Hyprop Investments Limited · JSE:HYP
Hyprop Investments — FY2022 Earnings Presentation
62 slides from Hyprop Investments's earnings presentation, September 2022
Slide 1: Integrated Annual Results presentation
Integrated Annual Results presentation for the period ended 30 June 2022
Slide 2: Agenda
Headlines and Key Metrics South Africa Eastern Europe Agenda Sub-Saharan Africa Financial Results In Closing 2
Slide 3: Progress over the past 3 years
Progress over the past 3 years Sub-Saharan Non-Tangible Group South Africa Eastern Europe Africa Assets Further strengthen Mixed-use opportunities Retain dominance – asset Ensure value creation SOKO – complete balance sheet management initiatives software development Implement priorities and extensi
Slide 4: Headlines
Headlines Creating spaces and connecting people Group South Africa Eastern Europe Sub-Saharan Africa Non-Tangible Assets • Hystead liquidity event • 9% like-for-like growth in • 3 months NOI of R110 million • Property valuation down 2.8% • Internalised physical districts implemented: distributable i
Slide 5: Key metrics
Key metrics Group Distributable income (Cps)/(R’m) IFRS NAV per share (R) 400 3.4% 70 6.3 38.8 350 6.82 40.0 29.5 65 6.60 300 381.4 67.70 354.5 342.5 65.57 60 250 308.3 313.0 62.96 58.97 60.88 200 55 June 2021 June 2022 June 2021 December 2021 June 2022 Group AVM Effect of Europe income Effect of ad
Slide 6: Interest cover ratio (ICR) Loan to value %
Interest cover ratio (ICR) Loan to value % 10% 6% 3.82 3.47 9.4% 14.2% 3.04 3.23 45.8% 36.4% 36.9% 22.7% June 2021 June 2022 June 2021 June 2022 June 2021 June 2022 June 2021 June 2022 IFRS ICR CASH ICR Fully consolidated SA REIT LTV Hard currency equity debt variance (EUR’000) 400 361 956 300 200 6
Slide 7: South Africa
South Africa Investment Distributable Total property income GLA 65% 86% 73% Clearwater Mall, Johannesburg
Slide 8: Operations
Operations South Africa – rolling 12 months Historic statistics updated for most recent available information Turnover (R’m) Effort ratio – portfolio (%) 22 000 14.9% 15.6% 12.0% 13.6% 1.6% 21 000 1.4% 0.0% 21 292 21 525 20 000 20 882 11.1% 20 527 11.0% 19 000 1.7% 10.0% 0.4% 1.4% 12.0% 1.5% 1.5% 18
Slide 9: Operations
Operations South Africa – rolling 12 months Historic statistics updated for most recent available information Average monthly foot count (millions) Spend per head 8 1.5% 6.7% 7.4% 290 6.2% 7 13.4% 289.5 7.2 7.0% 7.7% 7.7% 285.3 287.2 6 8.8% 11.5% 6.2 6.1 6.2 6.2 270 5 5.7 268.8 4 250 1.7% 3 3.0% 241
Slide 10: Leasing activity
Leasing activity South Africa Vacancy Lease expiry profile (total) 25.3% 24.4% 200 000 40 000 3.8% 35 000 3.9% 16.5% 150 000 14.3% 3.1% 30 000 10.1% 2.4% 25 000 2.4% 30.3% 1.9% 23.9% 100 000 2.0% 20 000 1.6% 1.4% 13.3% 5.5% 10.7% 15 000 3.9% 0.8% 5.5% 10 000 50 000 5 000 0 - 2018 2019 2020 2021 2022
Slide 11: Leasing activity
Leasing activity South Africa Leasing workload FY2022 200 000 5 073 13 507 180 000 19 056 (63) 160 000 148 142 140 000 120 000 77 259 Expiries 100 000 (85 488) 80 000 61 727 60 000 26 356 Vacancies (38 500) Vacancies 25 714 40 000 44 527 Under negotiation 20 000 Under negotiation 36 013 - Workload E
Slide 12: Tenants
Tenants South Africa Canal Walk Somerset Mall Canal Walk CapeGate Woodlands Hyde Park Corner The Glen Somerset Mall Hyde Park Corner Rosebank Mall Hyde Park Corner Canal Walk 12
Slide 13: Eastern Europe
Eastern Europe Investment Distributable Total property income GLA 28% 9% 22% Skopje City Mall, Skopje, Macedonia
Slide 14: Macroeconomic and retail environment
Macroeconomic and retail environment Real GDP growth (%) CPI (%) 12 25 10 20 8 15 6 10 4 5 2 -5 Bulgaria Croatia North Eurozone European Union Europe Bulgaria Croatia North Eurozone European Europe Macedonia plus UK Macedonia Union plus UK 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 Unemployme
Slide 15: Operations
Operations Eastern Europe – rolling 12 months Historic statistics updated for most recent available information Turnover (€’m) Effort ratio – portfolio (%) 480 14.5% 13.4% 12.9% 16% 3.8% 460 470 0.1% 0.1% 465 467 12% 0.1% 0.3% 0.3% 0.3% 462 440 10.6% 10.7% 10.8% 10.5% 10.5% 10.5% 420 11.3% 0.7% 8% 4
Slide 16: Operations
Operations Eastern Europe – rolling 12 months Historic statistics updated for most recent available information Average foot count (millions) Spend per head (€/person) 4 24 22 3 0.7% 2.5% 2.6% 1.9% 20 12.0% 16.6% 11.8% 10.6% 10.8% 19.4 19.4 19.3 2.4 11.4% 18 6.3% 18.9 2 4.5% 2.0 2.0 2.0 2.0 16 1.8 1
Slide 17: Leasing activity
Leasing activity Eastern Europe Retail vacancy Lease expiry profile 6 000 100 000 46.5% 5 000 80 000 4 000 60 000 3 000 1.3% 40 000 17.1% 2 000 0.7% 13.0% 14.4% 0.7% 0.3% 8.3% 1 000 20 000 0.7% - - 2019 2020 2021 2022 Vacancy 2023 2024 2025 2026 2027 + June *Excluding Delta City Belgrade and Podgori
Slide 18: Tenants
Tenants Eastern Europe The Mall, Sofia The Mall, Sofia The Mall, Sofia Skopje City Mall 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 18
Slide 19: Sub-Saharan Africa
Sub-Saharan Africa Investment Distributable Total property income GLA 7% 5% 5% Accra Mall, Ghana
Slide 20: Trading overview
Trading overview Sub-Saharan Africa Turnover ($ ‘m per month) Turnover (Cedi ‘m per month) 120 7.9% 650 10.7% 10.3% 8.9% 16.9% 3.3% 3.1% 5.9% 100 109 9.9% 600 3.5% 606 613 616 80 91 94 7.7% 91 89 86 550 60 551 7.8% 548 500 40 508 20 450 0 400 June 2019 June 2020 June 2021 June 2022 July 2022 August
Slide 21: Trading overview
Trading overview Sub-Saharan Africa Spend per head ($/person) Spend per head (Cedi/person) 5.8 8.5% 40.0 3.4% 4.9% 5.6% 5.6 7.9% 35.0 12.5% 2.7% 0.1% 5.4 5.6 30.0 32.9 33.5 34.0 5.4 31.9 5.2 9.8% 25.0 28.3 28.3 5.0 9.5% 10.5% 20.0 12.6% 4.8 5.0 15.0 4.9 4.9 4.6 4.8 10.0 4.4 5.0 4.2 0.0 June 2019 Jun
Slide 22: Disposals and interventions
Disposals and interventions Salient points • Managing fall out from economic deterioration in Ghana • All bank covenants met • Refinanced Nigerian senior debt, in process on extending Ghana senior debt • Managing Game’s exit in Ghana and finding replacement tenants • No US$ liquidity in Nigeria thro
Slide 23: Financial results
Financial results
Slide 24: Distributable income
Distributable income Change in distributable income (R’m) 1 250 74 1 171 45 105 1 090 112 (9) 64 1 050 (134) (53) (123) 850 650 450 250 June 2021 Atterbury Covid-19 Income Operating Expected Hystead Europe Net interest Other June 2022 Value Mart loss of costs Credit dividends and sale rental Loss ma
Slide 25: Expense analysis
Expense analysis SA Property Portfolio expenses Increase / % June 2022 June 2021 (decrease) change Property expenses 1 160 174 1 101 683 Expected credit losses 9 347 58 006 Other operating expenses 113 290 107 668 Total expenses 1 282 811 1 267 357 15 454 - Less Atterbury Value Mart - (57 420) 57 42
Slide 26: Reconciliation of cash
Reconciliation of cash Generated from operations to distributable income 30 June 2022 30 June 2021 South Africa Eastern Europe Sub-Saharan Africa Group South Africa Eastern Europe Sub-Saharan Africa Group R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 Cash generated from operations 1 479 974 208 98
Slide 27: Hyprop debt exposure by currency (R’m)
Hyprop debt exposure by currency (R’m) Debt exposure by currency (R’m) Total bank borrowings at year-end (R’m) LTV 45.8% 19 960 25000 20000 1 167 22 871 13 393 20 397 3 190 (3 409) 20000 19 597 LTV 36.4% 724 15000 (25.5%) 20.4% 14 477 237 1 404 (3 129) (177) 6 678 15000 14 036 (23.4%) (1.3%) 464 100
Slide 28: Change in LTV and sensitivity
Change in LTV and sensitivity Movement in fully consolidated LTV from 30 June 2021 to fully consolidated LTV at 30 June 2022 (%) 55 7.8 50 45.8 45 (1.5) 40 (3.1) (7.9) 36.4 (0.4) 35 (3.2) (0.5) (0.7) 30 25 20 LTV at Atterbury Belgrade Hyprop Hystead Consolidation Podgorica Fair value Other LTV at 30
Slide 29: Group debt maturity profile
Group debt maturity profile Rand equivalent (R’m) 5000 4500 4000 500 3500 2 832 3000 2500 2000 1500 1 861 1000 993 1 425 600 1 335 950 847 868 500 959 650 450 452 500 548 618 0 Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q3: Q4: Q1: Q2: Q1: Q3: Q4: Q1: Q4: Q2: 2022 2022 2023 2023 2023 2023 2024 2024 2024 2025 2025
Slide 30: In closing
In closing
Slide 31: Our impact
Our impact Environment • Introduced collective zero wet waste strategy across SA portfolio • Propelair toilets installed at Hyde Park Corner and Rosebank Precinct • Phase 2&3 solar at Woodlands, Clearwater Mall and Rosebank approved • IOT.nxt, an internet based smart building management system (BMS)
Slide 32: 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 Cen
Slide 33: Questions & answers
Questions & answers
Slide 34: Annexures
Annexures
Slide 35: South African properties
South African properties Portfolio summary Canal Walk and Canal Walk Offices Clearwater The Glen Woodlands CapeGate % Ownership 80% 100% 75.15% 100% 100% GLA 156 879 87 044 79 607 72 382 64 032 Vacancy levels Retail 1.0% 1.7% 1.6% 6.8% 1.0% Offices 31.8% Total foot count (12 months) 16.7m 8.7m 11.0m
Slide 36: South African properties
South African properties Portfolio summary Somerset Mall Rosebank Precinct Hyde Park Corner and Offices % Ownership 100% 100% 100% GLA 68 791 91 053 38 750 Vacancy levels 0.1% Retail 2.4% Retail 2.5% Offices 27.0% Office 36.8% Total foot count (12 months) 8.8m 9.2m 3.2m 36
Slide 37: Top tenant groups by GLA
Top 10 tenant groups by GLA South Africa – at 30 June 2022 % of total GLA 10% 8.1% 8.0% 8% 7.4% 7.4% 6.0% 6.0% 5.9% 5.9% 6% 5.1% 5.1% 3.8% 3.8% 3.7% 3.7% 3.8% 4% 3.4% 2.7% 2.7% 2.2% 2.1% 2% 0% Woolworths Pick 'n Pa y LTD Retailability Foschini Group Mass Mart Group Shoprite Mr Price Group Pepkor Hol
Slide 38: Trading performance
Trading performance South African portfolio % of reported Trading density Primary category growth Total GLA turnover Department Stores: Clicks, Dis-Chem, Edgars, Game, Woolworths 9.8% 27.1% 25.1% Apparel: Mr Price, Foschini, Truworths 15.1% 18.5% 20.7% Food: Checkers, Pick ‘n Pay, Liquour stores, Fo
Slide 39: Leasing activity
Leasing activity South Africa New lettings and renewals Rental reversion as Average of Tenant Gross Rentable Reversion % of average Contractual Lease Period retention Lettable Area % of Total Leasing Area (m2) rate monthly rental Escalation Rate (Year) rate by area (m²) renewal workload Retail 118 6
Slide 40: Operations
Operations South Africa – 12 months average ending 3O June 2022 Historic statistics updated for most recent available information Tenant Turnover (R’m) Effort ratio (%) 20% 8 000 Millions 7 000 18.5% 16% 6 000 5 000 6 161 12% 2.3% 2.1% 1.3% 0.8% 0.9% 4 000 1.2% 0.1% 1.7% 11.0% 10.4% 11.1% 8% 10.0% 9
Slide 41: Operations
Operations South Africa Cost to income (%) Receivables and collections (R’m) – 100% of properties 45.0 44.4 43.4 3 840 3 217 40.0 7.3 6.5 1.2 1.1 1 920 (55) 35.0 38.6 4.5 4.4 Management costs 30.0 1.9 0.4 1.8 and other expenses 960 2.2 25.0 Maintenance costs 480 20.0 Contractor service 240 level agr
Slide 42: SA valuations bridge (R’m)
SA valuations bridge (R’m) 2.6% 23 500 571 23 205 100% 23 000 2% 2% 3% 6% 2% 5% 58 22 662 80 8% 97 27 45 4% 143 22 500 260 (139) (R’m) 22 000 (1 114) 21 500 21 000 t 21 d) lk ter ll ds n er ate nc 22 20 s ol Wa a Ma n Gle rn G rec i 20 e ry ( na l arw et dla e Co pe kP e Jun rbu Ca Cle m ers W oo Th
Slide 43: Current projects
Current projects Mall Project Completion date Cost/Budget Yield Status The Glen KFC drive-through September 2022 R4 850 000 14.3% Complete Clearwater Mall Piazza up-grade September 2022 R9 400 000 - Complete Somerset Mall New Checkers FreshX November 2023 R60 000 000 - Underway Canal Walk Freedom Ad
Slide 44: Eastern European properties
Eastern European properties Portfolio summary Skopje City Mall The Mall City Center one East City Center one West Skopje, Macedonia Sofia, Bulgaria Zagreb, Croatia Zagreb, Croatia % Ownership 100% 100% 100% 100% GLA 36 702 61 568 47 355 42 282 Vacancy levels 0.0% 2.3% 0.0% 0.0% Total foot count (12
Slide 45: Top tenant groups by GLA
Top 10 tenant groups by GLA Eastern Europe – at 30 June 2022 % of total GLA 10% 8.3% 8.3% 8% 7.2% 7.2% 6% 5.7% 5.7% 4% 3.7% 3.7% 3.1% 2.9% 2.9% 2.2% 2.4% 2.4% 2.3% 2.3% 2.0% 2.0% 2% 1.7% 1.7% 0% Inditex Interspar Peek & H&M LPP Cineplexx C&A Müller Arena New Yorker Cloppenburg Drogeriemarkt June 202
Slide 46: Operations
Operations Eastern Europe – 12 months ending 3O June 2022 Historic statistics updated for most recent available information Turnover (€’m) Effort ratio (%) 180 18% 160 14.6% 11.4% 16% 0.6% 140 143 143 14% 120 14.3% 100 1.4% 44.8% 12% 0.4% 80 0.9% 0.7% 91 88 10% 60 10.6% 8% 9.5% 9.2% 40 20 6% 0 4% Ci
Slide 47: Trading performance
Trading performance Eastern Europe portfolio % of reported Trading density Primary category growth Total GLA turnover Apparel: Peek & Cloppenburg, Zara, H&M, C&A 7.5% 37.8% 44.9% Food: Interspar, Ramstore, Raffy Restaurant, Billa 4.0% 10.9% 12.6% Shoes: Humanic, CCC, Mat Star, Deichmann 1.5% 6.3% 7.
Slide 48: 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 17 641 6.5% 12.9% 4.5% 4.8 9.4% New leas
Slide 49: Operations
Operations Eastern Europe – receivables and collections Receivables and collections (€’m) 90 82.0 80 (3.3) 70 60 50 40 30 20 101% 10 1.7 (79.4) 1.0 - Net receivables Invoiced Covid-19 relief Collected Net receivables b/fwd and discounts c/fwd Arrears – June 2021: €2.0 million June 2022: €1.2 million
Slide 50: Europe valuations bridge (€’m)
Europe valuations* bridge (€’m) 0.03% 0.2 900.0 800.0 768.4 100.0% 700.0 100.0% 0.8% 1.9% (120.3) 0.7 1.8% 2.8 573.6 600.0 0.1% (74.7) (3.2) (0.1) 500.0 400.0 300.0 200.0 100.0 0.0 21 e ric a ll fia st - - 22 20 ad lgr old) go old) Ma So Ea reb est b 20 Jun e e d o (s Ci ty all, n e g e W re Jun e i
Slide 51: Current projects
Current projects Current Mall Project Completion date Cost/Budget Yield Status Skopje City Mall Repositioning December 2021 €5 850 000 10.0% Complete The Mall, Sofia Bathroom upgrade (phase 1) Q2 2023 €773 000 - Underway The Mall, Sofia Bathroom upgrade (phase 2) Q3 2023 €700 000 - Underway 51
Slide 52: Sub-Saharan Africa properties
Sub-Saharan Africa properties Portfolio summary Ikeja City Mall Accra Mall West Hills Mall Kumasi City Mall % Ownership 75.0% 23.5% 29.4% 49.0% GLA 22 223 21 311 28 272 18 534 Vacancy levels 0% 5.2% 23.3% 7.8% Total foot count (12 months) 6.3m 5.7m 4.6m 8.1m 52
Slide 53: Operations
Operations Sub-Saharan Africa – 12 months ending 30 June 2022 Historic statistics updated for most recent available information Turnover ($m) Turnover (Cedi ‘m) 80 400 10.1% 60 300 3.0% 313 40 47 200 13.6% 9.1% 2.7% 3.8% 20 100 151 142 22 21 0 0 Accra Mall West Hills Mall Kumasi City Mall Accra Mall
Slide 54: Currency and interest rate analysis
Currency and interest rate analysis Sub-Saharan Africa Cedi rental Cedi/USD 600 7.0 500 6.0 400 5.0 4.0 300 3.0 200 2.0 100 1.0 - - Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Naira/USD 1 Month LIBOR Rate 500 3.0 400 2.5 2.0 300 1.5 200 1.0 100 0
Slide 55: Segmental performance
Segmental performance South Africa Eastern Europe Sub-Saharan Africa 30 June 2022 30 June 2021 30 June 2022 30 June 2021 30 June 2022 30 June 2021 R’000 R’000 R’000 R’000 R’000 R’000 Revenue 2 597 851 2 559 028 285 337 - 237 575 222 311 Lease revenue 1 830 134 1 813 864 233 448 - 183 759 184 278 Non
Slide 56: LTV calculations
LTV calculations 30 June 2022 30 June 2021 Fully Fully SA REIT consolidated SA REIT consolidated LTV LTV LTV LTV Hyprop total assets 37 276 317 37 276 317 26 878 084 26 878 084 Less: Goodwill and intangible assets (54) (1 141) (20 133) (20 133) Financial asset (297 235) Cash and cash equivalents (1
Slide 57: Bank and DCM debt profile
Bank and DCM debt profile as at June 2022 On balance sheet debt by lender On balance sheet by currency Standard Bank Group 16.0% 19.6% Nedbank 29.6% ZAR Bank 4.4% RMB USD 9.5% 9.9% Eerste Bank 47.3% ZAR DCM DSK/OTP Bank 7.1% EUR Syndicate Bank 20.2% 20.4% DCM 16.0% 57
Slide 58: Debt maturity profile
Debt maturity profile as at June 2022 South African Debt (ZAR’m) Jun 2022 Dec 2021 Jun 2021 1500 1 425 Property value (Rbn) 22.7 22.4 23.2 500 600 LTV 26.09% 14.97% 20.41% 1000 Weighted average cost of debt 950 959 868 7.6% 7.6% 7.8% 500 847 (incl. hedges) 450 452 500 548 Weighted average loan tenor
Slide 59: Investment property and capital expenditure
Investment property and capital expenditure 30 June 2022 30 June 2021 30 June 2020 South Africa R25.0bn (63%) R25.4bn (59%) R27.0bn (56%) Hyprop share R22.7bn (65%) R23.2bn (70%) R24.7bn (68%) Hyprop’s effective interest Exit cap rate range 6.8% - 10.0% 6.8% - 9.3% 6.8% - 9.0% Weighted average exit
Slide 60: Equity bridge
Equity bridge Hyprop Group (R’m) 232 21 000 66 219 459 45 9 20 814 (1) (15) 876 (450) (1) 20 500 1 053 20 000 (1 035) 19 500 19 357 19 000 18 500 NAV Net Property Derecognition Other Impairments Loss on FCTR Non-controlling Tax Distribution Share Business Other NAV June 2021 operating revaluation Of
Slide 61: 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 62: Investor Relations
Investor Relations Lizelle du Toit - [email protected]