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Certain statements in this document may constitute ’forward looking statements’. Such forward looking statements reflect the company’s beliefs and expectations and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Hospitality Property Fund Limited and its subsidiaries to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document, or to reflect the occurrence of anticipated events. Past performance of the company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this document. You are cautioned not to place any undue reliance on such forward looking statements. No statement in this document is intended to be a profit forecast.
This document is being supplied to you for informational purposes only. This document is not a prospectus or an offer or invitation or inducement to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. This document does not constitute a recommendation regarding the securities of the company.
No representation or warranty, express or implied, is given by the company, its subsidiaries or any of their respective directors, officers, employees and affiliates or any other person as to the fairness, accuracy or completeness of the information (including data obtained from external sources) or opinions contained in this document, nor have they independently verified such information, and any reliance you place thereon will be at your sole risk. Without prejudice to the foregoing, no liability whatsoever for any loss howsoever arising, directly or indirectly, from any use of information contained in this document, or otherwise arising in connection therewith is accepted by any such person in relation to such information. None of the data in this document has been reviewed or reported on by the group’s auditors and no guarantee or warranty as to the data’s accuracy, expressed or implied, is given.
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DISCLAIMER
3
SHAREHOLDING STRUCTURE
40.8%59.2%
Public
4
MANAGEMENT AND BOARD
Board of Directors
• Executive Directors
• Rob Nicolella – CEO
• Mara de Lima – FD
• Non-Executive Directors
• John Copelyn – Chairman
• Gerald Nelson – Lead Independent
• Mac Gani – Audit and Risk Chairman
• Don Bowden – RemCo Chairman
• Zuko Kubukeli – Social and Ethics Chairman
• Syd Halliday
• Jacques Booysen
• Laurelle McDonald
• Zibusiso Kganyago
• Mohamed Ahmed
Executive Committee• Rob Nicolella - CEO
• Keith Randall – COO
• Mara de Lima – FD
• Rosa van Onselen – Company Secretary
• Natalie Moodley – Financial Manager
• Mario Monica – Group Development & Facilities Manager
• Charlene Haripersad – HR & Training Manager
• James Nathan – Investment & Asset Manager
5
MANAGEMENT AND BOARD
HOTEL BRAND PORTFOLIO
Luxury Upscale Midscale Economy
6
HOTEL PORTFOLIO
Geographic locations
9
13
12
19
Western Cape
Gauteng
Rest of South Africa
Sun1 Hotels
Eastern Cape
Northern Cape
Western Cape
KwaZulu-Natal
Limpopo
North West
Free State
MpumalangaGauteng
Polokwane
HazyviewTshwane
Johannesburg
Drakensburg
Durban
Nelspruit Richards Bay
Bloemfontein
Kimberley
Cape Town Port Elizabeth
Rustenberg
9
13
1
3
1
1
10
2
1
1
1
1
6
1
1
1
7
8
HOTEL PORTFOLIO
OPERATING SEGMENTS BY ROOMS HOTEL GRADE BY ROOMS
26%
34%
23%
17% Western Cape
Gauteng
Rest of SA
Sun1
8%
31%
44%
17% Luxury
Upscale
Midscale
Economy
9
INCOME STATEMENT
Rm
6 Months to
Sept 2018
6 Months to
Sept 2017
Change on
Prior year %
Rental Income 345 314 10%
Net operating costs (28) (27) (4%)
EBITDAR 317 287 10%
Net finance costs (80) (83) 4%
Profit before tax & adjustments 237 204 16%
Fair value on interest rate swops 23 (3) -
Fair value (decrease) / increase on investment property (431) 0 (100%)
Adjusted Earnings (171) 201 (185%)
Less adjustments noted above (408) (3) -
Distributable Earnings 237 204 16%
No. of shares (excluding appraisal right shares) 576 576 0%
Dividend per share (cents) 41.2 41.8 (1%)
10
CASH FLOW STATEMENT
Rm
6 Months to
Sept 2018
6 Months to
Sept 2017
EBITDAR per income statement 317 287
Working capital adjusted for non-cash and exceptional items 38 (103)
Cash generated from operations 355 184
Net finance costs (80) (83)
Maintenance capex (100) (33)
Free cash flow 175 68
Distributions to shareholders (451) (196)
Investment activities (net of transaction costs) 0 (1 301)
Rights issue 0 994
Move in net IBD (276) (435)
Opening net IBD (1 545) (1 508)
Acquired with acquisitions 0 203
Closing net IBD (1 821) (1 740)
Rm
as at
Sept 2018
as at
Sept 2017
Bank Facilities 1 047 1 238
Corporate Bonds (notes) 890 890
Gross Interest bearing debt 1 937 2 128
Cash on hand (116) (388)
Net Interest bearing debt 1 821 1 740
Loan to Value 15.8% 16.3%
Weighted average cost of debt 9.5% 10.8%
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INTEREST BEARING DEBT
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HOTELS PORTFOLIO AND STATISTICS
30 September 2018
Hotels Keys
Luxury 3 749
Upscale 12 3 227
Midscale 19 3 517
Economy 19 1 508
Total 53 9 001
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HOTELS PORTFOLIO AND STATISTICS
Including Sun 1 :
Statistics 6 Months
Sept 2018
6 Months
Sept 2017
Change
%
Occupancy (%) 59.7% 61.4% (2.8%)
Average room rate (R) 988 990 (0.1%)
RevPar (R) 590 608 (3.0%)
All trading is shown for the full portfolio on a like-for-like 6 month basis
Excluding Sun 1 :
Statistics 6 Months
Sept 2018
6 Months
Sept 2017
Change
%
Occupancy (%) 60.6% 62.3% (2.6%)
Average room rate (R) 1 078 1 088 (0.9%)
RevPar (R) 654 677 (3.5%)
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HOTELS PORTFOLIO AND STATISTICS
HPF: Trading Information – April to September (6 Months)
Occupancy Average Room Rate RevPAR
F2019
Actual
F2018
Actual
%
on PY
Relative
GI
F2019
Actual
F2018
Actual
%
on PY
Relative
GI
F2019
Actual
F2018
Actual
%
on PY
Relative
GI
Western Cape 51.8% 60.4% (14.3%) 93.4 1 333 1 376 (3.1%) 101.6 690 831 (16.9%) 94.9
Gauteng 62.4% 59.7% 4.6% 103.4 1 004 1 005 (0.1%) 96.8 627 600 4.6% 100.1
Rest of South Africa 68.1% 68.6% (0.7%) 100.1 956 890 7.4% 103.4 651 610 6.7% 103.5
Total 60.6% 62.3% (2.6%) 99.4 1 078 1 088 (0.9%) 98.2 654 677 (3.5%) 97.6
Sun 1 55.1% 57.5% (4.2%) 496 471 5.3% 273 271 0.8%
Total 59.7% 61.4% (2.8%) 99.2 988 990 (0.1%) 99.0 590 608 (3.0%) 98.1
STR: Trading Information – April to September (6 Months)
Occupancy Average Room Rate RevPAR
F2019
Actual
F2018
Actual
%
on PY
F2019
Actual
F2018
Actual
%
on PY
F2019
Actual
F2018
Actual
%
on PY
Western Cape 54.2% 59.1% (8.2%) 1 281 1 343 (4.6%) 695 794 (12.4%)
Gauteng 62.1% 61.4% 1.2% 1 121 1 086 3.2% 696 667 4.4%
Rest of South Africa 62.2% 62.7% (0.8%) 1 039 1 000 3.9% 646 627 3.1%
South Africa 60.0% 61.2% (2.0%) 1 134 1 124 0.9% 680 688 (1.2%)
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PORTFOLIO AND COMPARATIVE TRADING
Note: Cullinan & Merway rental only included from 1 July 2017
Rooms Occ % ARR RevPAR
F2019
H1 Rent
(Rm)
F2018
H1 Rent
(Rm)
Western Cape Region 2 381 51.8% 1 333 690 84 92
Gauteng Region 3 016 62.4% 1 004 627 138 120
Rest of South Africa 2 096 68.1% 956 651 91 83
Subtotal 7 493 60.6% 1 078 654 313 295
Sun 1 1 508 55.1% 496 273 32 19
Total 9 001 59.7% 988 590 345 314
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WESTERN CAPE REGION : TRADING AND RENT
Rooms Occ % ARR RevPAR
Rent
(R’000)
Western Cape Region 2 381 51.8% 1 333 690 84 189
Westin Cape Town 483 23 522
Southern Sun - Waterfront 537 22 396
Southern Sun- The Cullinan 394 20 874
StayEasy Century City 175 5 915
Radisson Blu Waterfront 177 4 481
Protea Hotel Victoria Junction 172 3 628
Southern Sun Newlands 162 2 985
Sunsquare Cape Town Gardens 136 2 493
Arabella Hotel & Spa 145 *
* Arabella Hotel & Spa : The rental is not aligned to HPF’s financial year end resulting in a timing difference in the variab le rent.
17
GAUTENG REGION : TRADING AND RENT
Rooms Occ % ARR RevPAR
Rent
(R’000)
Gauteng Region 3 016 62.4% 1 004 627 137 874
Birchwood Hotel & Conference Centre 665 38 222
Radisson Blue Gautrain 220 15 430
Crowne Plaza Rosebank 318 12 164
Garden Court OR Tambo 253 11 764
Garden Court Milpark 251 11 659
Sandton Eye BC – Retail - 8 555
Holiday Inn Sandton 301 8 342
Garden Court – Hatfield 157 6 499
Kopanong Hotel & Conference Centre 166 5 518
Garden Court – Morningside 150 5 482
Southern Sun – Katherine Street 122 5 153
Mount Grace Hotel & Spa 121 3 973
Garden Court – Eastgate 157 3 313
StayEasy - Eastgate 135 1 800
18
REST OF SA : TRADING AND RENT
Rooms Occ % ARR RevPAR
Rent
(R’000)
Rest of South Africa 2 096 68.1% 956 651 90 688
Garden Court South Beach 414 16 190
Champagne Sports 152 12 310
Garden Court - PE King’s Beach 280 10 013
Garden Court - Polokwane 180 9 479
Garden Court - Umhlanga 204 8 396
Protea Hotel Edward 131 8 281
StayEasy - Pietemaritzburg 127 6 437
StayEasy - Rustenburg 125 4 228
Garden Court – Kimberley 135 4 226
Protea Hotel Marine 114 4 085
Southern Sun - Bloemfontein 147 4 038
Protea Hazyview 87 3 005
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F2019 CAPEX : KEY PROJECTS
Westin• Bedroom FF&E refurbishment F2020
• R148 million over 2 years
• 7/16 floors completed in F2019
Arabella Hotel & Spa• Bedroom Soft Refurbishment F2020
• R14.5 million over 2 years
• 2/5 floors completed in F2019
Birchwood Hotel & Conferencing
• Conference Rooms Refurbishment – completed F2019
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CAPEX PROJECTS : THE WESTIN
21
CAPEX PROJECTS : THE WESTIN
22
CAPEX PROJECTS : ARABELLA HOTEL & SPA
23
WATER RESILIENCE
Water Resilience Projects
• Capex committed on water resilience projects have been spent, barring some
administrative procedures, these Western Cape hotels will be off the grid by the
first quarter 2019
• Desalination Plants installed and commissioned
• Westin, Radisson Blu Waterfront and Stay Easy Century City
• Westin Plant will feed Southern Sun Cullinan & Southern Sun Waterfront
• Boreholes and filtration plants installed
• Southern Sun Newlands, Sun Square Gardens, Garden Court Kings Beach and
Protea Hotel Marine
• Additional water storage
• Protea Hotel Victoria Junction and Sun 1 Milnerton, Foreshore and Parow
• Water Services Intermediary contracts signed with the relevant local authorities
where required
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DISTRIBUTIONS
• Distribution of 100% of earnings not sustainable in the long term
• Gearing low and can borrow for maintenance capital expenditure in the short term
• Maintenance capital expenditure averages approximately 20% of hotel rental income
per annum over a 7 to 8 year cycle
Thank you
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