Hyprop Investments Limited · JSE:HYP
Hyprop Investments — FY2007 Earnings Presentation
41 slides from Hyprop Investments's earnings presentation, March 2008
Slide 1: Audited results for the year ended 31 December 2007
audited results for the year ended 31 december 2007 www.hyprop.co.za presentation to the investment analysts society 1
Slide 2: Business overview
Business overview Successful track record Focus on premium retail property investments since 1987 75% of total investments from 5 prime shopping centres 84% of total income from shopping centres Asset managers: Madison Property Fund Managers 2
Slide 3: Business Strategy
Business Strategy Long-term investment Focus on sustainable income growth Continually enhance quality of portfolio Ongoing re-investment in existing portfolio Hands-on management with specialised knowledge Close relationship with retailers and service providers 3
Slide 4: Investment Property Portfolio
Investment Property Portfolio Quality shopping centres Value attributable Contribution Ownership Size to Hyprop to income Property % m2 R ’000 % Canal Walk 80 135 402 3 320 000 41 The Glen 75.15 54 030 1 029 555 13 Hyde Park 100 37 011 1 140 000 15 Rosebank Mall 100 33 774 820 000 12 Southcoast Mall
Slide 5: Highlights
Highlights Record growth Distribution 45 cents 20% 270 cents Investment Properties R1.3 billion 24% R6.9 billion Total investments R1.9 billion 29% R8.6 billion Market cap R1.9 billion 34% R7.5 billion Pre-tax NAV R10.30 pu 26% R49.93 Unit Price R6.50 pu 17% R45.00 Gearing (R796 m) -13% 3.6% 5
Slide 6: Investment performance: proven track record
investment performance proven track record 6
Slide 7: Distribution growth
Distribution growth Cents per combined unit Growth rate 300 30% Distributions Growth 25% 250 20% 200 15% 10% 150 5% 0% 100 -5% -10% 50 -15% 0 -20% 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 Average growth p.a over 20 years 9.9% Average growth p.a since 2004 17.9% 14 years of consecuti
Slide 8: 20 years of unit price growth
20 years of unit price growth Combined Unit Price 50 45.0 45 Combined Unit Price over 20 years 40 38.5 35 29.9 30 25 19.8 20 13.8 15 11.5 10.0 10.0 10 6.5 6.1 6.8 6.9 6.3 6.5 7.0 5.7 5.7 7.8 5.0 5.3 5 0 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 Average growth p.a over 20 years 10.7% Av
Slide 9: Unit price performance against indices
Unit price performance against indices Outperformed peer group 900 800 Hyprop 700 600 PLS 500 ALSI 400 300 200 100 0 98 99 0 1 2 3 4 5 6 7 Years 9
Slide 10: Asset and market capitalisation growth
Asset and market capitalisation growth Financially sound R billion 10 Total Assets R8.65bn 8 R7.48bn Market Capitalisation 6 Debt 4 2 R312m 0 2001 2002 2003 2004 2005 2006 2007 Average growth p.a in assets 46% Average growth p.a. in market cap 50% 10
Slide 11: Financial results: landmark growth
financial results landmark growth 11
Slide 12: Net property income growth
Net property income growth 2007 2006 Distributable income R’000 R’000 Canal Walk 179 294 156 107 15% The Glen 59 176 51 843 14% Hyde Park 66 731 58 639 14% The Mall of Rosebank 52 782 47 218 12% Southcoast Mall 10 953 9 665 13% Shopping Centres 368 936 323 472 14% Offices 33 870 50 731 Investment pr
Slide 13: Net income growth
Net income growth 2007 2006 Distributable income R’000 R’000 Listed property securities 26 008 81 861 Fund management expenses -39 651 -29 120 Net interest 3 664 -106 725 Interest received 85 362 1 917 Interest paid -81 698 -108 642 Enhancement fees - VPIF 2 196 Share of income from VPIF 9 070 1 936
Slide 14: Sale of 46% interest in SA Retail
Sale of 46% interest in SA Retail Sale price of R1.135 billion in cash Received interest of R36.7 million Realised gain of R147 million (before CGT) Repaid floating debt Balance invested in cash deposits 14
Slide 15: Acquisition of interest in Sycom
Acquisition of interest in Sycom Acquired 31.7% interest in Sycom Property Fund Distribution-enhancing for Hyprop Value at year-end R1.29 billion Payment: R66.3 million cash Issued 21.7 million Hyprop units – Oct ’07 Swapped 5.6 million Resilient units Subsequent to year-end: Acquired
Slide 16: Changes to assets
Changes to assets (attributable to Hyprop) 2007 2006 Investment Property R’000 R’000 Opening balance 5 559 558 4 404 821 Acquisitions, developments & 249 451 90 142 refurbishments Depreciation -6 632 -7 693 TI's & building appurtenances 10 314 5 990 Disposals -173 732 Held for sale (net of cost) -18
Slide 17: Analysis of balance sheet
Analysis of balance sheet (attributable to Hyprop) 2007 2006 Change R’000 R’000 Investment Property 6 979 202 5 559 558 26% Listed Property Securities 1 288 939 1 135 019 Investment in VPIF 198 186 142 620 39% Investment Property held for sale 188 390 38 060 Non-current assets 8 654 717 6 875 257 26
Slide 18: Net borrowings
Net borrowings 2007 2006 R’000 R’000 Net borrowings 311 678 1 107 692 Average interest rate 9.54% 9.80% Gearing 3.6% 16% Fixed interest rate profile: Fixed for periods of two to seven years 18
Slide 19: Valuations
Valuations Strong gains Value Value per rentable area Property Rm R/m² Canal Walk 4 150 30 649 28% The Glen 1 370 25 356 23% Hyde Park 1 140 30 802 24% Rosebank Mall 820 24 279 17% Southcoast Mall 304 10 779 11% Offices * 436 11 223 40% * Includes two buildings sold Yield range: 6.4% to 8.5% 19
Slide 20: Sale of office buildings
Sale of office buildings Sale Price Yield Property Rm % Morningview 56 7.6 Atholl Ridge 135 8.2 191 8.0 Gain (before CGT): R63.7 million 20
Slide 21: Unit price vs Net Asset Value
Unit price vs Net Asset Value Rand 60 Closing unit price R49.93 50 Pre-tax NAV R45.00 40 NAV R39.96 30 20 10 0 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Premium to NAV 18% 23% 24% 23% 13% Premium / (Discount) to Pre-tax NAV 18% 1% 1% -3% -11% 21
Slide 22: Operating performance: active management
operating performance active management 22
Slide 23: Operating performance
Operating performance Property Gross retail rent /m² Canal Walk 160 11.5% The Glen 139 11.9% Hyde Park 194 9.6% Rosebank Mall 149 10.6% Southcoast Mall 83 11.9% Contractual % of escalations Rental Lease activity Area Portfolio % Growth Renewals 28 400 9 9.4 15% New Tenants 28 000 9 9.6 13% 23
Slide 24: Vacancies
Vacancies Historic low 12% 10.8% 10% 8.8% 8% 6.8% 6% 3.7% 4% 2.7% 2% 1.1% 0.8% 0% 2001 2002 2003 2004 2005 2006 2007 24
Slide 25: Gross income spread
Gross income spread Retail income 69% Operating cost recovery 14% Customer parking 7% Office income 5% Turnover rent 2% Tenant parking 2% Other 1% 25
Slide 26: Trading performances
Trading performances Visitors million Spend Rm 6,0 Visitors 2007 Spend 2007 800 5,5 Visitors 2006 Spend 2006 700 600 5,0 500 4,5 400 4,0 300 200 3,5 100 3,0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Visitors to the centres 52.5 million 1% Retail spend R 5.8 billion 9% Spend per customer R110
Slide 27: Lease expiries
Lease expiries Future opportunities 2008 2009 2010 m² m² m² Canal Walk 15 300 10 600 52 000 The Glen 9 900 6 300 6 300 Hyde Park 8 300 3 000 1 400 Rosebank Mall 5 400 5 900 6 500 Southcoast Mall 2 400 1 300 9 600 Offices 5 500 4 000 3 000 Total 46 800 31 100 78 800 15% 11% 25% 27
Slide 28: Developments: yield-enhancing
developments yield-enhancing 28
Slide 29: Expansions - completed projects
Expansions - completed projects Size Value Yield Status: Centre m² Rm % Opened Canal Walk Mr Price Home 3 600 26 13.0 Nov 07 Sportsman's 2 000 5 18.0 Nov 07 Warehouse The Glen Edgars 2 300 12 13.0 Mar 07 Southcoast Mall Boardmans 1 000 3 9.5 Nov 07 Total 8 900 46 13.3 29
Slide 30: Expansions – under development
Expansions – under development Size Value Yield Status: Centre m² Rm % To open Canal Walk Woolworths 1 400 10 10.0 Apr 08 Food court 1 800 26 9.0 Oct 08 enlargement The Glen Extension to 600 7 17.0 Apr 08 Nedbank & FNB Southcoast Mall Mr Price Home 1 400 5 10.0 Aug 08 Total Value 5 200 48 10.5 30
Slide 31: Stoneridge shopping centre
Stoneridge shopping centre Located in Greenstone Park, a fast growing mixed-use precinct in Modderfontein Ownership 90% Phase 1 (under construction) 50 000 m² Development cost R508 million Budget yield 8.3% Virgin Active, Superspar, Toys-R-Us, Major tenants Sportsman’s Warehouse Opening date October
Slide 32: The Glen shopping centre
The Glen shopping centre Size 19,500m² Cost R369m (Hyprop share - R277m) Completion date November 2009 Major tenants Game, Dis-Chem, Mr Price Home, etc Budget yield 10.9% 32
Slide 33: Canal Walk shopping centre
Canal Walk shopping centre Six stand-alone retail boxes Size 16,000m² Cost R250m (Hyprop share - R200m) Completion date May 2009 Budget yield 9.2% 33
Slide 34: Hyde Park shopping
Hyde Park shopping Four star hotel Size 132 rooms Cost R176m Completion date July 2009 Budget yield 11.4% 34
Slide 35: Corporate information
corporate information 35
Slide 36: Unitholder profile
Unitholder profile Redefine 29% Stanlib Funds 13% Old Mutual Funds 10% Coronation Group 6% Standard Bank Property Group 5% Liberty Life 3% 36
Slide 37: Board structure
Board structure Independent Non-Executive Directors MS Aitken (Chairman) JR McAlpine K Sibisi Non-executive Directors WE Cesman EG Dube S Shaw-Taylor M Wainer LE Weil Executive Directors P Prinsloo (CEO) L Cohen (FD) 37
Slide 38: Corporate social responsibility
Corporate social responsibility Angels in Blue and Plight of the Homeless Canal Walk Foundation - various charities in the area Thusanani Children’s Foundation and community policing forum EmployAbility Vulindlela and Fountain of Love Esayedi FET College and ‘Tree of Light for Hospice’ 38
Slide 39: Prospects: long-term sustainability
prospects long-term sustainability 39
Slide 40: Prospects
Prospects Challenge Consumer spend Strengths Quality assets and low gearing Continued demand for retail space Contractual rental escalations Yield-enhancing expansions Distribution growth: 12 to 14% 40
Slide 41: Questions and answers
www.hyprop.co.za questions and answers 41