Vukile Property Fund Limited · JSE:VKE
Vukile Property Fund — Debt Investor Presentation (July 2022)
44 slides from Vukile Property Fund's debt investor presentation, July 2022
Slide 1: Debt Capital Markets Annual Roadshow
DEBT CAPITAL MARKETS July 2022 Annual Roadshow (Some photographs used in this presentation may have been taken prior to the COVID-19 pandemic and resultant health and safety requirements)
Slide 2: Contact Details
CONTACT DETAILS AVAILABLE FOR QUESTIONS Vukile Property Fund Designation Email Tel. Number Mobile number Laurence Rapp Chief Executive Officer Laurence.Rapp@vukile.co.za +27 (0)11 288 1002 +27 (0)83 266 3011 Laurence Cohen Chief Financial Officer Cohen.Laurence@vukile.co.za +27 (0)11 288 1014 +27 (0
Slide 3: Agenda
AGENDA 1 INTRODUCTION Laurence Rapp 2 TREASURY MANAGEMENT Laurence Cohen 3 CORPORATE STRATEGY Laurence Rapp 4 DMTN PROGRAMME Maurice Shapiro Q&A 3
Slide 4: Introduction
1 INTRODUCTION Laurence Rapp 4
Slide 5: Profile: Who We Are
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 PROFILE WHO WE ARE High-quality, low-risk, retail REIT operating in South Africa and Spain Significant geographic diversification with 54% of assets located in Spain Strong operational focus with a core competence in active asset manage
Slide 6: Why Vukile?
INTRODUCTION/ DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 WHY VUKILE? A UNIQUE PROPERTY COMPANY SPECIALISTS HIGH QUALITY ROBUST FINANCIAL ACTIVE HIGHEST GOVERNANCE INNOVATION AND STRONG INCOME & CUSTOMER CENTRICITY IN RETAIL PORTFOLIO METRICS MANAGEMENT STANDARDS GROWTH PROSPECTS AS PART OF OUR
Slide 7: Group Overview – Property Assets of R33bn
1 GROUP OVERVIEW – PROPERTY ASSETS OF R33bn FOCUSSED RETAIL REIT WITH A BLUE CHIP TENANT MIX PROVIDING WELL DIVERSIFIED EXPOSURE ACROSS MACRO ECONOMIC DRIVERS AND AN INCREASED RAND HEDGE PROFILE SPAIN SOUTH AFRICA Total assets €1 091m R17.6bn 54% R15.2bn 46% Direct property assets €1 001m R16.2bn 10
Slide 8: Diversified Retail Property Exposure
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 DIVERSIFIED RETAIL PROPERTY EXPOSURE HIGH QUALITY RETAIL PORTFOLIO COMPRISING 52 RETAIL ASSETS ACROSS SOUTH AFRICA AND SPAIN 8
Slide 9: Significantly Diversified Retail Tenant Exposure
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 SIGNIFICANTLY DIVERSIFIED RETAIL TENANT EXPOSURE HIGH QUALITY CASHFLOWS FROM A BLUE-CHIP TENANT MIX ACROSS SOUTH AFRICA AND SPAIN 9
Slide 10: Retail Portfolio Composition
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 RETAIL PORTFOLIO COMPOSITION WELL POSITIONED DEFENSIVE PORTFOLIO FOCUSSED ON TOWNSHIP AND RURAL MARKETS Township Rural Value Centre Urban Commuter Value R4.2bn R3.3bn R1.8bn R3.4bn R1.1bn Number of properties 10 10 4 9 3 6 8% GLA 195 22
Slide 11: Direct South African Retail Portfolio
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 DIRECT SOUTH AFRICAN RETAIL PORTFOLIO KEY RETAIL PORTFOLIO METRICS PV installed Portfolio Value Total number GLA Operational KEY FACTS 17 plants of assets Capex 12.7MW R13.8bn 36 774 864m2 R89m 9% of energy consumption Like-for-like ann
Slide 12: Retail Tenant Exposure
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 RETAIL TENANT EXPOSURE HIGH QUALITY CASHFLOWS FROM A WELL DIVERSIFIED BLUE-CHIP TENANT MIX 33% OF RENT FROM ESSENTIAL SERVICES 57% OF RENT FROM TOP 20 TENANTS Pepkor - 7% Foschini - 7% Essential Grocery/ Supermarket - 19% Pick n Pay Sto
Slide 13: Valuations: Retail Portfolio Valued at R13.8bn
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 VALUATIONS: RETAIL PORTFOLIO - 36 PROPERTIES VALUED AT R13.8BN 4.6% INCREASE WITH A CONSERVATIVE VALUE DENSITY OF R17 766/m² 13 160 764 (224) 5 62 13 767 R’m 5.8% (1.7%) 0.0% 0.5% Value Organic growth Effect of income Effect of discount
Slide 14: Valuation Methodology – South African Portfolio
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 VALUATION METHODOLOGY SOUTH AFRICAN PROPERTY PORTFOLIO Valuations are based on multiple assumptions which involve some subjectivity. The key is consistency in applying SCIENCE VS. ART the same methodology over time. We’ve applied consis
Slide 15: Spanish Retail Portfolio (Including Lar España Stake)
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 SPANISH RETAIL PORTFOLIO (INCLUDING c.24% STAKE IN LAR ESPAÑA) WELL DIVERSIFIED ACROSS SPAIN CASTELLANA RETAIL CENTRES LAR ESPAÑA RETAIL CENTRES 6 8 12 1 1 El Faro (Extremadura) 1 Megapark + Leisure Area (País Vasco) 13 2 Bahía Sur (And
Slide 16: Direct Spanish Portfolio
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 DIRECT SPANISH PORTFOLIO KEY PORTFOLIO METRICS GAV Portfolio value GLA NOI Like-for-like KEY FACTS +4.5% (2) €1 091b (1) €1 001b growth +0.2% (3) 350 271m² +5.94% (4) Average asset Average Average exit Total number VALUATIONS value disc
Slide 17: Tenant Mix
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 TENANT MIX HIGHLY DIVERSIFIED RETAIL MIX LEADING TO SUSTAINABLE, HIGH QUALITY AND LOW RISK INCOME STREAMS ASSETS GLA WALE (1) OCCUPANCY 16 350 271m² 13.2 years 98.4% CATEGORY PROFILE BY RENT TOP 10 TENANTS BY RENT 31 MARCH 2022 1% 31 MA
Slide 18: Valuation Methodology – Spanish Portfolio
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 VALUATION METHODOLOGY SPANISH PROPERTY PORTFOLIO VALUATION POLICY The portfolio is externally and independently valued (by Colliers International) using the Discounted Cash Flow method every six months and reviewed by external auditors
Slide 19: Investment in Lar España: Key Takeaways
INTRODUCTION / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 1 INVESTMENT IN LAR ESPAÑA POSITIONING CASTELLANA FOR FURTHER GROWTH INVESTMENT THESIS Q1 2022 BUSINESS UPDATE Highly attractive acquisition price at c. 48% discount to EPRA NTA. Q1 2022 business update in line with Castellana’s forecast.
Slide 20: Notes
NOTES 20
Slide 21: Treasury Management
2 TREASURY MANAGEMENT Laurence Cohen 21
Slide 22: Debt and Balance Sheet Overview
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 DEBT AND BALANCE SHEET OVERVIEW 66% (R2.3bn) of FY23 maturing debt has already been repaid, refinanced or extended LIQUIDITY AND Undrawn debt facilities of R3.1bn at 31 March 2022 (R1.9bn at 31 March 2021) EXPIRY PROFILE Sufficie
Slide 23: Composition of Group Balance Sheet
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 COMPOSITION OF GROUP BALANCE SHEET MATCHING DEBT WITH PROPERTY ASSETS - BY GEOGRAPHY AND CURRENCY VUKILE COMPANY CASTELLANA (non-recourse to Vukile) Total Company Assets (R24.7bn) to Debt (R6.6bn) Ratio 3.7x EUR Assets (18.1bn) t
Slide 24: Key Treasury Metrics
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 KEY TREASURY METRICS LOW RISK BALANCE SHEET AND RISK METRICS SUPPORTING INVESTMENT GRADE CREDIT RATING 31 March 31 March 2022 2021 Interest cover ratio 3.4 times 3.3 times Loan-to-value ratio 43.0% 42.8% (net of cash and cash equ
Slide 25: Analysis of Group Loan Expiry Profile
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 ANALYSIS OF GROUP LOAN EXPIRY PROFILE LOW RISK EXPIRY PROFILE 66% of expiries relating to FY23 of R2.3bn have already been repaid, refinanced or extended; €128m (R2.3bn) of EUR debt was repaid or converted into ZAR facilities; R5
Slide 26: The Interest Rate Cycle in South Africa
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 THE INTEREST RATE CYCLE IN SOUTH AFRICA WHERE ARE WE IN THE CURRENT HIKING CYCLE? The average hiking cycle has lasted 2 – 3 years with an average increase of 200bps - 400bps Period Start Period End Years Start Rate End Rate Chang
Slide 27: Interest Rate Hedging Strategy
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 INTEREST RATE HEDGING STRATEGY TACTICAL STRATEGY OF DYNAMICALLY HEDGING TO MITIGATE INTEREST RATE RISK Cognisant of interest rate hiking cycle over next few years, however current cost of hedging with interest rate swaps is at al
Slide 28: Overview of Unencumbered Assets
TREASURY MANAGEMENT / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 2 OVERVIEW OF UNENCUMBERED ASSETS Total Unencumbered Unencumbered Number GLA unencumbered direct listed of assets property shares properties R10 281m (A) R1 168m R9 113m 8 97 143m² Average property Retail rent from Contractual rent
Slide 29: Notes
NOTES 29
Slide 30: Corporate Strategy
3 CORPORATE STRATEGY Laurence Rapp 30
Slide 31: Strategic Focus Areas
CORPORATE STRATEGY / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 3 STRATEGIC FOCUS AREAS CUSTOMERS DRIVE VALUE OUR Continued drive to embed a singular culture within Vukile and Castellana Ensuring the group remains an employer of choice PEOPLE People leadership and management will be a key differ
Slide 32: ESG Update
CORPORATE STRATEGY / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 3 ESG UPDATE ESG REPORTING FRAMEWORKS AND CERTIFICATIONS ESG reporting aligned with Key Stakeholder Capitalism Metrics are: World Economic Forum (WEF) Stakeholder Capitalism Metrics People Planet Prosperity Governance ESG 3-year pla
Slide 33: Significant Deliverables on ESG During FY22
CORPORATE STRATEGY / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 3 SIGNIFICANT DELIVERABLES ON ESG DURING FY22 Performance metric Achievements for FY22 Further 2.9 MWp of PV installed in SA, increasing renewable capacity by 26% year-on-year to a total of 12,7MWp. Optimisation of energy mix Contra
Slide 34: ESG Focus Areas FY23 – FY25
CORPORATE STRATEGY / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 3 ESG FOCUS AREAS FY23 ‒ FY25 ENVIRONMENTAL SOCIAL GOVERNANCE Further enhancing our energy mix through Providing funding and mentorship Maintaining our high ethical standards the installation of additional renewable to a minimum of
Slide 35: Notes
NOTES 35
Slide 36: DMTN Programme
4 DMTN PROGRAMME Maurice Shapiro 36
Slide 37: Corporate Bond Issuances
DMTN PROGRAMME / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 4 CORPORATE BOND ISSUANCES COMPOSITION OF SECURED AND UNSECURED DEBT Corporate Bonds Security Amount Reference Rate Margin Maturity Date Initial Term VKE11 Unsecured R175m 3M JIBAR 1.75% 20 April 2023 5 years VKE14 Unsecured R375m 3M JI
Slide 38: 2022 Issuance Strategy
DMTN PROGRAMME / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 4 2022 ISSUANCE STRATEGY PRUDENT LIQUIDITY MANAGEMENT During FY2023 R471 million of corporate notes mature: VKE10 a R194 million 5 year note matured on the 8 July 2022 (and was repaid with existing facilities) VKE17 a R158 million 1 yea
Slide 39: 2022 Issuance Strategy – Indicative Timeline
DMTN PROGRAMME / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 4 2022 ISSUANCE STRATEGY – INDICATIVE TIMELINE TRANSPARENT COMMUNICATION Target Issuance Size: R500 million – R750 million Instrument Type: Senior Unsecured Floating Rate Notes Tenor: 3 year (27 August 2025) and 5 year (27 August 2027)
Slide 40: Update to APS Covenants
DMTN PROGRAMME / DEBT CAPITAL MARKETS ANNUAL ROADSHOW JULY 2022 4 UPDATE TO APS COVENANTS ALIGN WITH BUSINESS OPERATIONS AND INDUSTRY STANDARDS APS to include Default Interest of 2% with standard industry wording To refine and clarify definition of Loan to Value to align with banks, proposed changes
Slide 41: Questions and Answers
QUESTIONS AND ANSWERS RTY REAL ESTATE. REAL GROWTH,
Slide 42: Contact Details
CONTACT DETAILS AVAILABLE FOR QUESTIONS Vukile Property Fund Designation Email Tel. Number Mobile number Laurence Rapp Chief Executive Officer Laurence.Rapp@vukile.co.za +27 (0)11 288 1002 +27 (0)83 266 3011 Laurence Cohen Chief Financial Officer Cohen.Laurence@vukile.co.za +27 (0)11 288 1014 +27 (0
Slide 43: 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 44: www.vukile.co.za
www.vukile.co.za
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