Vukile Property Fund Limited · JSE:VKE
Vukile Property Fund — FY2019 Earnings Presentation
119 slides from Vukile Property Fund's earnings presentation, May 2019
Slide 1: Annual Results Presentation
Annual Results Presentation for the year ended 31 March 2019 www.vukile.co.za
Slide 2: Agenda
AGENDA 1 Introduction Laurence Rapp Southern African Retail Portfolio Overview 2 Ina Lopion 3 Castellana Properties Overview Alfonso Brunet 4 Financial Mike Potts Performance & Treasury Management 5 Vukile Academy Sedise Moseneke 6 Key initiatives in the year ahead Laurence Rapp Prospects 7 Laurence
Slide 3: Introduction
1 Introduction Laurence Rapp www.vukile.co.za 3
Slide 4: Profile
Profile INTRODUCTION Who we are High quality, low risk, Retail REIT operating in Southern Africa and Spain SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Strong operational focus with a core competence in active asset management Aim for simplicity and transparency CASTELLANA PROPERTIES OVERVIEW
Slide 5: Highlights
Highlights INTRODUCTION A transformational year in review 7.5% increase in dividends SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW ₋ In line with guidance to 181.48 cents per share Strong balance sheet and capital market support ₋ ICR of 6 times ₋ LTV reduced to 37% with 96% of debt hedged CASTELLA
Slide 6: Group Overview - Consolidated property assets of R33bn
Group Overview - Consolidated property assets of R33bn INTRODUCTION Well diversified exposure across macro economic drivers SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW United Kingdom R1.3bn 4% CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT 45% FINANCIAL PERFORMANCE Spain R14.9bn ACADEMY VUKILE
Slide 7: Clarity of vision and strategic intent
Clarity of vision and strategic intent INTRODUCTION Focused strategy and clear deliverables SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Southern Africa Spain Balance Sheet Continued focus on defensive retail sector in line with Drive home the advantage we have created in Good progress in reduci
Slide 8: Southern African Retail Portfolio Overview
2 Southern African Retail Portfolio Overview Ina Lopion www.vukile.co.za 8
Slide 9: Key Retail Portfolio Metrics
Key Retail Portfolio Metrics INTRODUCTION Direct Southern African Retail Portfolio SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Key Facts Tenant Operating Efficiency Valuations Profile metrics CASTELLANA PROPERTIES OVERVIEW Rent-to-sales & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Portfolio Value
Slide 10: Edcon
Edcon INTRODUCTION Significant reduction in exposure Retail Rental exposure reduced from 5.7% to 4.3% Area reduced by 17 000m² by August 2019 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Since March 2018 our exposure to Edcon has reduced by 5 598m² from 56 656m² (7.4% of retail GLA) to 51 058m² (6.2
Slide 11: Retail portfolio trading statistics for Top properties
Retail portfolio trading statistics for Top 15 properties INTRODUCTION High trading densities delivering higher growth than national retail sales growth SOUTHERN AFRICAN RETAIL (2.0%) PORTFOLIO OVERVIEW 4.3% 0.8% (3.4%) 1.0% 7.0% * * * (5.4%) * 2.3% 8.1% 5.7% (2.5%) 1.1% 4.5% 1.2% (3.1%) # (1.5%) 7.
Slide 12: Rent-to-sales ratio by Top properties
Rent-to-sales ratio by Top 15 properties INTRODUCTION Continuing to provide very profitable centres for our tenants SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 10.5% CASTELLANA PROPERTIES OVERVIEW 8.4% & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 7.7% 7.0% 6.8% 6.5% 6.0% 5.8% 5.7% 5.6% 5.5% 5.1% 5.0%
Slide 13: Retail insights
Retail insights INTRODUCTION Defensive portfolio with further potential rental growth Segment Focus SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Rural and township and centres that account for 53% of the portfolio showed a year on year trading density growth of 0.8% which is higher than the national
Slide 14: Valuation methodology
Valuation methodology INTRODUCTION Southern African property portfolio Directors’ valuations used in financial statements SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Valuations are based on multiple assumptions which involve some subjectivity. The key is consistency in applying Science vs. art the sa
Slide 15: Capital investment last years – R1.1bn invested in our retail portfolio
Capital investment last 5 years – R1.1bn invested in our retail portfolio INTRODUCTION Continued focus on maintaining and improving our properties SOUTHERN AFRICAN RETAIL R'm R'm PORTFOLIO OVERVIEW East Rand Mall 220 Pine Crest (i) 102 Major upgrades / R930m Maluti (i) 169 Workshop 72 CASTELLANA PRO
Slide 16: Extension and upgrade
Extension and upgrade INTRODUCTION Pine Crest Shopping Centre, Pinetown, KZN Upgrading the existing centre and expanding the total GLA SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW from 40 087m² to 43 414m² A new mall with street level access, upgraded food court and an improved tenant mix is being
Slide 17: Redevelopment
Redevelopment INTRODUCTION Maluti Crescent, Phuthaditjhaba Complete redevelopment and extension of the centre to SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW accommodate more national tenants with high trading densities The new extension area, which includes Pick n Pay as the second food anchor, i
Slide 18: Acquisitions and Sales
Acquisitions and Sales INTRODUCTION Transferred during the year SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Price Property acquired Location Sector GLA Date of transfer R'm Kolonnade Retail Park Pretoria, Gauteng Retail 39 450 470.6 Transferred Nov-18 CASTELLANA PROPERTIES OVERVIEW Total acquisitions
Slide 19: Acquisitions and Sales
Acquisitions and Sales INTRODUCTION To be acquired/sold post year end SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Price Property to be acquired Location Sector GLA Update R'm Gauteng and East Agreements signed Rebosis Portfolio of 3 shopping centres Retail 90 265 1 777.8 CASTELLANA PROPERTIES London
Slide 20: Alternative Income Management
Alternative Income Management INTRODUCTION Significant milestones achieved with platform now in place SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 35 properties have live fibre to The shopper app is being the business connections, finalised - to be deployed (2 more in process) to Hillfox and Dobsonvil
Slide 21: Energy and water management
Energy and water management INTRODUCTION Focus on sustainability Achievements FY2019: SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 5.5 million kWh sustainable electricity savings (equivalent of powering 500 houses) R2.8m saved through billing & metering optimisation CASTELLANA PROPERTIES OVERVIEW
Slide 22: Castellana Properties Overview
3 Castellana Properties Overview Alfonso Brunet www.vukile.co.za 22
Slide 23: FY2019 Highlights
FY2019 Highlights INTRODUCTION A transformational year, now the ninth largest Socimi in Spain by market capitalisation Strong portfolio delivering solid income growth SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW ₋ Like for like growth of 3.5% in gross rental income. Healthy operating expense ratio o
Slide 24: Key Portfolio Metrics
Key Portfolio Metrics INTRODUCTION A premier retail Socimi in Spain SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Tenants Operating Key Facts Valuations Metrics CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Portfolio Value of €916m Average asset value €54m 94% of reta
Slide 25: Value Creation
Value Creation INTRODUCTION Castellana Approach SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Strategic Active Asset Corporate Debt 1 2 3 4 5 Dividend focus Acquisitions Management Governance Management CASTELLANA PROPERTIES Keep high Implementation OVERVIEW Dominant Diversification Predictab
Slide 26: Growing Portfolio Valuations
Growing Portfolio Valuations INTRODUCTION Significant like-for-like growth in value of acquisitions over time SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Like-for-Like (ii) Revaluation FY2018 vs FY2019 €308m +6.49% € 328m(i) CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT FINANCIAL PERFORMANCE A
Slide 27: Value Creation
Value Creation INTRODUCTION Capital Growth vs Acquisition Cost – Consistently adding value over time SOUTHERN AFRICAN RETAIL Alameda PORTFOLIO OVERVIEW 27 000 Konecta 240 000 Project London 75 000 26 000 8% 9% 10% 26 300 15% 73 420 8% 26 140 220 000 70 000 25 000 7% 13% 228 190 25 560 25 750 223 610
Slide 28: Asset Management Initiatives
Asset Management Initiatives INTRODUCTION Adding value through active asset management SOUTHERN AFRICAN RETAIL Annualised NOI Increase Leases Signed GLA Additional Value Added PORTFOLIO OVERVIEW €1.6m (i) 61 (ii) 14.6K m2 +€26m (iii) Asset management team continue to unlock value in 19 029 CASTELL
Slide 29: Acquisitions
Acquisitions INTRODUCTION 5 accretive retail acquisitions strengthened the portfolio in FY2019 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW Habaneras – Torrevieja Vallsur - Valladolid Bahía Sur – Cádiz & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Acquisition Date : 9 Ma
Slide 30: Tenant Mix
Tenant Mix INTRODUCTION Highly diversified retail portfolio Assets GLA WALE (i) Occupancy SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 15 300 362 m2 14.3 years 97.8% Category profile by Rent - 31 March 2019 Category profile by Rent - 31 March 2018 CASTELLANA PROPERTIES OVERVIEW 32% Fashion & Accessori
Slide 31: Value Add Projects & Refurbishments
Value Add Projects & Refurbishments INTRODUCTION Granaita Leisure Centre - from 48% occupancy to 100% let and completely transformed SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Interior upgrade and increased natural light Customised high-visibility children’s play CASTELLANA PROPERTIES OVERVIEW a
Slide 32: Value Add Projects & Refurbishments
32 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Value Add Projects & Refurbishments Granaita Leisure Centre in Granada
Slide 33: Upcoming Operational Plans
Upcoming Operational Plans INTRODUCTION Driving value through hands-on asset management SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Marketing ₋ Leverage customer knowledge through new data sources ₋ Enhanced digital customer journey through personalised communication CASTELLANA PROPERTIES OVERVIEW
Slide 34: Proposed Investments & Value Add Projects
Proposed Investments & Value Add Projects INTRODUCTION Opportunity to unlock additional value across portfolio SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Commencement Date : May 2019 Completion Date : July 2020 Total Investment : €115m (i) CASTELLANA PROPERTIES OVERVIEW Annualised NOI Increa
Slide 35: Bahía Sur – Project Overview
Bahía Sur – Project Overview INTRODUCTION Cementing dominance of the centre by enhancing leisure and fashion mix SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Acquisition of two ECI-owned units: €20.6m Capex ECI units: €17.6m Purchase of adjacent land to develop retail CASTELLANA PROPERTIES OVERV
Slide 36: Los Arcos – Project Overview
Los Arcos – Project Overview INTRODUCTION Adding value by improving F&B, leisure and convenience shopping to be the dominant offering in Seville city centre SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Acquisition of the Hipercor unit: €18.3m Capex Hipercor units: €6.3m Incorporation of adjacent
Slide 37: El Faro – Project Overview
El Faro – Project Overview INTRODUCTION Unlocking value by improving F&B and leisure to further cement dominance of centre SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Capex required: €4.5m Increase in Net Operating Income Improved tenant mix by replacing Bricor CASTELLANA PROPERTIES OVERVIEW wi
Slide 38: Capex on the rest of the portfolio
Capex on the rest of the portfolio INTRODUCTION €25m of value-adding capex spread across the portfolio SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Reconfiguration of first floor to incorporate more F&B and leisure offerings at a cost of €10m 1 Vallsur Reduce vacancies and introduce leading beauty
Slide 39: Project Funding
Project Funding INTRODUCTION Equity Capital already raised by Vukile SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Project Funding Expected CASTELLANA timing mix return PROPERTIES OVERVIEW & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Total project cost of €115m Project funding to be split 50/50 Exp
Slide 40: Financial Performance & Treasury Management
4 Financial Performance & Treasury Management Mike Potts www.vukile.co.za 40
Slide 41: Distribution history
Distribution history INTRODUCTION Continuing 15 year trend of unbroken growth in distributions Cents per share SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Interim Final Normalised total Non-recurring 7.5% 181.48 CASTELLANA PROPERTIES OVERVIEW 168.82 156.75 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE
Slide 42: Simplified income statement
Simplified income statement INTRODUCTION R1.7bn distributable income for FY2019 Mar-19 Mar-18 Variance SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW R'000 R'000 % Property Revenue 2 806 484 2 014 966 39.3 Property Expenses (932 183) (705 891) (32.1) CASTELLANA PROPERTIES OVERVIEW Net profit from proper
Slide 43: Simplified income statement
Simplified income statement INTRODUCTION R1.7bn distributable income for FY2019 Mar-19 Mar-18 Variance SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW R'000 R'000 % Attributable to Vukile Group 1 442 850 1 208 312 19.4 Non-IFRS related adjustments: CASTELLANA PROPERTIES OVERVIEW Accrued dividends and cum
Slide 44: Segmental income statement
Segmental income statement INTRODUCTION Spain increasing its contribution to 35% of net profit from property operations Operating segment analysis for the year ended 31 March 2019 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Total Total Total Retail Other Southern Retail Other Spain Group R'000 R'000
Slide 45: Group net cash flow
Group net cash flow – (R'm) INTRODUCTION Dividend fully covered by cash flows from operating activities 5 003 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW 1 828 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 2 615 1 786 ACADEMY VUKILE 345 ( 9 574 ) 109 76 KEY INITIATIVES IN
Slide 46: Group balance sheet
Group balance sheet – (R'm) INTRODUCTION Assets and liabilities at 31 March 2019 Mar-18 Mar-19 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 29 334 CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 18 821 12 035 ACADEMY VUKILE KEY INITIATIVES IN THE YEAR AHEAD 5 485 3 207 3 344
Slide 47: NAV Bridge
NAV Bridge – (Cents) INTRODUCTION Increase in NAV to 2026 cps The fair value of investments increased by R804m for the year (87 cps) SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW This increase to NAV was offset by: − Unrealised fair value loss on listed property shares: R88m − Unrealised foreign ex
Slide 48: Key debt and foreign exchange metrics
Key debt and foreign exchange metrics INTRODUCTION Good progress in reducing LTV and strong ICR SOUTHERN AFRICAN RETAIL Reduced Group cost of funding to 4.5% (South Africa 9.2%) from 5.7% (South Africa 9.2%) PORTFOLIO OVERVIEW Strong cash flow compared with net interest cost with Interest cover
Slide 49: Segmental loan-to-value and interest cover ratios
Segmental loan-to-value and interest cover ratios INTRODUCTION Low risk conservative balance sheet Southern Africa Spain Group Internal Policy at SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW R'000 €'000 R'000 Group level Loan-to-value ratio (net of cash and cash equivalents) (i) 29.98% 45.93% 37.18 %
Slide 50: Analysis of Group loan repayment and hedging expiry profile
Analysis of Group loan repayment and hedging expiry profile INTRODUCTION Well hedged with low risk expiry profile Group loan and hedging (swap & fixed debt) expiry profile SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW (vii) 54.6% Internal Policy (viii) R1.4bn of CASTELLANA PROPERTIES OVERVIEW No more t
Slide 51: Cost of funding
Cost of funding INTRODUCTION Reduction in Group cost of finance due to funding mix Group Debt by Currency SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 9.24% 9.21% 9.38% 2.28% 2.70% 2.61% 3.34% 3.45% 3.63% 5.74% 4.53% 4.31% R13.230bn CASTELLANA PROPERTIES OVERVIEW R9.462bn & TREASURY MANAGEMENT FINANCI
Slide 52: Vukile Academy
5 Vukile Academy Sedise Moseneke www.vukile.co.za 52
Slide 53: Vukile Academy launch in March 2019
53 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Vukile Academy launch in March 2019
Slide 54: Vukile Academy
Vukile Academy INTRODUCTION Real deliverables for a real world The Academy is our skills development programme that was officially launched at the beginning of calendar year SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 2019, it comprises of the bursary fund, the internship and the entrepreneur devel
Slide 55: Top 8 Academy candidates
55 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Top 8 Academy candidates
Slide 56: Vukile Academy - Internship
Vukile Academy - Internship INTRODUCTION Making a meaningful impact - Internship The Academy internship is a unique, industry leading development platform SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW The programme is structured to transfer knowledge related to property specific skills and to also
Slide 57: Making a meaningful impact - Internship
57 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Making a meaningful impact - Internship Vukile Academy - Internship
Slide 58: Key initiatives in the year ahead
6 Key initiatives in the year ahead Laurence Rapp www.vukile.co.za 58
Slide 59: Management changes
Management changes INTRODUCTION Welcoming our new executives in a seamless transition SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT Laurence Cohen Itu Mothibeli FINANCIAL PERFORMANCE ACADEMY VUKILE Been with Vukile since 2012 Former CFO of Hyprop
Slide 60: Transactions in process
Transactions in process INTRODUCTION Active recycling of assets Non-core assets deals in progress Core strategic deals in progress SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Sale of non-retail SA portfolio to a BEE group currently Evaluating buying out the underwriter from the under evaluation P
Slide 61: Rebosis Transaction
Rebosis Transaction INTRODUCTION Strategically aligned acquisition of three shopping centres currently being evaluated Announced transaction on 13 May 2019 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Acquisition of three shopping centres for an aggregate price of R1.78bn Mdantstane Mall, Bloed
Slide 62: Listed Investments
Listed Investments INTRODUCTION Looking for opportunities to recycle into core strategies SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Gemgrow Atlantic Leaf Fairvest Supportive of proposed Arrowhead Continues to deliver in line with Ongoing strong performance CASTELLANA PROPERTIES OVERVIEW trans
Slide 63: Looking to the future of shopping centres
Looking to the future of shopping centres INTRODUCTION Positioning the business for long term sustainability Retail apocalypse story is grossly exaggerated and shopping centres are not dying but… SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW … change is happening at a rapid rate creating the need f
Slide 64: Southern Africa
Southern Africa INTRODUCTION Internally focussed strategy to drive operational performance Anticipate another challenging period ahead for the local economy SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Portfolio is defensively positioned with 92% retail exposure with a specific focus on LSMs 1-7
Slide 65: Spanish strategy
Spanish strategy INTRODUCTION Building off a solid foundation with potential to become a dominant market participant Spanish retail and economic fundamentals remain positive; not an over-retailed market with 560 retail assets SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW − Spanish consumer and social
Slide 66: Prospects
REAL ESTATE. REAL GROWTH. Prospects Laurence Rapp 66
Slide 67: Prospects
Prospects INTRODUCTION The Vukile business remains in very good shape; operationally, financially and strategically SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Clearly focused retail strategy in both South Africa and Spain is providing benefits in each of these markets as seen by the strong opera
Slide 68: DPS outlook for FY2020
DPS outlook for FY2020 INTRODUCTION Expect dividends to grow by between 3% to 5% in FY2020 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW The guidance range takes into consideration that Vukile is currently in negotiations, some at advanced stages, to recycle certain non-core assets and redeploy the
Slide 69: Acknowledgements
69 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Brokers and developers Property managers Service providers Colleagues Investors Funder
Slide 70: Q&A
8 Q&A www.vukile.co.za 70
Slide 71: Appendices
9 Appendices www.vukile.co.za 71
Slide 72: Our Southern Africa retail footprint
Our Southern Africa retail footprint INTRODUCTION Retail portfolio profile (Top 15 properties 64% of portfolio by value) SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 10 12 CASTELLANA PROPERTIES OVERVIEW 8% 1 7% 8 6 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 11 36% 9 14 4% 15 1 East Rand Mall 9 Meadow
Slide 73: High quality retail assets
High quality retail assets INTRODUCTION Top 15 assets East Rand Mall Pine Crest Phoenix Plaza Maluti Crescent Gugulethu Square SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW GAV R1 433m R1 047m R940m R667m R553m & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Region Gauteng Kw
Slide 74: High quality retail assets (cont.)
High quality retail assets INTRODUCTION Top 15 assets (cont.) Oshakati Shopping Dobsonville Mall Nonesi Mall Kolonnade Retail Park Meadowdale Mall SOUTHERN AFRICAN RETAIL Centre PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW GAV R546m R500m R497m R438m R428m & TREASURY MANAGEMENT FINANCIAL PERFOR
Slide 75: High quality retail assets (cont.)
High quality retail assets INTRODUCTION Top 15 assets (cont.) Daveyton Shopping Thavhani Mall Bloemfontein Plaza Randburg Square Moruleng Mall SOUTHERN AFRICAN RETAIL Centre PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW GAV R421m R414m R411m R409m R399m & TREASURY MANAGEMENT FINANCIAL PERFORMANC
Slide 76: Retail tenant exposure
Retail tenant exposure INTRODUCTION Direct Southern African Retail Portfolio Tenant profile - by Contractual Rent Top 10 tenants - by Contractual Rent SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 2.6% Pep Stores Other Pepkor 8.1% 2.5% Ackermans CASTELLANA PROPERTIES OVERVIEW 21% Pick n Pay 6.2% Stores
Slide 77: Retail tenant exposure
Retail tenant exposure INTRODUCTION Well diversified tenant mix Category profile - by Contractual Rent Category profile - by GLA SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 24% Unisex Wear 19% 14% Grocery/ Supermarket 22% CASTELLANA PROPERTIES OVERVIEW 6% Home Furnishings/ Art/ Antiques/ 7% Décor 5%
Slide 78: Retail tenant expiry profile
Retail tenant expiry profile INTRODUCTION 41% of contractual rent expiring in FY2023 and beyond (WALE 4.0 years) % of Contractual Rent Cumulative SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 100 72 CASTELLANA PROPERTIES OVERVIEW 59 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 40 23 ACADEMY 28 VUKILE 17
Slide 79: Retail vacancies
Retail vacancies INTRODUCTION 33 Properties Fully let / Vacancies lower than 1 000m² Fully Let Ga-Kgapane Modjadji Plaza SOUTHERN AFRICAN RETAIL Germiston Meadowdale Mall PORTFOLIO OVERVIEW Giyani Plaza Gugulethu Square Mbombela Truworths Centre Pietermaritzburg The Victoria Centre Pretoria Kolonnad
Slide 80: Retail tenant affordability
Retail tenant affordability INTRODUCTION Consistently strong metrics Retail Vacancy Profile by Rent Retail Average Base Rentals (excl. Recoveries) SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 134.78 130.44 4.0% 122.88 114.61 3.6% 108.14 3.4% 3.3% 3.3% CASTELLANA 102.56 PROPERTIES OVERVIEW 3.0% & TREAS
Slide 81: Ratio of net cost to property revenue – Retail portfolio
Ratio of net cost to property revenue – Retail portfolio INTRODUCTION Cost Containment SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Average 18.5 CASTELLANA PROPERTIES OVERVIEW Average 17.1 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 22.2 20.2 18.7 18.6 18.2 18.1 17.8 17.0 16.9 16.9 16.2 16.2 16.0 15.9
Slide 82: Southern African total portfolio composition
Southern African total portfolio composition INTRODUCTION Top 15 assets make up 59% of the total portfolio Sectoral Profile - by Value Sectoral Profile - by GLA SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Top 15 Top 15 By Value By GLA Properties CASTELLANA PROPERTIES Properties OVERVIEW 92% Retail 87
Slide 83: Southern African total portfolio tenant exposure
Southern African total portfolio tenant exposure INTRODUCTION Low risk with 77% national tenants Top 10 Tenants - by Contractual Rent Top 10 Tenants - by occupied GLA SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Other Other 22% 23% Top 10 Diversified across Top 10 Tenants Tenants CASTELLANA PROPERTIES
Slide 84: Southern African total portfolio tenant expiry profile
Southern African total portfolio tenant expiry profile INTRODUCTION 42% of contractual rent expiring in FY2023 and beyond (WALE 4.0 years) % of Contractual Rent % of Contractual Rent Cumulative SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 100 70 58 40 30 23 12 CASTELLANA PROPERTIES OVERVIEW 17 18 & TR
Slide 85: Southern African total portfolio vacancy profile
Southern African total portfolio vacancy profile INTRODUCTION Vacancy contained at 3.6% of contractual rent 19.6 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 10.3 Vacancy 6.0 3.6% of Rent CASTELLANA 3.7 PROPERTIES 3.6 OVERVIEW 3.4 3.0 2.9 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Retail Industrial O
Slide 86: Individual properties vacancy profile
Individual properties vacancy profile (% of GLA) INTRODUCTION Vacancy > 1 000m2 Vacant Area Mar-18 Vacant Area Mar-19 SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Mbombela Shoprite Centre (20%) Retail Randburg Square (6%) Hillfox Power Centre (5%) 269 Independence Avenue (16%) CASTELLANA PROPERTIES OV
Slide 87: Southern African total portfolio lease renewals
Southern African total portfolio lease renewals INTRODUCTION Positive reversions SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Lease renewals percentage 5.5 escalation on expiry rentals CASTELLANA PROPERTIES OVERVIEW 4.5 4.0 & TREASURY MANAGEMENT FINANCIAL PERFORMANCE ACADEMY VUKILE KEY INITIATIVES IN
Slide 88: Contracted rental escalation profile
Southern African total portfolio contracted rental escalation profile INTRODUCTION Rental escalations still ahead of inflation SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 7.9 7.8 7.6 7.4 Escalation 7.2 7.1 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 percentage CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGE
Slide 89: Weighted average base rentals – R/m2
89 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES Southern African total portfolio weighted average base rentals – R/m2 127.54 Total 3.9% 122.
Slide 90: Weighted average base rentals R/m2 (excluding recoveries)
Weighted average base rentals R/m2 (excluding recoveries) INTRODUCTION Southern African Retail portfolio Boksburg East Rand Mall SOUTHERN AFRICAN RETAIL Durban Phoenix Plaza PORTFOLIO OVERVIEW Durban Workshop Mbombela Truworths Centre Pinetown Pine Crest Windhoek 269 Independence Avenue Daveyton Sho
Slide 91: Weighted average base rentals R/m2 (excluding recoveries)
Weighted average base rentals R/m2 (excluding recoveries) INTRODUCTION Southern African Other portfolio SOUTHERN AFRICAN RETAIL Jhb Houghton Estate Oxford Terrace PORTFOLIO OVERVIEW Cape Town Bellville Barons Jhb Houghton 1 West Street CASTELLANA PROPERTIES OVERVIEW Sandton Bryanston Ascot Offices M
Slide 92: Growth in net profit from Southern African property operations
92 CASTELLANA SOUTHERN AFRICAN RETAIL PROPERTIES FINANCIAL PERFORMANCE VUKILE KEY INITIATIVES IN INTRODUCTION PORTFOLIO OVERVIEW OVERVIEW & TREASURY MANAGEMENT ACADEMY THE YEAR AHEAD PROSPECTS Q&A APPENDICES 2019 3.4% Growth in net profit from Southern African property operations 2018 6.5% 2017 7.5%
Slide 93: Ratio of cost to property revenue
Southern African total portfolio - ratio of cost to property revenue INTRODUCTION Net cost to property revenue Containing cost ratios SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Average 18.5 Average 17.1 22.2 CASTELLANA PROPERTIES 20.2 OVERVIEW 18.7 18.6 18.2 18.1 17.8 17.0 16.9 16.9 16.2 16.2 16.0 1
Slide 94: Appendix B: Spanish Portfolio
9 Appendix B Spanish Portfolio www.vukile.co.za 94
Slide 95: Spanish market outlook and political environment
Spanish market outlook and political environment INTRODUCTION Spain GDP growth continues to outperform Eurozone SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Spain still the European leader in GDP growth GDP (%) Unemployment (%) 6 30 − Investments and consumption are expected to 4 25 continue boostin
Slide 96: Spanish portfolio footprint
Spanish portfolio footprint INTRODUCTION Spain portfolio profile Property rank SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW by value 8 4% Geographic profile % by value 1 El Faro 10 Edificio Alcobendas CASTELLANA PROPERTIES OVERVIEW 5 10% 2 Bahía Sur 11 La Heredad & TREASURY MANAGEMENT FINANCIAL PERFOR
Slide 97: Spanish vacancy profile
Spanish vacancy profile INTRODUCTION Vacant Area Mar-19 Vacant Area Sep-18 Vacant Area Mar-18 Portfolio SOUTHERN AFRICAN RETAIL Shopping Centres - New Acquisitions PORTFOLIO OVERVIEW Vacancy Habaneras (24 158m² - 7.1% vacant) 2.1% of Los Arcos (17 906m² - 6.8% vacant) El Faro (43 423m² - 2.4% vacant
Slide 98: Spanish portfolio overview
Spanish portfolio overview INTRODUCTION Top 10 assets El Faro Bahía Sur Los Arcos Granaita Retail Park Vallsur SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW GAV €162.4m €120.2m €118.2m €113.7m €92.8m & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Province Extremadura Andaluc
Slide 99: Spanish portfolio overview
Spanish portfolio overview INTRODUCTION Top 10 assets Habaneras Parque Oeste (i) Parque Principado Marismas del Polvorín Edificio Alcobendas SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW GAV €88.8m €51.6m €34.6m €28.4m €20.6m & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Pr
Slide 100: Retail lease expiry profile
Retail lease expiry profile INTRODUCTION 45% of contractual rent expiring in FY2029 and beyond (WALE 14.3 years to expiry and 3.7 years to break) SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Expiry Profile (% Rent) 100 % of Contractual Rent Cumulative CASTELLANA PROPERTIES OVERVIEW 59 55 47 39 42 33 &
Slide 101: Retail tenant exposure
Retail tenant exposure INTRODUCTION Low risk with 93% national and international tenants Top 10 tenants by rent Tenant profile - by contractual rent SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Other 7% 4.2% CASTELLANA PROPERTIES OVERVIEW 4.2% & TREASURY MANAGEMENT FINANCIAL PERFORMANCE 3.1% Top 10 te
Slide 102: Spanish total portfolio composition
Spanish total portfolio composition INTRODUCTION Sectoral Profile - by Value Sectoral Profile - by GLA SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Top 10 Top 10 Properties By Value By GLA CASTELLANA PROPERTIES OVERVIEW Properties 91% 63% Shopping Centre 46% 82% 33% Retail Park 49% of Total & TREASURY
Slide 103: Spanish weighted average base rentals
Spanish weighted average base rentals - €/m² INTRODUCTION Improved average base rentals post acquisitions Mar-18 Sep-18 Mar-19 Shopping Centres SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Los Arcos 0.2% 0.1% 0.3% 53% Bahía Sur Habaneras Weighted average El Faro €19.98/m² 19.98 CASTELLANA PROPERTIES O
Slide 104: Appendix C: Financial Results Overview
9 Appendix C Financial Results Overview www.vukile.co.za 104
Slide 105: Group net income analysis
Group net income analysis INTRODUCTION Distributable income of R1.7bn for FY2019 Income R3 204.9m R'000 % SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Rental income 2 186 904 68.2 Municipal and rates recoveries 619 580 19.3 Investment and other income 181 741 5.7 Net cash flow from cross-currency inte
Slide 106: Debt and foreign exchange policy
Debt and foreign exchange policy INTRODUCTION A prudent approach to managing risk Internal management policy of a maximum loan to value ratio of 40% with 35% targeted level SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Minimum of 75% of interest bearing debt to be hedged with a minimum 3 year fixed
Slide 107: Sources of funding
Sources of funding INTRODUCTION R13.2bn of Vukile Group debt from diversified sources of funding Analysis of Group Debt by Currency SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW CASTELLANA PROPERTIES OVERVIEW 4% (iv) (ix) 9% & TREASURY MANAGEMENT FINANCIAL PERFORMANCE Foreign Spanish funders (EUR) (x)
Slide 108: Southern African loan repayment and swap expiry profile
Analysis of Southern African loan repayment and swap expiry profile INTRODUCTION Well hedged with low risk expiry profile Southern African loan and hedging (swap & fixed debt) expiry profile SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW (xii) 29.1% 30.7% CASTELLANA PROPERTIES OVERVIEW 23.7% 26.0% & TRE
Slide 109: Debt Expiring in FY2020
Debt Expiring in FY2020 INTRODUCTION R1.1bn of Term debt and R347m of access facilities Maturity Date Amount Drawn Comments SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW '000 Investec Access Facility 23 Jun 2019 R38 083 Approved by Investec Investec EUR Term Loan €21 681 Credit. Agreements 23 Jun 2019
Slide 110: Undrawn facilities
Undrawn facilities INTRODUCTION R1.4bn of available bank facilities Facility Amount Amount Drawn Facility Undrawn SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW '000 '000 '000 ABSA Multicurrency Revolving Credit Facility R850 000 R309 427 R540 573 Banco Santander Development Loans (xiii) €3 000 €2 257 €
Slide 111: Spanish loan repayment and swap expiry profile
Analysis of Spanish loan repayment and swap expiry profile INTRODUCTION Low refinance risk over the next six years Spanish loan and hedging (swap & fixed debt) expiry profile SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW (vii) 81.7% (viii) 66.2% CASTELLANA PROPERTIES OVERVIEW & TREASURY MANAGEMENT FINA
Slide 112: GBP foreign exchange hedging
GBP foreign exchange hedging INTRODUCTION Maintaining sustainable predictable income while reducing currency volatility SOUTHERN AFRICAN RETAIL £'000 May-19 Nov-19 May-20 Nov-20 PORTFOLIO OVERVIEW Net GBP dividends forecast (xv) £2 546 £2 282 £2 282 £2 338 FEC hedge (£2 035) (£1 996) (£2 045) (£2 07
Slide 113: EUR foreign exchange hedging
EUR foreign exchange hedging INTRODUCTION Maintaining sustainable predictable income while reducing currency volatility SOUTHERN AFRICAN RETAIL €'000 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 PORTFOLIO OVERVIEW Net EUR dividends forecast (xvii) €6 616 €7 881 €8 549 €8 439 €7 551
Slide 114: Cross Currency Interest Rate Swap Exposure
Cross Currency Interest Rate Swap Exposure INTRODUCTION Prudent currency management SOUTHERN AFRICAN RETAIL EUR Nominal ZAR Nominal EURZAR Initial EUR Fixed Rate ZAR Average PORTFOLIO OVERVIEW Maturity €'000 R'000 Rate over Term Rate over Term Nedbank CCIRS June 2018 (€93.2m) €93 200 R1 346 240 14.4
Slide 115: Overview of DMTN Secured Property Portfolio
Overview of DMTN Secured Property Portfolio (Group 1 Notes) INTRODUCTION Quality Secured Portfolio Property Value R2 592m 45% of income from top 10 tenants SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW 7 Properties WALE of 4.3 years CASTELLANA PROPERTIES OVERVIEW GLA 153 341m² Retail Tenant R
Slide 116: Overview of Unencumbered Assets
Overview of Unencumbered Assets INTRODUCTION Quality Unencumbered Assets Total Unencumbered Assets R7 180m 44% of income from top 10 tenants SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW Property Value R3 360m WALE of 3.0 years CASTELLANA PROPERTIES OVERVIEW 24 Properties Retail Tenant Retent
Slide 117: Corporate Bond and Commercial Paper Issuances
Corporate Bond and Commercial Paper Issuances INTRODUCTION Balance of secured and unsecured debt Corporate Bonds Security Amount Reference Rate Margin Maturity Date Initial Term SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW VKE07 Secured R200m 3M JIBAR 1.65% 08/06/2020 5.1 years VKE09 Secured R378m 3M
Slide 118: Notes to Treasury Management Slides
Notes to Treasury Management Slides INTRODUCTION Aligned with industry best standards (i) Loan-to-Value ratio calculated as a ratio of actual interest-bearing debt owing less cash and cash equivalents (excluding tenant deposits & restricted cash) divided by SOUTHERN AFRICAN RETAIL PORTFOLIO OVERVIEW
Slide 119: Notes to Treasury Management Slides (continued)
Notes to Treasury Management Slides (continued) INTRODUCTION Aligned with industry best standards (xv) Net forecast dividend after deducting interest costs on Vukile GBP debt. Forecast dividends are an estimate and will differ from actual dividends because of normal differences SOUTHERN AFRICAN RETA