Post on 13-Jul-2020
Unaudited group resultsfor the six months ended 30 September 2012
AgendaAgenda
• Highlights Laurence Rapp
• Strategy Laurence Rapp
• Financial performance Mike Potts
• Portfolio performance and overview Ina Lopionp p
• East Rand Mall overview Laurence Rapp
• Prospects and plans Laurence Rapp• Prospects and plans Laurence Rapp
• Acknowledgements Laurence Rapp
• Questions Team
2
Highlights, Vision, Values and Strategy
LAURENCE RAPPHighlights, Vision, Values and Strategy
3
HighlightsHighlights• Distribution for the six months is 5.0% higher than the comparable period.
• Overall cost of funding reduced from 9.36% at 31 March 2012 to 8.60% per annum, inclusive of margins and costs.
Ranked Top Property Fund and first in the industrial and office sectors by• Ranked Top Property Fund and first in the industrial and office sectors by IPD for best total return over a three year period.
• Continued strong operational performance of the property portfolio.
• Improving quality of the portfolio:– Acquired R1.48 billion quality office and retail portfolio;
– Offer accepted for acquisition of 50% of East Rand Mall for R1.1 billion;
– Realised R225 million on sales of higher risk properties;
Identified further non core properties for sale of R427 million; and– Identified further non-core properties for sale of R427 million; and
– Further acquisitions of c.R500 million in pipeline.
4
StrategyStrategy
Grow the fund to c R10 billion in assetsGrow the fund to c.R10 billion in assets
Overweight retail
Constantly looking to improve the quality of the portfolio
• Broaden our shareholding base and enhance market perception of an independent Vukile
y g p q y p
• Building sustainable partnerships• Improved customer and tenant focus• Optimise long and short-term returns for unitholdersOptimise long and short term returns for unitholders• Minimise funding cost and refinance risk• Invest in our people by engaging our people, building competence and
capacitycapacity• Transformation
5
Financial performance
MIKE POTTSFinancial performance
6
Distribution historyDistribution history140.0
1
117.6
124.8
120.0
88.3
97.9
107.9
80.0
100.0
linke
d un
it
50
54.3
57.0
4
53.8
60.9
67.1
70.5
68.5
76.8
60.0
Cen
ts p
er
32.5
35.8
40.3
44.1
47.0
0.5
36.0
41.0
48.0
820.0
40.0
0.02006 2007 2008 2009 2010 2011 2012 2013
Interim Final Total
7
Interim Final Total
Growth in distributionGrowth in distribution
1
18.0
14.3
13.9
17.1
1
15.014.0
16.0
10.0
12.6
9.
9
12.1
13.2
10. 2
11.4
12.0 10.9 10. 2
10.0
12.0
enta
ge
8.3
0 6
6.6
7.5
7.5
22
9.0
6.1
6.0
8.0
Per
ce5.0
5.1
2.0
4.0
0.02006 2007 2008 2009 2010 2011 2012 2013
Interim Final Total
8
Group income and expenditure (R000)Group income and expenditure (R000)
Income (R641 9 million) Expenditure (R373.4 million)
Asset management income
Interest incomeR8 096
1%
Income (R641.9 million)
Assetmanagement
expensesR14 387
Rates and taxesR39 007
pe d tu e ( 3 3 o )
incomeR59 682
9%Rates and taxes
recoveredR30 346
5%
R14 3874% Corporate admin
R14 5104%
Electricity and
R39 00710%
Electricity and water servicesR90 299
14%Rental Income and other
R453 49471%
Finance costsR100,356
27%
Property Expenses and
th
Electricity and water costsR107,008
29%
TaxR16 031
otherR56 089
15%
Property and management fees
R25 995
Distributable Income R268.5 million
R16 0314%
R25 9957%
9
Simplified income statementSimplified income statement
Sept 2012Rm
Sept 2011Rm
Variance%
Group net rental income 346.0 276.2 25p
Income from asset management business 59.7 23.0 160
Asset management expenditure (14.4) (13.9) 4g p ( ) ( )
Net finance costs (92.3) (74.9) 23
Corporate administration costs (14.5) (10.7) 36 p ( ) ( )
Taxation (16.0) (6.7) 139
Available for distribution 268.5 193.0 39
10
Financial Bad debt and arrears analysisFinancial - Bad debt and arrears analysis
• Tenant arrears R22.8 million (March 2012: R20.3 million).
• Impairment allowance increased from R10.0 million to R11.7 million.
R000
• Impairment allowance 1 April 2012 10 028
• Allowance for receivable impairment for the six months
• Receivables written off as uncollectable
2 528
(829)
• Impairment allowance 30 September 2012 11 727
Bad debt write-off and impairment allowance provided per the statement of comprehensive income 4 492income 4 492
11
Group balance sheetGroup balance sheet Sep-12 Sep-11
7 27 000
8 000
288
5 596
5 525 000
6 000
68
4 136
3 000
4 000
milli
on
427
37
615
3 5 25
364
1 000
2 000
Rm
7 655 53 4
0
nves
tmen
t pr
oper
ties
For s
ale
nves
tmen
t pr
oper
ties
ent a
sset
s
on-c
urre
nt
iabi
litie
s
t lia
bilit
ies
12
In p In p
Cur
re No l
Cur
rent
Group debt structureGroup debt structureMaturity and interest rate profile of interest bearing debt at 30 September 2012
164
240
9.0%
8.8%
April 2017
May 2017
Fixed interest rate
580
163
200
8.6%
8.6%
8.5%
May 2015
April 2016
May 2016
399
140
163
8.7%
7.7%
8.0%
August 2014
March 2015
April 2015
150
51 6.8%
7.7%
August 2014
March 2014
Variable interest rate
0 150 300 450 600 750
V i bl t d bt Fi d t d bt
13
Variable rate debt Fixed rate debt
Group net cash flowGroup net cash flow
5 94
7
8 54
7
6 02
2
4 18
8
539
466)
291)
316)
260)
5 91
01000 000
215
398
556
224
861
(247
(1 5
91
(9
(92
315
400 000
600 000
800 000
(200 000)
0
200 00012 es gs et
s its on ts
ets
sts 12
R00
0
(600 000)
(400 000)
(200 000)
Bal
ance
1 A
pril
201
m o
pera
ting
activ
itie
Bor
row
ing
rope
rties
/fixe
d as
se
Issu
e of
link
ed u
ni
Dis
tribu
tio
mpr
ovem
ents
to
rties
and
fixe
d as
set
r-sal
e fin
anci
al a
sse
Net
fina
nce
cos
e 30
Sep
tem
ber 2
01
(1200 000)
(1000 000)
(800 000)
Cas
h fro
ale
of in
vest
men
t pr
Acq
uisi
tion/
imin
vest
men
t pro
per
tion
of a
vaila
ble-
for
Bal
ance
(1600 000)
(1400 000)
( )
Pro
ceed
s on
sa
Acq
uisi
14
NAV bridgeNAV bridge
Cents
(160)71 37 210 (14)
67
(57)1 000
1 250
1 500
1 109 1 263
250
500
750
April
nits
and
and
nits
tion
tion
tion
12)
AV B
alan
ce (1
A20
12)
ditio
nal l
inke
d un
issu
e
refu
rbis
hmen
t are
d ta
xatio
n
of d
efer
red
tax
ath
er
ssue
of l
inke
d un
e sw
ap re
valu
at
befo
re d
istri
but
Dis
tribu
t
0 S
epte
mbe
r 20
Ope
ning
NA
Adju
sted
for a
dd in i
Adj
uste
d fo
r de
fer r
Rev
alat
ion
net o o I s
Inte
rest
rate
Net
reve
nue
Clo
sing
NA
V (3
0
A R C
NAV Contribution to NAV
15
Linked unit price and trading volumesLinked unit price and trading volumes
V l (000)P i ( t ) Chart Title
14 000
16 000
1 900
2 000
Volumes (000)Price (cents) Chart Title
10 000
12 000
1 700
1 800
4 000
6 000
8 000
1 400
1 500
1 600
0
2 000
4 000
1 200
1 300
1 400
A M J J l A S O t N D J F b M A M J J l A S
2011 2012
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Volume Share Price
16
Linked unit price and trading volumesLinked unit price and trading volumes
160
170
Linked unit price-index performance (36 months)
130
140
150
100
110
120
80
90
100
VUKILE Property Loan Stock
17
Property portfolio performance and overview
INA LOPIONProperty portfolio performance and overview
18
OverviewOverview
N b f i 82• Number of properties 82
• GLA 1 054 323m²
• Valuation– Total portfolio R7.698 billion
51.4% of portfolio valued51.4% of portfolio valued externally, values in line with internal values
– Average value per property R94 millionAverage value per property R94 million– Average discount rate 14.6%– Average exit capitalisation rate 10.0%
19
10 largest properties10 largest properties
Area ValueArea m²
Value Rm % of total
Durban Phoenix Plaza 24 348 521.2 6.8 Cape Town Bellville Louis Leipoldt 22 311 299.9 3.9 Jhb Isle of Houghton 28 068 244.7 3.2 Soweto Dobsonville Shopping Centre 23 177 242.5 3.2 pp gOshakati Shopping Centre 24 628 219.9 2.9 Pinetown Pine Crest (50%) 20 101 210.5 2.8 Cape Town Bellville Tijger Park 20 225 198 8 2 6Cape Town Bellville Tijger Park 20 225 198.8 2.6 Durban Embassy 32 367 198.6 2.6 Randburg Square 50 769 185.7 2.4 Roodepoort Hillfox Power Centre 38 068 183.4 2.4
284 062 2 505.2 32.8
20
Sectoral profileSectoral profile
Industrial
Market value (Rm) GLA (m²)
Retail48%
Industrial14%
Retail44%
Industrial24%
Offices38% Offices
32%
Market Value (R/m²)7 457 7 911
3 952
6 5917 910
8 774
4 185
7 291
2 0004 0006 0008 000
10 000
R/m
²
02 000
Retail Offices Industrial Average
March 2012 September 2012
21
DisposalsDisposals
GLA Yi ld S lProperty Sector
GLAm²
Yield%
Sales price R000 Transfer date
Pretoria VWL Building Offices 16 933 12.5 103 000 August 2012
Mid d 179 15th R d (S B ildi ) * I d t i l 11 001 8 1 57 000 O t b 2012Midrand 179 15th Road (Sony Building) * Industrial 11 001 8.1 57 000 October 2012
Truworths Building Jhb Retail 6 919 7.8
44 128 July 2012
Glencairn Building Eloff Street Offices 13 378 23 520 July 2012g 23 520 July 2012
Nelspruit Prorom Offices 6 178 12.5 38 000 August 2012
Johannesburg John Griffen Industrial 9 774 16 500 May 2012
Rundu Ellerines Retail 1 283 14.7 2 800 August 2012
Total 65 466 284 948
* Transferred after 30 September 2012 Transferred after 30 September 2012
22
Properties held for saleProperties held for sale
Sales
Property SectorGLA
m²Yield
%
Sales price R000 Status
Durban Embassy Offices 32 367 tbc No sale yety y
Jhb Bassonia Office Park Offices 1 597 13.4 8 300 CPs fulfilledKatima Mulilo Pep Stores Retail 2 472 11.7 18 000 CPs fulfilledLichtenburg Shopping Centre Retail 8 423 tbc No sale yetg pp g yMidrand Allandale Land (Halfway House Ext 64)
Commercial land 20 700 CPs outstanding
Midrand Allandale Land (Halfway House Ext 65)
Commercial land 21 850 CPs outstandingHouse Ext 65) land
Midtown Building Offices 8 087 tbc No sale yetPretoria Hatfield 1166 Francis Baard Street (DLV Building) Offices 2 871 tbc No sale yet
Randburg Cresta Eva Park Offices 10 911 tbc No sale yetRandburg Triangle Offices 3 047 10.5 13 500 CPs outstanding
CP = Conditions precedent
23
Geographic profile (GLA m²)Geographic profile (GLA m²)
Free StateLimpopo
3%
Mpumalanga2%
Northwest2% Northern Cape
1% Eastern Cape1%
GautengNamibia
Western Cape8%
ee S a e4%
Gauteng55%
KwaZulu-Natal18%
Namibia6%
Top 4 regions account for 87% of exposure
24
Tenant profile (GLA m²)Tenant profile (GLA m²)
Large national and listed tenants and major franchises
48%38%
franchises
National and listed tenants, franchised and medium to large48%
9%5%
medium to large professional firms
Government
Other
25
Weighted average base rentals R/m² (excluding recoveries)(excluding recoveries)
82 51 81 45
6.1% 8.7%8.9%90
100
77.79 74.96 65.73
82.51 81.45 71.59
4.0%60
70
80
90
36.77 38.23
30
40
50
-
10
20
Retail Offices Industrial Total
March 2012 September 2012
26
Weighted average base rental R/m² -(excluding recoveries): Retail(excluding recoveries): Retail
Durban WorkshopDurban Qualbert Centre
Durban Phoenix Plaza
Oshikango Spar CentrePinetown Pine Crest (50%)
Windhoek 269 Independence AvenueCape Town Kenilworth Motor Showrooms (Barlows …
Sandton Bryanston Grosvenor Shopping Centre Mbombela Truworths Centre (Truworths Centre …
Durban Workshop
Malamulele Plaza (Mala Plaza)Katutura Shoprite Centre
Pietermaritzburg The Victoria CentreSoweto Dobsonville Shopping Centre
Daveyton Shopping CentreOshikango Spar Centre
Monsterlus Moratiwa Crossing (94.50%)Giyani Plaza
Cape Town Bellville BaronsPiet Retief Shopping CentreOndangwa Shoprite CentreOshakati Shopping Centre
Mbombela Shoprite Centre (Nelspruit Sanlam Centre)Bloemfontein Plaza
Kokstad Game CentreGiyani Spar Centre (Masingita Spar Centre)
Katima Mulilo Pep StoresRustenburg Edgars Building
20 00 40 00 60 00 80 00 100 00 120 00 140 00 160 00 180 00 200 00
Germiston Meadowdale MallLichtenburg Shopping Centre
Roodepoort Hillfox Power CentreRandburg Square
Kimberley Kim ParkMbombela Shoprite Centre (Nelspruit Sanlam Centre)
Weighted average R82.51/m²
27
- 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 200.00
Weighted average base rental R/m² -(excluding recoveries): Offices(excluding recoveries): Offices
Sandton Rivonia 36 Homestead Road (Barlow Place Rivonia)Cape Town Bellville Suntyger (Santyger)
Sandton Hyde Park 50 Sixth Road
Cape Town Parow De Tijger Office ParkPretoria Lynnwood Excel Park (Wymark)
Jhb Bassonia Office ParkPretoria Hatfield 1166 Francis Baard Street (DLV Building)
Jhb Houghton 1 West Street (Jhb Houghton 2446)Pretoria Lynnwood Sanlynn
Sandton Bryanston St Andrews ComplexSandton Rivonia Tuscany
Jhb Parktown OakhurstCape Town Bellville Tijger Park
Centurion 259 West StreetMidrand Ulwazi Building (Arivia.Kom Building)
Pretoria Lynnwood Sunwood Park (Sanwood Park)
Durban Westville Surrey ParkEast London Vincent Office Park (Oos London Sanlam Centre)
Midrand IBGSandton Sunninghill Place
Cape Town Bellville Louis LeipoldtSandton Sunninghill Sunhill Park (Sanhill Park)
Sandton Bryanston St Andrews Complex
Jhb Isle of Houghton (Johannesburg Houghton)Pretoria Arcadia Suncardia (Sancardia)
Randburg Cresta Eva ParkCape Town Pinelands Pinepark
Pretoria Hatfield Festival Street Offices (Hatfield Sanlam …Jhb Parktown 55 Empire Road (Johannesburg Empire Road …
20 00 40 00 60 00 80 00 100 00 120 00 140 00 160 00 180 00
Pretoria High Court ChambersJhb Bedfordview 1 Kramer Road (Bedfordview GIS)
Randburg TriangleMidtown Building
Sandton Bryanston Ascot OfficesDurban Embassy
Weighted average R81.45/m²
28
- 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00
Weighted average base rental R/m² -(excluding recoveries): Industrial(excluding recoveries): Industrial
Centurion Samrand N1
Kempton Park Spartan Warehouse (Hellman International)
Sandton Linbro Galaxy Drive Showroom (Supra Hino)
Pi t Ri h d I d t i l P k (Ri h d P k)
Midrand Sanitary City
Midrand Allandale Industrial Park
Randburg Tungsten Industrial Park
Pinetown Westmead Kyalami Industrial Park
Randburg Trevallyn Industrial Park
Germiston Meadowdale R24
Pinetown Richmond Industrial Park (Richmond Park)
Durban Valley View Industrial Park
Roodepoort Robertville Industrial Park
Jhb Rosettenville Village Main Industrial Park
Pretoria Rosslyn Warehouse
Weighted average
- 10.00 20.00 30.00 40.00 50.00 60.00 70.00
Cape Town Parow Industrial ParkR38.23/m²
29
Lease renewals % escalation on expiry rentalsLease renewals - % escalation on expiry rentals
7 5%
9.2%
8.0% 8.3%8.0%
9.0%
10.0%
7.5%
5 0%
6.0%
7.0%
8.0%
3.0%
4.0%
5.0%
0.0%
1.0%
2.0%
Retail Offices Industrial AverageRetail Offices Industrial Average
30
New leases concludedNew leases concludedRatio of rental concluded against budget i.e. market related rentals
102%
102%
103%
100%100%
101%
102%
97%
98%
97%
98%
99%
95%
96%
97%
94%Retail Offices Industrial Average
31
Contracted rental escalation profileContracted rental escalation profile
8.9%
8.8%
9.0%
8.4%
8.6%
8.1% 8.1%8.2%
8.0%
8.2%
7.6%
7.8%
7.6%Retail Offices Industrial Total
32
Group lease expiryGroup lease expiry100%
80%
40%
60%
20%
40%
Vacant Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Beyond March 2017
0%
GLA 7.6% 18.4% 27% 17% 11% 9% 10%Cumulative 7.6% 26% 53% 70% 81% 90% 100%
33
New leases and renewalsNew leases and renewals • For the six months ended 30 September 2012 leases were concluded with a:p
– Total contract value R480.5 million
– Total rentable area 136 685m²
• Largest contracts concludedContract
valueLease
duration Tenant Property Sector Rm yearsPretoria Society Of Advocates Pretoria High Court Chambers Offices 121.1 10OK Bazaars Randburg Square Retail 17.0 5Road Accident Fund Durban Embassy Offices 16.0 2Clicks Durban Phoenix Plaza Retail 14.0 10Clicks Oshakati Shopping Centre Retail 11.5 10
• Tenant retention 67%
34
Vacancy profile % of gross rentalVacancy profile - % of gross rental
11.6%12%
14%
8.6%
9.7%
6 8%7.4% 7.3%8%
10%
5.0%
6.8%
4.0%4%
6%
2%
0%Retail Offices Industrial Total
March 2012 September 2012
35
Vacancy profile % of gross rentalVacancy profile - % of gross rental
Stable portfolio
5.0%9.3% 8.7% 6.8%
4 2%
11.8%
6.2% 6.6%10%
15%
Stable portfolio (excluding sales and acquisitions)
5.0% 4.2%
0%
5%
Retail Offices Industrial Total
31 March 2012 30 September 201231 March 2012 30 September 2012
24 1%30%
Total portfolio (excluding sales)
4.21%11.76%
6.19% 6.59%0.9%
11.3%
24.1%
10.1%4.0%
11.6%7.4% 7.3%
0%
10%
20%
30%
%Retail Offices Industrial Total
Stable portfolio Acquisitions Total portfolio excluding sales
36
Individual properties vacancy profileIndividual properties vacancy profile(% of GLA) (vacancy > 1 000m²)
St bl tf li ( l di l d i iti )
Germiston Meadowdale R24 (10%)Midrand Allandale Industrial Park (17%)
Randburg Cresta Eva Park (54%)Durban Embassy (24%)
Stable portfolio (excluding sales and acquisitions)
Roodepoort Hillfox Power Centre (7%)Sandton Bryanston St Andrews Complex (28%)
Pretoria Lynnwood Sunwood Park (Sanwood Park) (46%)Randburg Trevallyn Industrial Park (9%)
Randburg Square (7%)
Jhb Bedfordview 1 Kramer Road (Bedfordview GIS) (17%)Windhoek 269 Independence Avenue (10%)
Centurion 259 West Street (36%)Randburg Tungsten Industrial Park (19%)
Sandton Sunninghill Place (22%)
Sandton Bryanston Grosvenor Shopping Centre (4%)Soweto Dobsonville Shopping Centre (1%)
Roodepoort Robertville Industrial Park (3%)Cape Town Parow De Tijger Office Park (20%)
Bloemfontein Plaza (3%)( ) ( )
-2 000m² 500m² 3 000m² 5 500m² 8 000m²
Cape Town Parow Industrial Park (0%)Durban Phoenix Plaza (1%)
y pp g ( )
Vacant area 31 March 2012 Vacant area 30 September 2012
37
Individual properties vacancy profileIndividual properties vacancy profile(% of GLA)
Acquisitions
Cape Town Bellville Tijger Park (14%)
Bloemfontein Bree Street Warehouse (Trador Cash & Carry) (100%)
Pretoria Arcadia Suncardia (Sancardia) (30%)
Acquisitions
Midrand IBG (14%)
Sandton Rivonia Tuscany (16%)
Cape Town Bellville Tijger Park (14%)
Cape Town Bellville Suntyger (Santyger) (12%)
Jhb Parktown 55 Empire Road (Jhb Empire Road Offices) (14%)
Jhb Isle of Houghton (Johannesburg Houghton) (4%)
Jhb Bassonia Office Park (10%)
Durban Workshop (1%)
Durban Westville Surrey Park (22%)
0m² 2 500m² 5 000m² 7 500m² 10 000m²
Vacant area at transaction approval Vacant area 30 September 2012
38
Ratio of gross recurring cost to property revenue total portfolio (excluding sales)revenue – total portfolio (excluding sales)
31 3%33.1% 33.3%
35.5%38.5%
35%
40%
45%
31.3% 30.5% 30.8%
25%
30%
15.7% 15.6% 14.8% 15.4% 14.7% 14.7%16.5%
10%
15%
20%
0%
5%
10%
M 07 M /08 M /09 M /10 M /11 M /12 S /12Mar-07 Mar/08 Mar/09 Mar/10 Mar/11 Mar/12 Sep/12
All recurring expenses All recurring expenses excluding rates and taxes and government services
39
Recurring expense categoriesRecurring expense categories
Maintenance
Sundry expenses
5%
Asset management
fee4%
Insurance premiums
3% Bad debt2%
GovernmentProperty
management
Maintenance contracts
6%
Government services
46%
Rates and taxes17%
Cleaning & security
10%
gfee7%
17%
80% of costs from top 4 categories
40
Re developments / upgradesRe-developments / upgradesAdditional
Projects completed Capital Rm
GLA m²
Year 1 yield
Completion date Note
Randburg Square Maintenance and upgrade: Phase 1 80.8 - - 30 June 2012 (1)
Oshakati Shopping Centre Standard Bank redevelopment 22.9 2 312 10.7% 31 July 2012pp g p y
Roodepoort Hillfox Power Centre Phase 2 of façade and mall upgrade 4.0 - - 31 March 2012 (1)
Total 107.7
Additi lProjects approved Capital
Rm
Additional GLA
m²Year 1
yieldCompletion
date NoteRandburg Square Maintenance and upgrade: Phase 2 126.7 - - 30 April 2013 (1)
Cape Town Bellville Tijger Park Offices upgrade and parking deck 49.8 - - 30 June 2013 (1)
Cape Town Bellville Louis Leipoldt Upgrade 33.5 - - 30 April 2013 (2)
Cape Town Bellville Barons Upgrade 17 5 9 4% 30 September 2013Cape Town Bellville Barons Upgrade 17.5 - 9.4% 30 September 2013
Total 227.5
Note (1): Post the upgrade/revamps higher rentals on renewals and reduced vacancies can be expected.Note (2): This capex was agreed as part of a new 15 year lease
41
Note (2): This capex was agreed as part of a new 15 year lease.
Randburg Square upgradeRandburg Square upgrade
Phase 1 of the upgrade completed June 2012• Phase 1 of the upgrade completed June 2012• Phase 2 of the upgrade progressing well• Construction work stopped to allow unobstructed trade during the festive season; will
commence mid January 2013 with completion at the end of April 2013commence mid January 2013 with completion at the end of April 2013• After completion 16 new brands will be added including the Foschini and Truworths
groups• Edgars and Woolworths, two of the anchor tenants, will be fully upgradedEdgars and Woolworths, two of the anchor tenants, will be fully upgraded• Mr Price, Clicks, Pep, Fashion World and Markham will also be upgraded and
expanded to cater for increased demand• Shoppers will enjoy an enhanced shopping experience offering a:pp j y pp g p g
modernised centrededicated food courtbanking malllarge variety of fashion retailerslarge variety of fashion retailersnumber of furniture and home ware storesservices like Telkom, Post office, Postnet and cell phone stores
42
Randburg Square upgradeRandburg Square upgrade
43
Potential acquisitions and developmentsPotential acquisitions and developments
Value Rm
GLA m²
Initial yield
%
Expected completion / transfer date
Boksburg East Rand Mall (50%) Acquisition 1 115 31 223 6.7 April 2013
Edendale Mall (50%) Acquisition 205 15 850 8.3 April 2013( ) q p
Hammarsdale Retail Development Development 194 19 138 9.5 June 2012
Li b P k Mi i F t i D l t 120 15 000 10 0 N b 2013Linbro Park Mini Factories Development 120 15 000 10.0 November 2013
McCormick JV Properties Acquisition 346 35 000 9 2013 / 2014
Total 1 980 116 211
44
Prospects, plans, acknowledgements and closing
LAURENCE RAPPProspects, plans, acknowledgements and closing
45
Overview of East Rand MallOverview of East Rand Mall
46
Overview of East Rand Mall Strategic rationaleOverview of East Rand Mall – Strategic rationale
• East Rand Mall (“ERM” or the “Property”) has been a core part of Sanlam’s portfolio for a• East Rand Mall ( ERM or the Property ) has been a core part of Sanlam s portfolio for a number of years
– Due to concentration risk Sanlam has decided to sell the Property
• Vukile is Sanlam’s property asset manager and knows the Property wellp p y g p y– Vukile team has managed the Property since acquisition
• Vukile has a pre-emptive right over the Sanlam property portfolio
• Sanlam recently elicited offers for the PropertySanlam recently elicited offers for the Property– The offers received were within a very narrow range
• Redefine was the successful bidder with a purchase consideration, post due diligence, of R2.23 billion
• Pursuant to Vukile’s pre-emptive right, Vukile has acquired a 50% undivided share from Redefine for R1.115 billion (excluding transaction costs)
• ERM will be Vukile’s flagship mall and is a strong regional shopping centre with good fundamentals and upside potential including c 10 000m² additional bulkfundamentals and upside potential including c.10 000m² additional bulk
• Consistent with stated strategy of building a fund of at least R10 billion, overweight the retail sector and with a view to always improving the quality of the portfolio
47
Overview of East Rand Mall Key statisticsOverview of East Rand Mall – Key statistics
• Purchase price (50%) R1.115 billion
• External Market Value (as at 31 May 2013) (50%) R1.09bn (98% of purchase price)
GLA 62 446 ²• GLA 62 446m²
• Number of Tenants 177
• Current vacancy 505m² (0 8%)Current vacancy 505m (0.8%)
• Historical average vacancy 1.6%
• Average annual growth rate previous 3 years– Recurring Net Income 5.8%
– Gross Income 9.9%
– Recurring expenses 20.9%
• Annualised property yield on adjusted purchase consideration 6.72%
48
Overview of East Rand Mall Centre layoutOverview of East Rand Mall – Centre layout
Largest Tenants (% of GLA)
Edgars Consolidated Stores 20.7%
Mr Price Group 9 0%
8 141m²3 031m²
Mr Price Group 9.0%
Woolworths 8.7%
Foschini Retail Group 7.3%
Ster Kinekor Films 5 3%Ster Kinekor Films 5.3%
Truworths International 5.2%
Pepkor Holdings 3.4%
New Clicks 1.9%7 635m²
e C c s 9%
Banks 4.1%
65.6%
3 302m² 1 974m²1 592m²
1 974m
49
Financing structure and financial effectsFinancing structure and financial effects
Off i R1 115 illi (50% f th P t )• Offer price : R1.115 million (50% of the Property)• Total purchase price is estimated to be R1.111 million (based on a 1 April 2013 transfer date including
price adjustment and transaction costs)• c R350 million funded by way of issuing new Vukile equityc.R350 million funded by way of issuing new Vukile equity• c.R225 million funded out of cash proceeds received from property sales• c.R537 million funded by way of DMTN short-term commercial paper & long term notes or bank term
funding as follows:g– c.R75 million - 6 months commercial paper– c.R75 million - 12 months commercial paper– c.R194 million - 3 year notes / 3 year term funding
c R193 million 5 year notes / 5 year term funding– c.R193 million - 5 year notes / 5 year term funding
• Overall cost of funds: – Year 1 = 7.18%
• Forecast yield - year one 6.72%Forecast yield year one 6.72%• Forecast yield - year two 7.18%• Anticipated as slightly dilutionary in year one: <1 cent and earnings enhancing from year two onwards
50
Management of the mallManagement of the mall
Shareholder principles and co o nership considerationsShareholder principles and co-ownership considerations• Co-ownership agreement
There will be equal representation by Vukile and Redefine on the– There will be equal representation by Vukile and Redefine on the Manco
– Each party will have equal voting rights • All decisions will be made within the framework of the existing
authority matrix for Vukile and Redefine– There will be three levels of escalation with defined mechanisms toThere will be three levels of escalation with defined mechanisms to
resolve deadlocks if need be• Agreement is based on common industry practice to co-
manage assetsmanage assets– Both Vukile and Redefine have experience in this regard
51
Portfolio construction post the dealPortfolio construction post the dealPre-acquisition as at 30 September 2012 Post acquisition Change
• Number of properties : 82 : 83 +1.2%
• Rentable area (GLA) : 1 054 323m² : 1 085 546m² +3.0%
• Portfolio value (directors’ valuation) : R7 698 million : R8 702 million +13.0%
• Loan to value : 29.2% : 33.6% 15%
• Vacancies : 7.6% of GLA : 7.4% of GLA -3.0%
Vukile portfolio pre acquisition Vukile portfolio post acquisition
alue
Industrial 14%
Industrial 12%
Mar
ket v
a
Retail 48%
Offices 38%
Industrial
Retail 54%Offices
34%
Industrial
GLA
(m²) Retail
44%
Offices
24%
Retail 46%
Offices
Industrial 23%
52
Offices 32%
Offices 31%
Positive impact on key metricsR10 000/m²
Market value (R/m²)19.4%
9.9%
Vacancy on GLA as at 30 September 2012
Positive impact on key metrics
R7
910/
m²
R8
774/
m²
85/m
²
7 29
1/m
²
R9
448/
m²
R8
774/
m²
85/m
²
R8
013/
m²
R4 000/m²
R6 000/m²
R8 000/m²
13.4
%
% %
13.4
%
% %
10.0%
15.0%
R
R4
18 R7
R4
18
R 0/m²
R2 000/m²
Retail Offices Industrial Total
Excluding East Rand Mall Including East Rand Mall
3.1% 8.
2%
7.6%
3.0% 8.
2 %
7.4%
0.0%
5.0%
Retail Offices Industrial TotalExcluding East Rand Mall Including East Rand Mallg g
40 0%
50.0%
Expense ratio
R100.00/m²
Average contractual base rent (R/m²)9.8%
5.8%
40.9
%
36.7
%
32.6
%
38.5
%
38.5
%
36.7
%
32.6
%
37.4
%
10 0%
20.0%
30.0%
40.0%
R82
.51/
m²
R81
.45/
m²
38.2
3/m
²
R71
.59/
m²
R90
.56/
m²
R81
.45/
m²
38.2
3/m
²
R75
.77/
m²
R20.00/m²
R40.00/m²
R60.00/m²
R80.00/m²
0.0%
10.0%
Retail Offices Industrial Total
Excluding East Rand Mall Including East Rand Mall
R3 R
R3
R0.00/m²Retail Offices Industrial Total
Excluding East Rand Mall Including East Rand Mall
53
Acquisition of ERM improves all Vukile operating indicators
Treatment of sales commissionTreatment of sales commission
N d d th l i f i d t th• Numerous concerns expressed around the lumpiness of earnings due to the sales commission generated on the Sanlam portfolio
• Tends to distort the solid underlying portfolio performancee ds o d s o e so d u de y g po o o pe o a ce
• Explored various options but not capable of successful implementation– REIT Structure
– Annuitise the sales commission income
• Evaluated two optionsS thi th i– Smoothing the income
– Pay as a special distribution when earned
• Decided on paying out abnormal sales commission as a special p y g pdistribution starting with the East Rand Mall commission
54
Rationale for special distribution
R t i t i f d
Rationale for special distribution
• Removes uncertainty going forward
• From F2014, distribution will only be from predictable income streams being property revenue, asset management fees, interest income
• A special distribution of c.R67 million arising from the sales commission earned on the sale of East Rand Mall will be paid in the financial year in which it is earned
– Still uncertain at this stage if it will be F2013 or F2014Still uncertain at this stage if it will be F2013 or F2014
– Will update on SENS, all hinges on date of Competition Commission approval
• In essence F2014 will be a year of slightly lower rebased earnings which will be more than offset by a significant special distributionthan offset by a significant special distribution
• Will provide earnings guidance at year end for F2014
• From 2015 expect a normalised growth trajectory on predictable earningsp g j y p g
• Consistent treatment of abnormal sales commission as a special distribution going forward
55
ProspectsProspects
E i f il b th l ll d b d• Economy remains fragile both locally and abroad
• Retail is still performing well
I d i d t i l ti it• Increased industrial activity
• Offices remain challenging and subdued
O ll th tf li i f i ll• Overall the portfolio is performing well
• Strong focus on operational efficiencies
C ti d i i th t t• Continue driving our core growth strategy
• Growth in distribution for F2013 expected to be in the range of 4 – 6% excluding any special distribution in respect of sales commission arising onexcluding any special distribution in respect of sales commission arising on the sale of East Rand Mall
56
AcknowledgementsAcknowledgements
B d• Board
• Property managers
S• Service providers
• Brokers and developers
• Tenants
• Investors
• Funders
• Team Vukile!
57
Questions and answers
CLOSINGQuestions and answers
58