Hyprop Investments Limited · JSE:HYP

Hyprop Investments — H1 2017 Earnings Presentation

57 slides from Hyprop Investments's earnings presentation, Dec 4, 2017

  1. Slide 1: Interim Results

    INTERIM RESULTS For the 6 months ended 31 December 2016

  2. Slide 2: Strategic & Operational Overview

    STRATEGIC & OPERATIONAL OVERVIEW Canal Walk (Cape Town, Western Cape)

  3. Slide 3: Strategy & Overview

    STRATEGY & OVERVIEW South African REIT Focused on emerging markets (South Africa, sub-Saharan Africa and South-Eastern Europe) Ownership of shopping centres, distinguished by:  Quality, dominance and location  Middle-to-higher income consumers  Mix of flagship national and international retailers

  4. Slide 4: Financial Highlights

    FINANCIAL HIGHLIGHTS 31 Dec 2016 31 Dec 2015 % Change Distribution 347,3 cps 297,8 cps 16,6% 31 Dec 2016 30 Jun 2016 % Change Market capitalisation (Rbn) 29,1 31,6 (7,9%) Total assets (Rbn) 34,4 33,8 1,7% Loan to value (%) 29,7 30,8 (3,7%) NAV (R per share) 98,47 94,50 4,2% Gross cost to income rati

  5. Slide 5: Distribution Growth

    DISTRIBUTION GROWTH Cents per share 700 14,2% 15,0% 620 600 11,3% 543 6,0% 500 472 424 14,9% 16,6% 400 13,4% 347 13,7% 16,3% 322 9,5% 13,1% 280 298 300 4,5% 7,5% 263 231 241 211 213 200 100 0 2013 2014 2015 2016 2017 1st Half 2nd Half Total % growth 5

  6. Slide 6: Investment Profile

    INVESTMENT PROFILE Investments Distributable income Held for sale Sold R673m * Held for sale Sold R11m R235m R43m South-Eastern Europe South-Eastern Europe R2,6bn R76m 1% 2% 1% 7% 7% Sub-Saharan Africa 4% Sub-Saharan Africa (excluding SA) 3% (excluding SA) R31m R4,07bn 12% 78% 85% Core South African

  7. Slide 7: Acquisitions

    ACQUISITIONS SKOPJE CITY MALL Dominant mall in Skopje, capital of Location Macedonia Acquisition cost EUR 92 million Rentable area 36 128m² Number of stores 131 Average rent EUR 17 /m² Inditex Group, Ramstore, Cineplex, Major tenants Terranova, Koton, LC Waikiki Transfer date October 2016 Skopje Cit

  8. Slide 8: Disposals

    DISPOSALS SALE OF NON-CORE ASSETS Property Price Transfer date Somerset Value Mart R185 m Sep 16 Glenfield Office Park R180 m Dec 16 Willowbridge South R460 m Mar 17 Willowbridge North R225 m Next FY* Total R1 050 m * Expected date of transfer Willowbridge Shopping centre (Western Cape) 8

  9. Slide 9: Developments

    DEVELOPMENTS Additional rentable Value Extensions completed area (m²) (Rm) Date Somerset Mall - H&M - 15,8 Oct 16 Atterbury Value Mart - Checkers 1 042 31,0 Nov 16 Underway Canal Walk La Piazza enclosure 600 41,6 Nov 17 Rosebank Mall extension 4 300 127,0 Apr 18 The Glen foodcourt 1 200 90,9 Apr 18

  10. Slide 10: Operating Performance

    OPERATING PERFORMANCE Rosebank Mall (Johannesburg, Gauteng)

  11. Slide 11: SA Property Locations

    SA PROPERTY LOCATIONS Super regional mall Canal Walk (80%) Large regional malls CapeGate Clearwater Rosebank Mall H Y D E P A R K C O R N E R Somerset Mall The Glen (75,15%) Woodlands Regional mall Hyde Park Corner Value/ lifestyle centre Atterbury Value Mart 11

  12. Slide 12: Performance & Market Conditions

    PERFORMANCE & MARKET CONDITIONS Vacancies still low Rental arrears remain low (0,5%) Retaining good escalations Renewals on track Rental growth lower due to large tenant renewals Trading density slowed - SA apparel retailers under-performed Status of Edcon and Stuttafords Clearwater Mall (Gauteng) 1

  13. Slide 13: Leasing Terms

    LEASING TERMS 12% Rental growth Contractual escalation 10% 8,3% 8,2% 8,2% 8,1% 8,0% 8% 7,4% 7,6% 7,3% 6,3% 6% 4% 3,3% 2% 0% Jun 2013 Jun 2014 Jun 2015 Jun 2016 Dec 2016 13

  14. Slide 14: Leasing Activity

    LEASING ACTIVITY 31 Dec 2016 % of total Rentable area Rental growth Contractual Leasing portfolio (m²) (%) escalation (%) No. of leases Retail 9,1 63 851 3,8 8,0 213 Offices 14,4 9 389 0,4 8,1 25 Total 9,6 73 240 3,3 8,0 238 31 Dec 2016 31 Dec 2015 Rentable area Rentable area Lease renewal process (

  15. Slide 15: Balance of Leases Outstanding

    BALANCE OF LEASES OUTSTANDING Balance outstanding Property Rentable area (m²) No. of leases m² CapeGate 63 777 12 8 388 Hyde Park Corner 28 583 23 6 678 Somerset Mall 69 032 22 6 622 The Glen 79 704 21 6 363 Canal Walk 148 252 30 6 159 Rosebank Mall 62 413 16 1 134 Clearwater 86 867 11 732 Woodlands

  16. Slide 16: Lease Expiry Profile

    LEASE EXPIRY PROFILE 2017 / 2018 Total Expiring % Rentable rentable area area area of Retail (m²) (m²) centre Canal Walk 148 252 18 712 13 Somerset Mall 69 032 12 352 18 CapeGate 63 777 7 958 12 Atterbury Value Centre 48 847 7 795 16 Clearwater 86 867 7 768 9 The Glen 79 704 7 765 10 Woodlands 71 63

  17. Slide 17: Vacancies

    VACANCIES Vacancies 31 Dec 2016 30 Jun 2016 31 Dec 2015 Retail (%) 0,8 0,8 0,9 Offices (%) 3,9 4,5 7,2 Total (%) 1,1 1,1 1,5 Large vacancies in portfolio The Glen 2 376m² CapeGate 1 461m² Canal Walk 1 336m² Somerset Mall (Western Cape) 17

  18. Slide 18: Trading Overview

    TRADING OVERVIEW Trading density growth Trading density growth Jul – Dec 2016 10% 10% 8% 8% 7,2% 6,0% 6% 5,5% 5,6% 6% 4% 3,4% 4% 3,5% 3,2% 2,5% 2,2% 2% 2% 1,2% 0% 0% Dec 2013 Dec 2014 Dec 2015 Dec 2016 Jul Aug Sep Oct Nov Dec 18

  19. Slide 19: Rent Ratio

    RENT RATIO Rental as % of turnover 10% 8% 7,8% 7,5% 6,8% 6,7% 6% 4% 2% 0% Dec 2013 Dec 2014 Dec 2015 Dec 2016 19

  20. Slide 20: Investment in Sub-Saharan Africa

    INVESTMENT IN SUB-SAHARAN AFRICA (excluding SA) West Hills Mall (Accra, Ghana) West Hills Mall, Accra, Ghana

  21. Slide 21: SSA - Property Locations

    SSA - PROPERTY LOCATIONS Hyprop ownership Accra, Ghana  West Hills Mall 16,8%  Accra Mall 17,6%  Achimota Retail Centre 28,1% Nigeria Kumasi, Ghana Ghana  Kumasi City Mall 28,1% Lagos, Nigeria  Ikeja City Mall 75,0% Lusaka, Zambia  Manda Hill Shopping Centre 68,8% Zambia 21

  22. Slide 22: Performance & Market Conditions

    PERFORMANCE & MARKET CONDITIONS Manda Hill Centre, West Hills Mall and Accra Mall - average income growth of 5,4% Good performance from Accra Mall post food court completion Good December trading from centres (except Manda Hill) Manda Hill Shopping Centre (Lusaka, Zambia) Manda Hill affected by more

  23. Slide 23: Income Producing Properties

    INCOME PRODUCING PROPERTIES INVESTMENT IN SUB-SAHARAN AFRICA (EXCL. SA) Vacancy % Vacancy % Rentable area rentable area rentable area Centre City & country m² 31 Dec 2016 30 Jun 2016 Ikeja City Mall Lagos, Nigeria 22 349 - 2,3 Manda Hill Lusaka, Zambia 40 561 6,1 4,4 Accra Mall Accra, Ghana 21 240 -

  24. Slide 24: Currencies

    CURRENCIES EXCHANGE RATE VOLATILITY 1,25 1,20 1,15 1,10 1,05 1,00 0,95 0,90 0,85 0,80 Jun 2016 Jul 2016 Aug 2016 Sep 2016 Oct 2016 Nov 2016 Dec 2016 Ghana Nigeria Zambia RSA 24

  25. Slide 25: Investment in South-Eastern Europe

    INVESTMENT IN SOUTH- EASTERN EUROPE Skopje City Mall (Macedonia) West Hills Mall, Accra, Ghana

  26. Slide 26: South-Eastern Europe Property Locations

    SOUTH-EASTERN EUROPE PROPERTY LOCATIONS Hyprop ownership (60%) Serbia Macedonia, Skopje  Skopje City Mall Montenegro Serbia, Belgrade  Delta City Belgrade Montenegro, Podgorica  Delta City Belgrade Macedonia 26

  27. Slide 27: Performance & Market Conditions

    PERFORMANCE & MARKET CONDITIONS Trading conditions and consumer spend remains positive Vacancies and rental arrears low Good turnover density and foot count growth Delta City Mall Podgorica (Montenegro) 27

  28. Slide 28: Income Producing Properties

    INCOME PRODUCING PROPERTIES Rentable Vacancy % Rentable Centre City & country area m² area Delta City Belgrade, Serbia 29 876 0 Delta City Podgorica, Montenegro 23 729 0 Skopje City Mall Skopje, Macedonia 36 128 1,7 Potential expansions: Belgrade (Serbia) Podgorica (Montenegro) Skopje (Macedonia) 

  29. Slide 29: Financial Results

    FINANCIAL RESULTS Woodlands (Pretoria, Gauteng)

  30. Slide 30: Net Income

    NET INCOME YEAR ON YEAR CHANGE R’000 900 000 16 071 850 000 58 351 14 403 (4 393) (4 976) 800 000 58 685 750 000 861 424 700 000 723 283 650 000 600 000 31 Dec 2015 Existing South-Eastern Sub-Saharan Properties Net Fees and 31 Dec 2016 portfolio Europe Africa sold interest other (Excl. SA) (SA) 30

  31. Slide 31: Distributable Earnings Statement

    DISTRIBUTABLE EARNINGS STATEMENT 31 Dec 2016 31 Dec 2015 % (R’000) (R’000) Change South African property portfolio 968 198 914 656 5,9 Investments in sub-Saharan Africa (excl. SA) 30 884 35 277 (12,5) Investments in South-Eastern Europe 58 351 - Fund management expenses (32 826) (31 558) 4,0 Net int

  32. Slide 32: Reconciliation to Dividend Declared

    RECONCILIATION TO DIVIDEND DECLARED 31 Dec 2016 31 Dec 2015 (R’000) (R’000) Total distributable earnings 861 424 723 283 Total shares in issue at period end 248 441 278 243 256 092 Treasury shares in issue (410 659) (410 659) Shares in issue for distributable earnings 248 030 619 242 845 433 Dividen

  33. Slide 33: Balance Sheet

    BALANCE SHEET EXTRACTS 31 Dec 2016 31 Dec 2015 (Rm) (Rm) % Change Hyprop’s share Investment property (South Africa) 27 241 26 502 2,8 Investments in sub-Saharan Africa 4 701 5 061 (7,1) (excl. SA) Held for sale 917 1 244 Other assets 1 010 427 Minority share 546 616 Total assets 34 415 33 849 1,7 To

  34. Slide 34: Property Valuations

    PROPERTY VALUATIONS SOUTH AFRICAN PORTFOLIO* Rentable Hyprop % change area share (from Value Cap rate Category (m²) (Rm) Jun 2016) (R/m2) (%) Shopping centres 649 499 25 938 2,6% 43 974 6,3 ̶ 7,0 Value centres 64 682 1 402 6,1% 21 674 7,8 Stand-alone offices 23 811 347 5,8% 14 580 8,5 ̶ 9,5 Total 73

  35. Slide 35: Property Valuations

    PROPERTY VALUATIONS SUB-SAHARAN AFRICA & SOUTH-EASTERN EUROPE Rentable Cap rate Category area (m²) Value / m² (%) Sub-Saharan Africa 127 079 USD 4 333 8,0 ̶ 9,0 South-Eastern Europe 89 733 EUR 3 331 8,2 ̶ 8,9 35

  36. Slide 36: Debt Management

    DEBT MANAGEMENT 31 Dec 2016 30 Jun 2016 (Rm) (Rm) Bank debt 8 968 9 344  South Africa 1 830 2 992  USD (Rand equivalent) 4 580 4 842  EUR (Rand equivalent) 2 558 1 510 Debt capital market funding (DCM) 2 300 1 640  Corporate bonds 2 300 1 200  Commercial paper - 440 Cash and cash equivalents (7

  37. Slide 37: Sources of Funding

    SOURCES OF FUNDING R million 1 830 16% 31 Dec 2016 Bank facilities (SA) 2 992 27% 30 Jun 2016 % of total debt 2 300 20% DCM funding (SA) 1 640 15% USD debt 4 580 41% (Rand equivalent) 4 842 44% EUR debt 2 558 23% (Rand equivalent) 1 510 14% 0 1000 2000 3000 4000 5000 6000 37

  38. Slide 38: Debt at Fixed Rates

    DEBT AT FIXED RATES* 31 Dec 2016 30 Jun 2016 (%) (%)  South African debt 100,5 89,6  USD debt 70,9 72,4 * Excludes EUR denominated debt 38

  39. Slide 39: Debt Maturities

    DEBT MATURITIES* 31 Dec 2016 30 Jun 2016 (years) (years) Fixed rates and swaps  South African debt 4,4 4,9  USD debt 3,2 3,7 Facilities  South African debt 2,7 2,4  USD debt 3,1 3,6 * Excludes EUR denominated debt 39

  40. Slide 40: Cost of Funding

    COST OF FUNDING 31 Dec 2016 30 Jun 2016 (%) (%) South African debt 8,9 8,9 USD debt 4,6 4,6 EUR debt 1,7 1,7 40

  41. Slide 41: Outlook & Focus

    OUTLOOK & FOCUS West Hills Mall (Accra, Ghana)

  42. Slide 42: Outlook & Focus: South Africa

    OUTLOOK & FOCUS SOUTH AFRICA Outlook  Low economic growth for 2017  Difficult consumer market but credit seems stable  Competitive market between SA and foreign retailers Focus  Complete lease renewals and improving trading environment  Continue with refurbishments and extensions  Disposal of

  43. Slide 43: Outlook & Focus: Sub-Saharan Africa

    OUTLOOK & FOCUS SUB-SAHARAN AFRICA (Excl. SA) Outlook  Closer to bottom of cycle  Modest economic growth  Better commodity prices, lower inflation and interest rates Focus  Improving operational performance  Renewing of asset based finance will improve cashflow  Bed-down Kumasi after opening I

  44. Slide 44: Outlook & Focus: South-Eastern Europe

    OUTLOOK & FOCUS SOUTH-EASTERN EUROPE Outlook  Sustained economic growth  International brands expanding  Investment opportunities becoming scarcer Focus  Unlock expansion opportunities  Complete refinancing of bridge loans  Further acquisitions and new developments  Establish a management pre

  45. Slide 45: Prospects

    PROSPECTS FY 2017: Dividend growth of ±12% Delta City Belgrade (Serbia) 45

  46. Slide 46: Appendices

    APPENDICES Rosebank Mall (Johannesburg, Gauteng)

  47. Slide 47: Company Structure: South African Portfolio

    COMPANY STRUCTURE SOUTH AFRICAN PORTFOLIO Clearwater Mall Somerset Mall Hyde Park Corner Rosebank Mall Woodlands Boulevard CapeGate 100% owned Offices Atterbury Value Mart Cradock Heights SOUTH AFRICA Canal Walk (80%) The Glen (75,15%) Co-owned Offices: Glenwood Held-for-sale Lakefield Offices: Some

  48. Slide 48: Company Structure: Sub-Saharan African Portfolio

    COMPANY STRUCTURE SUB–SAHARA AFRICAN PORTFOLIO Hyprop Investments Mauritius 37,5% 50% 75% AttAfrica 50% Manda Hill Ikeja City Mall SUB- (Mauritius) (Zambia) (Nigeria) SAHARAN 100% owned AFRICA 47% 45% 75% 75% West Hills Achimota Retail Kumasi City Accra Mall Mall Centre Mall (Ghana) (Ghana) (Ghana)

  49. Slide 49: Company Structure: South-Eastern Europe Portfolio

    COMPANY STRUCTURE SOUTH-EASTERN EUROPE PORTFOLIO Hystead Limited (established in the UK ) SOUTH- 100% 100% 100% EASTERN 60% owned EUROPE Delta City Belgrade Delta City Podgorica Skopje City Mall (Serbia) (Montenegro) (Macedonia) 49

  50. Slide 50: Track Record

    TRACK RECORD Rbn LTV % 36 33,4 60% Investment property 33,4 32 29,4 31,6 Market cap 28,6 29,1 28 26,4 LTV % 45% 24 20,2 19,3 20 18,7 17,7 19,0 17,4 26,2% 30% 16 30,8% 29,7% 12,9 26,6% 12 23,1% 22,9% 23,1% 8 15% 4 0 0% Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Dec 2016 50

  51. Slide 51: Debt Maturity Profile

    DEBT MATURITY PROFILE FIXED RATES AND SWAPS* Rm Average maturity: 1400  South African debt 4,4 years  USD debt 3,2 years 1200 Bank facilities 1000 USD Funding 800 600 400 200 0 June 18 June 19 June 20 June 21 June 22 June 23 June 24 * Excludes EUR denominated debt 51

  52. Slide 52: Debt Maturity Profile

    DEBT MATURITY PROFILE BANK FACILITIES AND DCM Rm Average maturity: 1 750  South African debt 2,7 years  USD debt 3,1 years 1 500 Bank facilities 1 250 Bonds / Commercial peper 1 000 USD Funding 750 500 250 - June 18 June 19 June 20 June 21 June 22 June 23 June 24 52

  53. Slide 53: % Gross Rent to Turnover

    % GROSS RENT TO TURNOVER Deterioration % Gross rent to turnover Improvement 11% 10% 11% 10% Portfolio average: +7,8% (2015: +7,5%) 9% 10% 9% 4% 3% 9% 6% 5% 8% 8% 8% 6% 8% 7% 3% 7% 2% 7% 6% 6% 5% 1% 4% 4% 3% 2% 1% 0% The Glen Hyde Park Canal Walk Atterbury Rosebank Clearwater Woodlands Somerset CapeG

  54. Slide 54: Trading Density

    TRADING DENSITY Per month (R/m²) 5 000 4 500 1% Average portfolio growth: +3,4% (2015: +5,6%) 4 000 4 232 4% 5% 3 500 3 622 3 513 3% 5% 3 000 3 109 1% 2% 6% 2 998 6% 2 773 12% 2 500 2 686 2 681 2 448 2 343 2 000 1 500 1 000 500 0 Hyde Park Canal Somerset Clearwater Willowbridge Rosebank Woodlands Ca

  55. Slide 55: Top 8 SA Properties

    TOP 8 SA PROPERTIES Canal Walk Clearwater Woodlands (80% undivided share) Rosebank Mall Region Cape Town Region Johannesburg Region Johannesburg Region Pretoria Total rentable Total rentable Total rentable Total rentable 158 429 86 867 62 413 71 638 area (m²) area (m²) area (m²) area (m²) Vacancy le

  56. Slide 56: Top 8 SA Properties (cont.)

    TOP 8 SA PROPERTIES (cont.) The Glen Somerset Mall (75,15% undivided share) Hyde Park Corner CapeGate Region Cape Town Region Johannesburg Region Johannesburg Region Cape Town Total rentable Total rentable Total rentable Total rentable 69 032 79 704 39 088 63 777 area (m²) area (m²) area (m²) area (

  57. Slide 57: Disclaimer

    DISCLAIMER FORWARD-LOOKING STATEMENTS  This document contains forward-looking statements that, unless otherwise indicated, reflect the group’s expectations as at 31 December 2016  Actual results may differ materially from the group’s expectations if known and unknown risks or uncertainties affect

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