Fountainhead Property Trust FY 2013 financial results presentation

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Fountainhead Property Trust FY 2013 financial results presentation

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Fountainhead Property Trust FY 2013 financial results presentation

  1. 1. for the period ended 31 August 2013
  2. 2. Overview Highlights for the year Len van Niekerk Chief Executive Officer Financial Results Aaron Suckerman Financial Director Segmental and Operational Performance Derick Perkins Retail Asset Manager New Developments and Refurbishments Derick Perkins Strategy: Investment and general Len van Niekerk Prospects Len van Niekerk
  3. 3. Highlights  Focussed property/asset management in place  Redevelopment plans well progressed  Clear investment strategy  Completion of Bryanston shopping centre interior refurbishment  Completion of Centurion Mall spine upgrade  Lease renewals of 141,432 m2 at positive reversions of 4.54%  High tenant retention rate
  4. 4. New operational structure Development management Redefine Properties Limited Board of Directors Sole shareholder Fountainhead Property Trust Management Limited Asset management Property management Fountainhead Property Administration (Evening Star 768 ) HR Legal Marketing IT services Fountainhead Property Trust CEO FD Asset managers Centre/Property managers Property and lease administration Finance
  5. 5. Strong core assets
  6. 6. Financial highlights  Total distribution for the 11 months of 50 cents per unit  Improved debt maturity profile and level of hedging  Arrears remain well controlled  Property expenses as a % of revenue at 20.6% vs 21.9% in 2011  Property portfolio forward yield of 8% on valuations  Capital investment in the portfolio of R221m
  7. 7. Annualised like-for-like distribution Distributable income (Rm) Cents per unit Distribution 2012 649 55.83 Less 1 month distribution (57) (5) Distribution 2012 – 11 months 592 50.83 Distribution 2013 581 50 12 1 593 51 Change Add: non-recurring expenses Like-for-like DPU (2%) 0%
  8. 8. Contribution to distribution (cents per unit) 90.0 0.4 80.0 11.3 2.4 70.0 6.4 60.0 16.9 1.7 50.0 40.0 84.9 30.0 50.0 20.0 10.0 0.0 Contractual Sundry income rental Operating expenses Net utilities Admin expenses Interest paid Interest received Distribution per unit
  9. 9. Distributable income statement 11 months 11 months Change Aug 2013 Aug 2012 Impact on growth Items affecting distribution growth  Property revenue 1 009 206 909 846 11% (3 056) (5 888) -48% 0% (35 316) (32 871) 7% (97 973) 5% -1% (29 370) (7 308) 302% -4% (5 786) (3 669) 58% 0% (176 532) (147 709) 20% -5% (5 289) (2 625) 101% 0% Professional/consultancy fees (11 288) (711) 1487% -2% Management fees (57 365) (48 452) 18% -2% Administration costs (73 941) (51 788) 43% -4% Net finance charges (177 378) (117 699) 51% -10% 581 355 592 650 -2% -2% 50.00 50.97  Reversal of historic municipal accruals in the prior period  Non-recurring advisory costs 0% (103 005) Expensing of interest on Blue Route Mall 17% Letting commission and tenant installation Property management Operating expenses Net Municipal charges Bad debts Property expenses Admin fees Net income Distribution per units
  10. 10. Abridged statement of financial position 31 August 2013 R000 Investment property 30 September 2012 R000 11 105 125 10 794 992 78 236 - 415 279 454 612 11 598 640 11 249 604 Unit holders funds 8 249 107 8 062 932 Interest bearing liabilities 2 881 319 2 733 205 468 214 453 467 11 598 640 11 249 604 709 693 26% 25% 1 157 050 1 032 997 Change Other non-current assets Current assets Total assets Current liabilities Total unit holders’ funds and liabilities NAV (cpu) Gearing Gearing headroom (R000) 3% 5% 2%
  11. 11. Funding profile Nominal value (R000) 31 August 2013 30 September 2012 Total interest bearing liabilities 2 881 319 2 733 205 Weighted average cost of debt 7.49% 7.97% % of debt fixed 55% 40% % of assets secured 47% 48% 1.6 1.8 Average term  Diversification of debt funding – banks and DCM  Extend facility expiry profile  Increase hedging against interest rate risk  1 000 000 Opportunities to reduce the weighted average cost of borrowings 800 000 600 000 400 000 200 000 2013 2015 2016 Facility 2017 Swap 2018
  12. 12. Property values Rate per m2 2013 Property Area m2 Valuation Aug 2013 Retail – Gauteng 332 170 5 967 111 17 964 Retail – Western Cape 139 587 2 451 613 17 563 Discount rates Total Retail 471 757 8 418 725 17 845 Capitalisation rates Total Office 137 367 1 691 400 12 313 Total Industrial 167 770 650 700 3 879 26 969 344 300 12 767 Total Specialised 2013 Range Retail 12.1% - 16.0% 7.1% - 11.0% Office Discount rates 5.5% - 16.5% Capitalisation rates 9.0% - 10.5% Industrial Total portfolio 803 863 11 105 125 13 815 Discount rates 16.0% - 18.0% Capitalisation rates 10.0% - 12.0% Specialised Discount rates Capitalisation rates 15.5% 9.5%
  13. 13. Efficient operations
  14. 14. Portfolio Split By GLA By GLA By market value By market value By number of By number of properties properties 2 3% 6% 3% 13 21% 15% 26 59% 17% 22 76% Retail Offices Industrial Specialised
  15. 15. Portfolio key metrics Description Office Retail Industrial Specialised Total Asset Value (R’b) 1.7 8.4 0.7 0.3 11.1 Average property value R(‘m) 77 647 25 172 176 Number of properties 22 13 26 2 63 137,367 471,757 167,770 26,969 803,863 Vacancy (%) 16.2 3.8 7.8 0.0 7.1 Average rental escalation (%) 8.16 8.22 8.95 8.70 8.46 Average gross rental (m²) 138 164 50 107 133 % of portfolio 15.2 75.8 5.9 3.1 100 Total GLA (m²)
  16. 16. Vacancies GLA (m2) 2013 GLA (m2) 2012 % Aug 2013 % Sep 2012 Retail 16 906 13 092 3.8 3.0 Office 27 230 27 721 16.2 16.5 Industrial 13 036 13 489 7.8 8.0 - - - - 57 172 54 302 7.1 6.7 Sector Specialised Total  Vacant office area at retail centres included under office sector
  17. 17. Letting activity Tenant retention and rental reversion Sector Expires Retention Retention (%) Rental reversion Retail 63 217 49 676 79% 4.3% Offices 17 247 11 052 64% 7.0% Industrial 81 914 64 560 79% 5.0% - - - - 162 378 125 288 77% 4.54% Esc (%) 2013 Esc (%) 2012 Specialised Weighted average rental and weighted average lease escalation Sector GMR (m2) 2013 GMR (m2) 2012 Retail 164 141 8.22% 8.32% Office 138 115 8.16% 8.24% 50 47 8.95% 8.05% 107 109 8.70% 8.85% 133 117 8.46% 8.31% Industrial Specialised
  18. 18. Lease expiry profile (by rental and sector) 120% 100% 100% 80% 63% 60% 37% 40% 21% 20% 14% 18% 22% 10% 8% 13% 16% 19% 18% 15% 6% 7% 9% 7% 0% 2014 2015 2016 Industrial Offices 2017 Retail 2018 Specialised >2018
  19. 19. Leases expiring 2014 (m2) Retail Total GLA Retail 471 757 74 067 16% Offices 167 770 10 927 7% Industrial 137 367 91 996 67% 26 969 - 0% 803 863 176 990 22% Specialised Total % GLA  Centurion contributes 26% of Retail expires  27% of expiries at Centurion already renewed  Industrial includes monthly leases of 31 310m2 which rentals are at premium to market
  20. 20. Trading density growth 1% 4.6% 9.3% 3.4% 4.2% 15.6% -21.0% 1 841 2.9% 1 840 1 818 11.7% -5.5% 4 000 3 534 3 500 3 000 2 568 2 500 2 458 2 343 2 056 2 000 1 637 1 500 1 153 1 000 500 Benmore Kenilworth Centurion Boulders Southgate N1 City Blue Route Bryanston Mall Westgate Brightwater commons
  21. 21. Focused and improved assets
  22. 22. Investment Strategy  Focus on core large assets   Major metropolitan areas and urban areas  > R150m, and/or >15,000m2   Dominant retail centres Review certain co-owned assets Office and Industrial   Disposal of numerous smaller properties   Fund to retain exposure to office and industrial Focus on quality assets with low risk income Specialised  Strict investment criteria on any new investments – Strong nodes – Strong operators – Long leases with fixed escalations (no operational exposure)
  23. 23. Strategy  Debt Funding   Extend facility expiry profile  Increase hedging against interest rate risk   Diversification of debt funding – banks and DCM Opportunities to reduce the weighted average cost of borrowings Greater operational alignment  Property management outsourced to Fountainhead Property Administration (FPA) from 1 Oct 2013 – Already includes asset management, finance and administration – All properties other than co-owned assets are managed by FPA   Improved management effectiveness and cost savings Ongoing review of legal structure  Commenced trading as a REIT on 1 September 2013  On-going SA REIT discussions regarding conversion of PUTs to corporate REITs
  24. 24. Investment Portfolio Portfolio breakdown by sub-sector (by value at 31 August 2013) Industrial 637; 6% Offices 1 795; 16% Hotel and hospital 344; 3% Super regional 3 989; 36% Neighbourhood shopping centres 30; 0% Community shopping centres 589; 5% Regional and small regional 3 393; 31%  Dominance of large established retail assets   Many of Fountainhead’s centres are named after the suburb in which they are located Focus on our core strengths
  25. 25. Investment strategy implementation 100% -16% +11% +1% +4% R159 R463 R 12 000 R1 800 R 10 000 100% R1 178 R 8 000 R 6 000 R11 105 R11 105 R 4 000 R 2 000 R0 Current Portfolio  Disposals Developments & Capex Acquisitions Balancing Capital Addition Current Portfolio Intensive asset management initiatives to improve focus and quality    Current and potential disposal, development and acquisition activity equates to 28% of the portfolio In addition to above, further development opportunities to existing assets are under consideration Chart indicates intended direction  Purposefully ignores the element of timing  Excludes any other acquisitions or developments not mentioned  Excludes using additional borrowing headroom
  26. 26. Disposals Rm Cumulative % R3 500 100% 90% R3 000 80% R2 500 70% 60% R2 000 50% R1 500 40% 30% R1 000 20% R500 10% R- 0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 Property Values Cumulative %  The largest 15 assets account for 84% of portfolio value  The smallest 32 properties account for 4.6% of the portfolio value
  27. 27. Developments Development Comment Committed at year-end Rm Initial Yield 120 Type Start date Completion date 5.82% Bryanston Shopping Centre Retail Upgrade, parking and Checkers expansion 95 5.00% Ongoing Jun-14 Centurion Mall Retail Food Lovers Market 25 8.93% Apr-14 Aug-15 924 7.10% Subsequent to year-end Boulders Shopping Centre Retail Expansion 262 7.25% Jun-14 Aug-15 Kenilworth Centre Retail Expansion, parking, R25m deck rectification 189 6.00% Jan-14 Jun-15 Centurion Mall Retail Expansion and upgrade 165 6.00% Mar-14 Aug-15 Retail Development Retail Board approved, subject to certain approvals 308 8.25% 984 7.38% Total committed and planned capex  Necessary non-yielding capex of R60 million to be spent on necessary structural maintenance and improvements Oct-14
  28. 28. Acquisitions Acquisition summary Acquisition Type Comment CIB Office Office Bedfordview Rm 159 Initial Yield Est Transfer 8.15% Feb-14  Two adjacent A-grade buildings in office park with combined GLA of 7,513m2  Prominent direct highway visibility  Single tenant: CIB Insurance  Triple net lease until June 2024 escalating at 8% pa  Conditional on Competition Commission approval
  29. 29. Improving quality
  30. 30. Kenilworth Centre – Kenilworth, Western Cape  Significantly improved access and egress  570 new parking bays  Improved internal vertical circulation  Additional 4,500m2 GLA  R25m rectification work to existing parking decks
  31. 31. Bryanston Shopping Centre – Bryanston, Gauteng  Improve access and egress including alignment of Hobart road  Adding 192 bays with new parking deck  Common area upgrade and refurbishment complete  Improved tenant mix  2000 m2 Expansion of Checkers
  32. 32. Centurion Mall – Centurion, Gauteng  Refurbishment of open-air spine completed  R25m, 8.9% yield, 1,000m2 extension and conversion of Fruit & Veg into a new Food Lovers Market  R128m, 7.7% yield 2,000m2 expansion, new mall and introduction of new tenants  R36m upgrade of common areas  Total capex R189.8m, 6.4% yield of which R153.5m is yielding 7.9%
  33. 33. Boulders Shopping Centre – Midrand, Gauteng  Additional 7219m2 of GLA, including new 3,500m2 food and grocery anchor  Improved internal circulation  Introduction of remaining banks and national value fashion  Strengthen dominance in its catchment area
  34. 34. Adding value
  35. 35. Prospects  Tough trading conditions likely to persist in 2014   Focus on letting vacancies and retaining tenants Drive to create improved trading environments at retail centres Continue to reduce operating expenses and improve cost control further Continue to improve assets to maximise potential  Focused investment strategy with improved operational alignment  Anticipated distribution growth  6.25 - 7.25% on an annualised basis for the 12 months to 31 August 2014   The forecast has not been reviewed or reported on by Fountainhead’s auditors
  36. 36. End
  37. 37. for the period ended 31 August 2013

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