Debt Capital Market Roadshow - July 2019 - Vukile Property Fund
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Debt Capital Market Roadshow July 2019 www.vukile.co.za
Contact details
Available for questions
Vukile Property Fund Designation Email Tel. Number Cell 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)82 875 7366
Maurice Shapiro Group Head of Treasury Maurice.Shapiro@vukile.co.za +27 (0)11 288 1001 +27 (0)83 577 6184
ABSA Capital Designation Email Tel. Number Cell number
Muhammad Motala Syndicate Desk Muhammad.Motala@absacapital.com +27 (0)11 895 5780 +27 (0)79 500 6191
Marcus Veller Debt Capital Markets Marcus.Veller@absacapital.com +27 (0)11 895 7298 +27 (0)79 613 6796
Matthew Duggan Debt Capital Markets Matthew.Duggan@absacapital.com +27 (0)11 895 7864 +27 (0)82 088 6721
2
AGENDA 1 Company Overview
2 Strategic Direction
3 Treasury Management
4 Defensive Cashflow – Southern Africa Retail Portfolio
5 Defensive Cashflow – Spanish Portfolio
6 DMTN Secured Assets
7 Unencumbered Assets
8 Q&A
9 Appendices
3
1 Company Overview www.vukile.co.za 4
Profile
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Who we are
High quality, low risk, Retail REIT operating in Southern Africa and Spain
Strong operational focus with a core competence in active asset management
TREASURY
Aim for simplicity and transparency
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Clarity of vision, strategy and structure
AFRICAN DEFENSIVE CASFLOW SECURED
Prudent financial management and strong capital markets expertise
– SPANISH PORTFOLIO ASSETS
Entrepreneurial approach to deal making
Strong focus on governance and leadership
DMTN UNENCUMBERED
History of strong shareholder returns with CAGR of 20.3% since listing
45% of assets now focused in Spain and 4% in the UK
ASSETS
Vukile listed on the JSE and NSX
Q&A APPENDICES
72% held subsidiary Castellana Property Socimi listed on the MAB (Madrid junior board)
5
6
COMPANY STRATEGIC TREASURY DEFENSIVE CASFLOW DMTN UNENCUMBERED
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN AFRICAN DEFENSIVE CASFLOW SECURED ASSETS Q&A APPENDICES
RETAIL PORTFILIO – SPANISH PORTFOLIO ASSETS
7.5%
181.48
2019
103.38
78.1
168.82
2018
96.17
72.65
156.75
2017
89.1
67.65
146.3
2016
83.1
Non-recurring
63.2
136.8
2015
77.7
59.1
13.8
Normalised total
Continuing 15 year trend of unbroken growth in distributions
126.5 2014
71.7
54.8
11.2
120.4
2013
68.2
52.2
Final
13.4
111.4
2012
63.8
Interim
47.6
8.7
109
2011
62.8
46.2
Distribution history
107.9
2010
60.9
47
97.9
2009
53.8
Cents per share 44.1
88.3
2008
48
40.3
Group overview - consolidated property assets of R33bn
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Well diversified exposure across macro economic drivers
United Kingdom
R1.3bn
4%
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
45% Spain
AFRICAN DEFENSIVE CASFLOW SECURED
R14.9bn
– SPANISH PORTFOLIO ASSETS
DMTN UNENCUMBERED
Southern Africa Direct property
51% R16.8bn portfolio R15.5bn
ASSETS
Fairvest : R595m
Gemgrow : R790m
Q&A APPENDICES
7
2 Strategic Direction www.vukile.co.za 8
Clarity of vision and strategic intent
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Focused strategy and clear deliverables
Southern Africa Spain Balance Sheet
TREASURY
Continued focus on defensive retail sector in line with Drive home the advantage we have created in Good progress in reducing loan-to-value (LTV) to 37%
our high- quality, low-risk portfolio Castellana through scale, on-the-ground presence
DEFENSIVE CASFLOW
Continue working to reduce LTV to target level of 35%
RETAIL PORTFILIO
Identify further investment opportunities in our and operational capabilities
Maintain very healthy ICR position
existing portfolio through expansions and upgrades Enlarged, experienced management team in place
allowing the business to mature following its start up Reduce LTV in Spain to 40% through value added
AFRICAN DEFENSIVE CASFLOW SECURED
Strong operational focus to keep delivering solid projects and if possible paper-funded acquisitions
results with a specific intent to further reduce phase and pursue new growth opportunities
vacancies and lower operating costs Continue identifying and delivering value add asset Maintain conservative and well diversified funding
– SPANISH PORTFOLIO ASSETS
management opportunities strategy
Increased focus on consumer analytics and
alternative income streams starting to gain traction Very healthy pipeline of organic growth Continue to hedge foreign earnings to provide
opportunities allied to our existing assets through the predictability in earnings
Evolve into a customer-led organisation to better
adapt to changing customer trends to ensure long El Corte Ingles deal Strong focus on risk management techniques in
term sustainability Good pipeline of new accretive acquisitions currently respect of currency and interest rate risks
DMTN UNENCUMBERED
Appetite to invest further in South Africa; always being evaluated
about the right assets at the right price and currently Evolve into a customer-led organisation to better
evaluating the proposed Rebosis portfolio acquisition adapt to changing customer trends to ensure long
ASSETS
Recycle non core assets and investments where term sustainability
appropriate without harming earnings momentum Already the 9th largest SOCIMI in Spain by market
Retain an opportunistic and entrepreneurial approach capitalisation
Q&A APPENDICES
to deal-making but always to be strategically Focus is on growth in dividends not portfolio size
consistent with our retail focus and driven by long Great window of opportunity to become a leading
term fundamentals retail operator in Spain
9
Management changes
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Welcoming our new executives in a seamless transition
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
Laurence Cohen Itu Mothibeli
– SPANISH PORTFOLIO ASSETS
Been with Vukile since 2012
Former CFO of Hyprop
DMTN UNENCUMBERED
Currently Head of Asset Management SA
Extensive experience and knowledge of REITs and retail
assets in SA and abroad Mentored by Ina Lopion over the past two years
ASSETS
Already very well integrated into the team Great understanding of the sector and strong track
record of delivery
Strong alignment of values with the team
Appointed as MD Southern Africa and joins the Board
Q&A APPENDICES
Assumes role of CFO and joins the Vukile Board effective
effective 1 July 2019
1 July 2019
10Transactions in process
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Core strategic deals in progress
Active recycling of assets Non-core assets deals in progress
Sale of non-retail SA portfolio to a BEE group Evaluating buying out the underwriter from the
TREASURY
currently under evaluation Project West transaction
− Strong focus on skills development further − Lowest risk deal is to buy our own assets
DEFENSIVE CASFLOW
RETAIL PORTFILIO
demonstrating Vukile’s commitment to transformation
El Corte Ingles transaction
in the sector
AFRICAN DEFENSIVE CASFLOW SECURED
− Very exciting initiative to add value to existing assets
Sale of the Namibian Portfolio through both NOI growth and cap rate compression
– SPANISH PORTFOLIO ASSETS
− Currently at advanced stage of a trade sale where Vukile resulting from greater ownership percentage of the
will retain a 30% stake for the time being centres
− Would consider other exit options should the sale not Nurturing a solid pipeline of accretive transactions
DMTN UNENCUMBERED
finalise in Spain
Acquisition of portfolio from Rebosis currently in
ASSETS
due diligence
Q&A APPENDICES
11Rebosis transaction
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Strategically aligned acquisition of three shopping centres currently being evaluated
Announced transaction on 13 May 2019
Acquisition of three shopping centres for an aggregate price of R1.78bn
TREASURY
Mdantstane Mall, Bloed Street Mall and Sunnypark are consistent with Vukile’s strategy and focus on mid- to lower
LSM centres operating in townships or highly dense CBD’s, benefiting from high footfall and strong national tenant
DEFENSIVE CASFLOW
RETAIL PORTFILIO
leases
Deal still has numerous conditions precedent before being finalised
AFRICAN DEFENSIVE CASFLOW SECURED
− Due diligence approval by Vukile in its sole discretion currently underway
– SPANISH PORTFOLIO ASSETS
− Competition Commission approval
− Rebosis shareholder approval
− Specific Vukile shareholder approval to fund the acquisition
DMTN UNENCUMBERED
− Funding needs to be raised on terms acceptable to Vukile
ASSETS
− Deal will reduce LTV, as Vukile is prepared to take on no more than 25% debt to fund the transaction
Market will be updated on progress of the deal as key milestones are reached
Q&A APPENDICES
12Listed investments
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Looking for opportunities to recycle into core strategies
Gemgrow Atlantic Leaf Fairvest
TREASURY
Supportive of proposed Arrowhead Continues to deliver in line with Ongoing strong performance
DEFENSIVE CASFLOW
transaction mandate and expectations
RETAIL PORTFILIO
Delivers above market growth rates
Potential consolidation opportunities Focus on recycling their assets to Aligned to Vukile’s core retail focus
AFRICAN DEFENSIVE CASFLOW SECURED
driven off the A/B share structure have an even greater focus on
No immediate plans to exit but will
Cost savings to benefit shareholders warehousing and logistics to further
continue to monitor total
– SPANISH PORTFOLIO ASSETS
strengthen the fund
Creates greater scale and index shareholder’s returns
inclusion for the enlarged entity No concerns about the business and
earnings outlook but looking difficult
Reduces Vukile holding to 10%
to scale the operation
DMTN UNENCUMBERED
Makes for an easier exit due to
Continue to work with management
relatively smaller percentage
to find appropriate solutions and
shareholding, greater scale and
ASSETS
potential exit for Vukile
liquidity
Proceeds would be deployed in Spain
Non-core holding and keen to find an
Q&A APPENDICES
exit
13Looking to the future of shopping centres
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Positioning the business for long term sustainability
Retail apocalypse story is grossly exaggerated and shopping centres are not dying but…
… change is happening at a rapid rate creating the need for a more agile organisation and approach to shopping centre
TREASURY
ownership
What will the future of shopping centre ownership look like in five and ten years time?
DEFENSIVE CASFLOW
RETAIL PORTFILIO
What key skills and core competencies will be required?
AFRICAN DEFENSIVE CASFLOW SECURED
Deep understanding of the customer and consumer behaviour lies at the heart of this journey
– SPANISH PORTFOLIO ASSETS
− Placing the customer at the centre of everything we do
Embarking on a process with external consultants to help us navigate this transition and build the required skills in both
Vukile and Castellana
DMTN UNENCUMBERED
May well require investment in new ventures and skills
ASSETS
Aim to spend the better part of the next year developing this strategy to manage and thrive in a world of disruption to
ensure we remain the best shopping centre owners and managers we can be
Q&A APPENDICES
14Valuation methodology
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Southern African property portfolio
Directors’ valuations used in financial statements
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 consistent views and methodology since listing, with minor
TREASURY
improvements to the model in refining risk assessment and the build-up of discount and exit cap rates
The portfolio is internally valued using the Discounted Cash Flow method and benchmarked against external
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Valuation policy valuations. 50% of the portfolio is externally valued every six months, ensuring that the total portfolio value is
reviewed by external valuers once a year
AFRICAN DEFENSIVE CASFLOW SECURED
Comparison The difference between the directors’ and external valuations were consistently within a narrow range of on
– directors’ vs. external valuation average approximately 2% over the past 6 years
– SPANISH PORTFOLIO ASSETS
The rolling 10 year government bond is used as base rate, to which a general property risk premium is applied.
Calculation of base
Further risk premiums are applied per individual property depending on risk. This property specific risk is
discount rate
evaluated annually using a bespoke comprehensive risk / expected return model
DMTN UNENCUMBERED
Calculation of exit 100bps risk loading for uncertainty of future cash flows is applied to the initial yield (discount rate less expected
capitalisation rate income growth) to calculate the exit capitalisation rate
ASSETS
Hold Period The hold period for valuation of multi tenanted properties is 4 years and single tenanted properties 10 years
Q&A APPENDICES
Value minimum of
Properties on ₋ discounted cashflow over leasehold period with zero residual value or
leasehold land
₋ discounted cashflow over 4 years plus perpetuity value of the 5th year’s net income
153 Treasury Management
At year ended 31 March 2019
www.vukile.co.za 16Debt and foreign exchange policy
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
A prudent approach to managing risk
Internal management policy of a maximum loan to value ratio of 40% with 35% targeted level
Minimum of 75% of interest bearing debt to be hedged with a minimum 3 year fixed rate
TREASURY
(swap) maturity profile
DEFENSIVE CASFLOW
RETAIL PORTFILIO
A multi-banked approach across diversified sources of funding with no more than 25% of total interest
bearing debt to mature within any one financial year
AFRICAN DEFENSIVE CASFLOW SECURED
Commercial Paper fully backed by committed revolving credit facilities
– SPANISH PORTFOLIO ASSETS
Acquisitions of foreign assets to be funded with foreign loans in the same currency to minimise
adverse foreign exchange fluctuations on Vukile’s earnings, assets and liabilities
DMTN UNENCUMBERED
On average 70% - 75% of foreign dividends to be hedged by way of forward exchange contracts
over a 3-year to 5-year period
ASSETS
Vukile is a member of the Debt Issuers Association (“DIA”) and has representation on their executive committee.
Q&A APPENDICES
Vukile abides by the Debt capital markets – primary issuance guidelines (November 2017)
17Key debt and foreign exchange metrics
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Good progress in reducing LTV and strong ICR
Reduced Group cost of funding to 4.5% (South Africa 9.2%) from 5.7% (South Africa 9.2%)
Strong cash flow compared with net interest cost with Interest cover ratio of 6 times (vi)
TREASURY
Stress testing reveals that the portfolio would need to undergo a 67% reduction in EBITDA before reaching 2 times bank covenant
level
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Solid balance sheet with a loan to value ratio of 37.2% (i), gearing ratio of 37.0% (ii) and “see-through” LTV of 38.9% (xx)
AFRICAN DEFENSIVE CASFLOW SECURED
A 25% weakening of the ZAR spot rate to the EUR from 16.26 to 20.32 will only increase Vukile’s LTV to 39.5%
– SPANISH PORTFOLIO ASSETS
95.7% (iii) of Interest bearing debt hedged with a 3.6 year fixed rate (swap & fixed debt) maturity profile
R1.2bn of Corporate Bonds issued and R7.4bn of bank facilities negotiated or extended during the 12-month period
R1.4bn of bank debt expiring in FY2020 will be refinanced, currently R1.1bn already in advanced negotiations. No corporate bonds
DMTN UNENCUMBERED
are to expire in FY2020
75.2% of forecast Net EUR income from Castellana hedged over the next 2½ years
ASSETS
86.0% of forecast Net GBP income from Atlantic Leaf hedged over the next 2 years
Q&A APPENDICES
Secured note long term rating of AA+(za) and corporate long term rating of A+(za) which is to be reviewed imminently in July 2019
(i), (ii), (iii), (iv) and (xx) defined in Appendix C: Notes to Treasury Management Slides
18Segmental loan-to-value and interest cover ratios
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Low risk conservative balance sheet
Southern Africa Spain Group Internal Policy at
R'000 €'000 R'000 Group level
TREASURY
Loan-to-value ratio (net of cash and cash equivalents) (i) 29.98% 45.93% 37.18 % 35% - 40%
Loan-to-value covenant level 50% 65% 50%
DEFENSIVE CASFLOW
RETAIL PORTFILIO
LTV stress level margin (% asset value reduction to respective covenant levels) 35% 24% 20%
LTV stress level amount (asset value reduction to respective covenant levels) R6 266 262 € 223 626 R6 522 696
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
Interest cover ratio (vi) 7.94 times 4.07 times 6.05 times
Interest cover ratio covenant level 2 times 2 times 2 times
ICR stress level margin (% EBITDA reduction to respective covenant levels) 75% 51% 67%
DMTN UNENCUMBERED
ICR stress level amount (EBITDA reduction to respective covenant levels) R909 634 € 18 534 R1 210 979
ASSETS
Interest bearing debt hedged (iii) (vii) 91.67% 98.66% 95.68% > 75%
Fixed rate (swap) maturity profile 2.66 years 4.16 years 3.55 years > 3 years
Q&A APPENDICES
Debt maturity profile 2.01 years 5.46 years 3.92 years
(i), (iii), (vi) and (vii) defined in Appendix C: Notes to Treasury Management Slides
19Analysis of Group loan and hedging expiry profile
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Well hedged with low risk expiry profile
(vii)
54.6%
TREASURY
Internal Policy (viii) R1.4bn of
No more than 25% available
DEFENSIVE CASFLOW
RETAIL PORTFILIO
of total interest undrawn
36.7%
bearing debt to bank facilities (viii)
mature within any
AFRICAN DEFENSIVE CASFLOW SECURED
one financial year
No corporate
– SPANISH PORTFOLIO ASSETS
96% of interest bonds are
18.5%
bearing debt expiring in
17.6%
hedged (iii) (vii) FY2020
16.5%
12.2%
10.9%
10.0%
Fixed rate
8.2%
DMTN UNENCUMBERED
(swap & fixed debt)
6.9%
maturity profile 3.6
4.2%
2.6%
years (vii)
0.8%
0.2%
0.1%
ASSETS
2020 2021 2022 2023 2024 2025 2026
Loan expiry profile R'm 1 084 1 441 2 454 1 330 1 612 4 850
Q&A APPENDICES
CP and Access Facility expiry profile R'm 347 12 100
Hedging (Swap & Fixed debt) profile R'm 518 842 2 013 2 145 6 676 25
(iii), (vii) and (viii) defined in Appendix C: Notes to Treasury Management Slides
20Debt expiring in FY2020
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
R1.1bn of term debt and R347m of access facilities
Maturity Date Amount Drawn Comments
'000
Investec Access Facility 23 Jun 2019 R38 083
TREASURY
Investec EUR Term Loan €21 681 Renewed
23 Jun 2019
ZAR Equivalent at EURZAR spot rate of 16.2582 at 31 March 2019 R336 236
Indicative approval &
DEFENSIVE CASFLOW
RETAIL PORTFILIO
RMB EUR Term Loan 30 Sep 2019 €10 475 agreements being
ZAR Equivalent at EURZAR spot rate of 16.2582 at 31 March 2019 R170 304
finalised
AFRICAN DEFENSIVE CASFLOW SECURED
ABSA Multicurrency Revolving Credit Facility 31 Oct 2019 R309 427
Indicative approval &
– SPANISH PORTFOLIO ASSETS
ABSA GBP Term Loan 31 Oct 2019 £9 000
ZAR Equivalent at GBPZAR spot rate of 18.8855 at 31 March 2019 R169 970 pricing provided by
ABSA GBP Term Loan ABSA
31 Oct 2019 £5 350
ZAR Equivalent at GBPZAR spot rate of 18.8855 at 31 March 2019 R101 037
Standard Bank EUR Term Loan 20 Dec 2019 €6 500
DMTN UNENCUMBERED
ZAR Equivalent at EURZAR spot rate of 16.2582 at 31 March 2019 R105 678
Indicative approval &
Nedbank ZAR Term Loan 30 Jan 2020 R100 000 agreements being finalised
ASSETS
ABSA ZAR Term Loan 31 Mar 2020 R100 000
Total R1 430 735
Q&A APPENDICES
Very confident that bank debt expiring will be extended
No corporate bonds are expiring in FY2020
21Updated undrawn facilities at 30 June 2019
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
R1.5bn of available bank facilities
Facility Amount Amount Drawn Facility Undrawn
'000 '000 '000
TREASURY
ABSA Multicurrency Revolving Credit Facility R850 000 R105 507 R749 493
Investec Access Facility R100 000 R5 603 R94 397
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Investec Revolving Credit Facility R100 000 R25 546 R74 454
R200 000 R34 391 R165 609
AFRICAN DEFENSIVE CASFLOW SECURED
RMB Access
Standard Bank Access R105 000 R0 R105 000
– SPANISH PORTFOLIO ASSETS
Standard Bank EUR Term Loan (xiv) €22 000 €0 €22 000
ZAR Equivalent at EURZAR spot rate of 16.2582 at 31 March 2019 R357 680 R0 R357 680
Total R1 712 680 R166 047 R1 546 633
DMTN UNENCUMBERED
ASSETS Q&A APPENDICES
(xiv) defined in Appendix C: Notes to Treasury Management Slides
22Cost of Group debt by currency
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Reduction in Group cost of finance due to funding mix
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
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
R9.462bn
AFRICAN DEFENSIVE CASFLOW SECURED
R7.071bn
– SPANISH PORTFOLIO ASSETS
R3.740bn
R3.226bn
R2.855bn
R0.542bn
R0.476bn
DMTN UNENCUMBERED
ASSETS
ZAR EUR GBP Total
Debt as at Mar-18 Debt as at Mar-19
Q&A APPENDICES
% FY2018 Historic cost of debt % FY2019 Historic cost of debt (iv) % FY2020 Budget cost of debt (v)
(iv) and (v) defined in Appendix C: Notes to treasury management slides
23Defensive Cashflow
4 - Southern Africa Portfolio
at year ended 31 March 2019
www.vukile.co.za 24Key retail portfolio metrics
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Direct Southern African retail portfolio
Key Facts Tenant Operating Efficiency
TREASURY
Valuations
Profile metrics
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Portfolio Value Average asset value National exposure Reversions Rent-to-sales
AFRICAN DEFENSIVE CASFLOW SECURED
R14.2bn R316m ₋ 83% GLA + 4.5% 6.0%
– SPANISH PORTFOLIO ASSETS
45 Properties Average discount ₋ 79% Rent Vacancies Average annual trading
rate Top 10 tenants ₋ 3.0% GLA density
GLA 13.5% R28 235/m²
₋ 54% GLA ₋ 3.0% Rent
860 591m²
Average exit ₋ 44% Rent Contractual escalations Annualised growth in
DMTN UNENCUMBERED
capitalisation rate WALE of 7.0% trading densities
8.3% 4.0 years 2.8%
ASSETS
Base rentals
Tenant retention of R134.78/m² Net cost to property
87% revenue
Q&A APPENDICES
Like-for-like net income 16.9%
growth
4.4%
25Southern African retail tenant affordability
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Consistently strong metrics
Retail Vacancy Profile by Rent Retail Average Base Rentals (excl. Recoveries)
TREASURY
134.78
130.44
4.0%
122.88
114.61
3.6%
108.14
3.4%
3.3%
3.3%
102.56
3.0%
DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Retail Contractual Escalations Retail Rent Reversions
12.3%
7.8%
DMTN UNENCUMBERED
7.6%
7.5%
10.8%
7.3%
7.1%
7.0%
7.0%
7.8%
6.9%
ASSETS
5.2%
4.5%
Q&A APPENDICES
2014 2015 2016 2017 2018 2019 Recent New 2014 2015 2016 2017 2018 2019
Leases and
Renewals
26Southern African retail tenant exposure
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Low risk with 79% national tenants
Tenant profile - by contractual rent Top 10 tenants - by contractual rent
TREASURY
2.6% Pep Stores
Other Pepkor 8.1% 2.5% Ackermans
DEFENSIVE CASFLOW
21%
RETAIL PORTFILIO
Pick n Pay
6.2%
Stores
AFRICAN DEFENSIVE CASFLOW SECURED
Shoprite 5.7%
Top 10
– SPANISH PORTFOLIO ASSETS
Foschini 4.8%
tenants
2.6% Jet
44% Edcon 4.3% 1.2% Edgars
of Retail Mr Price 4.1%
Rent
DMTN UNENCUMBERED
Spar 3.4%
ASSETS
Truworths 3.1%
Nationals
79% Massmart 2.7%
Q&A APPENDICES
First Rand
1.9%
Group
27Edcon
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Significant reduction in exposure
Retail Rental exposure reduced from 5.7% to 4.3% Area reduced by 17 000m² by August 2019
Since March 2018 our exposure to Edcon has reduced by
TREASURY
5 598m² from 56 656m² (7.4% of retail GLA) to 51 058m²
(6.2% of retail GLA)
3.2%
Jet
DEFENSIVE CASFLOW
RETAIL PORTFILIO
2.6% A further 11 258m² to be reduced by August 2019 which will
reduce our exposure to 39 800m² (4.9% of retail GLA, and the
AFRICAN DEFENSIVE CASFLOW SECURED
group’s rental exposure from 2.5% to 2.0%)
1.6% Already re-let or are in advanced stages of negotiations to let
Edgars
– SPANISH PORTFOLIO ASSETS
1.2% the majority of the 11 258m² at higher rentals
Agreed to take a R36m capital investment in Edcon in exchange
for shares in the retailer, injected monthly over 24 months.
0.5%
Edgars Active Vukile’s participation in the Edcon restructuring didn’t impact
DMTN UNENCUMBERED
0.3% our distribution to shareholders for FY2019
The effects of the restructured Edcon leases have already been
ASSETS
CNA, Red Square factored into our figures and form part of Vukile’s guidance for
0.3%
and Edgars our next financial year
Connect 0.2%
Q&A APPENDICES
We will continue to critically assess our exposure to the tenant
Mar-18 Mar-19 and manage proactively over time
28Capital investment last 5 years – R1.1bn invested in our retail portfolio
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Continued focus on maintaining and improving our properties
R'm R'm
East Rand Mall 220 Pine Crest (i) 102
Major
TREASURY
upgrades / R930m Maluti (i) 169 Workshop 72
DEFENSIVE CASFLOW
extensions
RETAIL PORTFILIO
Meadowdale 147 Hillfox 36
AFRICAN DEFENSIVE CASFLOW SECURED
Dobsonville 112 Phoenix 33
– SPANISH PORTFOLIO ASSETS
Maintenance
DMTN UNENCUMBERED
Capital R111m to be spent in FY2020
Based on condition R200m
ASSETS
assessment of properties
by in-house team
Q&A APPENDICES
(i) Remainder of capex to be spent in FY2020
29Alternative Income Management
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Significant milestones achieved with platform now in place
35 properties have live fibre to The shopper app is being
the business connections, finalised - to be deployed
TREASURY
(2 more in process) to Hillfox and
Dobsonville during June
DEFENSIVE CASFLOW
RETAIL PORTFILIO
50 tenants installations Will generate consumer
AFRICAN DEFENSIVE CASFLOW SECURED
completed with 57 on order behaviour insights from
data captured
– SPANISH PORTFOLIO ASSETS
Wi-Fi installed at 2 Websites and social media sites for all retail properties
properties, currently in across the portfolio are being upgraded or created
DMTN UNENCUMBERED
technical testing phase
ASSETS
More than 2 000 people have Mustard Seed Relationship Marketing appointed to
Q&A APPENDICES
already registered via the implement marketing strategy across 33 properties
captive portal
30Energy and water management
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Focus on sustainability
Achievements FY2019:
5.5 million kWh sustainable electricity savings (equivalent of
TREASURY
powering 500 houses)
R2.8m saved through billing & metering optimisation
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Total installed PV capacity of 4.8 MW
Total spend to date of R53m with annual income of R10m
AFRICAN DEFENSIVE CASFLOW SECURED
equating to an 18% yield on investment
– SPANISH PORTFOLIO ASSETS
Sustainable water savings of 18 000 kl per annum (equivalent
of 700 swimming pools)
Targets for the next 12 months:
DMTN UNENCUMBERED
Energy savings of 8.6 million kWh (equivalent of powering 800 houses)
Increasing PV capacity by 3.6 MW
ASSETS
Further optimised metering and billing savings of +R0.6m
Q&A APPENDICES
Additional water savings of +15 000 kl per annum (equivalent of +600
swimming pools)
31Southern Africa strategy
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Internally focussed strategy to drive operational performance
Anticipate another challenging period ahead for the local economy
Portfolio is defensively positioned with 92% retail exposure with a specific focus on LSMs 1-7
TREASURY
Defensive tenant mix with approximately 80% national tenants and large grocery component at low rent to sales
ratios
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Local activity will be focused on expansions and upgrades to existing centres
AFRICAN DEFENSIVE CASFLOW SECURED
Continued strong operational focus to drive results with a specific objective to reduce vacancies and operating costs
– SPANISH PORTFOLIO ASSETS
Growing focus on consumer analytics and alternative income streams gathering momentum
Installation of fibre at 35 centres is a key foundation for our future strategy
DMTN UNENCUMBERED
Appetite to invest further in South Africa through buying the right assets at the right price as evidenced by the
current Rebosis transaction that is under evaluation
ASSETS
Look to recycle non-core assets and investments where appropriate without harming earnings momentum
Q&A APPENDICES
Retain an opportunistic and entrepreneurial approach to deal-making but always to be strategically consistent with
our retail focus and driven by long term fundamentals
325 Defensive Cashflow – Spanish Portfolio
At year ended 31 March 2019
www.vukile.co.za 33Key portfolio metrics
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
A premier retail Socimi in Spain
Operating
TREASURY
Key Facts Valuations Tenants
Metrics
DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
Portfolio Value of €916m Average asset value €54m 94% of retail space let to 10.8% increase in reversions
national tenants and new lettings
17 Properties Average discount rate 7.8%
27% of income from top 10 97.9% Occupancy
GLA 317 106m² Average exit capitalisation tenants
DMTN UNENCUMBERED
rate 6.0% Average base rentals
96.4% Retail by value WALE of 14.2 years (i)
€14.14/m²/month
ASSETS
99.3% rent collection rate 3.5% Like-for-like growth in
rental income
Q&A APPENDICES
(i) WALE is to expiry of lease excluding break options
34Spanish retail tenant exposure
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Low risk with 93% national and international tenants
Tenant profile - by contractual rent Top 10 tenants - by contractual rent
TREASURY
Other
7% 4.2%
DEFENSIVE CASFLOW
RETAIL PORTFILIO
4.2%
3.1%
AFRICAN DEFENSIVE CASFLOW SECURED
Top 10
tenants 2.9%
– SPANISH PORTFOLIO ASSETS
28% 2.4%
of retail
2.3%
rent
DMTN UNENCUMBERED
2.2%
2.2%
ASSETS
Nationals 2.1%
Q&A APPENDICES
93%
1.9%
35Growing portfolio valuations
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Significant like-for-like growth in value of acquisitions over time
TREASURY
Like-for-Like (ii) Revaluation
FY2018 vs FY2019 €308m +6.49% € 328m(i)
DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
Total Portfolio R1.5 bn of value (iv) created
DMTN UNENCUMBERED
Revaluation since Acquisition (iii) €824m +11.17% € 916m (1) since acquisition
ASSETS Q&A APPENDICES
(i) Valuation as at 31 March 2019
(ii) Like-for-Like is the growth in stable portfolio value excluding new acquisitions made in FY2019
(iii) €824m is total of prices paid at each acquisition date excluding transaction costs
(iv) Difference between €916m and €824m = €92m multiplied by EURZAR exchange rate of 16.2582
36Value creation
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Capital growth vs acquisition cost – consistently adding value over time
Alameda
27 000
Konecta 240 000
Project London
75 000
TREASURY
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 5%
9% 71 310
DEFENSIVE CASFLOW
24 000 7% 215 360 67 886
RETAIL PORTFILIO
200 000 212 270 65 000 -1%
-2%
66 940
23 935 66 310
23 000
197 629
AFRICAN DEFENSIVE CASFLOW SECURED
22 000 180 000 60 000
Acquisition Dec-17 Mar-18 Sep-18 Mar-19 Acquisition Dec-17 Mar-18 Sep-18 Mar-19 Acquisition Dec-17 Mar-18 Sep-18 Mar-19
Dec-17
– SPANISH PORTFOLIO ASSETS
May-15 Jun-17
90 000 Habaneras 510 000 Project West
88 000
6% 500 000
DMTN UNENCUMBERED
88 780
86 000 6%
490 000 499 780
84 000 2%
2%
85 200
ASSETS
83 828 491 700
480 000
82 000
482 578
80 000 470 000
Q&A APPENDICES
Acquisition Sep-18 Mar-19 Acquisition Sep-18 19-Mar
May-18 Jul-18
Note: Acquisition price includes costs
37Proposed investments & value add projects
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Opportunity to unlock additional value across portfolio
Commencement Date : May 2019
TREASURY
Completion Date : July 2020
Total Investment : €115m (i)
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Annualised NOI Increase : +€7.6m (ii)
AFRICAN DEFENSIVE CASFLOW SECURED
Yield on Capex : 6.8% (ii)
– SPANISH PORTFOLIO ASSETS
Key Highlights
Acquisition of ECI-owned boxes in Bahia Sur and
DMTN UNENCUMBERED
Los Arcos centres concluded May 2019 Image: Bahía Sur’s Hipercor unit owned by ECI
Units Acquisition Capex on ECI Capex on Rest of
ASSETS
Capex projects totaling €76m to enhance Price (iii) units Portfolio
dominance of the centres commencing in May 2019 €39m €28m €48m (iv)
Q&A APPENDICES
(i) All capex including acquisition and repositioning of ECI units as well as other capex across the portfolio, excluding minor regulatory works of €3m
(ii) Once fully let , yield excludes minor regulatory works of €3m
(iii) Including transaction costs
(iv) Includes the acquistion of land and development of a new retail park at Bahia Sur
38Spanish strategy
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
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
− Spanish consumer and social culture together with large tourist market provides a defensive position against online retail sales
TREASURY
Remain focused on the retail sector including retail parks and shopping centres
Critical to our success is that we operate as locals on the ground
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Focus on value added asset management initiatives and driving operational excellence
Currently seeing very good deal flow with Castellana known as a credible and trustworthy buyer
AFRICAN DEFENSIVE CASFLOW SECURED
Good organic acquisition opportunities allied to existing assets including buying owner occupied boxes
– SPANISH PORTFOLIO ASSETS
Strong focus on corporate governance
Internal management structure with complete alignment between key staff and investors through the recently
implemented long term incentive plan that rewards growth in dividends as the key metric
DMTN UNENCUMBERED
Window of opportunity to really dominate the market
− US private equity funds need to return capital and sell assets
ASSETS
− Negative perception of retail means less competition for assets
Q&A APPENDICES
− Need to be alert to exciting corporate opportunities
396 DMTN Secured Assets
At year ended 31 March 2019
www.vukile.co.za 40Overview of DMTN secured property portfolio (Group 1 Notes)
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Quality secured portfolio
Property Value R2 592m 45% of income from top 10 tenants
TREASURY
7 Properties WALE of 4.3 years
DEFENSIVE CASFLOW
RETAIL PORTFILIO
GLA 153 341m² Retail Tenant Retention 82%
AFRICAN DEFENSIVE CASFLOW SECURED
Average property value R432m 2.6% Vacancy (by Rent)
– SPANISH PORTFOLIO ASSETS
73% of retail space let to national tenants Total DMTN Secured Debt R772m
DMTN UNENCUMBERED
Contractual rental escalation 7.4% DMTN Secured Portfolio LTV 29.8%
ASSETS Q&A APPENDICES
41DMTN secured portfolio
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
High quality assets
Dobsonville Bloemfontein Randburg Elim Hubyeni Randburg Nzhelele Valley
Phoenix Plaza Shopping Centre
Mall Plaza Square Apartments Shopping Centre
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
GAV R940m R546m R411m R409m R148m R74m R65m
AFRICAN DEFENSIVE CASFLOW SECURED
Region KwaZulu-Natal Gauteng Free State Gauteng Limpopo Gauteng Limpopo
– SPANISH PORTFOLIO ASSETS
Gross
Lettable 24 231m² 26 589m² 43 771m² 40 767m² 12 686m² 180 units 5 297m²
Area
Monthly
Rental R273/m² R141/m² R88/m² R104/m² R103/m² R5 900/unit R125/m²
DMTN UNENCUMBERED
National
Tenant 78% 82% 56% 78% 84% - 87%
exposure
ASSETS
Approx.
Footfall 10.4m 11.7m 8.8m 7.4m 2.5m ~ - 1.1m ~
Q&A APPENDICES
Vacancy 1% Fully Let 2% 5.6% 2.5% 14 units 6.5%
~ Estimate
42DMTN secured portfolio tenant exposure
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Low risk with 72% national tenants
Tenant profile - by contractual rent Top 10 tenants - by contractual rent
TREASURY
3.5% Ackermans
9.6% 3.2% Pep
6.3%
DEFENSIVE CASFLOW
Other
RETAIL PORTFILIO
28% 5.7%
AFRICAN DEFENSIVE CASFLOW SECURED
4.4% Jet
5.4% 0.7% Edgars
Top 10
– SPANISH PORTFOLIO ASSETS
tenants 4.0%
45% 3.1%
of Retail
3.0%
DMTN UNENCUMBERED
Rent
2.8%
ASSETS
2.7%
Nationals
72%
Q&A APPENDICES
2.1%
43DMTN secured portfolio tenant expiry profile
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
40% of contractual rent expiring in 2023 and beyond (WALE 4.3 years)
% of Contractual Rent Cumulative
100
TREASURY
74
DEFENSIVE CASFLOW
RETAIL PORTFILIO
61
AFRICAN DEFENSIVE CASFLOW SECURED
39
– SPANISH PORTFOLIO ASSETS
20
19 22 26
14
Mar-20 Mar-21 Mar-22 Mar-23 Beyond Mar-23
DMTN UNENCUMBERED
For the 12 months ended 31 March 2019 Retail leases were concluded with:
ASSETS
Total contract value R255m
Q&A APPENDICES
Total rentable area 33 122m²
Tenant Retention 79%
44DMTN secured portfolio rent-to-sales ratio
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Continuing to provide very profitable centres for our tenants
TREASURY DEFENSIVE CASFLOW
8.4%
RETAIL PORTFILIO
7.7%
AFRICAN DEFENSIVE CASFLOW SECURED
6.5%
6.1%
– SPANISH PORTFOLIO ASSETS
5.2%
4.1%
3.3%
DMTN UNENCUMBERED
ASSETS
Phoenix Plaza Randburg Square Bloemfontein Plaza Nzhelele Valley Shopping Dobsonville Mall Hubyeni Shopping Centre DMTN Portfolio Average
Centre
Q&A APPENDICES
Township Rural Urban
45DMTN secured portfolio trading statistics
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
High trading densities
Annualised trading density R/m² Trading density like-for-like growth
(0.5%) 0.8% (3.4%) 8.5% 5.7% (2.5%) 0.0%
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
DMTN UNENCUMBERED
41 713
39 223
37 194
37 038
21 585
16 057
28 833
ASSETS
Nzhelele Valley Shopping Dobsonville Mall Phoenix Plaza Hubyeni Shopping Centre Bloemfontein Plaza Randburg Square DMTN Portfolio Average
Centre
Q&A APPENDICES
Township Rural Urban
Note: Annualised trading density calculated using monthly trading density over 12 months. Trading density like-for-like growth calculated on stable tenants..
46DMTN secured portfolio structure
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Industry best practices
The Secured Notes are secured through a guarantee from the Vukile Security
Vukile Security SPV Trust No.1 Company No.1
The mortgage bonds are housed in the Guarantee SPV, which Owner Trust
TREASURY
provides guarantees to the Permitted Creditors and Vukile
Security SPV Trust No.1
DEFENSIVE CASFLOW
100%
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
Indemnity, Mortgage Vukile Security Permitted
– SPANISH PORTFOLIO ASSETS
bond security cession
Company No.1 Creditors
“Guarantee Guarantee (ABSA)
SPV”
Issue of Indemnity
DMTN UNENCUMBERED
Secured Bonds Guarantee
to raise funding
ASSETS
Vukile
Security SPV
Noteholders Trust No1
Q&A APPENDICES
Group 1
Notes
477 Unencumbered Assets
At year ended 31 March 2019
48Overview of unencumbered assets
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Quality unencumbered assets
Total Unencumbered Assets R7 180m 44% of income from top 10 tenants
TREASURY
Property Value R3 360m WALE of 3.0 years
DEFENSIVE CASFLOW
RETAIL PORTFILIO
24 Properties Retail Tenant Retention 88%
AFRICAN DEFENSIVE CASFLOW SECURED
GLA 287 187m² 6.6% Vacancy (by Rent)
– SPANISH PORTFOLIO ASSETS
Average property value R140m Total Unsecured Debt R1 341m (xix)
DMTN UNENCUMBERED
87% of retail space let to national tenants Unsecured Debt to Unencumbered Assets ratio 18.7%
ASSETS
Contractual rental escalation 7.1%
Q&A APPENDICES
(xix) defined in Appendix C: Notes to treasury management slides
49High quality unencumbered assets
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Top 5 unencumbered assets
Pretoria Kolonnade Oshakati Shopping Windhoek 269
Moruleng Mall Durban Workshop
Retail Park Centre Independence Avenue
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
GAV R497m R428m R399m R356m R213m
AFRICAN DEFENSIVE CASFLOW SECURED
Region Gauteng Namibia North West KwaZulu-Natal Namibia
– SPANISH PORTFOLIO ASSETS
Gross Lettable
Area 39 450m² 24 632m² 31 592m² 20 223m² 12 828m²
Monthly Rental R108/m² R138/m² R118/m² R204/m² R172/m²
National Tenant
83% 94% 86% 73% 90%
DMTN UNENCUMBERED
exposure
Vukile
Ownership 100% 100% 80% 100% 100%
ASSETS
Approx.
Footfall 28.3m ~ 3.2m ~ 3.9m 13.5m 5.2m ~
Q&A APPENDICES
Vacancy Fully Let 2.4% 4.9% 0.5% 15.6%
~ Estimate
50Unencumbered assets tenant exposure
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Low risk with 82% national tenants
Tenant profile - by contractual rent Top 10 tenants by rent
TREASURY
3.5% Pep
10.2% 2.8% Ackermans
Other
8.9%
DEFENSIVE CASFLOW
18%
RETAIL PORTFILIO
7.9%
AFRICAN DEFENSIVE CASFLOW SECURED
5.5%
– SPANISH PORTFOLIO ASSETS
Top 10 4.9%
tenants
4.3%
53%
3.2%
DMTN UNENCUMBERED
of Retail
Rent 1.0% Edgars
2.6% 1.0% Jet
ASSETS
2.5%
Q&A APPENDICES
Nationals 2.4%
82%
51Unencumbered assets tenant expiry profile
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
31% of contractual rent expiring in 2023 and beyond (WALE 3.0 years)
% of Contractual Rent Cumulative
100
TREASURY
76
69
DEFENSIVE CASFLOW
RETAIL PORTFILIO
50
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
29
21 19 24
7
DMTN UNENCUMBERED
Mar-20 Mar-21 Mar-22 Mar-23 Beyond Mar-23
For the 12 months ended 31 March 2019 Retail leases were concluded with:
ASSETS
Total contract value R317m
Q&A APPENDICES
Total rentable area 43 402m²
Tenant Retention 86%
52Unencumbered assets rent-to-sales ratio
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Continuing to provide very profitable centres for our tenants
TREASURY
9.4%
8.9%
DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
6.7%
6.5%
5.7%
– SPANISH PORTFOLIO ASSETS
5.6%
5.6%
5.3%
5.1%
4.4%
4.3%
4.3%
4.2%
4.0%
3.4%
DMTN UNENCUMBERED
ASSETS
269 Mbombela Oshikango Workshop Oshakati Ondangwa Moruleng Mall Kolonnade Mbombela Batho Plaza Katutura Maake Plaza Ermelo Game Van Unsecured
Independence Truworths Shopping Shopping Shoprite Retail Park Shoprite Shoprite Centre Riebeeckshof Portfolio
Q&A APPENDICES
Avenue Centre Centre Centre Centre Centre Centre Shopping Average
Centre
Township Rural Urban
53Unencumbered assets trading statistics
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
High trading densities
Annualised trading density R/m² Trading density like-for-like growth
21.0% 5.5% (7.5%) (2.1%) (4.2%) (8.1%) (5.4%) 3.5% 1.3% * (11.7%) 2.3% (12.5%) 2.8% (0.6%)
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
DMTN UNENCUMBERED
35 189
23 335
44 310
37 658
37 421
32 609
27 816
27 599
26 585
26 442
25 292
25 104
25 098
24 580
28 920
ASSETS
Van Workshop Katutura Batho Plaza Maake Plaza 269 Oshakati Oshikango Ermelo Game Kolonnade Ondangwa Moruleng Mall Mbombela Mbombela Unsecured
Riebeeckshof Shoprite Independence Shopping Shopping Centre Retail Park Shoprite Shoprite Truworths Portfolio
Shopping Centre Avenue Centre Centre Centre Centre Centre Average
Centre
Q&A APPENDICES
Township Rural Urban
Note: Annualised trading density calculated using monthly trading density over 12 months. Trading density like-for-like growth calculated on stable tenants..
54Corporate Bond and Commercial Paper Issuances
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Balance of secured and unsecured debt
Margin Current
Corporate Bonds Security Amount Reference Rate Maturity Date Initial Term
at Issuance MtM Margin
VKE07 Secured R200m 3M JIBAR 1.65% 1.65% 08/06/2020 5.1 years
TREASURY
VKE09 Secured R378m 3M JIBAR 1.64% 1.15% 08/07/2020 3.2 years
VKE10 Secured R194m 3M JIBAR 1.80% 1.80% 08/07/2022 5.2 years
DEFENSIVE CASFLOW
RETAIL PORTFILIO
VKE11 Unsecured R175m 3M JIBAR 1.75% 1.75% 20/04/2023 5.0 years
VKE12 Unsecured R150m 3M JIBAR 1.60% 1.50% 03/05/2021 3.0 years
AFRICAN DEFENSIVE CASFLOW SECURED
VKE13 Unsecured R535m 3M JIBAR 1.55% 1.375% 27/08/2021 3.0 years
– SPANISH PORTFOLIO ASSETS
VKE14 Unsecured R375m 3M JIBAR 1.65% 1.65% 27/08/2023 5.0 years
Unsecured Debt Summary (xix) Security Amount
Corporate Bonds Unsecured R1 235m
Commercial Paper Unsecured R0m
DMTN UNENCUMBERED
Bank Debt Unsecured R106m
Total Unsecured R1 341m
ASSETS
Secured long-term credit rating of AA+(ZA), corporate long-term credit rating of to A+(ZA) and corporate short-term
Q&A APPENDICES
credit rating of A1(ZA) which is to be reviewed imminently in July 2019
Note: MtM as at 30 June 2019.
(xix) defined in Appendix C: Notes to treasury management slides
55Funding plans
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Prudent management of cash flow
Raised R2.6bn in new equity during FY2019 and R700m in April 2019
TREASURY
Raised R1.2bn in corporate bonds during FY2019
DEFENSIVE CASFLOW
RETAIL PORTFILIO
Total outstanding listed corporate bonds of R2.0bn
AFRICAN DEFENSIVE CASFLOW SECURED
No corporate bonds are expiring in FY2020
– SPANISH PORTFOLIO ASSETS
Vukile committed to annual debt roadshow encouraging engagement with DCM market investors
DMTN UNENCUMBERED
Intention to be a regular issuer with a benchmark sized auction annually, subject to debt requirements
ASSETS
Currently no need for corporate bonds issuances during FY2020
Q&A APPENDICES
568 Q&A www.vukile.co.za 57
8 Appendix A
Southern African portfolio
www.vukile.co.za 58Our Southern Africa retail footprint
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Retail portfolio profile (Top 15 properties 64% of portfolio by value)
TREASURY
10
12
DEFENSIVE CASFLOW
RETAIL PORTFILIO
8%
1
7% 8 6
11
36% 9 14
AFRICAN DEFENSIVE CASFLOW SECURED
4%
15 1 East Rand Mall 9 Meadowdale Mall
4%
– SPANISH PORTFOLIO ASSETS
2 10 Oshakati
Pine Crest
13 4
3 11
2
3 Phoenix Plaza Daveyton
8% 12
4 Maluti Crescent Thavhani Mall
DMTN UNENCUMBERED
23%
13
5 Gugulethu Square Bloemfontein Plaza
7
14
Randburg Square
ASSETS
6 Dobsonville Mall
15 Moruleng Mall
7% 3% 7 Nonesi Mall
5
Q&A APPENDICES
Top 15 Properties
Retail Geographic Profile
8 Kolonnade Retail Park
%
by Value
59High quality retail assets
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Top 15 assets
East Rand Mall Pine Crest Phoenix Plaza Maluti Crescent Gugulethu Square
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
GAV R1 433m R1 047m R940m R667m R553m
AFRICAN DEFENSIVE CASFLOW SECURED
Region Gauteng KwaZulu-Natal KwaZulu-Natal Free State Western Cape
– SPANISH PORTFOLIO ASSETS
Gross Lettable
Area 68 253m² 43 414m² 24 231m² 35 335m² 25 322m²
Monthly Rental R278/m² R175/m² R273/m² R144/m² R164/m²
National Tenant
94% 91% 78% 94% 88%
DMTN UNENCUMBERED
exposure
Vukile
Ownership 50% 100% 100% 100% 100%
ASSETS
Approx.
Footfall 10.2m 11.2m 10.4m 6.5m 11.5m
Q&A APPENDICES
Vacancy 1.8% 4.1% 1.0% 1.2% Fully Let
Development vacancy Development vacancy
60High quality retail assets
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Top 15 assets (cont.)
Oshakati Shopping
Dobsonville Mall Nonesi Mall Kolonnade Retail Park Meadowdale Mall
Centre
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
GAV R546m R500m R497m R438m R428m
AFRICAN DEFENSIVE CASFLOW SECURED
Region Gauteng Eastern Cape Gauteng Gauteng Namibia
– SPANISH PORTFOLIO ASSETS
Gross Lettable
Area 26 589m² 27 898m² 39 450m² 49 487m² 24 632m²
Monthly Rental R141/m² R128/m² R108/m² R81/m² R138/m²
National Tenant
82% 97% 83% 81% 94%
DMTN UNENCUMBERED
exposure
Vukile
Ownership 100% 100% 100% 67% 100%
ASSETS
Approx.
Footfall 11.7m 8.2m 8.8m (i) 9.8m (i) 5.1m (i)
Q&A APPENDICES
Vacancy Fully Let Fully Let Fully Let Fully Let 2.4%
(i) Estimate
61High quality retail assets
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Top 15 assets (cont.)
Daveyton Shopping
Thavhani Mall Bloemfontein Plaza Randburg Square Moruleng Mall
Centre
TREASURY DEFENSIVE CASFLOW
RETAIL PORTFILIO
GAV R421m R414m R411m R409m R399m
AFRICAN DEFENSIVE CASFLOW SECURED
Region Gauteng Limpopo Free State Gauteng North West
– SPANISH PORTFOLIO ASSETS
Gross Lettable
Area 17 774m² 53 289m² 43 771m² 40 767m² 31 592m²
Monthly Rental R166/m² R165/m² R88/m² R104/m² R118/m²
National Tenant
83% 92% 56% 78% 86%
DMTN UNENCUMBERED
exposure
Vukile
Ownership 100% 33% 100% 100% 80%
ASSETS
Approx.
Footfall 7.9m 9.3m 8.8m 7.4m 3.9m
Q&A APPENDICES
Vacancy 1.4% 0.9% 2.0% 5.6% 4.9%
62Retail tenant expiry profile
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
41% of contractual rent expiring in 2023 and beyond (WALE 4.0 years)
% of Contractual Rent Cumulative
100
TREASURY
72
DEFENSIVE CASFLOW
RETAIL PORTFILIO
59
AFRICAN DEFENSIVE CASFLOW SECURED
40
– SPANISH PORTFOLIO ASSETS
23
28
17 19 13
DMTN UNENCUMBERED
Mar-20 Mar-21 Mar-22 Mar-23 Beyond Mar-23
For the 12 months ended 31 March 2019 Retail leases were concluded with:
ASSETS
Total contract value R1 658m
Q&A APPENDICES
Total rentable area 181 123m²
Tenant Retention 87%
63Retail portfolio trading statistics for Top 15 properties
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
High trading densities delivering higher growth than national retail sales growth
4.3% 0.8% (3.4%) 1.0% (2.0%) 7.0% * * * (5.4%) * 2.3% 8.1% 5.7% (2.5%) 1.1%
4.5% 1.2% (3.1%) # (1.5%) 7.0% * * * (4.3%) * 3.5% # # (1.2%) 2.8%
TREASURY
Trading density growth including asset
Annualised trading density R/m² Trading density like-for-like growth management intervention
DEFENSIVE CASFLOW
RETAIL PORTFILIO
AFRICAN DEFENSIVE CASFLOW SECURED
– SPANISH PORTFOLIO ASSETS
DMTN UNENCUMBERED
28 986
41 758
39 223
37 194
34 394
30 079
29 447
27 919
27 896
27 599
25 292
25 098
21 769
21 585
16 057
28 235
ASSETS
Daveyton Dobsonville Phoenix Plaza Gugulethu East Rand Nonesi Mall Pine Crest Maluti Thavhani Oshakati Kolonnade Moruleng Meadowdale Bloemfontein Randburg Southern
Shopping Mall Square Mall Crescent Mall Shopping Retail Park Mall Mall Plaza Square African
Centre Centre Average
Q&A APPENDICES
Township Rural Urban
Note: Annualised trading density calculated using monthly trading density over 12 months. Trading density like-for-like growth calculated on stable tenants.
* Trading density like-for-like growth excludes Pine Crest, Maluti Crescent, Thavhani Mall and Kolonnade as recent developments/refurbishments/acquisition.
# Not yet measured.
64Rent-to-sales ratio by Top 15 properties
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Continuing to provide very profitable centres for our tenants
TREASURY
10.5%
DEFENSIVE CASFLOW
RETAIL PORTFILIO
8.4%
AFRICAN DEFENSIVE CASFLOW SECURED
7.7%
7.0%
6.8%
6.5%
– SPANISH PORTFOLIO ASSETS
6.0%
5.8%
5.7%
5.6%
5.5%
5.1%
5.0%
4.6%
4.6%
4.1%
DMTN UNENCUMBERED
ASSETS
East Rand Phoenix Plaza Randburg Pine Crest Thavhani Mall Bloemfontein Maluti Oshakati Moruleng Gugulethu Kolonnade Nonesi Mall Daveyton Meadowdale Dobsonville Southern
Q&A APPENDICES
Mall Square Plaza Crescent Shopping Mall Square Retail Park Shopping Mall Mall African
Centre Centre Average
Township Rural Urban
65Retail insights
OVERVIEW DIRECTION MANAGEMENT – SOUTHERN
COMPANY STRATEGIC
Defensive portfolio with further potential rental growth
Segment Focus
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
TREASURY
retail sales growth of 0.2%
The low rent to sales ratio of 5.3% in the rural and township centres creates an opportunity for further rental growth
DEFENSIVE CASFLOW
Overall rent to sales remained at 6.0% which augurs well for further portfolio growth
RETAIL PORTFILIO
Rural and township centres are seeing an increase in diversity of the tenant mix through the introduction of strong second tier privately owned national
tenants
AFRICAN DEFENSIVE CASFLOW SECURED
Groceries (22% exposure) grew by 0.4%, down from prior periods due to negative food inflation and not necessarily due to movement in turnover growth
Fashion (27% exposure) trading results were marginally negative by 0.4% which is indicative of the challenging retail environment but green shoots starting to
– SPANISH PORTFOLIO ASSETS
emerge within second-tier nationals
Segmental Profile - by Value Segmental Profile – Trading Statistics
Year on year
growth 0.8%
DMTN UNENCUMBERED
Year on year Rent to sales 5.2%
By Value Year on year growth 0.8%
growth 1.7% Rent to sales 5.3%
Rural and 47% Urban Rent to sales 6.9%
ASSETS
Township 28% Rural
R24,942/m²
R28,970/m²
R37,311/m²
53% 25% Township
Q&A APPENDICES
Urban Rural Township
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