Vukile Property Fund Limited · JSE:VKE
Vukile Property Fund — Debt Investor Presentation (July 2023)
48 slides from Vukile Property Fund's debt investor presentation, July 2023
Slide 1: Building Communities, Growing Value
BUILDING COMMUNITIES, GROWING VALUE. Debt Capital Markets Annual Roadshow – July 2023
Slide 2: Contact Details
CONTACT DETAILS AVAILABLE FOR QUESTIONS Laurence Rapp Laurence Cohen Maurice Shapiro Chief Executive Officer Chief Financial Officer Group Head of Treasury Laurence.Rapp@vukile.co.za Cohen.Laurence@vukile.co.za Maurice.Shapiro@vukile.co.za +27 (0)11 288 1002 +27 (0)11 288 1014 +27 (0)11 288 1001 +27
Slide 3: Agenda
AGENDA 01 INTRODUCTION Laurence Rapp 02 TREASURY MANAGEMENT Laurence Cohen 03 STRATEGY AND ESG Laurence Rapp 04 DMTN PROGRAMME Maurice Shapiro 2
Slide 4: Introduction
01 INTRODUCTION Laurence Rapp 3
Slide 5: Profile: Who We Are
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 PROFILE WHO WE ARE High-quality, low-risk, retail REIT operating in South Africa and Spain Significant geographic diversification with 59% of assets located in Spain Strong operational focus with a core competence in active asset managem
Slide 6: Why Vukile? Our Investment Case
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 WHY VUKILE? OUR INVESTMENT CASE INNOVATION AND SPECIALISTS HIGH QUALITY ROBUST FINANCIAL ACTIVE HIGHEST GOVERNANCE STRONG INCOME & GROWTH CUSTOMER CENTRICITY IN RETAIL PORTFOLIO METRICS MANAGEMENT STANDARDS PROSPECTS AS PART OF OUR DNA ▪
Slide 7: Group Overview – Property Assets of R37 Billion
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 GROUP OVERVIEW – PROPERTY ASSETS OF R37 BILLION FOCUSSED RETAIL REIT WITH A BLUE-CHIP TENANT MIX PROVIDING WELL DIVERSIFIED EXPOSURE ACROSS MACRO-ECONOMIC DRIVERS SPAIN SOUTH AFRICA Total property assets €1 118 million R21.5 billion 58%
Slide 8: South African Retail Portfolio Composition
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 SOUTH AFRICAN RETAIL PORTFOLIO COMPOSITION WELL POSITIONED DEFENSIVE PORTFOLIO FOCUSSED ON TOWNSHIP AND RURAL MARKETS 5 Township Rural Value Centre Urban Commuter (7%) Limpopo Value R4.4 billion R3.4 billion R2.0 billion R3.6 billion R1.
Slide 9: Direct South African Retail Portfolio
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 DIRECT SOUTH AFRICAN RETAIL PORTFOLIO KEY RETAIL PORTFOLIO METRICS KEY FACTS Portfolio Value Total number GLA Operational PV installed of assets Capex 20 plants 14.9MWp 9.6% of energy R14.4 billion 34 760 632m2 R100.3 million consumption
Slide 10: South African Retail Tenant Exposure
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 SOUTH AFRICAN RETAIL TENANT EXPOSURE HIGH QUALITY CASHFLOWS FROM A WELL DIVERSIFIED BLUE-CHIP TENANT MIX 32% OF RENT FROM ESSENTIAL SERVICES 58% OF RENT FROM TOP 20 TENANTS 8% TFG 8% Pepkor Essential 19% Grocery/ supermarket 7% Pick n Pa
Slide 11: Tenant Affordability
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 TENANT AFFORDABILITY CONSISTENTLY SOUND PORTFOLIO METRICS RETAIL VACANCY PROFILE BY GLA RETAIL AVERAGE BASE RENTALS R/m² (EXCL. RECOVERIES) 3.9% 152.69 159.96 141.43 146.40 3.2% 130.44 134.78 3.0% 2.9% 2.6% 2.0% 2018 2019 2020 2021 2022
Slide 12: Energy and Sustainability: Cost of Diesel Backup Generators
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 ENERGY AND SUSTAINABILITY THE COST OF DIESEL BACKUP GENERATORS Total diesel cost FY23 R11.2 million (budget R2.2 million) Total unrecoverable common area diesel cost FY23 R3.4 million Total tenant diesel cost FY23 R7.8 million Recovery o
Slide 13: Energy and Sustainability: Renewable Power Backup Strategy
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 ENERGY AND SUSTAINABILITY RENEWABLE POWER BACKUP STRATEGY ▪ 14.9 MWp of Solar PV installed over the past five years – equating to 9.6% of portfolio energy consumption ▪ Installation of 2.3MWp completed for FY23 and an additional 7.5 MWp
Slide 14: Net Cost to Property Revenue
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 NET COST TO PROPERTY REVENUE DRIVING OPERATIONAL EFFICIENCIES TO MANAGE COST PRESSURE COST REDUCTION INITIATIVES NET EXPENSES Average annual escalation since 2013 ▪ Continued energy management through solar PV, meter optimisation, Net ex
Slide 15: Valuations: South African Retail Portfolio
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 VALUATIONS: SOUTH AFRICAN RETAIL PORTFOLIO 34 PROPERTIES VALUED AT R14.4 BILLION 5.8% INCREASE WITH A CONSERVATIVE VALUE DENSITY OF R18 895/m² 935 (185) (10) 54 R million (1.4%) (0.1%) 0.4% 13 579 6.9% 14 372 Value Organic growth Effect
Slide 16: Spanish Portfolio
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 SPANISH PORTFOLIO WELL DIVERSIFIED ACROSS SPAIN 9 Asturias 4% 1 El Faro 9 Parque Principado 7 Castilla y León 2 Bahía Sur 10 Marismas de Polvorín 7% 3 Los Arcos 11 La Heredad 8 16 4 12 15 Madrid Granaita La Serena 5% Comunidad 5 Habanera
Slide 17: Direct Spanish Portfolio
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 DIRECT SPANISH PORTFOLIO KEY PORTFOLIO METRICS KEY FACTS GAV Portfolio value GLA Normalised NOI €1 118 billion +2.5%(i) €1 012 billion +1.1% (ii) 350 925m² Like-for-like growth +9.0% (iii) VALUATIONS Average asset Average Average exit To
Slide 18: Spanish Tenant Exposure
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 SPANISH TENANT EXPOSURE HIGHLY DIVERSIFIED RETAIL MIX LEADING TO SUSTAINABLE, HIGH QUALITY AND LOW RISK INCOME STREAMS ASSETS GLA WALE (i) OCCUPANCY 16 350 925m² 12.6 years 98.7% CATEGORY PROFILE BY RENT TOP 10 TENANTS BY RENT 31 MARCH 2
Slide 19: Leasing Activity
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 LEASING ACTIVITY CONSISTENTLY STRONG COMMERCIAL PERFORMANCE MAIN BUSINESS KPI´S PORTFOLIO OCCUPANCY (iii) 189 €7.3 million LEASES SIGNED NEW RENT SIGNED 31 MARCH 2023 98.7% 31 MARCH 2022 98.4% 85 104 €4.1 million €3.2 million RENEWALS NE
Slide 20: CPI Indexation Environment
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 CPI INDEXATION ENVIRONMENT CPI-LINKED ESCALATIONS ARE MANDATORY FOR c.100% OF OUR LEASE AGREEMENTS, 72% OF THE INCREASED RENTAL ESCALATIONS WILL APPLY IN FY24 ALL TENANTS ACCEPTED CPI INDEXATION DURING FY23 WITH ASSET MANAGEMENT MONITORI
Slide 21: Valuations: Spanish Portfolio
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 VALUATIONS: SPANISH PORTFOLIO CYCLICAL YIELD EXPANSION ABSORBED BY VERY POSITIVE OPERATIONAL PERFORMANCE KEEPING VALUES FLAT DESPITE AVERAGE PORTFOLIO CAP RATES EXPANSION OF 113 BPS PORTFOLIO VALUES REMAIN STABLE STABILISED NOI EVOLUTION
Slide 22: Investment in LAR España
01 INTRODUCTION DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 INVESTMENT IN LAR ESPAÑA ▪ Castellana’s investment in Lar España continues to perform well as a financial investment ▪ In line with our expectations, FY22 results reported by the company reflect a strong operational performance: ‒ Sales
Slide 23: Treasury Management
02 TREASURY MANAGEMENT Laurence Cohen 22
Slide 24: Debt and Balance Sheet Overview
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 DEBT AND BALANCE SHEET OVERVIEW LIQUIDITY AND ▪ Only 5.9% (R1.0 billion) of group debt matures in FY24 EXPIRY PROFILE ▪ Undrawn debt facilities of R2.5 billion at 31 March 2023 (R3.1 billion at 31 March 2022) ▪ Cash and undrawn co
Slide 25: Composition of Group Balance Sheet
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 COMPOSITION OF GROUP BALANCE SHEET MATCHING DEBT WITH PROPERTY ASSETS - BY GEOGRAPHY AND CURRENCY VUKILE COMPANY CASTELLANA (non-recourse to Vukile) Total Company Assets (R25.4 billion) to Debt (R7.6 billion) EUR Assets (22.2 bill
Slide 26: Key Treasury Metrics
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 KEY TREASURY METRICS STRONG BALANCE SHEET AND CREDIT METRICS SUPPORT CREDIT RATING UPGRADE 31 March 2023 31 March 2022 R million R million Interest cover ratio 3.1 times 3.4 times Loan-to-value ratio (net of cash and cash equivale
Slide 27: Analysis of Group Loan Expiry Profile
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 ANALYSIS OF GROUP LOAN EXPIRY PROFILE LOW RISK EXPIRY PROFILE ▪ R767 million of unsecured corporate bonds were refinanced through 4.6x oversubscribed auction in August 2022 (R2.3 billion of bids from 16 investors); ▪ Sufficient ca
Slide 28: Interest Rate Cycles
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 INTEREST RATE CYCLES CURRENT HIKING CYCLE HAS BEEN SHORT AND AGGRESSIVE, WITH A CUTTING CYCLE EXPECTED TO FOLLOW EUROPEAN CENTRAL BANK BENCHMARK INTEREST RATE (EURR002W INDEX) SOUTH AFRICAN REPO AVERAGE RATE (SARPRT INDEX) 5.0% 18
Slide 29: Analysis of Group Loan Repayment and Hedging Profile
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 ANALYSIS OF GROUP LOAN REPAYMENT AND HEDGING PROFILE GROUP LOAN AND HEDGING (SWAP & FIXED DEBT) EXPIRY PROFILE 44.1% 45.9% (i) R2.5 billion OF AVAILABLE UNDRAWN BANK FACILITIES 89% OF INTEREST-BEARING 25.3% 20.7% DEBT HEDGED 19.0%
Slide 30: Overview of Unencumbered Assets
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 OVERVIEW OF UNENCUMBERED ASSETS TOTAL UNENCUMBERED UNENCUMBERED UNENCUMBERED NUMBER OF GLA ASSETS DIRECT PROPERTY LISTED SHARES PROPERTIES R12 404m (A) R1 052m R11 352m 7 74 737m² AVERAGE PROPERTY RETAIL RENT FROM CONTRACTUAL INCO
Slide 31: Key Treasury Focus Areas Going Forward
02 TREASURY MANAGEMENT DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 KEY TREASURY FOCUS AREAS GOING FORWARD LIQUIDITY AND ▪ Continue to proactively manage debt expiry by maintaining strong relationships across all major bank funders EXPIRY PROFILE ▪ Increasing debt maturity profile by refinancing d
Slide 32: Notes
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 NOTES 31
Slide 33: Strategy and ESG
03 STRATEGY AND ESG Laurence Rapp 32
Slide 34: Becoming a Consumer-Focused Retail Real Estate Business
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 BECOMING A CONSUMER-FOCUSED RETAIL REAL ESTATE BUSINESS OUR CONSUMER-LED MODEL WILL CREATE VALUE FOR ALL OUR STAKEHOLDERS SHOPPERS TENANTS INVESTORS ▪ Understanding our ▪ Growing customer support ▪ Increasing rentals grows SHOPPERS'
Slide 35: Translating Our Strategy into Action
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 TRANSLATING OUR STRATEGY INTO ACTION WHO WE ARE - SPECIALIST CONSUMER-LED RETAIL REAL ESTATE FUND PURPOSE VISION MISSION WHY we exist WHO we aspire to be WHAT we must accomplish To positively impact the lives of our To be the most tr
Slide 36: Building Our Brand Strategy
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 BUILDING OUR BRAND STRATEGY Our brand ethos is encapsulated in our brand descriptor. Our tagline summarises our approach – by considering the needs of our communities, we create sustained value for them, our tenants and ultimately ou
Slide 37: Strategy
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 STRATEGY A CLEAR AND CONSISTENT RETAIL-FOCUSED STRATEGY CONSUMER-FOCUSED RETAIL REAL ESTATE BUSINESS 3rd Party Other markets South Africa Spain Asset Management ▪ Namibia EXISTING Core Portfolio Core Portfolio ▪ ALT Capital and ▪ REi
Slide 38: Delivering on Our ESG Strategy
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 DELIVERING ON OUR ESG STRATEGY ACHIEVEMENTS FOR FY23 Renewable energy Additional Evaluating Solar Completed first Investment in 100% of rural malls All Spanish ENVIRONMENTAL installations (PV) of renewable PV entry strategy verified
Slide 39: Strategic Focus Areas for 2024
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 STRATEGIC FOCUS AREAS FOR 2024 Operational excellence ▪ Already providing our tenants with nodally dominant shopping centres with very strong trading conditions ▪ Continued focus on retaining tenants and filling vacant space through
Slide 40: Notes
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 NOTES 39
Slide 41: DMTN Programme
04 DMTN PROGRAMME Maurice Shapiro 40
Slide 42: 2023 Issuance Strategy
04 DMTN PROGRAMME DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2023 ISSUANCE STRATEGY PRUDENT LIQUIDITY MANAGEMENT ▪ During FY2024 R550 million of corporate notes mature: ‒ VKE11, a R175 million 5 year note matured on 20 April 2023 (and was repaid with available cash) ‒ VKE14, a R375 million 5 yea
Slide 43: 2023 Issuance Strategy – Indicative Auction Date
04 DMTN PROGRAMME DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2023 ISSUANCE STRATEGY – INDICATIVE AUCTION DATE TRANSPARENT COMMUNICATION TARGET ISSUANCE SIZE: INSTRUMENT TYPE: TENOR: R500 million Senior Unsecured Floating 3 year (27 August 2026) Rate Notes and 5 year (27 August 2028) July 2023 Au
Slide 44: Corporate Bond Issuances
04 DMTN PROGRAMME DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 CORPORATE BOND ISSUANCES COMPOSITION OF UNSECURED DEBT AND COVENANT EXCLUSIVE DEBT Corporate Bonds Security Amount - Rm Reference Rate Margin Maturity Date Initial Term VKE11 (Repaid after FYE) Unsecured 175 3M JIBAR 1.75% 20 April 202
Slide 45: Questions and Answers
dvukile D> Centre of Growth QUESTIONS AND ANSWERS
Slide 46: Notes
03 STRATEGY AND ESG DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 NOTES 45
Slide 47: Legal Disclaimer
LEGAL DISCLAIMER This document has been prepared and issued by and is the sole responsibility of the management of the Company and its subsidiaries. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part, or otherwise disseminated
Slide 48: www.vukile.co.za
www.vukile.co.za
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