Eastern Europe Outlook & Focus $ Sub-Saharan Africa - - PDF document

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Pre-close 28 June 2019

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Agenda

Outlook & Focus Outlook & Focus Eastern Europe € Borrowings

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Sub-Saharan Africa South Africa R

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Outlook & Focus - March 2019

▪ Reposition malls ▪ Partner with tenants ▪ Portfolio approach ▪ Reduce exposure ▪ Active asset management ▪ Strengthen the entertainment and restaurant offering ▪ Secure rights for extensions

South Africa Eastern Europe ▪ Recycle capital to support growth ▪ Cash-backed distributions ▪ Long-term investment decisions ▪ Review strategy ▪ Review borrowings ▪ Restore Moody’s investment grading Sub-Saharan Africa

(Excl.SA)

Hyprop Group

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Strategy

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How do we do it?

We create environments and opportunities for people to connect and have authentic and meaningful experiences

The Why

By owning and managing a portfolio of dominant retail centres in key economic nodes in South Africa and Eastern Europe

Why do we exist?

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To be the leading South African based REIT through managing and developing tangible and intangible assets

Mission

South Africa Eastern Europe Non-tangible revenue streams

The three growth/focus areas: 1 2 3

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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

▪ Reposition malls ▪ Partner with tenants ▪ Portfolio approach

Canal Walk, Century City, Cape Town 7

Gauteng region Western Cape region

South Africa

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Average monthly foot count / m²

Operations

South Africa

1.6% 1.1% 1.0% 0.0% 0.5% 1.0% 1.5% 2.0% 8.6% 8.8% 9.0% 9.1% 9.3% 9.4% 0% 2% 4% 6% 8% 10% 12% 2 924 2 943 2 945 2 939 2 929 2 930 1 000 2 000 3 000 4 000 5 000 0.5% 0.5% 0.5% 5.6% 5.5% 4.9% 12.2 12.1 12.1 12.1 11.9 11.7 11.0 11.5 12.0 12.5 13.0 2.8% 1.6% 1.3% (Month)

Rent ratio - portfolio Trading density - R/m² Retail vacancy

(Rolling 12 months) Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 (Rolling 12 months) Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 (Rolling 12 months) Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 Jun 2018 Apr 2019 Dec 2018

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Edcon exposure

South Africa

92.4% 7.6% 90.6% 9.4% Other tenants Edcon

2.1% 1.4% 1.1% 0.7% 0.7% 0.4% 0.4% 0.2% 0.1% 2.1% 2.2% 0.8% 1.0% 0.9% 0.8% 0.8% 0.1% 0.1% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% Canal Walk Clearwater Mall The Glen Shopping Centre Rosebank Mall Woodlands Boulevard Cape Gate Mall Somerset Mall Hyde Park Corner Atterbury Value Mart

% of Gross Income % of GLA

Other tenants Edcon

2019 2020 50 871 8 630 66 781 1 200 78 4 992 829 1 531 Already reduced Still to reduce 2018 7 280 50 781

% of GLA (Dec 2018) Exposure per property (Dec 2018) % of Gross Income (Dec 2018) GLA reduction - m² (Jun 2019)

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Top 10 Tenant Groups by GLA

* Gross income (based on basic rental & operating cost)

Tenant Group % of total Gross Income* % of total GLA Edcon 7.3% 9.6% Woolworths 2.9% 8.0% Pick 'n Pay 2.7% 7.5% Massmart 3.9% 7.5% Foschini 7.1% 5.4% Mr Price 4.2% 4.3% Pepkor Holdings 3.3% 3.3% Nu Metro 1.1% 2.7% Truworths 3.3% 2.7% Shoprite Holdings 0.9% 2.6%

Edcon 9.6% Woolworths 8.0% Pick 'n Pay 7.5% Massmart 7.5% Foschini 5.4% Mr Price 4.3% Pepkor Holdings 3.3% Nu Metro 2.7% Truworths LTD 2.7% Shoprite Holdings 2.6% Other 46.4%

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Woodlands

▪ Upgrade to the piazza and foodcourt area

• Opened April 2019
• Integrated cinema block and piazza to improve

entertainment offering

• Two new restaurant sites are trading well (Mooi and Casa Bella)
• Created new kiddies play and entertainment facility
• Three existing restaurants currently under refurbishment
• Average footfall growth of +25% since completion
• Capital investment R9,5m

▪ Restroom upgrade

• Phase 1: Two refurbished blocks opened May 2019
• Phase 2: Two remaining blocks to be refurbished shortly

▪ Repositioning & right-sizing of various anchors underway

• To improve the mall tenant mix
• To maintain mall dominance in node

Foodcourt Footcount

100 000 200 000 300 000 400 000 Mar Apr May 2017/2018 2018/2019 1.2% 11.1% 65.3% 12

▪ Foodcourt redevelopment

• New enclosed ‘Foodhall’ and improved entertainment offering
• 1 100m² new GLA added
• Capital investment R121m (incl. co-owner portion)
• Key new tenants incl. Mr. Funtubbles, Nando's, Krispy Kreme, PEP

, Miniso

• Scope included re-tiling the entire mall

▪ Down-sizing of Edgars and new Checkers

• New 4 100m² Checkers shop to ‘Fresh-X’ specification
• Includes grocery and liquor stores
• Capital investment R54,2m (incl. co-owner portion)
• Completion 1 November 2019
• Checkers will close their nearby store

The Glen

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Canal Walk

▪ Foodcourt upgrade project

• Ratanga Junior has withdrawn
• Project scope being reviewed to include entertainment

▪ Restroom refurbishment project

• Project scope incl. refurbishing all 12 public ablution facilities
• Phased over a 9-month period to minimise impact on customers
• Capital investment R31m (incl. co-owner’s portion)

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Sustainable initiatives

▪ Solar roll-out

• Install solar PV at six malls
• Total project generation capacity will be 18 million kWh / annum
• Estimated capital investment R121m and yield of 14%

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Macedonia Serbia Montenegro Bulgaria Croatia

▪ Strengthen the entertainment and restaurant offering ▪ Secure rights for extensions

City Center One East - Zagreb, Croatia

Eastern Europe

16 12.2% 11.7% 11.7% 11.6% 11.6% 11.6% 11% 11% 12% 12% 12% 12% 12% Jun Dec Apr

Operations

Eastern Europe

17.8 17.8 17.6 17.6 17.4 17.8 5 10 15 20 25 30 35 40 Jun Dec Apr 1.1% 2.0% 1.3% 231 239 240 242 247 249 50 100 150 200 250 300 350 400 Jun Dec Apr 3.3% 3.6% 0.0% 0.1% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% (Rolling 12 months) (Month) 0.7% 0.9% 4.7% 4.5%

Average monthly foot count / m² Rent ratio - portfolio Trading density per month - € Vacancy - portfolio

Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 (Rolling 12 months) Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 (Rolling 12 months) Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 Jun 2018 Dec 2018 Apr 2019

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The Mall, Sofia

▪ Hypermarket conversion

• Conversion of former Carrefour hyper to traditional mall
• Converted area comprises 12 000m² GLA with 40 line stores
• Anchor tenants incl. Billa supermarket (2 450m²), JYSK (1 280m²)

Sinsay (880m²) & PEPCO (540m²)

• Capital investment €23,5 million
• Additional income €2,07 million / annum
• Opened 20 June 2019

▪ Restroom Upgrade

• Phased upgrade of all six toilet blocks
• Completion first quarter 2020
• Capital investment €315 000

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Skopje City Mall, Macedonia

▪ Various internal projects to ensure longevity of the mall

• Right-sizing various tenants and recycling large under-utilised space
• Introduction of new LPP fashion brands
• Improved vertical transport (escalator) to second floor
• New external café-terraces and kiddies play area
• Restroom and foodcourt upgrade
• Project timeline: June 2019 – March 2021
• Capital investment €5,2 million, delivering a yield of 10%

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Delta Podgorica, Montenegro

▪ Refurbishment of parking deck and new parking equipment

• Project scope includes
• Structural repairs to the parking deck behind the mall
• Installation of new parking equipment
• Capital investment €960 000 delivering a 15% yield
• Project completion August 2019

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Eastern Europe - future projects

▪ The Mall, Sofia

• Foodcourt upgrade

▪ Delta City, Podgorica

• Mall expansion circa 7 500 m²
• Possible link bridge to adjoining City Mall
• Still subject to Council approval

▪ City Center One East, Zagreb

• Mall expansion circa 14 000 m²
• Expansion into existing parking decks
• Still subject to Council approval

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Nigeria Ghana Zambia

▪ Reduce exposure ▪ Active asset management

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Sub-Saharan Africa

(Excl.SA)

22 208 218 213 216 213 207 200 205 210 215 220 2.8% 3.8%

7.7% 8.3% 9.0%

6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% Jun 2018 Dec 2018 Apr 2019 2.3% 25 26 25 25 26 26 5 10 15 20 25 30 35

Operations

Sub-Saharan Africa

(Rolling 12 months – Excluding Ikeja) (Rolling 12 months) (Month) 1.4% 1.5% 0.1%

Average monthly foot count / m² Trading density - $ / m² Retail vacancy

Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019 Jun 2017 Jun 2018 Dec 2017 Dec 2018 Apr 2018 Apr 2019

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Disposals

Sub-Saharan Africa

▪ Phase one

• Achimota, Ghana and one other asset
• Subject to CP’s
• Target completion date 31July 2019

▪ Phase two

• Ikeja Mall, Nigeria
• Under exclusivity
• Target completion date 31 March 2020

▪ Phase three

• Balance of the portfolio
• Various interested parties
• Target completion date 30 June 2020

▪ All proceeds will be used to settle US$ debt

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Borrowings and Moody’s Rating

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Dec 2018 (R ‘000)

LTV Calculations & Key Objectives

Per balance sheet Moody’s methodology Hyprop methodology Per balance sheet Moody’s methodology Hyprop 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%

Key objectives: Jun 2018 (R ‘000) ▪ Refinance existing short term debt ▪ Moody’s LTV = 35% ▪ Restore investment grade rating

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Total debt (Rm)

Total debt maturity – 28 June 2019

(After refinancing and proposed utilisation of new bond issues) Rand equivalent – includes guaranteed debt in Hystead and 100% of Ikeja

824 650 2 687 2 821 863 246 317 3 019 1 074 400 452 1 459 2 687 500 348 500 1000 1500 2000 2500 3000 3500 Q1: 2019 Q2: 2019 Q3: 2019 Q4: 2019 Q1: 2020 Q2: 2020 Q3: 2020 Q4: 2020 Q1: 2021 Q2: 2021 Q3: 2021 Q4: 2021 Q1: 2022 Q2: 2022 Q3: 2022 Q4: 2022 Q1: 2023 Q2: 2023 Q3: 2023 Q4: 2023 Q1: 2024 Q2: 2024 Q1: 2025 Refinanced Refinanced Refinanced * Bond of R350m to be repaid from cash proceeds of new bonds issued in March 2019 * 350* 1 438

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Reducing LTV

38.5% 35.0% R1.05bn R2.9bn R2.4bn 41.7%

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Interest Cover Ratios (times cover)

4.9 3.68 3.73 12.37 7.18 4.61 2 4 6 8 10 12 June 2017 June 2018 Dec 2018 3.87 4.36 4.52 6.38 8.08 8.81 2 4 6 8 10 12 Jun 2017 Jun 2018 Dec 2018 4.07 4.08 3.45 6.37 6.17 5.15 2 4 6 8 10 12 Jun 2017 Jun 2018 Dec 2018 4.9 5.05 7.75 5.6 6.06 9.27 2 4 6 8 10 12 Jun 2017 Jun 2018 Dec 2018

Excluding Africa Including Hystead interest paid Consolidated cash interest paid / Cash generated from operations Consolidated EBITDA / interest paid

Bank covenant Gross interest paid Net interest paid

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Outlook and focus areas - June 2019

▪ Improve trading densities ▪ Minimise/contain impact of reversions ▪ Continue to reposition malls ▪ Identify new potential revenue streams ▪ Conclude current disposal transactions ▪ Drive/lead further disposal processes ▪ Increased involvement in asset management in the interim ▪ Increase value through asset management initiatives and mall extensions ▪ Improve operating performance by leveraging off SA expertise (facilities management, systems and processes, asset management skills) ▪ Improve clarity of financial reporting/information ▪ Recognition of value created in existing portfolio ▪ Improve Moody’s outlook (short term) ▪ Restore long term investment grade rating ▪ Reduce LTV below 35% ▪ Increase in overall cost of borrowings as a result of converting US$ debt to ZAR

South Africa Eastern Europe Africa Borrowings

Hyde Park Corner, Johannesburg 30

Questions & Answers

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Appendices

Clearwater Mall, Johannesburg 31 32

Hystead capital structure (€ million)

PDI Dec 2018 € m HYPROP Dec 2018 € m PDI Dec 2018 % HYPROP Dec 2018 % Debt guaranteed directly % 40 361 10 90 Adjusted for: 91 (91) 23 (23) PDI - back to back security - UK Listed shares 47 (47) 12 (12) Guarantee fee* 44 (44) 11 (11) Subtotal 131 270 33 67 % Shareholding in Hystead (160) (241) (40) (60) Perceived (under)/over-exposure (29) 29 (7) 7 * Guarantee fee PDI Dec 2018 % % Shareholding in Hystead 40 Adjusted for direct guarantees and security: (22) PDI - €40m direct guarantee to lenders (10) PDI - €46.8m back to back security

• UK listed shares

(12) Unsecured portion 18 Guarantee fee (60% x 18.3%) (11) Carry 7 241 160

60% 40% 100% 10% 12% 11% 67% 270

Debt guaranteed directly

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Investment profile – as at 31 December 2018

Core South African portfolio R29.7bn = 73% Cap rates: 6.3% – 8.8% Sub-Saharan Africa (excl. SA) Hyprop share R3.4bn Cap rates: 7.8% – 9.0% Eastern Europe Hyprop share R7.9bn Cap rates: 7.0% – 9.3% Total portfolio R41bn 68% 4% 19% 8% SA shopping centres SA value centres SA standalone offices 1%

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Company structure

South African portfolio

100% owned Co-owned Somerset Mall Clearwater Hyde Park Corner Rosebank Mall Woodlands CapeGate Atterbury Value Mart Offices Cradock Heights Canal Walk (80%) The Glen (75,15%) SOUTH AFRICA

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South African properties

Portfolio summary Canal Walk & Canal Walk Offices Clearwater The Glen Woodlands CapeGate % Ownership 80% 100% 75.15% 100% 100% GLA 158 741 87 059 80 431 71 626 63 832 Vacancy levels 0.5% 0.3% 5.7% 0.2% 0.1% Avg foot count per m² / month 11.1 9.5 11.9 9.4 14.0 * As at April 2019

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South African properties

Portfolio summary Somerset Mall Rosebank Mall Hyde Park Corner & Offices Atterbury Value Mart Cradock Heights Rosebank Mall Offices % Ownership 100% 100% 100% 100% 100% 100% GLA 69 007 65 836 38 737 48 641 4 468 18 249 Vacancy levels 0% 0.8% 6.1% 0.8% 11.1% 2.5% Avg foot count per m² / month 12.8 14.9 12.5

• * As at April 2019

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Company structure

Eastern Europe portfolio

60%

• wned

EASTERN EUROPE 100% 100% 90% Delta City Belgrade (Serbia) Delta City Podgorica (Montenegro) Skopje City Mall (Macedonia) The Mall Sofia (Bulgaria) City Center One - East, Zagreb (Croatia) City Center One - West, Zagreb (Croatia) 100% 100% 90% Hystead Limited (established in the UK)

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Eastern Europe properties

Portfolio summary Delta City Belgrade Serbia Delta City Podgorica Montenegro Skopje City Mall Macedonia The Mall Sofia Bulgaria City Center One East Zagreb, Croatia City Center One West Zagreb, Croatia % Ownership 60% 60% 60% 60% 54% 54% GLA 29 862 23 478 36 264 51 228 48 569 46 719 Vacancy levels 0% 0% 0% 0% 0.2% 0% Avg foot count per m² / month 27 21 20 13 11 10

* As at April 2019

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

Company structure

Sub–Saharan Africa

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Portfolio summary Accra Mall West Hills Mall Achimota Kumasi Manda Hill Ikeja City Mall % Ownership 17.6% 16.8% 28.1% 28.1% 68.8% 75.0% GLA m² 21 311 28 272 15 534 18 604 42 002 22 223 Vacancy levels 7.2% 15.9% 8% 13.6% 8.4% 2.0% Avg foot count per m² / month 28 16 32 31 21 29

Sub-Saharan Africa properties

* As at April 2019

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• 1. Refinancing of existing debt becoming due in the next 18 months
• 2. Size of the portfolio and scale of operations relative to local

peers

• 3. Exposure to the retail sector and the weakening consumer

environment

• 4. Growing exposure to retail properties across countries with low

ratings in the rest of Africa and Central and Eastern Europe

Rating agency overview – Moody’s

Rating class Rating scale Rating Rating outlook Long Term International Ba1 Negative Long term National Aa3.za Short term National P1.za Rating Action - 13 February 2019

Source: Moody’s Credit Opinion Hyprop Investments Limited 21 February 2019

Points to watch Positives

• 1. High quality and well positioned retail portfolio in South Africa
• 2. Active management and low vacancies (1.9% as of 30 June 2018),

producing solid, recurring rental income

• 3. Fixed-charge cover of 4.3x and Hyprop's conservative approach

to development risk

• 4. Strong track record of access to debt and equity capital

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Disclaimer

Forward-looking statements

▪ This document contains forward-looking statements that, unless otherwise indicated, reflect the group’s

expectations as at 28 June 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

• f future events or for any other reason, other than as required

by the JSE Listings Requirements

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Contact details

Investor relations

Delta City, Belgrade

Mobile: +27 82 497 9827 Tel: +27 10 003 0661 E-mail: michele@singular.co.za

Michèle Mackey

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