Interim Results 31 March 2018

Transcription

1 Interim Results 31 March 2018

2 Green shoots Green shoots starting to show Portfolio surprised on the upside Letting vacant space but with greater incentives Benefits in 2019 Remains tough environment 2

3 Arrowheads mission Opportunistic Diversified Sustainable value for our shareholders Trusted South African focused 3

4 Diverse commercial (office, retail and industrial) portfolio: value R5.6 billion as at 31 March 2018 Arrowhead 60% interest in Indluplace: R1.9 billion 56% interest in Gemgrow: R1.6 billion 19% interest in Rebosis: R1.1 billion 11% interest in Dipula: R509 million Gearing R3.5 billion, company LTV of 31.3% 4

5 Operational suc c ess Initially vacancies forecast to increase for 2018 Started year at 12.1% Vacancy at period-end 10.6% Vacancy expected to be below 9% by financial year-end Well positioned for defensive sustainable growth 5

6 1 Sturdee m 2 of m 2 let 3-5 year leases Strong demand at market related rentals around R135m 2 Breakdown of tenants Eurasian Resources Group 3 298m 2 SPARK Schools Head Office 1 794m 2 Sizwe Medical Fund 1 692m 2 Cool Ideas 1 250m 2 Ombudsman for Short-Term Insurance 1 184m 2 Sanlam 1 001m 2 Arrowhead Group 811m 2 Motherland Coffee 313m 2 We encourage shareholders to come visit and view success 6

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8 Operational suc c ess Interim Results 2018 Kwela Logistics Kwela Logistics (15 450m 2 ) Blackheath Cape Town Declined several offers to sell Re-let m 2 at higher rate (3 tenants) 8

9 Operational suc c ess Interim Results 2018 Hill Street Hill Street (13 347m 2 ) Sold to Live/Easy (student development) R60 million (VAT inclusive) Transferred 24 April

10 Operational suc c ess 3 000m 2 let at Owl Street Working on large leads Major lease renewal with RCS in Cape Town 6% step up and 6% annual escalation Lease expiry was June 2018 and now is June 2021 SARS, the other major renewal Advanced discussions Expect a 4 year lease renewal 10

11 T ot al dividend 31 March 2018 Interim Results 2018 R Revenue (excluding straight line rental income) Listed securities income Property expenses ( ) ( ) Administration and corporate costs (28 319) (23 809) Finance charges ( ) ( ) Finance income Pre-effective date dividend # Non-controlling interest profits elimination (net of antecedent income) ( ) ( ) Distributable income Accrued dividend on listed securities Listed securities income recognised in previous reporting period ( ) (95 893) Total dividends Dividend to the Arrowhead Charitable Trust and corporate fees* Total dividend after effects of Arrowhead Charitable Trust # Pre-effective date dividend is in respect of the dividend declared by Gemgrow as regards the income earned by Gemgrow on the Cumulative Properties Limited ( Cumulative ) portfolio prior to the accounting effective date. * Dividend to the Arrowhead Charitable Trust and corporate fees is added back as it is eliminated on consolidation. Corporate fees are in respect of administration costs recouped from Indluplace and Gemgrow. Property expenses as a percentage of revenue gross 38% 38% Property expenses as a percentage of revenue net 16.1% 16.0% Dividend for the quarter ended 31 December** Dividend for the 6 months/quarter ended 31 March^ Total dividend (cents) Dividend per share for the quarter ended 31 December** Dividend per share for the 6 months/quarter ended 31 March^ Total dividend (cents) Net asset value per share (cents) - including non-controlling interest Net asset value per share (cents) - excluding non-controlling interest ** As announced on SENS on 22 January 2018, dividends are declared bi-annually, compared to quarterly as in the prior financial year. ^ The dividend was declared on 23 May

12 Arrowhead as at 31 March 2018 Unaudited for the six months ended Unaudited for the six months ended R March March 2017 Assets Non-current assets Investment property Fair value of property portfolio for accounting purposes Straight line rental income accrual Property, plant and equipment Loans to participants of group share purchase and option schemes Goodwill Financial assets Deferred taxation Derivative instruments Current assets Trade and other receivables Cash and cash equivalents Total assets Equity and liabilities Shareholders interest Stated capital Reserves Non-controlling interest Other non-current liabilities Secured financial liabilities Derivative instruments Current liabilities Trade and other payables Secured financial liabilities Total equity and liabilities

13 Debt as at 31 March 2018 Arrowhead loans of R3 482 million and group of R6 242 million Arrowhead LTV of 31.3%, group of 36.75% Loans fixed, Arrowhead 73% and group 80% Arrowhead effective interest rate of 9.35% and group effective interest rate of 9.40% for Interim period ended March R R R R907 Total R

14 40 assets Indluplace Properties Gemgrow Properties 14

15 T o p 5 properties Access Park Western Cape R m 2 Retail 15

16 T o p 5 properties Cleary Park Eastern Cape R m 2 Retail 16

17 Increase catchment due to new bus transport system Excited Cleary Park residents 17

18 T o p 5 properties Westgate Mall Western Cape R m 2 Retail 18

19 T o p 5 properties Midtown Mall North West R m 2 Retail 19

20 T o p 5 properties 158 Offices Gauteng R m 2 Office 20

21 Our exposure GLA (m 2 ) % Revenue (R) % Edcon as at 31 March 2018 Post Cleary Park (exited post period-end) GLA (m 2 ) % Revenue (R) % Our Edcon exposure is broken down as follows: Edgars 53% Jet 47% 21

22 Letting success where Edcon has vacated King Williams Town Replaced Jet Mart & Edgars Active with a local supermarket & national shoe retailer Westgate Mall Replaced Jet & Edgars with a national Gym & created a new wing which is now fully let to national tenants Cleary Park Replaced Edgars with a national supermarket Thohoyandou Centre (Prior to disposal to Gemgrow) Replaced Jet with a national supermarket In all instances above we have matched the exiting rental or achieved a higher rental rate. 22

23 4000 6% T rad ing densities % 4% 3% 16% 1% Access Park Westgate Montclair Cleary Park Midtown Mall KWT September 2017 vs March % 9.00% Rent to sal es ratio 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2% 3% 1% 3% 14% Access Park Westgate Montclair Cleary Park Midtown Mall KWT 23

24 50 commercial (retail, office & industrial) properties As at 31 March % retail, 35% office and 8% industrial (sectoral by value) Overall vacancy 10.63% (retail 5%, office 21%, industrial 3%) Average gross rent per sector (R134/m 2 retail, R107/m 2 office, R45/m 2 industrial) Escalation per sector (7.83% retail, 8.18% office, 8.14% industrial) Average lease profile 3.87 years Escalations achieved per sector (retail 4%, office 7%, no Industrial lease expiry within the period under review), overall 5% positive 24

25 Indluplace dominant listed residential fund in South Africa Indluplace Defensive investment opportunity offers good returns in a difficult environment if managed properly On track with 4% forecast for year-end 30 September 2018 Tough 6 months but proving defensive and diversified Vacancies responsive to small changes Portfolio growth to R4.3 billion with units 25

26 High yield high growth fund Manage risk by diversification Performing well in tough environment Growth of 7-9% on track for year-end 30 September 2018 Acquisitions 26

27 10 assets to sell Dipula Income Fund Rebosis Property Fund 27

28 Rebosis dividend growth of 4% to February 2018 Currency to Arrowhead, currently holding Positive engagement with management 28

29 Dipula B dividend growth to February 2018 Dipula Dipula B dividend forecast for year-ended August 2018 Positive engagement with management Dipula stake has performed well Looking to recycle shareholding responsibly 29

30 Sustainable income Current matters Transparency Constantly reviewing and improving reporting Re-evaluating remuneration policy and moving away from loan scheme Transformation 30

31 Arrowhead 6 mon th s to 30 September 2018 Manage lease expiries in advance especially single tenanted buildings Focus on letting vacant space Improve tenant retention Strategic and operational support for Indluplace and Gemgrow Extract value from Dipula and Rebosis stakes SA focused sustainable dividends 31

32 Portfolio surprised on the upside Prospects Challenging environment Forecast on track Well positioned for growth in 2019 and going forward... 32

33 Thank you