INTERIM FINANCIAL RESULTS

Transcription

1 INTERIM FINANCIAL RESULTS Six months ended 31 December 2009

2 AGENDA Introduction & Highlights Financial Review Operational Overview Acquisitions, Developments and Disposals Growthpoint Properties Australia Prospects Annexures 2

3 INTRODUCTION AND HIGHLIGHTS

4 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet GROWTHPOINT IN SUMMARY The largest listed property company on the JSE with property assets valued at more than R34,6 billion Market capitalisation in excess of R21 billion Diversified property portfolio comprising 435 properties in SA and 24 in Australia: Retail Office Industrial Australia R10,4 billion R12,5 billion R6,8 billion R4,9 billion AU$ 744 million The only fully integrated internally managed property company on the JSE employing 443 staff 4

5 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet HIGHLIGHTS FOR THE SIX MONTHS TO DECEMBER 2009 Distribution per linked unit 59.1 cents 7.6% 5.0% Acquisition of 76.2% of Growthpoint Properties Australia AU$ 194,5 million R1,3 billion New equity raised via vendor placement R1,3 billion 5

6 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet HIGHLIGHTS FOR THE SIX MONTHS TO DECEMBER 2009 New equity raised via Distribution Reinvestment Plan (supported by 66% of unitholders) R540 million 7.6% Favourable Moody s rating Global - Baa2/P2 National - A1.za/P1.za Launch of DMTN Commercial Paper programme R5 billion 6

7 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet HIGHLIGHTS FOR THE SIX MONTHS TO DECEMBER 2009 First issue of Short Term Commercial Paper R500 million 7.6% Repayment of Series 3 CMBS Notes R1,566 billion Funded a skills development and training centre in Diepsloot R4,0 million Inclusion in JSE Socially Responsible Investment Index ( SRI ) 7

8 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet GROWTH IN DISTRIBUTIONS Period Distribution (cents) % of total distribution Increase 6 Months Dec 06 45,0 48.3% 15.1% 6 Months June 07 48,1 51.7% 14.0% Year to June 07 93, % 14.5% 6 Months Dec 07 51,1 48.0% 13.6% 6 Months June 08 55,4 52.0% 15.2% Year to June , % 14.4% 6 Months Dec 08 56,3 49.1% 10.2% 6 Months June 09 58,3 50.9% 5.2% Year to June , % 7.6% 6 Months Dec 09 59,1 5.0% 8

9 GROWTH PRIMARY IN ASSETS TITLE 18 PT AND TREBUCHET MARKET Secondary CAPITALISATION Title 16 pt Trebuchet R bn Unit price NTAV Cents

10 FINANCIAL REVIEW

11 SIMPLIFIED INCOME STATEMENTS (Extracts) Dec 2009 R million Dec 2008 R million Increase/ (decrease) June 2009 R million Gross property revenue % Property expenses (455) (390) 16.7% (759) Net property income % Other operating expenses (52) (30) 73.3% (75) Net property income after operating expenses % Investment income Operating profit % Interest paid (589) (451) 30.6% (921) Finance income % 162 Taxation (excl CGT and deferred tax) - (1) (100.0%) (5) Adjustment for non-controlling interest (9) % - Profit before debenture interest % Distribution for the period %

12 NET PROPERTY INCOME ANALYSIS Dec 2009 R million Dec 2008 R million Increase/ (decrease) Net property income % Adjustments: Acquisition of GOZ (159) - Acquisitions and developments (165) (96) Disposals (11) (17) Adjusted like for like net property income % Retail % Office % Industrial % Total % 12

13 SEGMENTAL INFORMATION Retail R million Office R million Industrial R million 100% Australia R million Total R million Gross property revenue Property expenses (172) (170) (104) (9) (455) Net property income Percentage of total 30.4% 37.4% 21.5% 10.7% 100% Property expense ratio 27.6% 23.4% 24.6% 5.4% 23.5% Property book value Percentage of total 30.1% 36.1% 19.7% 14.1% 100% 13

14 BALANCE SHEETS (Extracts) Total Dec 2009 R million RSA Dec 2009 R million Australia Dec 2009 R million June 2009 R million Direct Property portfolio * Intangible assets (net of deferred tax) Derivative financial assets Long-term loans (BEE) Cash Interest bearing liabilities ** Non-controlling interest Linked unitholders interest (NAV) Units in issue ( 000) * Includes R493m of properties reclassified as held for sale (June 2009 R574m) ** Including fair value adjustment of R470m (June 2009 R424m) 14

15 KEY STATISTICS AND RATIOS INCOME STATEMENT Dec 2009 Dec 2008 June 2009 Income statement: Property expense ratio (%) 23.5% 25.0% 23.6% Operating expense ratio (%) 2.7% 1.9% 2.3% Total expense ratio (%) 26.2% 26.9% 25.9% Interest cover ratio (times) Bad debts (R million) 9,7 6,2 17,0 Bad debts as % of gross property revenue 0.5% 0.4% 0.5% 15

16 KEY STATISTICS AND RATIOS BALANCE SHEET Balance sheet: Dec 2009 Dec 2008 June 2009 Total arrears (R million) 57,9 39,0 36,4 Provision for bad debts (R million) 20,7 14,2 16,7 Net asset value per linked unit (cents) Net tangible asset value per linked unit (cents) Loan to value ratio (%) * 32.6% 36.3% 32.2% Loan to value ratio (%) excluding GOZ 30.2% 36.3% 32.2% * Based on nominal value of interest bearing borrowings and net of cash balances 16

17 PROPERTY PORTFOLIO Dec 2009 R million Balance at 30 June Acquisitions Australia Goulburn, NSW and Stormill 481 Disposals (379) Foreign exchange translation 81 Transfer to investment property held for sale (493) Developments and capital expenditure 392 Sub-total Fair value adjustment 687 Properties held for sale (refer Annexure 9) 493 Balance at 31 December

18 BORROWINGS AND CASH Growthpoint has access to significant additional bank funding Current margins are likely to be 175 bps to 225 bps for facilities between 3 and 5 years Growthpoint s initial issue of CP in November 2009: Amount Term Margin Debt facilities (refer Annexure 6) R m Available debt facilities Utilised * (9 491) Un-utilised * R1,3 billion of facilities to be refinanced before November 2010 R360 million 3 months 55 bps R140 million 6 months 80 bps Interest rate risk policy: At least 75% of interest rates hedged Currently 118.3% hedged (refer Annexure 6) Strategy in place to reduce this to below 100% by 1 March 2010 Cash balances at 31 December 2009 of R533 million Montclare Place, Cape Town 18

19 OPERATIONAL OVERVIEW

20 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet GROWTHPOINT S PROPERTY PORTFOLIO Retail Office Industrial RSA Total 100% Australia Number of properties GLA (m²) Vacancy (m²) Vacancy (%) 2.8% 9.2% 5.6% 6.0% 2.5% Valuation (R m) Value per m² (excl bulk) Average gross rental (per m² / month) R102 R97 R29 R59 R48 Forward yield 8.7% 9.1% 10.2% 9.2% 8.6% Average in force escalations 7.8% 7.9% 8.1% 2.7% Weighted average lease period (years) - By gross rental Excluding Investec

21 GLA AND VACANCY RECONCILIATION (RSA) Total GLA (m²) Vacant area (m²) Vacancy Balance at 30 June % GLA Adjustments (4 906) (25) Disposals (77 321) (159) Acquisitions Developments and extensions Leases expired in the period Renewals of expired leases * ( ) New letting of vacant space ( ) Leases terminated Balance at 31 December % * Retention % of 76% compared to 59% for the year to June

22 SECTORAL ANALYSIS - (RSA) South African Property portfolio by value and gross lettable area ( GLA ) Value GLA 22

23 GEOGRAPHICAL ANALYSIS (RSA) South African Property portfolio by value and gross lettable area ( GLA ) Value GLA Great JHB Western Cape Pretoria KwaZulu-Natal Eastern Cape North West Other 23

24 RETAIL Total portfolio vacancies: Dec 2009 Dec Total portfolio vacancy 2.8% 3.0% Top 18 centre vacancy 1.1% 1.5% Balance of portfolio 6.4% 6.0% Arrears: R mil R mil Total 21,1 19,7 Bad debt provision 5,2 8,1 Brooklyn Mall, Pretoria National retail sales remain under pressure Cross subsidising by national retailers of poor performing new stores Retailers margins and cost structures under pressure Most leases renewed with positive reversions but increase in temporary rent relief to deserving smaller tenants Marginal improvement in vacancies and arrears have stablised 15.4% of leases come up for renewal in 2010 Development dynamics: New developments unlikely to find any support from retailers but extensions to existing retail space still in demand at performing centres Acquisitions: Scarcity of good quality low-risk investments 18 major shopping centres make up more than 80% of value of our retail portfolio Regional centres continue to trade well whilst smaller centres remain vulnerable 24

25 OFFICE Vacancies: Dec 2009 Dec 2008 Vacancy 6.1% 3.8% Development vacancies 3.1% 1.4% Total 9.2% 5.3% Arrears: R mil R mil Total 13,8 10,4 Bad debt provision 5,8 3,8 Demand for office space remains very weak 16% of leases by GLA expire in 2010 Ongoing high vacancies putting pressure on vacancy periods, rentals and tenant installation allowances Other key points of interest Approximately 66% of new developments let with 36,765m² remaining un-let In excess of 16,988m² let since 1 January 2010 of which 7,126m² related to new developments Top 12 office buildings make up 43% of the value of the office portfolio (refer Annexure 4) Development dynamics Demand for new developments remains weak Most new developments still not feasible, due to rentals under pressure and high building costs The Place (SAPOA Merit Award) 25

26 INDUSTRIAL Vacancies: Dec 2009 Dec 2008 Vacancy 4.6% 2.0% Development vacancies 1.0% 0.7% Total 5.6% 2.7% Arrears: R mil R mil Total 23,0 8,9 Bad debt provision 9,7 2,3 Tough trading conditions as a result of sharp decline in manufacturing output Oversupply of industrial space with vacancies continuing to rise Uptake of new developments slow Rental growth static, negatively impacted by increased utility costs Motor industry and ancillary services particularly weak Development and leasing dynamics New developments not feasable Client commitment time much longer due to market uncertainty Utility management is key Short term view Bottom of the cycle towards mid 2010 Increased activity and take up of space towards the end of 2010 and into 2011 Central Park, Cape Town 26

27 ACQUISITIONS, DEVELOPMENTS AND DISPOSALS

28 ACQUISITIONS, PRIMARY TITLE DEVELOPMENTS 18 PT TREBUCHET AND Secondary DISPOSALS Title 16 pt Trebuchet Acquisition and development activity remains low The anticipated distressed selling of quality property has not materialised and is unlikely to in South Africa More properties being offered for sale with possible rise in capitalisation rates, albeit modest No new developments unless substantially pre-committed Development focus to remain on adding good quality properties in strong commercial nodes Sold 4 buildings for R379,0m with a profit of R179,5m over historical cost price Newlands on Main, Cape Town 28

29 ACQUISITIONS AND DISPOSALS (RSA) Acquisitions Purchase price R million Sector Initial yield Stormill Industrial Park 50,0 Industrial 11.3% Total 50,0 11.3% Disposals Selling price R million Sector Profit on cost Profit on book value Holiday Inn Marine Parade 136,0 Office 71,3 7,2 Tulbach Park 125,0 Office 74,1 29,6 Imperial 60,0 Industrial 22,2 8,5 Goodwood Mall 58,0 Retail 11,9 1,9 Total 379,0 179,5 47,2 29

30 GROWTHPOINT PROPERTIES AUSTRALIA GOZ

31 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet GROWTHPOINT PROPERTIES AUSTRALIA Quality, well located, industrial property portfolio 24 industrial properties Office GLA $744 million R12,4 billion 731,798 m² 8.6% yield A$1,9 billion Lease expiry 10,6 year WALE Solely domestic property focus with 100% of distributions comprised of rental income (i.e. no development, funds Office management or other non property income paid out as distributions) Forecast distribution to 30 June 2010 of 14,0 Australian cents 6 months to December 2009: 5,5 cents 6 months to June 2010: 8,5 cents Annualised distribution of 17,0 cents based on normalised second half distributions of 8,5 cents representing a forward yield of over 10% in Australian dollars on the current share price Major tenants Woolworths, Coles and Star Track Express account for 76% of income No lease expiries until 2012 Secure debt facilities to June

32 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet DISTRIBUTABLE INCOME SUMMARY Item Dec 2009 $ million Dec 2008 $ million Increase/ (decrease) Net property income 28,3 27,5 0,8 Net interest (17,8) (16,8) (1,0) Management fee Office (0,2) (1,0) 0,8 Fund expenses (1,5) (0,5) (1,0) Profit from operations after tax 8,8 9,2 (0,4) Distributions paid / payable 8,8 8,6 0,2 32

33 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet BALANCE SHEET (Extracts) Dec 2009 $ million June 2009 $ million Increase/ (decrease) Item Current assets Cash and cash equivalents 4 7 (3) Other assets Total current assets 7 10 (3) Non-current assets Investment property Office Less Straight line rental adjustment (26) (19) (7) Other assets Total non-current assets Total assets Current liabilities Trade and other payables Derivative financial instruments - 15 (15) Provision for distribution Total current liabilities Non-current liabilities Derivative financial liabilities Interest bearing debt (161) Total non-current liabilities (161) Total liabilities (128) Net assets

34 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet SECTORAL ANALYSIS (AUSTRALIA) Australian Property portfolio by value and gross lettable area ( GLA ) Property sector Geographic diversity Office * Includes Goulburn acquisition VIC QLD WA SA NSW 34

35 ACQUISITION PRIMARY TITLE LILLKAR PT TREBUCHET ROAD, Secondary GOULBURN, Title 16 pt Trebuchet NSW Address 134 Lillkar Road, Goulburn, NSW, 2580 Property description Regional distribution centre and office Lettable area 42,826 m² Potential expansion 12,458 m² of lettable area Site area Ownership hectares Freehold title Office Constructed Completed 2007 Tenant Lease term Rental Annual rent increases Purchase price Coles Group Limited 15 years lease expiring 15 February 2022, with two (2) renewal options each of five (5) years $6,506,485 per annum (at next rental adjustment on 16 February 2010) 2.75% per annum $64m (under the sale contract an early settlement fee of $1.5m was also payable) Initial purchase yield 9.93% 35

36 PROSPECTS

37 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet PROSPECTS Economic recovery on the cards but pace of recovery to be slow and gradual Recovery in commercial property sector fundamentals (letting demand and rental growth) to lag the overall economic recovery by 9 to 12 months Vacancies to peak towards the middle of the year with demand starting to pick up towards the end of 2010 and into Focussed effort to reduce vacancies in the short term Limited new supply across all sectors Very little, if any, distressed selling however more properties and portfolio s being offered for sale with moderate increase in capitalisation rates predicted 37

38 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet PROSPECTS (Cont d) Improved banking liquidity compared to 2009 but margins still repricing higher on renewal of facilities or signing of new facilities All known sources of debt funding now available to Growthpoint following favourable Moody s rating Growthpoint to continue looking for growth opportunities locally and in Australia whilst investing in our portfolio with a view to improving the overall quality of the portfolio and enhancing future rental growth prospects Growth in distributions for the full year to be similar to that achieved for the half year. (This forecast has not been reviewed or reported on by Growthpoint s auditors) 38

39 THANK YOU

40 ANNEXURES

41 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet ANNEXURE 1 UNITHOLDERS HOLDING >1% AT DEC 09 Name Units held Holding Public Investment Corporation % BEE Consortiums % Old Mutual Group % Stanlib % Investec % Investment Solutions % Liberty Group % Transnet Retirement Funds % Coronation Fund Managers % ABSA Group % Sanlam Group % Mine Workers Provident Funds % Vanguard % Marriott % Prudential % Brait % Rand Merchant Bank % Standard Bank Group Retirement Fund % Total unitholders holding >1% % Other % Total % Foreign unitholding 7.2% 41

42 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet ANNEXURE 2 LINKED UNITS ISSUED DURING THE PERIOD Linked units Opening balance 30 June Vendor placement Distribution reinvestment Closing balance 31 December

43 ANNEXURE PRIMARY 3 TITLE - PROPERTY 18 PT TREBUCHET PORTFOLIO Secondary ANALYSIS Title 16 pt Trebuchet Top 12 retail properties by value Building Fair value R million % Retail portfolio % Total portfolio GLA % Retail portfolio % Total portfolio 1 Brooklyn Mall Waterfall Mall Lakeside Mall (87%) La Lucia Mall Kolonnade (50%) Northgate (50%) Woodmead Retail Park Constantia Village River Square Centre Walmer Park Shopping Centre Golden Acre Longbeach Mall Sub total % 24% % 11% 41 Balance of the sector % 11% % 10% 53 Total for the sector % 35% % 21% 43

44 ANNEXURE PRIMARY 4 TITLE - PROPERTY 18 PT TREBUCHET PORTFOLIO Secondary ANALYSIS Title 16 pt Trebuchet Top 12 office properties by value Building Fair value R million % Office portfolio % Total portfolio GLA % Office portfolio % Total portfolio 1 Investec, Sandton The Place Constantia Office Park Montclare Place Growthpoint Business Park Investec, Cape Town N1 City Hospital Sunnyside Ridge Office Park Central Park Hatfield Gardens Fredman Towers The District Sub total % 18% % 9% 124 Balance of the sector % 24% % 18% 136 Total for the sector % 42% % 27% 44

45 ANNEXURE PRIMARY 5 TITLE - PROPERTY 18 PT TREBUCHET PORTFOLIO Secondary ANALYSIS Title 16 pt Trebuchet Top 12 industrial properties by value Building Fair value R million % Industrial portfolio % Total portfolio GLA % Industrial portfolio % Total portfolio 1 Growthpoint Industrial Estate Hilltop Industrial Estate Central Park, Cape Town Brakpan Road Midas, Meadowdale Rectron, Midrand Kulingile Pine Industrial Park Omni Park Maitland Industrial Meadowdale Richard Carte Road Sub total % 5% % 9% 234 Balance of the sector % 18% % 43% 246 Total for the sector % 23% % 52% 45

46 PRIMARY TITLE 18 PT TREBUCHET Secondary Title 16 pt Trebuchet ANNEXURE 6 - BORROWINGS South Africa Refinance date Dec 2009 R million June 2009 R million Investec Buildings loan May Securitisation issue I Nov Securitisation issue II Jul Securitisation Metboard Aug Standard Bank Jul Nedbank Sep ABSA Mar RMB Feb ABSA Paramount Feb RMB Paramount Apr Commercial paper 3 months * Feb Commercial paper 6 months * May Omsfin Feb Total Weighted average fixed rate of interest 10.3% 9.7% % of debt at fixed interest rates 118.3% 108.4% * New facilities obtained in the current period Australia Westpac Jun Nab Jun Total

47 ANNEXURE 7 - INTEREST RATE FIX EXPIRY PROFILE R m Weighted average length of fixes: 8 years 47

48 ANNEXURE PRIMARY 8 TITLE CONSOLIDATED 18 PT TREBUCHET LEASE Secondary EXPIRY Title 16 PROFILE pt Trebuchet Consolidated lease expiry profile from Jan to Dec each year % 48

49 ANNEXURE PRIMARY 9 TITLE NON 18 PT CURRENT TREBUCHET ASSETS Secondary HELD Title 16 FOR pt Trebuchet SALE Properties held for sale Sector Fair value Dec 2009 R million 174 Visagie Street Office 47,7 Forum Office 175,0 Metro Park Office 77,6 Sunset Boulevard Office 49,1 OK Empangeni Retail 45,0 Lighthouse Mall Retail 84,4 M & R Bedfordview Office 14,2 Total 493,0 Montclare residential units Residential 21,0 49