Hyprop Investments Limited (SA) HY 2014 financial results presentation

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Hyprop Investments Limited (SA) HY 2014 financial results presentation

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Hyprop Investments Limited (SA) HY 2014 financial results presentation

  1. 1. Interim Results 31 December 2013
  2. 2. Agenda STRATEGIC & OPERATIONAL OVERVIEW INVESTMENT IN SUB-SAHARAN AFRICA (Excluding SA) Canal Walk, Cape Town, Western Cape FINANCIAL RESULTS PROSPECTS QUESTIONS & ANSWERS Somerset Mall, Somerset West, Western Cape 2
  3. 3. STRATEGIC & OPERATIONAL OVERVIEW Hyde Park, Johannesburg, Gauteng 3
  4. 4. Strategy - Progress Portfolio growth  Somerset Mall (67 000m2) - 1 Oct 2013  Acquired 87% of African Land ‒ Manda Hill (43 400m²) - 5 Dec 2013 Somerset Mall, Somerset West, Western Cape Developments  Rosebank Mall (62 000m²) - completion Sept 2014  West Hills, Accra (27 500m²) - completion Oct 2014 Rosebank Mall redevelopment, Johannesburg, Gauteng 4
  5. 5. Strategy - Progress (cont.) Portfolio Refurbishments & expansions completed:  Edgars at Canal Walk & The Glen  Restrooms at Hyde Park  R63 million investment Disposals  R205 million  Non-core - Sycom & Mantrablox Leasing  Vacancies reduced  Strong contractual escalation  Renewals & new lettings ‒ 60 332m² ‒ 236 leases International brands  Cotton On group - various  Lipsy, Dune (Edcon) - Canal Walk  Mont Blanc - Hyde Park  Coming mid year - Forever 21 5
  6. 6. Strategy - Progress (cont.) Sustainability  Green Design and Environmental Strategy gaining traction ‒ Energy saving initiatives Connecting with consumers  Increased social media activity  High-speed WiFi at Canal Walk ‒ Portfolio roll out in progress  Employee Share Incentive Scheme approved 6
  7. 7. Diverse investor base Improved liquidity Rank Beneficial shareholder % of units 1 Government Employees Pension Fund 13.16% 2 STANLIB 7.35% 3 Investec 5.79% 4 Coronation Fund Managers 5.74% 5 Old Mutual 4.89% 6 Investment Solutions 4.77%  Top 10 hold ~50% of units 7 Eskom Pension & Provident Fund 3.19%  Possible inclusion in 8 Norval, L 3.09% 9 Vanguard (USA) 2.42% 10 Sanlam 2.31% 97% free float Diversified investor base MSCI EM & SA indices 7
  8. 8. Financial performance ahead of consensus Financial highlights 31 Dec 2013 31 Dec 2012 231 cpu 211 cpu 31 Dec 2013 30 June 2013 Total expense : income 34.6% 34.6% - Total assets R25bn R22.5bn 11.1% Gearing 26.6% 22.9% 3.7% NAV (per unit) R71.80 R68.43 4.9% Total tenant arrears* R17.4m R17.1m 1.8% Distribution Change 9.5% * Excluding development property 8
  9. 9. Sustainable distribution growth Cents per unit 500 400 6-months % growth Full year 6.7% 6.9% 200 5.7% 167 424 400 364 341 300 5.9% 9.9% 9.6% 183 10.4% 4.5% 202 211 9.5% 231 100 0 2010 2011 2012 2013 2014 9
  10. 10. Existing shopping centre portfolio solid foundation Hyprop Investments Limited South Africa 100% owned Canal Walk Clearwater Mall The Glen Somerset Mall Stoneridge Hyde Park Rosebank Mall Atterbury Value Mart Willowbridge Lifestyle Somerset Value Mart 100% Co-owned CapeGate Precinct Woodlands Boulevard Sub-Saharan Africa (80%) (75.15%) (90%) Hyprop Mauritius 37.5% Atterbury Africa (Excl. SA) 87% African Land Investments 100% Manda Hill, Zambia 47% Accra Mall, Ghana 10
  11. 11. Improved investment profile Total property assets (R billion) 30 African Land R1.3bn Super regional mall R5.9bn Development property R1.7bn 25 20 Atterbury Africa R579m 25.0 22.5 Value/ lifestyle centres R2.2bn 15 2.3% 5.4% Offices R471m 6.8% 1.9% 23.7% 8.8% 6.5% 10 Regional malls R1.6bn 5 44.6% 0 Jun 2013 Dec 2013 African Land = Hyprop’s 87% Large regional malls R11.1bn 11
  12. 12. OPERATING PERFORMANCE South Africa Hyde Park, Johannesburg, Gauteng 12
  13. 13. Vacancies improve Vacancies 31 Dec 2013 30 Jun 2013 31 Dec 2012 Retail 1.2% 2.1% 1.7% Offices 8.2% 8.1% 9.1% Total 1.8% 2.7% 2.5% Significant reductions  Willowbridge 2 442m²  Stoneridge 2 839m² Largest vacancies  Offices 6 296m²  CapeGate Lifestyle 3 561m²  Somerset Mall 1 786m²  Stoneridge 1 608m² Rosebank Mall, Johannesburg, Gauteng 13
  14. 14. Strong demand persists Area (m²) Rental growth* Contractual escalation Retail 53 258 4.6% 8.4% Offices 7 074 7.1% 7.9% 60 332 4.9% 8.3% Leasing Total * Excluding temporary leases % of total Renewal profile 10.0% 7.6% Area (m²) % of GLA No. of lease % of total June 2014 109 364 13% 451 21% June 2015 173 615 21% 572 27% June 2016 160 652 19% 480 23% 14
  15. 15. Trading density growth Rolling 6-month average % 8% 7% 6% 5% 4% 3% 2% Hyprop Trading Density* Stats SA - Retail Sales 1% 0% Sep Oct Nov Dec Jan Feb 2013 Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Excludes Rosebank Mall 15
  16. 16. Continued growth in trading density Per month (R/m²) 4500 4000 3500 Average portfolio growth: +6% (2012: +7%) 13% 3 722 6% 2% 3 067 3000 3 013 8% 6% (5%) 2 716 2 670 2 615 4% 9% 2% 2 353 2500 2 314 2 266 1500 10% 20% 1 802 2000 1 788 5% 1 309 1000 500 0 Hyde Park Canal Walk Clearwater Willowbridge Somerset Mall Mall The Glen Somerset Value Mart Woodlands CapeGate Regional Atterbury Value Mart CapeGate Lifestyle Stoneridge 16
  17. 17. Rentals remain affordable Deterioration Improvement % Gross rent to turnover 10% (0.3%) 9% 8.9% 8% 0.3% 8.7% 0.5% 8.6% Portfolio average: +6.75% (2012: +6.73%) (0.8%) (0.1%) 7.9% 0.6% 0.1% 6.9% 7.5% 7% 6.8% 6% (0.4%) 6.7% 0.1% (0.3%) 6.6% 6.1% 5% (0.03%) 4.8% 4% 0.1% 4.1% 3% 2% 1% 0% Canal Walk Atterbury Value Mart Hyde Park The Glen Somerset Mall CapeGate Lifestyle Woodlands Clearwater Mall Stoneridge CapeGate Regional Somerset Willowbridge Value Mart 17
  18. 18. Developments Rosebank Mall  Redevelopment progressing according to schedule  98% GLA leased (up from 95%)  30 new store openings  Final completion September 2014 Rosebank Mall redevelopment, Johannesburg, Gauteng 18
  19. 19. Developments Refurbishments & expansions  Expansions due to tenant demand  Tenant replacements / tenant mix improvements  Ongoing capital replacements / refurbishments  Energy saving projects Hyde Park, Johannesburg, Gauteng Rosebank Mall, Johannesburg 19
  20. 20. INVESTMENT IN SUB-SAHARAN AFRICA (Excluding SA) West Hills Mall, Accra, Ghana 20
  21. 21. The case for Africa Africa’s economic growth hotspots GDP growth 2011 - 2013 Population Accra Accra 10.0 Maputo 2.3 Maputo 7.3 Abuja 7.1 Abuja Lagos 7.1 Lagos Kinshasa 7.0 1.6 Kinshasa Lusaka 1 21 9.5 Lusaka 6.8 1.7 1.6 Kampala 4.1 Kampala Nairobi 4.1 Nairobi 3.4 3.5 Cape Town 3.0 Cape Town Johannesburg 3.0 Johannesburg 0 3 % per annum 6 9 12 10.3 0 5 10 15 20 25 Millions of people Source: HIS Global Insight, September 2013 (National Data); Jones Lang LaSalle, 2013 21
  22. 22. The case for Africa Africa’s commercial real estate stock Relates to modern offices and shopping malls North Africa Sub-Saharan Africa* South Africa Offices 4 million m² 2 million m² 15 million m² Shopping malls 1 million m² 0.5 million m² 21 million m² 210 million 830 million 52 million Population Source: Jones Lang LaSalle, Emerging Markets Consultants, SACSC, HIS Global Insight * Excluding South Africa 22
  23. 23. Investment philosophy Investment increases to R3bn over next 5 years Atterbury Africa  Developing and owning shopping centres  Investment up to R1bn from R750m African Land  Acquisitive  Existing, high-quality, income-producing shopping centres  Strong pipeline of opportunities Accra Mall, Accra, Ghana 23
  24. 24. Atterbury Africa Property Rentable area (m2) Attributable Ownership value Status USD’000 Income-producing property Accra Mall (Accra, Ghana) 19 000 47% 38 328 Fully let Construction work progressing well - scheduled opening October 2014 Developments West Hills Mall (Accra, Ghana) 27 500 45% 42 087 Achimota Land (Accra, Ghana) 14 500* 75% 4 630 Acquisition of land rights concluded Kumasi Land (Kumasi, Ghana) 27 800* 75% 4 851 Acquisition of land rights concluded Waterfalls Project 27 500* 25% 1 374 Land holding with development rights for retail & hotel (Lusaka, Zambia) * Proposed 24
  25. 25. African Land Investments  Acquired 87% of African Land for R768 million ‒ Attacq acquired 12.4% for R110 million  Yield 8.1%  Provides geographic diversification  Restructure ‒ 50% of shares in African Land to Atterbury Africa ‒ Hyprop’s effective shareholding 69% Manda Hill, Lusaka, Zambia 25
  26. 26. African Land Investments Manda Hill - Lusaka, Zambia        First regional shopping centre in Zambia 43 400m² GLA Market value USD149 million (USD3 548/m²) Tenants: Shoprite, Game, Homecorp, Woolworths, Foschini, Mr Price Strong demand from retailers Fully let 49% of leases* expire over next 3 years * by GLA Manda Hill, Lusaka, Zambia 26
  27. 27. FINANCIAL RESULTS Rosebank Mall, Johannesburg, Gauteng 27
  28. 28. Highlights Strong distribution growth - 9.5% Growth from regional & super-regional malls – 9.6% Canal Walk, Cape Town, Western Cape Exceptional performance from Canal Walk, Clearwater, Woodlands & Hyde Park Somerset Mall included from 1 Oct 2013 Clearwater Mall, Roodepoort, Gauteng Muted growth from value centres - 3.5% Dilution from Rosebank Mall in line with budget Canal Walk, Cape Town, Western Cape 28
  29. 29. Drivers of distribution growth R’000 650 000 39 124 6 248 4 008 600 000 51 982 561 886 (36 567) (15 565) 550 000 (1 244) (974) Rosebank Mall Net interest Other 514 874 500 000 450 000 400 000 Dec 2012 Existing portfolio Somerset Mall Sub-Saharan Africa (Excl. SA) Fund management Sycom Dec 2013 29
  30. 30. Income statement Revenue Investment property Listed investments (Sycom) Property expenses Net property income Fund management expenses Operating income Net interest Net operating income Hyprop Investments (Mauritius) African Land Net income No of combined units (000) Distribution pu (cents) ‒ extracts 31 Dec 2013 (Rm) 1 142 1 105 37 (366) 776 (26) 750 (194) 556 2 4 562 31 Dec 2012 (Rm) 1 088 1 014 74 (350) 738 (29) 709 (194) 515 515 243 256 211.0 8.0% 9.2% 243 113 231.0 9.0% (49.6%) 4.7% 5.2% (8.8%) 9.5% 30
  31. 31. Net Income Stronger contribution from shopping centres December 2013 1% 3% 5% December 2012 11% Shopping centres 3% Stand-alone offices Sycom 91% Sub-Saharan Africa (excl. SA) 86% 31
  32. 32. Sound Balance Sheet 31 Dec 2013 (Rm) Investment property Atterbury Africa 30 Jun 2012 (Rm) 23 086 19 846 16.3% 579 337 71.8% African Land 1 540 Other assets 445 398 Held-for-sale 52 2 401 Total assets 25 702 22 982 11.8% Gross debt 6 995 5 384 29.9% Net asset value pu (R) 71.80 68.43 4.9% 32
  33. 33. Improved property valuations Category Hyprop share (Rm) % change (from Jun 13) Value (R/m2) Average yield Super regional 5 911 5.0% 48 127 6.6% Large regional 11 139 4.1%* 29 541 7.1% Regional 1 634 5.0% 44 159 7.4% Value centres 2 212 1.5% 14 175 8.4% 20 896 4.2%* 31 049 7.1% 6.7% 13 817 9.9% 4.2%* 30 293 7.2% Shopping centres Stand-alone offices Total 471 21 367 * Excludes Rosebank & Somerset Malls 33
  34. 34. Diligent debt management Borrowings 31 December 2013 30 June 2013 R6.7 bn R5.1 bn 26.6% 22.9% Debt at fixed rates 70% 87% Debt Capital Market (DCM) % of total debt 30% 31% R2.4 bn R2.4 bn Net borrowings Gearing Undrawn facilities 34
  35. 35. Sources of funding R million 3 726 53% Bank facilities (SA) 3 404 31 December 2013 2 098 30% 30 June 2013 DCM funding (SA) 1 648 63% % of total debt 31% Atterbury Africa 1 170 17% 566 US dollar debt 333 0 604 African Land 6% 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 35
  36. 36. Cost of funding Average interest rate 31 Dec 2013 30 Jun 2013 7.5% 8.1% SA debt 8.0% 8.4% US Dollar debt 4.6% 4.2% Total debt  Debt to acquire African Land (SA bank facility) currently unhedged  Additional dollar funding: ‒ Atterbury Africa (USD21 million) ‒ Consolidated African Land debt (USD58 million) 36
  37. 37. PROSPECTS Canal Walk, Cape Town, Western Cape 37
  38. 38. Well positioned High quality assets     Dominant (average size of malls) Attracts new concept & flagship stores Location of choice for international brands Somerset Mall, Somerset West, Western Cape Defensive in economic downturn Robust financial position  Strong balance sheet  Gearing capacity Experienced management The Glen, Johannesburg South, Gauteng  Low staff turnover  Hands-on approach Strong development partner Canal Walk, Cape Town, Western Cape 38
  39. 39. Prospects Risks  Challenging economic environment  Impact on consumer spend Focus      Refurbishments & expansions Tenant mix improvements Investment opportunities - SA & rest of Africa Clearwater Mall, Roodepoort, Gauteng Improve BEE scorecard Dispose of non-core properties (subject to market conditions) Improved distribution forecast  8.5% - 10.5% Hyde Park, Johannesburg, Gauteng 39
  40. 40. QUESTIONS & ANSWERS Hyde Park, Johannesburg, Gauteng 40
  41. 41. APPENDICES Rosebank Mall, Johannesburg, Gauteng 41
  42. 42. Credible track record Rbn LTV % 28 60% 25.0 Investment property 24 Market cap 20 17.4 LTV % 16 6.9 7.5 4 0 17.7 19.0 18.6 12.9 12 8 18.7 20.2 3.6% 2007 7.7 7.0 8.9% 8.7 7.6 13.0% 9.4 9.5 26.2% 45% 30% 23.1% 22.9% 26.6% 15% 12.6% 0% 2008 2009 2010 2011 2012 June 2013 Dec 2013 42
  43. 43. Top 8 properties by value Canal Walk (80% undivided share) Region Cape Town Clearwater Mall Region Woodlands Boulevard Somerset Mall Johannesburg Region Cape Town Region Pretoria Valuation (Rm) 5 911 Valuation (Rm) 3 316 Valuation (Rm) 2 243 Valuation (Rm) 1 979 Total GLA (m²) 153 531 Total GLA (m²) 86 028 Total GLA (m²) 67 133 Total GLA (m²) 71 617 Vacancy levels 0.6% Vacancy levels 0% Vacancy levels 2.7% Vacancy levels 0% Footcount Dec 2013 10 918 821 Footcount Dec 2013 5 370 967 Footcount Dec 2013 5 641 400 Footcount Dec 2013 4 217 336 43
  44. 44. Top 8 properties by value The Glen (75% undivided share) Region Johannesburg CapeGate Precinct Region (cont.) Hyde Park Cape Town Region Atterbury Value Mart Johannesburg Region Pretoria Valuation (Rm) 1 958 Valuation (Rm) 1 643 Valuation (Rm) 1 634 Valuation (Rm) 987 Total GLA (m²) 76 849 Total GLA (m²) 97 346 Total GLA (m²) 37 003 Total GLA (m²) 47 745 Vacancy levels 0.3% Vacancy levels 4.2% Vacancy levels 2.8% Vacancy levels 0.2% Footcount Dec 2013 N/A Footcount Dec 2013 7 443 056 Footcount Dec 2013 4 695 954 Footcount Dec 2013 2 563 139 44
  45. 45. Lease expiry 2014 and 2015 2014 / 2015 2015 / 2016 Retail Total GLA The Glen 76 849 17 145 Stoneridge 48 584 Canal Walk Retail Total GLA m² % GLA of centre 22% CapeGate Regional 62 791 9 859 16% 7 690 16% Clearwater 86 028 11 809 14% 143 441 12 805 9% Woodlands Boulevard 71 617 7 570 11% CapeGate Lifestyle 32 133 4 684 15% The Glen 76 849 5 750 7% Willowbridge 42 181 12 805 9% Canal Walk 143 441 48 221 34% CapeGate Regional 62 791 32 928 52% Hyde Park 27 657 2 556 9% Atterbury Value Centre 47 786 7 869 16% Atterbury Value Centre 47 786 10 334 22% Hyde Park 27 657 9 930 36% Stoneridge 48 584 5 328 11% Woodlands Boulevard 71 617 13 804 19% CapeGate Lifestyle 32 133 6 364 20% Clearwater 86 028 28 797 33% Willowbridge 42 181 16 427 39% Somerset Mall 67 133 11 419 17% Somerset Mall 67 133 9 992 15% Somerset Value Mart 12 386 2 808 23% Somerset Value Mart 12 386 980 8% 754 537 156 420 21% 754 537 136 734 18% 76 634 17 194 22% Offices 76 634 23 917 31% 831 171 173 615 21% Total 831 171 160 652 19% Offices Total m² % GLA of centre 45
  46. 46. Retail rental dominates revenue Revenue spread 6-months to December 2013 Monthly parking 1% Office rental Turnover rental 1% Storerooms & other Customer parking 3%3% 4% Operating cost recovery 7% Municipal cost recovery 22% 59% Retail rental 46
  47. 47. Debt maturity profile Bank facilities and DCM Average maturity 3.09 years Rm 2 000 1 739 1 800 Bank facilities 1 600 Bonds/CP* 1 331 1 400 1 200 1 000 800 600 655 498 750 450 400 400 200 0 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 * CP: Commercial Paper 47
  48. 48. Maturity profile Fixed rate debt Average maturity 3.82 years Rm 1 600 1 450 1 400 1 200 1 050 950 1 000 800 600 600 400 200 200 100 0 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 48
  49. 49. Disclaimer Forward-looking statements  This document contains forward-looking statements that, unless otherwise indicated, reflect the group’s expectations as at 31 December 2013.  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. 49

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