Introduction and Highlights - Growthpoint Statements/FINAL... · Introduction and Highlights...

2

Introduction and Highlights

Financial Review

Operational Overview

RSA

GOZ

V&A

Acquisitions, Disposals, Developments and Commitments

Sustainability and CSI

Prospects

Annexures

AGENDA

4

INTRODUCTION TO GROWTHPOINT

Fully integrated internally managed property company employing 457 staff

R13,1 billion

Office

R14,6 billion

R7,3 billion R13,1 billion

AUD 1,57 billion

Industrial

Australia V&A

Waterfront Office Industrial Retail

The largest listed property company on the JSE with property assets valued at

R53,1 billion including 100% of Growthpoint Properties Australia (“GOZ”) and 50% of

the V&A Waterfront in Cape Town

Market capitalisation of R40,1 billion at 30 June 2012 (R23.00 per linked unit)

Diversified property portfolio comprising 403 properties in RSA, 41 properties in

Australia which is 64.5% owned and a 50% interest in the properties of the V&A

Waterfront

R5,0 billion

5

HIGHLIGHTS FOR THE YEAR UNDER REVIEW

33.2% Return to investors for the

year

Capital growth 25.6%

Income yield 7.6%

Distribution per linked unit 6.1% growth 139,0 cents

Repayment of CMBS Notes

New equity raised via placement

GOZ acquires office properties and

developments totalling

R1,5 billion additional investment in Growthpoint Properties Australia

R2,0 billion

R1,8 billion

AUD 346,2 million

Market value Jun 2012

R4,3 billion

Total cost Jun 2012

R3,1 billion

6


37.1% Return on R3,1 billion

Australian investment for the year

Capital growth 25.4%

Income yield 11.7%

New equity raised via Distribution Re-Investment Plan (supported by 42.0% of unit holders on average)

Vacancies

Formalisation of sector-specific

development parameters with a

current development pipeline of

Increase in unsecured debt to 39.0%

of total RSA borrowings by increasing

corporate bond program by

Growthpoint’s foreign unitholding

R959,9 million

Jun 2011

5.0%

Jun 2012

4.0%

R1,6 billion

R1,5 billion

Jun 2011

11.8%

Jun 2012

15.3%

7


Inclusion in JSE – Socially Responsible Investment Index (SRI)

Honeycomb BEE rating Level 4

Investment Analysts’ Award Best reporting and communication in

financial services sector

8

GROWTH IN DISTRIBUTION PER LINKED UNIT

51,1 56,3 59,1 63,9 67,8

55,4 58,3

62,1

67,1 71,2

106,5

114,6 121,2

131,0

139,0

0

30

60

90

120

150

FY2008 FY2009 FY2010 FY2011 FY2012

Final distribution Interim distribution Cents

9

GROWTH IN TANGIBLE ASSETS AND MARKET CAPITALISATION

Cents R’bn

0

400

800

1200

1600

2000

2400

0

10

20

30

40

50

60

Tangible assets (R’bn) Market cap (R’bn)

Unit price (cents) NTAV per unit (cents)

11

SIMPLIFIED CONSOLIDATED INCOME STATEMENT

Jun 2012

R’ million

Jun 2011

R’ million Increase

Gross property revenue 5 107 4 410 15.8%

RSA 4 096 3 803 7.7%

GOZ 1 011 607 66.6%

Property expenses (1 102) (1 001) 10.1%

RSA (997) (948) 5.2%

GOZ (105) (53) 98.1%

Net property income 4 005 3 409 17.5%

Other operating expenses (176) (135) 30.4%

Net property income after operating expenses 3 829 3 274 17.0%

Finance costs (1 677) (1 237) 35.6%

RSA (1 276) (950) 34.3%

GOZ (401) (287) 39.7%

Finance income 425 107 297.2%

Investment income from V&A – distributable 369 18 1950.0%

Investment income from V&A – non-distributable (76) - 100.0%

Other finance income 132 89 48.3%

Adjustment for NCI, foreign exchange & taxation (excl CGT & deferred tax) (182) (72) 152.8%

Profit before debenture interest 2 395 2 072 15.6%

Distribution for the year 2 395 2 072 15.6%

Note:

Average exchange rate at R8.01 /AUD (Jun 2011: R6.91/AUD) for GOZ

50% interest in V&A Waterfront included for full year in Jun 2012 (Jun 2011: 23 days)

32.1%

12

EXPENSE TO INCOME RATIOS

Property expense ratio (%)

Operating expense ratio (%)

RSA V&A

GOZ

12

27.4% 27.6% 26.7%

15.1% 14.3%

16.7%





26.0%

6.1%

0%

5%

10%

15%

20%

25%

30%

35%

Jun 2012

10.4% 8.7%

11.4%

4.7% 5.6%

5.3%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jun 2012 Jun 2011 Jun 2010

24.3% 24.9% 24.5%

3.1% 2.7% 2.2%

0%

5%

10%

15%

20%

25%

30%

35%

Jun 2012 Jun 2011 Jun 2010

13

CONSOLIDATED BALANCE SHEET (EXTRACTS)

Jun 2012

R’ million

Jun 2011

R’ million

Increase/

(decrease)

Property portfolio * 48 106 40 919 17.6%

RSA 34 988 32 495 7.7%

GOZ 13 118 8 424 55.7%

50% Investment in V&A Waterfront 4 912 4 950 (0.8%)

Borrowings ** 19 731 19 093 3.3%

RSA 13 613 14 249 (4.5%)

GOZ 6 118 4 844 26.3%

Linked unitholders’ interest (NAV) 28 543 24 884 14.7%

RSA 27 653 24 325 13.7%

GOZ 890 559 59.2% * Includes R515m of properties reclassified as held for sale (Jun 2011 – R539m)

** Excludes fair value adjustments

Note:

Closing exchange rate at 30 Jun 2012 R8.35/AUD (Jun 2011 – R7.24/AUD)

14

PROPERTY PORTFOLIO

Annexures

RSA

Jun 2012

R’ million

GOZ

Jun 2012

R’ million

Total

Jun 2012

R’ million

V&A

Jun 2012

R’ million

Balance at 1 Jul 2011 32 495 8 424 40 919 4 783

Acquisitions 3 & 19 575 2 283 2 858 -

Disposals 4 & 19 (644) (43) (687) -

Foreign exchange translation - 1 349 1 349 -

Developments and capital

expenditure

883

831

1 714

128

Sub-total 33 309 12 844 46 153 4 911

Fair value adjustment* 1 679 274 1 953 39

Balance at 30 Jun 2012 34 988 13 118 48 106 4 950

Long-term property assets 34 473 13 118 47 591 4 950

Properties held for sale 5 515 - 515 -

* Fair value adjustment represents 4.2% of investment property portfolio (excl V&A Waterfront)

15 BORROWINGS – LOAN TO

VALUE & INTEREST COVER RATIO

RSA

LTV (incl V&A) *

Interest cover ratio (incl V&A)

GOZ

LTV *

Interest cover ratio

NET ASSET VALUE & NET

TANGIBLE ASSET VALUE

times %

times %

NAV (Per linked unit consolidated)

NTAV (Per linked unit consolidated)

* Based on nominal value of interest bearing borrowings and net of

cash balances

1601 1499

1365

1638 1563

1444

0

200

400

600

800

1000

1200

1400

1600

1800

Jun 2012 Jun 2011 Jun 2010

Cents

33.9%

37.9%

29.9%

3.5 3.2 3.1

0

1

2

3

4

5

6

7

8

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Jun 2012 Jun 2011 Jun 2010

44.4%

55.4% 53.9%

2.2 1.9 1.7

0

1

2

3

4

5

6

7

8

0%

10%

20%

30%

40%

50%

60%

Jun 2012 Jun 2011 Jun 2010

16

BORROWINGS

Jun 2012

R’ million

% of total

RSA debt

Jun 2011

R’ million

% of total

RSA debt

RSA

Secured debt: 8 303 61.0% 11 249 78.9%

Bank debt 6 853 50.3% 8 080 56.7%

Institutional financier 1 450 10.7% 1 200 8.4%

CMBS - - 1 969 13.8%

Unsecured debt: 5 310 39.0% 3 000 21.1%

Bank debt 2 000 14.7% 2 000 14.1%

Corporate bonds 2 510 18.4% 1 000 7.0%

Commercial paper 800 5.9% - -

Total RSA debt 13 613 100.0% 14 249 100.0%

GOZ

Secured debt:

Bank debt 6 118* 4 844*

Consolidated debt 19 731 19 093 Note: Refer to Annexure 15 for a breakdown of debt

* Includes a cumulative foreign exchange difference of R1,1 billion (30 Jun 2011: R379,0 million)

17

BORROWINGS (CONT’D)

R750,0 million bond issue (GRT05) in Jan 2012 utilised for additional investment in GOZ

Total DRIP of R959,9 million utilised for acquisitions, capital expenditure and reduction

of debt

RSA: 83.1% (2011: 77.7%) of interest rates fixed for a weighted average of 4.9 years

(2011: 5.3 years)

Unutilised committed facilities (RSA) available of R2,1 billion

Growthpoint currently enjoys the following Moody’s ratings, with a stable outlook:

Global long-term Baa3

Global short-term P-3

National long-term A-2.za

National short-term P-2.za

Subsequent to 30 Jun 2012 :

R400 million commercial paper issue rolled and downscaled to R300,0 million at

JIBAR + 21 basis points

R400 million commercial paper issued rolled and upscaled to R500,0 million at

JIBAR + 21 basis points

19 OPERATIONAL

OVERVIEW

RSA

19

The P

lace, 1

Sandto

n D

rive, S

andto

n

SIMPLIFIED INCOME STATEMENT (EXTRACTS) RSA

Jun 2012

R’ million

Jun 2011

R’ million Increase

Gross property revenue 4 096 3 803 7.7%

Retail 1 441 1 374 4.9%

Office 1 712 1 555 10.1%

Industrial 943 874 7.9%

Property expenses (997) (948) 5.2%

Retail (401) (390) 2.8%

Office (390) (367) 6.3%

Industrial (206) (191) 7.9%



Net property income after operating expenses 2 971 2 754 7.9%

Finance costs (1 276) (950) 34.3%


Investment income from V&A 369 18 1950.0%

Investment income from V&A – non-distributable (76) - 100.0%

Other finance income 123 83 48.2%

Taxation (excl CGT and deferred tax) 2 (1) 300.0%

Profit before debenture interest 2 113 1 904 11.0%

Note:

50% interest in V&A Waterfront included for full year in Jun 2012 (Jun 2011: 23 days)

20

21

CONSOLIDATED OPERATIONS – RSA (EXCLUDING V&A)

Jun 2012 Jun 2011

Vacancies (%) 4.0% 5.0%

Total arrears (R’million) 32,6 34,8

Bad debts (R’million) 7,8 9,6

Average in force escalations (%) 8.4% 8.3%

Renewal success rate (%) 75.2% 65.8%

Weighted average renewal growth (%) 2.7% 3.1%

Weighted average future escalations on renewals (%) 8.1% 8.1%

Number of employees 457 456

Net Property Income per employee (R) 6 781 181 6 260 964

22

RSA - RETAIL Trading density growth remains above the IPD benchmark

notwithstanding construction activity at various centres

Rent/Turnover ratios are affordable, resulting in positive rent

reversions at renewal

Vacancies, due to redevelopments, will reduce significantly

with the completion of the redevelopment at Brooklyn Mall

Demand for space at Top 16 centres is robust with national

retailers seeking expansion opportunities

Entry of new international retailers to SA market provides

further opportunity to enhance tenant mix albeit we are not

expecting a massive inflow

Costs are under control but subject to pressure

Redevelopments/Refurbishments/Extensions: R780 million next

financial year (Brooklyn Mall, Kolonnade, River Square,

Northgate, Waterfall Mall and Walmer Park)

Vacancy:

Jun

2012

%

Jun

2011

%

Total portfolio 3.1 2.9

Top 10 centre vacancy 1.6 1.3

Balance of portfolio 4.4 4.3

Arrears: R’million R’million

Total 14,8 16,9

Bad debt provision 5,2 5,3

Renewals: % %

Renewal success rate 81.1 81.2

Renewal rental growth 6.7 3.5

Booklyn Mall, Pretoria

23

RSA - OFFICE Notwithstanding challenging market conditions, vacancies have

been reduced from 8.1% to 5.8%, significantly outperforming

the national average for Q2: 2012 of 10.5%

New letting of 108 119m² was achieved due to continued focus

by our teams and by offering attractive incentives to brokers

and tenants

142 665m² of leases expiring in the year were renewed,

improving the renewal success rate to 74.6%. The renewal

growth rate has been under pressure due to the tougher

market environment

Eight new developments and major redevelopments, totalling

44 634m² have been completed or are in progress. Two of the

developments achieved Green Star certifications from GBCSA

Arrears have been kept under control through continued

proactive credit control, ending the year at 5.4% of

collectables

Maximising rental growth, keeping costs under control and

exploring new acquisition and development opportunities will

be key future focus areas

Vacancy:

Jun

2012

%

Jun

2011

%



Total 10,9 8,2


Renewals: % %


Renewal rental growth (1.5) 2.1

Summer Square, Rivonia

24

RSA - INDUSTRIAL Trading conditions are sound. Contradicts negative factory

output data and sentiment

Continued positive demand for warehousing and distribution

facilities (>10 000m²)

Performance of mini and midi units still under

pressure. Highest vacancies and lowest growth

Increasing demand for manufacturing facilities

Vacancy levels expected to remain at current levels. Arrears

management remains key area of focus

New development enquiries increasing, however land prices

remain high

Utility costs and impact of rates increases remain an area of

concern

Strategy:

Pursue development opportunities on existing land holdings

Redevelop properties in key nodes

Pursue acquisition opportunities if financially viable

Dispose non-performing properties into “Seller’s” market

Vacancy:

Jun

2012

%

Jun

2011

%



Total 6,9 9,7


Renewals: % %


Renewal rental growth 4.0 7.1

Ellerines, Cape Town

25

AUSTRALIA – GOZ

33-3

9 R

ichm

ond R

oad,

Kesw

ick,

SA

OPERATIONAL OVERVIEW

25

26

Jun 2012

R’ million

Jun 2011

R’ million

Increase

Gross property revenue 1 011 607 66.6%

Property expenses (105) (53) 98.1%

Net property income 906 554 63.5%


Net property income after operating expenses 858 520 65.0%

Finance costs (401) (287) 39.7%


Adjustment for non-controlling interest, foreign

exchange difference and taxation (excl CGT and

deferred tax)

(184)

(71)

159.2%

Profit before debenture interest 282 168 67.9%

Distribution for the year 282 168 67.9%

Note:

Average exchange rate R8.01/AUD (2011: R6.91/AUD) for GOZ

The number of properties in Australia has increased from 37 in Jun 2011 to 41 in Jun 2012. Refer to Annexure 21 for net property income like for

like growth.

SIMPLIFIED INCOME STATEMENT (EXTRACTS) GOZ (100%)

27

GROWTHPOINT PROPERTIES AUSTRALIA – GOZ (CONT’D)

LARGER PROPERTY

PORTFOLIO/

GREATER

DIVERSIFICATION

STRONG

OPERATING

PERFORMANCE

CAPITAL

MANAGEMENT

Statutory profit: AUD49,5 million; 14.0% above FY2011

Distributable income: AUD57,7 million; 17.7 cps; 58.5% above FY2011

Distributions paid and provided of AUD57,4 million; 17.6 cps – above guidance & 2.9% above FY2011

result

All Group operating expenses, inclusive of interest expense, as a percentage of net property income

have reduced to 51% from 58% in the prior year

AUD1,6 billion of property assets

A concentration in office 47% of portfolio value and industrial 53% of portfolio value

Acquired, or contracted to acquire, 6 properties during FY2012, for a total price of AUD346,2 million

(before transaction costs), at an average initial yield of 8.9%

Greater diversification of tenants and geographic locations

Raised or issued equity in excess of AUD640 million over the last 3 years, driving over 250% growth of

the property portfolio

Recently introduced a distribution reinvestment plan

Debt facilities of the Group total AUD835 million, with an average duration of 3.5 years. No

refinancing requirement until December 2014

Cost of capital reducing over time – ASX price above NTA, whilst average cost of debt has fallen

(restructuring swaps plus incremental debt at lower rates)

28

GROWTHPOINT PROPERTIES AUSTRALIA – GOZ (CONT’D)

STRONG

FUNDAMENTALS FOR

PROPERTY & A-REIT

INVESTMENT

QUALITY

PROPERTY

PORTFOLIO

GOZ owns a diversified portfolio of modern, well leased office and industrial properties,

occupied by quality tenants, with a rising rental income

Limited lease expiry risk in the next 3 years: FY13 – 0.8%, FY14 – 7.5%, FY15 – 6.5% of rental

income

WALE: 7.2 years; Occupancy: 99.7%; WARR: 3.2%; WACR: 8.3%

Top 5 tenants: Woolworths, General Electric, Commonwealth Government, Coles Group and

Sinclair Knight Merz

Increase into office market with strategic positioning into Brisbane

Strong AUS economic growth has continued in FY12

There is a limited supply of new developments in major office and industrial markets. Tenants

seeking new quality accommodation have fewer choices

The spread between property yields or capitalisation rates and the long-term government bond

rate is historically high

A-REIT sector has outperformed other asset classes in the last 6 months. Domestic and global

investors are chasing “yield” and a safer haven for funds

29

OPERATIONAL OVERVIEW

V&A WATERFRONT

Victoria and Alfred Waterfront, Cape Town

30

SIMPLIFIED INCOME STATEMENT (EXTRACTS) V&A (50%)

Jun 2012

V&A

R’ million

Jun 2011

V&A

R’ million

Gross property revenue 412 25

Property expenses (107) (8)

Net property income 305 17

Other operating expenses (25) -

Net property income after operating expenses 280 17

Net finance income 12 1

Taxation (excl CGT and deferred tax) 1 -

Profit before debenture interest 293 18

Distribution for the year 293 18

Interest paid to Growthpoint 369 18

Interest paid to Growthpoint – exceeding distributable income (76) -

31

V&A WATERFRONT (CONT’D) RETAIL

Retail sales increased by 12.8% measured against the

comparative 12 month period

Footfall consistently strong with 2.5% growth for the year,

putting annual visitorship in excess of 21,9 million

Vacancies in the retail portfolio reduced from 11.8% at June

2011 to 4.6% at June 2012 following improved letting at the

Clock Tower after the refurbishment, whereby weaker retail

space was converted to office space. The Victoria Wharf

vacancy is at 1.9% following the letting of some large spaces

and is expected to reduce further following the take up of

remaining vacancies

OFFICE

Office vacancies have been reduced to 2.4% at June 2012 from

3.3% at June 2011 with just over 2 000m² remaining vacant

73% of re-developed Clock Tower has been let

Tenant retention is 100% for the period

The development of a 18 100m² office space in the Silo precinct

is under way for Allan Gray with completion expected in

September 2013

Vacancy:

Jun

2012

%

Jun

2011

%



Total 38,1 23,6


Renewals: % %

Renewal success rate 83.7 -

Renewal rental growth 2.7 -

32

V&A WATERFRONT (CONT’D) HOTEL

Reduced hotel occupancy levels and average rates per room

negatively impacted on turnover rental from the hotel and

leisure sector

The expectation is for this to improve slightly over the coming

12 months and we continue to work closely with the hotel

operators to help ease the current situation

INDUSTRIAL AND FISHING INDUSTRY

The industrial portfolio with it’s exposure to the fishing

industry remains stable with 100% occupancy during the period

The recent decision by Home Affairs banning cruise liners from

docking at the V&A was detrimental, however positive steps

are being taken to have this decision reversed and in the

meantime the focus has changed to target vessels servicing the

oil exploration and research industries

33

V&A WATERFRONT (CONT’D) DEVELOPMENT AND LEASING UPDATE

Allan Gray development currently on track for completion in

September 2013

Food court refurbishment to be completed early November

2012

A small residential development adjacent to the Allan Gray

office development to be launched early 2013

“Zara” opened on Friday, 17 August 2012 and is the first Zara

store to open in the Western Cape

Terms agreed with “Topshop” for the first Western Cape store

to open early in 2013

Lease signed with “Moyo” for a new concept design restaurant

in the old “Paulaner Brauhaus” space in the Clock Tower

precinct with opening scheduled for the Festive Season

First Food & Wine market known as “Market on the Wharf” to

open in the ex Musica space adjacent to Nobel Square

35

Retail Office Industrial GOZ Total V&A

Purchase price of acquisitions 424 146 5 2 283 2 858 -

Selling price of disposals 288 191 165 43 687 -

Developments and capex 174 350 359 831 1 714 128

Note: Refer to Annexures 3, 4 and 19 for yields on Acquisitions and Disposals

In aggregate, RSA properties sold at R1,0 million profit on book value and R184 million

profit on cost

RSA Properties (excl V&A) where amounts in excess of R30,0 million were spent on

development during the period include:

Brooklyn/Design Square 75% (retail) R36,2m

OK Empangeni (retail) R32,0m

Mayfair on the Lake (office) R55,0m

Grenville (industrial) R74,8m

Greenbushes (industrial) R72,4m

Growthpoint Industrial Estate (industrial) R33,9m

Adcock Ingram (industrial) R32,0m

ACQUISITIONS, DISPOSALS AND DEVELOPMENTS

36

Rosebank:

35 000m² office development near Rosebank Gautrain Station

Estimated development value – R700m

Commencement – will be tenant driven

DEVELOPMENTS

MTC:

6 700m² office development underway opposite

Midrand Gautrain Station

2 500m² let to Gautrain Management Agency

Development value – R105m

Completion – 31 May 2013

Lakeside Centurion:

25 000m² office development to be developed in

phases

Phase 1 underway – 5 000m²

Development value Phase 1 – R74m

Completion Phase 1 – 31 December 2012

37

RSA Sector R’ million

Commitments for developments

Brooklyn/Design Square, Brooklyn, Pretoria Retail 110,8

Waterfall Mall, Rustenburg Retail 215,8

Hatfield Festival, Hatfield, Pretoria Office 200,6

MTC, Midrand Office 98,8

Meadowbrook Estate, Meadowbrook, Germiston Industrial 81,5

Other below R50,0 million 203,1

TOTAL 910,6

Commitments for acquisitions

Menlyn Corner, Menlyn, Pretoria Office 213,0

Deloitte & Touche KZN, La Lucia Ridge, Durban Office 113,4

Willowbridge Office Park, Bellville, Cape Town Office 74,1


TOTAL 401,3

GOZ AUD’ million

Development commitments for Energex and Fox Sports Office 61,7

TOTAL 61,7

V&A R’ million

Allan Gray (Growthpoint’s 50% share) Office 207,6


TOTAL 222,8

COMMITMENTS

39

SUSTAINABILITY AND CSI

Sustainability:

Founding Member of the GBCSA

Pursuing Green Star accreditation in new developments with two “Four Star Green Star”

ratings achieved

Reducing resource consumption – energy efficiency projects focusing on LED retrofit and HVAC

resulted in savings of 10,4 million kWh

Exploring alternate clean energy sources – partnered with Eskom on rooftop solar project at

Lincoln on the Lake in Umhlanga Ridge resulting in generation capacity of 87,000 kWh per

annum

Carbon Disclosure – now the leading real estate player in Africa with a score of 83%

40

SUSTAINABILITY AND CSI (CONT’D)

CSI Initiatives:

Property Point – small business development programme that develops SMME’s in the property

sector. R80 million in procurement opportunities facilitated and 420 jobs created

Bursary programme – offered to students wanting to pursue a career in property through SAPOA

and Growthpoint directly

Growsmart – an inter-schools competition reaching over 60 000 learners promoting literacy

amongst scholars of the Western Cape – received a national award from the SACSC and 3

international awards from the ICSC, including one for the best CSI campaign globally

Bricks and Mortar Projects – We support infrastructure development projects in under

resourced communities. Projects include the Zikhuliseni Skills Centre in Diepsloot, the Zolile

Malindi Community Centre in Mfuleni and the Rylands Primary school hall in Cape Town

Staff Involvement Projects – “Helping and Loving Others” aka HALO is a charitable project run

by a committee of Growthpoint staff members. These staff give of their personal time to

assist charities and people in need, usually those that are lesser known and supported

42

PROSPECTS: RSA

Business confidence in South Africa is currently at a 12 year low

GDP growth prospects continue to be revised lower (2.7%) based on a weaker global

economic outlook, particularly in the Eurozone

Property “fundamentals” to remain solid, however “like for like” net property income

growth will come under pressure:

Consolidated vacancies are at 4.0%; unlikely to reduce much further

Debtors arrears levels are close to record lows at 6.5% of total monthly collectables; unlikely to

reduce much further

Property expense ratio at <25.0%; unlikely to reduce much further

Access to liquidity (debt and equity) remains good, although access to conventional

bank debt funding and the cost thereof will become more challenging with the

implementation of Basel III

Office sector to remain the weakest with very little growth in overall demand when

measured net of savings in space due to efficiencies

Early signs of positive yield spread emerging following the recent 0.5% cut in interest

rates, the strong performance in the listed property sector and the Growthpoint share

price in particular

43

PROSPECTS: RSA (CONT’D)

Focus on executing the Development Plan, completing existing developments and

identifying new ones

REIT legislation is anticipated to be promulgated in the first quarter of 2013 and it is

Growthpoint’s intention to convert into a REIT

Assuming current economic conditions continue, the growth in distribution per linked

unit for the year to 30 June 2013 is expected to be in line with that achieved in the

current year (this forecast has not been audited by the company’s auditors)

44

PROSPECTS: GOZ

Access to debt funding remains challenging with the four major Australian banks still

hesitant to lend and being concerned about single borrower limits

The Australian Corporate Bond market and debt capital markets are relatively

undeveloped compared to South Africa and currently not a viable alternative to bank

funding

Yields on good quality investment property are significantly higher than the cost of debt

(positive yield spread)

The economic outlook for Australia is still positive with projected GDP growth of 3.25%,

inflation at below 3% and bond yields and interest rates near all time lows

Historic vacancy and arrear levels are not sustainable as the portfolio has been

diversified from a few, large, single tenanted industrial buildings to include a number

of large multi-tenanted office buildings

Forecast distribution growth of 4% in AUD from 17.6 cents per stapled security for

FY2012 to 18.3 cents per stapled security for FY2013 whilst managing the payout ratio

to take into account capex requirements, portfolio metrics, prevailing financial

conditions and access to finance

Estimated distributable profit for the year ending 30 June 2013 is between 19.4 cents

and 19.8 cents per stapled security, suggesting a payout ratio of between 92% and 94%

45

PROSPECTS: V&A WATERFRONT

Overall development masterplan is taking shape

The perception that the V&A is “too expensive” and that major corporates “can’t

afford” to be in the V&A is incorrect

V&A is “Open for Business” in respect of development, redevelopment and investment

however activity is constrained by weak demand for office space and weak residential

demand

Actively pursuing single occupancy office tenants and development opportunities

Whilst the Link Mall lease renewal process has been completed resulting in 3 vacancies

and “better than expected” outcome on reversions, demand for good retail space

remains very strong

Net distributable income from the V&A is expected to increase by circa 7

48

CONTENT

Annexure 1 – Growthpoint’s Property Portfolio

Annexure 2 – Split of RSA Property Portfolio (Excl V&A)

Annexure 3 – Acquisitions RSA (Excl V&A)

Annexure 4 – Disposals RSA (Excl V&A)

Annexure 5 – Non-Current Assets Held for Sale

Annexure 6 – Top 12 RSA Retail Properties by Value (Excl V&A)

Annexure 7 – Top 12 RSA Office Properties by Value (Excl V&A)

Annexure 8 – Top 12 RSA Industrial Properties by Value (Excl V&A)

Annexure 9 – Net Property Income Analysis RSA (Excl V&A)

Annexure 10 – GLA and Vacancy Reconciliation RSA (Excl V&A)

Annexure 11 – Lease Expiry by Sector RSA (% of GLA)

Annexure 12 – Lease Expiry by Sector RSA (% of Gross Monthly Rental)

Annexure 13 – Unitholders Holding > 1% at June 2012

49

CONTENT (CONT’D)

Annexure 14 – Linked Units Issued

Annexure 15 – Detailed Borrowings

Annexure 16 – Debt Expiry Profile RSA

Annexure 17 – Fixed Interest Rate Expiry Profile for RSA borrowings

Annexure 18 – Split of GOZ Property Portfolio

Annexure 19 - Acquisitions and Disposals – GOZ

Annexure 20 – Top 12 GOZ Properties by Value

Annexure 21 – Net Property Income Analysis GOZ

Annexure 22 - GLA and Vacancy reconciliation GOZ

Annexure 23 - Lease expiry by sector GOZ

Annexure 24 – Split of V&A Property Portfolio

Annexure 25 – GLA and Vacancy Reconciliation V&A

Annexure 26 – Lease expiry by sector V&A

50

ANNEXURE 1 - GROWTHPOINT’S PROPERTY PORTFOLIO

Retail

Office

Industrial

RSA

Total

GOZ*

V&A*

Number of properties 47 130 226 403 41 1

GLA (m²) 975 373 1 156 944 2 219 781 4 352 098 900 676 192 086

Vacancy (m²) 30 215 66 736 75 810 172 761 2 291 3 088

Vacancy (%) 3.1% 5.8% 3.4% 4.0% 0.3% 1.6%

Valuation (R’m) 13 145 14 592 7 251 34 988 13 118 4 950

Value per m² (excl bulk) 13 462 12 363 3 222 7 947 14 565 22 880

Average gross rental (per m²/month) R122 R115 R36 R76 AUD 142** R152

Forward yield 8.7% 9.3% 11.0% 9.4% 8.5% 7.2%

Average in force escalations 7.7% 8.8% 8.7% 8.4% 3.2% 8.5%

Weighted average lease period (years):

- By gross rental 3.2 4.4 3.0 3.7 7.2 5.0***

- Excluding Investec - 3.3 - 3.2 - -

Renewal success rate 81.1% 74.6% 74.0% 75.2% 100.0% 83.7%

Weighted average renewal growth 6.7% (1.5%) 4.0% 2.7% 6.1% 2.7%

Weighted average future escalations on

renewals

8.1% 8.6% 8.6% 8.1% 3.6% 7.6%

Note:

* V&A is included reflecting Growthpoint’s 50% interest, GOZ is reflected at 100%

** Based on net rental per annum

*** Various leases in the V&A were excluded in the average lease period calculation. When these leases are included the average lease period

increases to 10.9 years

51 ANNEXURE 2 - SPLIT OF RSA PROPERTY PORTFOLIO

(EXCL V&A)

Value

GLA

Value

GLA

Retail

Office

Industrial

55%

18%

8%

13%

3% 1% 2%

22%

27%

51%

37%

42%

21%

Eastern Cape

Other

Greater JHB

Western Cape

Pretoria

KwaZulu-Natal

North West

50%

20%

11%

10%

4% 3%

2%

52

ANNEXURE 3 - ACQUISITIONS RSA (EXCL V&A)

Purchase

Price

R’ million Sector

Alberton City * 423,8 Retail

Ernst & Young ** 71,6 Office

144 Oxford Road, Rosebank 43,3 Office

Merck Longmeadow ** 10,7 Office

Other below R10,0 million 25,1 -

574,5

* Additional 64.3% acquired, Growthpoint now owns 100%

** Payment for rights to cancel bare dominium structures

53

ANNEXURE 4 - DISPOSALS RSA (EXCL V&A)

Selling

price

R’ million Sector

Profit/

(loss) on

cost

Profit/

(loss) on

book value Yield

Brooklyn/Design Square (7% sold),

Pretoria

120,3 Retail 54,9 - -

Ruimsig Shopping Centre, Roodepoort 73,0 Retail 6,2 (0,1) 8.9%

Bronkhorstspruit Mall, Bronkhorstpruit 44,1 Retail 27,7 - 9.9%

Otjiwarongo, Namibia 28,4 Retail 14,2 0,2 11.4%

The Gallery, Milnerton 22,5 Retail (21,8) (0,2) 11.0%

Meersig, Centurion 73,0 Office 37,1 (0,1) 9.1%

Hatfield Festival * 23,2 Office - - -

ABSA Bruma, Bruma Lake 23,0 Office 6,2 (1,9) 9.4%

The Ridge, Parktown 33,6 Office 15,2 - 10.4%

Other Office below R20,0 million

(3 properties)

38,1 Office 10,4 1,2 -

Chamberlain, Durban 33,3 Industrial 8,3 0,1 13.3%

Metro Cash & Carry, East London 20,0 Industrial (2,1) (0,6) 7.6%

Other Industrial below R20,0 million

(11 properties)

111,1 Industrial 27,3 2,1 -

643,6 183,6 0,7

* Vacant land

54

ANNEXURE 5 – NON-CURRENT ASSETS HELD FOR SALE

Properties held for sale

Sector

Fair value

Jun 2012

R’ million

Northcliff Square Shopping Centre, Northcliff Retail 40,0

ABSA Midrand, Midrand Office 118,0

Metropark, CBD Pretoria Office 78,0

174 Visagie Street, CBD Pretoria Office 47,6

115 Paul Kruger Street, CBD Pretoria Office 36,2

ABSA Cash Centre, Westway, Westville Office 28,8

La Rocca, Bryanston Office 27,8

Itas House, Meyersdal Office 15,4

Emerson Network Power Building, Sunninghill Office 13,7

Galileo House, Bruma Office 13,6

Oakhill Building, Fourways Office 13,1

ABSA Goodwood, Goodwood Office 11,2

Montclare Residential Units, Cape Town Residential 1,3

Amalgam South, Crown Mines Industrial 43,6

Fitzmaurice, Epping * Industrial 27,0

Total 515,3

* Subdivided portion

55 ANNEXURE 6 - TOP 12 RSA RETAIL PROPERTIES BY

VALUE (EXCL V&A)

Building Fair value R’ million

GLA m²

1 Brooklyn/Design Square (75%), Brooklyn, Pretoria 1 538 54 181*

2 Waterfall Mall, Rustenburg 1 044 49 268

3 Lakeside Mall, Benoni 980 67 578

4 La Lucia Mall, La Lucia, Durban 874 36 343

5 Kolonnade (50%), Montana Park, Pretoria 714 36 355*

6 Alberton City, Alberton 671 49 295

7 Walmer Park Shopping Centre, Walmer Park, Port Elizabeth 664 38 317

8 The Constantia Village, Constantia, Cape Town 649 20 395

9 Northgate (50%), Randburg 639 45 286*

10 Woodmead Retail Park, Woodmead, Johannesburg 620 54 891

11 River Square Shopping Centre, Three Rivers, Vereeniging 515 38 904

12 Golden Acre, CBD Cape Town 442 33 686

Subtotal 9 350 524 499

35 Balance of the sector 3 795 450 874

47 Total for the RSA sector 13 145 975 373

* GLA reflected is the % undivided share held by Growthpoint

Value

GLA

Top 12 Properties

Balance of Retail Properties

Top 12 Properties

Balance of Retail Properties

71.1%

28.9%

53.8%

46.2%

56 ANNEXURE 7 - TOP 12 RSA OFFICE PROPERTIES BY

VALUE (EXCL V&A)


GLA m²

1 Investec, Sandton 1 893 70 945

2 The Place, Sandton 826 33 979

3 Constantia Office Park, Roodepoort 779 71 955

4 Montclare Place, Claremont, Cape Town 483 29 446

5 Growthpoint Business Park, Midrand 429 62 966

6 36 Hans Strijdom Avenue, Cape Town 339 12 836

7 Central Park, Midrand 317 34 060

8 Hatfield Gardens, Hatfield, Pretoria 314 25 556

9 N1 City Hospital, Goodwood, Cape Town 310 14 022

10 Sunnyside Ridge Office Park, Parktown, Johannesburg 268 29 571

11 The District, Woodstock, Cape Town 234 18 413

12 Fredman Towers, Sandton 228 15 005

Subtotal 6 420 418 754


130 Total for the RSA sector 14 592 1 156 944

Value

GLA

44.0%

56.0%

36.2%

63.8%

Top 12 Properties

Balance of Office Properties

Top 12 Properties

Balance of Office Properties

57 ANNEXURE 8 - TOP 12 RSA INDUSTRIAL PROPERTIES

BY VALUE (EXCL V&A)


GLA m²

1 Growthpoint Industrial Estate, Meadowdale, Germiston 353 59 166

2 Hilltop Industrial Estate, Elandsfontein 173 69 571

3 Adcock Ingram, Midrand 172 21 536

4 Central Park, Elsiesriver, Cape Town 122 49 135

5 Grenville, Epping, Cape Town 120 16 220

6 Omni Park, Aeroton, Johannesburg 113 40 527

7 Pine Industrial Park, New Germany 110 39 150

8 226 Brakpan Road, Boksburg 100 40 300

9 Kulingile Building, Isando, Kempton Park 96 49 000

10 Midas Meadowdale, Germiston 93 18 981

11 Greenbushes, Port Elizabeth 92 13 539

12 Maitland Industrial Park, Maitland, Cape Town 87 27 961

Subtotal 1 631 445 086

214 Balance of the sector 5 620 1 774 696

226 Total for the RSA sector 7 251 2 219 782

Value

GLA

22.5%

77.5%

20.1%

79.9%

Top 12 Properties

Balance of Industrial Properties

Top 12 Properties

Balance of Industrial Properties

58 ANNEXURE 9 – NET PROPERTY INCOME ANALYSIS RSA

(EXCL V&A)

Jun 2012

R’ million

Jun 2011

R’ million

Increase


Adjustments:

Acquisitions & Developments (234) (78)

Disposals (22) (145)

Investec rent (227) (205)

Adjusted “like for like” net property

income 2 616 2 427 7.8%

Retail 919 857 7.2%

Office 1 028 948 8.4%

Industrial 669 622 7.6%

Total 2 616 2 427 7.8%

59 ANNEXURE 10 – GLA AND VACANCY RECONCILIATION

RSA (EXCL V&A)

Total GLA

(m²)

Vacant

area

(m²)

Vacancy

Balance at 1 Jul 2011 4 390 073 220 003 5.0%

GLA adjustments (6 380) 4 107

Disposals (126 258) (22 133)

Acquisitions 32 175 864

Developments and extensions 62 488 -

Leases expired in the period * 901 815

Renewals of expired leases ** (678 195)

New letting of vacant space (362 949)

Leases terminated 109 249

Balance at 30 Jun 2012 4 352 098 172 761 4.0%

* 20.5% of opening balance GLA expired during the year under review

** Retention % of 75.2% compared to 65.8% for the year to Jun 2011

60 ANNEXURE 11 – LEASE EXPIRY BY SECTOR RSA (% OF GLA)

RETAIL OFFICE INDUSTRIAL

%

19.2

7.5

11.8

17.7

21.7

16.1

2.9

3.1

17.1

10.1

9.9

17.6

19.6

16.1

3.8

5.8

8.6

12

12.9

15.7

24.6

21.2

1.6

3.4

TOTAL 13.2

TOTAL 10.5

TOTAL 11.8

TOTAL 16.7

TOTAL 22.6

TOTAL 18.7

TOTAL 2.5

TOTAL 4.0

2017-beyond

By June-17

By June-16

By June-15

By June-14

By June-13

Monthly

Vacant

61 ANNEXURE 12 – LEASE EXPIRY BY SECTOR RSA

(% OF GROSS MONTHLY RENTAL)

%

RETAIL OFFICE INDUSTRIAL

12.9

7.2

12.1

18.6

23.4

19.5

3.3

3.0

26.5

8.3

9.2

14.6

17.6

15.4

3.8

4.6

9.9

8.9

11.3

16.9

24.7

23.1

1.9

3.3

TOTAL 17.5

TOTAL 8.0

TOTAL 10.8

TOTAL 16.6

TOTAL 21.4

TOTAL 18.8

TOTAL 3.2

TOTAL 3.7

2017-beyond

By June-17

By June-16

By June-15

By June-14

By June-13

Monthly

Vacant

62 ANNEXURE 13 – UNITHOLDERS HOLDING >1% AT JUNE 2012

Name

Units held

Holding

Public Investment Corporation 418 064 821 24.0%

BEE Consortia 122 000 000 7.0%

Stanlib 104 471 356 6.0%

Old Mutual Group 77 717 711 4.5%

Investec 64 324 683 3.7%

Eskom Pension & Provident Fund 52 172 282 3.0%

Investment Solutions 46 249 747 2.7%

Vanguard 43 857 190 2.5%

Prudential 30 942 900 1.8%

Momentum 30 646 140 1.8%

Sanlam Group 29 523 361 1.7%

Liberty Group 27 851 232 1.6%

Transnet Retirement Funds 25 432 109 1.5%

Coronation Fund Managers 18 177 440 1.0%

Total unitholders holding >1% 1 091 430 972 62.8%

Other 651 649 946 37.2%

Total 1 743 080 918 100.0%

Foreign unitholding 15.3%

63

ANNEXURE 14 – LINKED UNITS ISSUED

Linked units

Opening balance 1 Jul 2011 1 591 971 441

Equity raising (Jul 2011) 100 000 000

Distribution reinvestment (Sep 2011) 9 395 001

Distribution reinvestment (Mar 2012) 41 714 476

Closing balance 30 Jun 2012 1 743 080 918

64

ANNEXURE 15 – DETAILED BORROWINGS

RSA

Refinance

Date

Jun 2012

R’ million

Jun 2011

R’ million

Commercial paper – 3 months (R400m x 2) Jul/Aug 2012 800

ABSA Nov 2012 695

Nedbank Sep 2013 2 000

Standard Bank/Sanlam Dec 2013 1 000

Standard Bank Feb 2014 800

China Construction Bank Aug 2014 250

Corporate Bond – GRT 01 Dec 2014 500

Corporate Bond – GRT 05 Jan 2015 750

ABSA – Paramount Feb 2015 740

RMB Jun 2015 500

Corporate Bond – GRT 03 Oct 2015 500

Corporate Bond – GRT 02 May 2016 500

Corporate Bond – GRT 04 Sep 2016 260

RMB Jun 2017 1 000

RMB Feb 2018 675

RMB – Paramount Apr 2018 740

OMSFIN May 2021 1 200

Investec Buildings loan Feb 2024 703

Total 13 613 14 249

Weighted average interest rate 9.5%

% of debt at fixed interest rate 83.1%

GOZ *

Westpac, NAB, ANZ (weighted average interest rate of 7.3%) 6 118

Total 6 118 4 844 * Includes a cumulative foreign exchange difference of R1,1 billion (30 Jun 2011: R379,0 million)

65

ANNEXURE 16 – DEBT EXPIRY PROFILE RSA

Debt expiry at 30 June 2012 per 12 month period

11%

28%

20%

7%

9%

11%

0% 0%

9%

0% 0%

5%

0%

5%

10%

15%

20%

25%

30%

2012-1

3

2013-1

4

2014-1

5

2015-1

6

2016-1

7

2017-1

8

2018-1

9

2019-2

0

2020-2

1

2021-2

2

2022-2

3

2023-2

4

%

Fixed interest rate expiry at 30 June 2012 per 12 month period

66 ANNEXURE 17 – FIXED INTEREST RATE EXPIRY PROFILE

FOR RSA BORROWINGS

R’m

2,299

1,000

318

905 952

2,212

1,915

650

500

2,159

- -

703

-

500

1,000

1,500

2,000

2,500

Flo

ati

ng

2012-1

3

2013-1

4

2014-1

5

2015-1

6

2016-1

7

2017-1

8

2018-1

9

2019-2

0

2020-2

1

2021-2

2

2022-2

3

2023-2

4

67

ANNEXURE 18 - SPLIT OF GOZ PROPERTY PORTFOLIO

GLA Net property

income

Industrial

Office

Value Value

84%

16%

40%

30%

9%

8%

7%

4% 2%

Western Australia

Tasmania

Queensland

Victoria

South Australia

New South Wales

ACT

53% 47%

Industrial

Office

35%

65%

68

ANNEXURE 19 - ACQUISITIONS AND DISPOSALS - GOZ

Acquisitions Sector R’ million

AUD’

million Yield

333 Ann Street, Brisbane, QLD Office 960,7 116,1 9.1%

CB 1, South Brisbane, QLD Office 560,9 67,8 8.9%

CB 2, South Brisbane, QLD Office 284,5 34,4 7.8%

219 – 247 Pacific Highway, NSW* Office 3,3 0,4 8.1%

10 - 12 Mort Street, Canberra, ACT Office 466,2 55,8 9.6%

Botanicca Carpark, Richmond, VIC** Carpark 7,8 1,0 -

2 283,4 275,5 -

Note:

* Only land value of development project acquired

** Consolidated into a current property

Disposals Sector R’ million

AUD’

million Yield

1304 Ferntree Gully Road, Scoresby, VIC Industrial 42,8 5,2 7.2%

42,8 5,2

33 A

nne S

treet,

Bri

sbane,

QLD

CB1 &

CB2,

SW

1 S

outh

Bri

sbane

219-2

47 P

acif

ic H

ighw

ay A

rtarm

on

10-1

2 M

ort

Str

eet,

Canberr

a

69

Building Sector Fair value R’ million

GLA m²

1 70 Distribution Street, Larapinta, QLD Industrial 1 328 75 425

2 333 Ann Street, Brisbane, QLD Office 972 16 476

3 2 Horrie Miller Drive, Perth Airport, WA Industrial 927 80 374

4 572-576 Swan Street, Richmond, VIC Office 626 14 660

5 134 Lillkar Road, Goulburn, NSW Industrial 593 42 826

6 28 Bilston Drive, Wodonga, VIC Industrial 589 57 440

7 CB1, 100 Melbourne Street, South Brisbane, QLD Office 568 11 561

8 52 Merivale Street, South Brisbane, QLD Office 543 9 453

9 120 Northcorp Boulevard, Broadmeadows, VIC Industrial 535 58 320

10 32 Cordelia Street, South Brisbane, QLD Office 535 10 125

11 599 Main North Road, Gepps Cross, SA Industrial 476 67 238

12 42 10-12 Mort Street, Canberra, ACT Office 466 15 398

Subtotal 8 158 459 296


41 Total for the GOZ sector 13 118 900 676

Value

GLA

ANNEXURE 20 – TOP 12 GOZ PROPERTIES BY VALUE

62.2%

37.8%

49.0%

51.0%

Top 12 Properties

Balance of GOZ Properties

Top 12 Properties

Balance of GOZ Properties

70

Jun 2012

AUD’000

Jun 2011

AUD’000 Increase


Adjustments:

Unallocated once off adjustments - (399)

Acquisitions (43 838) (13 127)

Disposals (294) (2 561)

Adjusted “like for like” net property income 64 810 63 115 2.7%

Office - - -

Industrial 64 810 63 115 2.7%

Total 64 810 63 115 2.7%

ANNEXURE 21 – NET PROPERTY INCOME ANALYSIS GOZ

70 Distribution Street, Larapinta, QLD

71

Total

GLA

(m²)

Vacant

(m²) Vacancy

Balance at 1 July 2011 843 964 29 0.0%

GLA adjustments 164 -

Disposals (7 621) -

Acquisitions, developments and extensions 64 169 1 395

Leases expired in the period - -

Renewals of expired leases - -

New letting of vacant space - -

Leases terminated - 867

Balance at 30 June 2012 900 676 2 291 0.3%

ANNEXURE 22 – GLA AND VACANCY RECONCILIATION GOZ

572-576 Swan St, Richmond, VIC 33-39 Richmond Road, Keswick, SA

72

ANNEXURE 23 – LEASE EXPIRY BY SECTOR GOZ

% of GLA % of gross monthly rental

Office

Industrial

2

12 8 9

13

56

1 5

0

5 8

81

0

10

20

30

40

50

60

70

80

90

100

2

11 12 10

12

53

4 1

4 5

86

0

10

20

30

40

50

60

70

80

90

100

73

ANNEXURE 24 - SPLIT OF V&A PROPERTY PORTFOLIO

Property portfolio

by value

Property portfolio

by GLA

87%

13%

54%

20%

14%

12%

Developed vs

undeveloped by value Net property

income

55%

16%

7%

9%

13% 23%

23% 32%

22%

Developed

Undeveloped

Bulk

Retail

Office

Fishing & Industrial

Hotel

Bulk

Retail

Office


Hotel

74 ANNEXURE 25 – GLA AND VACANCY RECONCILIATION V&A

50% of GLA

(m²)

Vacant

(m²) Vacancy

Balance at 1 Jul 2011 191 918 6 732 3.5%

GLA adjustments - (1 130)

Disposals - -

Developments and extensions 168 -

Leases expired in the period * - 11 673

Renewals of expired leases ** - (9 770)

New letting of vacant space - (5 042)

Leases terminated - 625

Balance at 30 Jun 2012 192 086 2 924 1.6%

* 3.7% of opening balance GLA expired during the year under review

** Retention of 83.7% for the year to Jun 2012

75

ANNEXURE 26 – LEASE EXPIRY BY SECTOR V&A

% of GLA % of gross monthly rental

Office

Retail


Hotel

2

21

4 7

12 13

41

5

16

12

16

8

19

24

14

5

10

71

14

1

85

0

10

20

30

40

50

60

70

80

90

100

11

2 3 2

7

75

20

15 16 13

17 19

34

18

1

17

30

1

99

0

10

20

30

40

50

60

70

80

90

100

Introduction and Highlights - Growthpoint Statements/FINAL... · Introduction and Highlights...

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