INTERIM RESULTS TO END MARCH 2020 - Indluplace
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INTERIM RESULTS
TO END MARCH 2020
20 MAY 2020
We were on track before lockdown
Environment changed dramatically – guidance
withdrawn, interim dividend declaration postponed
Operations & initial collections good
Balance sheet and cash position in good shape
Our priority: safety of staff and tenants, protect
company and all stakeholders
We have good tenants that want to stay and pay,
they just do not have money at the moment
DISTRIBUTABLE
INCOME
6 MONTHS YEAR ENDED
VARIANCE
31 MARCH 2020 31 MARCH 2019
Contractual revenue 275 342 138 265 246 288 3,8%
Net property expenses (94 869 201) (85 779 777) 10,6%
Net property income 180 472 937 179 466 511 0,6%
Administration costs (13 054 029) (9 863 929)
Net finance charges (66 404 218) (49 125 381)
Interest on loan shares
8 125 078 -
(equal to 'dividend declared')
Distributable income 109 139 768 120 477 201 -9,4%
Average number of shares in issue 319 356 701 321 351 669
Net expense ratio 34,5% 32,3%
Dividend per share 34,17 37,49 -8,8%
PROPERTY
EXPENSE BREAKDOWN
% CONTRACTUAL REVENUE % EXPENDITURE
Gross municipal 26,7 48,9%
Building expenses 8,2 15,0%
Repairs & maintenance 3,3 6,0%
Collection commission 6,4 11,7%
Security 4,8 8,8%
Bad debts 1,0 1,8%
Legal expenses 0,4 0,7%
BC levies 2,8 5,1%
Other property expenses 1,1 2,0%
54,7 100,0%
Less recoveries 20,2
Net property expense ratio 34,5
MUNICIPAL
EXPENSES
Municipal
Expenses
Electricity Rates & Taxes Waste Removal
48,9%
42,1% 15,5% 4,2% of total
PRIOR YEAR
PRIOR YEAR
41,4% 15,8% 5,1% 50,2%
22,9% 13,7% 1,1% 80%
21,5% 15,4% 1,3% 79%
Water Sewerage Gas Recovered
excluding rates
ESCALATIONS
5 000
R 4 712
R 4 386
4 000 R 3 915
3 000
Average Average Average
Escalation Escalation Escalation
2 000
v Mar ‘19 v Mar ‘19 v Mar ‘19
(1,3%) 1,3% 0,4%
1 000
0
Inner City Non-Inner City Total
RENTALS, INNER AND NON-INNER CITY
INNER CITY NON-INNER CITY OVERALL
AVERAGE ESCALATIONS AVERAGE ESCALATIONS AVERAGE ESCALATIONS
RENTALS V SEPTEMBER RENTALS V SEPTEMBER RENTALS V SEPTEMBER
ROOMS R 1 810 -0,70% R 1 686 4,20% R 1 723 2,70%
BACHELORS R 2 695 -1,40% R 3 561 2,00% R 2 581 0,30%
1 BED R 3 717 -1,00% R 4 441 0,50% R 4 111 -0,10%
2 BED R 4 598 -2,20% R 5 263 1,40% R 5 066 0,60%
3 BED R 5 155 -0,20% R 7 077 0,70% R 5 874 0,20%
4 BED R 6 031 -1,30% R 11 810 0,10% R 6 881 -1,00%
ARREARS AND BAD DEBTS
2020 2019 2018
COLLECTIONS % TOTAL
MARCH SEPTEMBER MARCH SEPTEMBER
Bad debts & 0,6%
100% 1,1% 1,0% 1,8%
provisions
90%
80% Arrears 0,9% 0,6% 1,2% 0,4%
70%
60%
Total 2,0% 1,6% 1,8% 2,2%
50%
40%
30%
20%
10%
I have never been so involved in our tenants
0%
personal lives and finances
Day 2
Day 4
Day 6
Day 8
Day 10
Day 12
Day 14
Day 16
Day 18
Day 20
Day 22
Day 2
Day 4
Day 6
Day 8
Day 10
Day 12
Day 14
Day 16
Day 18
Day 20
Day 22
Day 2
Day 4
Day 6
Day 8
Day 10
Day 12
Day 14
Day 16
Day 18
Day 20
Day 22
Credit Controller
MARCH APRIL MAY
2020 TOTAL 2019 TOTAL APRIL 2020 TOTALBALANCE SHEET
EXTRACT
6 MONTHS ENDED YEAR ENDED
R
31 March 2020 30 September 2019
Investment property 4 137 056 088 4 175 006 452
Property loan receivable 39 501 514 44 767 070
4 176 557 602 4 219 773 522
Stakeholders’ interest 2 766 212 486 2 901 930 111
Secured financial liabilities 1 496 641 496 1 480 005 758
Shares in issue 319 356 701 321 351 671
Net asset value (cents) 866,18 903,04
Loan to value ratio 34,7% 33,6%LOANS
AND GEARING
LTV 34,7%
Total debt R1,5 billion
Available facilities R93 million
Percentage of drawn down debt hedged 67%
Weighted average cost of debt 8,99%
Cash on hand R23 millionLOANS
EXPIRY
FINANCIAL MATURITY STANDARD BANK ABSA/INVESTEC
YEAR MONTH DRAWN AVAILABLE DRAWN AVAILABLE
September 2020 September 2020 160 000 000 40 000 000
September 2021 April 2021 732 500 000 53 300 000
September 2023 October 2022 604 300 000 -
160 000 000 40 000 000 1 336 800 000 53 300 000NET ASSET VALUE
PER SHARE (CENTS)
1000
950
2,71
900 2,71
31,63
40,76 11,03
850 6,07 13,33
800
750
700 903,04 896,42
866,18
650
600
550
500
NAV – Distributable Share Dividends paid NAV – Fair value NAV –
30 SEPT 2019 income buyback 6 months pre Investment Derivatives Loans 2020
6 months ended revaluations property
ended 30 Sept 2019
31 Mar 2020UNITS
79%
JHB
5%
5,7% Emalahleni
vacancy
10% 1,8%
vacancy
Pretoria
Own
3,1%
vacancy 5% 9 668 units
Vanderbijl
0%
vacancy
Retail
1% 1%
Bloemfontein Durban 18 834 m2
1,4% 10%
vacancy vacancy
The vast majority of our tenants are good
people who want to do the right thingUNIT LOCATION AND VACANCY RATE
11%
PTA
6% Midrand
JHB North
3,1%
7,2% vacancy
5% vacancy
11% JHB CBD
JHB Periphery
West Rand
8,5%
6,0% vacancy
vacancy
34% 23%
JHB East
5% JHB Inner
JHB South City
9,1%
And Soweto
vacancy
4,4%
4,9% vacancy
vacancy
5%
Vanderbijl
0%
vacancyINFO
RESIDENTIAL UNIT TYPES UNITS % OF TOTAL VACANCIES
TOTAL RESIDENTIAL UNITS
Bachelors/rooms 2 165 22 8,8%
1 Beds 1 990 20 6,0%
2 Beds 4 522 47 4,2%
TOTAL RETAIL m2
3 Beds 830 9 2,9%
Other 161 2 4,3%
TOTAL BUILDINGS
Total 9 668 100 5,5%PROVINCIAL
VACANCY RATE
Indluplace 5,5%DISPOSALS
Factors considered include number of units, condition, forecast performance and location
SMALL PROPERTIES
NUMBER OF PROPERTIES TRANSFERRED SINCE YEAR END 8
NUMBER OF PROPERTIES AGREED BUT NOT TRANSFERRED 13
AVERAGE NUMBER OF UNITS PER PROPERTY 13
LOCATION Mainly
South of Johannesburg
Discussions underway to
TRIFECTA
STUDENT
Student Residence
dispose of student
Trifecta is situated in Durban and lets buildings in Vanderbijlpark
to individual students
Disposal price R20 000 000We have grown to understand more and more in
this time that we deal with real people’s lives and
they have real struggles under lockdown
COVID-19
RAPID ADAPTION Head Office | Property Managers | Site Staff | Tenants
RESPONSE
Sensitive collections process (Rehabilitation vs Vacancies)
GOOD TENANTS / DIFFICULT TIMES Payment Holiday (6-month repayment terms)
Tenant by tenant engagement | Deposits
PPE Compliance
SITE OPERATIONS Protection of staff and tenants
Housing of security and building staff
Expedited payments to SMME’s
SMME SUPPORT & ECOSYSTEM Support SMME suppliers (security, cleaning, contractors etc)
Continues Municipal paymentsCOVID-19
INCREASED COMMUNICATION Tenants | Staff | Property managers
RESPONSE
LEASING FRUSTRATIONS Continually changing rules to lockdown levels
Rates of adoption and readiness
PROPERTY MANAGERS Different processes and structures
Good over all response
Food parcels to families in need
ASSISTANCE WHERE POSSIBLE & APPROPRIATE
Site and security staffPROPERTY MANAGEMENT Outsourced to seven Specialist Managers
ON THE EFFECTS OF LOCKDOWN
NEGATIVES Increased arrears and bad debts - Some tenants affected financially by employers having to suspend their operations and not able to continue paying salaries / small entrepreneurs that are not able to operate Credit control – having to soften our approach with those actually affected while remaining firm with those that can pay and wanting to take advantage Tendency to form groups to try and create distance between individual tenants and property managers Individuals’ difficulty in obtaining documentation confirming impact of lockdown Letting activity stopped for April and limited for May
NEGATIVES Limited ability to move struggling tenants to more affordable units Difficult to vacate non-paying tenants Competitor landlords offers to tenants; commercial negotiations in the public eye No evictions currently Fast changing lockdown rules and unclear regulations
POSITIVES Indluplace is focused on providing homes for working families and therefore playing a vital role in lockdown (staying at home) Basic need for accommodation during lockdown Indluplace occupation going into lockdown at best levels for years Paying rent still priority for most tenants with most deposits still intact Most tenants thus far able to pay (employed in industries able to operate / pay salaries) although seeing more pressure building Building operations close to normal (BMs, cleaners live in)
POSITIVES Good adherence to strict lockdown regulations with very few negative incidents Indluplace team working well remotely and coming up with creative solutions as problems come up Systems robust e.g. cloud based financial system Moved even closer to our property managers and their operations Increased communications with internal team, property managers exec team, funders and other stakeholders Fast tracking some processes that were underway pre-lockdown
POSITIVES
Student head leases stability and good working relationships
with NWU and VUT
Reduction in prime rate
On-going support for CIDs, targeted assistance where there is
basic need (in our area of operation)
Support SMMEs, protect jobs, keep tenants and staff safe
Time for creative solutions and quick reactions - outsourced
model therefore we have collective experience of seven teams of
the best in the business
We have to adapt and respond quickly with solid
information. What happened to Skype?
Said during a Zoom meetingI am worried that we will be feeling the impact of
the lockdown for many months to come
Management company ownerFOR THE REMAINDER OF 2020
The demand for
Difficult to predict even short term Council increases value for
money,
professionally
managed rental
Longer lockdown and slower opening than expected Court backlog after lockdown residential
buildings
offering a
diversity of unit
Regulations sometimes confusing but being adapted Cashflows and balance sheet (LTV) strong types, buildings,
locations and
rentals and
“Tail” probably longer than hoped Valuations will be under pressure for everyone contributing
positively to the
areas of
operation,
No opportunity for rental increases this year Vacancy increase potential in short term remains strong.You can also read
