Investor Presentation July 2018 www.vukile.co.za
DISCLAIMER This document has been prepared and issued by and is the sole responsibility of the management of the Company and its subsidiaries. No information made available in connection with this presentation may be passed on, copied, reproduced, in whole or in part, or otherwise disseminated, directly or indirectly, to any other person. The contents of this presentation are to be kept confidential. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation thereto nor does it constitute a recommendation regarding the securities of the Company. Investors and prospective investors in securities of the Company are required to make their own independent investigation and appraisal of the business and financial condition of the Company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in any pre-listing statement or prospectus published in relation to such an offering. This presentation and any materials distributed in connection with this presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Company’s business, financial condition and results of operations. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect”, “forecast” and words of similar meaning, reflect the directors’ beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts. 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 presentation and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this presentation. No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements. This document speaks as of the date hereof. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, accuracy or fairness. This information is still in draft form and has not been legally verified. The financial information included herein is in draft form and unaudited. The Company, its advisers and each of their respective members, directors, officers and employees are under no obligation to update or keep current the information contained in this presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions expressed in them are subject to change without notice. No representation or warranty, express or implied, is given by the Company, or any of its subsidiary undertakings or affiliates or directors, officers or any other person as to the fairness, accuracy or completeness of the information or opinions contained in this presentation and no liability whatsoever for any loss howsoever arising from any use of this presentation or its contents otherwise arising in connection therewith is accepted by any such person in relation to such information. 2
DEAL HIGHLIGHTS An opportunity to buy a high quality unique portfolio of dominant shopping centres from Unibail- Rodamco-Westfield The proposed off- market acquisition provides meaningful scale to Vukile’s strategy to invest in the Spanish economy through retail property assets with strong fundamentals at an attractive yield − The property portfolio will enhance the diversification of Vukile’s assets across Spain − Acquisition yield of 5.9% is attractive and accretive − Cash on cash yield of 8.1% in first 12 months Portfolio consists of 4 strong and dominant assets, 2 of which are Unibail 4-star centres which speaks to the strong fundamentals supporting the properties Acquisition will lead to a temporary increase in Vukile’s LTV to c.42.5% with active plans to bring gearing down to target level of 35% within the short-term Earnings enhancing and strategically aligned
STRATEGIC DIRECTION Focus on capital allocation and strategic consistency Balance Southern Africa International sheet management Continued focus on defensive retail Focus will be on Spain to drive home Disciplined and conservative financial management with stable sector in line with our high-quality the advantage we have created in LTV target around 35% low risk portfolio Castellana through scale, on-the- ground presence and operational Further investment in our existing Prudent interest rate policy to capabilities portfolio through expansions and hedge at least 75% of debt Despite performing in line with upgrades Foreign exchange hedging policy to expectations, limited potential to Strong operational focus to keep minimise adverse foreign exchange invest further new equity into fluctuations by hedging forward on delivering solid results Atlantic Leaf under current average 75% of foreign dividends by Increased focus on consumer conditions, but rather working with way of forward exchange contracts analytics and alternative income management to unlock value over a 3 year period streams Decided not to look at any other Look to recycle non-core assets into Appetite to invest further in new markets in the short to medium core strategy: South Africa but limited local term but rather to focus on Spain - Timing and price dependent acquisition prospects at the right price - Includes stake in Gemgrow
TRANSACTION OVERVIEW Opportunity to gain further exposure to Spain through acquiring a unique portfolio of dominant assets at an accretive yield Portfolio acquisition value c.€460 million (externally valued at c.€480 million) Portfolio acquisition cost c.€490 million (inclusive of transaction costs) Cash on cash yield 8.1% Local bank funding c.€257 million (no recourse to Vukile) ▪ Vukile: c.€152 million Equity contributors ▪ Co- Investor: €80 million Vukile underwrite €30 million of Vukile’s required equity contribution is underwritten Co-Investor Lee Morze related entity ▪ The size of the portfolio requires that Vukile co-invests with a 3rd party in order fund the Rationale for co-investment transaction arrangements ▪ Co-Investment with Morze serves to deepen alignment with Vukile Mechanisms in place, for Vukile to acquire the equity held by the Co-Investor 36 months post Nature of co-investment acquisition at a pre-determined price that Vukile projects to be accretive 5
DETAILS OF THE CAPITAL RAISE Marketed to key investors followed by accelerated book build Targeted amount R1.55 billion (including R250 million from Encha SPV & R115 million from management) ▪ Book build: Wednesday, 18 July 2018 Indicative timing ▪ Settlement date: Thursday, 26 July 2018 Capital raising mechanism Accelerated book build ▪ To partially fund the acquisition of the portfolio of Spanish properties Use of proceeds ▪ The balance required to fund the acquisition will be drawn from existing debt facilities 6
ACQUISITION OVERVIEW A low-risk dominant portfolio with stable income profile and value add potential Average asset value Dominant Occupancy costs Cash on cash yield of €120.3 Retail portfolio ratio of 13% of 8.1% million in Spain WALE of 8.1 121 119m² 92% of income Vacancy rate of years to expiry of lettable area 1.8% across derived from and 4.4 With average GLA international and the portfolio of 30 280m 2 per national tenants years to Break asset 7
ASSET SUMMARY Evenly weighted shopping centre portfolio EL FARO LOS ARCOS BAHIA SUR VALSUR Location Badajoz Seville Cadiz Valladolid Valuation (€’000) 157 400 112 000 118 800 93 100 GLA (i) 43 423m² 17 906m² 24 789m² 35 220m² Number of stores 110 97 117 94 Opening Year 2013 1992/ 2013, 2016 Refurb 1992/ 2014 Refurb 1998/ 2013 Refurb Catchment 1.3 m in 60’ drive time 1.0m in 30’ drive time 0.8m in 45’ drive time 0.4m in 15’ drive time Occupancy (ii) 99% 99% 96% 98% Average monthly rental (ii) €16.6/m 2 €32.3/m 2 €25.4/m 2 €14.2/m 2 Occupancy cost ratio (iii) 11.3% 16.8% 13.2% 12.1% WAULT (years) to break (ii) 5.0 4.3 3.8 4.1 Annual visitors 6.7m 6.7m 6.9m 5.5m (i) Based on GLA to be acquired as part of the proposed transaction (ii) As at 31 May 2018 (iii) Represents the total occupation costs to the tenant (incl. rental, service charges and marketing contribution) as a percentage o f the tenant’s sales 8
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