INVESTMENTS LIMITED
CapeGate, Brackenfell, Cape Town INVESTMENTS LIMITED Roadshow May 2019 Contact Details INVESTMENTS LIMITED
Hyprop Investments Limited
Name Position Contact
[email protected] Morne Wilken Chief Executive Officer 011 447 0090 [email protected] Brett Till Chief Financial Officer 011 447 0090 [email protected] Mari Hattingh Financial Manager 011 447 0090
Standard Bank Debt Capital Markets
Name Position Contact
+27 (0) 11 344 5277 Carl Wiesner DCM Transactor [email protected]
2 Agenda
INVESTMENTS LIMITED
Hyprop at a glance – Pg. 4 Financial performance – Pg.10 Funding matters – Pg. 12
Outlook & focus – Pg. 20 Questions & answers – Pg. 22 Appendices – Pg. 23
3 INVESTMENTS LIMITED
Hyprop at a glance
Canal Walk, Cape Town 4 Group overview
INVESTMENTS LIMITED
Hyprop Investments Limited
Europe South Africa Hystead Limited 60% owned (established in the UK) Clearwater Mall Somerset Mall Delta City Belgrade Delta City Podgorica (Serbia) (Montenegro) 100% 100% Hyde Park Corner Rosebank Mall Owned Owned Skopje City Mall The Mall Sofia (Macedonia) (Bulgaria)
Woodlands Boulevard CapeGate 90% City Centre One – East City Centre One – West Zagreb (Croatia) Zagreb (Croatia) Owned
Atterbury Value Mart Offices Cradock Heights
Co-owned Canal Walk (80%) The Glen (75.15%) 100% Owned Rest of Africa
Hyprop Investments37.5% Mauritius
37.5% 50%
AttAfrica (Mauritius) 75% 50% Manda Hill (Zambia)
Accra Mall (Ghana) Achimota Retail Kumasi City Mall West Hills Mall Ikeja City Mall (47%) Centre (Ghana) (75%) (75%) (Ghana) (45%) (Nigeria) 5 Stratco
INVESTMENTS LIMITED
• CEO of MAS REI (2018) • CFO of Mentor Africa Limited • Executive Director at Blend (2007 ‒ 2017) Property Group • CEO of Attacq Limited (2011 – 2017) • Group CFO of Rebhold / • Manager: Strategic Mvelaphanda Group Investments at Royal Bafokeng • COO of Attacq limited (1999 ‒ 2007) Holdings (2008 – 2011) • Extensive experience in: • Investment analyst at BJM • Extensive experience in property development, investment, finance ‒ Corporate finance • Extensive experience in: and corporate restructuring Morné Wilken (47) Brett Till (50) ‒ Financial reporting & Wilhelm Nauta (47) ‒ Investments • His key focus at Attacq was the management CEO CFO CIO ‒ M&A roll-out of the Waterfall ‒ Taxation & commercial law B. Eng (Hons) development in Gauteng, CA (SA) CA (SA); EDP (Wits) ‒ Business strategy including Mall of Africa Joined Dec 2018 Joined Oct 2018 Joined Jul 2016
• Project architect at ORT • Regional Executive overseeing • Regional Executive overseeing International Terminal Gauteng & Africa Western Cape & Pretoria Building (2005 – 2009) portfolio • Portfolio Manager – European • Development Director at investments (2015 – 2017) • Previously GM of Canal Walk Compass Group, USA • Joined Hyprop as Portfolio • Previously GM of Menlyn Park (2003 – 2005) Manager Shopping Mall • Various retail development • Joined Colliers RMS and GM at roles at Old Mutual Properties Westgate Shopping Centre Steven Riley (49) (1998 – 2003) Nicole Greenstone (50) Wayne Abegglen (52) Development Executive Regional Executive Regional Executive B. Arch, PDP (UCT), PMD (GIBS) BA (Hons), HDIP ED, Nat Dip Real Estate (valuations) Higher Diploma (HR) Joined Nov 2009 Joined Oct 2003 Joined Nov 2003
6 Focus areas, highs, lows & challenges
INVESTMENTS LIMITED Focus Areas
South South-Eastern Sub-Saharan Africa Europe Africa
Highs
• Distributable income from SA up 9% (yoy to Dec 2018) • R750m new bonds issued at a weighted average margin of 1.62% • Distributable income from Europe up 17% (yoy to Dec 2018) • Refinance of EUR debt: €397m • Stuttafords space all re-let • Disposal of last non-core asset – Lakefield • South-Eastern Europe portfolio vacancy <0.1%
Lows
• Moody’s credit downgrade • African impairment / reduced distribution
Challenges & Outlook
• Managing weakening economy • Growth in distributions • Restore Moody's rating to investment grade • Edcon restructure • Reducing exposure to Africa • Repositioning our malls • Refinancing debt
7 Edcon exposure ‒ 31 December 2018 South Africa INVESTMENTS LIMITED
% of gross income Exposure per property
2,5% 2,3% 2,1% 2,1% 7,6% % of gross income % of GLA 2,0% 1,5% 1,5% 1,5% 1,3% 1,2%
Edcon 1,0% 0,9% 0,8% 0,7% 0,6% 0,7% Other tenants 0,4% 0,4% 0,5% 0,2% 0,1% 0,1% 0,1% 92,4% 0,0% Canal Clearwater The Glen Rosebank Mall Woodlands CapeGate Somerset Mall Hyde Park Atterbury Walk Mall Shopping Boulevard Mall Corner Value Mart Centre % of GLA GLA reduction - m²
9,4% 66 781
Edcon Other tenants
50 871 90,6%
2019 2020 8 Sustainability South Africa INVESTMENTS LIMITED 2018 2017 GRESB benchmark 61% 42% CDP carbon score reduced B+ A-
CDP water First Hyprop submission
Clearwater Mall now generates 15% of total energy from solar power
Savings during the past 6 months 24.5% 5.4% 83% Water saving Electricity Waste recycling
9 INVESTMENTS LIMITED
Financial performance
CapeGate, Brackenfell, Cape Town 10 Key group performance metrics
INVESTMENTS LIMITED
Distributable earnings - Rm Distribution – cps Loan-to-value - % 600 40 1000 5.0% 5.6% 2.5% 6.6% 30 32,8 900 400 31,2 6.4% 800 376,3 385,6 383,8 20 985 330,6 21,2 700 933 200 20,0 10 600 500 0 0 31 Dec 2017 31 Dec 2018 Dec 2017 Dec 2018 30 June 2018 31 Dec 2018
Group Excl Africa Based on IFRS See through* * Hystead: Guaranteed debt and 60% of NAV Gross assets - Rbn^ Share price - R NAV per share - R 50 120 104 0.7% 40 100 -20.4% 103 103,7 103,0 80 102 30 -2.9% 60 101 -3.0% 20 42,9 43,2 102,3 40 81,5 100 100,6 10 20 99 99,9 0 0 98 30 June 2018 31 Dec 2018 30 June 2018 31 Dec 2018 30 June 2018 31 Dec 2018
^ Including 60% of Hystead gross assets Based on IFRS TNAV**
** Incl. Hystead: 60% debt and 60% of NAV 11 INVESTMENTS LIMITED
Funding matters
Rosebank Mall, Johannesburg, Gauteng 12 Bank & DCM debt profile
INVESTMENTS LIMITED On balance sheet by lender On balance sheet sources of funding Dec 2018 (Total R8.4bn) Dec 2018 (Total R8.4bn)
DCM funding ZAR bank facilities 34% 5% 4% Investec
5% OMSFIN USD bank facilities 61% Standard Bank 54% 3% RMB 34% ZAR DCM facilities Group
Group (incl. guaranteed debt) by lender Group (incl. guaranteed debt) sources of funding Dec 2018 (Total R13.1bn) Dec 2018 (Total R13.1bn)
DCM funding 2% Investec 3% ZAR bank facilities 21% Nedbank EUR bank facilities 40% 10% 3% OMSFIN 21% ZAR DCM facilities Standard Bank 38% Group 26% RMB USD bank facilities 36%
13 Total debt maturity – 31 December 2018 Rand equivalent – includes guaranteed debt in Hystead and 100% of Ikeja INVESTMENTS LIMITED
Total debt (Rm)
3500
3 019 3000 2 821 2 699
2500
2000 1 796
1500
1000 824 863 650 452 500 400 246 317 250 348
0 Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q1: 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2025
14 Total debt maturity – 31 March 2019
(After refinancing and proposed utilisation of new bond issues) INVESTMENTS LIMITED Rand equivalent – includes guaranteed debt in Hystead and 100% of Ikeja Total debt (Rm)
3500
3 019 3000 2 687 2 821 2 687
2500
2000
1 438 1500
1 074 Refinanced 1000 824 863 650 452 500 500 400
246 317 348 Refinanced 0 Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q2: Q3: Q4: Q1: Q1: Q2: Q1: 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2024 2024 2025
Q2:2023
15 Key credit metrics INVESTMENTS LIMITED
31-Dec-18 30-Jun-18 30-Jun-17 Hyprop Hyprop Hyprop Hyprop Group (including Hyprop Group (including Hyprop Group (including Amounts in R’000 Hystead at 100%) Hystead at 100%) Hystead at 100%) Income statement ratios: EBITDA (including interest income) 1 357 447 1 906 688 2 592 038 3 146 661 2 439 758 2 805 507 EBITDA 1 196 229 1 680 536 2 279 488 2 834 111 2 145 581 2 511 069
Interest paid 300 079 552 742 594 823 771 626 630 679 688 697 Interest received (161 218 ) (226 151) (312 550 ) (312 550) (294 177) (294 438) Net interest 138 862 326 591 282 273 459 076 336 503 394 259
Interest cover ratio 4.52 3.45 4.36 4.08 3.87 4.07 Debt service cost (gross) 4.52 3.45 4.36 4.08 3.87 4.07 Debt service cost (net) 8.61 5.15 8.08 6.17 6.38 6.37
Cash flow statement ratios: Cash generated from operations 1 054 372 2 133 136 2 159 602 Interest received 54 133 283 289 266 423 Interest paid (282 721) (580 280) (441 049)
Cash generated from operations / interest paid 3.73 3.68 4.90 Cash generated from operations / net interest paid 4.61 7.18 12.37
LTV Bond Programme 35.27% 33.57% 35.94% Hyprop / Moody’s (see next slide) 34.18 – 43.02% 32.69% - 41.63%
Unencumbered assets (SA only) Total unencumbered assets as % of total assets 31.53% 40.73% 41.79% Total unencumbered property assets as % of total property assets 18.78% 27.57% 27.60%
Borrowing Covenants LTV (Banks / DCM ) 50 – 70% / 55% 50 – 70% / 55% 50 – 70% / 55% Interest cover (Banks) 1.75 – 2.0 1.75 – 2.0 1.75 – 2.0 16 LTV calculations
Comparison between Hyprop and Moody’s methodologies INVESTMENTS LIMITED
Dec 2018 (R ‘000) Jun 2018 (R ‘000)
Per Moody’s Hyprop Per Moody’s Hyprop Balance Sheet methodology methodology Balance Sheet methodology methodology Dec 2018 Dec 2018 Dec 2018 Jun 2018 Jun 2018 Jun 2018
Hyprop total assets 34 785 233 34 785 233 34 785 233 35 012 920 35 012 920 35 012 920
Financial asset - Hystead 176 473 152 556
Hystead total assets 13 941 899 13 217 510
Hystead NAV (total assets - in-country debt) x 60% 4 752 879 4 297 489
Total assets 34 961 706 48 727 132 39 538 112 35 165 476 48 230 430 39 310 409
Hyprop gross debt 8 403 239 8 403 239 8 403 239 7 884 994 7 884 994 7 884 994
Hystead gross debt 12 562 624 12 194 954
Hystead Debt guaranteed by all shareholders (gross) 6 542 190 6 352 742
Hystead Debt guaranteed by PDI (EUR 40m) (659 200) (640 128)
Security from PDI held by Hyprop (EUR 46.8m) (771 489) (748 950)
Total debt 8 403 239 20 965 863 13 514 740 7 884 994 20 079 948 12 848 659
Gross debt / total assets 24.0% 43.0% 34.2% 22.4% 41.6% 32.7%
17 Bonds outstanding
INVESTMENTS LIMITED
Bond Code Issue Date Maturity Size(ZAR’m) Benchmark Spread Initial Tenor HILB05 11-Jul-16 11-Jul-19 358 Jibar 169 3 HILB04 01-Nov-13 01-Nov-19 450 Jibar 154 6 HILB06 11-Jul-16 11-Jul-20 425 Jibar 179 4 HILB07 11-Jul-16 11-Jul-21 317 Jibar 190 5 HILB10 17-Sep-18 17-Mar-22 250 Jibar 144 3.5 HILB08 29-Mar-18 29-Mar-23 452 Jibar 160 5 HILB11 15-Mar-19 15-Mar-24 150 Jibar 175 5 HILB12 15-Mar-19 15-Mar-24 350 Jibar 170 5 HILB09 29-Mar-18 29-Mar-25 348 Jibar 190 7 Total Outstanding 3 100
600
500 500 450 425 452 400 358 348 317 300
R'm 250
200
100
0 HILB05 HILB04 HILB06 HILB07 HILB10 HILB08 HILB11 & 12 HILB09 11-Jul-19 01-Nov-19 11-Jul-20 11-Jul-21 17-Mar-22 29-Mar-23 15-Mar-24 29-Mar-25 2019 2020 2021 2022 2023 2024 2025
18 Rating agency overview
INVESTMENTS LIMITED
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) High quality and well positioned retail portfolio in South Africa (1) Refinancing of existing debt becoming due in the next 18 months (2) Active management and low vacancies (1.9% as of 30 June 2018), producing solid, (2) Size of the portfolio and scale of operations relative to local peers recurring rental income (3) Exposure to the retail sector and the weakening consumer environment (3) Fixed-charge cover of 4.3x and Hyprop's conservative approach to development (4) Growing exposure to retail properties across countries with low ratings in the rest risk of Africa and Central and Eastern Europe (4) Strong track record of access to debt and equity capital
Source: Moody’s Credit Opinion Hyprop Investments Limited 21 February 2019 19 INVESTMENTS LIMITED
Outlook & focus
Woodlands, Pretorius Park, Pretoria East 20 Outlook & focus
INVESTMENTS LIMITED
Hyprop
• Strategy • Recycle capital to support growth • Review debt position • Cash-backed distributions • Restore Moody’s investment grade • Long-term investment decisions
South Africa South-Eastern Europe Sub-Saharan Africa (Excl. SA) • Reposition malls • Strengthen the • Reduce exposure entertainment and Partner with tenants • Active asset management • restaurants • Portfolio approach • Secure rights for extensions
21 INVESTMENTS LIMITED
Questions & answers
Hyde Park Corner, Johannesburg 22 INVESTMENTS LIMITED
Appendices
Clearwater mall, Johannesburg 23 Investment profile – 31 December 2018
INVESTMENTS LIMITED
SA shopping centres Core South African portfolio SA value centres R29.7bn = 73% SA standalone offices 1% Cap rates: 6.3% – 8.8%
68% 4%
8% Sub-Saharan Africa (excl. SA) Hyprop share R3.4bn Total portfolio Cap rates: 7.8% – 9.0% R41bn 19%
South-Eastern Europe Hyprop share R7.9bn Cap rates: 7.0% – 9.3%
24 Distribution growth
INVESTMENTS LIMITED Cents per share
900 8.8%
800 12.1% 757 695 700
600
500 8.3% 9.3% 2.5% 16.6% 8.0% 376 380 386 400 347 348 13.1%
300 89.3%
200 5.6% 100
0 H1 2017 H2 2017 FY 2017 H1 2018 H2 2018 FY 2018 H1 2019
South Africa Sub-Saharan Africa South-Eastern Europe
25 Distributable earnings
Dec 2018 % Dec 2017 June 2018 INVESTMENTS LIMITED R000 Change R000 R000 Revenue 1 631 673 6 1 539 370 3 113 712 Property expenses (587 669) 13 (521 113) (1 049 892) Net property income 1 044 004 3 1 018 257 2 063 820 Other operating expenses (20 649) (27) (28 295) (55 778) Operating income 1 023 354 3 989 962 2 008 042 Net interest (138 862) (14) (161 646) (282 273) Other income 20 425 (11) 22 996 46 671 Dividends received 111 434 41 78 820 182 778 Net income before fair value adjustments 1 016 352 9 930 132 1 955 219
Net income before fair value adjustments 1 016 352 9 930 132 1 955 219 South Africa 833 022 8 771 784 1 590 217 Sub-Saharan Africa 47 177 (11) 52 960 128 275 South-Eastern Europe 136 153 29 105 388 236 727
Distributable earnings 985 240 6 933 127 1 904 514 South Africa 844 682 9 776 326 1 591 673 Sub-Saharan Africa 4 405 (89) 40 025 78 368 South-Eastern Europe 136 153 17 116 776 234 473
26 Gauteng region
Property locations as per the next slide of all the SA assets
H Y D E P A R K C O R N E R
Western Cape region
<1%
14% South Africa 86%
Contribution to DPS CapeGate, Brackenfell, Cape Town 27 Operations South Africa – 31 December 2018 INVESTMENTS LIMITED New lettings & renewals Retail vacancy % of Rentable Rental Contractual 2,0% total area growth escalation 1,5% 1,4% Leasing portfolio (m²) (%) (%) 1,2% 1,1% 1,0% 0,9% 0,8% 0,9% Retail 7.4 49 010 -1.8 7.3 0,5% 0,0% Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 New lettings 2.6 17 447 -2.0 7.2
Lease expiries (retail and office) Renewals 4.8 31 562 -1.6 7.3 40% 31% 30% 25% 18% Offices 13.4 7 920 -7.8 7.8 20% 12% 14% 10% Total 7.9 56 930 -2.2 7.3 0% *2019/2020 *2020/2021 *2021/2022 *2022/2023 *2023+
* Expiries for financial year Jul - Jun
28 INVESTMENTS LIMITED
Croatia
Serbia
Bulgaria
Montenegro
Macedonia
14% South-Eastern Europe 86%
Contribution to DPS The Mall, Sofia, Bulgaria 29 Operations
South-Eastern Europe – 31 December 2018 INVESTMENTS LIMITED
Vacancy - portfolio Lease expiry profile
0,4% 30% 28% 0,3% 0,3% 0,3% 25% 19% 20% 0,2% 0,2% 13% 14% 14% 15% 12% 0,1% 0,0% 10% 0,0% 0,0% 0,0% 5% Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 0% 2019 2020 2021 2022 2023 2024+
New lettings & renewals
% of Rentable Rental Contractual total area growth escalation portfolio (m²) (%) (%)
New lettings 1.7 4 079 9.6 1.7 Renewals 5.0 11 729 0.1 1.8 Total 6.7 15 808 2.9 1.8 City Center One West – Zagreb, Croatia
30 Ghana Nigeria
Zambia
<1%
14% Sub-Saharan Africa 86%
Contribution to DPS Manda Hill, Lusaka, Zambia 31 Operations Sub-Saharan Africa – 31 December 2018 INVESTMENTS LIMITED
Average monthly foot count / m² Vacancy as % of GLA
40 5% 4% 25% 2% 3% 20% 1.3% 30 0% 4.9% 1% 33 31 32 31 7.9% 27 28 29 29 15% 0.5% 20 15,6% 1.9% 22 22 10% 14,0% 12,7% 11,3% 1.6% 10 17 16 10,7% 5% 3,4% 7,2% 3,1% 5,8% 6,3% 5,3% 1,5% 0 0% Accra Mall West Hills Achimota Kumasi Manda Hill Ikeja City Accra Mall West Hills Achimota Kumasi Manda Hill Ikeja City Mall Mall Mall Mall YTD 2017 YTD 2018 YTD 2017 YTD 2018 Rent ratio - property Lease expiries* Deterioration 12% 40% Improvement 0.5% 0.3% 10% 11,1% 0.8% 0.6% 30% 34% 34% 8% 9,2% 8,9% 9,2% 8,7% 27% 7,4% 6% 6,8% 6,8% 20% 6,0% 4% 10% 2% 2% 3% 0% 0% Accra Mall West Hills Mall Achimota Kumasi Manda Hill 2019 2020 2021 2022 2023
YTD 2017 YTD 2018 Note: Turnover provided by tenants * Includes Ikeja 32 Disclaimer Forward-looking statements INVESTMENTS LIMITED
• This document contains forward-looking statements that, unless otherwise indicated, reflect the group’s expectations as at 1 March 2019
• Actual results may differ materially from the group’s expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate
• The group cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on any forward-looking statements
• The group disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available as a result of future events or for any other reason, other than as required by the JSE Listings Requirements
33