Hyprop Investments Limited · JSE:HYP
Hyprop Investments — FY2019 Earnings Presentation
32 slides from Hyprop Investments's earnings presentation, Sep 5, 2019
Slide 1: Audited annual results as at 30 June 2019
2019/09/05 Audited annual results As at 30 June 2019 1 THE MARKET HAS CHANGED We create By owning environments and and managing opportunities for mixed-use precincts Improve underpinned by Reposition people to connect dominance and have authentic dominant retail and meaningful centres in South Afric
Slide 2: Agenda and headlines
2019/09/05 AGENDA HEADLINES & SOUTH EASTERN KEY METRICS AFRICA R EUROPE € SUB-SAHARAN FINANCIAL PRIORITIES & AFRICA $ RESULTS GUIDANCE 3 3 HEADLINES SOUTH AFRICA EASTERN EUROPE SUB-SAHARAN AFRICA GROUP Take control of Revised 6.5% 13.5% asset management strategy Distributable income (yoy) Distributa
Slide 3: Key metrics
2019/09/05 KEY METRICS Trading density – Rate / m² Rent ratio SA and effort ratio EE Distribution – cps South Africa - R Eastern Europe - € South Africa Eastern Europe Group Excl Africa 0.3% 1.5% 5.9% 0.6% 0.3% 757 745 768 10.9% 10.6% 725 2 936 2 958 9.1% 9.4% 3.7% 245 254 Jun 2018 Jun 2019 Jun 2018
Slide 4: Trading overview and operations
2019/09/05 TRADING OVERVIEW 12% 11.0% 10% 9.4% 9.1% 9.0% 8.5% 8% 7.4% 7.3% 8.0% 7.1% 6% 5.2% 6.0% 6.0% 4% 2% 1.4% 1.9% 1.6% 1.3% 0.6% 0.5% 0.8% 0.7% 0% Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Trading density growth Rent ratio (rental as % of turnover) Vacancies Rental growth 7 7 OPERATIONS NOI
Slide 5: Operations and top 10 groups by GLA
2019/09/05 OPERATIONS Rent ratio Retail vacancy 1.8% 3% 12% 4.9% 4.9% 10% 4.2% 2.5% 0.3% 2.6% 1.9% 4.1% 2% 8% 5.6% 1.6% 1.3% 6% 1% 0.7% 0.8% 4% 2% 0% 0% Canal Clearwater Somerset Woodlands CapeGate Rosebank The Glen Atterbury Hyde Park Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Walk Mall Mall Boul
Slide 6: Edcon exposure and current projects
2019/09/05 EDCON EXPOSURE % of Gross GLA (Jun 2019) Edcon to retain Trading density growth 50 198m² 75% Remaining 9.1% 8% 5 579m² Taken back 17% 11 004m² Edcon Apr - Jun 2018 Apr - Jun 2019 8.1% Mall New Tenants m² Canal Walk Coricraft 1 012 New concept iStore 538 Clearwater Mall Leather Gallery 829
Slide 7: Future projects and sustainability initiatives
2019/09/05 FUTURE PROJECTS Mall Project Woodlands Boulevard, Right size tenants and secure new Pretoria anchor Rosebank Mall, Edgars replacement with a new anchor Johannesburg to the Mall Entertainment offering plus foodcourt Canal Walk, Cape Town upgrade 13 13 SUSTAINABILITY INITIATIVES Solar roll-
Slide 8: Eastern Europe and shareholder funding arrangements
2019/09/05 EASTERN EUROPE ▪ Retain dominance Croatia ▪ Leverage SA expertise Serbia Bulgaria ▪ Formalise growth strategy Montenegro Macedonia DISTRIBUTABLE INCOME GROSS ASSET VALUE R266 m R12.8bn 14% 25% 15 15 SHAREHOLDER FUNDING ARRANGEMENTS June 2019 PDI shareholding % % Shareholding in Hystead 40
Slide 9: Operations: Eastern Europe
2019/09/05 OPERATIONS NOI per mall (€’000) Turnover - €m 1.5% 7.2% 9.6% 2.5% 4.7% 6.6% 12 000 1.2% 160 10 000 3.4% 3.9% 120 0.8% 3.1% 8 000 1.7% 6 000 80 4 000 40 2 000 0 City Centre City Centre Delta City Skopje City The The Mall Mall Delta City City Centre City Centre Delta City Skopje City The Th
Slide 10: Top tenant groups by GLA and current projects
2019/09/05 TOP 10 TENANT GROUPS BY GLA Inditex 10.2% % of Total * % of Total Interspar 5.8% Tenant GLA Income Peek & Cloppenburg 4.5% Inditex 10.2% 7.0% Cineplexx 4.3% Interspar 5.8% 3.3% H&M 4.0% Peek & Cloppenburg 4.5% 2.6% C&A 2.7% Cineplexx 4.3% 1.5% New Yorker 2.1% H&M 4.0% 1.4% Ramstore 2.0% C
Slide 11: Future projects and Sub-Saharan Africa
2019/09/05 FUTURE PROJECTS Mall Project • Upgrade and refurbishment of The Mall, Sofia, the mall food court Bulgaria • New potential tenants • Mall extension of 7 500m² Delta City, Podgorica, • Linking with the adjoining mall Montenegro – subject to zoning approval • Extend the mall by adding City C
Slide 12: Disposals and operations
2019/09/05 DISPOSALS ▪ Phase one ▪ Achimota (Ghana) and Manda Hill (Zambia) sold ▪ Proceeds of $66m will be used to settle USD debt ▪ Phase two ▪ Ikeja Mall, Nigeria ▪ Various interested parties ▪ Target completion date 30 June 2020 ▪ Phase three ▪ Accra Mall, West Hills Mall and Kumasi City Mall ▪
Slide 13: Operations and lessons learnt
2019/09/05 OPERATIONS Average monthly Trading densityfoot – R/count m² / m² 40 7.5 % 10.2% 1.5 % 0.3% 30 0.9% 2.1% 20 10 0 Manda Hill Accra West Hills Kumasi Achimota Ikeja Retail vacancy - Portfolio 10% 8.0% 8% 6.6% 6.4% 6% 5.1% 4% 2% 0% Jun 2016 Jun 2017 Jun 2018 Jun 2019 25 25 LESSONS LEARNT Sub-
Slide 14: Interventions and financial results
2019/09/05 INTERVENTIONS ▪ Clear lines of responsibility ▪ Improve communication ▪ Internalise asset management function ▪ Retain and hire key staff ▪ Restructure in-country debt to reduce funding cost ▪ Restructure arrangements with in-country partners ▪ New funding arrangements between shareholder
Slide 15: Distribution growth and distributable income
2019/09/05 DISTRIBUTION GROWTH Cents per share 900 1.5% 8.8% 800 12.1% 757 745 695 700 600 500 5.5% 8.0% 8.3% 9.3% 2.5% 16.6% 400 376 380 386 359 347 348 300 200 100 0 -100 H1 2017 H2 2017 FY 2017 H1 2018 H2 2018 FY 2018 H1 2019 H2 2019 FY 2019 South Africa Eastern Europe Sub-Saharan Africa 29 29 DI
Slide 16: Revenue and distributable income
2019/09/05 REVENUE & DISTRIBUTABLE INCOME SOUTH AFRICA EASTERN EUROPE SUB-SAHARAN AFRICA 30 June 2019 30 June 2018 30 June 2019 30 June 2018 30 June 2019 30 June 2018 R'000 R'000 R'000 R'000 R'000 R'000 Revenue 3 003 847 2 889 135 214 000 224 578 Expenses (1 092 420) (956 146) (86 634) (93 746) Net
Slide 17: Cost-to-income ratios and results analysis
2019/09/05 COST-TO-INCOME RATIOS (Gross basis %) % 40 35.4 35 33.0 6.2 30 8% 6.1 3.9 25 3.9 7% 2.0 1.6 20 31% 15 16% 21.4 23.3 10 5 0 June 2018 June 2019 Maintenance & management costs (%) Contractor service level agreements (%) Bad debts & depreciation (%) Municipal costs (%) 33 33 RESULTS ANALYSIS
Slide 18: Investment property and capital expenditure
2019/09/05 INVESTMENT PROPERTY 72.4% South African portfolio R31.2bn (61%) Hyprop share R28.6bn Cap rates 6.3% – 8.3% Forward yield 7.2% Sub-Saharan Africa R7.2bn (14%) R51bn Hyprop share R3.5bn Hyprop’s total interest Cap rates 7.8% – 8.8% 8.9% Forward yield 7.9% R39.5bn Eastern Europe R12.8bn (25%
Slide 19: Results analysis and debt refinanced
2019/09/05 RESULTS ANALYSIS Africa Impairment Hystead financial Financial Guarantees Cash R1.3bn asset R218m R110m R1.45bn (2018:R153m) (2018:R715m) (2018:R186m) Manda Hill R106m Year end balance includes R350m All Euro denominated loans No change in accounting treatment earmarked for bond redemptio
Slide 20: Debt maturity profile and LTV calculations
2019/09/05 DEBT MATURITY PROFILE SOUTH AFRICA Jun 2019 Jun 2018 (ZAR million) 1200 960 Property value (Rbn) 28.5bn 28.6bn 1000 800 650 LTV 15.62% 9.83% 452 600 425 400 500 Weighted average cost of debt (incl hedges) 9.3% 9.4% 358 317 348 400 250 Weighted average loan tenor 2.84 3.15 200 Proportion o
Slide 21: Reducing LTV, ICR and bank covenants
2019/09/05 REDUCING LTV AND SENSITIVITY 45% 44.0% R740m R2 864m Moody’s LTV ratio 44.0% 44.0% 43% Change in property values (0.9%) Moody’s 41% 44.0% (5%) (10%) (15%) (20%) R1 881m LTV ratio 39.3% (20%) 42.1% 44.2% 46.6% 49.3% 39% (3.8%) Rand (10%) 44.2% 46.4% 48.9% 51.7% 37% (stronger)/ 0% 46.1% 48.
Slide 22: Bank and DCM debt profile; equity bridge
2019/09/05 BANK & DCM DEBT PROFILE On balance sheet by lender On balance sheet sources of funding 5% Omsfin ZAR DCM Standard Bank Group 38% 38% 43% ZAR Bank RMB 47% Investec USD Bank Facilities 4% 6% DCM 19% Group (incl. guaranteed debt) by lender Group (incl. guaranteed debt) sources of funding 3%
Slide 23: Hystead Group
2019/09/05 HYSTEAD GROUP Balance sheet Pro-forma distributable income JUN 2019 JUNE 2018 Year Year R000 R000 Jun 2019 Jun 2018 Non-current assets 13 013 799 12 703 739 R000 R000 Investment property 12 951 540 12 676 758 Total revenue 1 434 847 826 177 Other non-current assets 62 259 26 981 Current a
Slide 24: Priorities and guidance; Q&A
2019/09/05 PRIORITIES AND GUIDANCE SOUTH AFRICA EASTERN EUROPE SUB-SAHARAN AFRICA NON-TANGIBLE ASSETS GROUP Assess and reposition Retain dominance Take control of asset Formalise and implement Reduce the LTV malls • Extensions management • New brands • Asset management Restore investment credit • En
Slide 25: Company structure - South African portfolio
2019/09/05 APPENDICES 49 49 COMPANY STRUCTURE - SOUTH AFRICAN PORTFOLIO Clearwater Somerset Mall Hyde Park Corner 100% owned Rosebank Mall Woodlands CapeGate SOUTH Offices Atterbury Value Mart AFRICA Cradock Heights Canal Walk (80%) The Glen (75,15%) Co-owned 50 50 25
Slide 26: South African properties
2019/09/05 SOUTH AFRICAN PROPERTIES Canal Walk & Portfolio summary Canal Walk Offices Clearwater The Glen Woodlands CapeGate % Ownership 80% 100% 75.15% 100% 100% GLA 158 697 87 028 80 323 71 629 63 831 Vacancy levels 0.8% 0.3% 4.0% 0.1% 0% Avg foot count per m² / month 11.2 9.5 11.9 9.6 13.9 51 51
Slide 27: Trading performance and Eastern Europe structure
2019/09/05 TRADING PERFORMANCE SOUTH AFRICAN PORTFOLIO Trading density % of % of Primary category growth total turnover area Department Stores: Clicks, Dis-Chem, Edgars, Game, Woolworths 2,4 27,7 24,4 Apparel (1,4) 18,3 21,3 Food 0,7 11,6 10,7 Electronic/Photography/Music 4,5 7,1 3,8 Food Service 4,
Slide 28: Eastern Europe properties and sustainability
2019/09/05 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 23 281 36 264
Slide 29: Sub-Saharan Africa structure and properties
2019/09/05 COMPANY STRUCTURE – SUB-SAHARAN AFRICA PORTFOLIO Hyprop Investments Mauritius 37,5% 75% AttAfrica Ikeja City Mall SUB-SAHARAN (Mauritius) (Nigeria) AFRICA 100% owned 47% 58.5% 97.5% Accra Mall West Hills Mall Kumasi City Mall (Ghana) (Ghana) (Ghana) 57 57 SUB-SAHARAN AFRICA PROPERTIES Por
Slide 30: Total debt maturity profile and Hystead capital structure
2019/09/05 TOTAL DEBT MATURITY PROFILE (ZAR million) 3 500 3 000 2 950 2 637 2 500 1 999 2 000 1 500 1 055 560 1 000 849 650 782 452 500 500 358 400 348 242 317 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 2021 2022 2023 2024 2025 59 59 HYSTEAD CAPITA
Slide 31: Moody's rating overview and forward-looking statements
2019/09/05 RATING AGENCY OVERVIEW – MOODY’S Rating class Rating scale Rating Rating outlook Long Term International Ba1 Long term National Aa3.za Negative Short term National P1.za Rating Action - 13 February 2019 Positives Points to watch 1. Refinancing of existing debt becoming due in the next 18
Slide 32: Contact details
2019/09/05 CONTACT DETAILS INVESTOR RELATIONS Michèle Mackey Mobile: +27 82 497 9827 Tel: +27 10 003 0661 E-mail: [email protected] 63 63 32