Rosebank Workspace Business Plan — Sensitivity and Scenario Analysis

What moves the outcome: occupancy, desk rate, lease escalation and centre timing, with scenarios.

Section 23 of 29

Sensitivity and Scenario Analysis

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The base case works. The downside case does not: it produces a negative return and a funding gap of R2.8m. This section sets out both without softening either.

22.1 Scenario definitions

Table 69 Scenario assumptions

Variable	Stress	Downside	Base	Upside
Achieved rate versus plan	−9.0%	−4.0%	Plan	+4.5%
Stabilised occupancy versus plan	−16.0pp	−8.0pp	Plan	+7.0pp
Operating costs versus plan	+7.0%	+3.5%	Plan	−1.0%
Narrative	Sustained oversupply with a macroeconomic contraction	Ramp materially slower than plan with competitive rate pressure	Plan as modelled	Faster absorption and firmer pricing

Figure 1. EBITDA and closing cash across the four scenarios

22.2 Scenario outcomes

Table 70 Scenario outcomes

Measure	Stress	Downside	Base	Upside
FY2031 revenue	R57.2m	R65.3m	R73.4m	R81.4m
FY2031 EBITDA	R-3.6m	R5.4m	R14.2m	R22.2m
FY2031 EBITDA margin	-6.3%	8.2%	19.3%	27.3%
FY2031 net profit	R-9.9m	R-0.9m	R8.8m	R13.0m
Minimum cash balance	R-29.0m	R0.2m	R6.9m	R15.4m
Minimum debt service cover	-1.29×	-0.17×	1.18×	2.26×
Additional funding required	R32.0m	R2.8m	nil	nil
Equity value at exit	R-70.7m	R25.7m	R122.0m	R202.9m
Money multiple	-1.29×	0.47×	2.23×	3.71×
Equity IRR	-95.0%	-15.0%	18.6%	32.0%

What the downside and stress cases actually mean

Downside. A four percent rate shortfall combined with eight points of occupancy underperformance produces FY2031 EBITDA of R5.4m against R14.2m in the base case. Minimum cash falls to R0.2m, debt service cover turns negative at its lowest point, and a further R2.8m of funding is required. The equity is not wiped out, the money multiple is 0.47×, but the investor loses money. The R10.0m revolving facility covers the gap; the covenant breach does not resolve itself and would require a lender waiver.

Stress. A nine percent rate shortfall with sixteen points of occupancy underperformance produces a minimum cash position of R-29.0m and a funding gap of R32.0m. This exceeds the committed facilities by a wide margin. In this scenario the equity is fully impaired, the senior lender is in control, and the realistic outcome is a lease surrender negotiation at one or more centres. The scenario is presented because it defines the outer boundary of the risk, not because it is considered probable.

The practical inference is that the plan has limited tolerance for simultaneous rate and occupancy disappointment. This is why the month-13 and month-34 decision gates in Section 18.3 exist, and why they should be treated as genuine tests rather than formalities.

22.3 Single-variable sensitivity

Figure 2. Sensitivity of FY2031 EBITDA to individual variables

Table 71 Single-variable sensitivity

Variable	FY2031 EBITDA (R m)	FY2031 net profit (R m)	Minimum DSCR	Money multiple	Equity IRR
Price -10%	8.4	2.7	0.26×	1.10×	2.0%
Price -5%	11.3	6.1	0.74×	1.68×	11.6%
Price +5%	17.1	11.6	1.61×	2.78×	24.3%
Occupancy -10percentage points	5.7	-0.6	-0.12×	0.54×	-12.3%
Occupancy -5percentage points	9.9	4.7	0.50×	1.41×	7.5%
Occupancy +5percentage points	18.4	12.0	1.82×	3.03×	26.5%
Opex +10%	11.2	6.0	0.65×	1.64×	11.0%
Opex -5%	15.7	10.3	1.43×	2.53×	21.7%
Base case	14.2	8.8	1.18×	2.23×	18.6%

Occupancy is the dominant variable. A six-point shortfall removes R4.2m of FY2031 EBITDA and reduces the equity IRR to 7.5%; a twelve-point shortfall produces a negative return. Price is the second most important variable: a ten percent rate reduction leaves the business solvent but reduces the IRR to 2.0%, below any reasonable cost of equity. Operating costs matter least, a ten percent overrun on all operating costs costs less than a six-point occupancy shortfall, which is why the commercial priority set out in Section 14.2 is to defend occupancy even at the expense of cost discipline.

22.4 Combined price and occupancy sensitivity

The two dominant variables are correlated in practice: an operator facing weak absorption discounts to fill space, so a rate shortfall and an occupancy shortfall tend to arrive together. The grid below tests them jointly. The shaded region, combinations producing an IRR below 12%, is uncomfortably large, and defines the zone within which the Company would need to revisit its expansion plan rather than proceed through the decision gates.

Table 72 Equity IRR across combined rate and occupancy outcomes

Rate versus plan	Occupancy -12pp	Occupancy -6pp	Occupancy +0pp	Occupancy +6pp
-8%	-95.0%	-12.9%	6.3%	17.2%
-4%	-34.2%	-0.8%	13.1%	22.3%
+0%	-12.3%	7.5%	18.6%	26.5%
+4%	-1.1%	13.7%	23.2%	30.2%

Source: Company financial model. Each cell is a full re-run of the sixty-month model with the balance sheet reconciling. The base case is the zero rate, zero occupancy cell.

22.5 Interest rate sensitivity

The model holds prime flat at 10.5% across the projection period. A 200 basis point increase would add approximately R0.8 million of cumulative finance cost across five years and reduce FY2030 debt service cover from 1.18× to approximately 1.09×, which would breach the proposed covenant. A 200 basis point reduction would add approximately R0.8 million of cumulative pre-tax profit and lift FY2030 cover to approximately 1.28×. Interest rate exposure is material to covenant compliance but immaterial to the investment return: the IRR moves by less than one point across a 400 basis point range, because the equity return is driven by the exit multiple rather than by cash accumulation.