FY22 H1 PRE-CLOSE PRESENTATION - SEPTEMBER 2021 - Vukile ...
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FY22 H1 PRE-CLOSE PRESENTATION SEPTEMBER 2021
SOUTHERN AFRICAN PORTFOLIO
FY22 H1 PRE-CLOSE PRESENTATION
2
RETAIL PORTFOLIO PERFORMANCE AND TRADING ENVIRONMENT
PORTFOLIO HOLDING STEADY IN TOUGH OPERATING ENVIRONMENT
> Portfolio trading metrics back to pre-Covid levels
AUG 2021 MAR 2021 AUG 2021 MAR 2021
> FY22 turnover average 4% higher than comparable period in FY20
> Trading density growth up to 4.3% vs 1.7% at FY21
> Improvement in retention ratio (94% vs 90%) with strong Rent
Vacancies 3.4% GLA 3.2% GLA 98% 98%
collection rate (98%), indicating that tenants are paying rentals and are collection rate
trading
> Vacancies marginally up from 3.2% at FY21 to 3.4% Tenant Rent-to-sales
> SMME’s under pressure and account for c. 60% of all new vacancies 94% 90% 6.2% 6.3%
retention ratio
> Limited concern in the core of the portfolio. Strong retention of
nationals and second tier tenants, although negotiations more Annualised
-3.4% -3.3% COMMUTER
protracted Reversions growth in trading 4.3% 1.7%
Excl ERM +1.1% Excl ERM -1.8%
> Rental reversions holding steady and trending in line with FY21 results densities
> Pressure in the Urban regional portfolio
> Footfall trending 15% below pre-Covid levels, but with increased spend Average annual
Base Rentals R147.93/m² R146.40/m² R29 787/m2 R29 212/m²
trading density
per head – now starting to indicate changes in shopper behaviour more
pronounced in Commuter and Urban Portfolio
> Pending finalisation of outstanding renewals, base rentals show Contractual 84% vs 2019 87% vs 2019
6.6% 6.7% Footfall
marginal increase of 1.0% for the five months to August 2021 escalations 103% vs 2020 99% vs 2020
> The downward trend of contractual escalations continues as leases with
historical high escalations come to an end. Recent reversions were 3.3 years GLA
3.2 years GLA
concluded at average 6.5% in-contract escalations, with new leases at WALE
2.5 years Rent 2.7 years Rent
6.7%
3
RETAIL PORTFOLIO PERFORMANCE AND TRADING ENVIRONMENT
FOOTFALL AND SALES
Benchmark 2019
> Encouraging to note that current sales are trending ahead of Benchmark 2019 / 2020
(Pre-Covid)
pre-Covid levels (104%)
Average 104%
> Footfall trending below pre-Covid levels with notable 110%
109% 108%
shopper behaviour changes in commuter and urban malls 106%
103%
105%
101% 101% 99% 99% 101% 100%
98% 97% 99%
95%
> Rural and township centres show consistent growth in sales 93% 92%
90% 90% 88%
88% 88%
84% 86% 85%
> Value centres, with large exposure to grocers and essential 82% 84% 83%
81%
services, weathered the storm well during the COVID-19 72%
lockdowns with strong sustainable sales growth
59%
> Urban centres are showing improved sales, albeit at softer
growth rates
47%
> Commuter centres remain under pressure with reduced Sales
sales and footfall 33%
Footfall
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
2020 2021 2021
4
RETAIL PORTFOLIO PERFORMANCE AND TRADING ENVIRONMENT
SEGMENTAL FOOTFALL AND SALES
Sales Footfall
RURAL TOWNSHIP
> Sales recovered well with rural centres to 110%,
125%
116%
113%
113%
111%
111%
110%
108%
106%
106%
106%
106%
105%
105%
104%
104%
103%
103%
103%
102%
102%
101%
100%
100%
100%
99%
99%
98%
98%
97%
92%
township centres to 102%, urban centres to 92% and
87%
104%
104%
100%
98%
97%
96%
93%
93%
93%
92%
91%
90%
90%
55%
89%
89%
89%
89%
commuter centres to 89% relative to pre-Covid
89%
89%
88%
53%
87%
85%
85%
84%
84%
81%
79%
78%
76%
74%
72%
58%
Benchmark 2019 Benchmark 2019
trends
46%
(Pre-Covid) (Pre-Covid)
41%
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
2020 2021 2021 2020 2021 2021
> Footfall still lagging with rural centres to 92%,
URBAN COMMUTER
township centres to 89%, commuter centres to 79%
112%
110%
102%
100%
99%
96%
and urban centres to 70% relative to pre-Covid trends
96%
94%
94%
94%
92%
91%
91%
91%
91%
90%
89%
89%
89%
88%
88%
88%
88%
87%
87%
84%
84%
83%
83%
83%
81%
75%
100%
92%
92%
91%
89%
87%
86%
85%
84%
84%
84%
82%
81%
79%
79%
78%
> Shopping patterns are returning to pre-Covid trends
78%
77%
77%
77%
76%
76%
75%
74%
73%
72%
72%
70%
69%
26%
62%
61%
16%
Benchmark 2019 Benchmark 2019
41%
with increased weekend trade
13%
(Pre-Covid) (Pre-Covid)
26%
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
2020 2021 2021 2020 2021 2021
5
RETAIL PORTFOLIO PERFORMANCE AND TRADING ENVIRONMENT
RETAIL CATEGORY PERFORMANCE
Home Grocery/
Furnishings/ Art/ Supermarket Pharmacies
Antiques/ Décor Density 12,7% Density 19,0%
Density 9,8% Turnover 12,4% Turnover 20,1%
Turnover 15,0%
Sports
Fashion
Year-on-year turnover growth
Utilities/Gyms/Outdoor Cell Phones
Density (2,5%) Goods & Wear
Turnover (2,8%) Density 15,8%
Density 0,4% Turnover 15,4%
Turnover 1,6%
Other
Health & Beauty Density (3,9%)
Density (12,9%) Turnover (3,1%) Food
Electronics
Turnover (8,4%) Density 13,6%
Density 5,9%
Turnover 14,1%
Turnover 2,8%
Bottle Stores
Density (8,0%)
Department Stores Restaurants &
Turnover (8,3%)
Density (15,8%) Coffee Shops
Turnover (15,5%) Density (14,3%)
Turnover (14,7%)
Average annual trading density growth
6
RETAIL PORTFOLIO PERFORMANCE AND TRADING ENVIRONMENT
COLLECTIONS
R937M OF R955M COLLECTED
66% of 13% of 19% of 2% of
billings billings billings billings
National Mid-tier SMME's Government *
tenants tenants 97% 71%
99% 97%
Total portfolio
98%
35% of 16% of 49% of
billings billings billings
Fashion,
Groceries Other
Department
100% 96%
and Home
100%
* Government of Namibia and SA Post Office biggest contributors to irregular collections in Government tenancy, but limited to 1.7% of portfolio billings
7
COVID -19 RENTAL CONCESSIONS
R6.4M VS. R133M IN FY21 H1
R0,1m R0,0m
R0,2m
SMME's
16 tenants
R0,4m R0,4m TOWNSHIP
6%
R1,9m
National R0,1m
tenants
R0,8m
National tenants Mid-tier tenants
85 tenants 37 tenants R0,1m R0,0m
R0,2m
R2,4m R3,6m R0,3m
37% 57%
R0,1m
Mid-tier R0,6m COMMUTER
tenants
R0,3m R0,2m
4% R0,5m
5% Hospitality
R0,5m
8% R2,1m Sports Utilities/ Gyms
33% R0,6m
Bottle Stores R 0,041m
R0,5m
9% Restaurants & Coffee Shops R 0,026m
R0,6m Fashion
R 0,032m
9%
Home Furnishings/ Décor SMME’s
R0,2m
Gambling
R0,7m
R1,4m
11% Other R0,1m
21% 8
UPDATE ON CIVIL UNREST
6 PROPERTIES AFFECTED BY UNREST
Expected reinstatement costs Expected loss of rental
SASRIA claim SASRIA claim
R125m R57m
Number of shops damaged GLA Impacted
473 139 000m²
43% national 14% mid-tier 43% SMME 73 000m² (55%) exposure to Top 10 tenants
20 000m² (15%) exposure to SMME’s
9
UPDATE ON CIVIL UNREST
REINSTATEMENT AND TRADE
Expected Expected Number of
Number of % of GLA
completion cost to stores
stores trading
date repair trading
57 57
Perimete r fen ce, main en tran ce d oors an d National 24 National 24
16 Aug 21 R2.6m Mid-tier 11
100%
sh op fron ts Mid-tier 11
SMME 22 SMME 22
90 90
E n tran ce d oors, sh op fron ts, CCTV, gates an d National 39 National 39
16 Aug 21 R1.6m Mid-tier 16
100%
p erimete r fen ce Mid-tier 16
SMME 35 SMME 35
E n tran ce d oors, sh op fron ts, CCTV, vertical 116 84
National 58 National 46
tran sp ort, electrical, fire eq u ip men t, fire d amage 28 Sep 21 R13.8m Mid-tier 14
79%
Mid-tier 21
to 1 sh op SMME 37 SMME 24
E n tran ce d oors, sh op fron ts, CCTV, WiFi, vertical 93 36
National 34 National 18
tran sp ort, electrical, p arkin g eq u ip men t, fire 17 Sep 21 R9.5m Mid-tier 4
55%
Mid-tier 11
eq u ip men t, fire d amage to 3 sh op s SMME 48 SMME 14
E n tran ce d oors, sh op fron ts, ab lu tion s, 90 20
National 33 National 10
man agemen t offices, CCTV, WiFi, electrical, fire 13 Sep 21 R5.5m 46%
Mid-tier 5 Mid-tier 1
eq u ip men t, fire d amage to 3 sh op s SMME 52 SMME 9
27 2
Roof an d section s of b u ild in gs fire d amaged , National 16 National 2
sh op fron ts, ab lu tion s, man agemen t offices, 30 Mar 22 R91.5m Mid-tier 0
36%
Mid-tier 2
electrical, fire eq u ip men t, fire d amage to 3 sh op s SMME 9 SMME 0
10UPDATE ON CIVIL UNREST
Pine Crest 16 July 2021 Pine Crest 10 September2021
11UPDATE ON CIVIL UNREST
Durban Workshop 17 July 2021 Durban Workshop 9 September 2021
12UPDATE ON CIVIL UNREST
Hammarsdale 19 July 2021 Hammarsdale 9 September 2021
13DISPOSALS UPDATE
Sales Expected
Sector price Yield transfer
[R’m] date
Total 1 511.7 10.4%
357.5 9.9%
Ulundi King Senzangakona Shopping Centre Retail 308.7 9.4% Transferred 19 August 2021
Transferred Kempton Park Spartan Warehouse Industrial 23.8 14.8% Transferred 12 April 2021
Pretoria Rosslyn Warehouse Industrial 25.0 11.4% Transferred 14 April 2021
367.2 9.7%
Letlhabile Mall Retail 161.0 10.0% Sep-21 Obtaining clearance certificates
Unconditional Soshanguve Batho Plaza Retail 160.0 9.8% Nov-21 Obtaining clearance certificates
Centurion Samrand N1 Industrial 46.2 8.0% Sep-21 Obtaining clearance certificates
787.0 11.0%
Namibia Portfolio (sale of 64% stake) Retail 717.0 11.0% Nov-21 Due diligence complete. Formal agreements to be
Conditional signed shortly
Makhado Nzhelele Valley Retail 70.0 10.7% Nov-21 Formal agreements have been signed. Purchaser
obtaining funding
14FY22 H1
PRE-CLOSE
PRESENTATION
15ECONOMIC UPDATE: SPAIN
> In Q2 2021, Spanish GDP increased by 2.8% vs. Q1 2021 and increased by 19.8% vs. Q2 2020.
> The Spain GDP growth outlook for 2021 has recently been revised upwards from 5.5% to 6.5%.
> This is mainly due to increased consumption attributed to faster than expected vaccination roll-out, pent-up
demand from a high level of household savings, expected to be c.€60bn by Q42021, and the
GDP NextGenerationEU Plan which aims to distribute 70% of total available funds by the end of 2022 and the
OUTLOOK remaining 30% by 2023
> GDP is expected to recover to 2019 levels by 2022
> Inflation reached 3.3% in August (YoY) due to increased consumption levels and significant increases in
energy-related price levels and commodities. Analyst consensus estimates that 2021 will close with an annual
inflation rate of 3.4%
> Unemployment is expected to stabilise back to 2019 levels of just over 14.2% by 2022. As at July 2021,
unemployment rate reached c. 14% vs. 16% in July 2020
LABOR > In Q2 2021, total unemployment dropped by c. 100k workers to 3.5 million people
MARKET > There was a reduction in furloughed workers (ERTE) in Q2 2021 from 4% of enrolled workers to c. 3%
> ERTE program has been extended to the end of September 2021
> Spain received 4.4 million international tourists in July 2021, up 78% from 2020, and 9.8 million for the year
to the end of July 2021, however this is still only c. 55% of the levels seen in 2019
> Spain regional governments and the tourism sector are attempting to extend its high season into September
TOURISM
and October to increase visitor levels
Source: BBVA, EL PAIS, European Commission, Funcas
16UPDATE ON COVID-19 IN SPAIN
SPAIN ACHIEVED THE TARGET OF VACCINATING AT LEAST 70% OF THE POPULATION BY THE END OF AUGUST 2021
VACCINATION PROGRAMME FOLLOWING THE WAVES
Fully Vaccinated At least 1 shot
State of Alarm
73% 78% declared
Start of
vaccination
– hard national
of population of population programme 34.3 million people
lockdown
with vaccination
completed
> Vaccination campaign enjoys a high acceptance rate by the Spanish Announcement of
(c. 73% of
population, ranking 3rd in Europe in the level of population fully vaccinated. de-escalation plan
population)
According to the Spanish Ministry of Health, c. 90% of the population trusts the
positive effects of being vaccinated Spain
under curfew
> Elderly and other vulnerable people have already been vaccinated, Main restrictions:
significantly reducing deaths and pressure in ICU beds. 100% of people >80 “New normal” trading hours,
years of age, 99% between 70-79 and 98% of people between 60-69 years of capacity limits and
age have been fully vaccinated non-essential
> At the current vaccination rate, 90% of the population will be vaccinated by closures
October 2021
KEY INDICATORS
> Accumulated incidence in last 14 days reached 160 cases per 100,000 people
yet deaths remain low compared to previous waves
> Pressure on ICU beds remains at c. 15%, which is considered a medium risk.
Currently, there are c. 1,300 COVID-related patients at hospitals
> Total number of accumulated cases: c. 5 million confirmed
> Total deaths: c. 85k confirmed by Ministry of Health
Source: Ministry of Health, Government of Spain. https://www.rtve.es/noticias/coronavirus-graficos-mapas-datos-covid-19-espana-mundo/ 17FOOTFALL & SALES
2020 2021
18 120,0%
1ST WAVE 2ND WAVE (3) 3RD WAVE (3) > Sales continue to strengthen and have
16 surpassed 100% of 2019 levels in June
100,0% 2021. Larger basket sizes and higher
14 conversion rates continue to drive
sales
12 80,0%
> Retail park sales are already above
10 2019 levels. Retail parks comprise
60,0%
45.1% of Castellana’s portfolio by GLA
8
> Footfall recovered up to 85.7% of 2019
6 40,0%
levels in August 2021, the highest level
4
since March 2020. Over the past 18
20,0% months the pandemic waves have
2 affected the performance of the
Partial restrictions and portfolio, however strong growth was
Essential services only trading hour limitations
0 0,0% evident once restrictions were relaxed
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dic Jan Feb Mar Apr May Jun Jul Aug
Nº of Assets open and without highly restricted mobility Footfall Recovery
Sales Recovery Footfall Recovery Benchmark
Sales Recovery Benchmark
(1) Footfall Data includes the following shopping centres: El Faro, Bahía Sur, Los Arcos, Vallsur, Habaneras, Puerta Europa and Granaíta Leisure & Retail Park. There are no counters in the rest of the retail park assets Granaita
only counts cars, so we have estimated an average of 2 people per car. Monthly information: evolution of month in 2020 and 2021 vs the same month in 2019
(2) Sales Data includes all retail assets. Monthly information: evolution of month in 2020 and 2021 vs the same month in 2019
(3) Regional restrictions during 2º and 3º wave: town perimeter closures, trading hours capped, curfews, non-essentials retails closures…). Regional restrictions during 4th and 5th waves: Trading hours and capacity capped
18OPERATING ACTIVITY
(2)
OCCUPANCY RATE 97% CONTINUOUSLY CLOSING AGREEMENTS AND OPENING
NEW STORES DURING THE PANDEMIC DUE TO THE STRENGH OF OUR TENANT
KEY KPI´S YTD 31st August 2021
RELATIONSHIPS AND RETAIL EXPERTISE
86 €4.3m PORTFOLIO ALMOST FULLY LET
31 AUGUST
LEASES SIGNED NEW RENT SIGNED 2021 97.0%
31 MARCH
2021 98.3%
28 58 €1.2m €3.1m
RENEWALS NEW CONTRACTS RENEWALS NEW CONTRACTS
RENT ARREARS UNDER 5% DESPITE PANDEMIC
31 AUGUST
2021
4.9%
31 MARCH
2021
4.8%
18,170 sqm 1.76%
GLA SIGNED AV. RENT INCREASE(1)
RENT COLLECTION ABOVE 95%
31 AUGUST
1.38% 95.1%
2,824 sqm 15,346 sqm 2.34% 2021
RENEWALS NEW CONTRACTS RENEWALS NEW CONTRACTS 31 MARCH
2021 95.2%
(1) Considering operations with passing rent as renewals, relocations and replacements
(2) Period reported from 1st April 2021 to 31st August 2021
19TRADING ENVIROMENT
> Sales & Footfall continue to improve with portfolio effort rates
in line with industry benchmarks
> Larger retailers like Inditex, JYSK, Primark, Kiwoko, Pepco, IKEA
(with a 3,000sqm concept), Kiabi, Media Markt (500-700sqm
“Smart” format), are currently expanding their portfolios and
continue to demand new space, opening new stores across the
country
> Restaurants and Leisure, two of the most affected sectors
during the pandemic, are recovering sales levels. Some
retailers like Popeye’s, Fitzgerald, KFC, Papa John’s, are
resuming their expansion projects
> Castellana has continued to create interesting and exciting
events in our Shopping Centres over summer which has
improved awareness and grown footfall
20RETAIL CATEGORY PERFORMANCE
+2.5% OVERALL PORTFOLIO SALES GROWTH FOR THE PERIOD 1 AUGUST 2020 TO 31 JULY 2021
Turnover growth by retail category
> 2021 sales are approaching 2019
120 000 000,00 40,0%
23,2% -6,3%
28,4% levels month by month. We have
19,9%
100 000 000,00 14,6% 20,0% been above 90% of 2019 sales in
0,4% 2,7% 0,4% 0,5%
the last three months, exceeding it
-2,8%
80 000 000,00 0,0% in June
-14,3%
60 000 000,00 -20,0%
> DIY, Electronics and Pets continue to
40 000 000,00 -40,0%
be the best performing categories
-62,6%
20 000 000,00 -60,0% > Leisure and Food & Beverage
continue to be the most affected by
- -80,0%
restrictions
Sales L12M 2020 Sales L12M 2021 Var %
21FINANCE AND TREASURY FY22 H1 PRE-CLOSE PRESENTATION
DEBT AND TREASURY UPDATE
IMPROVED BALANCE SHEET METRICS RECOGNISED BY DEBT CAPITAL MARKETS AND CREDIT RATING AGENCY
> Balance sheet metrics remain positive:
> Group LTV and ICR ratios are expected to be largely in line with 31 March 2021
> c. R300 million of Vukile bank debt maturing in FY2022 is currently being negotiated and a further c. R1.6 billion of Vukile bank
debt maturing in FY2023 is currently under consideration for early re-finance
> In advanced stages of finalising the re-finance of Castellana’s Syndicate Loan (c. €140m, which matures over three tiers across
FY2023, FY2024 and FY2025), into a new 5-year loan
> c. R2.7 billion of undrawn facilities
> GCR reaffirmed national scale Issuer rating of AA-(ZA) and A1+(ZA) for the long- and short-term respectively, with a stable outlook
> Successful oversubscribed R500 million unsecured bond auction held in August:
> Auction 4.4 times oversubscribed, attracting bids of more than R2.2 billion and drew orders from 13 investors
> R342 million 3-year note issued below guidance at a margin of 185bps and R158 million 1-year note issued at a margin of 135bps
> R535 million note maturing in August was repaid with the proceeds of the auction. The issuances were LTV neutral
> Good progress on the sale of non-core assets:
> R357 million property sales transferred in FY2022
> R367 million property sales unconditional and expected to transfer in Q3 and Q4 2021
> Good progress with potential sale of Namibian Portfolio 23QUESTIONS
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