Hyprop Investments Limited · JSE:HYP
Hyprop Investments — Merger or Acquisition (March 2022)
26 slides from Hyprop Investments's merger presentation, March 2022
Slide 1: Acquisition of four centres from Hystead Limited
oy HYPROP Acquisition of four centres from Hystead Limited February/March 2022
Slide 2: Hystead Group
Hystead Group Hyprop PDI Hystead Delta City Delta City Podgorica Belgrade SCM Retail Balkan Retail (Held-for-sale (Disposed) to 3rd party) City Center Skopje City Mall, The Mall, One East & North Macedonia Sofia, Bulgaria City Center One West, Croatia 2
Slide 3: Hystead shareholder arrangements
Hystead shareholder arrangements Guarantee Fee = 60% of the dividend on shareholding not guaranteed by PDI (60% x 18.3% = 11%) Hyprop Investments PDI Back-to-back security = € 47.2 million (11.7%) Limited 60% SHAREHOLDING 40% Guarantee = € 40 million (10%) Equity Guarantees = debt providers In-count
Slide 4: Options available for a liquidity event?
Options available for a liquidity event? An initial public offering of Hystead Listing of Hystead Disposal of the underlying Hystead property portfolio Corporate Restructure: • Hyprop takes 100% control of Hystead • Align shareholding with guarantees provided to Financial Institutions – 90% Hyprop a
Slide 5: Liquidity event via the disposal of underlying portfolio
Liquidity event via the disposal of underlying portfolio Hyprop PDI Hystead Delta City Delta City Podgorica Belgrade SCM Retail Balkan Retail (Held-for-sale (Disposed) to 3rd party) The Transaction Once the Delta City Podgorica disposal is complete, Hystead only holds a Vendor Loan relating to Belgr
Slide 6: What is remaining? (1 of 2)
What is remaining? (1 of 2) • Signed SPA of €95 million for Delta City Podgorica • Purchase consideration of €95 million (the 30 June 2021 valuation €75.3 million) • Sale is expected to complete Q1 2022 • Belgrade vendor loan • €10 million vendor loan to the purchaser of Delta City Belgrade • Shareh
Slide 7: What is remaining? (2 of 2)
What is remaining? (2 of 2) • Hyprop is purchasing 100% of SCM Retail and Balkan Retail, holding Skopje City Mall, The Mall Sofia, City Center One East and City Center One West respectively • Total aggregate consideration: €193 million • Estimated purchase consideration: €173 million • Excluded clai
Slide 8: Terms of the transaction
Terms of the transaction Purchase consideration payable is based on: • The sum of the independent property valuations of the Hystead acquisition properties at 31 October 2021 (€575.1 million) • minus: short and long-term debt at the effective date • plus/minus: the net working capital at the effecti
Slide 9: Fundamentals
Fundamentals Valuations Amounts in € million 2019 2020 COVID 2021 COVID Transaction Initial Valuation Valuation Valuation Valuation Purchase 31 Dec 31 Dec 31 Dec 31 Oct 595.8 598.1 573.4 575.1 Portfolio Price 2018 2019 2020 2021 Skopje City Mall 92 93.7 95.2 90.7 91.3 The Mall, Sofia 179 186.6 186.8
Slide 10: Why are we doing it? (1 of 3)
Why are we doing it? (1 of 3) • In line with Hyprop’s diversification strategy • Understand the centres and have a 4-year history • Retain competent asset management and property management teams: • Ensuring in-country know how; and • Continuity 10
Slide 11: Why are we doing it? (2 of 3)
Why are we doing it? (2 of 3) Upside on all centres: City Center One East & West • Expansion opportunity due to tenant demand The Mall of Sofia, Bulgaria • Hyper conversion only completed 7 months before Covid • Food court fully upgraded • Revamp of bathrooms started Skopje City Mall, North Macedoni
Slide 12: Why are we doing it? (3 of 3)
Why are we doing it? (3 of 3) • Solid base to grow the EE portfolio • Optimise capital structure • Restructure debt • Create real Euro equity by investing circa €173 million • Reducing Euro-denominated equity debt exposure • Reducing the cross-currency risk/exposure • Settle Hystead equity debt from
Slide 13: Capital profit/loss in Hystead
Capital profit/loss in Hystead Initial valuation on Current valuation based on Hyprop acquisition by Hystead transaction and other sales € 789 million € 785 million +/- reserves Accumulated reserves € ? City Center One East & West € 315 million 4 transaction properties € 575 million In-country and T
Slide 14: The financial implications
The financial implications 14
Slide 15: How will we fund it?
How will we fund it? The purchase consideration: Funded from: € million R billion R billion Purchase Price 173 2.9 Cash 2.0 Excluded Claim 20 0.4 Bank Facilities 0.9 193 3.3 Excluded Claim 0.4 3.3 Undrawn Facilities 2.4 15
Slide 16: Financial impact – Balance Sheet
Financial impact – Balance Sheet Actual Pro forma before Pro forma after 30 June 2021 the transaction1 the transaction (R’000) (R’000) (R’000) Total assets 26 878 084 26 697 199 34 793 370 Less Total liabilities (7 586 744) (7 564 092) (16 471 463) Non-controlling interests 66 145 66 145 66 145 Equi
Slide 17: Pro Forma Statement of Financial Position
Pro Forma Statement of Financial Position After the subsequent Hyprop as at Hyprop as at events and the 30 June 2021 30 June 2021 Transaction Audited Pro forma 1 Pro forma (R’000) (R’000) (R’000) ASSETS Non-current assets 22 993 712 23 059 836 32 744 293 Investment property 21 831 329 21 831 329 31
Slide 18: Financial Impact - Income Statement
Financial Impact - Income Statement Forecast Forecast Year ending Year ending 30 June 2022 30 June 2023 (R’000) (R’000) Profit for the period/year of the target group 97 473 418 491 Incremental costs for the Group1 (47 557) (128 500) Profit for the period/year for the Group attributable to the trans
Slide 19: Pro Forma Statement of Profit or Loss and Distributable Income
Pro Forma Statement of Profit or Loss and Distributable Income Hyprop Group Audited Pro Forma Year ended 30 June 2021 Aggregate1 (R’000) (R’000) Revenue 2 781 339 4 007 000 Changes in expected credit losses - trade receivables (72 253) (77 432) Property expenses (1 178 249) (1 673 460) Net property
Slide 20: Impact on LTV
Impact on LTV Before the After the transaction Rand equivalent % of Group transaction Rand equivalent % of Group (million)1 (R million) total (million)2 (R million) total Rand Total bank borrowings 5 543 6 433 Cash on hand/RCF drawn (1 649) 413 Net borrowings 3 894 3 894 22% 6 846 6 846 48% Investme
Slide 21: In closing
In closing 21
Slide 22: Our rationale
Our rationale • In line with Hyprop’s diversification strategy • Understand the centres and have a 4-year history • Retain competent asset management and property management teams • Upside on all centres • Solid base to grow the EE portfolio • Optimise capital structure • Settle the remaining Hystea
Slide 23: HYPROP
oy HYPROP 23
Slide 24: Hyprop's exposure and Hystead's borrowings
Hyprop’s exposure and Hystead’s borrowings € millions % Borrowings 786 100.0 In-country borrowing 384 48.9 Equity debt 402 51.1 The equity debt is guaranteed as follows: Hyprop PDI Total Guarantees issued to lenders 362.0 40.0 402.0 Back-to-back security from PDI (47.2) 47.2 - Net exposure 314.8 87.
Slide 25: Disclaimer
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 contai
Slide 26: oe ary | yA S
oe ary | yA S HYPROP 26
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