annual financial results for the 12 months ended 31 august ...€¦ · annual financial results for...

annual financial results for the 12 months ended 31 August 2017

Creating value beyond financial return

Octodec Head OfficeSharon’s PlaceOne On Mutual012Steyn’s Place

agenda

1 about us 03

2 overview for the period 06

3 our portfolio performance 10

4 our results 33

5 outlook 44

6 questions and answers 48

7 contact details 49

8 appendices 50

2

Octodec Investments Limited | Reviewed provisional annual results presentation 2017

2017Tshwane, Church Square

1905Pretoria, Church Square

1about us

3

2017One on Mutual completed

2014One on Mutual site preparation

the Octodec story

4

• Listed on the JSE in 1990: REIT status on 1 September 2013

• Provided shareholders with an annual compounded return over a five and 10-year period of 12.8% and 9.4% respectively

• 315 properties (including joint ventures) in portfolio

• Properties managed by City Property Administration (Pty) Ltd

‣ New five-year management contract under negotiation

‣ Separate sub-committee formed comprising of non-executive directors

‣ Over 40 years’ property management experience

‣ Solid track record of managing residential, retail, office and industrial property


2017Kerk Street,

Johannesburg

1911Anstey’s Building

the Octodec story our strategy

5

• The strategy remains the same

‣ Focus on Tshwane and Johannesburg CBDs

‣ Continually improving the quality of our portfolio

‣ Focus on growing our residential portfolio

‣ Continue to focus on the low to mid income LSM


2017Kerk Street,

Johannesburg


2overview for the period

6

2016Tshwane, Church Square

1920sPretoria,Church Square

overview for the period• Dividends of

203.1 cents per share, for the twelve month period ending 31 August 2017, a 0.8% increase compared to the prior period of 201.5 cents per share

• Total property assets value at R12.8 billion, up by R474.2 million

• NAV up by 0.7% to R29.33 per share

7

Progress

• Property fundamentals sound

• Strategic greenfield developments to uplift key Tshwane CBD node

• Entrance to new market outside the CBD

• Successful trial of more upmarket offering with One on Mutual trading above expectations

• Profitable recycling of non-core assets

• Improved balance sheet

• Prudent capital management

Context• Residential increasingly competitive

• Tough economic, political and operating environment

• Rising costs (finance, utility and assessment rates and operating costs)

• Council service delivery issues

• Difficult construction environment


overview of Tshwane CBD• Concentration of investments

• Increased urbanisation

• New developments improving node

• New Tshwane House

‣ GLA of 37 000 m2

‣ Housing in excess of 1 500 staff

8

Sustaining city life: TWO decades of building a city bears fruit


Octodec propertiesOctodec properties – developments

New Tshwane

House

One on Mutual MidtownSharon’s

Place

overview of Johannesburg CBD• Urban renewal gaining momentum

• Increasing private sector investment

• Higher demand for property

• Local council support

9

Sustaining city life: TWO decades of building a city bears fruit


Octodec properties

3 our portfolioperformance

10

29%Residential

8%Industrial

22.2%Offices

4.2%Parking

26.6%High street

shops

10%Shoppingcentres

11


portfolio analysis: rental income 31 August 2017

29.0(FY16: 29.5)

26.6 (FY16: 28.9)

22.2 (FY16: 19.6) 10.0

(FY16: 9.8)

8.0(FY16:

8.0)

4.2(FY16:

4.2)

Rental income (%) by sector

Residential Retail: shops Offices Retail: shopping centres Industrial Parking

2.3

4.4

4.8

7.3

12.1

14.7

21.5

32.9

0%5%

10%15%20%25%30%35%40%

Centurion

Silverton and surrounding areas

Tshwane Arcadia

Hatfield

Johannesburg and surrounding areas

Tshwane O

ther

Johannesburg CBD

Tshwane C

BD

Rental income (%) by geographical location

12


portfolio analysis: GLA31 August 2017

23.7 (FY16: 22.0)

25.3 (FY16: 25.9)

29.3(FY16: 29.4)

5.5 (FY16:

5.4)

16.2 (FY16: 17.3)

GLA (%) by sector

Residential Retail: shops Offices Retail: shopping centres Industrial

3.8

4.2

4.6

5.9

7.0

9.1

9.1

24.9

31.4

0%5%

10%15%20%25%30%35%40%

Waverley, G

ezina, Moot

Hatfield

Tshwane, Arcadia

Tshwane W

est

Silverton and surrounding areas

Tshwane O

ther

Johannesburg and surrounding areas

Johannesburg CBD

Tshwane C

BD

GLA (%) by geographical location

residential

13

Portfolio sectors:Rental income (%)

29%Rental income

Average monthly rentals:• R3 400 – R3 900 for a bachelor unit (average size 27 m2)• R4 100 – R4 600 for a one-bedroom unit (average size 43 m2)• R5 400 – R5 900 for a two-bedroom unit (average size 63 m2)Like-for-like rental income growth, after taking into account occupancy levels, reversions and escalations for the twelve-month period, assuming no major development activity

*Octodec Investments Limited | Reviewed provisional annual results presentation 2017

2.5%Growth in rental income

*

2017 2016

Number of properties 70 68Number of residential units

‣ Johannesburg‣ Tshwane

9 50934%66%

8 84038%62%

Gross lettable area (GLA) 394 721 m2 366 827 m2

Rental income R415 million R407 millionGrowth in rental income year-on-year (like-for-like) 2.5% 5.6%

Total vacancies at year end (% of GLA) 12.3% 4.0%Core vacancies (% of GLA) 7.2% 3.6%

residential (continued)

14


29%Rental income

• Tenant profile analysis, for applications during the year‣ Employed by government – 27% of occupants‣ Students – 27% of occupants‣ Churn at 45% per annum‣ Average gross salary per application of R28 000‣ Gross salary above R35 000 – 7% of occupants

• Strong demand for residential units• Vacancies higher due to:

‣ Total vacancies include 400 units at Sharon’s Place – under development

‣ Increased competition in Hatfield and Johannesburg CBD‣ Slower take-up by students – impact mainly in Hatfield

• Affordability a concern in the tough economic environment• Bad debts write-offs below 1% reflect strong collection and credit

management• Ongoing innovation such as roll-out of fibre installation and wifi• Response to tough operating environment – zero deposit for selective

buildings



*

retail overview - combined

15


Like-for-like rental income growth, after taking into account occupancy levels, reversions and escalations for the twelve-month period, assuming no major development activity

*

36.6%Rental income



*

2017 2016


Rental income R523 million R533 millionGrowth in rental income year-on-year (like-for-like)* 5.9% 5.5%

Total vacancies at year end(% of GLA) 9.3% 8.5%

Core vacancies (% of GLA) 8.0% 8.5%

retail: high street shops

16


• High street shops make up 82% of our retail portfolio by GLA and provide 73% of our retail portfolio rental income

• 69.4% of our high street shops are in Tshwane• 30.6% are in Johannesburg• Strong demand in well located CBD retail node• CBD retail offers more growth opportunities than traditional

shopping centres• Retailers are demanding larger tenant installations• Lower cost structures (common area, security, cleaning)Like-for-like rental income growth, after taking into account occupancy levels, reversions and escalations for the twelve-month period, assuming no major development activity

*

26.6%Rental income



*

2017 2016


Rental income R380 Million R398 MillionRental income growth (like-for-like)* 5.7% 5.4%Total vacancies (% of GLA) 10.3% 9.1%Core vacancies (% of GLA) 8.8% 9.1%

retail: high street shops (continued)

17


26.6%Rental income



Top 10 retailers by rentable area

Top 10 retailers by rental FY17

Lessee GLA (m2) Lessee Rental (R’000)

Shoprite Checkers 48 145 Shoprite Checkers 26 237

Pepkor 16 193 Pepkor 22 047

Edcon 13 647 Edcon 15 226

Bidvest 12 325 Bidvest 12 947

Standard Bank 9 591 Foschini Retail Group 11 448

Mr Price Group 6 342 Nedbank 11 127

Foschini Retail Group 6 202 Standard Bank 10 923

AutoZone 5 501 Mr Price Group 8 821

Nedbank 5 388 KFC 7 878

Cambridge Food 4 489 FNB 5 820

Total 127 823 Total 132 475

retail: shopping centres

18


We have six high-quality neighbourhood / convenience shopping centres:

• Johannesburg: Killarney Mall and the Woodmead Value Mart

• Tshwane: Elardus Park, Waverley Plaza, Gezina City and BlaauwVillage (50% held JV)

10%Rental income



2017 2016


Rental income R143 Million R135 MillionRental income growth (like-for-like) 6.4% 4.7%Total and core vacancies (% of GLA) 4.6% 5.4%

retail: shopping centres (continued)

19


• Elardus Park Shopping Centre ‣ Increase in vacancies to 12%‣ In need of an upgrade

• Woodmead Value Mart‣ No vacancies ‣ Rental growth of 10%

• Killarney Mall‣ Occupancy levels stable‣ Increase in trading density by 5% and net property income‣ Focus on improving tenant mix

• Waverley Plaza and Gezina‣ No vacancies

10%Rental income



offices

20



*

22.2%Rental income



*

2017 2016

Let to government (% of total rental income from offices) 42.2% 35.7%

Other (% of total rental income from offices) 57.8% 64.3%Gross lettable area (GLA) 487 510 m2 489 750 m2

Percentage of office space in development / mothballed (opportunities to sell, develop orenter into partnerships)

18.2% 19.4%

Rental income R317 Million R269 MillionGrowth in rental income year-on-year (like-for-like) 8.4% 5.2%

Total vacancies at year-end (% of GLA) 33.8% 34.7%Core vacancies at year-end (% of GLA) 15.6% 15.3%

offices (continued)

21


22.2%Rental income



*

• Offices comprise of‣ Government office space‣ Corporates‣ Smaller units occupied by SME’s, occupancy levels stable

• Upgrading of offices‣ Wits Technikon – R16.1m (let effective 1 March 2017)‣ Midtown – R17.3m (first phase of renovation)

• Strong like-for-like growth mainly due to new government lease for 9 365 m2 included in results for 12 months (effective 1 March 2016)

industrial

22



*

8%Rental income



*

2017 2016

GLA in Tshwane 217 090 m2 235 306 m2

GLA in Johannesburg 53 431 m2 53 602 m2

Total GLA 270 521 m2 288 908 m2

Rental Income R115 million R110 million

Growth in core rental income year-on-year (like-for-like) 5.8% 3.3%

Total and core vacancies at year-end (% of GLA) 12.3% 10.8%

industrial (continued)

23


8%Rental income



*

• Successful redevelopment of properties – demand for upgraded properties‣ Achieving higher rentals after upgrades‣ Upgrade largely tenant driven‣ The Tannery Industrial Park (R12m) – improved occupancy

and rentals achieved• Our competitive advantage

‣ Lower cost of occupation in desirable areas

parking

24



*

4.2%Rental income



*

2017 2016

Average monthly residential rentals (per bay) R380 R360

Average monthly commercial rentals(per bay) R650 R600

Rental income R61 million R58 millionGrowth in core rental income year-on-year (like-for-like)* 4.6% 7.2%

• Focused strategy to increase the number of parking bays in the CBD, due to high demand

• Strong demand from government and residential tenants

• Greater focus on increasing revenue through improved efficiencies

vacancies by sector as at 31 August 2017

25


33.8

10.3

4.6

12.3

12.3

17.7

15.6

8.8 4.6

12.3 7.2

10.7

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%

Offices

High street shops

Retail: Shopping

centres

Industrial

Residential

Total

% of gross lettable area (by sector)Total vacanciesCore vacancies

Note: • Total vacancies include mothballed properties held for development which offer significant redevelopment, partnership or disposal

opportunities. The value of these vacancies will be realised over time.• Core vacancies exclude lettable area of properties that are mothballed.

vacancies

• Total vacancies in our portfolio as at 31 August 2017 were at 17.7% of our total GLA (2016: 15.6% of our total GLA)

• Core vacancies were at 10.7% of total GLA (31 August 2016: 9.8%)

• Core vacancies increased mainly in the residential sector (mainly Hatfield and other strong student nodes)

• Residential total vacancies include 20 195 m2

relating to Sharon’s Place, One on Mutual and The Manhattan

• Mothballed office vacancies of 88 742 m2 for future redevelopment, partnerships or disposal opportunities 26


lease expiry profile

27


Gross lettable area

m²GLA (%)

Monthly contractual rent

R’000

Rental income

(%)Residential (12 months and less) 346 027 20.8 34 946 29.4

Monthly commercial 234 506 14.1 15 544 13.1

to 28 February 2018 317 555 19.1 25 461 21.4

to 28 February 2019 170 060 10.2 14 321 12.1

to 29 February 2020 148 485 8.9 13 149 11.1

to 28 February 2021 81 118 4.9 7 984 6.7

Thereafter 73 179 4.4 7 371 6.2

Vacancies 294 132 17.6 0.0

Total 1 665 062 100.0 118 740 100.0

lease expiry profile

Octodec’s portfolio features a mix of short- to long-term leases with the majority of short-term leases providing for a monthly agreement at expiry, which is typical of the residential market and leases with small to medium sized enterprises

• Government leases concluded for three-year term on average

• Residential leases – short term leases (12 month contracts providing for a month to month arrangement on expiry)

• Majority of leases for non-national tenants concluded for 1- to 10-year term

• National tenants – leases concluded for 3- to 10-year term 28


recent sales

29

In line with our strategy to dispose of non-core assets, the following properties were sold and transferred during the period under review

• The profit on the disposal consideration of R77.8 million amounted to R3.7 million, a premium of 4.8% above revalued book value at 31 August 2016.

• A further 35 non-core properties with a carrying value of R284.3 million have been recommended for disposal by the board. The average carrying value of these properties is R8.1 million.

• The proceeds from property sales will be used to repay debt, as well as fund the development pipeline.


Property Location

Total consideration

R’million

Profit / (loss) on disposal

R’million

Transfer date / expected

transfer date

Exityield

%

Frederika Street Gezina, Tshwane 7.8 0.1 3 Feb 2017 8.0

Karkap Gezina, Tshwane 5.5 0.4 3 Feb 2017 10.7

Munt Street Waltloo, Tshwane 10.9 2.1 28 Feb 2017 7.8Raschers Johannesburg CBD 6.1 0.2 26 Nov 2016 2.7Paulefko Tshwane CBD 4.4 0.9 17 Oct 2016 9.7Blagil Hatfield, Tshwane 2.1 (0.1) 26 Nov 2016 9.9High Court Building and Somerset House Johannesburg CBD 14.5 (0.1) 26 Nov 2016 –Fine Art House and Fine Art Court Johannesburg CBD 17.5 0.3 May 2017 3.5Valhof Valhalla, Tshwane 9.0 (0.1) May 2017 10.5Total 77.8 3.7

30• The impact of the let-up affects results negatively. The loss after interest for the 2017 financial year was at R13.4 million or equivalent to 2.5% of distributable income• The construction of the residential development Reinsurance House is in the planning phase, which is situated in the Johannesburg CBD. The total development costs is

expected to be R90 million• This development will only commence if an acceptable yield is achieved – at least 8.5% per annumOctodec Investments Limited | Reviewed provisional annual results presentation 2017

capital expenditure greater than R50 millionManagement recognises the need to improve hurdle rates of returns and has taken a more cautious approach to development roll-outs going forward

Property Location Details

Total develop-

ment costR’million

Completion date

Fully letyield %

Loss after interest FY2017

R’millionThe Manhattan

Sunninghill, Johannesburg

50% undivided share in residential development – 180 units and parking

80.9 December 2016 9.0 6.1

One on Mutual

Tshwane CBD

Upmarket residential development of 142 units, 1 746 m2 retail and 204 parking bays

155.0 February 2017 7.1 6.3

Sharon’s Place

Tshwane CBD

400 residential units, 5 660m2 retail and 289 parking bays

356.0 Early 2018 - residential

July 2017- retail

7.3 -

Pretoria Midtown

Tshwane CBD

Upgrade of 7 133m² office block with 944m² retail and 90 parking bays

56.5 1st phase complete2nd phase subject to securing lease

9.5 1.0

Total 648.4 13.4

One on Mutual

The project was designed to be a more upmarket mixed-use development, attracting mid-income tenants working in Tshwane CBD

Development cost of: R155mResidential units: 142Retail: 1 746m2

(mostly let – Pick n Pay and Mugg & Bean)Offices: 443m2 (not let)Parking bays: 204

Currently over 90% residential occupancy

31

One on

Mutual


sharon’s place

Tshwane CBD mixed use development Development cost of: R356mResidential units: 400Retail: 5 660m²Parking bays: 289

• Retail completed in July 2017• Retail leasing progressing well and is

almost 100% let with anchor tenants including Shoprite and Clicks

• Completion of the 400 residential units delayed further, expected completion in early 2018

32


2016Sharon’s Place construction

2017Sharon’s Place

2014Centre Forum

4our results

33

2017Tshwane,Golden Mile

1902Market Place, Pretoria

achievements

34

• Distribution growth per share of 0.8% to 203.1 cents per share for the twelve month period

• Like-for-like growth in rental income of 5.3%• Net property expense to rental income ratio increased to

30.9% (31 August 2016: 29.6%)• Arrears and doubtful debt provisions remain at acceptable

levels despite a challenging operating environment ‣ Bad debts and movements in doubtful debt provisions

as a percentage of rental income – 0.9% (31 August 2016: 0.8%)

‣ Tenant arrears at 3.9% of gross revenue (3.6% at 31 August 2016)

• Balance sheet strengthened ‣ Loan to value ratio of 37.1% (31 August 2016: 38.3%)‣ Proceeds of R263 million from dividend reinvestment

programme‣ Proceeds from disposal of properties of R77 million

Distribution growth of

0.8%


Rental income

Like for like growth

5.3%

achievements (continued)

35

• 0.7% increase in net asset value (NAV) to R29.33 per share• Interest rate risk reduced – 82.1% hedged through interest rate

swap contracts• Successful refinance of Domestic Medium Term Note

Programme (DMTN) commercial paper notes • Four major projects under construction during the period with

two successfully completed• Some major renovations to existing properties recently

completed (Wits Technikon) in JHB CBD

Distribution growth of

0.8%


Rental income

Like for like growth

5.3%

challenges

36

• Tough economic and operating environment• Like-for-like growth in rental income of 5.3%, under pressure• Rise in costs (finance cost, utilities, assessment rates and repairs and

maintenance)• Higher interest rates (all-in weighted average cost of funding at 9.2%

at 31 August 2017)• Core vacancies in portfolio (excludes properties held for

redevelopment) at 10.7% (31 August 2016: 9.8%)• Dilutionary impact in the short term on distribution growth due to:‣ Let-up phase of new residential developments‣ Major upgrades to properties‣ Properties acquired with vacancies, for redevelopment

• Council service delivery challenges

New development

impact


distributable earningssimplified income statement

37

Note: Shareholders will be entitled to elect to reinvest the cash dividend in return for sharesOctodec Investments Limited | Reviewed provisional annual results presentation 2017

R’000%

ChangeReviewed

31 August 2017Audited

31 August 2016

Revenue – earned on contractual basis 5.4% 1 836 251 1 742 871 Like-for-like growth in rental income of5.3%

Operating costs 6.7% (843 636) (790 529) Increased cost pressures

Net rental income from properties 4.2% 992 615 952 342

Administrative costs 9.6% (77 813) (71 005) Increased corporate costs

Operating profit 3.8% 914 802 881 337

Interest income 18 094 10 138 Loan advanced to JV partners

Share of income from Joint Ventures 12 238 14 026 4 equity accounted JVs

Distributable profit before finance costs 945 134 905 501

Finance costs 3.5% (408 702) (394 751) Increase in interest rates

Shareholder distributable earnings 5.0% 536 432 510 750

Number of shares in issue (000) 266 864 254 551

Dividend per share (cents) 203.10 201.50

% growth in distribution 0.8

condensed consolidatedstatement of financial position

38

R'000 Reviewed 31 August 2017 Audited 31 August 2016ASSETSNon-current assets 12 568 875 12 219 234Investment properties 12 153 834 11 776 839 320 properties 2016 – 311 properties 2017Plant and equipment 5 300 6 810Straight-line rental income accrual 110 864 115 849Tenant installation and lease costs 44 550 57 133Other financial assets 75 000 51 849Derivative financial instruments 1 847 38 172Investment in joint ventures 177 480 172 528 4 equity accounted JVs - 50% heldCurrent assets 560 397 373 661Receivables 145 291 131 552Cash and cash equivalents 130 756 69 109Non-current assets held for sale 284 350 173 000 Properties recommended for sale at 31 August 2017

13 129 272 12 592 895EQUITY AND LIABILITIESEquity 7 828 229 7 413 800Stated capital 4 221 477 3 958 207Non-distributable reserves 3 269 053 3 112 855Retained earnings 337 699 342 708Non-current liabilities 3 381 370 4 106 208Interest-bearing borrowings 3 253 517 4 023 911Derivative financial instruments 47 421 9 308Deferred taxation 80 432 72 989Current liabilities 1 919 673 1 072 887Interest-bearing borrowings 1 572 817 755 116 Commercial paper notes, short term bank financeNon-interest bearing borrowings 342 548 317 771Derivative financial instruments 4 308 -

13 129 272 12 592 895Shares in issue ('000) 266 864 254 551Net asset value (NAV) per share (cents) 2 933 2 913Loan to investment value (LTV) ratio (%) 37.1% 38.3%

cash flow for the year ended 31 August 2017

39


69109

948325

(421107)

(536 536)

263270

77200

(316812)

47307

130756

-600 000-400 000-200 000

0200 000400 000600 000800 000

1 000 000

Balance 1 September

2016

Cash generated from

operations

Net finance costs

Dividend paid

Issue of new shares

Disposal of investm

ent property

Acquisition and im

provements to

investment property

Increase in interest bearing borrow

ings

Balance end of year

R'000

capital managementfunding at 31 August 2017

• Prudent management of debt‣ LTV – at 37.1% (target – maximum

of 40%)‣ Interest rate hedging – maintain at

levels of at least 80% ‣ Proactively address expiries of

loans and swaps in the 2018 FY‣ Debt capital market issuance –

R1 116.0m of total borrowings (currently at 23.1%)

• Continue to pay down debt through sales of non-core properties

• Unutilised banking facilities of R625.9 million

4040

R’000Interest

rateTotal borrowings – Banks 3 710.30 9.1%

DMTN programme 1 116.0 8.5%

TOTAL BORROWINGS 4 826.30 9.0%

Cost of swaps 0.2%

TOTAL BORROWINGS 4 826.30 9.2%

Loan to value 37.1%

Weighted average cost of borrowings– all-in cost, including swaps 9.2%

Interest rate hedging – percentage of borrowings 82.1%

Weighted average term of fixed rate loans/swaps 1.6 years

Weighted average term of debt 1.4 years


Nedbank –R2 999m

Standard Bank –R1 025m

DMTNprogramme

–commercial

paperR755m

31 August 2016

Nedbank –R2 785m

Standard Bank –R925m

DMTNprogramme

–commercial

paper R1 116m

31 August 2017

funding as at 31 August 2017

41


interest bearing debt expiry profile as at 31 August 2017

42

Debt maturing in the next 12 months:• Short term borrowings are

commercial paper (DMTN programme) of R958m and bank secured loans of R615m

• To date, R239m of the commercial paper notes have been successfully refinanced for a 12-month term at an all-in cost of 130 bps above JIBAR

• Debt maturing after 31 August 2017‣ Higher cost of interest

anticipated

Expiry profile per financial year (Rm and %)


1573

2440

525 288

0

500

1 000

1 500

2 000

2 500

3 000

31 Aug 2018 31 Aug 2019 31 Aug 2020 31 Aug 2021

Thou

sand

s

Rm

32.6%

50.5%

10.9%6.0%

Secured loansCorporate paper

1351

1361

500

750

0

200

400

600

800

1 000

1 200

1 400

1 600

31 Aug 2018

31 Aug 2019

31 Aug 2020

31 Aug 2021

Thou

sand

s

Rm

34.1% 34.4

12.6%

18.9%

interest rate hedges expiry profile

43

Fixed rate loans –R412 millionSwaps – total of R3.550 billionAverage weighted expiry –1.6 years• At 31 August 2017, interest rates in

respect of 82.1% of borrowings hedged

• R1.250 billion of swap contracts commenced effective from 3 January 2017 ‣ Weighted term 3.6 years‣ All-in weighted cost of 8.11%

Expiry profile per financial year (Rm and %)


5outlook

44

2017012central

2014012central original site

outlook• Continued lack of business and consumer confidence• Increasing competition – CBD Johannesburg and Hatfield (residential)• Strong operational focus to continue• Well-positioned to continue to take advantage of opportunities in the

CBDs‣ CBD retail continues to generate strong demand from National and

independent tenants‣ Strong demand for affordable and secure, quality residential

accommodation• Residential developments to significantly uplift the Tshwane CBD node

where we have a strategic concentration of assets‣ One on Mutual letting well above expectation‣ Sharon’s Place will be ready for occupation in early 2018

45


outlook (continued)

• Continue to unlock value – future development opportunities under discussion

• Exploring new product offering (Nano units)• Consideration of residential opportunities outside of Gauteng - ongoing• Project returns will be improved, hurdle yield required of above 8.5%• Disposal of non-core or non-performing properties will remain a focus

area

46


Forecast• Impact on distributions during let-up phase• Current forecast growth in distributable

income per share‣ No growth for 2018 FY‣ Positive growth in 2019 FY

investment case

• Strategy to remain the same and diversify geographically

• Sustainable model – urban renewal and middle-class growth

• Well-balanced portfolio with significant synergies across sectors in the CBDs

• Strong development pipeline – unlock value of current portfolio (new and redevelopments)

• Proven track record – hands-on approach delivering steady returns

Well-positioned to continue to unlock value and navigate the challenging economic environment

47

Steady and sustainable

value creation


6questions and answers

48

2016Kerk Street Building, Johannesburg


after modernisation

2011The building beforeredevelopment

7contact uswww.octodec.co.za

49

Managing DirectorTel: +27 12 319 8708e-mail: [email protected]

Anthony Stein

Financial DirectorTel: +27 12 319 8780e-mail: [email protected]

Jeffrey Wapnick


8appendices

50

2017One on Mutualcompleted

2015One on Mutual under construction

corporate structure

51

38%Institutional investors

23%Other

39%Wapnick family

& directors

Top 5Beneficial institutional shareholders

4.8%GovernmentEmployees

Pension Fund

4.9%Stanlib

5.2%Old Mutual

Group


3.8%Nedbank

Group

2.3%Eskom

Pension & Provident

Fund

our strategy

• Offer innovative property investment opportunities that create and deliver long-term sustainable returns by:

‣ Building a diversified portfolio in the Tshwane and Johannesburg CBDs and surrounding areas with an exposure to residential, office, retail and industrial sectors

‣ Actively promoting urban renewal in the Tshwane and Johannesburg CBDs

• Increase the profitability of our existing portfolio by:‣ Continually improving the quality of our portfolio‣ Enhancing our tenant profile‣ Developing well-located properties

52

1899Palace of Justice, Pretoria

2016Tshwane (previously Pretoria)Octodec Investments Limited | Reviewed provisional annual results presentation 2017

our strategy (continued)

• Increase the profitability of our existing portfolio by:‣ Concentration of properties in Tshwane and

Johannesburg CBDs, which makes it easier to manage and extract value from our portfolio

‣ Pursuing acquisitions that offer strategic value and sustainable yield-enhancing opportunities

‣ Focusing on growing our residential portfolio in the medium term

‣ Recycling capital from low growth, poor quality assets to high growth, high quality assets

‣ Enhancing returns through effective mix of debt and equity to optimise capital structure

‣ Management of interest and liquidity risk

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1880Church Street South, Pretoria

2016Tshwane (previously Pretoria)


top 10 propertiesAccount for 25.0% of the Octodec investment property portfolio by value

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Property Location Sector Size (m2)

The Fields Hatfield, Tshwane Mixed use 54 026

Killarney Mall Killarney, Johannesburg Shopping centre 46 945

Centre Walk Tshwane CBD Mixed use 25 417

Woodmead Value Mart Woodmead,Johannesburg Shopping centre 18 093

Kempton Place Kempton Park Mixed use 32 507

Sharon’s Place Tshwane CBD Mixed use 5 647

Louis Pasteur Medical Tshwane CBD Mixed use 22 314

Nedbank Plaza Arcadia, Tshwane Mixed use 23 177

Steyn’s Place Tshwane CBD Mixed use 15 638

Jeff’s Place Tshwane CBD Residential 14 771


annual financial results for the 12 months ended 31 august ...€¦ · annual financial results for...

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