.00 14.35 15.17 5.00 16.28 17.68 19.66 21.44 - 2011 2012 2013 2014 2015 2016 Interim Final 6
Distribution Growth 25.0% 20.0% 10.5% 15.0% 9.4% 8.4% 9.9% 10.0% 3.5% 11.2% 9.1% 8.6% 5.0% 7.3% 5.7% 0.0% 2012 2013 2014 2015 2016 Interim Final 7
Distribution at a glance Dec 2016 Dec 2015 % Rm Rm Variance Net Property Income - Standing Portfolio 1,078.649 984.576 9.6 Net Property Income - Acquisitions 115.725 47.675 142.7 Net Property Income - Buildings sold 10.636 27.822 (61.8) Net Property Income 1,205.010 1,060.073 13.7 Taxation on distributable earnings (1.008) 0.489 (306.1) Investment in Joint Venture 60.350 9.207 555.5 Yield guarantee on investment in Joint 7.871 - - Venture Net finance costs (226.569) (231.146) (2.0) Distribution related expenses (47.569) (37.562) 26.6 Anti-cedent distribution 17.624 52.392 (66.4) Distributable earnings 1,015.709 853.453 19.0 Distribution per unit (cents) 43.02 39.57 8.7 First six months 21.44 19.66 9.1 Second six months 21.58 19.91 8.4 8
Distribution contributors and detractors 50 0.85 2.54 45 2.83 (0.40) 1.40 (3.01) (0.76) 40 35 30 43.02 39.57 25 20 15 Distribution 31 Increase in NPI Increase in NPI Decrease in Investment in Decrease in Increase in Impact of Distribution 31 December - Standing - Acquisitions NPI - Sold Joint Venture, net interest distribution share December 2015 Portfolio Buildings including yield paid related issuances 2016 guarantee expenses and tax 9
Investment Properties Growth Analysis Portfolio growth underpinned by acquisitions, development expenditure and upward revaluation. 16,000 1,513 598 14,000 811 (292) 12,000 10,000 8,000 15,022 12,392 6,000 4,000 2,000 - Investment Properties Acquisitions Improvements / Disposals Fair value adjustment Investment Properties FY 2015 development costs FY 2016 10
Growth in Assets and Market Capitalisation R’bn cents 18.0 600 16.0 500 14.0 12.0 400 10.0 300 8.0 6.0 200 4.0 100 2.0 0.0 0 2012 2013 2014 2015 2016 Total Assets (Rbn) Market Cap (Rbn) NAV per share (cents) Share Price (cents) 11
Net Asset Value Cents per share 550 2.9 525 61.7 (1.5) 500 (19.9) 475 21.6 450 (1.9 ) 425 400 499.3 375 436.4 350 325 300 Opening NAV 1 Distributable Revaluation of Net exposure Net new Other Non- Distributions Closing NAV January 2016 earnings for Investment to Zambian JV shares issued distributable paid to 31 December the period Properties, income shareholders 2016 Shares and statement Interest Rate items Swaps 12
Capital Structure Sources of Capital Debt finance sources are diversified between banks and institutional borrowings. Syndicated Loans, Bank Revolvers, 0.6% 21.0% Institutional and Development Finance Institution Debts, 3.8% Bank Term Debts, 2.2% Equity, 72.4% Equity Bank Term Debts Institutional and Development Finance Institution Debts Bank Revolvers Syndicated Loans 13
Capital Structure – at 31 December 2016 Active Debt Management Notwithstanding low leverage, liquidity risk is actively managed via high hedge ratio’s and staggered debt maturities. 2,500 120% 100% 2,000 80% 1,500 60% 1,000 40% 500 20% - 0% (1 Year) Q1 (1 Year) Q2 (1 Year) Q3 (1 Year) Q4 (2 Year) Q1 (2 Year) Q2 (2 Year) Q3 (2 Year) Q4 (3 Year) Q1 (3 Year) Q2 (3 Year) Q3 (3 Year) Q4 (4 Year) Q1 (4 Year) Q2 (4 Year) Q3 (4 Year) Q4 (5+ Years) 2020+ 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 Interest Rate Risk (Hedged) (%) Debt Maturity Profile 14
Group debt structure – at 31 December 2016 (excl. fixes) Maturity and interest rate profile of interest-bearing debt WAR of 8.5%, weighted average tenor of 2.8 years, and WAM of 1.7%. Loan type: 6.88% Amortising Apr 2024 129 - 9.21% Term Loan (Syndication) Dec 2021 550 - 2.69% Term Loan (US$) Nov 2020 371 - 9.14% Term Loan (Syndication) Jun 2020 950 - 9.16% Term Loan (Syndication) Dec 2019 848 - 8.81% Revolving credit Mar 2019 100 100 8.96% Term Loan Jan 2019 - 500 8.71% Revolving credit Nov 2018 - 300 9.01% Term Loan Sep 2018 30 - 9.01% Term Loan Sep 2018 270 - 9.06% Term Loan Aug 2018 200 - 8.86% Term Loan (Syndication) Dec 2017 1,152 - 0 200 400 600 800 1,000 1,200 Amount Drawn Available 2016 movements 15
Group debt structure – at 31 December 2016 (incl. fixes) Maturity and interest rate profile of interest-bearing debt – WAR inclusive of fixes of 8.5%. Current LTV 29.0% Loan type: 6.88% Amortising Apr 2024 129 - 9.13% Term Loan (Syndication) Dec 2021 550 - 3.59% Term Loan (US$) Nov 2020 371 - 9.06% Term Loan (Syndication) Jun 2020 950 - 9.08% Term Loan (Syndication) Dec 2019 848 - 8.73% Revolving credit Mar 2019 100 100 8.88% Term Loan Jan 2019 - 500 8.63% Revolving credit Nov 2018 - 300 8.93% Term Loan Sep 2018 30 - 8.93% Term Loan Sep 2018 270 - 8.98% Term Loan Aug 2018 200 - 8.78% Term Loan (Syndication) Dec 2017 1,152 - 0 200 400 600 800 1,000 1,200 Amount Drawn Available 16
Group swap profile – at 31 December 2016 Tenor and interest rate swaps profile – weighted average tenor – 3.4 years and rate of 6.7% (weighted swap margin 0.0002%). 89.0% of variable rate debt hedged by swaps. 89.3% of effective debt fixed (incl fixed rate debt) 2023 8.45% 240 7.40% 2022 834 2021 650 7.60% 2020 771 4.65% * 2019 6.35% 240 2018 705 7.27% 2017 540 6.51% - 500 1,000 Swap amount * Includes $27m swap at 1.79% (based on US LIBOR) 17
18 (1,400,000) 1,100,000 (900,000) (400,000) R '000 100,000 600,000 310,341 Balance 31 December 2015 1,161,688 Group net cash flow Cash generated from operations (303,014) Net finance costs (895) Taxation paid (111,730) Acquisition of subsidiaries (3,269) Acquisition of Property, plant and equipment (1,149,640) Acquisitions and Improvements to Investment Property (263,903) Advances (1,616) Letting commissions and tenant installations 304,390 Disposal of investment properties Disposal of property, plant and 36 equipment (78,461) Increase in financial assets (949,330) Distributions paid 600,027 Issue of new shares (44,550) Investments in shares (7,098) Buy-back of shares (21,596) Interest bearing borrowings - foreign 750,000 Interest bearing borrowings - local 191,380 Balance 31 December 2016
Trading Volumes and liquidity Value traded as % of market capital SAC: closing price v monthly volume traded 80% 600 120,000,000 70% RDF GRT 500 100,000,000 HYP 60% 400 80,000,000 FFA EMI 50% FFB 300 60,000,000 SAC 40% 200 40,000,000 RES VKE 30% 100 20,000,000 20% 0 - IPF 10% Volume Traded Closing Price ( c ) 0% -20,000 - 20,000 40,000 60,000 80,000 100,000 19
SOUTH AFRICAN PORTFOLIO REVIEW RORY MACKEY
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