for the year ended 31 March 2013

Transcription

1 for the year ended 31 March 2013

2 Agenda Highlights Laurence Rapp Strategic review Laurence Rapp Financial performance Mike Potts Portfolio performance and overview Ina Lopion Prospects and plans Laurence Rapp Acknowledgements Laurence Rapp Questions Team 2

3 Highlights, Vision, Values and Strategic review LAURENCE RAPP 3

4 Highlights Annual distribution for the year up 5.4% to cents per linked unit Impact of non-recurring income masks a much stronger underlying property performance Normalised growth of 8% on core business Significant achievement of strategic objectives and metamorphosis of the portfolio: Portfolio growth of 26% for the financial year Improved quality of the portfolio Finalisation of East Rand Mall transaction post year end Successful debt (R1.57 billion) and equity (R1.60 billion) capital raised during the year Overall cost of funding reduced from 9.36% to 8.1% Operation highlights Reduced vacancies Strong positive reversions across all sectors Increase in base rentals 4

5 Acquisitions and sales activity Long-term value decisions have focussed largely around portfolio composition and buying better quality assets whilst selling non-core properties Acquisitions Rm Sales Rm Pending transactions Rm Project Gold 20 properties Durban Embassy 238 Bloemfontein Bree Street 14 East Rand Mall 50% Pretoria VWL 103 Midrand Allandale 22 Hammarsdale 100% 195 Midrand Sony 57 Edendale 50% 204 Glencairn and Truworths 67 4 McCormick developments 50% 382 Randburg Cresta Eva Park 40 Linbro Park Industrial Development 119 Nelspruit Prorom 38 Lethlabile Mall 194 Midrand Allandale 21 Katima Mulilo 18 John Griffin 17 Bassonia 8 Rundu Elleringes 3 Randburg Triangle 14 Total Total 624 Total 36 5

6 Growing the portfolio 58% growth since March % growth since March

7 Strategic review Grow the portfolio to c.r10 billion in assets Broaden our shareholding base and enhance market perception of an independent Vukile Building sustainable partnerships Improved customer and tenant focus Optimise long and short-term returns for unitholders Minimise funding cost and refinance risk Invest in our people by engaging g g our people, building competence and capacity Transformation 7

8 Financial performance MIKE POTTS 8

9 9 Distribution history Cents per linked unit Interim Final Total

10 Simplified income statement March 2013 Rm March 2012 Rm % Variance Group net rental income Income from asset management business Asset management expenditure (32.0) (30.8) (3.9) Net finance costs (168.7) (152.1) (10.9) Corporate administration costs (29.2) 2) (25.9) (12.7) Taxation (5.8) (4.3) (34.9) Available for distribution

11 Treatment of non-recurring income Unitholders were advised d in the interim i results announcement that t in future nonrecurring income would be paid as a separately identified special distribution. Distinction between normalised and non-recurring income over the past two years: March 2012 Cents per linked unit March 2013 Cents per linked unit % increase Normalised distribution Non-recurring distribution Total distribution

12 Group balance sheet at 31 March

13 Bad debt and arrears analysis Tenant arrears increased by R6.6 6 million from March 2012 to R26.9 million at year end. Impairment allowance increased from R10 million (March 2012) to R13.7 million at 31 March Portfolio group of 26% over the same period. R000 Impairment allowance 1 April 2012 Allowance for receivable impairment for the year Receivables written off as uncollectable (2 372) Impairment allowance 31 March Bad debt write-off per the statement of comprehensive income

14 Group debt structure Maturity and interest rate profile of fixed interest bearing debt at 31 March

15 Group debt structure Maturity and interest rate profile of variable interest bearing debt at 31 March

16 Group net cash flow 16

17 NAV bridge Cents per linked unit 17

18 Linked unit price Cents 18

19 Trading volumes and liquidity % VALUE TRADED AS % OF MARKET CAPITALISATION EMI SAC GRT 30 VKE RDF HYP 20 ACP Market capitalisation (Rm) as at 28 March

20 Post year end transactions East Rand Mall Acquisition of 50% of East Rand Mall successfully concluded transfer effected 2 April 2013 Financed as follows: Rm Equity raised 342 Corporate bonds issued 300 Commercial paper issued 250 Surplus cash from property sales utilised 220 Earnings enhancing from 1 st year Initial yield 6.72% Weighted average cost of capital 6.59% Equity raise R400 million Accelerated book build of R400 million successfully undertaken on 7 May 2013 Linked units issued : 20.5 million Issue price : R19.50 per linked unit Issued at 2.3% discount to 5 day VWAP 20

21 Property portfolio performance and overview INA LOPION 21

22 Overview Number of properties 78 GLA m² Valuation Total portfolio R7.694 billion Average value per property R98.6 million Average discount rate 14.4% Average exit capitalisation ti rate 10.2% 48% of portfolio valued externally, values in line with internal values 22

23 10 largest properties Property Location Sector Area Value %of m² Rm total Durban Phoenix Plaza Durban Retail Cape Town Bellville Louis Leipoldt Bellville Offices Pinetown eo Pine eces Crest (50%) * Pinetown eo Retail ea Jhb Isle of Houghton Houghton Offices Soweto Dobsonville Shopping Centre Soweto Retail Randburg Square Randburg Retail Oshakati Shopping Centre Oshakati Retail Durban Embassy Durban Offices Daveyton Shopping Centre Daveyton Retail Cape Town Bellville Tijger Park Bellville Offices Total : 10 Largest properties * Represents an undivided 50% share in this property. Sector Area m² Value Rm % of total Retail Offices Total : 10 Largest properties

24 Sectoral profile Market value (Rm) Offices 37% Industrial 13% Retail 50% Offices 31% GLA (m²) Industrial 24% Retail 45% R/m² 10,000 5,000 Market Value (R/m²) 8,394 7,457 7,911 8,750 3,952 4,026 7,442 6,591 0 Retail Offices Industrial Average Mar-12 Mar-13 24

25 Disposals Yield Sales Property Sector GLA (m²) per annum price (R000) Status transferred Pretoria VWL Offices Aug-12 Midrand TH Road (Sony Building) Industrial Oct Truworths Building Jhb Retail Jul-12 Glencairn Building Eloff Street Offices Jul-12 Randburg Cresta Eva Park Offices Mar-13 Nelspruit Prorom Offices Aug Midrand Allandale Land (Halfway House Ext 64) Industrial Mar-13 Katimo Mulilo Pep Stores Retail Dec-12 Johannesburg John Griffen Industrial May-12 Jhb Bassonia Office Park Offices Mar-13 Rundu Ellerines Retail Aug-12 Total sales during year Sales post year end: Durban Embassy Offices May-13 Randburg Triangle Offices May-13 Total

26 Properties held for sale Property Sector GLA (m²) % Yield Sales per price annum (R000) Status Midtown Building Offices tbc No sale yet Lichtenburg Shopping Centre Retail tbc No sale yet Midrand Allandale Land (Halfway House Ext 65) Industrial CPs outstanding CP = Conditions precedent 26

27 Geographic profile (GLA m²) Limpopo 3% Free State 5% Western Cape 8% Mpumalanga 2% North West Northern Cape 2% 1% Eastern Cape 1% Gauteng 54% Namibia 6% KwaZulu-Natal 18% Top four regions account for 86% of exposure 27

28 Tenant profile (GLA m²) 37% Large national and listed tenants, government (i.e. local, provincial and national) and major franchises 54% National and listed tenants, franchised and medium to large professional firms Other 9% 28

29 Weighted average base rentals R/m² (excluding recoveries) % 10.8% % % Retail Offices Industrial Total March-12 March-13 29

30 Weighted average base rentals R/m² (excluding recoveries) Stable portfolio (excluding sales and acquisitions) % 6.1% % % Retail Offices Industrial Total March-12 March-13 30

31 Weighted average base rentals R/m² (excluding recoveries) Remaining portfolio (excluding sales) Retail Offices Industrial Total Stable Portfolio Portfolio purchased from Sanlam Apr 12 Total 31

32 Weighted average base rental R/m² - (excluding recoveries): Retail Durban Phoenix Plaza Durban Workshop Durban Qualbert Centre Mbombela Truworths Centre (Truworths Centre Nelspruit) Windhoek 269 Independence Avenue Pinetown Pine Crest (50%) Sandton Bryanston Grosvenor Shopping Centre Cape Town Kenilworth Motor Showrooms Oshikango Spar Centre Daveyton Shopping Centre Soweto Dobsonville Shopping Centre Pietermaritzburg The Victoria Centre Malamulele Plaza (Mala Plaza) Katutura Shoprite Centre Oshakati Shopping Centre Ondangwa Shoprite Centre Giyani Plaza Piet Retief Shopping Centre Cape Town Bellville Barons Monsterlus Moratiwa Crossing (94.50%) Rustenburg Edgars Building Kokstad Game Centre Giyani Spar Centre (Masingita Spar Centre) Randburg Square Mbombela Shoprite Centre (Nelspruit Sanlam Centre) Bloemfontein Plaza Kimberley Kim Park Lichtenburg Shopping Centre Roodepoort Hillfox Power Centre Germiston Meadowdale Mall Weighted Average R86.86/m² R0/m² R40/m² R80/m² R120/m² R160/m² R200/m² 32

33 Weighted average base rental R/m² - (excluding recoveries): Offices Sandton Hyde Park 50 Sixth Road Cape Town Bellville Suntyger Pretoria Lynnwood Sanlynn Sandton Rivonia 36 Homestead Road (Barlow Place Jhb Houghton 1 West Street (Jhb Houghton 2446) Pretoria Hatfield 1166 Francis Baard Street (DLV Building) Pretoria Lynnwood Sunwood Park Cape Town Parow De Tijger Office Park Cape Town Bellville Tijger Park Midrand Ulwazi Building (Arivia.Kom Building) Midrand IBG Sandton Sunninghill Place Jhb Parktown Oakhurst Centurion 259 West Street East London Vincent Office Park Sandton Bryanston St Andrews Complex Sandton Rivonia Tuscany Sandton Sunninghill Sunhill Park Cape Town Bellville Louis Leipoldt Durban Westville Surrey Park Cape Town Pinelands Pinepark Jhb Parktown 55 Empire Road Pretoria Hatfield Festival Street Offices Pretoria Arcadia Suncardia Jhb Isle of Houghton Sandton Bryanston Ascot Offices Durban Embassy Midtown Building Jhb Bedfordview 1 Kramer Road (Bedfordview GIS) Randburg Triangle Pretoria High Court Chambers Weighted Average R83.05m² R0/m² R20/m² R40/m² R60/m² R80/m² R100/m² R120/m² R140/m² R160/m² 33

34 Weighted average base rental R/m² - (excluding recoveries): Industrial Sandton Linbro Galaxy Drive Showroom (Supra Hino) Kempton Park Spartan Warehouse (Hellman International) Centurion Samrand N1 Randburg Tungsten Industrial Park Midrand Sanitary City Midrand Allandale Industrial Park Pinetown Richmond Industrial Park Germiston Meadowdale R24 Randburg Trevallyn Industrial Park Pinetown Westmead Kyalami Industrial Park Pretoria Rosslyn Warehouse Jhb Rosettenville Village Main Industrial Park Roodepoort Robertville Industrial Park Cape Town Parow Industrial Park Durban Valley View Industrial Park Weighted Average R39.19m² R0/m² R10/m² R20/m² R30/m² R40/m² R50/m² R60/m² R70/m² 34

35 Lease renewals % escalation on expiry rentals 14.0% 12.0% 11.6% 10.0% 80% 8.0% 6.0% 6.7% 8.2% 4.0% 4.0% 2.0% 0.0% Retail Offices Industrial * Average * Excluding the short-term renewal at Pretoria Rosslyn Warehouse where the previous rentals exceeded market rentals significantly. 35

36 New leases concluded (Ratio of rental concluded against budget) 110% 108% 105% 104.7% 100% 101% 95% 94% 90% 85% * Retail Offices Industrial Average * Excluding the Durban Workshop transaction on the old cinema premises which are converted to retail space to obtain much higher rental rates. 36

37 Contracted rental escalation profile 8.8% 8.7% 8.6% 8.4% 8.2% 8.0% 8.0% 8.1% 8.1% 7.8% 7.6% Retail Offices Industrial Total 37

38 Group lease expiry 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Beyond Vacant Mar/14 Mar/15 Mar/16 Mar/17 Mar/18 March 2018 GLA 6.7% 35% 18% 15% 9% 6% 10% Cumulative 6.7% 42% 60% 75% 84% 90% 100% 38

39 New leases and renewals For the year ended 31 March 2013 leases were concluded with a: Total contract value R1 015 million Total rentable area m² Largest contracts concluded Contract Lease Tenant Property Sector value (Rm) duration (years) Pretoria Society of Advocates Pretoria High Court Chambers Offices Edgars Rustenburg Edgars Building Retail Plumblink (SA) Midrand Sanitary City Industrial OK Bazaars Randburg Square Retail Road Accident Fund Durban Embassy Offices Tenant retention 87% 39

40 Vacancy profile - %ofgla 16.0% 14.0% 13.4% 13.6% 12.0% 10.0% 9.7% 8.0% 6.0% 7.0% 8.2% 5.1% 7.6% 6.8% 6.1% 4.0% 3.6% 3.1% 3.1% 2.0% 0.0% Retail Offices Industrial Total March-12 September-12 March-13 40

41 Individual properties vacancy profile Pretoria Arcadia Suncardia (32%) Durban Embassy (20%) Bloemfontein Bree Street Warehouse (59%) Roodepoort Hillfox Power Centre (10%) Pretoria Lynnwood Excel Park (100%) Pretoria Lynnwood Sunwood Park (54%) Cape Town Bellville Tijger Park (17%) Randburg Trevallyn Industrial Park (9%) Sandton Bryanston St Andrews Complex (26%) Randburg Square (4%) Midrand Allandale Industrial Park (10%) Centurion 259 West Street (36%) Jhb Parktown Oakhurst (20%) Pretoria Hatfield Festival Street Offices (34%) Sandton Sunninghill Place (17%) Bloemfontein Plaza (4%) Randburg Triangle (42%) Midrand IBG (14%) Cape Town Parow Industrial Park (6%) Jhb Bedfordview 1 Kramer Road (17%) (% of GLA) (vacancy > 1 000m²) 0m² 2,000m² 4,000m² 6,000m² 8,000m² 10,000m² Vacant Area 31 Mar 12 Vacant Area 31 Mar 13 41

42 Ratio of gross recurring cost to property revenue - stable portfolio 40% 35% 30% 31.2% 30.3% 30.7% 33.0% 33.2% 35.4% 36.6% 25% 20% 18.2% 17.8% 17.2% 17.7% 7% 16.9% 17.0% 17.8% 15% 10% 5% 0% All recurring expenses All recurring expenses excluding rates & taxes and electricity Stable portfolio include only those properties that were in the portfolio for the full 12 month period. 42

43 Recurring expense categories Maintenance contracts 6% Asset Sundry expenses management fee 3% 4% Insurance premiums 2% Bad debt 2% Property management fee 8% Government services 48% Cleaning and security 10% Rates and taxes 17% 83% of costs from top four categories 43

44 East Rand Mall acquisition R billion purchase in conjunction with Redefine (50%), transferred 2 April Asset integrated into Vukile. Management committee with Redefine established. Portfolio composition post East Rand Mall acquisition Market value Pre ERM Post ERM 13% 11% 37% 50% 32% 57% Retail Offices Industrial 44

45 Re-developments / upgrades Projects completed Property Randburg Square Roodepoort Hillfox Power Centre Roodepoort Hillfox Power Centre Project detail Upgrade and maintenance Phase1 Phase 1 of the upgrade to the exterior of the centre Phase 2 of the upgrade to the exterior of the centre Additional GLA m² Total capex Rm Yield % Completion date 80.8 June April May 2012 Oshakati Shopping Centre Redevelopment of the ex- Standard Bank premises July 2012 Kimberley Kim Park Upgrade June 2012 Total

46 Re-developments / upgrades Projects approved and in process Property Randburg Square Project detail Upgrade and maintenance Phases 2&3 Additional GLA m² Total capex Rm Yield % Completion date (1) August 2013 Bellville Louis Leipoldt Hospital Upgrade for Medi Clinic (2) May 2013 Durban Workshop Cape Town Bellville Tijger Park Offices Upgrade to the mall areas and conversion of cinema area to retail premises Upgrade and additional parking decks 102 parking bays (1) November (1) October 2013 Cape Town Bellville Barons Upgrade to Barloworld premises October 2013 Roodepoort Hillfox Power Centre Third (Final) phase of the upgrade to the exterior of the centre (1) November 2013 Daveyton Shopping Centre Pick n Pay extension October 2013 Ondangwa Shoprite Centre Extension to Shoprite November 2013 Total (1) Post the upgrade/revamps higher rentals on renewals and reduced vacancies can be expected. (2) The capital was agreed as part of a new 15 year lease. 46

47 Prospects, plans, acknowledgements and closing LAURENCE RAPP 47

48 Update on Transactions Encha deal: o o Commercially driven BEE deal Acquiring four properties for c.r1.04 billion o Earnings enhancing at a purchase yield of 9.5% o o o o Option to acquire the Pretoria Momentum Building at a 9.5% yield once new five year lease has been signed, will increase value of portfolio to R1.4 billion Encha becomes a large shareholder in Vukile who should achieve majority of ownership points on PSC scorecard Equity tap structure to ensure BEE credentials are not diluted as Vukile grows Dr Sedise Moseneke to join executive team and have responsibility to drive: Overall transformation Sovereign tenant portfolio Acquisitions o Transaction is on track with general meeting expected to be held in early July Wingspan deal: details still to be finalised before more information is released 48

49 Strategic priorities Grow the portfolio In line with stated strategy Will consider strategic investments in other listed funds Stakeholder engagement Debt, equity and foreign Markets Customer and tenant focus Closer to retailers Minimise cost of funding and refinance risk Operational efficiencies Vacancies and energy management Invest in our people p Transformation Optimise short and long-term returns for unit-holders 49

50 Prospects Economy remains stubbornly sluggish with next year very much in line with F2013 Retail to continue performing well, offices will remain tough with added impetus to move vacant space Solid deal pipeline with yield enhancing acquisitions and developments that will add positively to the portfolio Expect to deliver a growth of 4-6% in normalised distributions (off a base of cps) Taking into account distributions of c.r64 million in sales commission on East Rand Mall together with the first distribution for March 2014 Expect to deliver total growth of 6 8 % (off the F2013 base of 131.6cps) 50

51 Acknowledgements Board Property managers Service providers Brokers and developers Tenants Investors Funders Colleagues 51

52 Questions and answers CLOSING 52