year in review - investec property€¦ · year in review 2. core strategy 3. financial review 4....

Specialist Banking | Asset Management | Wealth & Investment

SOUTH AFRICA

RESULTS

PRESENTATIONFOR THE YEAR ENDED

31 MARCH 2019

2

1. Year in review

2. Core strategy

3. Financial review

4. SA property portfolio and investments

5. Foreign investments

6. Pan-European light industrial platform

7. Balance sheet management

8. Capital allocation

9. Projects

10. Capital expenditure and sustainability

11. Looking forward

12. Annexures

Contents

YEAR IN REVIEW

4

• Macro-economic environment remains challenging - expectation of further deterioration into FY2020

• Edcon rental concession agreed – no impact on FY2019 but will impact FY2020 dividend growth by

1%

• Agreed share repurchase by Ingenuity of their shares for R124m, subject to ING shareholder

approval

› will deliver a 29% profit and provides clarity to shareholders

• R0.5 billion of South African property sold during the year and R0.6 billion earmarked

to be recycled to reduce leverage or support European expansion activity

• Completed R3.7bn bank refinancing, refinancing all bank debt maturing within the next two years

and opportunistically refinancing some longer-term debt on more attractive terms

• Management changes – Joint CEO’s and new CFO

• Initial investment into Pan-European Logistics platform in May 2018 - €150m capital commitment

› €83.7m deployed to date to acquire a 42.9% interest in a portfolio of 25 logistics properties

with gross asset value of €515.8m

• Entered into agreement to invest up to €64.5m into Pan European light industrial platform

› initial portfolio of 21 properties of which 4 assets acquired to date and 17 identified

› complements existing European logistics strategy, provides further offshore exposure and

delivers earnings accretion for shareholders

• Potential sell down of 10% of IAPF announced post year end

› c.10% interest remaining if all units placed

Year in review

FY19 key events

4

5

• Complementary skills make for a stronger management team, particularly in the current tough operating

environment

• Property fundamentalist and finance specialist coming together – opportunity to exploit synergies

• Mutual trust, respect and discipline amongst leadership team within a culture of collaboration

• Supported by experienced board of directors comprised of both property and financial / business skills

Darryl Mayers (54), Joint-CEO

• South African portfolio

• Development projects

• Marketing and client

experience

New executive leadership teamMore than the sum of the parts

5

Custodians of the team’s culture and values

"Though younger and potentially less

experienced than management teams

of the more established REITS, the

team is solid and introduces new blood,

ideas and energy to the company"

"Though the management is new and

untested, the greater team and board

provide a solid underpin to the strategy

and operations of the company"

Blend of experience to manage

and grow business in complex

and challenging environment…Andrew Wooler (37), Joint-CEO

• Previous CFO

• Offshore investments

• Capital allocation

• M&A activity

Jenna Sprenger (33), CFO

• Finance

• Treasury

• Balance sheet management

61. Excluding 3.1cps IAPF once off rights offer dividend

2. Including strategic development vacancy 3.0% (Mar 2018: 4.8%)

Highlights – FY2019Good performance in challenging environment

6

5.1%normalised full year

distribution growth

0.8%like-for-like net property

income growth

2.8 yearsWeighted Average

Lease Expiry (WALE)

142.3 cents per share

(Mar 2018: 135.4 cps)¹ (Mar 2018: 5.7%) (Mar 2018: 3.3 years)4.8% growth

18.8%net cost to income ratio

94.2%of space expired

in the period renewed

or re-let

73.5 cents per share

(Mar 2018: 70.2 cps)

(Mar 2018: 16.8%) (Mar 2018: 73.0%)

16.4% p.a.total return to

shareholders

since listing

2.4%vacancy²

(Mar 2018: 4.0%)

H2 distribution

7

Highlights – FY2019Performance underpinned by offshore investments

7

7.9%all-in cost of funding

decreased

84.0%interest rate exposure

hedged

3.9%increase in net asset value

driven by performance of

offshore investments

(Mar 2018: 8.6%)

Swap expiry extended

to 3.4 years

35.9% gearing

Focused strategy

to bring below 35% 84.8% South Africa

(Mar 2018: 32.6%)

EUR 26.0%total return

from PEL portfolio

Balance sheet composition

15.2% Offshore

11.6% income yield

14.4% capital uplift

CORE STRATEGY

9

What’s our PURPOSE?

What’s our MISSION?

To be recognised as

South Africa’s

leading REIT…

Purpose and missionTo be recognised as South Africa’s leading REIT…

9

Who are we?

• IPF is a very strong brand

with an excellent reputation,

a legacy to preserve and an

exciting future to craft

• Property purists – team with

extensive property skills

and experience

Combining the physical

with the sensory

• Deep-rooted understanding and

hands-on skills of how to unlock

the potential of space

• Client centric approach – how IPF

operates in this space is not easily

replicated, and it is a key differentiator

Client experience is everything

Size counts… BUT

1. For the right assets

2. Premised on the fact that bigger isn't better, BETTER is BETTER!

10

Strategic pillarsBusiness underpinned by core philosophy Deliver sustainable long-term returns by…

…ensuring

best of breed assets

…focusing on

client experience

as a key differentiator

…unlocking

the potential of space

Revenue security

and growth

Client service

excellence

Value add asset

management and

capital allocation

Cost efficiency

and system

optimisation

• Early engagement

• Solutions based

• Proactive asset

management

• Delivering an out of the

ordinary experience

• Differentiating IPF in a

commoditized

environment

• Understanding of and

delivering on client needs

• Best of breed assets

• Positioning the portfolio

for growth

• Active capital recycling

• Proactive balance sheet

management

• Diversified investment

base

• Maximise returns on a

long-term risk-adjusted

basis

• Speed and agility

• Margin preservation

• Controllable costs tightly

managed

11

Operational strategyAdhered to stated strategy in accomplishing FY2019 achievements…

01Property

purists

• Focus on the basics

• Passionate team with extensive

property skills and experience

02Focus on long-term

value creation

• Always underpinned by property

fundamentals

• Focus on quality

03People

on the ground

• Invest where we have local

expertise, whether locally or

offshore

04Remain

opportunistic

• Culture of entrepreneurship and

agility

05Strategic offshore

platforms

• Provide optionality

• Build platforms where we have access

• Look to exert control over time

06M&A and balance

sheet management

• Conservative approach in volatile

economic environment

• Adds value to property operations

• Enables us to be opportunistic

07Disciplined approach to capital

allocation and asset recycling

• Across platforms and individual assets

• Property matrix

11

12

Balance sheet constructBalance sheet remains diversified across SA & developed markets (85% SA focused)

March 2019

Rm % of total

Pro forma

for Q1 FY20

acquisitions

and disposals¹

(% of total)

Pro forma

for full

deployment

into

Pan-European

strategy²

(% of total)

SA Investment property 17 284 82.7 83.2 77.1

Ingenuity 133 0.6 - -

Izandla 306 1.5 1.5 1.4

South African assets 17 723 84.8 84.7 78.5

Investec Australia Property

Fund1 272 6.1 3.3 3.1

Investec Argo UK 223 1.1 1.1 1.0

PEL portfolio 1 686 8.0 10.2 12.8

Pan-European light

industrial portfolio- - 0.8 4.6

Offshore assets 3 180 15.2 15.3 21.5

Total Investments 20 903 100 100 100

1. Includes pro form adjustments for (a) disposal of Ingenuity (b) sell down of c.45m shares in IAPF at low end of offer range at offer price of A$1.30 (c) assumed further €26.7m investment into Pan-European Logistics platform

to fund identified pipeline (refer to slide 31) and (d) €10.2m investment in Pan-European light industrial platform as announced on SENS on 3 May 2019

2. Includes full deployment of a further (a) €47.4m into Logistics platform and (b) €54.3m into light industrial platform to satisfy full commitments of €150m and €64.5m respectively

FINANCIAL REVIEW

14

Distribution statement5.1% normalised full year DPS growth (2.7% total DPS growth)

14

Mar 2019

Rm

Mar 2018

Rm

±

%

Net property income (excl. straight lining) 1 471.9 1 507.2 (2.3)⁵

Base net property income (‘NPI’) 1 352.1 1 341.2 0.8

Acquisitions and disposals 119.8 166.0 (27.8)

Income from investments¹ 278.7 137.7 102.4

Notional cost of Ingenuity funding 8.8 7.6 (15.7)

Other operating expenses² (95.6) (72.6) (31.7)

Net finance costs (600.1) (570.6) (5.2)

Izandla JPIK interest not received³ (10.5) (0.8) (1 208.1)

Antecedent dividend 1.6 2.9 (46.4)

Taxation (net of deferred tax) ⁴ (6.8) (7.0) 2.9

Net distribution income 1047.9 1 004.4 4.3

Number of shares 736.3 731.4 0.7

Final dividend per share (cents) 73.5 70.2 4.7

Interim dividend per share (cents) 68.8 68.4 0.6

Total dividend per share (cents) 142.3 138.5 2.7

IAPF once-off rights offer dividend (cents) - (3.10) (100.0)

Core dividend per share (cents) 142.3 135.4 5.1

1. Includes income from new investments into PEL portfolio (R124.7m) and Izandla (R34.7m)

2. Other operating expenses comprise Fund expenses and the management fee. The increase is due to the management fee as enterprise value increased

and the Zenprop discount reduced

3. Prior year included only one month of interest (Izandla transaction took place in Feb 2018)

4. Tax included in the distribution recon relates to withholding tax on the IAPF dividend

5. NPI decreased as a result of the sale of properties to Izandla at the end of the prior year, as well as the sale of four properties in the current year

15

Dividend bridgePEL platform – key contributor to growth

982

1,048

125 11

326

(46)

(30)(23)

FY18normaliseddistribution

PELplatformrevenue

Base NPIgrowth

Acquisitionsand disposals

NPI

IAPF Net financecosts

Operatingcosts

Other¹ FY19distribution

Rm

1Includes Izandla revenue, UK Fund, antecedent dividend, Ingenuity and taxation

16

Summarised income statementSignificant fair value gains achieved on investments

16

Mar 2019

Rm

Mar 2018

Rm

±

%

Net property income

(incl. straight line adjustment)1 503.9 1 559.9 (3.6)

Other operating expenses¹ (95.6) (72.6) (31.7)

Fair value adjustments 356.8 233.4 57.0

Mark-to-market – derivatives² (53.7) (12.6) (326.1)

Foreign exchange translation (39.5) 7.1 (654.3)

Mark-to-market – investment property³ (15.5) 475.9 (103.3)

Mark-to-market – investments⁴ 226.2 (239.7) 194.4

Mark-to-market – PEL portfolio⁵ 259.2 - 100.0

(Loss) / profit on sale of investment property (19.9) 2.7 (836.9)

Net finance costs (600.1) (570.6) (5.2)

Income from investments 276.2 107.5 157.0

Taxation6 (15.2) (9.9) (53.8)

Accounting profit after tax 1 426.0 1 247.7 14.3

1. Increased due to increase in management fees linked to Zenprop ratchet

2. The negative mark-to-market on derivatives is driven by the weakness of the Rand on cross currency swaps

3. Downward revaluation during the year of R16m due to current environment

4. Mark-to-market in investments comprises an increase in IAPF of R220m, Ingenuity of R16m and an impairment of Izandla investment of R30m

5. As a result of property revaluations on the underlying portfolio of 12.5%

6. Taxation is made up of IAPF withholding tax of R6.8m and deferred tax raised on the fair value gain through profit and loss on Ingenuity and the U.K. investment

17

Summarised balance sheetGrowth in asset value driven by offshore investment

17

Mar 2019

Rm

Mar 2018

Rm %

Property related investments 20 903.4 19 164.1 9.1

South Africa1 17 284.2 17 598.9 (1.8)

IAPF2 1 271.9 1 051.5 21.0

UK 222.5 191.8 16.0

Europe3 1 685.8 - 100.0

Ingenuity4 133.0 114.6 16.1

Izandla5 306.0 207.2 47.6

Other assets 383.7 281.5 36.3

Cash 382.9 507.3 (24.5)

Total assets 21 670.0 19 952.9 8.6

Shareholders interest 13 131.1 12 643.8 3.9

Long term borrowings6 7 945.2 6 756.7 (17.6)

Total funding 21 076.3 19 400.5 (8.6)

Other liabilities 593.7 552.0 7.6

Total equity and liabilities 21 670.0 19 952.5 (8.6)

Net asset value per share (cents) 1 783.4 1 728.7 3.2

1. SA property portfolio has reduced due to the sale of four properties and downward revaluation, offset by capital expenditure

2. IAPF increase due to the share price moving from R10.50 to R12.70

3. Investment into PEL platform and revaluation

4. Movement in ingenuity share price from R0.99 in FY18 to R1.15 in FY19

5. Further investment to support Sasol development

6. Borrowings increased to fund European investment activity

18

12,644

13,131

81

195

22017 16 (42)

12,000

12,500

13,000

13,500

Opening NAV Share issue PELfair value

adjustment

IAPFfair value

adjustment

Ingenuityfair value

adjustment

Propertyfair value

adjustment

Other¹ Closing NAV²

1 Property fair value adjustments includes the straight-line rental adjustment of R31.9m and negative revaluation of R15.4m2 Includes FX gains on investments (+R42.0m), MTM on derivatives (-R53.7m) and Izandla impairment (-R30.0m)

Net asset value bridgeNAV growth of 3.9%

R’0

00

SA PROPERTY PORTFOLIO

AND INVESTMENTS

20

SA property portfolio0.8% base NPI growth reflects challenging environment

20

Property portfolio

• Despite an extremely challenging and weak local economic and operating environment, the base

property portfolio delivered NPI growth of 0.8%

› Driven by positive escalations but offset by void periods, negative rental reversions and increased costs

• Decrease in NPI of 2.3% due to disposals to Izandla at the end of FY2018 and the disposals of four

buildings in the current year

• Key drivers of the lower base net property income and the increased cost to income ratio were:

› 2.6% core rental growth which is lower than contractual escalations due to increased void periods and lower

and negative rental reversions

› An increase in variable costs of 33.5% due to higher letting commissions and tenant installations

› Fixed costs increased below inflation at 3.4%

› Gross utility costs increased by 4.9% while gross recoveries increased 8.3%

› Gross rates expense increased by 25.8% as a result of significant municipal revaluations in the office

portfolio, while rates recoveries only increased by 16.2% due to leakage from void periods

Mar 2019

Rm

Mar 2018

Rm

±

%

Gross income 1 674.7 1 618.9 3.4

Net expense (322.6) (277.7) (16.2)

Base net property income 1 352.1 1 341.2 0.8


Net property income

(excl. straight lining)1 471.9 1 507.2 (2.3)

Net cost to income ratio 18.8% 16.8% (11.8)

Arrears % collectibles¹ 1.4% 1.1% (27.3)

2019 2018

No. of properties 102 106

GLA (m²) 1 197 921 1 240 851

Vacancy 2.4% 4.0%

WALE (years) 2.8 3.3

In-force escalation 7.6% 7.6%

Average gross rental incl. parking (R/m²) 123.0 117.8

Property asset value R17.3bn R17.6bn

1 Including legal tenants – 2.9% (Mar 2018: 3.1%)

21

RetailRobust and defensive portfolio

Mar 2019

Rm

Mar 2018

Rm

±

%

Gross income 654.5 618.1 5.9

Net expense (124.0) (115.9) (7.0)

Base net property income 530.5 502.2 5.6

Disposals 41.7 54.2 (23.0)

Net property income 572.2 556.4 2.8


Arrears % collectibles¹ 1.6% 2.1% 23.8

21

Retail2019 2018


GLA (m²) 417 177 414 911

Vacancy 1.0% 1.2%




Asset value R7.3bn R7.0bn

• Strongest performer in SA portfolio despite lack of economic growth

› Due to focused strategy of maintaining significant proportion of national clients (currently 81%) to

ensure trade through periods of subdued consumer spending

• Turnover growth of 2.7% on total portfolio (4.1% excl. Design Quarter and Balfour Mall)

• Trading density growth of 2.5% (4.5% excl. Design Quarter and Balfour Mall)

• Base NPI growth of 5.6% driven by positive escalations

• Net cost to income ratio increased marginally due to:

› 5.3% core rental growth which is lower than contractual escalations due to lower rental reversions

› Fixed costs well managed – reduced by 1.1%

› An increase in variable costs of 16.4% driven by letting commissions and tenant installation incentives

› Gross utility costs increased by 5.1% and gross recoveries improved by 8.9% with benefit driven by

the solar roll out

› Gross rates expense increased by 19.8% with recoveries increasing by the same rate


22

RetailEdcon restructure

22

• All term sheets have been signed and Competition Commission approval granted to Edcon on 30 April

to proceed with the restructuring

• IPF elected the rental concession option

• A summary of the final terms agreed are as follows:

› Rent reduced by 40.9% over the next 2 years

› CNA and Edgars Active are to be excluded

› Full operating costs and utilities will be paid

› At the end of the 2 years rentals revert to contractual rental

• Landlords effectively receive 6.6% equity in the restructured Edcon Group (pro rata to the level of rent foregone over the 2 years)

(Through the negotiations with the UIF (PIC) this was proposed to reduce to 5.7% and has not materialised)

• Edcon is a tenant across 10 of the Fund’s retail properties, with a GLA exposure of approximately 27 500m² representing less

than 2% of the Fund’s total revenue

• Reduction in rental income will amount to R9.8m p.a. from FY2020

• c.1% impact on distribution growth in FY2020

• IPF currently in negotiations to be able to take back space and re-let to other tenants on IPF’s terms

23

OfficeSupply continues to exceed demand

Mar 2019

Rm

Mar 2018

Rm

±

%

Gross income 680.3 663.0 2.6

Net expense (142.7) (110.9) (28.7)

Base net property income 537.7 552.1 (2.6)


Net property income 538.6 580.2 (7.2)



Office2019 2018


GLA (m²) 249 243 251 678

Vacancy 7.3% 5.4%






• High quality and well-located properties

• Sandton properties are defensive with a WALE of 3.5 years and expiries of only

4 434m² in FY2020 (renewal already concluded)

• Negative base NPI growth of 2.6%

› Downward pressure on rentals with longer void periods and increased incentive costs for

landlords to secure clients

• Net cost to income ratio significantly increased due to:

› 1.2% core rental growth which is lower than contractual escalations due to void periods,

negative reversions and increased vacancy

› Fixed expenses well controlled - growth below inflation at 4.5%

› Variable costs up 56.1% driven by costs of leasing (i.e. commissions, tenant installations)

› Gross utility costs increased by 5.3% with recoveries increasing 6.3% due to backbilling

› Gross rates expenses increased by 35.3% driven by municipal revaluations with

recoveries up only 25.7% due to void periods

24

Mar 2019

Rm

Mar 2018

Rm

±

%

Gross income 339.9 337.8 0.6

Net expense (55.9) (51.0) (9.7)

Base net property income 284.0 286.8 (1.0)


Net property income 361.1 370.5 (2.6)



Industrial2019 2018


GLA (m²) 531 501 574 262

Vacancy 1.2% 5.7%





• Quality assets in strategically located nodes

• Negative base NPI growth of 1.0% due to void periods and negative reversions

• The cost to income ratio deteriorated due to:

› 0.4% core rental growth which is lower than contractual escalations due to weak tenant

demand environment resulting in longer void periods and negative rental reversions

› Fixed costs increased by 34.3% due to higher security and property management fees

› Variable costs reduced 12.6% due to lower bad debt provisions

› Gross utility costs increased by 3.8% while recoveries improved by 9.6% due to higher

electricity recoveries

› Gross rates expense increased by 22.3% while recoveries only grew by 5.3% due to void

periods

24

IndustrialLack of tenant demand driven by macro-economic factors


25

• Proactive asset management resulted in a decrease in vacancy from 4.0% in March 2018 to 2.4% in the current year

• 33% of space that expires during FY20 already let

1. Negative reversion driven by the current letting environment and new letting concluded at properties purchased above market rentals (for which top slice price adjustments were made at acquisition with the benefit of higher initial yields)

2. Long term leases where expiring rentals had escalated above current market, renewed at market

3. Reversion subdued due to renewals with two national tenants where 5- and 7-year leases were concluded. Excluding these renewals, the balance of letting activity reflected growth of 5.3%

4. Low retention due to two clients not renewing 8 549m2 and 21 441m2 spaces respectively. The first was acquired by a large multi-national with multiple facilities and the operations were consolidated and the second, due to consolidated

business operations and reduced space. Both spaces have however been re-let

Letting activity94.2% of expired space let or renewed in the current year – testament to the quality of the assets

Expiries &

cancellations

GLA

Renewals

& new lets

GLA

Letting %

concluded

Gross

expiry

rental

(R/m2)

Gross new

rental

(R/m2)

Rental

reversion

(%)

Average

escalation

(%)

WALE

(years)

Incentive

(% lease

value)

Retention

(%)

Office 52 914 45 674 86.3 193 166 (13.9)¹ 7.9 5.0 4.5 68.2

Industrial 116 314 110 983 95.4 61 57 (6.4)² 7.9 1.9 1.2 47.24

Retail 58 280 57 619 98.9 155 159 2.6³ 7.1 4.8 1.1 91.3

Subtotal 227 508 214 276 94.2 115 107 (6.9) 7.7 3.3 1.9 62.9

Opening vacancy 59 902 38 440 64.2 n/a 67 n/a 7.0 5.6 0.8 n/a

Total 287 410 252 716 88.0 115 102 (6.9) 7.6 3.7 1.7 62.9

26

Letting activity – FY202033% of space that expires during the coming year already let

26

Sector Expiries (m²)

Average

gross rental

on expiries

(R/m²)¹

Already let

(m²)

Already let

(%)

Rental

reversion

(%)

Retail 61 322 158.3 16 322 26.6² (9.1)

Office 33 359 233.9 9 737 29.0³ (10.4)

Industrial 151 016 69.3 55 089 36.5⁴ (7.1)

Total 272 362 107.0 98 837 33.0 (7.9)

1. Includes parking income

2. A further 34% of space currently under offer or in advanced stages of negotiation



Key leasing activityGLA (m²)

Office

Nicol Main (Bryanston) 5 334

4 Sandown Valley (opening vacancy) 6 500

Firs (retail + office) 5 500

17 334

Industrial

Alrode Multipark (Alberton) 28 503

Consol (Germiston) 20 331

GE (Midrand) 11 180

Lerwick Road (Durban) 14 903

74 917

Retail

Musina Mall (Limpopo) 3 154

Balfour Mall (Highlands North) 6 290

Toyota dealership (Menlyn) 6 785

Kriel Mall (Kriel) 2 189

18 418

27

Full year

Carrying

amount

31 March

2018

(Rm)

Revaluation

and straight

lining

(Rm)

Other capital

movements

(Rm)

Directors’

valuation

31 March

2019

(Rm)

Total

change

(%)

Revaluation

and straight

lining

(%)

Forward

yield

(%)

Prior year

yield

(%)

Office 6 362.7 (183.9) 35.8 6 214.6 (2.3) (3.0) 9.4 9.1

Industrial 3 287.6 15.0 24.4 3 327.0 1.2 0.5 9.5 9.0

Retail 6 584.3 188.7 112.0 6 885.1 4.6 2.7 8.4 8.2

Total base 16 234.6 19.9 172.2 16 426.7 1.2 0.1 9.0 8.7

Acquisitions 261.4 12.3 0.1 273.8 4.8 4.5 8.8 0.0

Held for sale 1 102.9 (41.1) (478.1) 583.7 (47.1) (7.0) 8.8 8.8

Total portfolio 17 598.9 (8.9) (305.8) 17 284.2 (1.8) 0.1 9.0 8.7

Property valuationsRealistic forward yield of 9.0%

27

• 49% of the portfolio (50 properties) was externally valued by two independent valuers

• Cap rates have been pushed outwards slightly in the current year

• Net property income assumptions used were realistic and reflected weaker environment

• Acquisitions refer to 3 buildings purchased in the prior year which will be moved into the base portfolio in FY2020 once they have a full 12-

month comparative

28

Izandla

SA investments

Sale of Ingenuity shares• On 17 April 2019 the Fund announced that

Ingenuity would repurchase all the ING

shares held by IPF at R1.08 per share

• The selling price is a 29% premium to the

purchase price

• The sale is part of IPF’s focused strategy

to recycle capital into assets where the net

proceeds can be used to generate

superior returns

• R115m invested during FY19 by way of a shareholder’s loan

› To support acquisition of a property in Hatfield and development

of logistics facility for Sasol on the back of a 15-year lease

• Izandla looking to raise equity for identified pipeline

› IPF will look to convert mezzanine debt to equity at that point, if

possible

Key portfolio metrics

Portfolio Mar 2019 Mar 2018

Total value of property R740.1m R522.5m

Value of investment R306.0m R207.2m

Equity R33.2m R18.3m

Loans R272.8m R188.9m


Vacancy 1.8% 10.3%

Number of properties 15 13


Portfolio Mar 2019 Mar 2018


Average cost of acquisition per share R0.84 R0.84

Average cost (notional costs capitalised) R0.99 R0.95

Last reported NAV per share R1.45 R1.32

Ingenuity

28

29

Focus on the SA portfolio

• Local expertise to navigate

current environment

• Continued focus on property

fundamentals ahead of anything

else

• Single-minded focus on the

client experience

• Proactive asset management

FY20 prioritiesThe South African market is our strategic priority

29

What can you expect from IPF in FY20?

• Anticipating and mitigating leasing risk through

early lease renewals and higher tenant retention

• Guerilla tactics – rolling up sleeves to source

and secure

• Every property assessed to ensure it remains

relevant and competitive

• Improve properties where necessary in order to

compete and outperform

• Invest in customer relationship management

and create an out of the ordinary experience for

tenants

• Capital expenditure and timing thereof –

identifying risks and opportunities early

• Offshore provides optionality – continued

deployment into Pan-European strategies

Building activity

• Design Quarter

• Balfour Mall

• Other

FOREIGN INVESTMENTS

3131

Seed portfolio

• IPF acquired a 42.9% interest in a Pan-European logistics platform and committed to

investing up to €150m into the platform over the next four years

› Total consortium commitment of €350 million

• Seed portfolio of 20 logistics properties acquired in May 2018 with asset value of €423m

› IPF initial equity contribution of €65.8m (plus transaction costs)

› Unlevered net initial yield of 6.0% and initial investment yield of ±10.5%

Pan-European logistics portfolioTransaction recap

Looking ahead: Q1 2020 pipeline

Property Date Country

GLA

(m²)

IPF equity

investment

(€'m)

Property value

(€'m)

Schiphol April 2019 Netherlands 17 557 2.1 23.2

Bergen April 2019 Netherlands 20 957 3.1 16.7

Venlo April 2019 Netherlands 25 704 3.2 18.1

Marseille April 2019 France 65 354 9.2 51.6

VRE May 2019¹ Poland 51 595 5.3 30.0

Warsaw May 2019¹ Poland 11 109 1.3 7.3

Tiel May 2019¹ Netherlands 9 900 1.2 7.1

Hanover May 2019¹ Germany 24 551 1.3 13.4

Acquisitions and commitments post year end 26.7 167.4

Funding

• As at 31 March 2019, 53% of investment value was

hedged by cross currency swaps and Euro-denominated

loans

› Weighted average debt and swap expiry of 2.8 years,

which was extended post year end

• 100% of contracted distributions over a five-year period

hedged at a range of between R16.07 and R23.2

Subsequent acquisitions

• IPF invested a further

€16.5m to support the

acquisition of four additional

properties across the

Netherlands and Germany

during H2 2019 (with one

French asset sold)

› Acquisitions are

expected to deliver

similar investment return

to seed portfolio

1. Anticipated date of transfer

32

Performance


Pan-European logistics portfolioStrong performance driven by leasing activity

Deal case 10.5% (uplift as a result of

stronger leasing activity, better rentals,

shorter void periods, quicker leasing of

vacant space, efficient cost

management and lower incentives)

Further supports investment rationale

As a result of external revaluations of

like-for-like properties by 12.5%

11.6%EUR income return

(11.9% ZAR return)

14.4%EUR capital uplift

on initial investment

(16.3% ZAR)

Metrics Mar 2019 At acquisition

Income return p.a. (€) 11.6% 10.5%


Vacancy 5.1% 10.1%


CommitmentsEuropean logistics portfolio IPF equity investment

Total commitment €150.0m

Already deployed (€75.9m)

To be deployed in Q1 FY202 (€26.7m)

Remaining commitment €47.4m

Gross asset

value (€m)

Investment

(€m)

Investment

(Rm)

Total (at acquisition, excluding costs) 431.7 65.8 1 069.7

Additions¹ 51.8 10.1 163.8

Total equity investment 483.5 75.9 1 233.6

Bridge equity - 9.0 146.9

Disposals (23.5) - -

Revaluation 55.8 12.5 203.2

Interest accrual and fees - 6.3³ 102.1

Total 31 Mar 2019 515.8 103.8 1 685.8

1. Acquisition of 5 properties

2. Acquisition of further 8 logistics

properties as set out on slide 31

3. Comprises accrual for distributions

earned but not received and other

transaction costs

32

33

Pan-European logistics portfolioGeographical overview

33

Gross asset

value (€m) No. properties Vacancy

WAULT

(years)

GLA

('000m2)

France 132.1 10 4.5% 5.2 226

Germany 200.9 7 3.3% 5.0 207

Italy 44.9 1 15.8% 2.6 303

Netherlands 48.4 3 11.5% 3.0 92

Poland 53.9 3 - 4.4 102

Spain 35.6 1 - 5.6 83

Total 515.8 25 5.1% 4.5 1 012

34


IAPF 31 Mar 2019 31 Mar 2018

Total value of property AUD1 063m AUD987m

Value of investment R1.3bn R1.1bn

Distribution return p.a. 8.0% 8.0%


Vacancy 0.6% 1.5%


ASX-listing

• IAPF is pursuing a primary listing on the ASX and is seeking

to raise approximately AUD100m

• Indicative offer price range of AUD 1.30 to AUD 1.35

• IPF has agreed to make will make available 45m shares to:

› Satisfy oversubscriptions under the primary offer

› Increase liquidity of IAPF

› Increase the quantum of the offer to improve the likelihood

of attracting more significant retail and institutional appetite

• If offer is not oversubscribed >AUD100m, then IPF’s units will

not be placed

• Proceeds will allow IPF to further de-lever balance sheet

and/or efficiently recycle capital

• IAPF remains a key investment and IPF will retain 10% interest

if all units placed

• Offer opened 13 May 2019, bookbuild to be conducted

20-21 May and ASX trading to commence 28 May 2019

IAPFThe Fund’s investment saw a substantial increase in value in the current year

from R10.50 per share at March 2018 to R12.70 at March 2019

34

+1.2%post WHT growth in DPS

(AUD)

+4.0%growth in ZAR

35

• Asset management activities

• Re-gearing of the Sainsbury’s,

Swansea lease to 30 years

• Sale of the Sainsbury’s, Worcester

property at a 14.7% premium to book

value

• Upward rental reversions of 22%

across 1,282m² of industrial space

renewed or re-let

NAV growth as a result of:

Investec Argo UKWell managed and positioned

for growth


UK portfolio Mar 2019 Mar 2018

Total value of property £233.8m £233.8m


Income return p.a. 5.4%1 7.2%


Vacancy 2.2%2 1.6%


• Total investment of

£11.7m

• Funded though a

combination of existing

ZAR facilities and cross

current swaps at all-in

rate of 2.36%

• 100% of the income

hedged for a period

of 5 years

35

1 The lower return is due to the dilutionary effect of Edmonton

which was acquired with development vacancies

2 Including development vacancies at Edmonton of 14.2%.

Vacancy at 30 June 2019 is expected to be c.4%

PAN-EUROPEAN LIGHT

INDUSTRIAL PLATFORM

37

• Initial 25% interest in an unlisted portfolio and pipeline of light industrial properties located

across France, Germany and Netherlands

› 4 assets acquired to date and 17 assets identified and in final stages of negotiation

› envisaged portfolio will comprise 21 properties with gross asset value of €116m

• Initial equity investment of €10.2m excluding costs (and €10.9m including costs)

• IPF commitment of €64.5m on a ratcheted equity participation basis with total consortium

commitment of €150m

› IPF interest increases to 42.9% post full-deployment

• To be funded through a combination of existing ZAR debt facilities (40%) and either Euro

debt facilities or cross currency swaps (60%)

• Expected to generate unlevered initial asset yield of 7.2% and grow to fully let ERV yield

of 8.2%

• Euro-denominated investment return of 9.6% once leveraged and is accretive to earnings

Pan-European light industrial investmentHighlights

37

France 59 9

Germany 31 6

Netherlands 26 6

1

2

3

38

Pan-European light industrial portfolioInvestment rationale

• Complementary to existing Pan-European logistics platform

• Strategy is well suited to the current macro environment and

benefits from growth of e-commerce across Europe and its

impact on last mile logistics

• Small storage units in urban infill locations playing an

increasingly important role in sophisticated supply chains

• Continued partnership with UREP – ability to unlock value

through intensive asset management initiatives

• Scarcity of available land due to increasing urbanisation which

has seen industrial infill locations in cities redeveloped for

higher value residential or office / retail use

• Acquisition prices at below replacement cost

• Comparatively limited obsolescence across the small storage

unit market with quality of location vs. specification of the

building that drives rental growth

• Evidence of rental growth in the major Western European

cities after a decade of static rentals

38

39

Logistics vs. light industrialKey characteristics

39

Geography Micro-location Asset quality Use Size Occupier demand Pricing

• Primary targets are

Germany, Benelux and

France with the

possibility of Spain,

Poland and Italy

• Focus on the Northern

corridor of Western

Europe, with liquid and

transparent property

markets

• Assets within

close proximity

to cities with high

concentrations

of industry and

consumers, as

well as limited

land availability

• Quality assets and

strong property

fundamentals –

• Below 20 years of age

which provides

maximum occupational

flexibility for storage,

distribution and general

warehousing and

expansion potential

• Units that are used for

storage, distribution

and general

warehousing

• Intention is to avoid

production facilities

due to the inherent

restriction of re-lettings

and associated

removal costs

• Premised on a similar

macroeconomic theme

to Logistics platform,

but targeted asset size

between €5-€10m

• Building size typically

less than 10 000m²

(vs. Logistics platform

targets larger unit sizes)

• Target both vacancy and cash

generating assets that offer

potential for current cash-on-cash

yields with the benefit of leasing

up any vacancy in areas where

occupier demand is high and

vacancy low

• Aggregate diverse range of tenants

ranging from large national tenants

though to small & SME companies

• Pricing that

reflects a

discount to

replacement

cost and/or

offers active

asset

management

opportunities

Light industrial platform strategy

• 10m+ eaves height

• 5-10% office element

• Unit size > 10 000 sqm

• Generally single-let to strong

tenant covenants

• Long leases (>5 years)

• More susceptible to functional

obsolescence

• Lot sizes >€30 million

• Plentiful site supply and

easier development finance

• Minimal / passive

management required

• 6m+ eaves height

• 10-15% office element

• Unit size < 10 000 sqm

• Multi-let to mixed tenant

covenants, usually SMEs

• Short leases (<5 years)

• Low depreciation, minimal capex

• Lot sizes <€30 million (€5-€15m)

• Limited supply / new build

available due to lack of financing

• Intensive asset management,

requires specialist management

skills

Logistics Light industrial

Specialist

logistics

properties

(trans-shipment)

E-commerce

(fulfilment and

cross dock)

>10 000 sqm

contract logistics

<10 000 sqm

(forwarding

and storage)

Light

manufacturing

properties

Converted

properties

Purpose build Purpose buildGeneric

BALANCE SHEET

MANAGEMENT

41

1. Metrics include post year end debt and swap movements

2. Extended due to debt refinancing

3. Hedged percentage includes all interest rate swaps and cross currency swaps over total debt

4. Gearing shown net of cash

5. Secured assets as a percentage of total investments

6. Secured debt as a percentage of total debt facilities

Balance sheet metricsBalance sheet well-positioned

31 Mar 20191 31 Mar 2018 +/-

Average all-in cost of funding (%) 7.9 8.6 (0.7)

Debt maturity (years)2 3.5 2.7 0.8

Swap maturity (years) 3.4 3.8 (0.4)

Hedged position (%)3 84 84 0.0

Gearing (%)4 35.9 32.6 3.3

Encumbrance ratio (%)5 26.9 33.5 (6.6)

Secured debt (%)6 33.7 34.6 (0.9)

• R3.7bn bank refinancing completed during the year which significantly reduced

refinance risk. R0.7m bank debt repaid subsequent to year end. See below

table for impact on metrics:

• Targeted gearing below 35% aimed to be achieved through capital recycling

where necessary

› Gearing anticipated to remain at conservative levels post full deployment

into Pan-European strategies as a result of active capital recycling strategy

› Look-through gearing is satisfactory at 43% with no guarantees into any

entities which are not wholly-owned by the Fund

• The Fund maintained strong credit metrics and its corporate rating was

upgraded to A+(ZA) from A(ZA) in August 2018

• Over R1bn swap book restructured subsequent to year end – extended the

swap expiry by 8 months at no cost

• R1.1bn of committed facilities

Post-refinancing Pre-refinancing

Debt maturity (years) 3.5 2.7

Margin (%) 1.67 1.64

Encumbrance ratio (%) 26.9 33.5

• Fundamental focus area for the Fund

• Diversified funding portfolio with banks and capital markets and early

engagement with lenders

• Weighted average cost of funding reduced to 7.9% as a result of Euro debt

introduced to fund the PEL investment

42

3.5 3.4

3.0

2.7

3.83.6

0

1

2

3

4

5

Debt Swaps¹ Cross currencyswaps

31 Mar 2019 31 Mar 2018

Balance sheet strategyFundamental focus

1. Metrics include post year end debt and swap movements

28%

8%

6%45%

13%

HQLA Bank

Commercial Paper DMTN

Foreign

Sources of funding (%)Weighted expiry profile (years)1 1

42

43

Balance sheet strategyLooking forward

43

Note: Based on utilised debt facilities

1. Includes bonds expiring of R650m – commitment to early refinance R250m with Nedbank thus limited refinance risk; bonds of R400m due in March 2020. R452m commercial paper rolled

in May 2019; will continue to roll if appetite in the market. May 2019 roll demonstrates demand we have seen historically for IPF commercial paper. IPF has sufficient committed facilities in

the event they choose not to roll

2. Bank facilities of R300m (R160m drawn) expire December 2020. Will begin negotiations shortly – further covered by committed facilities

3. Bonds amounting to R590m expire in December 2020. Have ample backstop facilities in place should we be unable to refinance closer to expiry

2%

11%

20%

27% 26%

14%

0%

15%

10%12% 13%

26%

18%

6%

0%

10%

20%

30%

FY20 FY21 FY22 FY23 FY24 FY25 FY26

Total swaps Total debt

Debt swap expiry (%)

0%2%

6%

11%

2%0% 0%0% 0% 0% 0%

14% 14%

0%

15%

8%6%

2%

9%

5% 6%

0%

5%

10%

15%

20%

FY20 FY21 FY22 FY23 FY24 FY25 FY26

Bank HQLA DMTN

Debt expiry (%)

¹

²

³

CAPITAL ALLOCATION

45

Capital recycling

45

Rm Mar 2019

Deployment funded by:

Proceeds from SA property disposals 500.5

Equity raised 81.1

Debt raised 1 108.4

1 690.0

Deployment into:

PEL platform (1 380.9)

Izandla (115.6)

UK Fund (11.5)

SA property portfolio projects and capital expenditure (182.0)

(1 690.0)

• Disposed of four properties in the current

year valued at R500.5m

› Blended yield of 7.1%

• Proceeds redeployed into the PEL platform

generating income return of 11.9% in ZAR

(11.6% in EUR)

• 12 properties earmarked for sale with a

book value of R0.6bn

• Proceeds of c.R0.5bn to be received from

sell down of IAPF units and R124m to be

received from sale of Ingenuity units

• Proceeds anticipated to be recycled into

Pan-European strategies and / or to further

manage gearing

46

Capital recyclingProperty matrix

46

Move to high-growth quadrant

through active asset management

• Balfour Mall

• Design Quarter

• The Firs

Ideal state

• 2929

• Nicol on Main

• Zevenwacht

• Dihlabeng

Exit properties

• e.g. tail on acquired portfolios (very limited)

• Scientific

• Beechwood House

Sell properties at best price

• Bigen

HighLow

Weak

Strong

Growth profile

Pro

pe

rty fu

nd

am

en

tals

9PROJECTS

48

25 462m² specialised retail centre

Challenges

• Not convenient in terms of access

• Mall aesthetics

• Deep retail space

ProjectsDesign Quarter

Planned upgrade and centre

refurbishment

• Negotiations with Checkers for

a 2 500m² concept store

• Consideration of a second anchor

(pharmacy)

• Entire internal refurbishment

• Vertical integration between

convenience store and other retail,

with parking area and access points

• Town planning application lodged

with council for a ‘left in access’ off

William Nicol for traffic coming from

the Fourways area

48

Design QuarterDesign Quarter offers a unique destination

for decor and design and a host of world

class restaurants on the piazzaDesign Quarter is a well-known mall located

in the Bryanston / Fourways precinct.

It offers a great alternative to Nicolway Mall

and to the offices in the area.

Satisfied with positioning.

49

• Since 2012 Balfour Mall has undergone a major shift in target market

• Currently attracts residents in immediate surrounding areas, with commuters

accessing the mall from Alexandra to Hillbrow and as far as Lombardy East

• Target market not fully accessed due to delays in the Rea Vaya system and

lack of certain amenities and activities in the mall

• In response to changing consumer needs, Balfour Mall management

embarked on creating a vision which addresses customer needs, focusing

on three pillars:

ProjectsBalfour Mall

49

Balfour Mall

Retail offering

National anchors

Food and entertainment

Reconfiguration

of banking mall

Mixed use precinct

Retail epicentre

Residential

Social amenities

Masterplan

Improve connectivity

to Louis Botha

Creation of precinct: partner

with City of Joburg (COJ)

Balfour Mall as a town

centre

Retail offering

• Optimise tenant mix by attracting national

tenants that will offer convenience, attract

commuters and increase dwell time

Mixed use precinct

• Offering ability to ‘live, socialise and play’ in

a safe and secure environment while

providing a solution for middle-income

earners to live and work within a close

proximity

Masterplan

• Partner with COJ to create a master design

that integrates transport links and the

broader precinct encompassing broader

social inclusion as identified by COJ

50

ProjectsBalfour Mall precinct

Highlands Mall

• The Fund has purchased the Highlands

Mall, a strategically located strip mall on

the corner of Louis Botha Avenue and

Athol Street in Highlands North

• The acquisition provides an opportunity

for the Fund to significantly strengthen

the Balfour Mall precinct

• Intention is to create a space in which the

target market is able to ‘live, socialise

and play’ in a safe and secure

environment, while providing a solution

for middle income earners to live and

work within close proximity

50

10CAPITAL EXPENDITURE AND

SUSTAINABILITY

52

• R182.0m spend on capital projects, refurbishments and maintenance capex during the year

› Includes R46.1m on sustainability projects that generated average return of 14%

› Project spend included R74.7m on Fleurdal Mall extension, Design Quarter refurbishment and Firs refresh

› Includes an amount of R48.9m attributable to general capex spend

• R90m sustainability budget for FY20 – ±90% earmarked for projects generating 13-15% returns

Capital expenditure and sustainabilityR90.8m earmarked spend for FY2020,

of which R79.1m is return generating

Rooftop Solar PV

• Structural assessment

of Design Quarter

• Awaiting Eskom approval

for Nicol Grove

• Identified 10 additional

buildings for Solar PV -

commitment of R70m

Energy efficiency

(ROI)

• Request for proposals

sent out for 9 properties

- commitment of ±R7.5m

Risk mitigation

• Investigate installation

of aerators to reduce flow

rate on basin taps thereby

reducing water usage

• Partnership with Don’t Waste

to develop an integrated

waste management

and recycling strategy -

currently implemented at 8

sites

• Audit of waste contractors on

all properties to identify

opportunities to decrease

waste going to landfill

• Futureproofing buildings

through diversion to avoid

potential landfill penalties

Green Building

Council of

South Africa

• Existing Building

Performance rating:

› 2929 on Nicol & Nicol Main

Office Park - 4 Star Green

Star EBP Rating

• Identified 7 additional

buildings - commitment of

±R2.4m

11LOOKING

FORWARD

54

Challenges

• South African portfolio to deliver base NPI growth similar to FY19

during the forthcoming year

› Short term outlook in South Africa remains challenging

› Edcon restructure has impacted the guidance for FY2020 by

1%

54

Drivers of growth

• Pan-European strategy expected to

provide earnings accretion

› supported by accretive Pan-European

light industrial investment

› successful execution of leasing and

asset management strategy

• Potential for further earnings

enhancement through:

› efficient capital recycling

› partial sale of IAPF (marginally offset

by impact of change in IAPF’s

distribution policy on remaining stake)

• Upper end of guidance range dependent

on extent of capital deployed into

European pipeline during FY2020

GuidanceExpected FY2020 DPS growth of between 3% and 5%

55

• Good FY2019 performance in a difficult

environment

• FY2020 will be very challenging in the

local market

• Continue to invest in offshore strategy

– key driver of FY2020 growth

• Conservative balance sheet and active

treasury management remains a

fundamental focus area

• Well-positioned to withstand difficult

trading environment and to achieve long-

term growth

• Well-placed to take advantage of market

dynamics

Conclusion

55

12ANNEXURES

57

IPF track recordIPF share price performance vs. peers since listing

80%

100%

120%

140%

160%

180%

200%

220%

Ap

r 1

1

Ju

n 1

1

Au

g 1

1

Oct 11

De

c 1

1

Feb

12

Ap

r 1

2

Ju

n 1

2

Au

g 1

2

Oct 1

2

De

c 1

2

Feb

13

Ap

r 1

3

Jun 1

3

Au

g 1

3

Oct 1

3

De

c 1

3

Feb 1

4

Ap

r 1

4

Ju

n 1

4

Au

g 1

4

Oct 1

4

De

c 1

4

Feb

15

Ap

r 1

5

Ju

n 1

5

Au

g 1

5

Oct 1

5

De

c 1

5

Feb

16

Ap

r 1

6

Ju

n 1

6

Au

g 1

6

Oct 1

6

De

c 1

6

Feb

17

Ap

r 1

7

Ju

n 1

7

Au

g 1

7

Oct 1

7

De

c 1

7

Feb

18

Ap

r 1

8

Ju

n 1

8

Aug 1

8

Oct 1

8

De

c 1

8

Feb

19

Ap

r 1

9

Investec (92%) Vukile (46%) Emira (5%) Growthpoint (42%) Redefine (40%) SA Corporate (5%)

58

Sector forward yieldsIPF well-rated against peer group

Source: Bloomberg as at 10 May 2019

Notes:

1. Yields are based on rolling 12-month distributions on clean prices

2. Numbers in brackets represent fund gearing

6.1

% 7.1

%

7.4

%

8.2

%

8.4

%

8.8

%

9.4

%

9.5

%

9.7

%

9.7

%

9.7

%

10.4

%

10.5

%

10.9

%

11.1

%

11.2

%

11.6

%

11.7

%

11.9

%

11.9

%

12.2

%

12.4

%

13.5

%

13.7

%

14.6

%

15.1

%

15.2

%

15.7

%

15.9

%

16.6

%

16.7

%

17.9

%

22.2

%

0%

5%

10%

15%

20%

25%

Attacq (

36%

)

IAP

F (

38%

)

Equites (

27

%)

Fort

ress A

(3

2%

)

Lib

ert

y 2

Degre

es (

16%

)

Sto

r-A

ge (

28%

)

Gro

wth

poin

t (3

5%

)

Exe

mpla

r (2

0%

)

Vukile

(3

9%

)

Inve

ste

c

(36%

)

Re

sili

ent

(26%

)

Spea

r (3

6%

)

Dip

ula

A (

41

%)

Em

ira

(41%

)

Re

define

(4

2%

)

Octo

de

c (

37%

)

Ho

sp

ita

lity (

16%

)

Hypro

p (

22%

)

Fair

ve

st

(27%

)

SA

Corp

ora

te (

35%

)

Gem

gro

w A

(27

%)

Tra

nscend

(43%

)

Gem

gro

w B

(27

%)

Indlu

pla

ce (

30%

)

Dip

ula

B (

41

%)

Safa

ri (

13%

)

Re

bosis

A (

52%

)

Fort

ress B

(3

2%

)

Accele

rate

(42%

)

Texto

n (

40%

)

To

we

r (3

9%

)

Arr

ow

hea

d (

38

%)

De

lta

(4

1%

)

Forward yield on clean price Sector Weighted Average (10.8%)

59

Price/NAVInvestec relative to peers

Source: Bloomberg as at 10 May 2019

1.2

1

1.1

8

1.1

1

1.0

9

1.0

4

1.0

3

1.0

2

1.0

2

0.9

6

0.9

3

0.9

0

0.9

0

0.8

9

0.8

5

0.8

5

0.8

3

0.7

5

0.7

4

0.7

1

0.7

0

0.6

9

0.6

8

0.6

6

0.6

3

0.6

2

0.6

0

0.6

0

0.5

6

0.5

4

0.5

2

0.4

6

0.4

3

0.2

6

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Equites

Sto

r-A

ge

Fort

ress A

Dip

ula

A

Gem

gro

w A

Vukile

IAP

F

Exe

mpla

r

Gro

wth

poin

t

Re

define

Tow

er

Inve

ste

c

Fair

ve

st

Spea

r

Re

bosis

A

Em

ira

Fort

ress B

Lib

ert

y 2

Degre

es

SA

Corp

ora

te

Dip

ula

B

Gem

gro

w B

Hypro

p

Octo

de

c

Indlu

pla

ce

Safa

ri

Tra

nscend

Attacq

Ho

sp

ita

lity

Re

sili

ent

Arr

ow

hea

d

Accele

rate

Texto

n

De

lta

60

Portfolio composition

39%

41%

20%

Retail

Office

Industrial

Sectoral spread by revenue

42%

36%

22%

Retail

Office

Industrial

Sectoral spread by asset value

60

61

Sectoral composition

77%

13%

7% 3%

Shopping centres

Retail Warehouse

Motor dealership

High street

Retail

36%

64%

Single

Multi

Office

61

10%

5%

17%

19%

49%

High tech industrial Standard units

Warehouses Manufacturing

Logistics

Industrial

62

8%9%

6%

10% 10%

6% 5%

8%

6%

10%

7%

3%

1%

5% 6%

21%

17%

15%

21%

26%

0%

10%

20%

30%

2020 2021 2022 2023 April 2023 Onwards

Retail Office Industrial Portfolio

Lease expiry (by revenue)33% of FY2020 expiries already let

63

• Density above R2,100/m² at all centers, with the exception

of Design Quarter and Balfour Mall

• Trading density growth of 2.5% including Design Quarter

and Balfour Mall (4.5% excluding)

RetailTrading performance

• Positive growth in a tough environment, with only Balfour

Mall showing negative growth - trade expected to improve

with Rea Vaya and precinct development plan

• Design Quarter showing positive growth and improved

trading numbers

• Long term growth expected to be in line with long term

wage growth (4%-4.5%)

• Centers are proving to be robust in a difficult market,

with vacancy rates near industry lows at 1%

7.2% 7.0%5.0% 4.8%

2.1% 1.8% 1.1%

(9.8%)

Dihlabeng Kriel Fleurdal DesignQuarter

Newcastle Zevenwacht Nonkqubela Balfour

63

Retail - annual turnover growth (%)

5.6% 5.7% 5.9% 5.7% 5.8% 5.7% 5.8% 5.8%5.0% 5.1% 4.8%

4.1%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Like-for-like turnover excluding Design Quarter and Balfour Mall (%)

1,650

2,400

1,7902,120 2,260

3,130

2,1802,430 2,330 2,340

Balfour BoitekongMall

DesignQuarter

Dihlabeng Fleurdal Great NorthRoad Plaza

Kriel Musina Newcastle Zevenwacht

Trading density by centre (R/m²)

2018 2019

64

Top 10 tenants

Tenant name %

Investec 4.1

Cliffe Dekker Hofmeyr 3.6

Woolworths 2.2

Innovation 1.7

Fluxmans Attorneys 1.4

Nedbank Group 1.4

Samsung Electronics 1.2

Clover 1.0

Mentoprox 1.0

Bigen Africa 0.9

Tenant name %

Altron Ltd 1.6

Kevro Trading 1.3

RTT Group 1.1

General Electric 1.1

CWT-ASI 1.0

Adcock Ingram Healthcare 0.9

Discovery Health 0.8

Tiger Brands 0.8

Martin & Martin 0.7

SA Ladder 0.7

Tenant name %

Massmart 4.4

Shoprite Checkers Group 2.6

Edcon Group 1.8

Bidvest 1.6

Mr Price Group 1.3

Foschini Group 1.1

Pick 'n Pay Group 1.1

Pepkor Group 0.9

Woolworths 0.9

Zenith Park Trading 0.6

OfficeGross revenue

% of total portfolio

IndustrialGross revenue


RetailGross revenue


Specialist Banking | Asset Management | Wealth & Investment

SOUTH AFRICA

RESULTS

PRESENTATION

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.

This document/publication may not be reproduced in whole or in part or copies distributed without the prior written consent of Investec Property.

year in review - investec property€¦ · year in review 2. core strategy 3. financial review 4....

Documents