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www.vukile.co.za
Domestic Medium Term Note Conference Call14 September 2017
Profile & Strategic Direction01
Update on Group Debt02
Proposed Amendments to DMTN Programme03
Q&A04
Appendix05
AGENDA
Domestic Medium Term Note Conference Call 14 September 2017 3
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
ProfileWho we are
Domestic Medium Term Note Conference Call 14 September 2017 4
Strategic direction – New horizonsA platform for growth - building on an exceptional core retail portfolio
Focus on defensive retailsector in-line with our high-quality low risk portfolio
Continue to invest in ourportfolio through expansionsand upgrades
Continue to invest in oursystems and team to add valuethrough our data-driven assetmanagement approach
Looking for accretiveacquisitions, developmentsand corporate opportunities
Continued South African
retail asset strategy
Disciplined and conservativefinancial management withstable LTV target around 35%
Prudent interest rate policy tohedge at least 75% of debt
Foreign exchange hedgingpolicy to minimise adverseforeign exchange fluctuationsby hedging forward on average75% of foreign dividends byway of forward currencyswaps over a 3 year period
Conservative balance sheet management
Developed markets – Spain &United Kingdom
Predominately focused onretail but will evaluate othersectors
Looking to invest into a holisticproperty strategy and createcapacity on the ground withlocal market knowledge
Atlantic Leaf platform forgrowth in United Kingdom
Castellana platform for growthin Spain
International expansion
Domestic Medium Term Note Conference Call 14 September 2017
52%48%Retail
Other
5
-
5,000
10,000
15,000
20,000
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
Property Sold Stable Portfolio Acquisitions since 2005 Average
Strong operational focus on asset management
Total Portfolio Market Value per m²
Consistently repositioning and proactively enhancing our portfolio
R2 949/m² R5 817/m² R13 994/m²
R3.1 Bn R5.4 Bn R13.1 Bn
R35m / prop R72m / prop R196m / prop
GAV
Value/m²
Ave value/prop
2005 53%47%
Retail
Other 91%
9%
Retail
Other2011 2017
Domestic Medium Term Note Conference Call 14 September 2017 6
Analysis of group debt (as at 31 July 2017)Well hedged with low risk expiry profile
* Excluding development loans and Corporate Paper
Maturities
Hedging strategy
Target bank versus debt capital market funding ratio
Multi-banked approach
LTV policy
Proposed LTV Ratio
DMTN Secured Portfolio
No more than 25% of total interest bearing debt to mature within any one financial year
Achieved and constantly managed
75% of interest bearing debt to be hedged 92.6% *
Diversified sources of funding28% DMTN debt
45% South African Bank debt27% Foreign Bank debt
Hold various facilities with multiple banks and lenders
Currently 11 funders + DMTN programme
Internal Management: Maximum LTV level of 40%
Group LTV 36.2% (Current DMTN Definition)Southern Africa LTV 33.2%, Spain LTV 47.7%
Group LTV 32.2% (Proposed DMTN Definition)Southern Africa LTV 28.8%, Spain LTV 47.7%
DMTN Secured Note LTV 30.95%
Properties in the Vukile Group Property Portfolio, on a consolidated basis + the market
value of equity accounted investments
Policy Actual
Domestic Medium Term Note Conference Call 14 September 2017 7
Analysis of group debt (as at 31 July 2017) (cont.)Well hedged with low risk expiry profile
Total cost of finance
Fixed rate (swap) maturity profile
Commercial Paper undertaking
Rating
Minimise while maintaining hedging andLTV policy
Group 5.52% (ZAR 9.08%)
Endeavour to allocate fixed rate debt to mature between 3 years and 5 years
3.0 years
Fully backed by the committed revolvingcredit facilities
Achieved
Long term rating A (Rating outlook Positive) and Short term rating A1
Secured long term rating AA+
Maintain “A” rating for Company and “AA” in respect of secured notes
Policy Actual
Market value of equity accounted investments R2.1 Billion
To include investments in:Atlantic Leaf (R763 mil); Gemgrow A (R46 mil); Gemgrow B (R815 mil); and Fairvest (R478 mil)
Value of unsecured assetsMoruleng Mall (80%) and
Tzaneen Maake Plaza (70%)
R477.3 million (R1.7 Billion of potential secured assets to be
release from Bank Security)
Domestic Medium Term Note Conference Call 14 September 2017 8
Foreign exchange hedging policiesContinuing to maintain a conservative balance sheet
Prudent approach
Reduce currency risk
Currency hedging strategy
Interest rate hedging on foreign debt
Minimise adverse foreign exchange fluctuations on Vukile’s earnings, assets and liabilities
On average 75% of foreign dividends to be hedged by way of forward currency swaps over a3 year period
75% of interest on foreign loans raised by Vukile to finance offshore acquisitions to be hedged
Acquisition of foreign assets to be funded with foreign loans in same currency
Policy
Domestic Medium Term Note Conference Call 14 September 2017 9
2 9
11
2 7
69
50
0
6 1
80
0.0 0%
1.0 0%
2.0 0%
3.0 0%
4.0 0%
5.0 0%
6.0 0%
7.0 0%
8.0 0%
9.0 0%
10. 00%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
ZAR EUR # GBP Total
Debt Total cost of Debt (%)
31%Standard Bank
29%ABSA
19%Investec
15%RMB
4% Nedbank3% SCM
66%Secured
34%Unsecured
55%Banco
Santander & Caixabank
19%BBVA
14% Bankia
13% Banco Popular
Foreign Funders # DMTN Local Funders *
2 7
72
1 7
49
1 6
59
Group Debt by Currency Sources of Group Debt
Group debt profile (as at 31 July 2017)Diversified sources of funding
* Debt from local funders includes loans of GBP28.7m and EUR71.2m# Debt from foreign funders is consolidated debt from Castellana, which in non-recourse to Vukile
9.08% 2.22% 3.10% 5.52%
# Debt in EUR includes consolidated debt from Castellana of EUR 106.4mil , which in non-recourse to Vukile
Domestic Medium Term Note Conference Call 14 September 2017 10
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
2.9
%
23
.4%
16
.8%
17
.9% 2
7.7
%
2.0
%
2.4
%
0.7
% 6.3
%
3.4
% 12
.0%
10
.8%
28
.0% 36
.1%
9.7
%
0.0
%
0.0
%
0.0
%
Fixed rate (swap) maturity profile 3.0 years
Analysis of loan repayment and swap expiry profile (as at 31 July 2017)
Loan and Swap Expiry Profile
Well hedged with low risk expiry profile
92.6% of interest bearing
debt hedged
Note: Loan Profile includes R77m Commercial Paper issued to Vukile subsidiary in Nambia
Domestic Medium Term Note Conference Call 14 September 2017 11
Proposed Amendments to Vukile DMTN ProgrammeTo align with Industry – while maintaining same low risk profile without unnecessary restrictions
Group LTV Definition
CURRENT PROPOSED AMENDMENT
Loan to Valuation Ratio means at any time, in respect of theNotes, the ratio as expressed as follows:
Loan to Valuation Ratio = L divided by V
Where:
L = means any secured or unsecured indebtedness of the VukileGroup (whether principal, premium, interest or other amounts)for or in respect of (i) monies borrowed, or (ii) liabilities underany acceptance or acceptance credit, or (iii) any bonds, notes,debentures, loan stock or other debt securities, or (iv) anyguarantees or indemnities given, whether present or future,actual or contingent; and
V = the amount of the most recent Open Market Valuation ofall the Properties in the Vukile Group Property Portfolio;
Group LTV threshold 45% 50%
Secured Portfolio LTV threshold
40% 45%
Loan to Valuation Ratio means at any time, in respect of theNotes, the ratio as expressed as follows:
Loan to Valuation Ratio = L divided by V
Where:
L = means any secured or unsecured indebtedness of the VukileGroup (whether principal, premium, interest or other amounts)for or in respect of (i) monies borrowed, or (ii) liabilities underany acceptance or acceptance credit, or (iii) any bonds, notes,debentures, loan stock or other debt securities, or (iv) anyguarantees or indemnities given, whether present or future,actual or contingent; and
V = the sum of (i) the amount of the most recent OpenMarket Valuation of all the Properties in the Vukile GroupProperty Portfolio, on a consolidated basis and (ii) the marketvalue of equity accounted investments
www.vukile.co.za
Q&A
12
Domestic Medium Term Note Conference Call 14 September 2017 13
Contact Details
Name Designation EmailContact Numbers
Vukile Property Fund
Laurence Rapp Chief Executive Officer [email protected](011) 288 1002
(083) 266 3011
Mike PottsChief Financial Officer [email protected]
(011) 288 1003
(083) 357 1111
Maurice ShapiroSenior Manager: Treasury & Investments
[email protected](011) 288 1001
(083) 577 6184
Rand Merchant Bank
Delia Patterson Distribution [email protected](011) 282 4162
(083) 676 9595
Leigh Cunningham-Scott Origination [email protected](011) 282 8559
(084) 569 6611
Domestic Medium Term Note Conference Call 14 September 2017
Laurence RappCEO
Laurence has been the driving force behind Vukile’s transformation and growth since his appointment in 2011. Prior to joining Vukile,Laurence was a director of Standard Bank and head of the insurance and asset management division and his experience spans the areas ofinvestment banking, private equity, retail banking and insurance and asset management. He currently serves as the chairman of SA REIT, anindustry body driving listed property interests, as well as non-executive director of Atlantic Leaf Properties Limited.
Michael PottsFinancial Director
Michael is a founding director of Vukile and, prior to joining Vukile, was an independent adviser to the Bridge Capital Group on propertytransactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and financial director ofthe South African group that forms part of the UK-based Hanover Acceptances Group and a non-executive director of Hanover AcceptancesLimited and Outspan International.
Hermina (Ina) LopionExecutive Director: Asset Management
Ina has 24 years’ property experience and six years’ life insurance experience within the Sanlam Group. She is responsible for the assetmanagement of the Vukile property portfolio. Ina is also a director of the South African Council of Shopping Centres (SACSC).
Sedise MosenekeExecutive Director
Sedise is responsible for Vukile’s for jointly driving Vukile’s overall portfolio growth and transformation objectives. He was chief executive ofEncha Properties from 2004 up until Vukile’s acquisition of a portfolio of government tenanted properties from Encha in 2013. He is a pastpresident of the South African Property Owners Association (SAPOA) and is the non executive chairman of Encha Property Services. He is amember of the South African Institute of Black Property Practitioners (SAIBPP).
Johann NeethlingDirector: Corporate Services/Group Company Secretary
Johann has 15 years' experience in the areas of assurance, general and corporate finance, governance and company secretariat. He joinedVukile in August 2010, after holding various positions within the property division of Sanlam, where he spent 7 years. He serves as a directorand senior vice-president of Chartered Secretaries Southern Africa.
Rob HawtonExecutive: Finance
Rob joined Vukile in May 2015 and held the position of Financial Director of Synergy Income Fund and was instrumental in its repositioninginto Gemgro Properties. Prior to joining Vukile, Rob was previously the Head: Finance and Support for the Real Estate Investment Divisionwithin the Corporate and Investment Bank of the Standard Bank Group, where he spent 8 years. Prior to that, he held various financepositions 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 MothibeliExecutive: Asset Management
Itumeleng’s real estate experience spans investment appraisal, retail developments and asset management both in the unlisted and listedreal estate environments over the past 10 years. He was previously part of the Old Mutual Property Unlisted Fund and later the SACorporate Real Estate Fund management teams prior to joining Vukile in August 2012. He is a member of South African Institute of BlackProperty Practitioners (SAIBPP), sits on the Gauteng Chapter Committee of the SACSC as well as on the SAPOA Awards Committee.
14
Executive TeamStrong blend of property and financial skills
Domestic Medium Term Note Conference Call 14 September 2017 15
Non-executive DirectorsStrong blend of property and financial skills
Anton Botha• Non-executive director of the JSE Limited (Johannesburg Securities Exchange)• Non-executive director African Rainbow Minerals• Non-executive director Sanlam Limited (one of South Africa's largest life insurers)
Steve Booysen
• 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
international retail holding company listed in Johannesburg and Frankfurt)• Non-executive director Clover Industries, JD Group Limited and Senwes Limited
Renosi Mokate
• Former executive director of the World Bank• Former deputy governor of the South African Reserve Bank.• Renosi currently serves on the board of Bidvest Bank• Chairman of the Government Employees Pension Fund (GEPF)
Peter Moyanga• Peter held a senior management position with McDonald’s Corporation for 10 years• 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
Nigel Payne
• 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• 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
Hatla Ntene
• Executive chairman of Mvua Property Partners, a commercial property investment firm• Non-executive director of AECOM South Africa • Non-executive director of Calgro M3 (One of the leading residential development companies in South Africa)• Non-executive director of the Don Hotel Group
Mervyn Serebro
• 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
people)• He is also Chairman of the Reach For a Dream NPO.
Domestic Medium Term Note Conference Call 14 September 2017 16
High quality retail assetsTop 10 assets
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%
VukileOwnership 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
East Rand Mall Pine CrestPhoenix Plaza Gugulethu SquareDobsonville
Shopping Centre
Domestic Medium Term Note Conference Call 14 September 2017 17
High quality retail assetsTop 10 assets (cont.)
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%
VukileOwnership 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
Nonesi MallOshakati Shopping
CentreMoruleng Mall Randburg SquareSetsing Crescent
Domestic Medium Term Note Conference Call 14 September 2017 18
Nationals78%
Other22%
8.0%
6.1%
5.9%
5.1%
4.7%
4.1%
3.4%
3.2%
3.2%
2.3%
Steinhoff
Shoprite
Edcon
Foschini
Pick n PayStores
Spar
Mr Price
Truworths
Massmart
First RandGroup
Tenant Profile - by Contractual Rent Top 10 Tenants by Rent
Retail tenant exposureLow risk with c.80% national tenants
Top 10 Tenants
46%of Retail
Rent
Diversified across 1105 tenants
2.9% Pep Stores2.4% Ackermans
2.5% Jet2.0% Edgars
Note: Portfolio as at 31 Mar 17 – Excluding Thohoyandou Thavhani Mall
Domestic Medium Term Note Conference Call 14 September 2017 19
24 2418 10
24
24
48
66
76
100
Mar-18 Mar-19 Mar-20 Mar-21 Beyond Mar-21
% of Contractual Rent Cumulative
Retail tenant expiry profile52% of contractual rent expiring in 2020 and beyond (WALE 3.6 years)
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