for the period ended
31 August 2013
Proceedings
• Introduction
• Highlights
Sandile Nomvete
• Strategy
• Unitholder profile
• Financial review
• Capital management
Bronwyn Corbett
• Consolidated property portfolio
• Capex
• Prospects
Sandile Nomvete
2
Introduction
Introduction to Delta
• Black managed property loan stock company
• Successfully raised R1.7 billion in equity post listing
• Defensive portfolio at an average value of R98.8 million
• Ratio of government to non-government (GLA) = 56:44
• Total investment portfolio of R4.8 billion (49 properties)
• Market capitalisation of R3.0 billion
• Constituent of the FTSE-JSE SA listed property index (J253)
• Achieved a Level 2 BEE property charter rating
4
Highlights
Highlights for the period under review
• Distribution achieved of 32.51 cents per linked unit, ahead of forecast
• In line to meet year end distribution
• Portfolio occupancy of 94.7%
• Attractive forward funding rates of 7.7%
• Leases renewed for 39 533 m² (R244.7 million)
• Yield enhancing acquisitions R2.7 billion (average yield of 9.7%)
6
Strategy
Strategy
Short-term:
• Achieved interim distribution
• Sweated current portfolio (lease renewals and uplift on vacancies)
• Transfer of all new acquisitions
• Bulked up asset management team
• Included 3 further property managers
• Maintained A/B grade fund – new acquisitions
• On track to achieve distribution growth and February 2014 distribution
8
Strategy | continued
Medium-term:
• Grew portfolio to R4.8 billion:
› Yield enhancing assets
› Increased SARS portfolio
• Diversification of portfolio:
(60/40 government/ non government)
› New acquisitions
› Parastatal
› Industrial
9
Organogram
CEO
Sandile Nomvete
(Exec Dep. & Prop Dev. Prog)
CFO / COO
Bronwyn Corbett
(CA (SA))
Asset Management
Legal
Taryn Harris
Finance
(BA Hons, LLB)
Senior AM
Otis Tshabalala
Andre Janari
Senior Ops AM
Trevor Matthews
Group Financial Manager
Greg Booyens
(CA (SA))
Ops AM
Sandra Mqina
Ojong Nso
Godfrey Ndlovu
Finance and
Compliance Manager
Stefan Smit
Bookkeeper
Rochelle Mumbengegwi
(Bcom Acc)
(CA (SA))
10
Unitholder profile
As at 31 August 2013
Units held
Holding
Coronation Fund Managers
88 389 171
24.62%
Stanlib Asset Management
74 875 588
20.85%
Public Investment Corporation
57 496 972
16.01%
Directors, Management and Founders
39 925 588
11.12%
Momentum
16 058 889
4.47%
276 746 208
77.07%
Other
82 337 407
22.93%
Total
359 083 615
100.00%
Subtotal
11
Financial review
Financial highlights
• Converted to a REIT
• GCR Credit Rating achieved
› Raised R190 million 6 month commercial paper
› Long-term: BBB+
› Short-term: A2
• Introduced Standard Bank as debt funders
• Reduced cost of funding to 7.50%
• Achieved 5 year fixed funding at 7.87%
13
Financial overview
31 August 2013
Distribution per linked unit
32.51
Cost to income ratio
23.40%
Gearing level
41.10%
Weighted average interest rate (at 31 August 2013)
Fixed vs. floating
7.50%
62 : 38
Average debt fixed period (years)
3.50
Net asset value per linked unit (excl deferred tax)
7.99
Average rental/m²
82.04
Average escalation
8.34%
14
Distributable income statement
R’000
Net property income
31 August 2013
167 734
Rental income
218 950
Property operating expenses
(51 216)
Administration expenses
(15 813)
Net finance costs
(34 024)
Sundry income
Retained profit not distributed
Distributable income for the period
Number of linked units in issue
Distribution per linked unit (cents)
Cost to income %
* Includes property management fees historically excluded
17
(1 176)
116 738
359 083 615
32.51
23.40%*
15
Segmental analysis
Revenue
Distributable
earnings
149 062
119 135
58 335
39 115
Industrial
6 064
5 056
Retail
5 489
4 428
218 950
167 734
R’000
Office government
Office other
Total property portfolio
Other income
17
Administration and corporate costs
(15 813)
Net finance charges
(34 024)
Retained distributable earnings
Total distributable earnings
(1 176)
218 950
116 738
16
Net property income analysis
GEOGRAPHICAL
2.0%
SEGMENTAL
0.6%
6.7%
2.6%
3.0%
6.8%
45.0%
23.3%
7.4%
71.1%
8.0%
23.5%
Gauteng (45.0%)
Limpopo (8.0%)
Northern Cape (6.8%)
Free State (2.0%)
KwaZulu Natal (23.5%)
Eastern Cape (7.4%)
Western Cape (6.7%)
North West (0.6%)
Office: government (71.1%)
Office: other (23.3%)
Industrial (3.0%)
Retail (2.6%)
17
Capital management
Group debt structure
Maturity date
Debt facility maturity profile
Interest rate
August 18
7.09%
July 18
7.09%
May 18
7.22%
May 18
7.87%
November 17
7.88% #
May 16
7.00%
May 16
7.04%
May 16
7.55%
May 16
7.01%
November 15
7.74%
November 15
7.18%
January 14
7.55%
0
# Fixed rate expires Feb 2016
50
100
150
Variable rate debt
200
250
300
Fixed rate debt
350
400 R million
19
Consolidated property
portfolio
Delta at a glance
Market capitalisation
No of properties
Valuation of portfolio
Average value per property
Gross lettable area
Sectoral profile: GLA
Tenant profile: GLA
Occupancy rate
Weighted average rent
Weighted average escalation
Loan to value
Funding costs
* OG – Office government
At listing
31 August 2013
R1.35 billion
20
R2.10 billion
R105 million
203 261 m²
Office: 94%
Retail: 6%
Industrial: 0%
*OG: 72%
Non Gov 22%
Retail: 6%
Industrial: 0%
95.6%
R 96.04
8.41%
40.0%
70% hedged / fixed
Ave all in rate 7.90%
R3.0 billion
49
R4.80 billion
R98.8 million
477 680 m²
Office: 81%
Retail: 7%
Industrial: 12%
*OG: 56%
Non Gov 25%
Retail: 7%
Industrial: 12%
94.7%
R 82.04
8.34%
41.0%
62% hedged / fixed
Ave all in rate 7.50%
21
Consolidated property portfolio analysis
SECTORAL PROFILE: GLA
GEOGRAPHIC PROFILE: GLA
BUILDING GRADE: GLA
7.0%
24.9%
11.9%
6.0%
28.8%
11.1%
5.0%
3.4%
1.7%
0.6%
7.3%
15.3%
73.6%
47.5%
55.9%
Office: government (55.9%)
Office: other (24.9%)
Retail (11.9%)
Industrial (7.3%)
SECTORAL PROFILE: RENTAL
Gauteng (47.5%)
Western Cape (7.0%)
Eastern Cape (5.0%)
Free State (1.7%)
GEOGRAPHIC PROFILE: RENTAL
7.5%
25.6%
6.3%
24.1%
A (73.6%)
B (11.1%)
64.6%
7.3%
6.6%
6.7%
10.9%
82.4%
45.8%
Gauteng (45.8%)
Northern Cape (7.5%)
Eastern Cape (6.6%)
Free State (1.7%)
C (15.3%)
BUILDING GRADE: RENTAL
6.5%
1.7%
0.5%
3.5%
Office: government (64.6%)
Office: other (25.6%)
Retail (6.3%)
Industrial (3.5%)
KwaZulu Natal (28.8%)
Northern Cape (6.0%)
Limpopo (3.4%)
North West (0.6%)
KwaZulu Natal (24.1%)
Western Cape (7.3%)
Limpopo (6.5%)
North West (0.5%)
A (82.4%)
B (6.7%)
C (10.9%)
22
Acquisitions
No of properties
Valuation of portfolio
Average value per property
Gross lettable area
Sectoral profile: GLA
Tenant profile: GLA
Occupancy rate
Weighted average rent
Weighted average escalation
% tenants single tenanted
% tenants < 5
Lease expiry > 28/02/2018
Lease renewals
SARS Randburg
SARS Bellville
Presidia
*SAPS
OG – Office
government
Acquisitions: 31 August 2013
29
R2.7 billion
R93.8 million
271 447 m²
Office: 72%
Retail: 7%
Industrial: 21%
*OG: 47%
Non Gov 25%
Retail: 7%
Industrial: 21%
96.6%
R78.20
8.7%
45.5%
52%
93%
5 years
5 years
5 years23
Acquisitions
GEOGRAPHICAL SPLIT (GLA)
5.2%
LEASE EXPIRY PROFILE
1.0%
6.7%
2.6%
3.0%
57.0%
8.5%
23.3%
71.1%
21.6%
Gauteng (57.0%)
Western Cape (8.5%)
Limpopo (5.2%)
KwaZulu Natal (21.6%)
Northern Cape (6.7%)
Free State (1.0%)
Office: government (71.1%)
Office: other (23.3%)
Industrial (3.0%)
Retail (2.6%)
24
Leasing
• Portfolio vacancy at 31 August 2013: 5.3% (GLA)
• Bad debts of 0% at half year
• GLA renewed: 39 533 m²
• Lease expiry (GLA) >28/02/2018: 79%
• Lease expiry (rental) > 28/02/2018: 81%
• Average rate/ m² achieved: R82.04
• Average rental escalation achieved: 8.34%
New leases
SARS Springs
NPA
Tivoli
Term
GLA
Historic rate/m²
New rate/m²
3 years
1 992m2
R63.92
R69.00
9 years 11 months
10 552m2
R108.00
R112.00
5 years
2 075m2
R80.23
R86.65
25
Consolidated property portfolio analysis
LEASE EXPIRY PROFILE: GLA
(percentage)
Incremental GLA
Cumulative GLA
100.0%
100%
79.2%
80%
100%
80%
60%
60%
40%
40%
15.4%
20%
19.6%
20.7%
20.8%
20%
10.6%
5.3%
5.3%
4.8%
0%
Vacant
4.2%
1.1%
0.1%
28 Feb 14 28 Feb 15 29 Feb 16 28 Feb 17 28 Feb 18
Incremental GLA
0%
Beyond
2018
Cumulative GLA
26
Consolidated property portfolio analysis
LEASE EXPIRY PROFILE: RENTAL
(percentage)
Incremental rental income
Cumulative GLA
100.0%
100%
81.5%
80%
100%
80%
60%
60%
40%
40%
16.8%
20%
18.4%
18.5%
1.60%
0.10%
10.3%
5.9%
4.40%
6.50%
0%
28 Feb 14
28 Feb 15
20%
29 Feb 16
Incremental rental income
28 Feb 17
0%
28 Feb 18 Beyond 2018
Cumulative rental income
27
Consolidated property portfolio analysis
WEIGHTED AVERAGE RENTAL ESCALATION
(percentage)
Rental escalation
10%
9%
8.3%
8%
7%
6%
5%
8.4%
8.2%
7.8%
8.6%
Office: government
Office: other
Retail
Industrial
Sectoral
Average
28
Consolidated property portfolio analysis
WEIGHTED AVERAGE RENTAL
(R/m²)
Rental
100
82.04
80
60
40
20
0
97.38
82.74
67.94
22.64
Office: government
Office: other
Retail
Industrial
Sectoral
Overall
29
Capex
Capex projects underway
SARS KIMBERLEY: Waterproofing project
Salient features
•
•
•
•
Roof
before
Building area: 2 950 m²
Location: Kimberley
Anchor tenant: SARS
Current gross rental/m²: R111.33
Renovation
• Capex cost: R1.2 million
• Completion date: August 2013
• Lease term: 5 years – 30 June 2015
after
31
Capex projects underway
NPA: office refurbishment: R33.5 million
Salient features
•
•
•
•
•
Building area: 10 5525 m²
Location: Cape Town
Anchor tenant: NPA
Current gross rental/m²: R134.57 (incl parking)
Lease term: 9 years, 11 months
– expiry 31 March 2023
• Building will be Grade A after refurbishment
SARS Randburg: extra parking: R11.5 million
Salient features
•
•
•
•
•
•
•
Building area: 8 496 m²
Location: Randburg
Anchor tenant: SARS
Current gross rental/m²: R79.58
Present parking: + 237 bays, to add 167 bays
Parking ratio will increase to 4 bays/100m²
Lease expiry: 28 February 2017
WB Centre: waterproofing project
and office refurbishment: R3.8 million
Salient features
• Building area: 7 425 m²
• Location: Kimberley
• Anchor tenant:
Woolies (1 738 m²)
Jetmart (1 500 m²)
• Current gross rental/m²: R76.31
Tivoli Building: office refurbishment:
R3.0 million
Salient features
•
•
•
•
•
•
Building area: 2 075 m²
Location: Klerksdorp
Anchor tenant: DPW (DHA)
Current gross rental/m²: R86.55
New gross rental/m²: R93.48 (incl parking)
Lease expiry: 30 September 2018
32
Prospects
Prospects
• Distribution growth
• Availability of yield enhancing, quality assets
• Value creation in existing assets
• Constituent of the FTSE-JSE SA listed property index
• REIT approval
• Liquidity of the fund
• Attractive funding rates from DCM programme
• Capitalise on BEE status (lease renewals)
34
Q&A