Domestic Medium Term Note Conference Call - 14 September 2017 www.vukile.co.za - Vukile ...
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Domestic Medium Term Note Conference Call 14 September 2017 www.vukile.co.za
AGENDA
01 Profile & Strategic Direction
02 Update on Group Debt
03 Proposed Amendments to DMTN Programme
04 Q&A
05 Appendix
Profile Who we are High quality, low risk, RETAIL REIT Strong OPERATIONAL focus Core competence in ACTIVE ASSET MANAGEMENT Prudent FINANCIAL MANAGEMENT and strong CAPITAL MARKETS EXPERTISE ENTREPRENEURIAL APPROACH to deal making Strong focus on GOVERNANCE and LEADERSHIP History of strong compounded growth and SHAREHOLDER RETURNS Growing INTERNATIONAL EXPOSURE focused on UK and Spain Listings on the JSE AND NSX Domestic Medium Term Note Conference Call 14 September 2017 3
Strategic direction – New horizons
A platform for growth - building on an exceptional core retail portfolio
Continued Conservative balance
South African International expansion sheet management
retail asset strategy
Focus on defensive retail Developed markets – Spain & Disciplined and conservative
sector in-line with our high- United Kingdom financial management with
quality low risk portfolio stable LTV target around 35%
Predominately focused on
Continue to invest in our retail but will evaluate other Prudent interest rate policy to
portfolio through expansions sectors hedge at least 75% of debt
and upgrades
Continue to invest in our Looking to invest into a holistic Foreign exchange hedging
systems and team to add value property strategy and create policy to minimise adverse
through our data-driven asset capacity on the ground with foreign exchange fluctuations
management approach local market knowledge by hedging forward on average
75% of foreign dividends by
Looking for accretive Atlantic Leaf platform for way of forward currency
acquisitions, developments growth in United Kingdom swaps over a 3 year period
and corporate opportunities
Castellana platform for growth
in Spain
Domestic Medium Term Note Conference Call 14 September 2017 4
Strong operational focus on asset management
Consistently repositioning and proactively enhancing our portfolio
Total Portfolio Market Value per m²
20,000 Property Sold Stable Portfolio Acquisitions since 2005 Average
15,000
10,000
5,000
-
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
9%
Retail Retail Retail
48% 2005 52% 47% 2011 2017
53% 91%
Other Other Other
R3.1 Bn GAV R5.4 Bn R13.1 Bn
R2 949/m² Value/m² R5 817/m² R13 994/m²
R35m / prop Ave value/prop R72m / prop R196m / prop
Domestic Medium Term Note Conference Call 14 September 2017 5
Analysis of group debt (as at 31 July 2017)
Well hedged with low risk expiry profile
Policy Actual
No more than 25% of total interest bearing
Maturities Achieved and constantly managed
debt to mature within any one financial year
Hedging strategy 75% of interest bearing debt to be hedged 92.6% *
28% DMTN debt
Target bank versus debt capital market funding ratio Diversified sources of funding 45% South African Bank debt
27% Foreign Bank debt
Hold various facilities with multiple banks and
Multi-banked approach Currently 11 funders + DMTN programme
lenders
Internal Management: Maximum LTV level of Group LTV 36.2% (Current DMTN Definition)
LTV policy
40% Southern Africa LTV 33.2%, Spain LTV 47.7%
DMTN Secured Portfolio DMTN Secured Note LTV 30.95%
Properties in the Vukile Group Property
Group LTV 32.2% (Proposed DMTN Definition)
Proposed LTV Ratio Portfolio, on a consolidated basis + the market
Southern Africa LTV 28.8%, Spain LTV 47.7%
value of equity accounted investments
* Excluding development loans and Corporate Paper
Domestic Medium Term Note Conference Call 14 September 2017 6Analysis of group debt (as at 31 July 2017) (cont.)
Well hedged with low risk expiry profile
Policy Actual
Minimise while maintaining hedging and Group 5.52%
Total cost of finance
LTV policy (ZAR 9.08%)
Endeavour to allocate fixed rate debt to
Fixed rate (swap) maturity profile 3.0 years
mature between 3 years and 5 years
Fully backed by the committed revolving
Commercial Paper undertaking Achieved
credit facilities
Long term rating A (Rating outlook Positive)
Maintain “A” rating for Company and
Rating and Short term rating A1
“AA” in respect of secured notes
Secured long term rating AA+
To include investments in:
Atlantic Leaf (R763 mil);
Market value of equity accounted investments Gemgrow A (R46 mil); R2.1 Billion
Gemgrow B (R815 mil); and
Fairvest (R478 mil)
R477.3 million
Moruleng Mall (80%) and
Value of unsecured assets (R1.7 Billion of potential secured assets to be
Tzaneen Maake Plaza (70%)
release from Bank Security)
Domestic Medium Term Note Conference Call 14 September 2017 7Foreign exchange hedging policies
Continuing to maintain a conservative balance sheet
Policy
Prudent approach Minimise adverse foreign exchange fluctuations on Vukile’s earnings, assets and liabilities
Reduce currency risk Acquisition of foreign assets to be funded with foreign loans in same currency
On average 75% of foreign dividends to be hedged by way of forward currency swaps over a
Currency hedging strategy
3 year period
Interest rate hedging on foreign debt 75% of interest on foreign loans raised by Vukile to finance offshore acquisitions to be hedged
Domestic Medium Term Note Conference Call 14 September 2017 8Group debt profile (as at 31 July 2017)
Diversified sources of funding
Group Debt by Currency Sources of Group Debt
9.08% 2.22% 3.10% 5.52%
2 772
6 180
7,000 10. 00%
9.0 0%
3% SCM
6,000
4% Nedbank
8.0 0%
15%
RMB
1 749
5,000
7.0 0%
1 659
19%
6.0 0%
Investec
4,000
13% Banco
2 911
2 769
5.0 0%
Popular 34%
14% Bankia Unsecured
3,000 29%
4.0 0%
19% ABSA
BBVA
3.0 0%
2,000
2.0 0%
55% 66%
Banco Secured 31%
500
1,000
1.0 0%
Santander & Standard Bank
Caixabank
0 0.0 0%
ZAR EUR # GBP Total Foreign Funders # DMTN Local Funders *
Debt Total cost of Debt (%)
* Debt from local funders includes loans of GBP28.7m and EUR71.2m
# Debt in EUR includes consolidated debt from Castellana of EUR 106.4mil , which in non-recourse to Vukile # Debt from foreign funders is consolidated debt from Castellana, which in non-recourse to Vukile
Domestic Medium Term Note Conference Call 14 September 2017 9Analysis of loan repayment and swap expiry profile (as at 31 July 2017)
Well hedged with low risk expiry profile
Loan and Swap Expiry Profile
92.6% of
interest bearing
debt hedged
36.1%
27.7%
28.0%
Fixed rate
23.4%
(swap) maturity
17.9%
16.8%
profile 3.0 years
12.0%
10.8%
9.7%
6.3%
3.4%
2.9%
2.4%
2.0%
0.7%
0.0%
0.0%
0.0%
2018 2019 2020 2021 2022 2023 2024 2027 2029 Total
Loan Profile R'm 177 1,445 1,039 1,105 1,709 122 150 44 389 6,180
Swap Profile R'm 182 652 586 1,517 1,956 523 - - - 5,417
Note: Loan Profile includes R77m Commercial Paper issued to Vukile subsidiary in Nambia
Domestic Medium Term Note Conference Call 14 September 2017 10Proposed Amendments to Vukile DMTN Programme
To align with Industry – while maintaining same low risk profile without unnecessary restrictions
CURRENT PROPOSED AMENDMENT
Group LTV threshold 45% 50%
Loan to Valuation Ratio means at any time, in respect of the Loan to Valuation Ratio means at any time, in respect of the
Group LTV Definition Notes, the ratio as expressed as follows: Notes, the ratio as expressed as follows:
Loan to Valuation Ratio = L divided by V Loan to Valuation Ratio = L divided by V
Where: Where:
L = means any secured or unsecured indebtedness of the Vukile L = means any secured or unsecured indebtedness of the Vukile
Group (whether principal, premium, interest or other amounts) Group (whether principal, premium, interest or other amounts)
for or in respect of (i) monies borrowed, or (ii) liabilities under for or in respect of (i) monies borrowed, or (ii) liabilities under
any acceptance or acceptance credit, or (iii) any bonds, notes, any acceptance or acceptance credit, or (iii) any bonds, notes,
debentures, loan stock or other debt securities, or (iv) any debentures, loan stock or other debt securities, or (iv) any
guarantees or indemnities given, whether present or future, guarantees or indemnities given, whether present or future,
actual or contingent; and actual or contingent; and
V = the amount of the most recent Open Market Valuation of V = the sum of (i) the amount of the most recent Open
all the Properties in the Vukile Group Property Portfolio; Market Valuation of all the Properties in the Vukile Group
Property Portfolio, on a consolidated basis and (ii) the market
value of equity accounted investments
Secured Portfolio LTV
40% 45%
threshold
Domestic Medium Term Note Conference Call 14 September 2017 11Q&A
www.vukile.co.za
12Contact Details
Contact
Name Designation Email
Numbers
Vukile Property Fund
(011) 288 1002
Laurence Rapp Chief Executive Officer Laurence.Rapp@vukile.co.za
(083) 266 3011
Mike Potts (011) 288 1003
Chief Financial Officer Mike.Potts@vukile.co.za
(083) 357 1111
Senior Manager: Treasury & (011) 288 1001
Maurice Shapiro Maurice.Shapiro@vukile.co.za
Investments (083) 577 6184
Rand Merchant Bank
(011) 282 4162
Delia Patterson Distribution Delia.Patterson@rmb.co.za
(083) 676 9595
(011) 282 8559
Leigh Cunningham-Scott Origination Leigh.Cunningham-Scott@rmb.co.za
(084) 569 6611
Domestic Medium Term Note Conference Call 14 September 2017 13Executive Team
Strong blend of property and financial skills
Laurence has been the driving force behind Vukile’s transformation and growth since his appointment in 2011. Prior to joining Vukile,
Laurence Rapp Laurence was a director of Standard Bank and head of the insurance and asset management division and his experience spans the areas of
CEO investment banking, private equity, retail banking and insurance and asset management. He currently serves as the chairman of SA REIT, an
industry body driving listed property interests, as well as non-executive director of Atlantic Leaf Properties Limited.
Michael is a founding director of Vukile and, prior to joining Vukile, was an independent adviser to the Bridge Capital Group on property
Michael Potts transactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and financial director of
Financial Director the South African group that forms part of the UK-based Hanover Acceptances Group and a non-executive director of Hanover Acceptances
Limited and Outspan International.
Hermina (Ina) Lopion
Ina has 24 years’ property experience and six years’ life insurance experience within the Sanlam Group. She is responsible for the asset
Executive Director: Asset
management of the Vukile property portfolio. Ina is also a director of the South African Council of Shopping Centres (SACSC).
Management
Sedise is responsible for Vukile’s for jointly driving Vukile’s overall portfolio growth and transformation objectives. He was chief executive of
Sedise Moseneke Encha Properties from 2004 up until Vukile’s acquisition of a portfolio of government tenanted properties from Encha in 2013. He is a past
Executive Director president of the South African Property Owners Association (SAPOA) and is the non executive chairman of Encha Property Services. He is a
member of the South African Institute of Black Property Practitioners (SAIBPP).
Johann Neethling
Johann has 15 years' experience in the areas of assurance, general and corporate finance, governance and company secretariat. He joined
Director: Corporate
Vukile in August 2010, after holding various positions within the property division of Sanlam, where he spent 7 years. He serves as a director
Services/Group Company
and senior vice-president of Chartered Secretaries Southern Africa.
Secretary
Rob joined Vukile in May 2015 and held the position of Financial Director of Synergy Income Fund and was instrumental in its repositioning
into Gemgro Properties. Prior to joining Vukile, Rob was previously the Head: Finance and Support for the Real Estate Investment Division
Rob Hawton
within the Corporate and Investment Bank of the Standard Bank Group, where he spent 8 years. Prior to that, he held various finance
Executive: Finance
positions within Investec Bank, Barclays Africa, Tourvest Retail Travel and Credit Suisse (London). Rob holds a B.Com and B.Com (Hons)
degrees in accounting and a Master’s degree in Financial Management from the University of Johannesburg and is a Chartered Accountant.
He completed his articles with PricewaterhouseCoopers.
Itumeleng’s real estate experience spans investment appraisal, retail developments and asset management both in the unlisted and listed
Itumeleng Mothibeli
real estate environments over the past 10 years. He was previously part of the Old Mutual Property Unlisted Fund and later the SA
Executive: Asset Management
Corporate Real Estate Fund management teams prior to joining Vukile in August 2012. He is a member of South African Institute of Black
Property Practitioners (SAIBPP), sits on the Gauteng Chapter Committee of the SACSC as well as on the SAPOA Awards Committee.
Domestic Medium Term Note Conference Call 14 September 2017 14Non-executive Directors
Strong blend of property and financial skills
• Non-executive director of the JSE Limited (Johannesburg Securities Exchange)
Anton Botha • Non-executive director African Rainbow Minerals
• Non-executive director Sanlam Limited (one of South Africa's largest life insurers)
• Former group chief executive of Absa Group Limited (Top 4 South African Retail Bank)
• Non-executive director and chairman of the audit committee of Steinhoff International Holdings Limited (Multi-billion Euro South African-based
Steve Booysen
international retail holding company listed in Johannesburg and Frankfurt)
• Non-executive director Clover Industries, JD Group Limited and Senwes Limited
• Former executive director of the World Bank
• Former deputy governor of the South African Reserve Bank.
Renosi Mokate
• Renosi currently serves on the board of Bidvest Bank
• Chairman of the Government Employees Pension Fund (GEPF)
• Peter held a senior management position with McDonald’s Corporation for 10 years
Peter Moyanga • He is the largest owner-operator franchisee of McDonald's restaurants in South Africa
• He is the Vice Chairman of Reach For a Dream NPO
• Former partner at KPMG
• Former Head of Internal Audit at Transnet (South Africa's largest rail, port and pipeline company)
• Serves as a member of the King Committee on Corporate Governance
Nigel Payne • Chairman of Mr Price Group Limited, a leading, multi-billion Euro South African fashion retailer
• Serves on the boards of Bidvest Group Limited (a listed South African conglomerate that owns over 300 companies), JSE Limited and BSi Steel
Group Limited
• Chairman of Bidvest Bank
• Executive chairman of Mvua Property Partners, a commercial property investment firm
• Non-executive director of AECOM South Africa
Hatla Ntene
• Non-executive director of Calgro M3 (One of the leading residential development companies in South Africa)
• Non-executive director of the Don Hotel Group
• Former chief executive officer of Vusani Property Investments
• Former managing director of OK Bazaars Group (taken over by Shoprite Holdings which is Africa's largest food retailer and employs over 136 000
Mervyn Serebro
people)
• He is also Chairman of the Reach For a Dream NPO.
Domestic Medium Term Note Conference Call 14 September 2017 15High quality retail assets
Top 10 assets
Dobsonville
East Rand Mall Phoenix Plaza Pine Crest Gugulethu Square
Shopping Centre
GAV R1 277m R791m R786m R513m R480m
Region Gauteng KwaZulu-Natal KwaZulu-Natal Gauteng Western Cape
Gross Lettable
Area 69 424m2 24 351m2 40 087m2 23 236m2 25 322m2
Monthly Rental R250/m2 R242/m2 R152/m2 R133/m2 R143/m2
National Tenant
exposure 89% 80% 92% 87% 90%
Vukile
Ownership 50% 100% 100% 100% 100%
Approx.
Footfall 11.1 million 9.4 million 11.2 million 9.8 million 10.5 million
Vacancy 3.8% 1.5% 2.3% * Fully Let * Fully Let
* Excluding development vacancy as at 31 Mar 17
Domestic Medium Term Note Conference Call 14 September 2017 16High quality retail assets
Top 10 assets (cont.)
Oshakati Shopping
Nonesi Mall Moruleng Mall Setsing Crescent Randburg Square
Centre
GAV R421m R394m R390m R385m R380m
Region Eastern Cape North West Namibia Free State Gauteng
Gross Lettable
Area 28 147m2 31 421m2 24 632m2 21 538m2 40 767m2
Monthly Rental R119/m2 R111/m2 R124/m2 R125/m2 R95/m2
National Tenant
exposure 96% 83% 94% 97% 85%
Vukile
Ownership 100% 80% 100% 100% 100%
Approx.
Footfall 7.0 million 3.6 million Open Mall Open Mall 7.1 million
Vacancy 1.0% 2.3% 0.3% Fully Let * 6.9%
* Excluding development vacancy as at 31 Mar 17
Domestic Medium Term Note Conference Call 14 September 2017 17Retail tenant exposure
Low risk with c.80% national tenants
Tenant Profile - by Contractual Rent Top 10 Tenants by Rent
Other 2.9% Pep Stores
Steinhoff 8.0%
22% 2.4% Ackermans
Diversified across
Shoprite 6.1%
1105 tenants
Edcon 2.5% Jet
5.9%
2.0% Edgars
Top 10 Foschini 5.1%
Tenants
Pick n Pay
4.7%
46% Stores
of Retail Spar 4.1%
Rent
Mr Price 3.4%
Truworths 3.2%
Nationals
78% Massmart 3.2%
First Rand
2.3%
Group
Note: Portfolio as at 31 Mar 17 – Excluding Thohoyandou Thavhani Mall
Domestic Medium Term Note Conference Call 14 September 2017 18Retail tenant expiry profile
52% of contractual rent expiring in 2020 and beyond (WALE 3.6 years)
% of Contractual Rent Cumulative
100
76
66
48
24
24 24 24
18 10
Mar-18 Mar-19 Mar-20 Mar-21 Beyond Mar-21
For the 12 months ended 31 March 2017 Retail leases were concluded with:
Total contract value R1 150 million
Total rentable area 142 118m²
Retail Tenant Retention 84% with almost all tenant vacancies being replaced with new tenants
Domestic Medium Term Note Conference Call 14 September 2017 19You can also read
