Hyprop Investments Limited · JSE:HYP
Hyprop Investments — H1 2019 Earnings Presentation
61 slides from Hyprop Investments's earnings presentation, 2019
Slide 1: Unaudited interim results
CapeGate, Brackenfell, Cape Town Unaudited interim results As at 31 December 2018
Slide 2: Stratco
Stratco • CEO of MAS REI (2018) • CFO of Mentor Africa Limited • Executive Director at Blend (2007 ‒ 2017) Property Group • CEO of Attacq Limited (2011 – 2017) • Group CFO of Rebhold / • Manager: Strategic Mvelaphanda Group Investments at Royal Bafokeng • COO of Attacq limited (1999 ‒ 2007) Holdings
Slide 3: Agenda
Agenda Six month overview South Africa R Sub-Saharan Africa $ South-Eastern Europe € Financial results Outlook 3
Slide 4: Six month overview
Six month overview Canal Walk, Cape Town 4
Slide 5: Highlights
Highlights 9% Distributable income 17% Distributable income 1.6% Vacancies reduced in from SA (yoy) from Europe (yoy) SA portfolio (retail & office) €183m Lakefield Refinance of debt Sale of last non-core asset The Glen Shopping Centre, Oakdene, Johannesburg South 5
Slide 6: Focus Areas, Highs, Lows & Challenges
Focus Areas, Highs, Lows & Challenges Focus Areas South Sub-Saharan South-Eastern Africa Africa Europe Highs • New R250m bond for 3.5 years @ 1.44% margin • Refinance of EUR debt: €183m • Disposal of last non-core asset – Lakefield • South-Eastern Europe portfolio vacancy <0.1% • Distributable incom
Slide 7: Key Metrics
Key Metrics Distributable earnings - Rm Distribution – cps Loan-to-value - % 600 40 1000 5.0% 5.6% 2.5% 6.6% 30 900 400 31.2 32.8 6.4% 800 376.3 385.6 383.8 20 985 330.6 20.0 21.2 700 933 200 10 600 500 0 0 31 Dec 2017 31 Dec 2018 Dec 2017 Dec 2018 30 June 2018 31 Dec 2018 Group Excl Africa Based on
Slide 8: South Africa
Gauteng region Property locations as per the next slide of all the SA assets H Y D E P A R K C O R N E R Western Cape region <1% 14% South Africa 86% Contribution to DPS CapeGate, Brackenfell, Cape Town 8
Slide 9: Operations
Operations South Africa % of Rentable Rental Contractual Retail vacancy total area growth escalation 2.0% Leasing portfolio (m²) (%) (%) 1.5% 1.4% 1.2% 1.1% Retail 7.4 49 010 -1.8 7.3 1.0% 0.9% 0.8% 0.9% 0.5% New lettings 2.6 17 447 -2.0 7.2 0.0% Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Renewals 4.
Slide 10: Operations
Operations South Africa Rent ratio - portfolio Average monthly foot count / m² 10% 20 1% 1% 0% 3% 5% 8% 8.9% 1% 8.3% 8.5% 15 4% 7.6% 7.7% 1% 15.0 14.8 15.1 15.2 14.1 13.6 6% 12.3 12.4 13.3 12.7 10 11.8 11.7 10.3 9.9 9.7 9.6 4% 5 2% 0 Canal Walk Clearwater The Glen Woodlands CapeGate Somerset Roseban
Slide 11: Edcon exposure ‒ Dec 2018
Edcon exposure ‒ 31 Dec 2018 South Africa % of gross income Exposure per property 2.5% 2.3% 2.1% 2.1% 7.6% % of gross income % of GLA 2.0% 1.5% 1.5% 1.5% 1.3% 1.2% Edcon 1.0% 0.9% 0.8% 0.7% 0.6% 0.7% Other tenants 0.4% 0.4% 0.5% 0.2% 0.1% 0.1% 0.1% 92.4% 0.0% Canal Clearwater The Glen Rosebank Mall
Slide 12: Strategy in the event of Edcon failure
Strategy in the event of Edcon failure South Africa Potential tenants identified for space 79% of Edcon space = 53 000m² Current concluded deals to reduce exposure Take back space of 7 563m² (11%) Estimated investment required to re-let and re-configure ±R300m Time period estimated to re-work and re
Slide 13: Developments
Developments South Africa Hyprop share Completion Property Project (Rm) date Rosebank Mall Offices Re-glazing and upgrade of atrium 10.0 Aug 2018 Woodlands Food court upgrade – phase 2 9.8 April 2019 Restroom upgrade 6.0 April 2019 The Glen Downsizing of Edgars to unlock space for Checkers 40.8 Nov
Slide 14: Sustainability
Sustainability South Africa 2018 2017 GRESB benchmark 61% 42% CDP carbon score reduced B+ A- CDP water First Hyprop submission Clearwater Mall now generates 15% of total energy from solar power Savings during the past 6 months 24.5% 5.4% 83% Water saving Electricity Waste recycling 14
Slide 15: Key Initiatives
Key Initiatives South Africa Portfolio approach Partner with the tenant Re-invest Relevance and repositioning of malls Entertainment Technology Embrace online CapeGate, Brackenfell, Cape Town Services 15
Slide 16: Sub-Saharan Africa
Ghana Nigeria Zambia <1% 14% Sub-Saharan Africa 86% Contribution to DPS Manda Hill, Lusaka, Zambia 16
Slide 17: Operations
Operations Sub-Saharan Africa Average monthly foot count / m² Vacancy as % of GLA 40 5% 4% 25% 3% 2% 1.3% 30 20% 4.9% 1% 33 32 0% 7.9% 31 31 29 29 27 28 15% 0.5% 20 15.6% 1.9% 22 22 10% 14.0% 12.7% 17 16 10.7% 11.3% 1.6% 10 5% 3.4% 7.2% 3.1% 5.8% 6.3% 5.3% 1.5% 0 0% Accra Mall West Hills Achimota Ku
Slide 18: Key initiatives
Key initiatives Sub-Saharan Africa Asset management Right-sizing Sustainability Reduce exposure West Hills Mall, Accra, Ghana 18
Slide 19: South-Eastern Europe
Croatia Serbia Bulgaria Montenegro Macedonia 14% South-Eastern Europe 86% Contribution to DPS The Mall, Sofia, Bulgaria 19
Slide 20: Hystead at a glance
Hystead at a glance A UK company, modelled on Hyprop Six high quality dominant shopping centres in capital cities of five countries – scale, credibility, bargaining power Strategic shareholders: Hyprop (60%) and PDI (40%) – deep retail experience Strong operational focus with core competence in acti
Slide 21: Operations
Operations South-Eastern Europe Trading density per month - € Rent ratio - portfolio 400 11% 6% 3% 300 10.5% 10.4% 10% 255 264 200 223 211 9% 9.2% 100 9.0% 8% Jun Dec Jun Dec 2017 2018 2017 2018 Average monthly foot count / m² Rent ratio - property 40 15% 1% 3% 3% 1% 2% 30 2% 0% 12.0 12.3 1% 2% 1% 1
Slide 22: Leasing
Leasing South-Eastern Europe Vacancy - portfolio Lease expiry profile 0.4% 30% 28% 0.3% 25% 0.3% 0.3% 19% 20% 0.2% 0.2% 13% 14% 14% 15% 12% 0.1% 0.0% 10% 0.0% 0.0% 0.0% 5% Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 0% 2019 2020 2021 2022 2023 2024+ New lettings & renewals % of Rentable Rental Contrac
Slide 23: Debt summary
Debt summary South-Eastern Europe Debt maturity profile Hyprop Non-recourse guaranteed 13% Hyprop guaranteed Property value €798 m < 1 year 0% Non-recourse 41% LTV 45.7% 49.7% 1-2 years 0% 14% Weighted average cost of debt 3.2% 2.1% 2-3 years 13% 32% Weighted average loan tenor 4.1 years 2.1 years 3
Slide 24: Developments & sustainability
Developments & sustainability South-Eastern Europe Live projects Project Project budget (€ m) Completion date The Mall Sofia Hypermarket redevelopment 23.5 Aug 2019 Planned projects Food court redevelopment 0.6 Q4 2019 The Mall Sofia Bathroom refurbishment 0.3 Q4 2019 Re-surfacing open parking 0.4 Q
Slide 25: Key initiatives
Key initiatives Deliver the supermarket conversion project at The Mall (Sofia) Execute asset management & redevelopment initiatives Delta City, Belgrade, Serbia Reposition for relevance & ‘experience’ Selective acquisitions to bolster scale and diversification City Center One West – Zagreb, Croatia
Slide 26: Financial results
Financial results CapeGate, Brackenfell, Cape Town 26
Slide 27: Distribution growth
Distribution growth Cents per share 900 8.8% 800 12.1% 757 695 700 600 500 8.3% 9.3% 2.5% 16.6% 8.0% 376 380 386 400 347 348 13.1% 300 89.3% 200 5.6% 100 0 H1 2017 H2 2017 FY 2017 H1 2018 H2 2018 FY 2018 H1 2019 South Africa Sub-Saharan Africa South-Eastern Europe 27
Slide 28: Distributable earnings
Distributable earnings Dec 2018 % Dec 2017 June 2018 R000 Change R000 R000 Revenue 1 631 673 6 1 539 370 3 113 712 Property expenses (587 669) 13 (521 113) (1 049 892) Net property income 1 044 004 3 1 018 257 2 063 820 Other operating expenses (20 649) (27) (28 295) (55 778) Operating income 1 023
Slide 29: Reconciliation of attributable net profit to distributable earnings
Reconciliation of attributable net profit to distributable earnings Dec 2018 Dec 2017 June 2018 R000 R000 R000 Total profit for the period/ year attributable to shareholders of the 181 894 1 436 930 2 529 466 company Adjusted for: 803 345 (503 803) (624 952) Change in fair value - investment propert
Slide 30: Bank & DCM debt profile
Bank & DCM debt profile On balance sheet by lender On balance sheet sources of funding Dec 2018 Dec 2018 DCM funding ZAR bank facilities 34% 5% 4% Investec 5% OMSFIN USD bank facilities 61% Standard Bank 3% RMB 34% 54% ZAR DCM facilities Group Group (incl. guaranteed debt) by lender Group (incl. gua
Slide 31: Total debt maturity
Total debt maturity Rand equivalent – includes guaranteed debt in Hystead and 100% of Ikeja Total debt (Rm) 3 500 3 019 3 000 2 821 2 699 2 500 R824m (Q1:2019) refinanced for 3 years to 31 March 2022 2 000 1 796 1 500 1 000 824 863 650 400 452 500 348 246 317 250 Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1:
Slide 32: LTV calculations
LTV calculations With recourse to Hyprop balance sheet 31 Dec 2018 30 Jun 2018 (Rm) (Rm) South African debt 3 199 2 951 • Bank debt 600 600 • Corporate bonds 2 599 2 350 USD bank debt (Rand equivalent of Hyprop’s effective %) 4 744 4 513 EUR bank debt (Rand equivalent) 5 177 4 963 Cash and cash equi
Slide 33: LTV calculations
LTV calculations Comparison between Hyprop and Moody’s methodologies Dec 2018 (R ‘000) Jun 2018 (R ‘000) Per Moody’s Hyprop Per Moody’s Hyprop Balance Sheet methodology methodology Balance Sheet methodology methodology Dec 2018 Dec 2018 Dec 2018 Jun 2018 Jun 2018 Jun 2018 Hyprop total assets 34 785
Slide 34: Hystead capital structure (€)
Hystead capital structure (€) 100% 10% 12% 11% 160 67% 40% 270 241 60% PDI HYPROP PDI HYPROP PDI Debt guaranteed directly Dec 2018 €m Dec 2018 €m Dec 2018 % Dec 2018 % * Guarantee fee Dec 2018 % % Shareholding in Hystead 40 Debt guaranteed directly % 40 361 10 90 Adjusted for: 91 (91) 23 (23) Adjust
Slide 35: Equity bridge
Equity bridge Hyprop group (Rm) 26 305* 25 520* NAV Net operating Property Africa Distributions Currency NAV Jun 2018 income re-valuations impairments paid translation Other Dec 2018 * NAV excluding minorities 35
Slide 36: NAV bridge
NAV bridge Hyprop & Hystead (Rm) 25 512 26 064 TNAV – R / share 101 TNAV – R / share 104 LTV on property assets 25.2% LTV on property assets 45.0% LTV on total assets 24.0% LTV on total assets 43.1% Hyprop Property Hystead Other In-country Equity Other Inter-group Aggregated NAV assets cash assets f
Slide 37: Investment profile
Investment profile SA shopping centres Core South African portfolio SA value centres R29.7bn = 73% SA standalone offices 1% Cap rates: 6.3% – 8.8% 68% 4% 8% Sub-Saharan Africa (excl. SA) Hyprop share R3.4bn Total portfolio Cap rates: 7.8% – 9.0% R41bn 19% South-Eastern Europe Hyprop share R7.9bn Cap
Slide 38: Outlook & Focus
Outlook & Focus Woodlands, Pretorius Park, Pretoria East 38
Slide 39: Outlook & focus
Outlook & focus Hyprop • Strategy • Recycle capital to support growth • Review debt position • Cash-backed distributions • Restore Moody’s investment grade • Long-term investment decisions South Africa Sub-Saharan Africa (Excl. SA) South-Eastern Europe • Reposition malls • Reduce exposure • Strength
Slide 40: Questions & Answers
Questions & Answers Hyde Park Corner, Johannesburg 40
Slide 41: Appendices
Appendices Rosebank Mall, Johannesburg 41
Slide 42: Aggregated Balance Sheet
Aggregated Balance Sheet Hyprop Group Hystead Group* Aggregated Hyprop Group incl Hystead** Dec 2018 June 2018 Dec 2018 June 2018 Dec 2018 June 2018 R000 R000 R000 R000 R000 R000 Non-current assets 33 558 090 33 951 124 13 263 131 12 703 739 46 644 748 46 502 308 Investment property 31 303 632 30 85
Slide 43: Balance sheet extracts
Balance sheet extracts 31 Dec 2018 30 Jun 2018 Change (Rm) (Rm) (%) Hyprop’s share Investment property (South Africa) 29 479 28 785 2.4 Investments in sub-Saharan Africa 3 422 4 470 (23.4) (excl. South Africa) South-Eastern Europe 4 148 3 843 7.9 Held-for-sale 206 199 Other assets (includes cash) 1
Slide 44: Guarantees on Balance Sheet
Guarantees on Balance Sheet Dec 2018 Dec 2017 Jun 2018 Details of movement in financial guarantees R000 R000 R000 Balance at beginning of the period 185 686 163 855 163 855 Net change 162 891 29 409 21 831 Recognition of new financial guarantees 196 565 41 393 33 815 Derecognition of expired guarant
Slide 45: Property valuations
Property valuations Sub-Saharan Africa (Excluding SA) South-Eastern Europe 31 Dec 2018 30 Jun 2018 31 Dec 2018 30 Jun 2018 (USD million) (USD million) (EUR million) (EUR million) Total value 550 638 Total value 799 740 Ikeja City Mall 121 151 Hyprop share 460 444 AttAfrica & Manda Hill 429 487 Hypro
Slide 46: Rand denominated debt
Rand denominated debt South African portfolio Maturity profile 31 Dec 2018 (years) 30 June 2018 (years) Fixed rates and swaps 2.9 3.3 Facilities 3.3 3.8 % of debt fixed 101.6 113.6 Average cost of funding 9.5 9.4 South African debt (Rm) 800 650 600 425 452 400 400 358 348 317 250 200 0 Q1: Q2: Q3: Q
Slide 47: USD debt
USD debt Sub-Saharan Africa Maturity profile 31 Dec 2018 (years) 30 June 2018 (years) Fixed rates and swaps 2.0 2.4 Facilities 2.2 2.7 % of debt fixed 58.1 63.5 Average cost of funding 5.0 4.8 African debt ($m) 200 167 150 100 100 60 50 17 0 Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: 2019 2019 2019 2019 2020 2
Slide 48: EUR debt
EUR debt South-Eastern Europe Maturity profile 31 Dec 2018 (years) 30 June 2018 (years) % of debt fixed 32.1 - Average cost of funding 2.1 1.7 Euro Debt (€m) (only guaranteed loans) 200 183 164 150 100 50 50 0 Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: 2019 2019 2019 2019 2020 2020 2020 2020 20
Slide 49: Edcon exposure by brand
Edcon exposure by brand % of total gross % of total Edcon Brands income* GLA Edgars 4.46% 6.81% Jet 0.8% Jet 0.77% 1.10% Edgars 4.5% CNA 0.55% 0.44% Boardmans 0.36% 0.29% CNA 0.5% River Island 0.27% 0.16% Edgars Beauty 0.19% 0.10% Edgars Cosmetics Gallery 0.17% 0.08% Top Shop 0.13% 0.10% Boardmans 0
Slide 50: Operations
Operations South Africa Trading density* Average monthly foot count – millions / m² Per month (R/m²) 5 000 20 1% 3% 18 3% 1% 0% 5% 4 000 0% 16 1% 15 15 15 15 4 004 0% 14 14 3 657 1% 14 4% 1% 13 3 548 1% 3% 12 12 13 0% 12 12 3 000 3 251 12 2 945 1% 10 10 2 836 0% 10 10 2 681 10 2 458 2 000 2 261 8 6
Slide 51: Lease expiry profile
Lease expiry profile 2018 / 2019 2019 / 2020 Expiring area % Rentable area Expiring area % Rentable area Retail (m²) of centre (m²) of centre Clearwater 33 301 38 17 641 20 CapeGate Regional Mall 29 393 46 3 986 6 Canal Walk 23 105 16 33 222 22 Rosebank Mall 16 059 24 3 231 5 The Glen 14 697 18 7 25
Slide 52: Trading performance
Trading performance Trading density % of % of Primary category growth total turnover area Department stores: Clicks, Dis-Chem, Edgars, Game, Woolworths (0.5) 27,1 25,3 Apparel (3,6) 18,8 21,3 Food/supermarket 1,4 11,5 10,6 Home furnishings 7,3 4,9 6,8 Speciality/toys (6,5) 5,4 6,5 Sporting/outdoor g
Slide 53: Company structure
Company structure South African portfolio Clearwater Mall Somerset Mall Hyde Park Corner 100% owned Rosebank Mall Woodlands Boulevard CapeGate Offices SOUTH Atterbury Value Mart Cradock Heights AFRICA Canal Walk (80%) The Glen (75,15%) Co-owned 53
Slide 54: South African properties
South African properties Canal Walk & Canal Walk Clearwater The Glen Woodlands CapeGate Portfolio summary Offices Mall Shopping Centre Boulevard Regional Mall % Ownership 80% 100% 75.15% 100% 100% GLA 158 750 87 060 80 431 71 624 63 832 Vacancy levels 0.5% 1.9% 3.7% 0.7% 0.0% Avg foot count per m² /
Slide 55: South African properties
South African properties Somerset Rosebank Hyde Park Corner Atterbury Cradock Rosebank Mall Portfolio summary Mall Mall & Offices Value Mart Heights Offices % Ownership 100% 100% 100% 100% 100% 100% GLA 69 018 65 836 38 771 48 641 4 468 18 249 Vacancy levels 0.1% 0.8% 6.7% 0% 30.4% 12.8% Avg foot co
Slide 56: Company structure
Company structure Sub–Saharan African Hyprop Investments Mauritius 37,5% 50% 75% AttAfrica 50% Manda Hill Ikeja City Mall SUB-SAHARAN (Mauritius) (Zambia) (Nigeria) AFRICA 100% owned 47% 45% 75% 75% Accra Mall West Hills Mall Achimota Retail Centre Kumasi City Mall (Ghana) (Ghana) (Ghana) (Ghana) 56
Slide 57: Sub-Saharan Africa properties
Sub-Saharan Africa properties Portfolio summary Accra Mall West Hills Mall Achimota Kumasi Manda Hill Ikeja City Mall % Ownership 17.6% 16.8% 28.1% 28.1% 68.8% 75.0% GLA m² 21 311 28 272 15 534 18 604 42 002 22 223 Vacancy levels 6.3% 15.6% 3.4% 12.7% 7.2% 3.1% Avg foot count per m² / month 28 16 31
Slide 58: Company structure
Company structure South-Eastern Europe portfolio Hystead Limited (established in the UK) SOUTH- EASTERN 100% 100% 100% 100% 90% 90% EUROPE 60% owned City Center City Center Delta City Delta City The Mall Skopje City Mall One - East, One - West, Belgrade Podgorica Sofia (Macedonia) Zagreb Zagreb (Ser
Slide 59: South-Eastern Europe properties
South-Eastern Europe properties Delta City Delta City Skopje The Mall City Center City Center Belgrade Podgorica City Mall Sofia One East One West Portfolio summary Serbia Montenegro Macedonia Bulgaria Zagreb, Croatia Zagreb, Croatia % Ownership 60% 60% 60% 60% 54% 54% GLA 29 862 23 753 36 264 51 21
Slide 60: Disclaimer
Disclaimer Forward-looking statements • This document contains forward-looking statements that, unless otherwise indicated, reflect the group’s expectations as at 31 December 2018 • Actual results may differ materially from the group’s expectations if known and unknown risks or uncertainties affect
Slide 61: Contact details
Contact details Investor relations Michèle Mackey Mobile: +27 82 497 9827 Tel: +27 10 003 0661 E-mail: [email protected] 61