Interim Results Presentation · Interim distribution* (R'000) 91 858 Number of shares for the...

Interim Results Presentation for the six months ended 31 August 2019

Table of Contents

5 64

Questions

1 2 3

Welcome& Introduction

Interim HighlightsFY2020

Interim FinancialPerformance

FY2020

PortfolioOverview

Outlook

Financial Results Presentationfor the year ended 28 February 2019

Welcome & Introduction

1

Interim Results Presentation for the six months ended 31 August 2019 1

Mission Statement

To be the leading Western Cape-focused REIT and to consistently grow our distribution per share ahead of inflation and within the top quartile of our peer group.


2Interim Highlights FY2020


Assets

Capital

31Number of properties

R1.89bnMarket cap

R3.92bnAsset value

2.82%Asset value growth

R126mAverage property value

R9 469/m2

Average property valuation

R164.6mCapital raised

206mShares in issue

Interim Highlights 2020 Interim Results - Portfolio Snapshot

Letting

8.08%Average in-force

escalations

413 832m2

GLA

98.1%Occupancy

29 monthsWALE

R87/m2/pmAverage rental including rates


Interim distribution

Tangible net asset value (TNAV)

44.64 cents

Interim distribution

per share

R11.64TNAV

-3.97%TNAV decline

R11.19TNAV net distribution

-4.12%TNAV net distribution decline

6.98%FY2019 interim distribution growth

44.64 centsFY2019 interim distribution

21.68%Net cost to Income

Interim Highlights 2020 Interim Results - Financial Performance

Debt

38%Loan to Value

(LTV)

64.2%Fixed debt ratio

22 monthsAverage debt expiry

8.85%Average cost of debt

9.05%Average fixed cost of debt


TNAV Bridge

0

2

4

6

8

10

12

14

TNAV per shareat Feb 2019

TNAV per share at Aug 2019

R12.12R11.64

Ran

ds

Profit for the year

(excluding FV adjustments)

R0.43

Capital raise 21 June 2019

(R0.20)

Treasury shares

acquired

(R0.01)

Distribution paid

(R0.41)

Fair value adjustment

(R0.29)


3

Interim Financial Performance FY2020


Summary Income Statement

Consolidated and separate statement of comprehensive incomefor the six months ended 31 August 2019

Spear REIT Limited and its subsidiaries

Group Unaudited six months ended

Aug 2019 R’000

Group Audited Year ended

Feb 2019 R’000

Property revenue 250 566 426 122

Other income 546 8 607

Total revenue 251 112 434 729

Property operating and management expenses (75 688) (139 200)

Net property-related income 175 424 295 529

Administrative expenses (12 107) (22 668)

Net property operating profit 163 317 272 861

Fair value adjustment – Investment properties (60 497) 111 702

Impairment of investments (6 647) –

Depreciation and amortisation (2 543) (2 943)

Listing cost – (262)

Share-based payment expense (4 011) (6 456)

Profit from operations 89 619 374 903

Net finance cost (58 750) (100 111)

- Finance costs (64 148) (109 202)

- Finance income 5 398 9 091

Profit before taxation 30 869 274 792

Taxation 83 (244)

Profit for the period 30 952 274 547

Attributable to:

Equity owners of the parent 28 342 270 389

Non-controlling interest 2 610 4 158

Total comprehensive income for the period 30 952 274 547

Interest cover ratio (times) 2.58 2.65


Distribution Reconciliation

Reconciliation between earnings and distributable earningsfor the six months ended 31 August 2019

* FY2020 distribution forecast remains on target for a 6% - 8% distribution growth from FY2019

Unaudited six months

ended Aug 2019

R’000

Earnings (profit attributable to owners of the parent) 28 342 Adjusted for:

Fair value adjustments to investment properties 60 497 Straight-lining of leases adjustment (11 506)Impairment of investment 6 647

Equity-settled share-based payment reserve 4 011 Antecedent dividend 3 867 Distributable profit 91 858

Interim distribution* (R'000) 91 858 Number of shares for the period 205 776 521 Interim distribution per share (cents) 44.64

Distributable reconciliation


Summary Balance Sheet

Consolidated and separate statement of financial positionfor the six months ended 31 August 2019

Group Audited six months ended

Aug 2019 R’000

Group Audited year ended

Feb 2019 R’000

ASSETS Non-current assets 3 988 580 3 808 427 Current assets 49 158 108 291 Total assets 4 037 738 3 916 718 EQUITY AND LIABILITIES

Total attributable to owners 2 401 215 2 295 532 Non-controlling interest 54 155 54 155 Shareholders' interest 2 455 370 2 349 687 Non-current liabilities 1 335 105 1 335 853 Current liabilities 247 263 231 178 Total liabilities 1 582 368 1 567 031 Total equity and liabilities 4 037 738 3 916 718

Number of ordinary shares in issue 205 776 521 188 888 709 Gearing ratio (%) 38.43 39.58Tangible net asset value per share (cents) 1 164 1 212

Spear REIT Limited and its subsidiaries


FundingFunding Maturity LTV

38%Average Cost of Funding

8.85% 16 BPS

R983mR547mFixedVariable

64.2%35.8%

R1.53bn

Cost 9.05%

Cost 8.7%

20 months

24 months R612m

R95mR223m

FY2021

FY2020

FY2023

40%

6%

39%

15%

R1.53bn22-month average

maturity

R600mFY2022


Group Gearing

Varian

ce (%

)Co

st o

f de

bt

(%)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-4,5

31 Aug 2017 28 Feb 2018 31 Aug 2018 28 Feb 2019 31 Aug 2019

-4,0

-3,5

-3,0

-2,5

-2,0

-1,5

-1,0

-0,5

0

0,5

Average cost of debt Average fixed cost

9.23% 9.25% 9.04%9.01%

8.85%

9.51% 9.45%9.09% 9.05% 9.05%

In-force cost of debt for period

Ge

arin

g (%

) Varian

ce (%

)

35%

36%

37%

38%

39%

40%

34% -8

31 Aug 2017 28 Feb 2018 31 Aug 2018 28 Feb 2019 31 Aug 2019

-6

-4

-2

0

2

4

6

8

10

12

Group gearing Group variance

37.23%

38.48%

36.01%

39.58%

38.43%


4 Portfolio Overview


Top 5 Properties by Value

Value (R’000)

446 732

Sector

Industrial

GLA (m2)

86 191

Total Value (%)

11.41%

Valuation (R/m2)

5 183

Mega Park, Bellville

Value (R’000) 428 467

Sector

Commercial

GLA (m2)

25 119

Total Value (%)

10.94%

Valuation (R/m2)

17 057

2 Long Street, Cape Town

Value (R’000) 417 926

Sector

Mixed Use

GLA (m2)

31 101

Total Value (%)

10.67%

Valuation (R/m2)

13 438

Sable Square, Century City

Value (R’000) 317 983

Sector

Commercial

GLA (m2)

17 002

Total Value (%)

8.12%

Valuation (R/m2)

18 703

Northgate Park, Brooklyn

Total Value R1.91bn

Total GLA 179 908m2

Portfolio 48.84%

Value (R’000) 301 151

Sector

Mixed Use

GLA (m2)

20 495

Total Value (%)

7.69%

Valuation (R/m2)

14 694

UES DoubleTree by Hilton, Woodstock


Sectoral split by GLA, Value & Revenuefor the period ended 31 August 2019

R559mRetail

Commercial130 507m2

Retail34 650m2

Hospitality28 347m2 Industrial

220 328m2

32%

8%

7% 53%

413 832m2

Property split by GLA

R39m

R19m

R4.2mR1m

R70m

Retail

Hospitality

Non-propertyResidential

Industrial

16%

8%

0.3%0.3%

29%

R110mCommercial46%

R239mTotal revenue by

sector

R460mR3.5m

R1.07bn

HospitalityResidential

Industrial

14%

13%0%

27%

R1.79bnCommercial

45%

R3.88bnProperty split

by value (excluding

lease asset)

R559mRetail


Letting Activity

Expiries andcancellations

GLA

Gross rental

at expiry

Average gross expiry rental

R/m²

Renewals/New lets

GLA

Gross rental at renewals/

New lets

Average gross new rental

R/m²

Average rental reversion

%

Commercial 21 285 3 158 275 148 27 335 4 271 042 156 5.30

Industrial 67 041 2 645 467 39 68 868 2 741 211 40 0.87

Retail 2 924 321 879 110 3 939 433 141 110 (0.10)91 250 6 125 621 99 100 142 7 445 394 102 2.72

Spear began the period with an opening vacancy of 7 992m² and with 91 250m² expiring during the year. Management has successfully renewed and re-let 100 141m² at a positive reversion of 2.72%.

The table below reflects the letting activity of the interim period:

Spear’s lease expiry profile remains defensive with a WALE of 29 months.

Spear’s asset and property management team has a hands-on approach to tenant retentions and actions tenant engagements well in advance of expiry to ensure business continuity and risk management for the business.


Tenant & Vacancy Profile

Large national and international tenants, large listed tenants, government

and major franchiseesNational tenants, smaller listed tenants, franchisees, medium

to large professional firms

Other

723m2

Hospitality

1 460m2

Retail

3 409m2

Commercial

1 860m2

Industrial

27%111 Tenants

17%73 Tenants

Based on GLA

56%233 Tenants

Based on GLA Based on GLA

Total

100%Total vacancy

7 452m2 = 1.85%(Due to aggressive letting and successful tenant retention programmes)

Number of tenants

417

An analysis of the property portfolio in respect of tenant profiles is provided below

Analysis of the property portfolio as at 31 August 2019


Lease Expiry by GLALease Expiry Profile based on GLA as at 31 August 2019

TotalTotalTotalTotalTotalTotalTotal

20% Average

10%

20%

30%

40%

50%

60%

Vacant

22%0%2% 21%

Monthly Expiries09/2019

– 08/2020

Expiries09/2020

– 08/2021

Expiries09/2021

– 08/2022

Expiries09/2022

– 08/2023

Expiries09/2023 onwards

70%

80%

90%

100%

0%

13% 16% 26%

Industrial Commercial Retail Hospitality


Top Tenants by GLAFY2019: 150 252m2 = 36.31% of Fund

Consol Liquor Runners

Distell Nampak 15 on Orange

Autograph Collection

Lindsay Manufacturing

ImperialSG Consumer

Multi Room Management

MWEB

10 k/m2

15 k/m2

20 k/m2

25 k/m2


Risk ManagementSustainability Update

Water continuity investment R7 million

Capital deployed to date R2 million

Water use and transport licences In process

Current boreholes 2

Current well points 3

Boreholes to be actioned 4

16 000l water tanker truck 1

Water savings initiatives:

Implemented waterless urinals

Taps switched off (where possible), supplied hand sanitisers

Tap aerators installed to reduce water flows

Use of pre-diluted cleaning chemicals

Use of grey water to clean where possible

Assets earmarked for Phase 1 rollout 12

Combined system size 4.2 MWh

Renewable energy investment R49 million

Average payback period 4.5 years

Benefits of renewable energy:

Reduction of energy costs by approximately 30%

Less reliance on fossil fuel-generated supply (best investment choice amongst other RE options)

Supply cost hedged against massive Eskom increases

Reduction of group carbon footprint including low maintenance and operation costs

Strong business and investment case to roll-out in favourable tariff areas from R0.72c p/kWh – R 1,30 p/kWh

Assists with green-star-rating process and aligns with Spear’s sustainability goals

Water continuity

Renewable energy


Sable Square - Phase 2

Organic Portfolio Growth

Development & Redevelopment Projects

Physical address:

Cnr Bosmansdam and Ratanga Roads, Milnerton

Planned GLA to be added:

12 000m2

Sector:

Retail & Residential

Development cost:

R150m

Target yield:

9%

Status:

TBC


78 on Edward



Physical address:

78 Edward Street, Tyger Valley

GLA added:

3 500m2

Sector:

Mixed Use

Development cost:

R89m

Target yield:

9%

Status:

Completed


No. 1 Waterhouse Place



Physical address:

No. 1 Waterhouse Place, Century City

GLA redeveloped:

11 236m2

Sector:

Commercial

Redevelopment cost:

R95m

Target yield:

9%

Status:

Target completion May 2020


Marine Place - Paarden Island



Physical address:

Marine Drive, Paarden Island

GLA to be developed:

52 000m2

Sector:

Mixed Use

Development cost:

R1.4bn

Target yield:

10%

Status:

Target commencement TBA


5 Outlook


Outlook

Fully internally managed fund

Led by industry veterans with successful track record

Substantial shareholding by directors – 32.6%

Proximity to assets is excellent

Distribution for FY2020 remains on target for a 6% – 8% growth from

FY2019 distribution per share

Growth supported by accretive acquisitions and organic portfolio

improvements

Realisation of underdeveloped portfolio bulk ± 150 000m2

Portfolio value R3.92bn

GLA of 413 832m2

Occupancy rate 98.1%

In-force escalations 8.08%

High Quality Real Estate Portfolio

Active Asset Management

FY2020 Guidance


6 Thank You & Questions?


Date post:	24-Jul-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Interim Results Presentation · Interim distribution* (R'000) 91 858 Number of shares for the...

Documents