Retail update November 2019 GROWTHPOINT RETAIL UPDATE Presented by Neil Schloss Head of Asset Management Retail 28/29 November 2019
INDEX 1. RETAIL OVERVIEW AND THEMES/ TRENDS 2. GROWTHPOINT TRADING DENSITY GROWTH VS BENCHMARK 3. TRADING PERFORMANCE 4. RETAIL PORTOLIO KPI’S 5. ARREARS 6. OPERATING COSTS 7. IMPACT OF COMPETITION 8. PROJECTS / DEVELOPMENTS 9. DISPOSALS 10. EDCON EXPOSURE
RETAIL OVERVIEW
RETAIL OVERVIEW GLA 1,381,997m² No. Retail Properties 49 Vacancy 3.9% Value R29.8bn
TOP 10 PROPERTIES TOP 10 TENANTS Top 10 Properties by Value Fair Value GLA Top 10 Tenants by gross rental GLA Rm m² m² Brooklyn Mall and Design Square (75%), Brooklyn, Pretoria 2 125 56 334 The Foschini Group Ltd 58 922 Festival Mall, Kempton Park, Johannesburg 1 754 82 754 Edcon Holdings Ltd 104 377 N1 City Mall (100%), Goodwood, Cape Town 1 741 63 397 Pepkor Holdings Ltd 72 001 Waterfall Mall, Rustenburg 1 628 49 883 Shoprite Holdings Ltd 135 297 Greenacres, Greenacres, Port Elizabeth 1 485 49 530 Pick n Pay Stores Ltd 112 897 Vaal Mall (66.6%), Vanderbijlpark, Johannesburg 1 386 44 029 Mr Price Group Ltd 56 647 Lakeside Mall, Benoni 1 346 65 355 Truworths International Ltd 32 070 La Lucia Mall, La Lucia, Durban 1 304 37 287 Woolworths Holdings Ltd 87 253 Kolonnade (50%), Montana Park, Pretoria 1 173 38 284 Massmart Holdings Ltd 65 715 The Constantia Village, Constantia, Cape Town 1 135 20 421 Clicks Group Ltd 27 344 Sub Total 15 077 507 274 Sub Total 752 523 Balance of the sector 14 768 874 723 Balance of the sector 576 242 Total for the sector 29 845 1 381 997 Total for the sector (excluding vacancies) 1 328 765
THEMES / TRENDS 7. Runaway administrative costs 1. Weak Consumer 2. Low like for like 8. Decision making slow turnover growth 3. Historic lease 9. Changing tenant mixes /alternative escalations outpacing uses turnover growth 4. Aggressive lease/ 10. Online renewal negotiations 5. Cost containment 11. Sustainable initiatives • Reversions Downsizing • • Consolidation of stores 12. Technology 6. Op Costs growing faster than rental income 13. Exclusivities
GROWTHPOINT TRADING DENSITY GROWTH VS BENCHMARK
GROWTHPOINT TRADING DENSITY GROWTH VS BENCHMARK Hyprop 0.6% June 2019 Attacq June 2019 6.8% May 2019 Liberty two°Degrees 3.3% Redefine 3.0% August 2019 Growthpoint 1.9% September 2019 Bellows College 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Trading Performance
TRADING PERFORMANCE 12 MONTH ROLLING TRADING DENSITY BY CENTRE CLASSIFICATION – SEPTEMBER 2019 4,000 3,500 3,602 3,467 3,000 2,733 2,500 2,616 2,537 2,497 2,442 2,000 1,500 1,000 500 - Bellows College Total Large Regional Small Regional Community Growthpoint MSCI
TRADING PERFORMANCE 12 MONTH ROLLING TRADING DENSITY BY LSM – SEPTEMBER 2019 4,000 1.9% ↑ 3,500 3,434 3,000 1.9% ↑ 1.0% ↑ 2,500 2,616 2.1% ↑ 2,453 Constantia Village Gardens Centre The Bridge 2,241 Brooklyn Mall Fourways Crossing 2,000 Kolonnade La Lucia Mall Vaal Mall Walmer Park Woodmead City Mall Key West Watercrest Mall N1 City Mall Village Square 1,500 Northgate Festival Mall Greenacres Lakeside Mall Golden Acre 14 th Avenue Helderberg Hyper 1,000 Hillcrest Corner Howard Centre Bayside Mall Paarl Mall River Square 500 Waterfall Mall Longbeach Mall Alberton City City View East Rand Value 0 Bellows College Total Portfolio Lower Income Middle Income Upper Income
TRADING DENSITY GROWTH ROLLING 12 MONTHS TO SEPTEMBER 2019 – LARGE REGIONAL 8.0 7.1 6.0 3.8 4.0 3.2 Percentage % 3.1 2.0 1.4 0.7 0.0 -0.1 -0.7 -1.0 -2.0 -2.4 -2.8 -4.0 BROOKLYN MALL FOURWAYS KOLONNADE VAAL MALL WOODMEAD FESTIVAL MALL KEY WEST N1 CITY MALL NORTHGATE GREENACRES LAKESIDE MALL CROSSING Bellows College
TRADING DENSITY GROWTH ROLLING 12 MONTHS TO SEPTEMBER 2019 – SMALL REGIONAL 5.0 4.0 3.9 4.0 3.8 3.0 2.6 2.0 2.0 Percentage % 1.0 0.6 0.0 -0.2 -0.7 -1.0 -0.9 -2.0 -2.2 -3.0 -3.1 -4.0 Bellows College LA LUCIA MALL WALMER PARK WATERCREST BAYSIDE MALL PAARL MALL RIVER SQUARE WATERFALL MALL LONGBEACH MALL ALBERTON CITY CITY VIEW GOLDEN ACRE MALL
TRADING DENSITY GROWTH ROLLING 12 MONTHS TO SEPTEMBER 2019 – COMMUNITY CENTRES 6.0 5.5 5.0 4.0 Percentage % 3.1 2.9 3.0 2.5 2.0 1.2 1.0 0.0 0.0 -0.1 Bellows College -1.0 CONSTANTIA VILLAGE GARDENS CENTRE HILLCREST CORNER HOWARD CENTRE CITY MALL THE BRIDGE VILLAGE SQUARE
RETAIL PORTFOLIO KPI’S Bellows College
RETAIL PORTFOLIO KPI REVIEW WEIGHTED AVERAGE VACANCY AVERAGE IN FORCE ESCALATION LEASE PERIOD % % Years 4.5 7.5 4.0 7.4 3.9 7.37 4.8 3.5 3.6 3.6 7.3 4.4 4.3 3.3 7.26 4.1 3.0 7.2 7.2 3.5 2.5 2.6 7.1 2.0 7.03 7 1.5 6.93 6.9 1.0 6.8 0.5 0.0 6.7 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19
RETAIL PORTFOLIO KPI REVIEW RENEWAL SUCCESS RATE WEIGHTED AVERAGE FUTURE ESCALATIONS WEIGHTED AVERAGE RENEWAL GROWTH % % ON RENEWAL % 90.0 8 89.3 7.73 88.0 6 87.0 5.87 5.68 86.0 7.36 7.27 4 7.09 84.0 3.18 2 82.7 82.0 81.8 0 FY15 FY16 FY17 FY18 FY19 6.54 80.9 80.0 -3.12 -2 78.0 -5.31 -4 76.0 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 -6
ARREARS
ARREARS 20% 80,000 74,623 18% 70,000 66,722 17.17% 16% Arrears as % of Total Collectables 15.72% 60,000 Total Arrears and Provision for Arrears (R'000) 55,377 14% 13.42% 50,000 12% 44,225 42,623 41,461 38,497 10.91% 10% 37,349 37,331 37,267 40,000 10.33% 35,240 10.20% 34,455 9.15% 30,822 9.06% 8.98% 8.84% 8% 8.52% 30,000 8.14% 6.90% 6% 20,000 4% 11,987 11,600 11,387 10,626 10,440 10,427 10,043 9,757 8,780 8,693 8,623 8,489 8,463 10,000 2% 0% - Sep'18 Oct'18 Nov'18 Dec'18 Jan'19 Feb'19 Mar'19 Apr'19 May'19 Jun'19 Jul'19 Aug'19 Sept'19 Arrears as % of Total Collectables Total Arrears (R'000) Provision for Bad Debt (R'000)
OPERATING COSTS Bellows College 20
TOTAL MUNICIPAL CHARGES CONTRIBUTED 62% OF TOTAL OPERATING COSTS Bellows College Source: SAPOA, MSCI
MUNICIPAL CHARGES NOW A LARGER SLICE OF A LARGER PIE Bellows College Source: SAPOA, MSCI
RATES & TAXES THE FASTEST GROWING COST SINCE 2009 Bellows College Source: SAPOA, MSCI
IMPACT OF COMPETITION
IMPACT OF COMPETITION 1. Bayside Mall Competition – Table Bay Mall – Opened September 2017 ▪ ▪ Full Competition in Primary Catchment Area 20% 15% Opened Sep 2017 10% 5% 0% -5% -10% -15% -20% -25% -30% Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Month-on-Month Trading Density Growth Month-on-Month Growth in Footcount
PROJECTS / DEVELOPMENTS
PROJECTS / DEVELOPMENTS Development/ Redevelopment Tenancy Estimated Capex Approval Completion Date (Rmil) Vaal Mall Extension 12/2016 294.00 COMPLETED PAST Greenacres Extension 07/2017 290.00 4 YEARS Fourways Crossing Refurbishment and Extension 06/2017 57.50 Downsizing of the 22 000m 2 Pick n Pay Northgate (50%) Hypermarket to accommodate a new flagship 10/2017 43.5 Pick n Pay Development of outdoor piazza accommodating Kolonnade (50%) 12/2017 16.00 casual dining River Square Refurbishment and relocation of Tenants 12/2018 65.00 Festival Mall Refurbishment 04/2019 58.15 Lakeside Mall Refurbishment 04/2019 55.00 Walmer Park Redevelopment 06/2019 148.64 APPROVED La Lucia Refurbishment 11/2019 65.5 Longbeach Mall Refurbishment 10/2019 34.00 Middestad Mall Redevelopment of upper level 03/2020 23.7 Lakeside Mall Cinema Redevelopment 06/2020 74.00 Waterfall Mall Dischem Development 04/2020 72.00 PLANNED Paarl Mall Extension Longbeach Mall Extension
DISPOSALS
DISPOSALS DISPOSALS – PAST 4 YEARS SELLING PRICE No BUILDING AREA DATE OF DISPOSAL GLA m² Rm 1 Picbel Parkade KZN 02/03/2017 13,818 271.3 2 Vaal Mall – 11.19% Vanderbijl Park 11/04/2017 7,387 209.3 3 Grayston Shopping Centre Sandton, JHB 22/05/2017 138.0 4,346 4 OK Bazaars Empangeni Empangeni, KZN 18/07/2017 172.5 13,660 5 Jet Bloemfontein Bloemfontein 26/09/2017 38.3 5,516 6 Hatfield Plaza Hatfield, PTA 19/03/2018 19,332 285.3 7 Hatfield Mall Hatfield, PTA 19/03/2018 61.4 6,332 8 Campus Building Hatfield, PTA 19/03/2018 3,179 39.0 9 Standard Plaza Hatfield, PTA 19/03/2018 2,733 32.0 Norkem Mall 20/12/2018 109.5 10 Kempton Park, JHB 9,591 Longbeach vacant land 04/10/2018 8.5 11 Noordhoek, WC Sunward Park Shopping Centre 19/07/2019 147.0 12 Boksburg, JHB 15,015 Stanger 08/10/2019 16.8 13 KZN 3,045
EDCON EXPOSURE
EDCON EXPOSURE – BY BRAND EXPOSURE AS AT 30 JUNE 2019 BRAND GLA (m²) Accessorize 18 Active 1,511 Boardmans 1,266 CNA 7,759 Edgars 72,436 Jet 14,478 Jetmart 5,837 MAC 66 Red Square 645 River Island 361 104,377 30 June 2018 116,636
EDCON EXPOSURE – EDGARS BY SIZE EXPOSURE AS AT 30 JUNE 2019 EDGARS GLA (m²) NUMBER OF STORES < 3,000m² 14,212 8 3,000m² - 5,000m² 30,328 9 > 5,000m² 27,896 4 72,436 21 BY GLA NUMBER OF STORES
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