Condensed consolidated interim results for the six months ended 31 December 2017 30 years of property investment excellence STRATEGIC & OPERATIONAL OVERVIEW Clearwater Mall (Roodepoort, Gauteng) 2 1
Strategy Invested in South-Africa, sub-saharan Africa and South Eastern Europe High quality dominant shopping centres in good locations Preferred shopping destination in high-density metropolitan areas or key cities Balanced tenant mix attractive to customers Continuously reinvest in existing assets to maintain quality Strong internal management Hyde Park Corner (Jhb, Gauteng) 3 Financial highlights 31 Dec 2017 31 Dec 2016 Change (%) Distribution 376,3 cps 347,3 cps 8,3 31 Dec 2017 30 Jun 2017 Change (%) Total assets (Rbn) 38,2 36,8 3,9 Loan to value (%) 28,5 28,9 (1,4) NAV (R per share) 102,22 99,78 2,5 Cost to income ratio (SA) - Gross (%) 33,3 33,3 - - Net (%) 16,3 15,7 3,8 4 2
Distribution growth Cents per share 800 700 600 15,0% 543 14,2% 620 12,1% 695 500 400 300 13,7% 16,3% 263 280 13,4% 298 14,9% 322 16,6% 8,0% 347 348 8,3% 376 200 100 0 2015 2016 2017 2018 1st Half 2nd Half Total % growth 5 OPERATING PERFORMANCE Canal Walk (Cape Town, Western Cape) 6 3
South African property locations Gauteng region Super regional mall Canal Walk (80%) H Y D E P A R K C O R N E R Large regional malls CapeGate Clearwater Rosebank Mall Somerset Mall The Glen (75,15%) Woodlands Western Cape region Regional mall Hyde Park Corner Value/ lifestyle centre Atterbury Value Mart 7 Performance & market conditions South Africa Retail vacancy reduced Positive retail rental growth and escalations Trading density growth lower with exceptions CapeGate 8.7% Rosebank Mall 5.4% Clearwater Mall 4.0% Rental arrears increase - remains small % of income Trend towards value and sport stores continues Relocation and re-sizing of stores Low inflation environment for retailers CapeGate (Cape Town, Western Cape) 8 4
Leasing activity 31 December 2017 Leasing % of total portfolio Rentable area (m²) Rental growth (%) Contractual escalation (%) No. of leases Retail 8,2 53 803 4,1 7,8 197 Offices 13,0 7 717-9,1 8,0 29 Total 8,6 61 520 3,5 7,8 226 Lease renewal process Rentable area (m²) Leases completed 61 521 Leases still outstanding 47 884 Total 109 405 44% 56% 9 Balance of leases outstanding Balance outstanding Property Rentable area (m²) No. of leases m² CapeGate Regional 63 767 23 10 453 Somerset Mall 69 021 27 5 411 Canal Walk 148 216 22 5 104 The Glen 74 769 20 3 779 Hyde Park Corner 28 580 20 3 343 Atterbury Value Centre 48 848 7 3 225 Woodlands Boulevard 71 641 10 3 076 Rosebank Mall 61 567 5 2 818 Clearwater 87 098 21 2 362 Retail total 653 506 155 39 571 Office total 59 280 26 8 313 Portfolio total 712 786 181 47 884 10 5
Vacancies Vacancies 31 Dec 2017 30 Jun 2017 31 Dec 2016 Retail (%) 0,9 1,9 0,8 Offices (%) 9,9 7,9 3,9 Total (%) 1,6 2,4 1,1 Vacancies Rentable area (m²) Change (m²) The Glen (Johannesburg, Gauteng) Retail 5 818 (7 028) Offices 5 851 1 137 11 669 (5 891) Clearwater (Roodepoort, Gauteng) 11 Comparison to IPD Trading Density Index September 2017 Super regional Canal Walk Regional Clearwater, Rosebank Mall, Somerset Mall, CapeGate, Woodlands, Hyde Park Corner Small regional Atterbury Value Mart Trading density growth Rent to turnover ratio Hyprop IPD Hyprop IPD 1,1% (5,6%) 9,6% 10,8% 1,9% (0,7%) 8,1% 8,7% 3,5% 0,7% 8,8% 7,4% Trading density growth Rent to turnover ratio Hyprop Dec 2017 Dec 2016 Dec 2017 Dec 2016 Total 1,4% 2,9% 8,5% 8,3% Total (excl. The Glen) 2,1% 3,5% 8,1% 8,0% 12 6
Trading performance July - December 2017 Primary category Trading density growth % of total turnover % of area Department stores: Clicks, Dis-Chem, Edgars, Game, Woolworths 2,8 27,7 26,1 Apparel (2,0) 18,6 20,4 Food/supermarket (0,1) 11,6 11,0 Electronic/photography/music/mobile 3,5 7,4 4,3 Food service 3,6 6,3 6,0 Sporting/outdoor goods & wear (0,2) 5,4 5,7 Home furnishings (2,2) 5,2 7,8 Speciality/toys 3,9 4,3 4,9 Jewellery 3,1 2,9 1,0 Health & beauty (1,3) 2,5 1,7 Books/cards/stationery (1,4) 2,2 2,3 Shoes 0,3 2,0 2,0 Eyewear 7,2 0,9 0,6 Entertainment/movies 10,7 0,9 4,7 Note: IPD/MSCI allocations 13 INVESTMENT IN SUB-SAHARAN AFRICA (excluding SA) Accra Mall (Accra, Ghana) West Hills Mall, Accra, Ghana 14 7
Sub-Saharan Africa property locations Ghana Nigeria Zambia Hyprop ownership Accra, Ghana West Hills Mall 16,8% Accra Mall 17,6% Achimota Retail Centre 28,1% Kumasi, Ghana Kumasi City Mall 28,1% Lagos, Nigeria Ikeja City Mall 75,0% Lusaka, Zambia Manda Hill Shopping Centre 68,8% 15 Performance and market conditions Sub-Saharan Africa Economic growth prospects improved in Ghana and Nigeria Focus on reduction in vacancies and rent collection Achimota and West Hills Game will replace the current second food anchor Ikeja City Mall remains the dominant centre New tenants incl. Miniso & Krispy Kreme Ikeja City Mall (Lagos, Nigeria) Manda Hill - significant new lettings: Home Essentials (3 277m²) opened Sep 2017 Ster Kinekor (1 700m²) Ackermans (805m²) opened Dec 2017 Manda Hill Shopping Centre (Lusaka, Zambia) 16 8
Income producing properties Investment in Sub-Saharan Africa (excl. SA) Centre City & country Rentable area m² Vacancy % rentable area 31 Dec 2017 Vacancy % rentable area 30 Jun 2017 Ikeja City Mall Lagos, Nigeria 22 223 1,5 - Manda Hill Lusaka, Zambia 40 561 5,3 5,4 Accra Mall Accra, Ghana 21 349 5,5 - West Hills Mall Accra, Ghana 27 560 12,3 5,3 Achimota Retail Centre Accra, Ghana 15 006 3,6 6,1 Kumasi City Mall Kumasi, Ghana 17 948 11,2 26,5 Average vacancies 6,6 6,5 17 INVESTMENT IN SOUTH- EASTERN EUROPE Delta City (Belgrade, Serbia) West Hills Mall, Accra, Ghana 18 9
South-Eastern Europe Property locations Eastern & Central Europe portfolio Hyprop ownership (60%) Rentable area m² Macedonia, Skopje Skopje City Mall 36 241 Croatia Montenegro Serbia Macedonia Bulgaria Serbia, Belgrade Delta City 27 691 Montenegro, Podgorica Delta City 23 718 Bulgaria, Sofia (New acquisition) The Mall 51 211 Zagreb, Croatia* City Center One - East 48 574 Zagreb, Croatia* City Center One - West 46 779 * Agreement to acquire in Feb 2018 19 Hystead at a glance High quality dominant shopping centres - gross asset value of EUR740m Six shopping centres in capital cities of five countries Hyprop and PDI are strategic shareholders Asset management and expansion opportunities Internally managed by in-country people on site Executive management team in place (CEO, CFO & COO) 20 10
Performance and market conditions South-Eastern Europe Trading conditions and consumer spend positive Good demand for space Shopping centres in Belgrade, Podgorica and Skopje fully let Small vacancy in Sofia Net income on asset level exceeding budget Delta City, Belgrade (Serbia) 21 Acquisition City Center One - East and West, Zagreb, Croatia Location Acquisition cost 2 Dominant shopping centres in Zagreb 90% ownership - EUR283,5 million Initial yield 7% Asset based finance (no recourse to Hyprop) Hyprop (60% interest) JV Arrangement EUR154,5 million EUR77,5 million (R1,16 billion) WKB 3, an Austrian-based company with 10% ownership Their operating company, CC Real will initially undertake the management City Center One - East and West, Zagreb (Croatia) 22 11
Acquisition (Continued) City Center One - East and West, Zagreb, Croatia Property name City Center One East City Center One West Retail rentable area (GLA/m²) 48 574 46 779 Weighted average rental per m² EUR17,39 EUR15,27 WAULT* (years) 6,5 6,0 Vacancy rate (all GLA) 0,6% 1,5% Expansion opportunities (GLA/m²) 10 000 13 600 City Center One - East and West, Zagreb (Croatia) * Weighted average unexpired lease term (WAULT) 23 DEVELOPMENTS Canal Walk (Cape Town, Western Cape) 24 12
Rosebank Mall extension Extension of Rosebank Mall by 4 344m² rentable area Within budget: R127 million On-track to complete April 2018 (H&M and Sportsman's Warehouse trade end March 2018) 92% let, offers have been sent to tenants for the balance of the space (352m²) Ackerman's trading well in their new site Refurbishment of The Zone will add appeal to the shopping precinct Rosebank continues to be a hive of construction activity 25 Canal Walk La Piazza project Enclosure of the La Piazza open-air court adding 2 800m² of rentable area Completed in Nov 2017 within budget R41,6 million Sportscene (1 469m²) and Exact (999m²) trading well Checkers completed its up-grade to flagship specification in December 2017 Current development activity in Century City: 400 residential apartments, 180 retirement apartments, 138 hotel rooms, 40 000m² offices, retail / showrooms 10 000m² 26 13
The Glen Foodcourt redevelopment Enclosure of foodcourt to create contemporary retail/leisure offering Design concept intact focuses on feel good factor Within budget: R90,9 million 70% let, offers have been sent to retailers for the remaining 30% (1 550m²) On-track to complete: April 2018 Project scope includes retiling of all existing malls 27 Hyde Park Corner Office upgrade Budget: R16,5 million Completion: April 2018 Project scope includes: Re-glazing link bridges with performance glazing Energy efficient lighting Refurbishment of all common areas Four new lifts Improvement in letting of the offices 28 14
Stuttafords Re-instatement projects Rentable area: 4 630m² H&M occupy the entire area Trade commenced mid-november 2017 Rentable area: 3 350m² MRP and MRP Sport occupy (1 900m²) Toys R Us occupy previous MRP premises (1 013m²) Discussions with various tenants for the balance of the space Rentable area: 2 473m² Subdivided for Standard Bank (1 500m²), Le Creuset (110m²) and Fabiani (360m²) ABSA to occupy the ground-floor of Cradock Heights (940m²) (ex. Standard Bank) Discussions with prospective tenants for the remaining 315m² 29 Hyprop sustainability Clearwater Mall Solar PV phase-3 Total expenditure for all 3 phases: R37,9 million Payback: 4,63 years at a projected yield of 21% Total installation peak capacity: 2 914 kw (15% of mall consumption) 30 15
Hyprop sustainability (continued) Water saving initiatives Water consumption has reduced by 30% (average) in the Cape malls in the past six months Monitoring of tenant consumption: the malls in the Cape region track the daily water consumption of the top 10-water users to ensure that consumption targets are met per City water restrictions Canal Walk and CapeGate: Boreholes have been drilled to reduce reliance on the municipal feed, water is currently being tested to assess whether water can be treated to potable standards Canal Walk: Grey water will be used to supply water to public toilets and cooling towers Aerators have been fitted in all ablutions in the Cape malls as a means to reduce consumption Several discussions have been held with City officials to better understand the current challenges 31 Hyprop sustainability (continued) Electricity saving initiatives Ikeja Mall: 50% of the metal halide lights in the parking areas are being changed to LED fittings Refuse management Waste recycled has increased from 78% to 82% since 2016 Rosebank Mall Offices façade upgrade Budget: R10 million Completion: August 2018 Scope: Re-glazing the south, east and a portion of the north façade with performance glazing Strong demand exists for well located affordable office space 32 16
FINANCIAL RESULTS Rosebank Mall (Johannesburg, Gauteng) 33 Distributable earnings 31 Dec 2017 (R 000) 31 Dec 2016 (R 000) Change (%) South African property portfolio 952 345 968 198 (1,6) - Continuing operations 944 034 924 877 2,1 - Properties sold 8 311 43 321 (80,8) Investments in sub-saharan Africa (excl. SA) 40 025 30 884 29,6 Investments in South-Eastern Europe 91 615 58 351 57,0 Fund management expenses (29 900) (32 826) (8,9) Net interest (148 373) (180 688) (17,9) Other income 27 415 17 505 56,6 Distributable earnings 933 127 861 423 8,3 34 17
Reconciliation to dividend declared 31 Dec 2017 (R 000) 31 Dec 2016 (R 000) Distributable earnings 933 127 861 423 Total shares in issue at period-end 248 441 278 248 441 278 Treasury shares in issue (446 260) (410 659) Shares in issue for distributable earnings 247 995 018 248 030 619 Dividend per share (cents) 376,3 347,3 Dividend per share growth (%) 8,3 16,6 35 Balance sheet extracts 31 Dec 2017 (Rm) 31 Dec 2016 (Rm) Change (%) Hyprop s share Investment property (South Africa) 28 561 27 860 2,5 Investments in sub-saharan Africa (excl. South Africa) 4 055 4 482 (9,5) South-Eastern Europe 4 083 2 681 52,3 Held-for-sale 190 427 Other assets (includes cash) 1 361 1 362 Total assets 38 249 36 813 3,9 Total debt 11 510 11 407 0,9 Net asset value per share (R) 102,22 99,78 2,5 36 18
Investment profile South-Eastern Europe R4,1bn Held-for-sale R188m 1% Sub-Saharan Africa (excluding SA) R4,1bn 11% 11% 77% Core South African portfolio R28,6bn 37 Property valuations South African portfolio Category Rentable area (m²) Hyprop share (Rm) % change (from Jun 2017)* Value (R/m 2 ) Cap rate (%) Shopping centres 643 611 27 159 2,5% 46 340 6,3 6,8 Value centres 48 848 1 277 2,3% 26 143 7,8 Stand-alone offices 20 328 308 (1,0%) 15 141 8,3-12,0 Total 712 786 28 744 2,5% 44 066 6,3 12,0 * Excludes properties sold 38 19
Property valuations Sub-Saharan Africa (Excluding SA) 31 Dec 2017 USD million Total value 629 Hyprop share 282 South-Eastern Europe 31 Dec 2017 EUR million Total value 460 Hyprop share 276 Rentable area (m²) Value/ m² Cap rate (%) Rentable area (m²) Value/ m² Cap rate (%) 144 647 USD 4 346 8,0 9,0 138 861 EUR 3 311 6,9 9,6 39 Effective debt management 31 Dec 2017 (Rm) 30 Jun 2017 (Rm) South African debt 3 814 4 114 Bank debt 1 814 1 814 Corporate bonds 2 000 2 300 USD bank debt (Rand equivalent) 4 144 4 391 EUR bank debt (Rand equivalent) 3552 2 673 Cash and cash equivalents (1 094) (1 126) Net borrowings 10 416 10 052 Loan to value 28,5% 28,9% 40 20
Sources of funding R million Bank facilities (SA) 1 814 1 814 16% 16% 31 Dec 2017 30 Jun 2017 % of total debt DCM funding (SA) 2 000 17% 2 300 21% USD debt (Rand equivalent) 4 144 36% 4 391 39% EUR debt (Rand equivalent) 2 673 24% 3 552 31% 0 1000 2000 3000 4000 5000 41 Rand denominated debt South African portfolio Maturity profile 31 Dec 2017 (years) 30 Jun 2017 (years) Fixed rates and swaps 3,7 3,9 Facilities 2,3 2,5 31 Dec 2017 (%) 30 Jun 2017 (%) % of debt fixed 100,9 100,9 Average cost of funding 9,0 8,9 Rand debt Maturity date Status R 300m bond Sept 2017 Repaid R 450m bond Apr 2018 To approach DCM market R 1,2 bn bank debt Jun 2018 In process 42 21
USD debt Sub-Saharan Africa Debt maturity profile 31 Dec 2017 (years) 30 Jun 2017 (years) Fixed rates and swaps 2,8 2,7 Facilities 3,1 2,6 31 Dec 2017 (%) 30 Jun 2017 (%) % of debt fixed 67,1 70,4 Average cost of funding 4,6 4,7 USD debt Maturity date Status USD40m Oct 2017 Re-financed for 3 years USD20m Nov 2018 Re-financed for 3 years USD55m Dec 2017 Re-financed for 3 years USD17m May 2018 In process 43 EUR debt South Eastern Europe 31 Dec 2017 (%) 30 Jun 2017 (%) % of debt fixed - - Average cost of funding 2,1 2,2 EUR debt Maturity date Status EUR134,1m bridge loans Mar 2018 EUR104,5m bridge loan Oct 2018 In process: to be replaced with asset-backed finance To be re-paid (if Hystead lists) or converted to term loan 44 22
OUTLOOK & FOCUS CapeGate (Brackenfell, Cape Town, Western Cape) 45 Outlook & focus South Africa Outlook is more positive but economic turnaround will take time Complete developments Improvement in income in the second half of FY Sub-Saharan Africa (Excl. SA) Continue to focus on operational improvement Consider opportunities to reduce investment exposure South-Eastern Europe Focus on asset management and expansion opportunities Consider potential listing of Hystead Dividend growth 8% to 10% 46 23
QUESTIONS & ANSWERS Skopje City Mall (Skopje, Macedonia) 47 APPENDICES Skopje City Mall (Skopje, Macedonia) 48 24
Company structure South African portfolio Clearwater Mall Somerset Mall Hyde Park Corner SOUTH AFRICA 100% owned Co-owned Held-for-sale Rosebank Mall Woodlands Boulevard CapeGate Atterbury Value Mart Offices Cradock Heights Canal Walk (80%) The Glen (75,15%) Offices: Lakefield 49 Company structure Sub Sahara African portfolio Hyprop Investments Mauritius 37,5% 50% 75% SUB- SAHARAN AFRICA 100% owned AttAfrica (Mauritius) 50% Manda Hill (Zambia) Ikeja City Mall (Nigeria) 47% 45% 75% 75% Accra Mall (Ghana) West Hills Mall (Ghana) Achimota Retail Centre (Ghana) Kumasi City Mall (Ghana) 50 25
Company structure South-Eastern Europe portfolio Hystead Limited (established in the UK) SOUTH- EASTERN EUROPE 60% owned 100% Delta City Belgrade (Serbia) 100% Delta City Podgorica (Montenegro) Skopje City Mall (Macedonia) 100% 100% 90% 90% The Mall Sofia (Bulgaria) City Center One - East, Zagreb (Croatia)* City Center One - West, Zagreb (Croatia)* * Agreement to acquire Feb 2018 51 Credible track record Rbn LTV % 36 32 28 24 20 16 12 8 4 0 Investment property 33,4 33,3 33,3 29,4 31,6 Market cap 28,6 29,0 29,1 26,4 LTV % 20,2 18,7 19,0 19,3 17,4 17,7 26,2% 30,8% 28,9% 12,9 28,5% 26,6% 23,1% 22,9% 23,1% Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Dec 2017 60% 45% 30% 15% 0% 52 26
% Gross rent to turnover 12% % Gross rent to turnover Deterioration Improvement 11% 10% 11% 10,5% 7% 10,2% 7% Portfolio average: +8,5% (2016: +8,3%) 9% 8% 7% 9,3% 3% 8,4% 4% 8,2% 1% 9% 8,1% 7,9% 7% 7,3% 1% 6% 6,2% 5% 4% 3% 2% 1% 0% The Glen Hyde Park Corner Canal Walk Atterbury Value Clearwater Mall Rosebank Mall Woodlands Shopping Centre Mart Boulevard Somerset Mall Cape Gate Mall 53 Trading density 5 000 Per month (R/m²) 4 500 3% Average portfolio growth: +1,4% (2016: +2,9%) 4 000 3 500 3 000 2 500 4 103 0% 3 675 0% 3 509 4% 3 233 5% 8% 2 924 2 912 1% 2 702 1% 6% 2 000 2 369 2 295 1 500 1 000 500 0 Hyde Park Corner Canal Walk Somerset Mall Clearwater Mall Rosebank Mall Cape Gate Mall Woodlands Boulevard Atterbury Value Mart The Glen Shopping Centre 54 27
Rent ratio Rental as % of turnover 10% 8% 7,4% 7,6% 7,7% 8,3% 8,5% 6% 4% 2% 0% Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 55 Top 8 SA properties Canal Walk (80% undivided share) Clearwater Rosebank Mall Woodlands Region Cape Town Region Johannesburg Region Johannesburg Region Pretoria Total rentable area (m²) 158 394 Total rentable area (m²) 87 098 Total rentable area (m²) 61 567 Total rentable area (m²) 71 641 Vacancy levels 0,1% Vacancy levels 1,9% Vacancy levels 0,8% Vacancy levels 0,7% Foot count 10,4 million Foot count 5,3 million Foot count 5,9 million Foot count 4,1 million 56 28
Top 8 SA properties (cont.) Somerset Mall The Glen (75,15% undivided share) Hyde Park Corner CapeGate Region Cape Town Region Johannesburg Region Johannesburg Region Cape Town Total rentable area (m²) 69 021 Total rentable area (m²) 74 769 Total rentable area (m²) 39 003 Total rentable area (m²) 63 767 Vacancy levels 0,1% Vacancy levels 3,7% Vacancy levels 0,8% Vacancy levels 0% Foot count 5,8 million Foot count 5,9 million Foot count 2,2 million Foot count 5,7 million 57 Disclaimer Forward-looking statements This document contains forward-looking statements that, unless otherwise indicated, reflect the group s expectations as at 31 December 2017 Actual results may differ materially from the group s expectations if known and unknown risks or uncertainties affect its business, or if estimates or assumptions prove inaccurate The group cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on any forward-looking statements The group disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available as a result of future events or for any other reason, other than as required by the JSE Listings Requirements 58 29