annual results presentation · 2019. 11. 13. · 2016 10 213 3 617 225,22 174,73 432,72 832,67 ......

1DWELLING ON RESIDENTIAL

ANNUAL RESULTS PRESENTATION

30 SEPTEMBER 2019

www.indluplaceproperties.co.za // reviewed annual results 2019

3

2019 YEARChallenging year and environment, but making the right decisions for the longer term

benefit of the company and its stakeholders

Good progress made with re-focused strategy to strengthen our team, processes and portfolio, sell small buildings and de-risk from head leases and students

Good results in letting high vacancy buildings and containing bad debts

Positive about the rental residential sector, the diversity of our portfolio and our value for money offering to tenants

Dividend for the year 78,25 cents

5

ENVIRONMENT


CONSUMERPRESSURES

Source: SSA Transunion ABSA research

Indications of deteriorating consumer credit health

56

54

52

48

46

44

42 2012 2013 2014 2015 2016 2017 2018

ImprovingDeteriorating

Trans Union Consumer Credit Health Index

Wage settlements appear to be slowing

Compensation of employees

2010 2011 2012 2013 2014 2015 2016 2017 2018

%y/y

2

3

4

5

6

7

8

9

10

11

12

13

7

CASE STUDYA REAL LIFE EXAMPLE IN THE CBDMost inner city property owners have not increased their rentals this year due to high vacancies and increased municipal charges

YEAR HOUSEHOLD INCOME RENTAL WATER

CHARGESSEWER

CHARGESELECTRICITY

CHARGESTOTAL COUNCIL

CHARGES2008 5 944 1 981 107,59 66,33 132,08 306,00

2009 6 360 2 150 117,97 75,61 157,16 350,74

2010 6 805 2 322 128,18 86,20 189,52 403,90

2011 7 281 2 530 149,89 98,27 235,00 474,16

2012 7 791 2 695 155,44 112,52 317,24 585,20

2013 8 337 2 911 167,98 123,56 258,48 650,02

2014 8 920 3 144 181,79 134,57 378,16 694,52

2015 9 545 3 412 205,16 153,41 406,72 765,29

2016 10 213 3 617 225,22 174,73 432,72 832,67

2017 10 928 3 798 291,08 196,05 442,60 929,73

2018 11 692 3 898 328,95 223,87 534,60 1 087,42

2019 R 12 511 R 3 988 R 361,00 R 285,00 R 536,00 R 1 183,00

2020 13 387 4 463 384,50 285,86 707,01 1 377,37

2021 14 324 4 397 415,26 363,92 709,28 1 488,46

Total increase 2008 - 2019 110,49% 101,26% 236,03% 329,68% 306,06% 286,56%

Total increase 2008 - 2021 140,98% 121,89% 285,97% 448,66% 437,01% 386,43%

Rooms 1

Area JHB CBD

Geysers Yes

Season Winter

Adults 2 - working

Children 1 - school

Electricity Kwh p/m 400

Water Kl p/m 22

Source: Nic Barnes JPOMA

NATIONALVACANCY RATE

National Vacancy

Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q42016 2017 2018

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

Q1 Q2 Q32019

7,25%

5,52%

6,19%

6,90%

8,11%

6,42%

5,35%5,86%

7,90% 7,70%8,10%

8,64%

7,91%

9,42%

Q1

Indluplace7,3%

9

PROVINCIALVACANCY RATE

9,6%

6,8%

National Average Gauteng

Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 Q32016 2017 2018

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

Q4

Eastern Cape KwaZulu-Natal

11,4%

Smaller 5 Provinces

10,7%

Western Cape

7,8%

Indluplace(Gauteng)

6%

Q1 Q2 Q32019

PRICE BANDVACANCY RATE

12,4%

8,9%

National Average

Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 Q32016 2017 2018

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

Q4

R 3 000 - R 7 000R 3 000 - R 4 500

7,4%

R 7 000 - R 12 000

7,8%

< R 3 000

13,6%

Q1 Q2 Q32019

R 4 500 - R 7 000 > R 12 000

11,6%

11

TPN MARKET STRENGTHINDEX BY PRICE BAND

46,3%48,4%

National Average

Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q2 Q32016 2017 2018

75%

70%

65%

60%

55%

50%

45%

40%

Q4

R 3 000 - R 7 000R 3 000 - R 4 500

48,5%

R 7 000 - R 12 000

45,7%

< R 3 000

52,9%

Q1 Q2 Q32019

R 4 500 - R 7 000 > R 12 000

51,6%

13

BUILDING ACTIVITYIS ON THE DECLINE

BUILDING PLANS PASSED JAN- AUG (2019/2019) % CHANGE

SA (%) GAUTENG (%)

Residential Building (No) (25,3) 2

Office (m2) (24,1) (9)

Shopping (m2) (21,1) (61,7)

Industrial (m2) (9,7) (29,6)

Source: Prof Francois Viruly quoting Stats SA

15

PORTFOLIO& ASSET MANAGEMENT

RESIDENTIALUNITS

GA

UTE

NG

MPU

MA

LAN

GA

FREE

STAT

E

KZN

Own 9 917 units

Retail 20 583 m2

10%Pretoria

5,4%vacancy

78%JHB

6,1%vacancy

5%Vanderbijl

0%vacancy

1%Durban

30%vacancy

1%Bloemfontein

1,4%vacancy

5%Emalahleni

33%vacancy


17

GAUTENGUNIT LOCATION AND VACANCY RATE

10%JHB

West Rand

7,4%vacancy

7%JHB South& Soweto

7,6%vacancy

5%Vanderbijl

0%vacancy

21%JHB East

6,6%vacancy

31%JHB Inner

City

5,5%vacancy

5%JHB North

5,6%vacancy

10%Pretoria

5,4%vacancy

5%JHB CBDPeriphery

4,2%vacancy


PORTFOLIOINFO

RESIDENTIAL UNIT TYPES UNITS % OF TOTAL VACANCIES

Bachelors/rooms 2 222 22 6,1%

1 Beds 2 054 21 7,9%

2 Beds 4 646 47 7,2%

3 Beds 834 8 4,5%

Other 161 2 1,2%

Total 9 917

19

TOTA

L RE

SID

ENTI

AL

UN

ITS9 917

TOTA

L RE

TAIL

m220 583

167

TOTA

L BU

ILD

ING

S

21

LETTING SUCCESSHIGH VACANCY PROPERTIES

HIGHVELD VIEWEMALAHLENI, MPUMALANGA450 x two bedroom units

Market rental R5 000 – R6 000

Currently letting at R5 500 for individual units – six months net gain per month average 23 units

Opening occupancy of 22%. At end September the complex was 67% let

Discussions with a potential buyer for the property was halted as there was no progress

Currently de-risked as far as head or bulk leases are concerned


23

1 ELOFFJOHANNESBURG CBD, GAUTENG138 x one bedroom units and 182 x two bedroom units

Currently at best occupancy since acquisition

Retail on ground floor not acquired, disappointing letting

Reduced rental to fill units (13% reversion)

High turnover building but busy settling

Installed subsidised internet connectivity

Several new initiatives with letting agents proved successful but add to costs

LETTING SUCCESSPER MONTH

1 Eloff

Total new lets: 260 units

Average 31 pm since March

Highveld View

Total new lets: 267 units

Average 34 pm since March

Oct Nov Dec Jan Feb Mch Apr May June July Aug Sept

22%24% 24% 26%

33%37% 40%

45%50%

54%

63%67%

83%76%

73%69% 69%

74%78% 81%

87%91%

97% 97%

Highveld View 1 Eloff

25


5,0%4,5%4,0%3,5%3,0%2,5%2,0%1,5%1,0%0,5%0,0%

2018 2019

October

Novem

ber

Decem

ber

Janu

ary

Febru

ary

March

AprilMay

June Ju

ly

Augus

t

Septem

ber

TURNOVEROF TENANTS

27

DISPOSALSFactors considered include number of units, condition, forecast performance and location

Number of properties transferred by end September 9

Number of properties agreed but not transferred 8

Average number of units per property 8

Location Mainly South of Johannesburg

Westwood Place & Huntingdon Place

Sellers agreed to buy back underperforming assets Westwood Place (14 units) & Huntingdon Place (14 units)

Purchase price R22,98m on terms

Discussions underway to dispose of student buildings (Durban and Vanderbijlpark)

STU

DEN

TSMA

LL P

ROPE

RTIE

S

BUFF

ET B

UYB

ACK


SOLAR REPORTSUMMARY - 1 JANUARY 2019 – 30 SEPTEMBER 2019

7 730Bags (25kg) of coal saved

310Tonnes of CO2 saved

4 637Months a lightbulb was powered

4 139Seeds planted

29

SITE NAME SIZE (KWH)

2019 PRODUCTION

(KWH)

2019 SAVINGS

(ZAR)

BAGS OF COAL

REDUCED

TONS OF CO2 REDUCED

MONTHS A 100W LIGHT

BULB WAS POWERED

TREE SEEDLINGS

GROWN FOR 10 YEARS

Quagga Estate 77,76 32 424 R 12 913 727 29 436 389

Amberfield Village 115,32 85 429 R 18 708 1 914 77 1 148 1 025

Park Village 228,78 132 289 R 33 368 2 964 119 1 778 1 587

Villa Mia 43,68 48 560 R 12 246 1 088 44 653 583

Annlin Place 25,85 10 832 R 3 523 243 10 146 130

Syringa Mews 41,8 21 261 R 13 301 454 18 272 243

Stone Arch Village 6 56,1 15 162 R 9 640 340 14 204 182

Total 589,29 344 957 R 103 702 7 730 310 4 637 4 139

31

PROPERTY MANAGEMENTOutsourced to seven Specialist Managers

33

FINANCIALS


INCOMEDISTRIBUTABLE

YEAR ENDED 30 SEPTEMBER

2019


2018VARIANCE

Contractual revenue 546 461 872 563 481 852 (3,0%)

Net property expenses (164 215 698) (146 817 312) 11,9%

Net property income 382 246 174 416 664 540 (8,3%)

Administration costs (19 718 977) (15 864 641)

Net finance charges (111 057 282) (89 827 109)

Antecedent income - 510 393

Distributable income 251 469 915 311 483 183 (19,3%)

Average number of shares in issue 321 351 671 318 645 117

Net expense ratio 30,1% 26,1%

Dividend per share 78,25 97,75 (19,9%)

35

PROPERTYEXPENSE BREAKDOWN

% CONTRACTUAL REVENUE % EXPENDITURE

Gross municipal 24,0 47,9

Building expenses 5,8 11,6

Repairs & maintenance 4,1 8,1

Collection commission 6,0 12,0

Security 4,7 9,4

Bad debts 1,2 2,5

Legal expenses 0,6 1,2

BC levies 2,6 5,2

Other property expenses 1,1 2,1

50,1 100,0

Less recoveries (20,0)

Net property expense ratio 30,1


MUNICIPALEXPENSES

Municipal expenses are 47,9% of total82% recovered excluding rates

41,1%Electricity

16,9%Rates & Taxes

4,6%Waste Removal

23,2%Water

13,2%Sewerage

1,1%Gas

AVERAGE RENTALESCALATIONS

5 000

4 000

3 000

2 000

1 000

0

Inner City Non-Inner City Total

R 3 804

R 4 697R 4 383

AverageEscalation

v Sept ‘18 (1,6%)

AverageEscalation

v Sept ‘18 2,0%

AverageEscalation

v Sept ‘18 0,9%

37

AVERAGERENTALS, INNER AND NON-INNER CITY


INNER CITY NON-INNER CITY OVERALL

AVERAGE RENTALS

ESCALATIONS V SEPTEMBER

AVERAGE RENTALS


AVERAGE RENTALS


ROOMS R 1 765 1,4% R 1 898 5,2% R 1 871 4,4%

BACHELORS R 2 716 (2,4%) R 4 580 2,7% R 3 115 0,2%

1 BED R 3 717 (1,1%) R 4 434 1,5% R 4 133 0,5%

2 BED R 4 254 (3,0%) R 5 352 2,4% R 5 129 1,4%

3 BED R 5 244 0,4% R 7 081 1,9% R 5 943 1,1%

4 BED R 6 106 (0,1%) R 11 642 (1,2%) R 7 020 (0,4%)

39

CONTROLLINGBAD DEBTS, ARREARS AND VACANCIES

VACANCIES2019 2018 2017

SEPTEMBER MARCH SEPTEMBER MARCH SEPTEMBER MARCH

Residential 7,3% 8,5% 8,4% 6,3% 3,5% 4,5%

Retail 4,3%* 1,0% 0,7% 1,5% 1,0% 9,6%

2019 2018 2017

SEPTEMBER MARCH SEPTEMBER MARCH SEPTEMBER

Bad debts & provisions 1,0%

1,8%1,8%

3,5% 1,3%Arrears 0,6% 0,4%

Total 1,6% 1,8% 2,2% 3,5% 1,3%

PRIME TRANCHE 2Part of Buffet portfolio acquired 1 October 2017 was a portfolio that was under conversion and refurbishment

Price adjustment mechanism instead of income guarantee

• Price adjustment: R28 million

• Two underperforming buildings returned to seller:

Westwood Place and Huntingdon Place, BoksburgNumber

ofbuildings

13

Numberof

units

Purchaseprice

446R241


41

BALANCE SHEETEXTRACT

RYEAR ENDED

30 SEPTEMBER 2019


2018

Investment property 4 175 006 452 4 270 425 689

Property loan receivable 44 767 070 -

4 219 773 522 4 270 425 689

Shareholders’ interest 2 901 930 111 3 216 099 141

Secured financial liabilities 1 480 005 758 1 286 849 338

Shares in issue 321 351 671 318 645 019

Net asset value (cents) 903,04 1 009,30

Loan to value ratio 33,6% 30,1%

LOANSAND GEARING

LTV 33,6%

Total debt R1,48 billion

Available facilities R110 million

Percentage of drawn down debt hedged 61%

Weighted average cost of debt 9,20%


43

NET ASSET VALUEPER SHARE (CENTS)


LOANSEXPIRY

Drawn Undrawn

700 000 000

600 000 000

500 000 000

400 000 000

300 000 000

200 000 000

100 000 000

0

30 September 2020 30 September 2021 30 September 2022 30 September 2023Financail yearending

47

THE WAY FORWARD


STAFFORGANOGRAM

Property AdministratorBuhle Mpofu

CEOCarel de Wit

Chief Operations OfficerGrant Harris

Financial DirectorTerry Kaplan

Asset ManagerArmand Fourie

Asset ManagerPaul Venter

Letting AgentPatricia Mtetwa

Financial ManagerMark Tait

Financial ManagerAnita-Joy Makgai

Utilities ManagerZweli Madhlala

TENANTS

Wage increases

Credit health

Cost of accommodation

ENVIRONMENT

Interest rates

Economic Growth

Demand/supply JHB CBD

Demand/supply STATS SA

Demand/supply TPN

Council charges increases

CPI

Escalations

Vacancies


51

Making a difference in communities

Value for money offering

Proven ability to attract good quality tenants

Bad debts under control

Valuations holding up

LTV

Team strengthened (internal & outsourced)

Strategy consistent and clear

INDLUPLACE

Expect 2020 dividends to be lower but like-for-like portfolio performance to be similar to 2019

www.indluplaceproperties.co.za

annual results presentation · 2019. 11. 13. · 2016 10 213 3 617 225,22 174,73 432,72 832,67 ......

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