RESULTS PRESENTATION for the year ended 28 February 2018

Transcription

1 88 Field Street, Durban RESULTS PRESENTATION for the year ended 28 February Sleepy Hollow, Pietermaritzburg

2 88 Field Street, Durban AGENDA Introduction, Updates & Highlights Financial Review Portfolio Review Conclusion Questions & Answers Annexures

3 INTRODUCTION, UPDATES AND HIGHLIGHTS Sandile Nomvete Liberty Towers, Durban

4 INTRODUCTION TO DELTA Sovereign underpinned JSE listed REIT 77.9% Dominant in of revenue from sovereign tenants Pretoria & Durban CBDs Most empowered fund Level 2 B-BBEE Maintained on new sector codes Average property value of R109.6m 2017: R101.6M Market capitalisation of R4.3bn as at 28 February 2018 Assets under management of R11.9bn by 100% black-owned asset manager 4

5 UPDATE ON DELTA Update on lease negotiations Leasing policy promulgated in January 2018, favouring empowered landlords Bulk lease negotiations progressing in earnest with renewals expected before December 2018 Proactive and pragmatic engagement from the DPW and the user departments in structuring solutions Year under review 21.6% of sovereign leases month-to-month (2017: 26.8%) Total exposure to sovereign leases: 77.9% (2017:76.4%) by rental income R941 million debt refinanced Average debt facility expiry period contracting to 1.5 years (2017: 1.9 years) Ongoing interactions with debt providers confirms WALE as a strong influencer of refinance terms & costs LTV less impactful at 41.3% levels Recapitalisation Awaiting final funding terms from consortium Reduce debt funding, facilitate index inclusion and provide a platform for growth 5

6 UPDATE ON DELTA Capital recycling Disposal of non-strategic assets continued, portfolio down to 105 buildings from 112 as at 28 February 2017 Vacancies increased slightly Eskom consolidation in Sunninghill node Local supplier preferences impacting Free State portfolio Short-term performance Exogenous impacts to short-term performance and forecasts: Clarity and implementation of DPW leasing policy Successful implementation of recapitalisation transaction Strong macro-economic growth that will support capital recycling and tenant demand 6

7 CORPORATE HIGHLIGHTS 2018 Distribution for FY2018 Distributable earnings for FY2018 Debtors well managed at cents per share R691.6 million 18.0 days Vacancy at Renewed Concluded 11.8% m m² SAPOA: 11.2% of existing leases of new leases 7

8 FINANCIAL REVIEW Shaneel Maharaj Delta Towers, Durban

9 FINANCIAL HIGHLIGHTS 2018 Loan to value of 41.3% Successfully refinanced and settled R941m Fixed debt of 85.4% (Feb 2017: 41.5%) of debt facilities (Feb 2017: 85.1%) Debtors well managed at 18.0 days Property operating margin at 73.5% in tough economic environment Interest cover ratio 2.4 (Feb 2017: 2.5) 9

10 FIVE YEAR REVIEW Revenue (R 000) Net property income (R 000) Finance costs (R 000) Cost to income ratio - gross method 26.5% 28.8% 26.4% 26.0% 25.5% Cost to income ratio - net method 12.1% 12.4% 12.2% 10.2% 10.8% Investment property (R 000) Investment in listed securities (R 000) Borrowings (R 000) Gearing level # 41.3% 41.5% 47.2% 49.9% 47.5% Weighted average interest rate 9.2% 9.2% 8.8% 8.1% 7.5% Average debt expiry period (years) Average debt fix expiry period (years) Fixed : floating debt (excluding revolvers) 85.4% 85.1% 83.5% 78.0% 36.0% Net asset value per share (exclusive of deferred tax) R10.06 R9.91 R10.61 R10.02 R

11 DISTRIBUTABLE INCOME STATEMENT- NON IFRS 28 Feb Feb Feb 2016 Net property income (excl. straight line accrual) 1,147,865 1,148, ,581 Administration expenses (53,329) (68,169) (82,744) Realised foreign exchange loss - - (39) Net finance costs (462,483) (443,412) (386,120) Dividend income - GRIT 35,666 37,990 36,779 Sundry income 20,287 6,215 7,266 Add back debt structuring fee - - 6,141 Antecedent interest 257-9,010 Distributable earnings paid/(retained) 3,378 (3,378) (912) Distributable income for the period 691, , ,822 Number of shares in issue 711,844, ,632, ,097,436 Number of shares entitled to distribution 711,844, ,632, ,097,436 Distribution per share (cents)

12 GROWTH IN DISTRIBUTIONS HISTORIC DISTRIBUTION PER SHARE (CENTS/SHARE) H1 Interim H2 Final Total Full year 15.6% % % % % % 7.2% % 7.1% % % 46.4 (1.0)% FY2013 H1 Aug-13 H2 Feb-14 FY2014 H1 Aug-14 H2 Feb-15 FY2015 H1 Aug-15 H2 Feb-16 FY2016 H1 Aug-16 H2 Feb-17 FY2017 H1 Aug-17 H2 Feb-18 FY

13 DISTRIBUTABLE EARNINGS BRIDGE R , , (2) (19 070) (97 096) 750, , , , , , , ,000 H2 Feb 2017 Existing portfolio Admin cost saving Prior year retained earnings distributed Other income Antecedent dividend Dividends received (GRIT) Net finance costs Disposals and noncore assets H2 Feb

14 LIKE-FOR-LIKE NET PROPERTY INCOME (NPI) ANALYSIS Description Amount (R 000) % NPI Feb 2017 (excl. straight line rental income accrual) Increased NPI from base portfolio held at 28 Feb % NPI attributable to disposals and non-core assets FY17 (97 096) (8.5)% NPI Feb 2018 (excl. straight line rental income accrual) (0.1)% Increased NPI from base portfolio held at 28 Feb NPI attributable to disposals and non-core assets FY18 (36 304) Like-for-like increase in NPI % 14

15 SUMMARISED STATEMENT OF FINANCIAL POSITION R Feb Feb 2017 Change % ASSETS Non-Current assets ,0% Investment property ,8% Fair value of property portfolio ,0% Straight line rental income accrual ,3% Investment in associate % Other non-current assets (81,2%) Current assets ,4% Non-current assets held-for-sale (6,0%) Total assets ,2% EQUITY AND LIABILITIES Total equity ,5% Liabilities (0,8%) Non-current liabilities ,7% Current liabilities (32,8%) Total equity and liabilities ,2% 15

16 NET ASSET VALUE BRIDGE RANDS (0.98) (0.11) Feb 2017 Contribution from operations Fair value of investment property Fair value of financial instruments & forex gains Contribution of associate after impairment Dividend paid Disposals 28 Feb

17 DEBT SUMMARY As at 28 February 2018 Facility Type R m Weighted Ave. Rate Floating bank facilities 3, % Fixed bank facilities % Revolving bank facilities % Total borrowings, net of accrued interest 4, % Accrued interest 64 - Debt structuring fees (19) - TOTAL 4,953 Total fixed bank facilities % Interest rate swap contracts 2, % Cross currency swaps 125 Libor % Total fixed 3,641 Fixed % (excluding revolvers) 85.4% 9.2% 17

18 GRAPHICAL DEBT ANALYSIS SOURCE OF DEBT 2.9% TOTAL: R4,908M ZAR Banking Facilities (R4,767m) DEBT CLASSIFICATION TOTAL: R4,908M 12.8% Floating Bank Facilities (R3,483m) 16.2% Fixed Bank Facilities (R,796m) 97.1% USD Banking Facilities (R141m) 71.0% Revolving Bank Facilities (R,629m) FINANCIER SPLIT 2.9% 13.8% TOTAL: R4,908M Nedbank (R3,213m) FIXED DEBT BREAKDOWN R3,641M 3.4% TOTAL: Swap Contracts (R2,720m) 17.9% Standard Bank (R,878m) Investec (R,676m) 21.9% Fixed Banking Facilities (R,796m) 65.4% Bank of China (R,141m) 74.7% Cross Currency Swaps (R,125m) 18

19 Rand (million) DEBT EXPIRY PROFILE Fixed Bank Facilities Floating Bank Facilities Revolving / Liquidity Bank Facilities Swap Contracts 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, FEB FEB FEB FEB-22 19

20 DEBT COMMENTARY The weighted average all-in cost of funding is 9.2% (2017: 9.2%) 85.4% (2017: 84.1%) of borrowings fixed for an average period of 1.5 years (2017: 2.2 years). The average debt facility expiry period is 1.5 years (2017: 1.9 years) Interest cover ratio at 2.4 (2017: 2.5) Intention is to term out the debt expiry profile once the bulk lease renewals are implemented. R941 million was refinanced at a blended margin of 2.6% R125 million commercial paper settled 20

21 PORTFOLIO REVIEW Otis Tshabalala Embassy Building, Durban

22 OPERATIONS HIGHLIGHTS FY2018 A distinct focus on sovereign tenants 72.8% Rental income attributed to sovereign tenants 77.9% Total lease renewals in a challenging environment m² being sovereign tenants (by GLA) Vacancies of Total new leases concluded (GLA) 11.8% m² m² (SAPOA average 11.2%) Bulk lease renewal proposal to DPW (PMTE) 59 leases nationally 22

23 A STRATEGY DESIGNED TO MAXIMISE ON SECURE AND STABLE INCOME BUILDINGS REPRESENTED BY PROVINCE No of Buildings GLA (m 2 ) Gauteng KwaZulu-Natal Free State Mpumalanga Limpopo Northern Cape Western Cape Eastern Cape North West Total North West Gauteng Limpopo Mpumalanga REPRESENTATIVE TENANTS Northern Cape Free State KwaZulu Natal Western Cape Eastern Cape 23

24 GOVERNMENT PRECINCT PRETORIA 24

25 PORTFOLIO BREAKDOWN Office - Sovereign * Office - Other Industrial Retail Total Number of properties Gross lettable area (m 2 ) 637, ,208 40,258 23, ,428 Vacancy (%) 7.2% 23.0% 19.0% 3.1% 11.8% Value R8.3bn R2.7bn R0.2bn R0.3bn R11.5bn Average rental (R/m 2 ) # $ Weighted ave. escalation (%) # 5.8% 7.0% 3.0% 7.3% 6.0% Weighted ave. lease expiry (by revenue) - by building type 1.4years 1.6years 1.3years 5.4years 1.5years Weighted ave. lease expiry (by revenue) - tenant specific # 1.3years 1.7years 1.3years 3.2years 1.5years Cost to income ratio (net) 8.7% 22.9% 5.9% 23.7% 12.1% Cost to income ratio (gross) 22.5% 38.4% 25.4% 35.8% 26.5% * Multi tenant buildings are classified according to majority tenant type. Office Other buildings therefore contain a minority element of sovereign tenants # This classification looks specifically at the tenant type within each building $ Rental as at interim, renewals not yet in effect 25

26 SECTORAL SPLIT GLA - BY BUILDING 4.2% 2.5% GLA - BY TENANT* 6.9% 3.9% Office - Sovereign (66.9%) Office - Sovereign (72.8%) 26.4% 66.9% Office - Other (26.4%) Industrial (4.2%) Retail (2.5%) 16.4% Office - Other (16.4%) Retail (6.9%) Industrial (3.9%) RENTAL - BY BUILDING 72.8% RENTAL - BY TENANT 19.5% 2.2%1.9% Office - Sovereign (76.4%) Office - Other (19.5%) 12.8% 7.5% 1.8% Office - Sovereign (77.9%) Office - Other(12.8%) Retail (2.2%) Retail (7.5%) 76.4% Industrial (1.9%) 77.9% Industrial (1.8%) * Excludes vacancies. Analysis focuses on what category the specific tenant falls into, rather than the category of the building 26

27 DETAILED TENANT BREAKDOWN TENANT PROFILE BY GLA TENANT PROFILE BY RENTAL 16.4% 3.9% 6.9% 38.2% Office - Sovereign Office - Other National Government Provincial Government 6.9% 12.8% 1.9% 7.4% 37.5% Retail Local Government 6.6% 12.1% 16.0% 72.8% Industrial State-Owned Enterprise 11.9% 21.6% 77.9% Excludes vacancies. Total occupied GLA = 840,203m2 27

28 UPDATE ON SOVEREIGN TENANTS Update on the DPW Leasing Policy The policy was signed by the Minister of DPW on 31st January The policy takes into account the following 3 axes - Ownership, Management and Board Control. Delta scores highly on the Management and Board Control The Policy favours transformed companies and rewards them with longer term leases. What does this mean for Delta The Negotiating Team that will finalize the Bulk Lease Proposals with the Top 80 Landlords has been set up. The Delta Operations Team has had various meetings with the joint DPW & Treasury Negotiating Team and had fruitful engagements i.r.o the 59 leases totalling 227,550m 2. Stage 2 - User Departments Pricing Maintenance plan BEE scorecard Stage 3 - Bid Adjudication Committee 104 DPW leases already concluded which incudes 59 Delta leases Changes in DPW 28

29 LEASING UPDATE Major leases concluded A total of 95 leases were renewed measuring 93,144m 2 for the value of R309 million. Our most notable renewals are : Building Tenant GLA Rate/m² Escalation Term Capital Towers Dept. of Health m² R % 24 months Smart Exchange Durban Technology m² R % 36 months Temo Towers Dept. of Agriculture m² R % 36 months Treasury House Dept. of Finance m² R % 24 months Std Bank Greyville Standard Bank m² R % 60 months 88 Field Dept. of Justice m² R % 12 months Liberty Towers Comit Technologies m² R % 36 months SARS Sleepy Hollow SARS m² R % 60 months Total m² 29 29

30 LEASING UPDATE cont. A total of 65 new leases were concluded measuring m 2 for value of R 199million. Our most notable new leases are : Building Tenant GLA Rate/m² Escalation Term Embassy & Delta Towers Tenant retention Ethekwini Municipality m² R ,5% 36 months Delta Heights Compensation Fund m² R ,5% 36 months Commission House Dept. of Pubic Enterprises m² R ,5% 36 months Liberty Towers Mr Price m² R ,5% TOTAL 37,733 m² 120 months plus 2 437m² from 01-Oct-18 Thanks to the hands on approach of the Delta team and the external property managers we have managed to achieve a high tenant retention rate and to conclude the abovementioned deals 30 30

31 REVERSION Sector Total leases concluded 1 March February 2018 No of Leases Total Area (m 2 ) Renewals by Sector No of Leases W.A Term (months) Total Area W.A. Expiry Rate (R / m 2 ) * W.A. Term (months) W.A. Achieved Rate (R / m 2 ) * W.A. Expiry Rate / m 2 * W.A. Achieved Rate / m 2 * Escalation / (Reversion) Escalation / (Reversion) W.A. Esc. achieved Renewed leases # (5.68%) 7.06% W.A. Esc. achieved National Government % 7.14% Provincial government (7.37%) 7.99% State-owned enterprise (18.07%) 7.81% Office - other (3.68%) 6.57% Retail % 7.80% Total (5.68%) 7.06% * All rentals quoted are gross rentals 31

32 GEOGRAPHICAL AND GRADE SPLIT GLA - BY BUILDING RENTAL - BY BUILDING OFFICE GRADE - BY GLA Gauteng (42.5%) Kwazulu-Natal (29.2%) Free State (9.0%) Limpopo (4.7%) Western Cape (4.4%) Northern Cape (3.9%) Mpumalanga (3.2%) Eastern Cape (2.5%) North West (0.6%) OFFICE GRADE BY RENTAL Gauteng (44.2%) Kwazulu-Natal (24.6%) Limpopo (9.3%) Free State (6.6%) Western Cape (5.3%) Northern Cape (3.7%) Eastern Cape (3.0%) Mpumalanga (2.8%) North West (0.5%) A (13.7%) B (85.7%) C (0.6%) A (20.8%) B (78.7%) C (0.5%) 32

33 ACQUISITIONS Delta did not embark on any new acquisitions during the current year, choosing to rather focus inwardly on acquisitions, filling up vacancies and renewal of leases Investment strategy Strategy is to continue to focus on: Significant assets (> R100million) Underpinned by (or have potential for) long term sovereign leases Located in nodes attractive to sovereign tenants 33

34 DISPOSAL OF NON-CORE ASSETS 34 Property Sector Location GLA Sales price (R) Transfer Date Transferred Samora House Office - Sovereign Durban Mar-17 Damelin Building Office - Other Durban Jul-17 1 Ferreira Street Office - Other Nelspruit Jun-17 3 Ferreira Street Office - Other Nelspruit Jun-17 Presidia Office - Other Pretoria CBD Oct New Street Office - Other Johannesburg CBD Nov-17 Edcon Building Office - Other Johannesburg South Jan-18 Sale agreements concluded New Street Office - Sovereign Johannesburg CBD End June 2018 Top Trailers site 1 Industrial Wadeville, Johannesburg End June 2018 Broadcast House Office - Sovereign Mthatha, Eastern Cape Early June 2018 Block G Office - Sovereign Pretoria CBD End August other non-core assets # # Total book value at Feb

35 REDEVELOPMENT STRATEGY Delta to deploy CAPEX into portfolio Create value uplift to assets Securing long term stable returns Provide improved accommodation offering to tenants Long term benefit to portfolio Lease driven to identify assets where greatest value can be added, through value enhancing developments, and activation of under-utilised area or available bulk Three tier approach to CAPEX Defensive compliance Tenant installation new and renewed leases Project specific value uplift 35

36 CAPEX EXISTING PORTFOLIO Property 88 Field Commission House Embassy Building Beacon Hill Sleepy Hollow Poyntons Fire Project 17 Harrison Street Approved budget * Spent in FY Spent in FY Remaining budget Completed Completed Description Internal refurbishment of tenanted floors for DPW. Project complete. Tenant installation to all floors for new tenant secured Façade Upgrade, Lifts and Tenant Installation. Complex project. Weather dependant Internal refurbishment of tenant space Turnkey contractor appointed Façade Upgrade Creating fire lobbies, sprinklers, hydrant system and smoke detection compliance Tenant installation and replacement of escalators * Fire compliance 36

37 CONCLUSION Sandile Nomvete Harlequins, Pretoria

38 CONCLUSION Focus on property fundamentals by renewing leases, reducing vacancies and refinancing debt Increase WALE, reduce gearing and improve credit rating Investment in both defensive and accretive capital lease renewals and retention Recapitalise the business to inject much needed capital Create a healthier balance sheet with opportunities for growth Expect that the domestic-focused listed property market will continue to face head-winds up-to 2019 Board and management remain committed to Delta s sovereign strategy 38

39 88 Field Street, Durban THANK YOU Questions & Answers Sleepy Hollow, Pietermaritzburg

40 88 Field Street, Durban ANNEXURES Sleepy Hollow, Pietermaritzburg

41 88 Field Street, Durban ANNEXURES Executive management Board of directors Shareholder Profile Snapshot Disposal of non-core assets Top 10 properties by value GLA and vacancy reconciliation Leasing Outlook Lease Expiry Profile Nodal Analysis

42 EXECUTIVE MANAGEMENT EXECUTIVE DIRECTORS Sandile Nomvete Chief Executive Officer Exec Dep. & Prop Dev. Prog. (Wits & UCT Business Schools) Otis Tshabalala Chief Operating Officer Prop Dev. Prog, CCPP Appointed: 7 June 2016 Shaneel Maharaj Chief Financial Officer BCom (Acc) (Hons) (Univ. of Natal), CA(SA), HDipTax Sandile cofounded Delta Property Fund in 2002, which would go on to list on the Johannesburg Stock Exchange in He has since led the company to be a predominately sovereign under-pinned fund that is represented in all 9 of South Africa s provinces, growing the value of its asset base from R2,1 billion at the time of listing to its current value of R11.5 billion. Through his leadership, Sandile has managed to position Delta as one of the most prominent black-owned and black-managed property funds for government and state owned enterprises across South Africa. Sandile serves as a director on a number of other listed entities, including KAP Limited. He has more than a decade and a half of experience in executive and non-executive positions. He is a graduate of the Property Development Programme from the University of Cape Town Graduate School of Business. He also holds an Executive Development Programme and Finance for non-financial managers Diploma from the University of Witwatersrand s Graduate School of Business. Mr Otis Tshabalala was appointed as COO and an executive director of Delta with effect from 7 June Otis is a graduate of the Property Development Programme from the University of Cape Town and holds a CCPP from the University of Pretoria and holds several certificates in real estate. Apart from heading up the task team that manages Deltas account with the Department of Public Works, Otis has over 25 years experience in the commercial property sector, with more than 12 years spent in the property finance space at Absa Property Finance where he excelled as a Top Dealmaker prior to joining Delta as a Senior Asset Manager. He has a thorough understanding of the business and its strategy. He is a key member of the team that grew Delta from listing with 20 properties to its current portfolio of 105 assets and has also been instrumental in assisting with Delta s funding and capital raising. Shaneel completed his BCom (Honours) degree at the University of Natal and articled at Deloitte & Touche. He started his career with Imperial Fleet Services followed by JSE-listed Cargo Carriers Limited, where he was the Group Financial Manager for three years before assuming the role as CFO. He spent six years as CFO of Cargo, assuming a significant role in its overall management including its subsidiary companies within South Africa and sub-saharan Africa. Shaneel joined Delta in December 2015 as CFO assuming a strategic role in Delta s overall financial, procurement and IT management. He was appointed to the board at year end February

43 BOARD OF DIRECTORS Non-Executive directors Board Committees IC = Investment Committee, ARC = Audit, Risk and Compliance Committee, NRC = Nomination and Remuneration Committee, SETC = Social, Ethics & Transformation Committee * Denotes chairperson JB Magwaza Mfundiso JJ Njeke Caswell Rampheri Nooraya Khan Independent Non-Executive Chairman Committees: NRC* (Nomination) Lead Independent Non-Executive Director Appointed 01 April 2017 Appointed LID 30 June 2017 Committees: ARC* Independent Non-Executive Director Appointed 01 June 2017 Committees: IC* Non-Executive Director Committees: NRC* (Remuneration), SETC Dumo Motua Nombuso Afolayan Ian Macleod Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Committees: NRC, SETC* Committees: IC, ARC Committees: IC, ARC 43

44 SHAREHOLDER PROFILE As at Feb 2018 Units held Holding Cornwall Crescent (Pty) Ltd % Bridge Fund Managers % Public Investment Corporation % Director's holdings % Coronation Fund Managers % Stanlib Asset Management % Kagiso Asset Management % Sanlam Investment Management % Mazi Capital % Investec Asset Management % Old Mutual Investment Group % Vunani Fund Managers % Sub Total % Other % Total % 44

45 SNAPSHOT Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: Delta Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% of enterprise value 28 February August February 2017 Shares in issue 711,844, ,632, ,632,182 Market capitalisation R4.3 billion R5.3 billion R5.9 billion NAV per share R10.05 R9.74 R9.9 No. of properties Valuation of property portfolio R11.5 billion R11.3 billion R11.4 billion Average value per property R109.6 million R104.9 million R101.6 million Gross lettable area 952,428 m² 973,431 m² 981,777 m² Tenant Sectorial profile (GLA) Office - Sovereign: 72.8% Office - Sovereign: 71.7% Office - Sovereign: 70.7% Office - Other: 16.4% Office - Other: 17.8% Office - Other: 19.4% Industrial: 3.9% Industrial: 3.8% Industrial: 3.1% Retail: 6.9% Retail: 6.7% Retail: 6.8% Vacancy rate 11.8% 11.3% 10.7% Weighted average rent (per m 2 ) R110.6 R108.1 R105.2 Weighted Average Lease Expiry # (years) Weighted average in force escalation* 6.0% 7.3% 6.9% Loan to value 41.3% 42.3% 41.5% Fixed % 85.4% 82.3% 81.5% Weighted Average Cost of Debt 9.2% 9.2% 9.2% # By revenue * Rate pre bulk renewals 45

46 TOP 10 PROPERTIES Forum Building Poyntons Liberty Towers Hallmark Building Delta Towers Location Pretoria Location Pretoria Location Durban Location Pretoria Location Durban Sector* Office - Sovereign Sector* Office - Sovereign Sector* Office - Other Sector* Office - Sovereign Sector* Office - Other GLA m 2 GLA m 2 GLA m 2 GLA m 2 GLA m 2 Valuation R676 mil Valuation R535 mil Valuation R422 mil Valuation R409 mil Valuation R397 mil * Building sector determined by majority occupation of a tenant type. Some buildings have different types in occupation 46

47 TOP 10 PROPERTIES Cont. Embassy Building Isivuno House Hensa Towers Phomoko Towers The Marine Location Durban Location Pretoria Location Durban Location Pretoria Location Polokwane Sector* Office - Other Sector* Office - Sovereign Sector* Office - Sovereign Sector* Office - Sovereign Sector* Office - Other GLA m 2 GLA m 2 GLA m 2 GLA m 2 GLA m 2 Valuation R336 mil Valuation R328 mil Valuation R306 mil Valuation R272 mil Valuation R258 mil * Building sector determined by majority occupation of a tenant type. Some buildings have different tenant types in occupation 47

48 GLA AND VACANCY RECONCILIATION Properties (No.) Total GLA (m 2 ) Vacant GLA (m 2 ) Vacancy (%) As at 28 February % Disposals (7) (36 013) (9 331) Acquisitions Leases terminated New letting of vacant space - - (47 763) Adjustments Commission House * Adjustments As at February % * Commission House was previously moth-balled due to renovations, building now functional and occupied by DPW 48

49 LEASING OUTLOOK Anticipated budgeted sovereign renewals Sector No of Leases Total Area W.A. Expiry Rate / m 2 * W.A. Proposed Rate / m 2 * Escalation / (Reversion) Leases on month-to-month or expiring by 31 August 2018 National government (1.17%) Provincial government (10.29%) Local government (14.68%) State-owned enterprise (4.81%) TOTAL (4.93%) * All rentals quoted are gross rentals 49

50 LEASE EXPIRY PROFILE AT 28 FEBRUARY 2018 TOTAL PORTFOLIO - BY GLA TOTAL PORTFOLIO - BY RENTAL Vacant (11.8%) Month to Month (16.8%) 28 Feb 19 (29.1%) 29 Feb 20 (12.2%) 28 Feb 21 (19.6%) 28 Feb 22 (5.4%) 28 Feb 23 (1.5%) Beyond 28 Feb 2023 (3.6%) Month to Month (18.1%) 28 Feb 19 (33.9%) 29 Feb 20 (13.9.%) 28 Feb 21 (21.5%) 28 Feb 22 (7.0%) 28 Feb 23 (1.6%) Beyond 28 Feb 2023 (4.0%) 50

51 NODAL ANALYSIS PRETORIA 1 8 Delta owned properties 9 ABSA Towers 13 CGI Building (DPW Head Office) 14 AVN Building (DPW occupied) 10 Momentum building 15 State Theatre 11 Treasury 12 Telkom Towers 16 Sammy Marks Shopping Centre 17 Intended new municipal HQ 51

52 NODAL ANALYSIS DURBAN 1 12 Delta owned properties 13 Durban International Convention Centre 17 SAHARA Park Kingsmead 18 South Beach 14 Durban City Hall 19 Redefine Towers 15 Workshop Mall (Old Railway Workshop) 20 Commercial City Building 16 Durban Marina 21 Durban Bay House 52

53 NODAL ANALYSIS BLOEMFONTEIN 1 13 Delta owned properties 14 Hoffman Square 19 Fourth Raadsaal 20 Bloemfontein City Hall 15 Sand du Plessis Theatre 21: CR Swart Building 16 Waterfront Mall 22 Lebohang Building 17 Loch Logan 23 Bram Fisher Building 18 Appeal Court 24 Liberty Life Building 53

54 NOTES

55 NOTES