30 June 2014 Annual Results Agenda S TRATEGIC & OPERATIONAL - - PDF document

Annual Results 30 June 2014

Agenda

S TRATEGIC & OPERATIONAL OVERVIEW Pieter Prinsloo OPERATING PERFORMANCE - S OUTH AFRICA Pieter Prinsloo INVES TMENT IN S UB-S AHARAN AFRICA (Excl. S A) Kevin Teeroovengadum FINANCIAL RES ULTS Laurence Cohen PROS PECTS QUES TIONS & ANS WERS Pieter Prinsloo Panel

2

QUES TIONS & ANS WERS Panel

S TRATEGIC & OPERATIONAL OVERVIEW S TRATEGIC & OPERATIONAL OVERVIEW

3 Hyde Park, Johannesburg, Gaut eng

A decade of growth

Compound annual growth rate (2005 – 2014) ( ) Distribution cpu 11 7% Focus on sustainable income growth Distribution cpu 11.7% NAV/ pu (excl def tax) 20 4% Focus on sustainable income growth Invest in high quality shopping centres i b S h Af i NAV/ pu (excl def tax) 20.4% Unit price 18.4% in sub-S aharan Africa S pecialised & experience internal Unit price 18.4% Total return 32.1% S

• und balance sheet

management

4

S

• und balance sheet

Distribution growth exceeds guidance

Financial highlights 30 June 2014 30 June 2013 Change Financial highlights 30 June 2014 30 June 2013 Change Distribution 472cpu 424cpu 11.3% S econd half distribution 241cpu 213cpu 13.1% S econd half distribution 241cpu 213cpu 13.1% NAV (per unit) R76 02 R68 43 11 1% NAV (per unit) R76.02 R68.43 11.1% Total property assets R26.4bn R22.5bn 17.3% Gearing 28 4% 22 9% Gearing 28.4% 22.9% Total tenant arrears* R14.3m R17.1m (16.4% )

5 * Excludes Rosebank Mall

Increased shopping centre focus Increased shopping centre focus Portfolio management

Investments

• S
• merset Mall ─ R2.3 billion
• African Land ─ Manda Hill ─ R1.3 billion
• Investment in Atterbury Africa up to R812 million

Disposals

• Indirect

S ycom Mantrablox amounting to R205 million

• Indirect ─ S

ycom, Mantrablox amounting to R205 million

• Held-for-sale ─ Office Parks, S

toneridge, Willowbridge & CapeGate Lifestyle Sub-Saharan Africa (excluding South Africa)

• Restructured African Land from 1 July 2014

6

• Restructured African Land from 1 July 2014

S trategic progress S trategic progress Portfolio management

Developments:

R b k M ll (62 000 ² ) Rosebank Mall (62 000m² )

• R932 million
• Final completion S

ept 2014

• Yield 7%
• Yield 7%

West Hills, Accra (27 500m² )

• US

D 94 million

• US

D 94 million

• Completion Oct 2014
• Yield 9.6%

Rosebank Mall, Johannesburg, Gaut eng

Achimota Mall, Accra (13 000m² )

• US

D 52 million

• Completion Oct 2015

7

p

• Yield 9.65%

West Hills, Accra, Ghana

S trategy Progress (

)

S trategy - Progress (cont.) Energy initiatives

Savings generated FY2015

R8m solar PV plant

• 4,9 million kWh (over 22 months)
• R5.9 million
• Total electricity consumption

R8m solar PV plant at Clearwater Mall Introduction of smart down 5.34% year-on-year C t d 2 536 50W d li ht Introduction of smart metering

• Converted 2 536, 50W down lighters

to 5W LED down lighters

• Converted 365, T8 fluorescent tubes

t ffi i t T5 t b to energy efficient T5 tube

• Participated in CDP & GRES

B

8

• Participated in CDP & GRES

B

The Glen, Johannesburg S

• ut h, Gaut eng

S trategy Progress (

)

S trategy - Progress (cont.) Connecting with consumers

320 000 Facebook fans 210 000 website hits Gift cards rollout underway at Clearwater Woodlands CapeGate High speed Wi-Fi across portfolio = 88 000 registered users to date

9

Gift cards rollout underway at Clearwater, Woodlands, CapeGate & S

• merset Mall

Company structure

Hyprop Investments Limited

100%

S

• uth Africa

S ub-S aharan Africa (Excl. S

A)

100%

• wned

Co-owned Held-for-sale Hyprop Investments Mauritius 100% 00%

• w ed

Co ow ed Canal Walk (80% ) Th Gl CapeGate Mall Clearwater Mall S

• merset Mall

eld

• sale

S toneridge

50% Atterbury Africa Manda Hill, Zambia 37.5%

The Glen (75.15% ) S toneridge S

• merset Mall

Woodlands Boulevard Hyde Park

50%

Willowbridge CapeGate

(Mauritius) Accra Mall, 47%

(90% ) Rosebank Mall Atterbury Value Mart S

• merset Value Mart

Lifestyle Offices:

• Glenfield
• Glenwood

Accra Mall, Ghana

10

African Land st ruct ure effect ive 1 July 2014

• Glenwood
• Lakefield

Quality & focused growth

30 000 Rm S ub S aharan 25 000 S ub-S aharan Africa (Excl. S A) Held-for-sale S ub-S aharan Africa R2,2bn 20 000 Listed property securities S tand-alone offices R1,7bn 15 000 Listed property securities S hopping centres Core portfolio R22,5bn 10 000 R22,5bn 11 5 000 30 June 2011 30 June 2014

OPERATING PERFORMANCE S OUTH AFRICA

12 Clearwat er Mall, Johannesburg, Gaut eng

S trong operating performance

9.5% like-for-like growth in distributable earnings from regional, large regional & super regional malls (excludes Rosebank & S

• merset Malls)

Occupancy rate remains high at 97.6% Property expenses well contained – cost-to-income ratio 34.4% Arrears 0.4%

• f rental income including S
• merset Mall

13

g

Trading indicators hold steady

12% 8 0% 10% Trading density growth Rent ratio (rental as %

• f turnover)

Vacancies 8.0% 7.8% 6.8% 7.0% 7.0% 7.0% 6.9% 6.9% 6% 8% Vacancies 3.30% 3.40% 2.70% 2 40% 4% 6% 2.70% 2.40% 2%

14

0% 2011 2012 2013 2014

Core portfolio Core portfolio Vacancies remain low

Vacancies 30 Jun 2014 30 Jun 2013 Retail 1 2% 2 1% Retail 1.2% 2.1% Offices 13.8% 8.1% Total 2.4% 2.7% Significant reductions at value centres Office portfolio improves to 9.5% after year-end

15

Rosebank Mall, Johannesburg, Gaut eng

Leasing terms remain favourable

12.0% 8.3% 8 0% 8.8% 8 2% 10.0% Rental growth Contractual escalation 6.3% 8.3% 8.0% 7.4% 8.2% 6 0% 8.0% 4.3% 3.4% 4.0% 6.0% 2.0%

16

0.0% 2011 2012 2013 2014

Leasing activity Leasing activity S trong uplift

Area ( ²) Rental growth Contractual escalation

• No. of

L (m²) growth (% ) escalation (% ) Leases Retail New lettings 45 156 8.0% 8.0% 118 Renewals 68 050 9.0% 8.0% 136 Total 113 206 8.2% 8.2% 254 %

• f total portfolio

15.7% Offices New lettings 7 335 10.0% 8.0% 15 Renewals 14 416 7.0% 9.0% 9 Total 21 751 8.6% 8.4% 24 %

• f total portfolio

28% T t l l ti it 134 957 8 3% 8 2% 278

17

Total lease activity 134 957 8.3% 8.2% 278 %

• f total portfolio

16.9%

Lease expiry profile Lease expiry profile 2015

Retail Total GLA m² Area m² % GLA of centre

Opport unit ies

CapeGate Regional 63 699 34 452 54% Clearwater 86 028 24 649 29% The Glen 76 849 24 545 32% W dl d B l d 71 617 15 973 22%

Replace underperforming tenants

pp

Woodlands Boulevard 71 617 15 973 22% S toneridge 48 584 14 115 29% S

• merset Mall

66 831 14 076 21% Hyde Park 28 097 13 518 48%

‒ The Glen & Clearwater Mall

Hyde Park 28 097 13 518 48% Canal Walk 146 941 12 784 9% CapeGate Lifestyle 32 446 8 410 26% Atterbury Value Centre 47 786 6 457 14%

Introduce new brands

‒ River Island & Forever 21

Willowbridge 40 519 4 348 11% S

• merset Value Mart

12 386 3 368 27% 721 783 176 695 24%

Upgrade & enlarge national tenants

‒ flagship stores

18 Offices 77 791 25 116 32% Total 799 575 201 811 25%

g p

Developments

Focus on continuous improvements Equipment replacement – R28 million Sh i t P j t C C l ti d t Extensions planned – R150 million Shopping centre Project Capex Completion date Canal Walk Mr Price & Forever 21 R14m S ept 2014 Will b id R l i f Di Ch R12 S 2014 Willowbridge Relocation of Dis-Chem R12m S ept 2014 CapeGate Foodcourt tenants R4m Oct 2014 Dion Wired

19

Hyde Park Dion Wired Various high-end tenants R25m Nov 2014

Hyde Park Hyde Park Various high-end tenants

20

INVES TMENT IN S UB-S AHARAN AFRICA (Excluding S A)

21 Manda Hill, Lusaka, Zambia

S ub S aharan Africa (S S A) S ub-S aharan Africa (S S A) Long-term growth remains strong

5 3 6

GDP growth %

4.4 5.0 5.3 4 5 2.4 3.2 3 4 1.3 1.7 1.9 1.8 1 2 2013 2014F 2015F

Developed World S ub S aharan Africa S

• uth Africa

22

Developed World S ub-S aharan Africa S

• uth Africa

S

• urce: JP Morgan & NKC

Ghana and Zambia

GHANA

• Growth impacted, but still strong

ZAMBIA

• S
• lid economic growth

p g

• Pressure on local currency (Cedi)
• Government committed to long term

economic reform

• Good appetite for government debt
• Ambitious infrastructure development

programme

‒

Maj or investment in roads & power

8 9

economic reform

GDP growth %

Maj or investment in roads & power

6.3 5.5 5.9 6.7 7.0 7.3 6 7 8 4 5 2013 2014F 2015F 2013 2014F 2015F

Ghana Zambia

23 S

• urce: NKC

The African consumer The African consumer S ustained middle-class growth

180 Million households 120 140 160 80 100 120 20 40 60 2000 2014 2030 (est)

Lower income Lower middle class Middle class Upper middle class

24

Lower income Lower middle-class Middle-class Upper middle-class

S

• urce: S

t andard Bank

The African consumer The African consumer Zambia & Ghana well positioned

Middle-class households as a share of total households, % (2014) 35

Angola

30 25

Angola S udan Nigeria 7.9

20 15

Ghana Zambia g

10 5

Kenya Uganda Tanzania S

• uth S

udan Mozambique

0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Total middle-class households (incl. lower middle-class), millions (2014)

Tanzania Ethiopia 25 S

• urce: S

t andard Bank

Market trends Market trends Existing assets

Pressure on yields

Yield 15% Yield 12% Yield 10% Yield 8 5% Yield 10% 8.5% to 9% Yield 8.0% to 8.5% Yield 7.5% to 8% Further yield compression? 2000 2012 2013 2014 2015 2020 2005 2010 26

Market trends (cont ) Market trends (cont.) Existing assets

Increasing number of players (both development and non-development)

• Regional
• Regional
• International
• Local

Demand from retailers to expand Increasing presence of regional/ local retailers Increasing presence of regional/ local retailers Deepening of tenant base with new breed of international retailers ‒ franchise model Debt funding: S till scarce but improving with new banks willing to fund

27

Land cost

Restructure Restructure Atterbury Africa & African Land

Pre-Merger Post-Merger

Focus FY2015 C lid t AttAf i t

• Consolidate AttAfrica team
• Ensure 100%

hands-on asset management (Manda Hill, Accra Mall and West Hills)

• Opening of West Hills
• Achimota & Kumasi City Mall developments

28

Achimota & Kumasi City Mall developments

• Future pipeline in key markets

Operating Assets Operating Assets Accra Mall, Ghana

• GLA 19 000m²
• Market value US

D 82 5 million (US D 4 548/ m²)

• Market value US

D 82.5 million (US D 4 548/ m²)

• Fully let
• S

trong trading density growth 3 illi i it J t J 2014

‒ 3 million visitors – Jan to Jun 2014 ‒ Over 100 000 Facebook fans

• Leasing trends

‒ S

trong demand from existing tenants

‒ Good pipeline of new tenants ‒ Expansion of 20 000m² planned

GLA %

• f Total GLA
• No. of leases

Lease expiry profile FY2015

29

309m2 1.5% 8

Operating Assets Operating Assets Manda Hill, Zambia

• GLA 43 400m²
• Market value US

D 153 million (US D 3 525/ m² )

• Fully let
• Trading density up 7%

in US D (six months to June 2014)

• Leasing trends

‒ S

trong demand

‒ Expansion of 10 000m² planned

GLA %

• f Total GLA
• No. of leases

Lease expiry profile FY2015

30

4 499m2 10.3% 19

Developments

West Hills Mall

• Location:

Achimota Mall

• Location:

Kumasi City Mall

• Location:
• Location:

West of Accra on main western highway

• Phase 1: 27 500m²
• 99%

let

• Location:

Northern suburb of Accra

• 13 400m²
• Anchored by S

hoprite, Jet Mr Price

• Location:

S

• uth of Kumasi
• 27 000m²
• Anchored by S

hoprite, and Game (Walmart)

• 99%

let

• Opening on track for

Oct 2014

• Phase 2: 12 000m²

Jet, Mr Price

• Construction underway

and on track

• Completion Oct 2015

and Game (Walmart)

• Bulk earthworks

commenced in June 2014

• Completion end 2016

31

FINANCIAL RES ULTS FINANCIAL RES ULTS

32 Hyde Park, Johannesburg, Gaut eng

Highlights

Distribution growth exceeds guidance at 11.3% S econd half growth of 13.1% S f f d l i l

• S

trong performance from super and large regional centres

• S

avings on interest costs

• Acquisition of African Land
• Acquisition of African Land

Dilution from Rosebank Mall in line with budget Investment in sub-S aharan Africa (excluding S A) increases t R2 2 billi g

33

to R2.2 billion

Distributable earnings Distributable earnings Existing portfolio drives growth

33 643 1 400 000 R’ 000 1 148 600 106 785 116 017 33 643 (16 124) (111 507) (13 809) 1 468 1 100 000 1 200 000 1 300 000 1 032 127 (111 507) (13 809) 900 000 1 000 000 1 100 000 700 000 800 000 900 000 500 000 600 000 700 000

30 June 2013 Existing portfolio Somerset Mall Sub-Saharan Africa (Excl. SA) Rosebank Mall Sycom Net interest Other 30 June 2014

34

Income statement ‒ extracts

30 June 2014 Rm 30 June 2013 Rm Revenue 2 392 2 172 Investment property 2 355 2 023 16.4% Listed investments 37 149 (75.0% ) Property expenses (821) (697) 17 8% Property expenses (821) (697) 17.8% Net property income 1 571 1 475 6.5% Other operating expenses (56) (56) Operating income 1 515 1 419 6.8% Atterbury Africa 5 1 African Land 30 Net income before interest 1 550 1 420 9.2% Net interest (401) (388) 3 6% Net interest (401) (388) 3.6% Net income 1 149 1 032 11.3% No of combined units (000) 243 256 243 113

35

Distribution pu (cents) 472.0 424.0 11.3%

Net Income

S tronger contribution from shopping centres

June 2013 June 2014

3%2% 2%

S A shopping centres

10%

S A shopping centres S tand-alone offices

3%

S ycom

93%

S ub-S aharan Africa (excl. S A)

87%

36

S

• und Balance S

heet

30 June 2014 (Rm) 30 June 2013 (Rm) Investment property 24 081 19 846 21.3% Atterbury Africa 812 337 141.2% Other assets 267 398 Held-for-sale 1 705 2 401 Total assets 26 865 22 982 16 9% Total assets 26 865 22 982 16.9% Gross debt 7 199 5 384 33.7% NAV pu (R) 76.02 68.43 11.1%

37

Improved property valuations

Category Size (m²) Hyprop share (Rm) % change (from June 2013) Value (R/m2) Average yield Category (m²) (Rm) June 2013) (R/m2) yield S uper regional 157 031 6 064 7.8% 48 271 6.7% l Large regional 399 892 11 718 37.1% * 31 006 7.1% Regional 38 345 1 769 13.7% * 46 134 7.0% Value centres 151 758 2 316 6.3% 15 578 8.4% S hopping centres 747 025 21 867 22.1% * 32 227 7.1% S tand-alone offices 34 114 457 3.4% 13 396 8.9% Total 781 139 22 324 21.7% * 7.2%

38

Total 781 139 22 324 21.7% 7.2%

* Excludes Rosebank Mall & Manda Hill

Diligent debt management

Borrowings 30 June 2014 30 June 2013 Net borrowings R7.1 bn R5.1 bn Gearing 28.4% 22.9% Debt at fixed rates 71% 87% Average fixed rate/ swap maturity 4.2 years 4.3 years Average debt maturity 3.0 years 3.5 years Debt Capital Market (DCM) 32% 31% %

• f total debt

32% 31%

39

S

• urces of funding

S

• urces of funding

US dollar debt increases

R million

3 404 3 509

Bank facilities (S A)

63% 49% 2 297

DCM funding (S A)

30 June 2014 30 June 2013

32%

603 603

1 648 1 393

DCM funding (S A)

31%

%

• f total debt

Atterbury Africa 603 603 790 790

333 1 393

US dollar debt

6% 19%

y Manda Hill

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 40

Cost of funding

Average interest rate 30 June 2014 30 June 2013 Total debt 7 5% 8 1% Total debt 7.5% 8.1% S A debt 8.2% 8.4% US Dollar debt 4.6% 4.2%

Debt to acquire African Land (S A bank facility) currently unhedged Following African Land restructure fixed rate debt to increase to ~80%

41

Following African Land restructure, fixed rate debt to increase to 80%

PROS PECTS PROS PECTS

42 Hyde Park, Johannesburg, Gaut eng

Prospects

Risks

• S

low economic growth in S

• uth Africa
• S

low economic growth in S

• uth Africa
• Mature shopping centre market in S
• uth Africa
• Distressed tenants in S
• uth Africa
• Exclusivity clauses

Exclusivity clauses Focus

• Opening of Rosebank Mall & West Hills
• Extensions & refurbishments at existing centres
• Renewal of leases & tenant mix improvements

Di f ti

• Dispose of non-core properties
• Investment opportunities ‒ S

A & rest of Africa

43

Distribution forecast 10% ‒ 12%

QUES TIONS & ANS WERS QUES TIONS & ANS WERS

44 Clearwat er Mall, Johannesburg, Gaut eng

APPENDICES APPENDICES

45 Woodlands Boulevard, Pret oria, Gaut eng

Top 8 properties by value

Canal Walk (80% undivided share) Clearwater Mall Woodlands Boulevard S

• merset Mall

Region Johannesburg Valuation (Rm) 3 473 Region Cape Town Valuation (Rm) 6 064 Region Pretoria Valuation (Rm) 2 196 Region Cape Town Valuation (Rm) 2 252 Total GLA (m²) 86 028 Vacancy levels 0% Footcount 10 million Total GLA (m²) 157 031 Vacancy levels 0.7% Footcount 21 million Total GLA (m²) 71 617 Vacancy levels 0% Footcount 8 million Total GLA (m²) 66 831 Vacancy levels 3.2% Footcount 11 million Footcount 10 million Footcount 21 million Footcount 8 million

46

Footcount 11 million

Top 8 properties by value (cont.)

CapeGate Regional Atterbury Value Mart The Glen (75% undivided share) Hyde Park

Region Cape Town Valuation (Rm) 1 400 Region Pretoria Valuation (Rm) 1 105 Region Johannesburg Valuation (Rm) 2 059 Region Johannesburg Valuation (Rm) 1 769 Total GLA (m²) 63 699 Vacancy levels 0.7% Footcount 10 2 million Total GLA (m²) 47 786 Vacancy levels 0% Footcount N/ A Total GLA (m²) 76 849 Vacancy levels 0.6% Footcount 14 million Total GLA (m²) 38 345 Vacancy levels 0% Footcount 5 1 million Footcount 10.2 million

47

Footcount N/ A Footcount 14 million Footcount 5.1 million

Continued growth in trading density

4500

Per month (R/ m²)

3500 4000

Average portfolio growth: +7.0% (2013: +6.8% )

12%

3 186 2 974 2 809 2 770 2 696 2 542 2500 3000

8% 5% 1% 6% (1% ) 8% 6% 8%

2 248 2 246 2 195 1 837 1 766 1 299 1500 2000

9% 16% 9%

1 299 500 1000

Hyde Park Canal Walk Clearwater Mall S

• merset

Mall Willowbridge The Glen Woodlands S

• merset

Value Mart CapeGate Regional CapeGate Lifestyle Atterbury Value Mart S toneridge

48

Rentals remain affordable

% Gross rent to turnover

Deterioration Improvement

10% 12%

Portfolio average: +6.9% (2013: +6.9% )

0.2% (0.3% ) (0 2% )

9.1% 8.9% 8.7% 8.3% 7.4% 7.2% 7.0% 8%

0.2% 0.6% (0.1% ) ( ) 0.7% (0.6% ) 0.2% 0.1% (0.2% ) (0.5% )

7.0% 6.6% 6.4% 6.3% 5.0% 4.2% 4% 6%

(0.1% ) (0.1% )

2%

49

0%

Canal Walk Atterburty Value Mart Hyde Park The Glen Clearwater Mall S

• merset

Mall Woodlands CapeGate Lifestyle S toneridge CapeGate Regional S

• merset

Value Mart Willowbridge

Lease expiry profile 2016

Retail Total GLA m² Area m² % GLA

• f centre

Canal Walk 146 941 45 872 31% Willowbridge 40 519 17 116 42% Clearwater 86 028 11 445 13% S M ll 66 831 9 969 % S

• merset Mall

66 831 9 969 15% Atterbury Value Centre 47 786 9 032 19% Woodlands Boulevard 71 617 6 413 9% CapeGate Regional 63 699 6 103 10% CapeGate Regional 63 699 6 103 10% The Glen 76 849 6 031 8% CapeGate Lifestyle 32 446 5 976 18% S toneridge 48 584 5 484 11% S

• merset Value Mart

12 386 2 359 19% Hyde Park 28 097 2 231 8% 721 784 128 031 18%

50

Offices 77 791 15 131 19% Total 799 575 143 162 18%

Retail rental dominates re en e Retail rental dominates revenue

Revenue spread 12 months to June 2014

June 2013 June 2014

1% 1%

Retail rental

2% 1% 8% 6% 4%

Municipal cost recovery Operating cost recovery

7% 5% 4% 58% 22%

Customer parking S torerooms & other

58% 23%

Office rental Turnover rental

51

Debt maturity profile Debt maturity profile Bank facilities and DCM

1 800 Rm

Average maturity 3.03 years

1 316 1 536 1 400 1 600 Bank facilities Bonds/ CP* US D Funding 750 1 000 1 200 US D Funding 656 697 400 750 450 603 590 400 600 800 200 200 400

52

June 2015 June 2016 June 2017 June 2018 June 2019 June 2020

* CP: Commercial Paper

Maturity profile Maturity profile Fixed rate debt

1 800 Rm

Average maturity 4.24 years

1 640 1 250 1 400 1 600 900 1 250 900 1 000 1 200 450 400 600 800 200 400

53

June 2015 June 2016 June 2017 June 2018 June 2019 June 2020

Disclaimer Disclaimer Forward-looking statements

• This document contains forward-looking statements that, unless otherwise

indicated reflect the group’s expectations as at 30 June 2014 indicated, reflect the group s expectations as at 30 June 2014.

• 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

i li d di l d i d l d 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
• 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 JS E Listings Requirements

54

required by the JS E Listings Requirements.