Hyprop Investments Limited · JSE:HYP
Hyprop Investments — FY2008 Earnings Presentation
38 slides from Hyprop Investments's earnings presentation, December 2008
Slide 1: Audited Results for the year ended 31 December 2008
Audited Results for the year ended 31 December 2008 Presentation to the Investment Analysts Society 1
Slide 2: Introduction
Introduction Sustainable Business Premium quality shopping centres since 1987 Market capitalisation of R7 billion Property assets of R9.3 billion 6 shopping centres: ― 79% of revenue ― 77% of portfolio value 263 000m² of retail space 43 000m² of office space 37% interest in Sycom 2
Slide 3: Highlights - Financial
Highlights Financial Distribution 308 cents 14.1% Property assets R9.3 billion 8% NAV excl. deferred taxation R 49.51 pu 2% Continued low gearing 8.9% Expansion programme (2009) R662 million 3
Slide 4: Highlights - Operational
Highlights Operational Like-for-like net income growth 13.1% Rental growth on letting 14% Maintained high occupancy levels 96.7% Maintained good rental escalation rate 9.5% Continued demand for retail space 4
Slide 5: Financial Results
Financial Results Financial strength 5
Slide 6: Income Statement - extracts
Income Statement - extracts 2008 Investment Property Income R658.67m 13.5% Contractual rental increase - 12.1% Other income increase - 8.7% Includes 3 months from Stoneridge Recovery of utility increases Listed Property Securities Income R106.9m 311% Full year income from Sycom Property Ex
Slide 7: Net income growth - Investment Property
Net income growth - Investment Property 2008 2007 Distributable income R'000 R'000 Canal Walk (80%) 206 913 179 294 15% The Glen (75.15%) 65 487 59 176 11% Hyde Park 71 206 66 731 7% The Mall of Rosebank 61 206 52 782 16% Southcoast Mall (50%) 12 567 10 953 15% Stoneridge (90%) 6 135 Shopping Centre
Slide 8: Net income growth - Portfolio
Net income growth - Portfolio 2008 2007 Distributable income R'000 R'000 Listed property securities 106 900 26 008 Fund management expenses (41 353) (39 651) Net interest (17 080) 3 664 Interest received 39 408 85 362 Interest paid (56 488) (81 698) Enhancement fees - VPIF 1 871 2 196 Share of incom
Slide 9: Changes to assets
Changes to assets 2008 2007 Investment Property R'000 R'000 Opening balance 6 979 219 5 559 558 Developments & refurbishments 516 257 249 451 Depreciation (7 147) (6 632) TI's & building appurtenances 6 134 10 314 Disposals (4 084) (43) Held-for-sale (net of cost) (188 390) Valuation gains 225 563 1
Slide 10: Balance Sheet - extracts
Balance Sheet - extracts 2008 2007 R'000 R'000 Investment Property 7 715 942 6 979 219 11% Listed Property Securities 1 421 447 1 288 939 10% Investment in VPIF 178 983 198 186 -10% Investment Property held-for-sale 188 390 Property assets 9 316 372 8 654 734 8% Combined unitholders funds 6 802 366
Slide 11: Valuations
Valuations Hyprop Total value Size Property share per rentable (m²) (Rm) area (R/m²) Canal Walk (80%) 135 402 3 368 31 093 1% The Glen (75.15%) 55 729 1 084 25 875 5% Hyde Park 36 894 1 217 32 986 7% The Mall of Rosebank 33 774 880 26 056 7% Southcoast Mall (50%) 29 361 165 11 239 9% Stoneridge (90%
Slide 12: Net borrowings
Net borrowings 2008 2007 Gearing R'000 R'000 Net borrowings 833 910 316 638 Average interest rate 9.54% 9.54% Gearing 8.9% 3.60% Interest Rate Profile R600m 2012 9.27% R450m 2013 9.40% R300m 2015 9.57% Average interest rate 2009 9.37% 12
Slide 13: Debt repayment profile
Debt repayment profile 31 Dec 2009 R450m 31 Dec 2010 R450m 30 Nov 2013 R500m Total debt R1 400m R450m drawn down in Feb 2009 Fixed until 2013 at 9.40% 13
Slide 14: Operational performance
Operational performance Consistent delivery 14
Slide 15: Investments
Investments By Value By Income VPIF 2% VPIF 1% Sycom Canal Walk Sycom Canal Walk Offices 3% 16% 19% 37% Offices 35% Stoneridge 5% Stoneridge 1% 5% Southcoast Southcoast Mall 2% 10% Mall 2% 11% 13% 12% 12% The Mall The Mall 13% of Rosebank of Rosebank The Glen The Glen Hyde Park Hyde Park 15
Slide 16: Revenue spread
Revenue spread Office income 2% Turnover rent Customer parking 2% Monthly parking 1% Storerooms & other Operating cost recovery Municipal cost recovery Retail income 16
Slide 17: Vacancies
Vacancies % Area Vacancy at 31 December 2007 0.75% 2 500m² Vacancy at 31 December 2008 3.30% 12 000m² Vacancy excl. Stoneridge 1.5% 4 400m² Canal Walk (3 196m²) 1% The Glen (66m²) Stoneridge The Mall of Rosebank (7 577m²) (569m²) Southcoast Mall (753m²) Hyde Park & The Grace offices have no vacancie
Slide 18: Lease expiries
Lease expiries 2009 2010 2011 m² m² m² Canal Walk* 9 817 51 903 18 789 The Glen 4 021 6 043 8 386 Hyde Park* 8 734 4 056 4 748 The Mall of Rosebank 5 738 6 486 5 911 Southcoast Mall 1 360 9 435 2 721 Stoneridge 7 039 Offices # 4 492 4 486 3 777 Total 34 162 82 409 51 371 9% 22% 14% * Includes office
Slide 19: Rent and escalation
Rent and escalation Gross retail Property rent (R/m²) Canal Walk 180 12.5% The Glen 153 10.0% Hyde Park 214 10.0% The Mall of Rosebank 168 12.8% Southcoast Mall 88 13.0% Office rent 82 7.0% Lease activity Renewals and new tenants 49 000m² (14% of portfolio) Average contractual escalation 9.50% Avera
Slide 20: Trading performance
Trading performance Retail spend 4% Visitors to the centres -3% Spend per customer - R120 8% Trading density - R22 500 / m² / year 3% Influencing factors: Construction work - The Glen & Hyde Park Slower trade in December save at The Mall & Southcoast Mall Increase in time spend per visitor at
Slide 21: Developments
Developments Building on solid foundations 21
Slide 22: Expansions - under development
Expansions - under development Additional retail Hotel Canal The Hyde Total Walk Glen Park Rm Rm Rm Rm Capital cost (Hyprop share) 206 278 179 663 Spent to Dec 08 (115) (100) (42) (257) Remaining commitment 91 178 137 406 Additional area added to the portfolio 42 500m² 12% Additional net income R62
Slide 23: Canal Walk
Canal Walk Size 15 541m² Cost R206m (Hyprop share) Completion date May 2009 Major tenants @ home, Cape Union Mart, Golfers Club Budget yield 8.9% 23
Slide 24: The Glen
The Glen Size 19 400m² Cost R278m (Hyprop share) Completion date November 2009 Major tenants Game, Dis-Chem, @home, Mr Price Home Budget yield 10.90% 24
Slide 25: Hyde Park
Hyde Park Four star Southern Sun hotel Size 132 rooms Cost R178m Completion date August 2009 Budget yield 11.4% 25
Slide 26: Investment performance
Investment performance Proven track record 26
Slide 27: Distribution growth
Distribution growth Cents per combined unit Distributions ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 Average growth p.a over 21 years 10.5% Average growth p.a since 2004 17.1% 15 years of consecutive growth 27
Slide 28: Unit price growth
Unit price growth Combined Unit Price 55 50 45.0 45 Combined Unit Price over 21 years 42.0 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 8 Average growth p.a over 21 years 13% Averag
Slide 29: Unit price performance against indices
Unit price performance against indices Outperformed peer group Hyprop -7% PLS -10% ALSI -26% 2003 2004 2005 2006 2007 2008 29
Slide 30: Unitholder profile
Unitholder profile Standard Bank Investec Old Mutual Funds Redefine Coronation Stanlib Funds 30
Slide 31: Prospects
Prospects Long-term sustainability 31
Slide 32: Market
Market Decline in consumer spend National retailers shown resilience Construction costs declining Interest rates reducing 32
Slide 33: Hyprop strengths
Hyprop strengths Defensive qualities in poor economy: Strong balance sheet and low gearing Superior retail offering with sustainable lease profile Expansions will enhance dominance and market differentiation Quality management with specialist knowledge 33
Slide 34: Business strategy
Business strategy Successfully complete expansion programme in 2009 Let balance of vacancies in Stoneridge and expansions Begin refurbishment at Hyde Park & The Mall of Rosebank Savings on utility costs 34
Slide 35: Madison contracts
Madison contracts Expire end 2009 Principle decision - internal or external asset management? New asset management contract requires unitholder approval Cost savings in 2010 35
Slide 36: Future opportunities
Future opportunities Future developments at Canal Walk and The Glen International expansion Expansion through acquisition and development Interest in Sycom 36
Slide 37: Distribution for 2009
Distribution for 2009 Cautious outlook on income growth Impact of construction work at Hyde Park & The Glen Vacancies at Stoneridge Benefits of expansions – H2 2009 and 2010 Positive impact of lower fixed interest rates Distribution for 2009: 328c - 332c 37
Slide 38: Questions & Answers
Questions & Answers 38