Hyprop Investments Limited · JSE:HYP
Hyprop Investments — H1 FY2023 Earnings Presentation
66 slides from Hyprop Investments's earnings presentation, March 2023
Slide 1: Interim Results presentation for the six months ended 31 December 2022
Interim Results presentation for the six months ended 31 December 2022
Slide 2: Agenda
Headlines and Key Metrics South Africa Eastern Europe Agenda Sub-Saharan Africa Financial Results In Closing 2
Slide 3: Headlines
Headlines Creating spaces and connecting people Group South Africa Eastern Europe Sub-Saharan Africa Non-Tangible Assets • 36% growth in the Group’s • Tenant turnover increased • Tenant turnover increased • Successful restructuring of the • Vacancies reduced to 7.8% distributable income by 15.5% by
Slide 4: Key metrics
Key metrics Group Distributable income (cps)/(R’m) 30% 250 9.7 200 0.9 47.5 Effect of additional shares 150 20.4 Effect of Europe income net of interest 213.1 100 203.4 156.9 156.0 155.9 135.5 SA interest relating to Europe 50 Group (excluding Europe) 0 December 2021 December 2022 IFRS NAV per share
Slide 5: Interest cover ratio and Loan to value ratio
Interest cover ratio (ICR) Loan to value ratio % 3.82 3.62 3.21 3.23 3.17 2.88 41.5% 36.4% 36.9% 37.2% 37.5% 18.1% December 2021 June 2022 December 2022 December 2021 June 2022 December 2022 IFRS ICR CASH ICR Fully consolidated SA REIT LTV 5
Slide 6: South Africa
South Africa Investment Distributable Total property income GLA 64% 63% 73% Rosebank Mall, Johannesburg
Slide 7: Operations
Operations South Africa – rolling 6 months Historic statistics updated for most recent available information Tenant turnover (R’m) Effort ratio – portfolio (%) 14 000 15.5% 13.2% 12% 12 000 0.6% 11.2% 0.6% 12.3% 12 204 12 233 11% 10 000 10 838 1.2% 10 563 11.0% 8 000 9 500 10% 10.4% 1.4% 6 000 4 000
Slide 8: Operations
Operations South Africa – rolling 6 months Historic statistics updated for most recent available information Average monthly foot count (millions) Spend per head (R/person) 8 0.9% 340 7 5.9% 3.9% 7.5 5.1% 20.7% 320 9.1% 9.0% 6 6.6 6.6 6.2 5.9 300 308 308 5 5.8% 280 10.5% 4 282 260 3 1.5% 267 2 240 2
Slide 9: Leasing activity
Leasing activity South Africa Tenant turnover (R’m) Rental Income (R’m) 30 000 3 000 16.1% 25 000 1.2% 3.5% 0.1% 0.6% 16.3% 2 500 2.7% 6.2% 5.2% 5.5% 6.1% 20 000 18.7% 7.6% 6.7% 2 000 15 000 1 500 10 000 5 000 1 000 2015 2016 2017 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022 Roll
Slide 10: Leasing activity (continued)
Leasing activity (continued) South Africa Average Portfolio Escalation (%) Turnover Rent growth 10 50 9 40 37.8% 8 7.2 30 21.4% 6.9 6.7 7 6 20 5 10 Dec 2020 Dec 2021 Dec 2022 Dec 2020 Dec 2021 Dec 2022 Average escalation of all leases excluding pure turnover rental leases (6 months) Vacancy (m2/% of
Slide 11: New tenants
New tenants South Africa Canal Walk Canal Walk Canal Walk Hyde Park Corner Woodlands Woodlands Rosebank Mall Rosebank Mall Somerset Mall Somerset Mall CapeGate CapeGate 11
Slide 12: Impact of loadshedding
Impact of loadshedding • Full backup generator capacity with 81 generators across the SA portfolio except Canal Walk – on City of Cape Town’s curtailment program • Trading through loadshedding at a cost: - Average cost of diesel R8.83 p/KWh vs Eskom/local authority cost R2.44 p/KWh - 1 551 650 litre
Slide 13: Energy solutions – priorities and workstreams
Energy solutions – priorities and workstreams Priorities • Diesel backup – at least 7 days of backup diesel to cater for a stage 6 and above • IT and office backup • Resolve the shortage of generator capacity at Canal Walk • Backup mobile generators for Gauteng and Western Cape • Further business co
Slide 14: Eastern Europe
Eastern Europe Investment Distributable Total property income GLA 29% 33% 22% The Mall, Sofia, Bulgaria
Slide 15: Macroeconomic and retail environment
Macroeconomic and retail environment Real GDP growth (%) CPI (%) 7 25 6 20 5 15 4 10 3 5 2 1 -5 -1 Bulgaria Croatia North Eurozone European Union Europe - 10 Macedonia plus UK Bulgaria Croatia North Eurozone European Europe Macedonia Union plus UK 2022 2023 2024 2025 2026 2022 2023 2024 2025 2026 Un
Slide 16: Operations
Operations Eastern Europe – rolling 6 months Historic statistics updated for most recent available information Tenant turnover (€’m) Effort ratio – portfolio (%) 300 14.1% 17.3% 16% 5.5% 16.1% 250 19.8% 275 276 0.5% 259 12% 0.2% 0.5% 200 241 0.8% 1.1% 208 10.0% 10.6% 10.0% 150 8% 9.2% 9.2% 100 4% 50
Slide 17: Operations
Operations Eastern Europe – rolling 6 months Historic statistics updated for most recent available information Average monthly foot count (millions) Spend per head (€/person) 4 25 14.7% 3.0% 1.7% 2.3% 3 20 1.7% 3.7% 16.1% 20.0% 19.6 20.1 19.8 19.6 2.5 12.8% 15 17.1 2 30.1% 2.3 2.3 2.0 1.8 10 1 5 0 0
Slide 18: Leasing activity
Leasing activity Eastern Europe Retail vacancy (m2/% of GLA) Lease expiry profile (m2/% of GLA) 6 000 100 000 45.1% 5 000 80 000 4 000 60 000 3 000 1.3% 19.4% 40 000 2 000 0.7% 12.7% 13.4% 0.7% 8.7% 1 000 0.3% 0.6% 20 000 0.6% - - 2019 2020 2021 2022 Dec 2022 Vacancy 2023 2024 2025 2026 2027 + June
Slide 19: Tenants
Tenants Eastern Europe The Mall, Sofia The Mall, Sofia The Mall, Sofia The Mall, Sofia City Center one East City Center one East City Center one East Skopje City Mall City Center one West City Center one West City Center one West Skopje City Mall 19
Slide 20: Sub-Saharan Africa
Sub-Saharan Africa Investment Distributable Total property income GLA 7% 4% 5% Kumasi City Mall, Ghana
Slide 21: Operations
Operations Sub-Saharan Africa - rolling 6 months Tenant turnover ($ ‘m) Tenant turnover (Cedi ‘m) 60 12.1% 450 30.3% 27.5% 13.2% 10.0% 400 50 16.6% 350 403 404 50 51 27.9% 0.8% 4.9% 40 45 32.7% 300 250 309 30 37 35 279 265 200 20 150 100 10 50 0 0 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Jan 2023 Dec 201
Slide 22: Operations
Operations Sub-Saharan Africa - rolling 6 months Spend per head ($/person) Spend per head (Cedi/person) 6 35.4% 31.0% 5.3% 45 13.9% 1.1% 40 5 2.8% 42.4 42.2 5.2 5.1 25.0% 35 11.2% 4 4.9 30.8% 30 1.6% 25 30.5 31.3 3 3.8 3.6 27.4 20 2 15 10 1 5 0 0 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Jan 2023 Dec 2019
Slide 23: Interventions and disposals
Interventions and disposals Salient points • Managing fall out from economic deterioration in Ghana • Refinanced Nigerian and Ghanaian senior debt • All bank covenants met • Game’s exit in Ghana complete • In negotiations with replacement tenant/s • Limited US$ received in Nigeria – insufficient in
Slide 24: Financial results
Financial results
Slide 25: Distributable income
Distributable income Change in distributable income (R’m) 240 203 cps 728 87 (93) (1) 157 cps 49 19 537 (97) (13) December 2021 Covid-19 Revenue Operating Expected Hystead Europe Net interest Other December 2022 relief costs credit and management losses fee income Increase Decrease 25
Slide 26: Cash generated from operations to distributable income
Cash generated from operations to distributable income Unaudited 31 December 2022 Unaudited 31 December 2021 Audited 30 June 2022 SA EE SSA Group SA EE SSA Group SA EE SSA Group R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 Cash generated from operations 680 077 347 785 82
Slide 27: Borrowings profile
Borrowings profile Movement in borrowings (R’m) Borrowings by lender LTV 37.2% 16 000 LTV 36.4% 129 15 013 Standard Bank Group 14 488 9.1% 15.7% 19.0% Nedbank 14 000 1 544 1 415 444 4.3% RMB 12 000 (200) 6.6% 9.4% 10.4% Erste Bank (3.0%) DSK/OTP Bank 10 000 6 678 6 922 20.0% 21.2% Syndicate Bank 8 0
Slide 28: LTV ratio
LTV ratio Movement in LTV from 30 June 2022 to 31 December 2022 (%) 2.8 37.2 40 36.4 0.4 0.4 (1.4) (1.4) 35 30 25 20 LTV at Change in Dividend DRIP Profit for the Investment LTV at 30 June 2022 exchange rates period 31 December 2022 Increase Decrease LTV by portfolio (%) LTV Sensitivity Change in pr
Slide 29: Interest rate profile
Interest rate profile ZAR (%) EUR (%) USD (%) 10 5 12 9 9.9% 4 10 8.4% 8 7.6% 7.6% 3.2% 3 8 7.1% 7.2% 2.7% 7 6.4% 1.97% 2 6 6 4.30% 4.9% 1 4 5 3.9% 0 (0.3)% 2 4 0.77% 0.05% 3 -1 0 2022 2022 2022 January December March December January December ZAR all-in hedged rate EUR all-in hedged rate USD all-in
Slide 30: Interest rate profile
Interest rate profile Interest rate exposure hedged (%) Average tenure at 31 December 2022 Interest cover ratio 100 93% 2.1 Rand 1.34 83% 81% 81% 83% 80 77% 73% 427 60 1.95 (4.9) 2.88 Euro 1.39 times 803 40 2.2 20 US Dollar 2.2 0% 0 0.5 1 1.5 2 2.5 0 Years Total ZAR EUR USD Cash operating profit 30
Slide 31: Group debt maturity profile
Group debt maturity profile Rand equivalent (R’m) 5 000 4 000 2 901 3 000 2 901 2 000 906 1 090 500 1 425 600 1 365 1 000 959 1 086 868 847 906 452 500 502 548 482 630 0 Q1: Q2: Q3: Q4: Q1: Q3: Q4: Q1: Q4: Q1: Q3: Q4: Q1: Q4: Q1: Q4: Q2: Q4: Q2: 2023 2023 2023 2023 2024 2024 2024 2025 2025 2026 2026
Slide 32: In closing
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Slide 33: Our impact – Environment
Our impact Environment • Next phase of solar-PV (R70 million) is being installed at Woodlands, Rosebank Mall and Clearwater Mall • Feasibility studies for new solar-PV installations at CapeGate and Canal Walk are underway • Propelair toilets have been installed at Woodlands and CapeGate • A waste-wa
Slide 34: Our impact – Social and Governance
Our impact Social • Hyprop Foundation refocused its initiatives in three key areas - education, community upliftment and enterprise development • Hyprop Foundation launched the Bursary Fund Programme Governance • Gavin Tipper retired from the Board and Spiro Noussis was appointed as the Chairman of
Slide 35: Purpose and priorities
Purpose and priorities How we do it Purpose Owning and managing dominant retail centres Creating spaces and connecting people in mixed-use precincts in key economic nodes in South Africa and Eastern Europe Sub-Saharan Non-Tangible Group South Africa Eastern Europe Africa Assets Pursue new growth Ene
Slide 36: Questions & answers
Questions & answers
Slide 37: Annexures
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Slide 38: South African properties
South African properties Portfolio summary Canal Walk Clearwater The Glen Woodlands CapeGate Cape Town, Western Cape Roodepoort, Gauteng Johannesburg, Gauteng Pretoria, Gauteng Cape Town, Western Cape % Ownership 80% 100% 75.15% 100% 100% GLA 156 911 87 043 79 407 72 380 64 029 Vacancy levels Retail
Slide 39: South African properties
South African properties Portfolio summary Somerset Mall Rosebank Precinct Hyde Park Corner Somerset West, Western Cape Johannesburg, Gauteng Johannesburg, Gauteng % Ownership 100% 100% 100% GLA 68 779 91 043 38 710 Vacancy levels 0.1% Retail 4.7% Retail 2.2% Offices 28.1% Office 42.2% Total foot co
Slide 40: Top 10 tenant groups by GLA
Top 10 tenant groups by GLA South Africa – at 31 December 2022 % of total GLA 10% 8.1% 8.0% 8% 7.4% 7.5% 7.0% 5.9% 6.0% 6.0% 6% 5.1% 5.1% 3.9% 4.1% 3.8% 3.9% 3.7% 3.7% 4% 2.7% 2.7% 2.1% 2.2% 2% 0% Woolworths Pick 'n Pay LTD Foschini Group Retailability Mass Mart Group Pepkor Holdings Shoprite Mr Pri
Slide 41: Trading performance
Trading performance South African portfolio % of reported Trading density Primary category growth Total turnover GLA Department Stores: Clicks, Dis-Chem, Edgars, Game, Woolworths 8.6% 25.1% 24.8% Apparel: Mr Price, Foschini, Truworths 18.0% 19.5% 20.8% Food: Checkers, Pick 'n Pay, Liqour Stores, Foo
Slide 42: Leasing activity
Leasing activity South Africa New lettings and renewals Renewal Rental reversion Average retention rate Gross Rentable Reversion as % of average Contractual Lease Period (by number of Lettable Area % of Total Leasing Area (m2) rate monthly rental Escalation Rate (Year) tenants) (m²) renewal workload
Slide 43: Leasing activity (continued)
Leasing activity (continued) South Africa Leasing workload FY2023 (89) (44 497) 129 709 (14 390) 118 727 Expiries Expiries 58 512 Vacancies 22 899 25 714 Vacancies Monthly 48 298 36 013 Monthly Workload Early renewals Non Expirying GLA Changes Added Renewals New Workload 1 Jul 2022 Replacements Vaca
Slide 44: Operations
Operations South Africa – 6 months ending 31 December 2022 Historic statistics updated for most recent available information Tenant Turnover (R’m) Effort ratio (%) 4 500 20% 24.3% Millions 4 000 3 500 3 860 16% 3 000 2 500 12% 1.9% 0.7% 0.8% 0.2% 1.1% 2 000 8.9% 0.7% 0.4% 11.7% 8% 1.8% 1 500 15.5% 2
Slide 45: Operations
Operations South Africa Cost to income (%) Receivables and collections (R’m) – 100% of properties 50 45.9 1 650 44.4 45 Management costs 7.8 40 7.3 and other expenses 1.4 1.2 35 4.5 4.5 Maintenance costs 2.0 1.9 30 2.7 0.4 Contractor service 25 level agreements 0.7 20 Depreciation 27.9 28.4 15 Bad d
Slide 46: SA valuations bridge (R'm)
SA valuations bridge (R’m) 0.3% 61 4.4% 2.4% 23 000 0.1% 2.2% 71 3.2% 2.8% 1.1% 72 4.5% 70 28 22 723 22 662 5 (51) (41) (93) 22 500 (R’m) 22 000 21 500 21 000 June 2022 Canal Walk Clearwater Somerset Mall Woodlands The Glen Hyde Park CapeGate Rosebank December 2022 Corner Precinct Increase Decrease
Slide 47: Current projects
Current projects Mall Project Completion date Cost/Budget Yield Status The Glen KFC drive-thru September 2022 R4 850 000 14.3% Complete Clearwater Mall Piazza upgrade September 2022 R9 400 000 - Complete Somerset Mall New Checkers FreshX November 2023 R60 000 000 - Underway Canal Walk Freedom Advent
Slide 48: Eastern European properties
Eastern European properties Portfolio summary Skopje City Mall The Mall City Center one East City Center one West Skopje, North Macedonia Sofia, Bulgaria Zagreb, Croatia Zagreb, Croatia % Ownership 100% 100% 100% 100% GLA 36 699 61 568 47 355 42 282 Vacancy levels 0.0% 1.8% 0.0% 0.0% Total foot coun
Slide 49: Top tenant groups by GLA
Top 10 tenant groups by GLA Eastern Europe – at 31 December 2022 % of total GLA 10% 8.3% 8% 7.1% 7.2% 7.2% 6% 5.7% 5.7% 4% 3.7% 3.7% 3.1% 3.1% 2.9% 2.9% 2.4% 2.4% 2.3% 2.3% 2.0% 2.0% 1.7% 1.7% 2% 0% Inditex Interspar Peek & H&M LPP Cineplexx C&A Müller Arena New Yorker Cloppenburg Drogeriemarkt June
Slide 50: Operations
Operations Eastern Europe – 6 months ending 31 December 2022 Historic statistics updated for most recent available information Tenant turnover (€’m) Effort ratio (%) 100 20% 90 12.6% 13.1% 80 16% 70 83 84 31.0% 3.0% 60 2.8% 12% 0.4% 50 58 0.4% 0.5% 11.1% 40 50 8% 9.6% 30 8.6% 8.3% 20 4% 10 0 0% City
Slide 51: Trading performance
Trading performance Eastern Europe portfolio Trading density % of reported Primary category growth Total turnover GLA Apparel: Peek & Cloppenburg, H&M, Zara, C&A 10.0% 36.4% 44.7% Food: Raffy Restaurant, Interspar, Billa, Ramstore 21.3% 11.2% 12.8% Shoes: Mat Star, Humanic, Deichmann, CCC 12.3% 6.1%
Slide 52: Leasing activity
Leasing activity Eastern Europe New lettings and renewals Rental reversion Rentable as % of average Contractual Average lease Gross lettable % of total Leasing Area (m2) Reversion rate monthly rental escalation rate duration (years) area (m2) portfolio Retail 12 558 4.5% 9.7% 4.4% 4.5 6.7% New lease
Slide 53: Leasing activity
Leasing activity Eastern Europe Leasing workload FY2023 3 888 81 (288) 1 312 21 450 (8 650) 13 885 (3 908) 18 557 Expiries Expiries 12 541 1 398 Vacancies Monthly Monthly 1 495 Vacancies 1 110 234 Workload Early renewals Non Expirying GLA Changes Added Renewals New … Workload 1 Jul 2022 Replacements
Slide 54: Operations
Operations Eastern Europe – receivables and collections Receivables and collections (€’m) 50 44.3 (0.6) 40 30 20 10 1.7 1.2 0 (43.2) Net receivables Invoiced Covid-19 relief Total Net receivables b/fwd and discounts collected c/fwd Arrears – June 2021: €1.2 million December 2022: €0.98 million 54
Slide 55: Europe valuations
Europe valuations Europe valuations* bridge (€’m) 0.7% (4.2) 700.0 600.0 0.0% 573.6 -0.1% -1.5% -1.0% 569.4 0.0 (0.1) (2.6) (1.5) 500.0 400.0 300.0 200.0 100.0 0.0 June 2022 Skopje City Mall The Mall, Sofia City Center one City Center one December 2022 East, Zagreb West, Zagreb * Valuations per inde
Slide 56: Current projects
Current projects Bathroom upgrade Phase 1 Completion date Cost/Budget Yield Status Q4 2022 €773 000 - Complete Bathroom upgrade Phase 2 Completion date Cost/Budget Yield Status Q2 2023 €700 000 - Underway 56
Slide 57: Cost to income
Cost to income Eastern Europe – 6 months ended 31 December 2022 50% 45% 39.9% 40% 11.6% 35.0% 35% 12.5% 30% 2.4% Management costs and other 25% 4.5% Maintenance costs 2.6% 2.6% 20% Contractor service level agreements 4.8% 19.4% 15% 2.8% Depreciation 10% 12.9% Bad debts 5% Municipal costs 0% (0.6%) (
Slide 58: Sub-Saharan Africa properties
Sub-Saharan Africa properties Portfolio summary Ikeja City Mall Accra Mall West Hills Mall Kumasi City Mall Lagos, Nigeria Accra, Ghana Accra, Ghana Kumasi, Ghana % Ownership 75.0% 23.5% 29.4% 49.0% GLA 22 223 21 311 28 272 18 534 Vacancy levels 0.7% 0.9% 18.6% 7.6% Total foot count (6 months) 2.8m
Slide 59: Operations
Operations Sub-Saharan Africa – 6 months ending 31 December 2022 Historic statistics updated for most recent available information Tenant turnover ($’m) Tenant turnover (Cedi ‘m) 25 400 22.4% 20 300 19 15 40.6% 200 218 10 31.8% 35.1% 23.5% 16.5% 8 8 100 5 93 92 0 0 Accra Mall Kumasi City Mall West H
Slide 60: Currency and interest rate analysis
Currency and interest rate analysis Sub-Saharan Africa Cedi rental Cedi/USD 800 15 600 10 400 5 200 0 0 2016 2017 2018 2019 2020 2021 2022 Dec 2016 2017 2018 2019 2020 2021 2022 Dec June 2022 June 2022 Naira/USD 1 Month LIBOR Rate 500 5 450 4 400 3 350 2 300 250 1 200 0 2016 2017 2018 2019 2020 2021
Slide 61: LTV calculations
LTV calculations 31 December 2022 30 June 2022 Hyprop SA REIT Hyprop SA REIT LTV LTV LTV LTV Hyprop total assets 38 059 850 38 059 850 37 276 317 37 276 317 Less: Goodwill and intangible assets (820) (49) (1 141) (54) Cash and cash equivalents (1 376 158) (1 376 158) (1 707 960) (1 707 960) Derivati
Slide 62: Debt maturity profile
Debt maturity profile as at December 2022 South African borrowings (ZAR’m) Dec 2022 Jun 2022 Dec 2021 Property value (Rbn) 22.7 22.7 22.4 1500 1 425 500 600 LTV 27.41% 26.09% 14.97% 1000 Weighted average cost of debt 959 8.4% 7.6% 7.6% 847 868 (incl. hedges) 500 452 500 502 548 482 Weighted average
Slide 63: Investment property and capital expenditure
Investment property and capital expenditure 31 December 2022 31 December 2021 30 June 2022 South Africa R25.0bn (61%) R24.6bn (60%) R25.0bn (63%) Hyprop effective interest R22.7bn (64%) R22.4bn (71%) R22.7bn (65%) Hyprop’s effective interest Exit cap rate range 6.8% - 10.0% 6.8% - 9.3% 6.8% - 10.0%
Slide 64: Equity bridge
Equity bridge Hyprop Group (R’m) 262 7 (54) 89 122 (2) 576 497 21 294 (13) 20 814 (1 004) NAV Net Property Other Impairments FCTR Non-controlling Tax Distribution DRIP Other NAV June 2022 operating revaluation Fair value interest December 2022 income adjustments 64
Slide 65: Disclaimer
This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements beliefs or opinions including statements with respect to the company’s business financial condition and results of operations. These statements which contain the words
Slide 66: Investor Relations
Investor Relations Boitumelo Nkambule - [email protected]