Hyprop Investments Limited · JSE:HYP

Hyprop Investments — FY2006 Earnings Presentation

51 slides from Hyprop Investments's earnings presentation, 2007

  1. Slide 1: Slide 1

  2. Slide 2: Company Overview

    COMPANY OVERVIEW  Successful track record since 1987  Focus on sustainable income growth  Sizable and quality shopping centres 5  Number of buildings 9  Total assets R6.9 billion − 76% shopping centres  Asset manager: Madison Property Fund Managers Ltd YEAR ENDED 31 DECEMBER 2006

  3. Slide 3: Investment Property Portfolio

    INVESTMENT PROPERTY PORTFOLIO High quality shopping centres Property Ownership Size m² No. of stores Canal Walk 80% 132,316 387 The Glen 75.15% 51,464 155 Hyde Park 100% 37,102 130 Rosebank Mall 100% 33,774 120 Southcoast Mall 50% 27,642 91 Offices 100% 44,604 TOTAL RETAIL 263,272 TOTAL OFFICES 63,6

  4. Slide 4: Highlights

    RECORD GROWTH IG LIG TS HYPROP

  5. Slide 5: Financial

    FINANCIAL Distribution 225 cents 18.4% Valuation increase R1.5 billion 27% Pre-tax NAV 39.63 per unit 34% Market capitalisation R5.6 billion 30% YEAR ENDED 31 DECEMBER 2006

  6. Slide 6: Company

    COMPANY Financing cost reduced through debt restructuring Strong income growth from shopping centres Successfully established BEE property fund YEAR ENDED 31 DECEMBER 2006

  7. Slide 7: BEE

    BEE PROGRESS IN TRANSFORMATION

  8. Slide 8: Vunani Property Investment Fund (VPIF)

    VUNANI PROPERTY INVESTMENT FUND (VPIF)  Established October 2006  Focus on enterprise and skills development  Structured as unlisted PLS 49.8% Hyprop 50.2% Vunani Properties  Hyprop sold VPIF 5 office buildings - R175 million  Total portfolio - R524 million − 18 buildings (mainly commercial) 

  9. Slide 9: SA Retail

    SA RETAIL PROFITABLE DISPOSAL

  10. Slide 10: Post Year-End Transaction

    POST YEAR-END TRANSACTION Profitable sale of 46% interest in SA Retail:  Sold to Public Investment Corporation Ltd Sale R1.135 billion or 9% interest price R10.50 per unit from 1 Oct 2006  Repay existing debt  Distribution enhancing for 2007 YEAR ENDED 31 DECEMBER 2006

  11. Slide 11: Investment Performance

    INVESTMENT PERFORMANCE SETTING NEW BENCHMARKS

  12. Slide 12: Distribution Growth

    DISTRIBUTION GROWTH Record growth Cents per combined unit Growth rate 250 20% 18% Distributions Growth 17% 18% 16% 225.0 200 16% 190.0 14% 150 163.0 12% 140.0 10% 126.4 130.0 100 107.5 117.0 8% 96.0 84.9 6% 76.5 50 4% 2% 0 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 YEAR ENDED 31 DECEM

  13. Slide 13: Unit Price and Liquidity

    UNIT PRICE AND LIQUIDITY Strong price increase in 2006 Share volume - m Unit price - R 12 60 Close price 29% 10 50 Volume traded 30% 8 40 6 30 4 20 2 10 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YEAR ENDED 31 DECEMBER 2006

  14. Slide 14: Market Performance

    MARKET PERFORMANCE Outperforms peer group 350 Hyprop 300 PLS 250 ALSI 200 150 100 Increase over 3 years 208% 50 Total return over 3 years (income and capital growth) 254% 0 2004 2005 2006 YEAR ENDED 31 DECEMBER 2006

  15. Slide 15: Asset Growth & Market Cap

    ASSET GROWTH & MARKET CAP R bn 8 7 Total assets R6.9 bn 6 5 Market cap 4 R5.6 bn 3 2 Debt 1 R1.14 bn 0 2001 2002 2003 2004 2005 2006 YEAR ENDED 31 DECEMBER 2006

  16. Slide 16: Direct Property Portfolio

    DIRECT PROPERTY PORTFOLIO Outperforms Investment Property Databank (IPD) Total Return Hyprop 58.6 Equities PLS 47.3 IPD Portfolio 41.3 Cash 31.6 27.8 31.9 28.8 26.0 21.9 19.7 16.9 7.5 9.5 10.1 Source: IPD 1 3 5 Years IPD measures ungeared return (capital and income) over 2 200 properties with a tota

  17. Slide 17: Direct Property Portfolio Contd.

    DIRECT PROPERTY PORTFOLIO Contd. IPD Awards – Calendar year 2005 Best Performance over 1,2,3,5 and 8 years Best 3-year performance for retail portfolio YEAR ENDED 31 DECEMBER 2006

  18. Slide 18: Financial Performance

    FINANCIAL PERFORMANCE SOLID PERFORMANCE

  19. Slide 19: Extracts - Income Statement

    EXTRACTS - INCOME STATEMENT (attributable to Hyprop) 2006 2005 Investment property income 548,934 497,965 10% Property Expenses 174,731 167,028 5% Net property income 374,203 330,937 13% YEAR ENDED 31 DECEMBER 2006

  20. Slide 20: Extracts - Income Statement

    EXTRACTS - INCOME STATEMENT (attributable to Hyprop) 2006 2005 Investment property income 548,934 497,965 10% Property Expenses 174,731 167,028 5% Net property income 374,203 330,937 13% Other operating expenses 29,120 23,094 26% 345,083 307,843 12% YEAR ENDED 31 DECEMBER 2006

  21. Slide 21: Extracts - Income Statement

    EXTRACTS - INCOME STATEMENT (attributable to Hyprop) 2006 2005 Investment property income 548,934 497,965 10% Property Expenses 174,731 167,028 5% Net property income 374,203 330,937 13% Other operating expenses 29,120 23,094 26% 345,083 307,843 12% Income from SA Retail 81,861 40,649 Income from VP

  22. Slide 22: Extracts - Income Statement

    EXTRACTS - INCOME STATEMENT (attributable to Hyprop) 2006 2005 Investment property income 548,934 497,965 10% Property Expenses 174,731 167,028 5% Net property income 374,203 330,937 13% Other operating expenses 29,120 23,094 26% 345,083 307,843 12% Income from SA Retail 81,861 40,649 Income from VP

  23. Slide 23: Income Growth

    INCOME GROWTH Outstanding performance Net property Average Increase YOY Property income to 2 year Rm Increase Hyprop increase Canal Walk 156,107 16,476 11.8% 35.8% The Glen 51,843 7,150 16% 49.8% Hyde Park 58,639 4,842 9% 22.3% Rosebank Mall 47,218 5,395 12.9% 27.7% Southcoast Mall 9,665 8,827 OFFIC

  24. Slide 24: Extracts - Balance Sheet

    EXTRACTS - BALANCE SHEET (attributable to Hyprop) 2006 2005 Investment property 5,559,558 4,404,821 26% Listed property securities 1,135,019 951,074 19% Investment in VPIF (associate) 142,619 - Investment property held for sale 38,060 34,800 9% Property Assets 6,875,256 5,390,695 28% Combined Unitho

  25. Slide 25: Extracts - Balance Sheet

    EXTRACTS - BALANCE SHEET (attributable to Hyprop) 2006 2005 Investment property 5,559,558 4,404,821 26% Listed property securities 1,135,019 951,074 19% Investment in VPIF (associate) 142,619 - Investment property held for sale 38,060 34,800 9% Property Assets 6,875,256 5,390,695 28% Combined Unitho

  26. Slide 26: Borrowings

    BORROWINGS Debt at year-end R1.136 billion Average interest rate 9.8% Gearing 17.0% Repayment of debt April 2007 YEAR ENDED 31 DECEMBER 2006

  27. Slide 27: Valuations

    VALUATIONS SIGNIFICANT GROWTH

  28. Slide 28: Property Total Value 2006

    2006 2006 value Total Value per attributable Cost Property value rentable area to Hyprop Rm Rm R/m² Rm Canal Walk 3,250 2,600 24,562 953 The Glen 1,117 839 21,704 345 Hyde Park 920 920 24,797 266 Rosebank Mall 700 700 20,726 245 Southcoast Mall 274 137 9,912 101 Stoneridge 58 58 - 58 RETAIL 6,319 5,

  29. Slide 29: Strong Valuation Gains

    STRONG VALUATION GAINS million 30% 1,400 1.268 Valuation gains 2006 vs 2005 1,200 1,000 800 30% 600 600 400 26.9% 34.5% 30.3% 195 215 163 29.6% 200 31 65 0 Canal Hyde The Rosebank Southcoast Offices Total Walk Park Glen Mall Mall 2006 2005 Yield range for retail 6.8% − 8.0% 7.9% − 8.9% Yield range f

  30. Slide 30: Operational Performance

    OPERATIONAL PERFORMANCE GROUNDBREAKING SUCCESS

  31. Slide 31: Lease Activity

    LEASE ACTIVITY High demand for space Renewals 35 553m² 10.3% of portfolio New Tenants 25 513m² 7.4% of portfolio Rental growth Contractual escalations Retail 9.3% Offices 7.5% Market rental growth Retail 12.0% Offices -1.0% YEAR ENDED 31 DECEMBER 2006

  32. Slide 32: Vacancies

    VACANCIES Historic low 14% 12% 10% 10.8% 8% 8.8% 6% 6.8% 4% 3.7% 2% 2.7% 1.1% 0% 2001 2002 2003 2004 2005 2006 YEAR ENDED 31 DECEMBER 2006

  33. Slide 33: Lease Expiries

    LEASE EXPIRIES Future opportunities 2007 2008 2009 2010 2011+ Canal Walk 9 12 13 39 27 The Glen 11 27 17 13 33 Hyde Park 26 17 19 7 31 Rosebank Mall 22 16 23 13 26 Southcoast Mall 2 14 5 47 33 RETAIL 13 16 16 26 29 OFFICES 45 8 24 15 7 Expiries by income YEAR ENDED 31 DECEMBER 2006

  34. Slide 34: Trading Performances

    TRADING PERFORMANCES Healthy retail environment  Continued strong consumer spend & good trading by national tenants  Visitors to centres 51.8 million  Retail spend R5.3 billion  Retail growth on 11% like-for-like basis YEAR ENDED 31 DECEMBER 2006

  35. Slide 35: Operational Focus

    OPERATIONAL FOCUS Brand building  Preferred shopping destination  Complete retail offering and tenant mix  New electronic giftcard  Active CSR programmes YEAR ENDED 31 DECEMBER 2006

  36. Slide 36: Ten Largest Tenants

    TEN LARGEST TENANTS Diversified risk % of % of Rank Tenant GLA income 1 Edcon 8% 6% 2 Pick 'n Pay 8% 3% 3 Woolworths 6% 4% 4 Shoprite Checkers 5% 2% 5 Nu Metro 4% 2% 6 Foschini 4% 5% 7 Stuttafords 4% 2% 8 Truworths 3% 3% 9 Pepkor 3% 3% 10 Mr Price Group 3% 3% 50% 32% YEAR ENDED 31 DECEMBER 2006

  37. Slide 37: Developments

    DEVELOPMENTS FOCUS ON GROUND BREAKING LONG-TERM FORGROWTH THE FUTURE

  38. Slide 38: New Development: Stoneridge Shopping Centre

    NEW DEVELOPMENT Stoneridge Shopping Centre  Greenstone Park, Modderfontein  Phase 1 retail centre 50 000m²  Development cost R544 million  Target yield 9%  Opening October 2008 Hyprop 90% Abland 10% YEAR ENDED 31 DECEMBER 2006

  39. Slide 39: Existing Portfolio: Canal Walk

    EXISTING PORTFOLIO Canal Walk  La Piazza  Opened December 2006  New restaurant offering  Cost R11.6 million  Initial yield 14% YEAR ENDED 31 DECEMBER 2006

  40. Slide 40: Existing Portfolio: Canal Walk

    EXISTING PORTFOLIO Canal Walk  Mr Price Home  Opening November 2007  Cost R32 million  Initial yield 13% YEAR ENDED 31 DECEMBER 2006

  41. Slide 41: Existing Portfolio: The Glen

    EXISTING PORTFOLIO The Glen  Edgars extension  Opening April 2007  Cost R19 million  Initial yield 10.5% YEAR ENDED 31 DECEMBER 2006

  42. Slide 42: Future Opportunities

    FUTURE OPPORTUNITIES Existing portfolio  Additional retail rights − 16 000 m²  Additional retail rights − 10 000 m²  Available land YEAR ENDED 31 DECEMBER 2006

  43. Slide 43: Corporate Information

    CORPORATE INFORMATION INVESTMENTS LIMITED

  44. Slide 44: Unitholder Profile

    UNITHOLDER PROFILE Major unitholders >5% of total units in issue Old Mutual Standard Bank Group 6.8% 6.8% Redefine 28.6% Coronation Group 7.9% 10.6% Stanlib Funds YEAR ENDED 31 DECEMBER 2006

  45. Slide 45: Board Structure

    BOARD STRUCTURE Independent Non-Executive Directors PF Kirchmann (Chairman) MS Aitken (alt P Thurling) JR McAlpine K Sibisi (appointed from 1 December 2006) Non-Executive Directors WE Cesman (alt J Finn) EG Dube S Shaw-Taylor (Chairman Audit committee) M Wainer (alt M Flax) LE Weil Executive Directo

  46. Slide 46: Management Structure

    MANAGEMENT STRUCTURE Asset Manager Madison Property Fund Managers Ltd Property Managers Madison Property Fund Managers Ltd, Canal Walk Management Company (Pty) Ltd, JHI Real Estate Ltd (Rosebank Mall & JHI House) Senior Management Asset Manager Nicole Greenstone Canal Walk Wayne Abegglen & Gavin Woo

  47. Slide 47: Prospects

    PROSPECTS POSITIVE OUTLOOK HYPROP

  48. Slide 48: 2007 Outlook

    2007 Growth in distribution 12%-15%  Strong rental growth from shopping centres  Disposal of SA Retail  BEE equity transaction under consideration YEAR ENDED 31 DECEMBER 2006

  49. Slide 49: Long-Term

    LONG-TERM Focus on income growth: Rental escalations Rental increases on renewals Proactive tenant mix management Investment in existing centres Development opportunities YEAR ENDED 31 DECEMBER 2006

  50. Slide 50: Questions & Answers

    QUESTIONS & ANSWERS INVESTMENTS LIMITED

  51. Slide 51: Slide 51

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