Results presentation – FY2014 interims September 2013

Results presentation – FY2014 interimsSeptember 2013

OverviewAcquisitions

Financial review

Operational review

Appendix

3

Highlights

• Interim distribution of 50.46 cpu – 7.7% increase on prior year

• R1.6 billion of concluded and announced acquisitions

• Capital structure converted to all-equity and REIT status obtained – effective 1 April 2013

• Gearing remains low at 10.1% but will increase to 31.0% post announced acquisitions

• R500m term debt facility put in place – evergreen structure with syndicate of banks

• Strong underlying property fundamentals – vacancy low at 2.8%

32 800 m2 of industrial space let and a further

28 000m2 committed

4

Number of Properties 52

Market Capitalisation R5.0 billion

Asset Value R4.4 billion

GLA 590,658 m2

Vacancies 2.8%

Gearing 10.1%

NAV per Unit R13.02

Unit Price R15.65

Premium to NAV 20.2%

Fund snapshot at 30 September 2013

5

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SA

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ani

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Ann

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Viv

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5.1% 5.

8%

6.5% 6.

8% 6.9% 7.

6%

7.8%

7.8% 8.0%

8.0%

8.1% 8.3%

8.3%

8.4%

8.5% 8.

6% 8.7%

8.8%

8.8% 9.

0%

9.1%

9.2%

9.2%

9.2%

9.2%

9.2%

9.3%

9.3% 9.

7% 9.9% 10

.3%

12.1

%

Forward yield on clean price

PUT Weighted Average (8.2%)

PLS Weighted Average (7.3%)

Sector Weighted Average (7.6%)

Comparative forward yields analysis

Source: I Net Bridge as at 15 November 2013

6

Forward yield vs. price / NAV

0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

Capital

Emira

Fountainhead

SA Corporate

Sycom

Acucap

AnnuityArrowhead A

Arrowhead B

Ascension A

Ascension BDipula A

Dipula B

Fortress A

Growthpoint

Hospitality A

Hyprop

Investec

Octodec

PremiumRebosis

Redefine

Resilient

Synergy A

Synergy B

Vividend

Vunani

Vukile

Tower

Price / NAV

12-m

on

th r

oll

ing

fo

rwar

d y

ield

(%

)

Overview

AcquisitionsFinancial review

Operational review

Appendix

8

Asset growth

Mar-12 Sep-12 Mar-13 Today

R2.1 bn 31 properties




Assets

Acquired

Announced acquisitions

9

Acquisition summary

Property name Sector GLA (m2) Cost (R’m) Transfer date

SA Ladder Industrial 25 000 75 April 2013

5 Bond Street Office 5 870 118 May 2013

Minolta Bellville Office 2 166 25 May 2013

Minolta Highveld Industrial 2 955 36 May 2013

Total completed acquisitions 35 991 254

Big box retail portfolio Retail 38 475 207 October 2013

Bigen Africa Office 5 545 125 October 2013

Martin & Martin Industrial 19 972 89 December 2013

Khayelitsha Retail 2 911 32 February 2014

RPP Portfolio Office / Industrial 35 206 572 March 2014

Nicol Main Office 11 863 298 Various - 2014

Total announced acquisitions 113 972 1 323

Investment in Investec Australia Property Fund Listed Fund 236 October 2013

Total 149 963 1 813

10

Disposal summary

Property name Sector GLA (m2) Cost (R’m) Transfer date

Monsanto Industrial 9 819 28.6 April 2013

SABB Mayville Industrial 4 003 12.0 September 2013

Total disposals 13 822 40.6

• Total profit on disposal of R10.3m

• No CGT under new REIT legislation – effective 1 April 2013

Overview

Acquisitions

Financial reviewOperational review

Appendix

12

Simplified income statement

Sep 13R’m

Sep 12R’m

+/-%

Net Property Income (excl. straight lining) 189.0 101.9 85.5%

Operating expenses (2.9) (1.7) (42.8%)

Asset Management Fee (12.6) (6.6) (47.6%)

Net finance costs (13.4) (14.0) 4.3%

Taxation 0.0 (0.0) 0.0%

Distributable profit 160.1 79.6 101.0%

Distribution per unit (cents) 50.46 46.83 7.7%

• Distribution equates to net property income less operating expenses and funding

costs

• Performance underpinned by 7.1% growth in base portfolio net income

13

Distribution reconciliation

Sep 13 Sep 12

Net property income 210.0 117.1

Less: straight-line rental revenue adjustment (21.0) (15.2)

Other operating costs (15.5) (8.3)

Finance costs (18.5) (20.0)

Finance income 5.1 6.1

Taxation (excluding capital gains tax and deferred tax) 0.0 (0.0)

Distributable earnings 160.1 79.6

Shares in issue (m) 317.22 170.0

Distribution per share 50.46 46.83

14

Key ratios

Sep 13 Sep 12

Income statement

• Net cost to income ratio 21.8% 16.5%

• Gross cost to income ratio 34.0% 24.7%

• Arrears % of total collectibles 0.4% 0.2%

Balance sheet

• Gearing 10.1% 19.5%

• NAV per share (cents) 1,301.6 1,085.8

• Shares in issue 317 220 000 170 000 000

15

Cash flow extractsSep 13

R’mSep 12

R’m

Cash generated from operations 197.5 89.4

Net finance costs paid (14.0) (4.3)

Distributions paid to unitholders (164.2) (83.8)

Net cash flow from operating activities 19.2 1.3

Net cash flow from investing activities (221.5) (229.4)

Net cash flow from financing activities (0.5) 319.0

Net increase / (decrease) in cash (202.7) 90.9

Cash at the beginning of the year 398.7 4.6

Cash at the end of the period 196.0 95.5

• Underlying business strongly cash generative, with arrears tightly controlled

• Investing activities include R50.4m inflow from disposal of 2 properties and capex of R14.0m

• Cash at period end used to partly fund announced acquisitions

16

Balance sheet

Low gearing – 10.7%

• Significant headroom to pursue attractive acquisitions, quickly

New SPV structure in place to access term debt market

• Syndicate of banks include Nedbank, Standard Bank and Investec

• Initial R500m tranche

Hedging policy remains conservative in volatile interest rate environment

• At least 75% of debt is hedged

• 91% of committed hedges are hedging 5 year interest rate risk

All-in cost of funding of 8.3%

• Reliance on long-term vs. short term funding

17

Debt maturity profile

• R million

• Weighted average debt expiry – 3.4 years

• No refinancing until April 2016

FY16 FY17 FY18 FY19

134

40

276

250

250

DMTN

Bank debt - post period end

18

Funding profileDebt at 30 September 2013 Expiry Rate Amount

(R'm)

DMTN - Tranche 1 April 2015 JIBAR + 140 bp 134



DMTN - Tranche 6 April 2017 Fixed @ 8.8% 226

Total DMTN 450

Facilities available

Investec bridge facility 12 months notice JIBAR + 225 bp 500

Standard bank term debt facility October 2016 JIBAR + 155 bp 250

Nedbank term debt facility October 2018 JIBAR + 170 bp 250

DMTN Programme n/a various 3,000

Total facilities 4,000

Drawn down at 30 September 2013 450

Drawn down post 30 September 2013 to fund acquisitions 480

Available facilities 3,070

Overview

Acquisitions

Financial review

Operational reviewAppendix

20

Portfolio map

21

Leasing activity

¹ Net GLA (total acquired less vacant space taken on).

² New leases account for 31 505 m2 of industrial and 2 188 m2 of retail space

Office Industrial Retail Total

Area (m²) Area (m²) Area (m²) Area (m²)

Tenanted at 31 March 2013 85,243 285,878 180,415 551,536

Sold (13,822) (13,822)

Acquired¹ 8,036 27,955 35,991

Expiries and cancellations (32,826) (2,818) (35,644)

New leases/renewals² 32,801 3,544 36,344

Tenanted at 30 September 2013 93,279 299,986 181,111 574,405

Expiry rent

(R/(m²)New rent

(R/(m²)Average

escalationGLA Expiries and

cancellationsGLA New

leases/renewals

Office

Industrial 37.65 36.48 9.1% 32,826 32,801

Retail 134.65 129.52 8.1% 2,818 3,544

Total 45.32 45.55 8.5% 35,644 36,344

• 32 800 m2 industrial space let

• Strong escalations achieved

• Reversions on anomalous short-term lets (14%), but +30% positive reversions achieved on remainder

22

Vacancies (% GLA)

• GLA (m2)

Office Industrial Retail Total

7.3%

1.8%

2.5%

2.9%

6.8%

1.8%2.1%

2.8%

31 March 2013

30 September 2013

23

Forward lease expiry profile

2014 2015 2016 2017 2018 April 2018 Onwards

7.4%

11.3% 11.7%

15.2%

12.0%

42.3%

7.5%

12.3%14.3%

19.6%

10.5%

35.8%

RevenueGLA

24

Portfolio compositionRevenue

March2013

September 2013

GLA Asset Value

Offices Industrial Retail

42%

35%

23%16%

51%

33%43%

24%

33%

27%

27%

46% 17%

52%

31%37%

23%

40%

25

Geographic spread

Geographic spread by GLA

2% 2%

73%

1%

4%

3%

1%

14%

Eastern Cape Free State GautengKZN Limpopo MpumalangaNorthern Cape North West Western Cape

Geographic spread by revenue

1% 2%

67%

5%

6%

6%

12%

Eastern Cape Free State GautengKZN Limpopo MpumalangaNorthern Cape North West Western Cape

26

Tenant spread

Single vs Multi-Tenanted by Revenue

46%

54%

Single-tenanted Multi-tenanted

Tenant profile (based on Revenue)

70%

15%

15%

A B C

Overview

Acquisitions

Financial review

Operational review

Appendix

28

Completed acquisitions

SA Ladder 5 Bond Street

Physical address 32 Potgieter Street, Alrode

GLA 25,000

Tenancy Single

WALE (by GLA) 10.2

Cost of acquisition R75.0m

Major tenants SA Ladder

Physical address 5 Bond Street, Midrand

GLA 5,870

Tenancy Single

WALE (by GLA) 9.6


Major tenants Investec

29

Completed acquisitions

Minolta Bellville Minolta Highveld

Physical address 4 Mike Pienaar Boulevard, Bellville, Cape Town

GLA 2,166

Tenancy Single

WALE (by GLA) 3.5


Major tenants Minolta

Physical address 14A Esdoring Nook, Techno Park, Highveld, Pretoria

GLA 2,955Tenancy SingleWALE (by GLA) 8.5Cost of acquisition R36.2mMajor tenants Minolta

30


Cash & Carry Silverlakes Zenth East Rand

Physical address Bendeman Boulevard, Silverlakes, Pretoria

GLA 12,492Tenancy MultiWALE (by GLA) 6.7 yearsCost of acquisition R76.2mMajor tenants Devland Cash & Carry

Physical address Cnr North Rand and Herman Pieters Road, Boksburg

GLA 14,144Tenancy SingleWALE (by GLA) 8.7 yearsCost of acquisition R78.0mMajor tenants Zenth Cash & Carry

31


Bigen Africa Martin & Martin

Physical address 1617 Allan Cormack Street, Pretoria GLA 5,545Tenancy SingleWALE (by GLA) 10 yearsCost of acquisition R125.1mMajor tenants Bigen

Physical address 9 Quality Street, Isando, Johannesburg

GLA 19,972Tenancy SingleWALE (by GLA) 10 yearsCost of acquisition R88.5mMajor tenants Martin & Martin

32


Khayelitsha The Braes

Physical address Sulani Drive, Khayelitsha, Cape Town GLA 2,911Tenancy MultiWALE (by GLA) 4.5 yearsCost of acquisition R31.9mMajor tenants Pick ‘n Pay

Physical address Cnr William Nicol & Bryanston Drive, Bryanston

GLA 4,372Tenancy MultiWALE (by GLA) 1.9 yearsCost of acquisition R88.2mMajor tenants Econet Wireless, Stratford Properties

33


Wellness Centre Greenhill Village

Physical address Cnr Culross & Main Road, BryanstonGLA 1,444Tenancy MultiWALE (by GLA) 1.7 yearsCost of acquisition R29.2mMajor tenants Reonet Utilities

Physical address Lynwood Road, Lynwood, PretoriaGLA 4,591Tenancy MultiWALE (by GLA) 2.5 yearsCost of acquisition R95.9mMajor tenants Online Intelligence & ACT Audit

Solutions

34


Danclove Vinebridge

Physical address 200 Constantia Drive, Constantia Kloof, Roodepoort

GLA 8,011Tenancy SingleWALE (by GLA) 5.4 yearsCost of acquisition R142.0mMajor tenants Clover

Physical address 99 Jip de Jager Drive, Tyger Valley, Cape Town

GLA 2,297Tenancy MultiWALE (by GLA) 1.8 yearsCost of acquisition R38.8mMajor tenants Pepkor, Reckitt Benckiser SA

35


Barinors Vineyards Linbro Park

Physical address 99 Jip de Jager Drive, Tyger Valley, Cape Town

GLA 4,941Tenancy MultiWALE (by GLA) 1.9 yearsCost of acquisition R96.3mMajor tenants Pioneer Foods, NHBRC

Physical address 10 Starfield Drive, Frankenwald, Gauteng

GLA 3,246Tenancy MultiWALE (by GLA) 1.7 yearsCost of acquisition R30.2mMajor tenants Tirhani Auctioneers

36


Beechwood Nicol Main

Physical address 33 Bearing Crescent, Silverton, Pretoria

GLA 5,677Tenancy SingleWALE (by GLA) 5 yearsCost of acquisition R50.8mMajor tenants Silver Star Auto Body Repairs

Physical address 6 Bruton Road, Bryanston, Johannesburg

GLA 11,863Tenancy MultiWALE (by GLA) 5.1 yearsCost of acquisition R298.4mMajor tenants YUM, Continental Outdoor Media

37

Disclaimer

The information contained herein is for information purposes only and readers should not rely on such information as advice in relation to a specific issue without taking financial, banking, investment or professional advice. Although information has been obtained from sources believed to be reliable, Investec Property Fund Limited (Reg. No.2008/011366/06) and or any affiliates (collectively “Investec Property”), do not warrant its completeness or accuracy. Opinions and estimates represent Investec’s view at the time of going to print and are subject to change without notice.

Past performance is not indicative of future returns. The information contained herein does not constitute an offer or solicitation of investment, banking or financial services by Investec Property. Neither Investec Property nor Investec Bank Limited shall be held liable in respect of any claim, damages or loss of whatever nature arising in connection with such information. Investec Property accepts no liability for any loss or damage of whatsoever nature including but not limited to loss of profits, goodwill or any type of financial or other pecuniary or direct or special indirect or consequential loss however arising, whether in negligence or for breach of contract or other duty as a result of use of or reliance on the information contained in this document whether authorised or not.

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Documents

Results presentation – FY2014 interims September 2013