RESULTS PRESENTATION 2013 · 2020. 3. 23. · RESULTS PRESENTATION. August 2013 2 AGENDA • The Year in Review • Financial ... Trading figures in line with the overall market (July

2013

RESULTS PRESENTATION

August 2013 2

AGENDA

• The Year in Review

• Financial Features

• Linked Unit Performance

• Property Portfolio

• Market Outlook

• Fund Strategy

• Distribution Time Frame

Westin Cape Town

August 2013 3

THE YEAR IN REVIEW

Global economy showing signs of recovery

• Eurozone showing signs of recovery with annualized GDP growth of 1.1% in Q2 2013;

• Growth expectations of BRIC economies better than rest of the world but slowing;

• US timing & strategy of unwinding its quantitative easing will be crucial to global financial markets;

• Global GDP forecasts lowered to 3.1% and 3.8% for 2013 and 2014 respectively.

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2008 2009 2010 2011 2012 2013e 2014e

GDP Growth*

World Developed Emerging* IMF Forecasts July 2013

August 2013 4

THE YEAR IN REVIEW

Outlook on domestic economic conditions

• GDP growth expectation for 2013 lowered to 2.2% (Reuters consensus)

› Service delivery protests

› Electricity supply challenges

• Inflationary pressures due to depreciating rand and potentially high wage settlements

• Rand depreciation benefiting foreign inbound travel

• Interest rates likely to remain low until mid 2014

August 2013 5

THE YEAR IN REVIEW

3.1%

-2.0%

2.8%

3.9%

2.5%2.0%

3.2%3.6%

9.5%

6.3%

4.3%5.0%

5.7% 6.0% 5.8% 5.9%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2008 2009 2010 2011 2012 2013e 2014e 2015e

Real GDP CPI

Sources: Stats SA & Nedbank Forecasts

SA Economic Indicators

August 2013 6

THE YEAR IN REVIEW

2.1%-3.8%

6.4%4.6% 4.0% 3.5%

5.7%3.8%

15.1%

3.3%

10.2%9.0%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

2008 2009 2010 2011 2012 2013e

International Tourist Arrivals (growth %)

Global South Africa

Sources: Stats SA & UNWTOHPF estimate

South African tourism market

• SA Tourism 2020 Vision aims to increase international tourist arrivals to 15 million by 2020

August 2013 7

INDUSTRY TRENDS

March 2012 – April 2013: Source Market Overseas Arrivals

-

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

Overseas Arrivals Mar 2012 –Apr 2013

2012 2013

4%

15%

10%

45% 44%

19%

14% 14%

27%

11%

18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Overseas Arrivals Growth Mar 2012 –Apr 2013

Sources: Stats SA

August 2013 8

INDUSTRY TRENDS

March 2012 – April 2013: Source Market Tourist Arrivals

-

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

Tourist Arrivals Mar 2012 –Apr 2013

2012 2013

4%

15%

10%

45% 44%

19%

14% 14%

27%

11%

18%

6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Tourist Arrivals Growth Mar 2012 –Apr 2013

Sources: Stats SA

August 2013 9

INDUSTRY TRENDS

2012 Tourism Bednight Market Mix – South Africa

89% 11%

Tourist Bednights in SA non-Hotel vs. Hotel stays

Bednights non-Hotel

Bednights Hotel

2011: 91% bednights non-Hotel9% bednights Hotel

75%

25%

HPF Market Mix

Domestic

Overseas

*Source: SA Tourism Annual Report and HPF

August 2013 10

INDUSTRY TRENDS

Nominal GDP and South Africa RevPAR growth rates

-20%

-10%

0%

10%

20%

30%

40%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -Q1

2013 -Q2

% Change

GDP Growth RevPAR

FIFA World Cup 2010

Global Recession

WSSD,ZAR depreciation

August 2013 11

DIVIDER SLIDE LAYOUT

August 2013 12

THE YEAR IN REVIEW

Strategic Achievements – 2013 Highlights

• Distribution growth YE June 2013 ahead of rights issue forecast

• Successful launch of Domestic Medium-Term Note Programme

• Acquisition of Radisson Blu Gautrain Hotel

• REIT status approval

• Implementation of staff long-term incentive scheme

• New independent Non-Executive Board Members

August 2013 13

THE YEAR IN REVIEW

Strategic Achievements – Domestic Medium-Term Note (“DMTN”) Programme

• Registered a R2 billion DMTN Programme

• Secured notes rating of A3(za)(sf) from GCR

• On 10 April 2013, Hospitality concluded its debut auction of

› R150 million secured notes (maturity 3 years); and

› R120 million unsecured notes (maturity 2 & 3 years).

• Secured Notes were 2.6x oversubscribed

• Margins:

› Secured Note: 3 month Jibar plus 182bps;

› Unsecured notes (2 years): 3 month Jibar plus 240bps for R40 million;

› Unsecured notes (3 years): 3 month Jibar plus 270bps for R80 million.

August 2013 14

THE YEAR IN REVIEW

Strategic Achievements – Radisson Blu Gautrain Hotel Acquisition

• Purchase Consideration R443 million

• 5-Star business & conferencing hotel

• 216 keys

• Close proximity to Gautrain Sandton

• Strategic fit: transport hub, major metropolitan area, global brand

• Revenue underpin from vendor & management company

• Anticipated forward yield of 8.15% (year 1)

• Estimated rental growth 15% (year 2)

Radisson Blu Gautrain Hotel

August 2013 15

THE YEAR IN REVIEW

Strategic Achievements – Sustainable Development

• Radisson BluWaterfront received Think Planet Recognition;

› 230 staff received a bicycle

• Holiday Inn & Carte Blanche Making A Difference Trust;

• Utility saving interventions continue to yield significant reductions:

› 11% decrease in KWH/RNS and a 6% increase in Litres/RNS.

KWH perRNS11%

Litres per RNS6%

August 2013 16

THE YEAR IN REVIEW

Strategic Achievements – Competitive Advantage

• Largest multi-branded hotel property portfolio in South Africa

• Strong partnerships with local and international hotel operators

• Benefits of global brands:

› Loyalty programs

› Distribution platforms

› Strategic alliances – car hire & airlines

› Training programs & staff development

› Strong financial controls & risk management

August 2013 17

THE YEAR IN REVIEW

Corporate Social Investment

No. Amount

UJ Bursary Students 9 R 240k

Traineeships, internship program ±100 R 660 k

Habitat for Humanity R 94k

Container Library Donation R 208k

Number of employees 2735*

Habitat for Humanity

Container Library Donation

Hospitality Bursary Students*excl. Radisson Blu Gautrain Hotel

August 2013 18

THE YEAR IN REVIEW

Awards and accolades

• Arabella Hotel and Spa

› No1 ranked Golf Course in the Western Cape and 4th in SA for 2012 by Golf Digest

› Winner of the Lilian Terry Spa of the Year Award for 2102

• Radisson Blu Gautrain Hotel

› Business Traveller Awards 2013: Winner Best Business Hotel in South Africa

• Mount Grace Country House & Spa

› Finalist in the Resort / Hotel Spa Category Les Nouvelle 2012

› World Luxury Hotel Awards Country Winner: 2012 Best Luxury day spa

› Best Conference Venue 2012 by West Rand Tourism

› Best Fine Dining Restaurant SA by Eat Out

August 2013 19

DIVIDER SLIDE LAYOUT

August 2013 20

THE YEAR IN REVIEW

Competitive Advantage

• Highly diversified in terms of:

› star grading;

› fixed and variable income;

› market mix. 48%

4%31%

16%

2%

Gross rental income

by province

August 2013 21

THE YEAR IN REVIEW

Trading figures in line with the overall market (July 2012 – June 2013)

57.5% 58.3%60.1% 61.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

HPF'12 STR'12 HPF'13 STR'13

Occupancy HPF vs STR

R 974

R 871

R 1 020

R 930

R 0

R 200

R 400

R 600

R 800

R 1 000

R 1 200

HPF'12 STR'12 HPF'13 STR'13

ADR HPF vs STR

August 2013 22

THE YEAR IN REVIEW

HPF’s occupancy cycle on the up

66.3% 66.0% 68.3%

55.6%53.4%

51.4%

57.5% 60.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2006 2007 2008 2009 2010 2011 2012 2013

Peak Occupancy

August 2013 23

THE YEAR IN REVIEW

Westin Performance compared to CompSet (July – June)

121.4

99.4

120.6119.8

103.2

123.6118.1

99.9

117.9

0

20

40

60

80

100

120

140

Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)

FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: The Mount Nelson Hotel, Southern Sun Cape Town Waterfront Hotel, Sun International Table Bay Hotel, Radisson Blu Hotel Waterfront, Legacy The Commodore, Southern Sun the Cullinan, Hilton Cape Town City Centre

August 2013 24

THE YEAR IN REVIEW

Radisson BluWaterfront Performance compared to CompSet (July – June)

122.5

103.1

126.3

107.8113

121.8

105.5

116.3122.6

0

20

40

60

80

100

120

140


FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: The Mount Nelson Hotel, Cape Grace Hotel, Sun International Table Bay Hotel, The Westin Cape Town , Legacy The Commodore, Victoria & Alfred Hotel, Cape Royale Luxury Hotel & Resort

August 2013 25

THE YEAR IN REVIEW

Holiday Inn Sandton Performance compared to CompSet (July – June)

107.6111.9

120.5118.4 116.2

137.6

112.8 111.4

125.6

0

20

40

60

80

100

120

140


FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: Sun International The Maslow Hotel, Garden Court Sandton, Protea Hotel Balalaika Sandton, Courtyard Hotel Sandton, Southern Sun Katherine Street Sandton, Protea Hotel Wanderers, Park Inn Sandton

August 2013 26

THE YEAR IN REVIEW

Crowne Plaza Rosebank Performance compared to CompSet (July – June)

104.2 100.4104.6

114.4

97.9

112

98.1 96.7 94.8

0

20

40

60

80

100

120

140


FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: Legacy Sunnyside Park, Courtyard Hotel Rosebank, Courtyard Hotel Sandton, Protea Hotel Wanderers, Southern Sun Hyde Park, Protea Hotel Fire & Ice Melrose Arch, Holiday Inn Johannesburg Rosebank

August 2013 27

THE YEAR IN REVIEW

Mount Grace Performance compared to CompSet (July – June)

106.991.7 98.1

89.3

105.193.893.4 96.4 90.1

0

20

40

60

80

100

120

140


FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: The Westcliff,, 54 On Bath, Kwa Maritane Bush Lodge, Legacy Bakubung Bush Lodge, African Pride Melrose Arch Hotel

August 2013 28

THE YEAR IN REVIEW

PH Victoria Junction Performance compared to CompSet (July – June)

102.9

85.1 87.5

105.8

90.1

95.399.2

92.391.5

0

20

40

60

80

100

120

140


FY 2011 FY 2012 FY 2013

Par vs. Competitor

set

Comp Set: Southern Sun Cape Town Waterfront Hotel, City Lodge Victoria & Alfred Waterfront, Legacy The Commodore, Cape Royale Luxury Hotel & Resort, Park Inn by Radisson Cape Town Foreshore

August 2013 29

THE YEAR IN REVIEW

Consolidated Income Statement

2010 2011 2012 2013

Rooms Revenue 66% 61% 63% 64%

F&B Revenue 27% 27% 29% 29%

Other Revenue 8% 12% 8% 7%

Total Revenue 100% 100% 100% 100%

Rooms 79% 76% 77% 77%

F&B 26% 26% 33% 33%

Other 63% 72% 45% 38%

Departmental Profit 63% 62% 61% 62%

Total Other Expenses 26% 28% 27% 27%

MCP 37% 34% 34% 35%

Fixed expenses 4% 6% 5% 5%

Mgmt & Incentive fee 5% 5% 5% 5%

EBITDA 29% 24% 24% 25%

August 2013 30

THE YEAR IN REVIEW

Lease expiry profile –Weighted average expiry 9.04 years

10 12 14 16 18 20 22 24 26 28 30 32 34 36 38

Mount Grace Country House & Spa

Courtyard Cape Town

Inn on the Square

Premier Hotel King David

Champagne Sports Resort

Protea Hotel - The Winkler

Protea Hotel - The Richards

The Bayshore Inn

Protea Hotel Imperial

Kopanong Hotel & Conference Centre

Protea Hotel Hazyview

Protea Hotel Hluhluwe & Safaris

Holiday Inn Sandton - Rivonia Road

Crowne Plaza Johannesburg - The Rosebank

Protea Hotel Edward

Protea Hotel Marine

Protea Hotel Richards Bay

Courtyard Arcadia

Courtyard Eastgate

Courtyard Rosebank

Courtyard Sandton

Arabella Hotel and Spa

Birchwood Executive Hotel & OR Tambo…

Protea Hotel Victoria Junction

Radisson Blu Gautrain

Radisson Blu Waterfront

Westin Cape Town

Initial Period Option Period(s)

* Birchwood to convert from fixed lease to F&V lease on 1 July 2014

August 2013 31

AGENDA





• Market Outlook

• Fund Strategy

• Distribution Time FrameChampagne Sports Resort

August 2013 32

FINANCIAL FEATURES

Year End 30 June 2013

YE2012 YE2013

Gross Rental Income

R 326 million 9.1% R 356 million

Portfolio Value

R 3,86 billion 18.3% R 4,57 billion

Weighted Average Cost of Debt

9.74% -12.1% 8.56%

Total Debt

R 1,36bn 15.4% R 1,57bn

YE2012 YE2013

Net Asset Value per Linked Unit

1 015 cents 7.9% 1 095cents

Distributable Debenture Interest

R125 million 59.8% R200 million

Gearing (% of asset value)

35.2% -2.3% 34.4%

Interest Cover Ratio

1.61x 53.4% 2.47x

August 2013 33

FINANCIAL FEATURES


57.46c 60.32c 63.34c 66.51c

58.84c 61.79c 49.74c68.12c

-

50

100

150

200

2010 2011 2012 2013

A Linked Unit Distribution

Final

Interim

-42% -33%-87%

129%

-100%

-50%

0%

50%

100%

150%Y-on-Y Growth

5% 5%

-7%

19%

-20%

-10%

0%

10%

20%Y-on-Y Growth

36.30c 38.45c 7.91c

9.19c

51.68c20.45c

0.00c

8.89c

-

50

100

150

200

2010 2011 2012 2013

B Linked Unit Distribution

August 2013 34

FINANCIAL FEATURES


-42% -33%-87%

129%

48%

-100%

-50%

0%

50%

100%

150%

5% 5%

-7%

19%

5%

-20%

-10%

0%

10%

20%Y-on-Y Growth

57.46c 60.32c 63.34c 66.51c

58.84c 61.79c 49.74c68.12c

141.36c

-

50

100

150

200

2010 2011 2012 2013 2014e

A Linked Unit Distribution

Fcst Total

Final

Interim

36.30c 38.45c 7.91c9.19c

51.68c20.45c

0.00c

8.89c

26.72c -

50

100

150

200

2010 2011 2012 2013 2014e

B Linked Unit Distribution

Y-on-Y Growth

ForecastForecast

August 2013 35

AGENDA





• Market Outlook

• Fund Strategy

• Distribution Time FrameArabella Hotel & Spa

August 2013 36

LINKED UNIT PERFORMANCE

Linked unit price performance

-

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Jul-09 Nov-09 Mar-10 Jul-10 Dec-10 Apr-11 Aug-11 Jan-12 May-12 Sep-12 Feb-13 Jun-13

HPA HPB

August 2013 37


Linked unit price relative to Listed Property Sector

-

1

2

3

4

5

6

7

8

9

Feb-06 Aug-06 Feb-07 Aug-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13

HPA/J253 HPB/J253

August 2013 38


Linked unit price relative to Tourism & Leisure Index

60%

80%

100%

120%

140%

160%

180%

200%

Jul-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13

Combined Unit Tourism & Leisure Index

August 2013 39

AGENDA





• Market Outlook

• Fund Strategy


Westin Cape Town

August 2013 40

PROPERTY PORTFOLIO

Radisson Blu Cape Town

• The refurbishment of 106 standard rooms was completed in August 2012;

• The 71 business class suites were refurbished during first phase of the renovation;

• 2013 – Introduction of Amani Spa and upgrade of spa facilities;

• 2014 – Consideration been given to upgrade public areas.

Standard Room

August 2013 41

PROPERTY PORTFOLIO

Westin Cape Town

• Conversion of administration office into revenue

generating meeting rooms

• Construction of outside swimming pool to enhance

leisure offering to be completed in Q1 2014

Public Area

Small Boardroom

Outside Swimming Pool

August 2013 42

PROPERTY PORTFOLIO

Arabella Hotel & Spa

• Upgrade of the irrigation system for a total consideration of R10,5 million;

• Water savings due to more efficient watering programs;

• Administration areas converted to revenue generating conference facilities;

• Restaurant upgrade.

August 2013 43

PROPERTY PORTFOLIO

Protea Hotel Hluhluwe Hotel & Safaris (KwaZulu Natal)

• Soft refurbishment of the 76 bedrooms as well as a complete bathroom fit out for a total

consideration of R6 million

• Renovation introduces a number of new innovations into the bedrooms adopting most of the

environmental best practices

• To be completed in September 2013

Before refurbishment After refurbishment

August 2013 44

PROPERTY PORTFOLIO

Protea Hotel The Richards (KwaZulu Natal)

• Soft refurbishment exercise of the initial 97 bedrooms for a total consideration of R4 million

• To be completed in September 2013

Before refurbishment After refurbishment

August 2013 45

DISPOSALS

Properties held for sale

• 7 non-core properties at total of R319 million (excl. break fees)

Bayshore Inn PH Hazyview

PH HluhluwePH Imperial PH The Richards

PH The Winkler

Kopanong

August 2013 46

AGENDA





• Market Outlook

• Fund Strategy


Radisson Blu Waterfront – Cape Town

August 2013 47

MARKET OUTLOOK

SA Hospitality outlook

• Overseas Arrivals YTD April up 5.5%;

• Non-traditional source markets continue above average growth;

• Domestic demand – volume based growth;

• Hotel oversupply diminishing paving way for next development cycle;

• Travellers remain rate sensitive and techno-savy;

• 65% occupancies trigger point for above inflation rate increases.

August 2013 48

AGENDA





• Market Outlook

• Fund Strategy


Holiday Inn SandtonTrip Advisor Certificates of Excellence in

2013

August 2013 49

FUND STRATEGY

• Bedding down all properties in the Fund;

• Focus on optimization of hotel revenues;

• Driving value of existing portfolio;

• Financing strategy:

› Hedging;

› Debt maturity policy.

Crowne Plaza RosebankTrip Advisor Certificates of Excellence in 2013

August 2013 50

FUND STRATEGY

Hedging Strategy

• R693.34 million or 44% of total liabilities are fixed through interest rate swaps

• Current swap agreements:

R’million Nominal Rate Maturity

Swap 2 R346.7 7.75% June 2014

Swap 3 R346.7 7.98% June 2015

• Hedging strategy: fixed interest rates for 50% of total liabilities

August 2013 51

FUND STRATEGY

Debt Maturity Profile

0

100

200

300

400

500

600

700

800

900

1000

Absa Nedbank Secured Note Unsecured Note

August 2013 52

AGENDA





• Market Outlook

• Fund Strategy

• Distribution Time FrameMount Grace Country House and Spa

August 2013 53

DISTRIBUTION TIMEFRAME

November

S M T W T F S

1 2

3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29 30

September

S M T W T F S

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30

Last day to trade cum interest 6 September

Linked units trade ex-interest 9 September

Record date 13 September

Payment date 16 September

Annual general meeting 8 November

2013

RESULTS PRESENTATION

August 2013 55

DISCLAIMER

The announcements and information in this presentation do not constitute an offer to sell or issue or the solicitation of

an offer to buy or acquire securities of Hospitality Property Fund (Pty) Ltd ('Hospitality') or any of its affiliates in any

jurisdiction or an inducement to enter into investment activity. This presentation may include "forward-looking

statements". These statements may contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of

similar meaning. All statements other than statements of historical facts included in these announcements, including,

without limitation, those regarding Hospitality's financial position, business strategy, plans and objectives of management

for future operations (including development plans and objectives relating to Hospitality's products and services) are

forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and

other important factors that could cause the actual results, performance or achievements of Hospitality to be materially

different from future results, performance or achievements expressed or implied by such forward-looking statements.

These forward-looking statements are based on numerous assumptions regarding Hospitality's present and future

business strategies and the environment in which Hospitality will operate in the future. These forward-looking

statements speak only as at the date of these announcements. Neither Hospitality nor any affiliate, nor any of their

respective officers, directors, partners, or employees claim any obligation or undertaking to disseminate any updates or

revisions to any forward-looking statements contained in these announcements to reflect any change in Hospitality's

expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is

based. Any information contained in these announcements on the price at which Hospitality's securities have been

bought or sold in the past, or on the yield on such securities, should not be relied upon as a guide to future

performance.

Documents

RESULTS PRESENTATION 2013 · 2020. 3. 23. · RESULTS PRESENTATION. August 2013 2 AGENDA • The Year in Review • Financial ... Trading figures in line with the overall market (July