annual results presentation for year end 31 march 2020 · 4 •3.0% growth in full year earnings...

Specialist Banking | Asset Management | Wealth & Investment

INVESTEC PROPERTY FUND

RESULTS PRESENTATIONFOR THE YEAR ENDED

31 MARCH 2020

2020

2

1. Year in review

2. Strategic overview – Recap

3. Financial review

4. Performance – SA property

5. Performance – Europe

6. Performance – UK

7. Performance – Australia

8. Capital allocation

9. Operating in a COVID-19 environment

10. Balance sheet and risk management

11. Looking ahead – FY21

12. Final dividend and guidance

13. Annexures

Contents

YEAR IN REVIEW

4

• 3.0% growth in full year earnings available for distribution in line with guidance

› H2 2020 earnings available for distribution of 75.7 cps – 3.0% growth

• 2.0% increase in NAV per share driven by revaluation of PEL portfolio

• Significant offshore transaction activity – R4.3bn deployed and balance sheet now 35% offshore

› Increased investment to 75% interest in PEL platform together with a 25% strategic partner

› Two Belgian assets acquired in December 2019 – to be transferred into PEL platform

› Initial investment into PELI for 25% stake

› Further investment into UK Fund – increased interest to 38%

› Partial sell down of IAP to 9% (March 2019: 21%)

• R1.2bn raised from 10 SA properties sold – 1.9% discount to book value and 9.1% exit yield

• R1.5bn of cash (including R0.9bn of guarantees relating to pending asset sales)

• SA portfolio like-for-like NPI growth of 0.9%

› 92.0% of space expiring re-let at a negative reversion of 14.3%

› 3.5% low vacancy maintained (March 2019: 2.4%)

• PEL platform continues to bolster Group performance – 9% like-for-like NPI growth, 8.4% DPS growth

› 76% of space expiring and 81% of opening vacancy let at positive reversion of 7.0%

› Vacancy at 5.0% (Mar-19: 5.1%)

• Stable performance from UK Fund – 3.1% like-for-like NPI growth; 1.6% DPS growth

› 100% of space expiring let at 29.6% positive reversion

› Vacancy at 8.8% (March 2019: 2.2%)

4

Key highlightsFY20 snapshot

4

5

Business snapshot

South AfricaPan-European

Logistics

(incl. Belgium)

Pan-European

Light Industrial UK Fund AustraliaDirect property Izandla

No. of properties 98 15 47 25 15 30

Ownership interest 100% 35% 75%1 25% 38% 9%

Asset value (LC) R16.9bn R750m €987m €128.5m £301.3m AUD 1 085m

Value of investment (Rbn) 16.9 0.3 6.5 0.2 1.1 0.7

GLA (m2) 1 158 249 83 511 1 139 740 146 818 119 604 333 889

WALE (years) 2.7 4.5 4.7 5.1 9.4 4.5

Vacancy 3.5% 1.8% 5.0% 9.6% 8.8% 1.0%

Sectoral composition

(by asset value)

5

65%

27%

5% 3%South Africa

Europe

UK

Australia

IFRS balance sheet construct

47%

43%

7% 3%South Africa

Europe

UK

Australia

Proportionally consolidated

19%

10%

25%

46%

Office

Industrial

Retail

Logistics

Sectoral exposure

(proportionally consolidated)

37

11

43

9

Office Industrial Retail Logistics

44

43

13

100 100

34

66 70

17

13

1IPF directly owns 100% of the Belgium assets

61. 3.0% growth yoy

2. 3.0% including strategic development vacancy

Key metrics – FY20Good performance in a challenging environment

3.0%

full year growth in

earnings available for

distribution

146.6cps

(Mar 2019: 142.3 cps)

H2 2020: 75.7cps¹

Group

11.5%

increase in NAV driven

by performance of

offshore investments

47.5% gearing

Expected to normalise

to c.34% post

de-gearing flightpath

(Mar 2019: 35.9%)

SA portfolio in focus

0.9%

base net property

income growth

(Mar 2019: 0.8%)

92.0%

of space expired during

the year renewed or re-let

(Mar 2019: 94.2%)

2.7 years

weighted average

lease expiry

(Mar 2019: 2.8 years)

19.8%

base cost to income ratio

(Mar 2019: 19.0%)

3.5%

Vacancy

(Mar 2019: 2.4%²)

8.9%

SA all-in cost of funding

9.0%

base net property

income growth

Offshore performance

7.0%

positive rental reversion

on space let

8.4%

full year DPS growth

PEL

3.1%

base net property

income growth

29.6%

positive rental reversion

on space let and 53.8%

on rent reviews

1.6%

full year DPS growth

UK Fund

65%

South Africa(Mar 2019: 84.8%)

27%

Europe(Mar 2019: 8.0%)

5%

UK(Mar 2019: 1.1%)

Balance sheet composition

3%

Australia(Mar 2019: 6.1%)

6

STRATEGIC OVERVIEW

- RECAP

8

Strategic pillarsBusiness underpinned by core philosophy Deliver sustainable long-term returns by…

…ensuring

best of breed assets

…focusing on client experience

as a key differentiator

…unlocking

the potential of space

Revenue security

and growth

Client service

excellence

Value add asset

management and

capital allocation

Cost efficiency

and system

optimisation

• Proactive asset

management

• Delivering an out of the

ordinary experience

• Differentiating IPF in a

commoditized

environment

• Delivering on client needs

• Active capital recycling

• Proactive balance sheet

management

• Diversified investment

base

• Maximise returns on a

long-term risk-adjusted

basis

• Speed and agility

• Margin preservation

• Controllable costs tightly

managed

8

9

Delivering on FY20 stated prioritiesIn our accomplishments for the year

Stated priority How we have delivered on this…

• Navigating SA portfolio through economic slow down

› Property fundamentals

› Anticipating and mitigating leasing risk

› Support performing assets and sell

underperforming ones

• Proactive asset management has ensured positive NPI growth

• 92% of FY20 expiring space re-let and 24% of FY21 expiring space let

• Low vacancy

• 10 non-core assets sold

• Invest in customer relationship management • Strong tenant retention in office and retail sectors

• One-on-one interaction with >1 000 clients during lockdown

• Supporting tenants through volatility

• Balance sheet management • Adequate liquidity with headroom in debt covenants

• Managing LTV with de-gearing flightpath

• Solid balance sheet position despite significant investment activity

• Continued deployment into Pan-European strategies • Enhanced offshore exposure to 35% of assets

• Offshore no longer about optionality, it’s a strategic commitment

• Supported and grew PEL and UK platforms

• Continue to explore M&A – remain opportunistic • Offshore acquisitions

• Assessed opportunities in SA – did not pursue

9

FINANCIAL REVIEW

11

1. SA NPI decreased due to sale of 5 properties

2. IPF acquired 2 Belgian properties for €70.5m in December 2019 – to be transferred into PEL platform upon debt refinancing

3. Comprises fund expenses and asset management fee for SA portfolio

4. Decreased due to pay down of debt, offset by deployment into European platforms and UK Fund

5. Interest charged to Izandla that is not serviced is not distributed

6. Current year antecedent arose due to accelerated book build on 11 February 2020 which resulted in the issue of 68.6m shares at R12.75 per share

7. Consists of CGT paid on sale of IAP units (R2.9m) and WHT on IAP dividend (R7m)

Distributable earnings statement3.0% growth in earnings available for distribution

11

Notes

31 March 2020

Rm

31 March 2019

Rm % change

Net property income (excl. straight lining) 1 1 420.1 1 471.9 (3.5%)

Base net property income 1 301.7 1 290.2 0.9%

Acquisitions and disposals 118.4 181.7 (34.8%)

Belgium net property income 2 19.6 - 100.0%

Income from investments 331.3 278.7 18.9%

Notional cost of ingenuity funding 5.1 8.8 (42.0%)

Other operating expenses 3 (105.0) (95.6) 9.8%

Net finance costs 4 (563.1) (600.1) (6.2%)

Izandla JPIK interest not received 5 (5.4) (10.5) (48.6%)

Antecedent dividend 6 39.0 1.6 2 337.5%

Taxation (net of deferred tax) 7 (9.9) (6.8) 45.9%

Net distributable income 1 131.7 1 048.0 8.0%

Number of shares 804.9 736.3 9.3%

Final available distribution per share (cents) 75.7 73.5 3.0%

Interim distribution per share (cents) 70.9 68.8 3.1%

Distribution per share (cents) 146.6 142.3 3.0%

121. Comprises movements in Izandla earnings (-R10m), antecedent dividend (R37m), taxation (-R3m)

Distributable earnings bridgeOffshore investments remain a key contributor to growth

1,048

1 132

1278

20

3724

(63)

(14)

(10)

HY19distributable

earnings

BaseNPI growth

Acquisitionsand disposals

NPI

Increasedearnings from

Europeanplatforms

IncreasedUK Fundearnings

Reductionin incomefrom IAPF

Reductionof net

finance costs

Operatingcosts

Other¹ HY20distributable

earnings

Rm

13

1. MTM increased at year end due to ZAR weakness and 200bps interest rate cut

2. Due to movements in the EUR (R551m) and GBP (R196m) exchange rate. The weakening of the ZAR provided net benefit to the investments net of funding (60% hedged)

3. Negative revaluation on investment property reflective of challenging SA economic climate and impact on FY21 NPI

4. Comprises MTM on IAP (-R30m), ING (-R8m), UK Fund (-R56m) and European platforms (R1 135m)

5. Lower dividend received in FY20 due to sell down of 45m units, and change of IAP payout ratio

6. Increased investment in UK

7. Increased investment in Europe

8. Results from the translation of the foreign subsidiaries holding the Belgian assets

Summarised income statementSignificant fair value gains achieved due to European logistics portfolio

13

Rm Notes

31 March 2020

Rm

31 March 2019

Rm % change

Net Property Income (excl. straight line rental adjustment) 1 420.1 1 471.9 (3.5%)

Straight line rental adjustment (12.8) 31.9 (140.0%)

Belgium NPI 19.6 - 100.0%

Other operating expenses (108.5) (95.6) 13.5%

Fair value adjustments 609.5 406.7 49.9%

Mark to market on derivatives 1 (774.6) (53.7) 1 342.5%

Foreign exchange translation 2 747.3 43.7 1 610.1%

Mark to market on SA investment property 3 (404.6) (15.5) 2 510.3%

Mark to market on investments 4 1 041.5 432.2 141.0%

(Loss)/profit on sale of investment property (1.9) (19.9) (90.5%)

Net finance costs (563.0) (600.1) (6.2%)

Expected credit losses – loans at amortised cost - (30.0) (100.0%)

Income from investments 351.2 276.3 27.2%

IAP 5 90.1 104.4 (13.7%)

Izandla 25.8 34.9 (26.1%)

UK Fund 6 32.5 12.3 164.2%

European platforms 7 202.8 124.7 62.6%

Taxation (incl deferred tax) (8.2) (15.2) (46.1%)

Accounting profit after tax 1 706.0 1 426.0 19.6%

Foreign currency translation reserve 8 3.0 - 100.0%

Total comprehensive income 1 709.0 1 426.0 19.8%

1414

1. Change attributable to increased expected credit losses reflective of weak domestic environment, as well as the disposal of 5 properties

2. 9.0% equity stake (20.9% FY19) following sell down of 45m units

3. Increased stake in UK Fund from 10% to 38%

4. 75% stake in PEL (R6.1bn), bridge loan to PEL (R3.1bn), 25% stake in PELI (R244m) and 100% of Belgian assets (R1.4bn)

5. Comprises trade receivables of R402m (FY19: R286m) and derivative financial instruments of R216m (FY19: 97m). Increase in trade receivables largely attributable

to prepayments due to the increased cost of letting, as well as an increase in arrears as a result of the current market conditions

6. 68.6m shares were issued at a share price of R12.75 in February 2020

7. Increase in long term borrowings to fund investment activity

8. Comprises trade and other payables of R563m (FY19: R346m), deferred tax of R8.7m (FY19: R16.5m) and derivative financial instruments R1 064m (FY19: R231m).

Derivative balance sheet liability increased due to ZAR weakness and 200bps interest rate cut which resulted in negative MTM on IRS

Summarised balance sheetSignificant offshore investment activity

Notes31 March 2020

Rm

31 March 2019

Rm % change

Property related investments 29 889.4 20 903.4 43.0%

South Africa 1 17 220.9 17 723.2 (2.8%)

IAP 2 661.2 1 271.9 (48.0%)

UK 3 1 148.3 222.5 416.0%

Europe 4 10 859.0 1 685.8 544.2%

Other assets 5 617.6 383.7 61.0%

Cash 643.1 382.9 67.9%

Total assets 31 150.1 21 670.0 43.7%

Total funding 29 514.8 21 076.2 40.0%

Shareholders interest 6 14 645.0 13 131.1 11.5%

Long term borrowings 7 14 869.8 7 945.1 87.2%

Other liabilities 8 1 635.3 593.8 175.4%

Total equity and liabilities 31 150.1 21 670.0 43.7%

Net asset value per share (cents) 1 819.4 1 783.4 2.0%

15

Net asset value bridgeGrowth from European investments

13,131

14,644

8,622730

747

(369)

(611) (133)

(6,665) (101)(707)

OpeningNAV

SAinvestments

Europeanplatforms

UKFund

Foreignexchange

Saleof IAPF

Saleof ING

Movementin net debt

Workingcapital

DerivativeMTM and

deferred tax

ClosingNAV

Rm

(2.8%)

65.7%5.6%

5.7%

(4.7%) (1.0%)

(50.8%) (0.8%)(5.4%)

11.5%

PERFORMANCE

– SA PROPERTY

17

• Portfolio has demonstrated resilience and achieved positive growth

• Retail affected by subdued consumer spending, office continues to struggle

with oversupply, industrial impacted by slowing retail and manufacturing sectors

SA property portfolioPerformance overview

Base NPI • Base growth of 0.9%

• Largest NPI growth in retail sector due to low vacancies and good retention

Cost base

drivers

• Net utility and rates increased due to void periods

• Net fixed expenses well-controlled – reduction of 0.7%

Leasing • 92% of expiries re-let at average negative reversion of 14%

• Marginal uptick in vacancy to 3.5% (March 2019: 2.4%) driven by office and

industrial sectors

Arrears • Arrears as a % of collectibles remained flat at 3.6%

• Bad debt expense increased due to tenant failures and challenging

environment

General • 3.4% retail trading density growth with cost of occupation at 6.2%, significantly

better than market average

• 4.3% yoy turnover growth

• R84m maintenance capex and R165m project capex spent – priority

to maintain quality of asset base

• 2.3% write down of investment property to R16.9bn (March 2019: R17.3bn)

17

18

SA property portfolioNPI growth despite macro-economic challenges

18

Property portfolio

Mar 2020 Mar 2019

No. of properties 98 102

GLA (m²) 1 158 249 1 197 921

Vacancy 3.5% 2.4%

WALE (years) 2.7 2.8

In-force escalation 7.6% 7.6%

Property asset value R16.9bn R17.3bn

Actual

Mar 2020

Rm

Actual

Mar 2019

Rm

±

%

Gross income 1 622.8 1 593.7 1.8%

Net expense (321.1) (303.5) 5.8%

Base net property income 1 301.7 1 290.2 0.9%

Office 526.2 539.9 (2.5%)

Industrial 309.3 302.8 2.1%

Retail 466.2 447.5 4.2%


Net property income (excl. straight lining) 1 420.1 1 471.9 (3.5%)

Base net cost to income ratio 19.8% 19.0% 4.2%

Arrears % collectibles 3.6% 3.6% -

19

There has also been positive momentum in FY21 leasing activity with 24% of the budgeted 248 046m² expiring in FY21

already been let

1. Office rental reversions is the product of a tough office market due to significant imbalance of supply and demand

2. Retail driven by large motor dealerships reverting an average of negative (37%). Excluding these would improve reversions to negative (1.2%)

3. Industrial retentions reduced from 47.1% in Mar-19 to 27.3% in Mar-20, however 92% of expiries have been re-let full year showing the quality of the Industrial portfolio

Letting activity92% expired space let or renewed for full year (March 19: 94%)

Full year

Expiries &

cancellations

GLA

Renewals

& new lets

GLA

Gross

expiry rentalR/m²

Gross new

rentalR/m²

Rental

reversion

%

Average

escalation

%

WALE

Years

Incentive

% lease

value

Retention

%

Office 35 204 29 513 233.8 183.9 (21.3%)¹ 7.8% 4.6 7.8% 68.7%

Industrial 181 660 170 479 66.1 60.7 (8.1%) 7.2% 2.6 8.9% 27.3%³

Retail 60 790 52 647 193.7 162.3 (16.2%)² 6.3% 4.2 2.0% 94.8%

Subtotal 277 654 252 639 112.3 96.3 (14.3%) 7.0% 3.1 7.3% 47.3%

Opening vacancy 24 399 8 494

Total letting 302 053 261 133

201. Including assets held for sale.

2. Opening balance includes assets disposed of in FY20

Property valuationsLoosening of cap rates and income assumptions

20

Notes:

• 55% of portfolio externally valued by two independent valuers

• 13 properties classified as held for sale of which 5 sold and awaiting transfer

Rbn Mar 2020¹ Mar 2019²Year on year

change

Weighted

average

cap rate

Prior year

cap rate

Directors Valuation 16.9 17.3 (2%) 9.1% 9.0%

Office 6.2 6.3 (1%) 9.4% 9.3%

Industrial 3.5 3.7 (6%) 9.5% 9.4%

Retail 7.2 7.3 (1%) 8.4% 8.4%

PERFORMANCE – EUROPE

(A) LOGISTICS

22

Deal

• IPF increased its interest in the PEL portfolio from 42.9% to 75%

• Strategic partner introduced for 25% with platform to be operated on joint control

basis

• Provides immediate scale in 6 European countries and offers shareholders

opportunity to gain sizeable exposure to a focused Pan-European logistics offering

• Managed by highly experienced on-the-ground management team - UREP

• Acquired two Belgian properties for €70m

› To be transferred into PEL platform concurrently with PEL refinancing

• 62% of capital value hedged by CCS and EUR loans and 100% of income

over the next five years hedged at average rate of R19.77

Performance

• 9.0% base NPI growth

• 8.4% full year DPS growth

• 81% of opening vacancy let and 76% of expiries let at an average reversion

of positive 7.0%

• Occupancy level at 95% (2019: 97.4%)

• WALE to break improved to 3.6 years (2019: 2.6 years); WALE improved

to 4.7 years (2019: 4.5 years)

Pan-European logistics portfolioTransformative transaction undertaken by IPF in terms of scale

and ability to generate long-term value for shareholders

2222

Key portfolio metrics

31 Mar 2020 31 Mar 2019

Shareholding 75.0% 42.9%

No. properties 47 25

GLA (m²) 1 139 740 906 483

Vacancy 5.0% 5.1%


Total value of property €987m €516m

23

Pan-European logistics portfolioSummarised income statement

23

Income statement

23

1. PEL year end is 31 December

2. Base portfolio NPI grew 9.0% as a result of positive letting and lower incentives.

3. The underlying properties were revalued at year end, driven by improved property fundamentals and positive leasing activity, resulting in a capital uplift for IPF of R1.2bn and further

supporting the investment rationale into this platform. The valuations formed the basis of the buyout and were corroborated by the independent valuations and external valuations

performed by the strategic partner.

Column1

31 Dec 20191

€’000

31 Dec 2018

€’000

%

Change

Net property income 37 017.8 26 030.0 42.2%

Base net property income2 24 899.4 22 853.3 9.0%

Acquisitions and disposals 12 118.4 3 176.7 281.5%

Fund expenses (9 171.7) (6 159.6) 48.9%

Finance costs (9 774.4) (6 611.2) 47.8%

Net Profit Before Tax 18 071.7 13 259.2 36.3%

Taxation (515.8) (1 042.4) (50.5%)

Distributable Earnings After Tax 17 555.9 12 216.8 43.7%

Fair Value Adjustments 187 751.2 21 547.0 771.4%

Investment Property3 188 211.5 22 554.8 734.5%

Derivative Financial Instruments (460.3) (1 007.8) (54.3%)

Net Profit/(Loss) After Tax 205 307.1 33 763.8 508.1%

No of shares 2 211 267.0 1 667 732.5 32.6%

DPS 7.94 7.33 8.4%

24

Pan-European logistics portfolioLetting activity

Full year

Expiries &

cancellations

GLA

Renewals

& new lets

GLA

Gross expiry

rental

€/m²

Gross new

rental

€/m²

Rental

reversion

%

WALE

Years

Incentive

% lease value

Retention

%

Germany 12 007 - n/a n/a n/a n/a n/a n/a

Netherlands 81 003 80 704 48.6 53.5 10.0% 3.3 - 10.4%

France 14 960 6 010 46.6 43.3 (7.2%) 9.0 - -

Poland 38 092 37 937 34.4 36.5 6.2% 10.0 25.3% 99.6%

Italy 18 180 - n/a n/a n/a n/a n/a n/a

Subtotal 164 242 124 651 44.4 47.5 7.0% 5.8 7.2% 34.6%


Total 215 453 166 099

• 81% opening vacancy let

• 76% of total expiries let at a reversion of positive 7.0%

• Majority of the 24% not let is in Italy and Germany and became available at the end of the financial year

PERFORMANCE – EUROPE

(B) LIGHT INDUSTRIAL

26

Acquisition

• Initial 25% interest acquired in unlisted portfolio and pipeline of light industrial properties located

across France, Germany and Netherlands for acquisition cost of €10.2m

• Portfolio comprises 25 properties with c.€128m gross asset value

• Expected to generate unlevered initial asset yield of 7.2% and grow to fully let ERV yield of 8.2%

• Anticipated 9.5% investment return in EUR once leveraged – accretive to earnings

• 62% of investment value hedged by CCS and EUR loans

• 100% of income over 5 years hedged at average rate of R19.77

Performance

• Marginal uplift in property valuation by €1.6m to €128.5m

• Good leasing activity with new leases and extensions concluded above underwritten rents

and for longer terms

• Occupancy level at 90.4%, from 93.7% at entry

• WALE at 5.1 years, up from 4.2 years at acquisition

Pan-European light industrial investmentTracking in line with expectations

26

Key portfolio metrics31 Mar 2020

Shareholding 25.0%

No. properties 25

Vacancy 9.6%

WALE (years) 5.1

Total value of property €128.5m

European logistics portfolio

IPF equity

investment

(€m)

Total commitment 64.5

Deployed (10.0)

Remaining commitment 54.5

PERFORMANCE – UK

28

Further investment

• Invested £25m during H1 2020 to acquire an additional 22.5% interest and a further £15.9m

during H2 2020 to fund an asset acquisition and ratchet up a further 5.5% interest to 38.0%

• IPF’s influence has evolved to a position of joint control

• 62% of investment value hedged at average rate of 2.2%

• 100% of income stream over the next five years hedged at average rate of R22.34

Performance

• Base portfolio NPI grew 3.1% driven by rental

reversions across light industrial portfolio

• DPS growth of 1.6%

• 29.6% positive rental reversion on space let

• 53.8% positive rental reversion on rent reviews

Acquisition activity

• 5 acquisitions valued at £64m completed

in the year at blended yield of 7.1%

› 34% light industrial / last mile logistics

and 66% big box retail with ability

to convert to last mile logistics

› 4 assets acquired as conversion properties

– expect ERV to be maintained

but expect cap rate contraction

of 1.5%-2.0% on conversion

UK FundStrategic investment providing exposure to urban logistics

and strong cash flows

28


Mar 2020 Mar 2019

Equity invested £51.6m £10.7m

Shareholding 38% 10%


GLA (m²) 119 604 89 520

Vacancy 8.8% 2.2%*


Total value of property £301.3m £233.8m

* Excluding development vacancy at Edmonton which was acquired

with development vacancies

UK sectoral composition by asset value

34%

38%

19%

9%

Light industrial

Supermarkets

Retail warehousing with conversion ability

Traditional retail warehouse

29

UK FundSummarised income statement

29

Income statement

£'000 Notes Mar 2020 Mar 2019 % change

Total net property income 12 829 11 857 8.2%

Base Portfolio 1 11 558 11 206 3.1%

Acquisitions and disposals 1 271 651 95.2%

Fund expenses (1 893) (1 722) 9.9%

Finance costs (4 866) (4 274) 13.9%

Net profit before tax 6 070 5 861 3.5%

Tax and minority interest (22) (88) (75.0%)

Distributable earnings after tax 6 047 5 773 4.7%

Fair value adjustments 2, 3 (24 264) 5 283 (559.3%)

Net profit/(loss) (18 217) 11 056 (264.8%)

Weighted average no. shares 21 879 366 21 220 000

Distributable EPS 0.276 0.272 1.6%

1. Base portfolio NPI grew 3.1% despite tenant insolvencies. Had tenant insolvencies not occurred, base NPI growth would have been 5.6%

2. Property values were revised downwards as a result of the current market and anticipated impact of COVID-19. Impairment of £19m – £4.4m relates to transaction costs

and £13.6m relates to the write down taken to reflect the COVID-19 position. If this was excluded, the impairment would have been £1.0m

3. Negative MTM on derivatives as a result of interest rate cuts. UK interest rates declined to their lowest levels in history in March 2020

30

• A total of 4 rent reviews 9 676m² (5 638m² light industrial and 4 038m² retail, representing 8% of total GLA)

were settled during FY20 achieving an average positive net effective reversion of 53.8%

UK FundLetting activity

FY20

Expiries &

cancellations

GLA

Renewals &

new lets

GLA

Gross expiry

rental

£/m2

Gross new

rental

£/m2

Rental

reversion

%

WALE

Years

Incentive

% lease value

Retention

%

Light Industrial 9 875 2 994 96.3 124.8 29.6% 4.1 8.9% 30.3%

Retail - - - - - - - -

Subtotal 9 875 2 994 96.3 124.8 29.6% 4.1 8.9% 30.3%


Total 22 552 8 046

PERFORMANCE

– AUSTRALIA

32

Key portfolio metricsFY20 highlights

• Completed ASX listing in May 2019

› Raised AUD100m and IPF sold down from 20.9% to 9.9%

• DPU (post-WHT) of AUD 8.57cps (March 2019: AUD 9.40cps)

› 8.8% reduction in line with guidance due to change in distribution policy

to AFFO

• Balance sheet in strong position

› Gearing reduced to 22.2% (March 2019: 37.4%)

› AUD17m of cash and AUD67m of undrawn debt

› Enhanced debt expiry profile to 7.4 years (March 2019: 3.6 years)

with no maturities until FY23

• Acquired three light industrial properties for A$81m at initial yield of 7.3%

› Undertook AUD84m capital raise in Sep-2019

› Diluted IPF’s interest to 9%

IPF returns

• Share price at 31 March 2020 of R11.99 (March 2019: R12.70) – R31m

impairment (4.4%)

• DPS growth of -8.8% (in AUD) and -0.5% (in ZAR)

IAPStrong financial results underpinned by sound asset

and capital management

32

Mar 2020 Mar 2019

Total value of property AUD 1 085m AUD 1 063m

Value of investment R0.7bn R0.9bn


Vacancy 1% 0.6%


NAV per unit AUD 1.32 AUD 1.30

Gearing 22.2% 37.4%

DPU (post-WHT) AUD 8.57 AUD 9.40

17%

13%

70%

Industrial

Logistics

Office

CAPITAL ALLOCATION

34

Capital recyclingEfficiently executed on return enhancing basis – 140bps spread

34

Looking forward:

• R0.9bn of cash outstanding from 5 properties

sold and awaiting transfer (still held for sale)

• Further 8 properties valued at R0.4bn

earmarked for sale

• Discussions to sell 10% of PEL to new

co-investor

1. Includes deployment into: PEL platform - current portfolio, Belgian properties, PELI platform, PEL buy up to 75%

2. Acquisition of Highlands Mall for R52m. Projects: R165m, sustainability R27m and general capex R84m

3. 10 assets sold raising total proceeds of R1.2bn. 5 assets transferred – cash proceeds of R0.3bn received;

5 awaiting transfer – guarantees of R0.9bn received for properties pending transfer

4. Net of capital gains tax and transaction costs

March 2020 Yield

Rm %

Deployment into:

European acqusitions¹ 3,498 10.1%

U.K. Fund 764 5.6%

SA property acquisition, projects and capital expenditure² 329 8.6%

4,591 9.2%

Funded by:

Proceeds from SA property disposals (incl those awaiting transfer)³ 1,170 9.1%

Proceeds from Ingenuity disposals 124 7.0%

Proceeds from IAPF disposal4 581 7.0%

Equity raised 875 12.2%

Debt - ZAR 867 8.9%

Debt - Offshore (blended rate) 974 1.8%

4,591 7.8%

9OPERATING IN A COVID-19

ENVIRONMENT

36

What are we seeing globally?

Retail sector has been the hardest hit – only essential retailers trading during lockdown

Demand side pressure is expected to adversely impact SMME’s

Ramp up in online retail activity and e-commerce penetration

Pressure on landlords to provide relief through the crisis

Global cash collection for April and May has been relatively strong – retail most adversely

impacted; logistics exhibiting most resilience

Increased need for storage space due to supply chain reconfigurations

36

37

• Diversification across sectors and geographies that we know and have on-the-ground expertise

• Investment allocation driven by sound property fundamentals and structural drivers

• Good exposure to logistics – shown resilience and set to benefit

• Geographically diversified

› Muted growth domestically bolstered by offshore performance

• Sectorally diversified

› Limited exposure to retail sector – most impacted on a global basis

› 56% exposure to industrial / logistics sector globally

IPF benefits from a diversified balance sheetSectoral and geographical diversification ensures the portfolio delivers through the cycles

Proportional consolidation

by asset value SA Europe UK Australia

Contribution

to group by

sector

Retail 43% - 66% - 25%

Industrial 11% - 34% 17% 10%

Logistics 9% 100% - 13% 46%

Office 37% - - 70% 19%

Contribution to Group by region 65% 27% 5% 3% 100%

38

IPF retail exposure

• South Africa:

› Constitutes majority of 25% global

retail exposure

› 83% of SA revenue comprise national

tenants; 17% comprises smaller

independent retailers

› Very nominal portion of SA balance

sheet considered “at risk” over time

› Metropolitan nodes more impacted

than rural retail – IPF has limited

metropolitan exposure

• UK: (5% of IPF balance sheet)

› 66% of portfolio is retail:

- 38% supermarkets

- 19% big-box with focus on

conversion to last mile logistics

- 9% traditional retail

IPF global retail exposure – 25% of total asset baseUnderpinned by quality tenant base

What to expect going forward…

• Short-term:

› Potential income loss from

discounts to national and large

retailers of non-essential goods

and services (not yet agreed)

and SMME relief provided

› Increased cost of operating malls

• Medium-term:

› Expect business failure of line

shops

› Slow return to lifestyle retail

› Reduced footfall as consumers

stay home

› Majority of retail base expected

to gradually resume trading once

lockdown restrictions are lifted

38

19%

10%

25%

46%

Office

Industrial

Retail

Logistics

Global sectoral exposure on proportional

consolidation basis (by asset value)

22%

13%

10%10%

8%

6%

6%

6%

4%

15%

Apparel

Grocery / supermarket

Department stores & general dealers

Hardware retailers

Furniture, homeware & interior

Financial services

Motor sales & services

Restaurants

Pharmacy / medical

Other

SA retail sub-categories (by revenue)

39

IPF industrial / logistics exposure

• Industrial and logistics exposure comprises majority

of IPF balance sheet (56%) underpinned by PEL:

• PEL portfolio well-positioned to benefit over

medium-term from demand for warehousing and

distribution assets, particularly regional and last mile

properties

› Increased e-commerce activity and change in

consumer behaviour

› Change in supply chains

› Need for more storage space

• UK portfolio has significant light industrial focus:

› 34% light industrial and urban logistics

› 19% retail warehousing with potential to convert

to last mile / urban logistics

• Australian portfolio (IAP) has 30% light industrial

focus (13% logistics) and 70% metropolitan office

› 90% of tenant base constitutes government,

listed and multinational tenants

IPF global industrial / logistics exposure set to benefitResilient through the crisis with expected tailwinds

What to expect going forward…

• South Africa:

› GDP-linked sector dependent on pace of broader

economic recovery

› Deferred rental collection

› Leasing uncertainty on vacant space

› Flexible lease structures

› Heightened risk of tenant failures

• Europe (logistics):

› Continues to be the most robust sector globally

› Short-term cashflow impact due to rental relief

› Long term structural reforms resulting in

increased demand for logistics space

• UK:

› Focus on conversion to last mile / urban logistics

where possible

39

40

• Majority (88%) of tenant base

considered investment grade –

will continue to trade post lockdown

• Limited exposure to high-risk industries

severely impacted by lockdown

• Largest risk remains SMMEs

and business failure

* Based on proportional revenue

Strength of tenant covenantsIPF has a strong tenant base globally that has underpinned the portfolio’s resilience to date

Tenant

grading SA Europe UK

Weighted

average*

A grade 72% 71% 56% 71%

B grade 19% 13% 18% 17%

C grade 9% 16% 26% 12%

Where:

• A grade: large national tenants, large listed tenants,

government and major franchisees

• B grade: national tenants, listed tenants, franchisees,

medium to large professional firms

• C grade: Other

41

Heightened

engagement

with over

1 000 tenants

Supporting

SMMEs

to the Fund’s

best ability

Ensuring malls

are well-tenanted

after lockdown

restrictions

are lifted

Ability

to extend

lease tenor

on back of

rental relief

Stronger

tenant

relationships

Relief

offered to tenants

in good standing

New and

restructured

leases

concluded

Rental relief

to support

working capital

41

Operating principles in the COVID-19 environmentWhat we are adhering to in navigating through the COVID-19 volatility

42

South Africa:

• R61.7m of rental relief agreed (4% of SA annual gross income) – 49% discounts, 51% rent deferrals

• Discounts provided almost solely to SMME’s, retail line shops and restaurants

• Proportion of discounts will decrease – primarily given to retail line shops and most requests now addressed

Europe:

• €4.1m of rent deferral relief agreed (8.6% of PEL gross annual income)

• All rent deferrals and changes to payment terms

Impact of lockdownRental collection experience across all regions has been strong

Investment region

% Collections

April(as % of April rent receivable)

May(as % of May rent receivable)

South Africa 73% 79%1

Europe (logistics) 94% 65%2

UK 87% 79%3

Notes:

1. 71% collected at the same time last month

2. 62% collected at the same time last month

3. 84% collected at the same time last month 42

43

Impact of lockdownTenant concessions

Investment

region Commentary

South Africa • Deferral and discount requests in industrial and office sectors

• Retailers requesting discounts

› SMMEs unable to pay rent – IPF has provided relief

› Attempts made to negotiate relief measures with large and medium sized retailers

– still in progress

› Deferment structures range from 1-3 months with payback periods of 3-6 months

• Requests considered only if arrears paid

• Negotiating lease re-gears in exchange for upfront rent-free incentives

Europe • Deferral requests only, no discounts

› Deferment structures range from 1-3 months net rental with recoupment

by 31 December 2020

• Requests considered only if arrears paid

• Concessions offered with extension of their existing leases

• Offering to bring forward future rent-free periods and adjust payment periods

i.e. monthly vs. quarterly payments

UK • Adjustments to payment periods i.e. monthly vs. quarterly payments

• No income loss to date (no concessions granted yet)

• Anticipate further requests

• Retailers may continue to refuse to pay due to government protective measures

43

44

IPF supports COVID-19 reliefIPF has implemented various initiatives to support and ensure the sustainability of SMME’s and the community

COVID-19 awareness and

hygiene

• Educational posters

• Provision of sanitisers

• Staff training

• Enhanced sanitation and

disinfecting procedures

at all properties

Service providers

• Ensuring job preservation

and full salaries to staff within

shopping centres and property

management companies

• Financial support to c.260

car guards and SMME car wash

operators within retail portfolio

Continual communication

• To all clients, regarding

COVID-19 and hygiene and

building resilience measures

• Engagement with over 1 000

tenants relating to rental

concessions

Ancillary services

• Supplying face shields for

frontline personnel including

JMPD, Emergency

Management Services and

health practitioners

• Food collection drive

Feeding scheme

• Contributed towards providing

160 000 meals a month for

next 4 months in support of

school children and students

Buildings

• 4 buildings made available

for Government quarantines

sites and testing centres

10BALANCE SHEET

AND RISK MANAGEMENT

46

• De-gearing flightpath:

› COVID-19 likely to impact implementation period

› Proceeds of R1.2bn from the disposal of SA properties – guarantees received, waiting for deeds offices

› PEL refinance of European property company debt and IPF acquisition bridge debt on track

› Transfer of the Belgium assets into PEL at acquisition value in process

› Izandla debt redemption delayed. In discussions with several parties on sell down of 10%

in PEL platform

• 47.5%¹ LTV expected to normalise to c.34% post implementation of the above de-gearing flightpath

• ICR of 2.9x at 31 March 2020

• Headroom in ICR and debt yield covenants across all regions

• R1.5bn of cash (including R0.9bn of guarantees relating to pending asset sales)

• R0.9bn debt maturing in December 2020

› Refinancing discussions far progressed

• 26.3% encumbrance ratio

• Balance sheet remains largely unencumbered

• Strong credit metrics maintained with corporate rating at A1 / A+(ZA) short / long term

1. Gearing at 46.5% on a "normalised" FX basis (i.e. c.R17.20/€ as at time of pre-close announcement)

Balance sheet managementWell-positioned to withstand economic turbulence

95.3%

Group interest rate exposure hedged

(Mar 2019: 84.0%)

Swap expiry extended to 3.8 years

(Mar 2019: 3.4 years)

100.0%

Europe interest rate exposure hedged

Swap expiry 3.2 years (pre-refinance)

85.0%

UK interest rate exposure hedged

Swap expiry 6.7 years

47

• Continue to progress discussions

with proposed funders

› Due diligence and legal work far advanced

› Slow progress over last six weeks

due to COVID-19 volatility

Update on PEL refinancing

47

• Have engaged in wider process to support club deal

› Positive feedback from funders that IPF is well

placed to benefit from logistics sector resilience

› Significant interest from lenders to participate,

including existing lenders

48

• R1.5bn available cash (including R0.9bn guarantees received on asset sales)

• R0.9bn debt maturing in December 2020

• Two acquisition bridges

› €205m extended for 12 months to April 2021

› €40m extended to May 2021

› To be settled through refinancing of PEL platform debt

The below schedule illustrates the debt expiring in the next 12 months and the refinancing status thereof:

Debt maturity – next 12 monthsLimited liquidity risk

Type Facility type Amount drawn Expiry Status

SOUTH AFRICA BALANCE SHEET

Bank Term R300m Dec 20 Advanced negotiations with bank(s) to early refinance

DMTN Corporate Bond R590m Dec 20 Discussions with banks and/or bond holders on potential refinance

DMTN Commercial paper R54m Jul 20 R54m was refinanced in April 2020

UK FUND BALANCE SHEET

No debt expiring in next 12 months

EUROPEAN PORTFOLIO BALANCE SHEET

Europe

BankTerm €85m May 20

• Extension option in favour of Hexagon to extend to November 2020

• Intention is to refinance this as part of PEL refinancing to 5-year term debt,

the status of which is far progressed

49

Balance sheet strategy – covenantsSignificant headroom on interest and debt yield covenants

UKICRs:

2.65x to 3.0x

Covenant level:

1.5x to 2.2x

EuropeDebt yield:

8.7% to 11.4%

Covenant level:

4.0% to 7.3%

AustraliaICR

5.2x

Covenant level:

2.0x

Group covenants Covenant March 2020

Group LTV 50.0% 47.6%

Group interest cover ratio 2.0x 2.9x

Group NAV 7.0bn 15.0bn

Minimum unencumbered asset % 30.0% 73.7%

50

1. By gearing up to 60% LTV in PEL platform, in-country debt may be increased by c.€160m

› Flows back to IPF to settle bridge loans of R2.7bn – reduces IPF LTV by c.6.5%

2. Transfer of Belgium assets to PEL reduces IPF LTV by c.2%:

› Enables €40m more debt to be raised at asset level and proceeds to flow back to IPF

› c.€8m of equity contribution by co-investor to acquire Belgian assets flows back to IPF

Balance sheet positionKey focus is PEL refinancing

47.5%

34.4%

(1.6%)

(8.7%)(2.3%) (0.5%)

Current gearing (c.) SA asset disposals PEL platform refinance¹and transfer of Belgium²

Sell 10% of PEL Izandla mezz refinancing Gearing post flightpath (c.)

51

Look-through gearing at c.49% post flightpath

• Regional gearing is evaluated on a risk adjusted basis

• Investments reside in developed markets, currently linked to best real estate markets globally

• Significant cash flow headroom given spread between asset yields and the cost of debt

• Debt yields of 8-10x and ICR of 5-6x

Risk adjusted LTV

LTV considered on a risk-adjusted basis across each region

Re

al e

sta

te r

isk

Country risk

SA

(34% LTV)

UK

(54% LTV)

W.E

(60% LTV)

(3%)

0%

3%

6%

9%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 20

10 year spread - widening

EU (asset yield) EU (debt yield)

UK (asset yield) UK (debt yield)

52

Balance sheet and liquidity key prioritiesNext 12 months and beyond

Key priority is

PEL in-country

debt refinance

which reduces

Group LTV

and increases

access to

liquidity across

all regions

1

2

3

4

5

In-country PEL debt refinance

• Expect successful outcome

Completion of de-gearing flightpath and normalization of LTV down to c.34%

Refinancing of debt maturing in December 2020

Bolster liquidity

• Continued engagement with banks and bond holders

• Continued focus on capital recycling

Maintain or improve credit rating

• Largely linked to the successful implementation of the de-gearing flightpath

11LOOKING AHEAD

– FY21

54

• Greater uncertainty around leasing activity and renewals

• Short-term cashflow impact from:

› Rental concessions affecting timing and quantum of cashflows

› Gradual return to business as usual as lockdown is lifted

› Pace of economic recovery

• Operating costs are increasing

• Cost of additional safety, security and hygiene measures

• Heightened risk of tenant failures particularly in retail sector

and SMMEs

• Expect greater office space flexibility

• Increased demand for logistics space driven by structural reforms

• Benefits emerging from IPF’s enhanced investment into PEL

What we expect to see over the next 12 months…

5454

55

FY21 strategic prioritiesKey focus elements driving our purpose in FY21

5555

South Africa• Activation strategies

• Repositioning SA assets using

property matrix as strategic filter

• Capital recycling

• Active asset management to add

value in a subdued market

› 248 046m² of space expiring

– 24% let already

Europe• Bed down acquisition

• PEL refinance

• Introduce third-party equity

• Focus on leasing

› 223 696m² space expiring

– 2.6% let

› New developments coming

online

UK• Focus on last mile / urban logistics

sector

• Focus on leasing

› 15 802m² of leasing activity

(13% let to date) and 23 489m²

rent reviews

IPF Group priorities

1. Client engagement

across all regions

• Support through COVID-19

volatility

• Ensuring occupancy and

sustainability of income

• Providing an out of the ordinary

experience

• Manage business failures

2. Active balance sheet

management

• Complete de-gearing flightpath

• Normalise LTV

• Preserving liquidity through

the downturn

3. Bedding down

Pan-European acquisition

• Complete PEL refinancing

• Aligning to IPF systems

and procedures

4. Humanity…

now, more than ever

• Good corporate citizenship

• Sustaining SMMEs and

the community (refer slide 44)

12FINAL DIVIDEND

AND GUIDANCE

57

Final dividend

• Lack of clarity around COVID-19 impact and duration

• Board has resolved to defer dividend declaration, to the extent permissible by regulators

until such a time as there is more certainty around the trading environment

Guidance

• Unable to forecast accurately amidst COVID-19 uncertainty

› Will start to have clarity when trading resumes

• Short-term economic outlook in SA remains challenging

• IPF will inevitably be impacted:

› Leasing activity will be slow

› Cashflow impact from concessions

› Business failures

• PEL and UK will be impacted to a lesser extent

• Confidence in IPF’s continued performance underpinned by:

› Evidence of cash collections to date

› Sound property fundamentals and robust tenant base

› Diversity of earnings base and limited exposure to undercapitalised retail

› Positive impact of COVID-19 on logistics sector

Final dividend and FY21 guidanceFocus on maintaining the longer-term competitive nature of the business

5757

13ANNEXURES

PERFORMANCE – SA PROPERTY

59


Mar 2020 Mar 2019


GLA (m²) 248 621 249 243

Vacancy 6.9% 7.3%




OfficeOver supply and subdued demand remain a challenge

59

Mar 2020

Rm

Mar 2019

Rm

±

%

Gross income 655.4 677.5 (3.3%)

Net expense (129.2) (137.5) (6.0%)

Base net property income 526.2 540.0 (2.6%)

Acquisitions and disposals (1.8) (1.4) 26.6%

Net property income (excl. straight lining) 524.4 538.6 (2.6%)

Base net cost to income ratio 19.7% 20.3% (3.0%)

Arrears % collectibles 3.6% 2.5% 44.0%

5959

• Pressure in the Rosebank and Sandton nodes giving rise to significant vacancies in 4 Sandown

Valley and Firs which drove down income growth year-on-year

• Cost to income ratio improved slightly due to the following:

› Contractual rental remained largely flat year on year due to large voids across the sector

› Net fixed expenses increased by 0.5%, well below inflation

› Bad debt increased significantly due to business failure of certain tenants

› Improvement in net utility recoveries, largely due to Council revaluations and non-tenant

rebates received on rates

› Offset by void impact on rates and ops cost

• Arrears as a % of collectibles have increased from 2.5% to 3.6% which is a sign of the tough

financial climate and challenges faced

• Vacancies reduced slightly to 6.9% at year end

60

Mar 2020

Rm

Mar 2019

Rm

±

%

Gross income 371.0 359.3 3.3%

Net expense (61.8) (56.5) 9.4%

Base net property income 309.2 302.8 2.1%


Net property income (excl. straight lining) 316.0 361.1 (12.5%)


Arrears % collectibles 0.7% 4.4% (84.1%)

60

• Rental growth due to filling of voids due to short term letting

• Net expenses grew largely due to the increase in fixed costs and net municipal expenses

• Cost to Income ratio increased from 15.7% to 16.6% due to:

› Contractual rental increased by 4.8% due to short term rental signed at desirable rental

› Bad debt has reduced largely due to the write-off of significant debtors

› Net rates expense increased due to gross lease structuring

› Gross fixed costs increased with 15% due to increase in insurance and security costs

• Arrears as % of collectibles have decreased significantly due to the proactive management of the

debtor’s balance as well as write offs at March-20

• Vacancies have increased due to short term lets negotiated

IndustrialUnder pressure due to void periods and increases costs

6060


Mar 2020 Mar 2019


GLA (m²) 511 108 531 501

Vacancy 3.5% 1.2%




61

Mar 2020

Rm

Mar 2019

Rm

±

%

Gross income 596.4 556.9 7.1%

Net expense (130.2) (109.5) 18.9%

Base net property income 466.2 447.4 4.2%


Net property income (excl. straight lining) 579.5 572.2 1.3%


Arrears % collectibles 4.8% 4.0% 20.0%

• Gross income grew inline with in-force escalation due to high demand and low voids

• Increase in expenses are largely impacted by increase in bad debt provisions as well as increase

in net rates expenses

• Cost to income ratio increased due to:

› Contractual rent increased largely by in-force escalation

› Fixed costs increased with 4%, largely due to increased security costs for the Fleurdal extension

› Increase in net municipal charges and reduction of council rebates received at certain properties

• Arrears as a % of collectibles increased largely due to business failures

• Vacancies remain low, with a large portion of current vacancies considered structural

or under development

RetailContinues to produce growth despite subdued consumer spending

616161

Mar 2020 Mar 2019


GLA (m²) 398 520 417 177

Vacancy 1.4% 1.0%




62

• Retail Portfolio showing good growth in

tough trading environment with Fleurdal

extension adding over 2% growth to the

12-month turnover figures

• Around 20% of the IPF SA retail portfolio

falls under essential services. The

retailers that are trading during this time

have been trading at higher levels than

prior months.

• These numbers are expected to decrease

going forward as consumers stockpiled

prior to (and in the early stages of) the

lockdown

RetailTrading performance

19.8%

8.7%6.1%

2.0% 2.4%

(12.2%)

1.5%

Fleurdal Kriel Zevenwacht Newcastle Dihlabeng Design Quarter Balfour

62

Retail – Average annual turnover growth (%)

3.8% 3.8%4.4% 4.3% 4.3% 4.0% 4.1%

3.6% 3.9% 4.0% 4.2% 4.3%

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Average like-for like turnover excluding Design Quarter and Balfour Mall (%)

1,455 1,450

2,4632,657 2,565 2,536

2,818

Balfour Design Quarter Dihlabeng Fleurdal Kriel Newcastle Zevenwacht

Average trading density by centre (R/m²)

2019 2020

• Average trading density of R2 616/m²

(excluding Design Quarter and Balfour)

• Amongst top 3 in property sector peer

group – trading density growth of 2.5%

including Design Quarter and Balfour Mall

(3.4% excluding)

626262

13ANNEXURES

CAPITAL ALLOCATION

64

Capital recyclingR1.2bn proceeds raised relating to SA properties sold (R0.9bn pending transfer)

R0.4bn assets held for sale at year end

Properties held for sale

Value at 31 Mar 2020

(Rm) Status

Scientific Building 30.0 Interest from potential purchaser

International SOS 6.0 Interest from potential purchaser

Builders Warehouse Polokwane 101.1 To be auctioned

Builders Warehouse Witbank 79.0 To be auctioned

Masscash Kimberley 34.0 To be auctioned

Renew It 24.0 Signed offer to purchase

Unitrans Polokwane 35.6 To be auctioned

Zenth East Rand 111.0 -

Total value of properties held for sale 420.7

Assets held for sale (Rm)

583.7 558.8

420.7

0

200

400

600

800

Mar 2019 Sep 2019 Mar 2020

13ANNEXURES

BALANCE SHEET

66

Balance sheet metrics

1. Includes all interest rate swaps and cross currency swaps over total debt (excluding bridge financing)

2. Secured assets as a percentage of total investments. Excludes R4bn bridge facility that will increase the encumbrance ratio

3. Secured debt as a percentage of total debt facilities

As at 31 March 2020 IPF Group SA

Europe

(pre-refinance)

Europe

(post-refinance) UK Australia

Average all-in cost of funding 6.1% 8.9% 2.1% TBC 3.5% 3.1%

Average debt margin (local currency) 1.8% 1.4% 2.1% TBC 2.4% n/a

Average all-in fixed rate - EUR 2.0% n/a n/a n/a n/a n/a

Average all-in fixed rate - AUD 4.2% n/a n/a n/a n/a n/a

Average all-in fixed rate - GBP 2.2% n/a n/a n/a n/a n/a

Debt maturity (years) 2.8 2.9 2.2 5.0 2.5 7.4

Average swap rate 5.8% 7.5% 0.3% n/a n/a 3.0%

Swap maturity 3.8 4.0 3.2 5.0 6.9 5.6

Hedge percentage¹ 95% 92% 100% 100% 85% 87%

Gearing % 47% n/a 42% 60% 54% 22.2%

Encumbrance ratio² 26% n/a 100% 100% 100% 100%

% debt secured³ 62% 31% 100% 100% 100% 100%

% CCS of AUD investment 60% n/a n/a n/a n/a n/a

% CCS of GBP investment 62% n/a n/a n/a n/a n/a

% Foreign debt of EUR investment 62% n/a n/a n/a n/a n/a

67

The Fund’s weighted average debt maturity is consistent across all platforms:

• South Africa (Group): 2.8 years with interest rates c.95% hedged over 3.6 years.

Current debt maturity is adversely impacted by short-term acquisition bridge funding

and will normalise to more than 3 years once re-financed

• Europe (logistics): 1.4 years which will extend to c.5 years upon completion of the

refinancing. Interest rates are 100% hedged over the remaining term of the debt,

to be extended upon the refinancing

• UK: 2.5 years with interest rates c. 85% hedged hedge maturity of 6.4 years

Balance sheet strategy – GroupFundamental focus

67

2.83.1

2.5

3.8

1.6

5.3

2.1

0

2

4

6

Group debt Europe in country debt UK in country debt

Debt Swaps Cross currency swaps

Ye

ars

Weighted expiry profile (years)

68

Balance sheet strategy – GroupAccess to multiple sources of funding across various lenders

7%

6%

13%

33%

28%

13%

Investec Nedbank

Nedbank HQLA Nedbank Bridge

SBSA Standard Chartered

SA debt split by bank

63%

37%

BAML

PBB

Europe in country debt split by bank

57%28%

15%

HSBC

PBB UK

Investec UK

UK in country debt split by bank

691. Includes R4bn bridge facility and R700m Belgian bridge funding extensions. Expecting credit approval by 19 May 2020 to extend both to April 2021

2. Group debt includes foreign debt raised to fund offshore investment

Balance sheet strategy – GroupDebt and swap expiry profiles

Group debt and swap expiry (%)

Group debt expiry

27%

1%

20%17%

21%

14%10%

30%

22%

14%

21%

3%

0%

10%

20%

30%

40%

FY21 FY22 FY23 FY24 FY25 FY26 +

Total swaps Total debt

0.9

7.1¹

1.42.4 2.1

0.71.7 2.0

0.2

3.2

0.5

2.11.0

0

2

4

6

8

FY21 FY22 FY23 FY24 FY25 FY26+

R b

illio

n

Group debt² Europe in country debt UK in country debt

701. By facility

2. Excluding bridge funding. If bridge funding is included, foreign bank debt increases to 43%

Balance sheet strategy – SASources of funding

70

42%

18%

14%

24%

2%

ZAR bank

Foreign bank²

HQLA

DMTN

Commercial paper

Sources of funding (%)¹

13ANNEXURES

SA PROPERTY PORTFOLIO

72

SA portfolio composition

37%

22%

41%

Office

Industrial

Retail

Sectoral spread by revenue

43%

37%

20%

Office

Industrial

Retail

Sectoral spread by asset value

22%

44%

34%

Office

Industrial

Retail

Sectoral spread by GLA

73

SA sectoral composition (by revenue)

73

78%

13%

7% 2%

Shopping centres

Retail Warehouse

Motor dealership

High street

Retail

36%

64%

Single

Multi

Office

7%

7%

18%

21%

47%

High tech industrial

Standard units

Warehouses

Manufacturing

Logistics

Industrial

74

SA lease expiry (by revenue)92% of full year expiries let

5.0%

1.3%

6.3%

3.5%

4.8%5.0%

9.0%8.2%

9.0%

7.3%

9.5%

6.4%

10.8%

6.2%7.7%

19.5%

16.7%

25.3%

18.7%19.8%

0%

5%

10%

15%

20%

25%

30%

FY21 FY22 FY23 FY24 April 2024 onwards

Industrial Office Retail Total

75

SA top 10 tenants

Tenant name %

Massmart 4.8

Shoprite Checkers Group 2.5

Mr Price Group 1.3

New Edcon Holdco 1.3

Foschini Group 1.0

Pick 'n Pay Group 1.0

Woolworths 1.0

Pepkor Group 0.9

Zenth Park Trading 0.7

Auto Alpina 0.6

RetailGross revenue

% of total portfolio

Tenant name %

Investec 4.4

Cliffe Dekker Hofmeyr 4.1

Woolworths 2.4

Innovation 1.9

Fluxmans Attorneys 1.5

Nedbank Group 1.5

Samsung Electronics Co. Ltd 1.1

Clover 1.0

Bigen Africa 1.0

ELB Engineering 1.0

OfficeGross revenue


Tenant name %

Altron Ltd 1.8

Kevro Trading (Pty) Ltd 1.4

RT Group (Pty) Ltd 1.2

Adcock Ingram Healthcare 1.0

Martin & Martin (Pty) Ltd 0.8

Tiger Brands Ltd 0.8

Waco International 0.8

AGCO Corporation 0.6

Naspers Limited 0.4

Bidvest Limted 0.4

IndustrialGross revenue


13ANNEXURES

PEL PROPERTY PORTFOLIO

77

PEL lease expiry (by revenue)

10.8%

18.4%

14.5%

4.0%

52.3%

0%

10%

20%

30%

40%

50%

60%


78

PEL top 10 tenants

Tenant name %

Rhenus 9.1%

CHI Deutschland 6.2%

Geodis Logistics 5.5%

DHL 5.3%

Odin Warehousing & Logistics BV 4.5%

AF Logistik 4.0%

Vilmorin & Cie 3.7%

Procter & Gamble 3.6%

Galeria Warehouse 3.4%

LogisticsGross revenue


13ANNEXURES

UK PROPERTY PORTFOLIO

80

UK portfolio composition

80

22%

37%

27%

14%

Industrial

Supermarkets



Sectoral spread by revenue

35%

38%

18%

9%

Industrial

Supermarkets



Sectoral spread by asset value

81

UK lease expiry (by revenue)

2.4%0.3%

11.9%

2.6%

60.7%

0.0%

3.7%1.9%

4.1%

12.4%

2.4%4.1%

13.8%

6.7%

73.1%

0%

20%

40%

60%

80%


Retail Industrial Total

82

UK top 10 tenants

Tenant name %

Sainsburys Supermarkets Ltd 26.7%

B&Q Plc 11.7%

Tesco Stores Ltd 9.3%

Go Outdoors Ltd 6.5%

Kuehne & Nagel Ltd 2.7%

Smiths Detection Watford Ltd 2.6%

Haag Streit UK Ltd 2.3%

Wren Kitchens Ltd 2.2%

Kingston Digital Europe Co LLP 2.1%

Go Karting For Fun Ltd 2.1%

Retail and IndustrialGross revenue


83

Glossary

Abbreviation Meaning

CCS Cross currency swaps

CGT Capital gains tax

DPS Distribution per share or dividend per share

Edcon Edcon Holdings Limited

EV Enterprise value

GAV Gross asset value

GBF General banking facility

HFS Held for sale

IAP Investec Australia Property Fund

ICR Interest cover ratio

Ingenuity or ING Ingenuity Property Investments Limited

IPF or The Fund Investec Property Fund Limited and its subsidiaries

Abbreviation Meaning

IRS Interest rate swaps

Izandla or Izandla Property Fund Izandla Property Fund Proprietary Limited

MTM Mark to market

NAV Net asset value

NPI Net property income

PEL Pan-European logistics

PELI Pan-European light industrial

UK Fund Nestor Investment Holdings Limited

WALE Weighted average lease expiry

WAULT Weighted average unexpired lease term

WAULTB Weighted average unexpired lease term to break

YOY Year on year

83

84

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annual results presentation for year end 31 march 2020 · 4 •3.0% growth in full year earnings...

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