hyprop investments limited · » maintaining overall strong liquidity profile with ample headroom...

FINANCIAL INSTITUTIONS

CREDIT OPINION4 May 2018

Update

RATINGS

Hyprop Investments LimitedDomicile South Africa

Long Term Rating Baa3

Type LT Issuer Rating - DomCurr

Outlook Negative

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Lahlou Meksaoui [email protected]

Dion Bate +971.4.237.9504VP-Senior [email protected]

Mara Tomasetto +971.4.237.9509Associate [email protected]

David G. Staples +971.4.237.9562MD-Corporate [email protected]

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Hyprop Investments LimitedUpdate of Key Credit Factors Following Conclusion ofSovereign Review

SummaryOn 27 March 2018, the outlook on Hyprop Investments Limited's (Hyprop) Baa3/P-3 globalscale issuer ratings was changed to negative after being placed under review for downgradeon 29 November 2017, following the rating action taken on the Government of South Africa(Baa3 stable) on 23 March 2018. As a result we no longer see Hyprop as being constrained bythe government of South Africa credit rating.

Hyprop's Baa3/Aa1.za long-term issuer ratings are supported by the high quality and well-positioned retail portfolio in South Africa, which benefits from active management and lowvacancies (1.6% as of 31 December 2017), producing solid, recurring rental income. Theratings also incorporate fixed-charge cover of 3.7x (according to our standard definitions andadjustments, as of LTM to 31 December 2017) and factor in Hyprop's conservative approachto development risk.

At the same time, the ratings assigned also factor: (1) the moderate size of the portfolio andsmaller scale of operations relative to local peers, as measured by total assets (ZAR40.6bn asof 31 December 2017); (2) the high exposure to the retail sector, as well as high geographicconcentration in the Gauteng province; (3) the small but growing exposure to retailproperties across the rest of Africa and Central and Eastern Europe (currently Ghana (B3stable), Zambia (B3 stable), Nigeria (B2 stable), Serbia (Ba3 stable), Montenegro (B1 stable),Macedonia (not rated), Bulgaria (Baa2 stable) and Croatia (Ba2 stable)), which improvesdiversification but increases Hyprop's operational risk and weakens its overall credit profile;(4) high percentage of secured debt in its capital structure and high leverage, as measured byadjusted total debt / gross assets of 35%. All figures are as of the last twelve months to 31December 2017 and adjusted per Moody's standard definitions and adjustments.

Exhibit 1

Leverage ratio is weakly positioned within rating guidance

24%

27%

23%

36%

33%

35%

3.3x 3.3x

3.6x

3.4x

3.9x

3.7x

2.8x

3.0x

3.2x

3.4x

3.6x

3.8x

4.0x

0%

5%

10%

15%

20%

25%

30%

35%

40%

FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 LTM 31-Dec-2017

Debt / Gross Assets (LHS) EBITDA / Fixed Charges YTD (RHS)

Source: Moody's Financial Metrics

https://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1101475

https://www.moodys.com/research/Moodys-confirms-South-Africas-Baa3-rating-and-changes-the-outlook--PR_381164

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Credit strengths

» High-quality retail portfolio in prime locations with good anchor tenants

» Stable cash generation supported by low vacancy rates and a moderate lease profile

Credit challenges

» Smaller scale and greater income concentration risk than similarly rated real estate peers

» Low growth prospects and weakening consumer environment in South Africa to pressure retailers

» Expansion into the rest of Africa and Eastern Europe offers growth and diversification opportunities but increases business risk

» Complex holding structure as it relates to Hyprop's Investments in the rest of Africa

Rating outlookThe negative outlook on Hyprop reflects the company's financial approach of debt funded acquisitions across Eastern Europe and thegrowing property exposure and cash flows from weaker sovereign markets. Following the proposed purchase of two shopping centersin Croatia during February 2018 through Hystead Limited (Moody's fully consolidates its 60% joint venture in Hystead Limited), weexpect adjusted debt / gross assets to weaken beyond our rating guidance of 35% for the Baa3 rating.

We could stabilize the outlook if we see leverage consistent with our rating guidance. We note Hyprop's intention to list HysteadLimited during 2018, which is expected to release capital and could reduce Hyprop's debt levels.

Factors that could lead to an upgradeWe do not expect any further upward rating action as Hyprop's rating is likely to be constrained at the same level as South Africa'sgovernment bond rating given that the bulk of Hyprop's net income and property exposure are derived in South Africa.

Any positive rating action would further depend on:

» The company continuing to grow scale with stable operating margins and broadening its geographic footprint into jurisdictions withstrong credit profiles;

» Following prudent financial and operating policies;

» Maintaining overall strong liquidity profile with ample headroom on its covenants;

» Maintaining leverage - as measured by adjusted total debt/gross assets - below 30% on a sustainable basis.

Factors that could Lead to a downgradeHyprop's rating would come under downward pressure in the event that any of the following occurs:

» South Africa's government bond rating is downgraded from Baa3;

» Hyprop's failure to maintain an adequate liquidity profile;

» Debt-financed acquisition or change in capital structure, such that leverage in terms of adjusted total debt/gross assets is trendingabove 35% or fixed-charge coverage trends below 3.0x on a sustainable basis;

» Unexpected operating difficulties that negatively affect operational performance or cash flows.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 4 May 2018 Hyprop Investments Limited: Update of Key Credit Factors Following Conclusion of Sovereign Review


Key indicators

Exhibit 2

KEY INDICATORS [1]

Hyprop Investments Limited

6/30/2014 6/30/2015 6/30/2016 6/30/2017 12/31/2017(L)

FFO Payout 101.0% 90.6% 100.4% 84.8% 87.0%

Amount of Unencumbered Assets 30.7% 26.1% 34.9% 35.6% 27.0%

Debt / Gross Assets 26.8% 23.2% 35.8% 33.4% 35.2%

Net Debt / EBITDA 4.4x 3.5x 5.5x 4.7x 5.2x

Secured Debt / Gross Assets 18.2% 15.7% 30.3% 26.4% 30.2%

Gross Assets (USD Million) 2,527 2,378 2,552 2,966 3,278

Development Pipeline 8.1% 0.5% 0.2% 0.6% 0.6%

EBITDA Margin (YTD) 81.9% 89.0% 92.0% 92.0% 93.3%

EBITDA Margin Volatility 4.0% 4.1% 4.7% 4.7% 4.3%

EBITDA / Fixed Charges (YTD) [2] 3.3x 3.6x 3.4x 3.9x 3.7x

Joint Venture Exposure (YTD) 0.0% 5.2% 6.9% 6.0% 6.4%

[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] Fixed Charges includes capitalized interests explained in Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporationsrevised December 2010.Source: Moody’s Financial Metrics™

ProfileHyprop is one of South Africa's largest Johannesburg Stock Exchange listed specialist shopping centre Real Estate Investment Trusts,and one of South Africa's oldest listed property companies (since 1988). Its activities include direct investments in predominately retailproperty assets in South Africa, and a growing exposure to retail properties in the rest of the Sub-Saharan Africa and more recently inCentral and Eastern Europe. Hyprop's head office is in Johannesburg, South Africa.

Detailed credit considerationsLargest listed retail focused REIT in South Africa in prime locations with good anchor tenantsRetail properties account for 99% of Hyprop's ZAR28.7 billion South African investment property assets, which we view as the mostresilient property sector in South Africa. Management's strategy is to invest in sizable shopping centres in the major metropolitan areas,currently including Johannesburg, Cape Town, Pretoria and in identified countries in Africa, being Ghana, Nigeria and Zambia as wellas in Central and Eastern Europe, including Serbia, Montenegro, Macedonia, Bulgaria, Croatia with a primary focus on high qualityretail assets and diversifying income. We view Hyprop's asset quality as excellent, supported by the number of prime quality shoppingcentres located in key retail nodes.

Exhibit 3

Portfolio growth has been driven by African and European expansion strategy

23.0

26.9 28.9

37.4 38.9

40.6

7%

17%

7%

29%

4% 4%

0 0%

5%

10%

15%

20%

25%

30%

35%

0

5

10

15

20

25

30

35

40

45

FYE 2013 FYE 2014 FYE 2015 FYE 2016 FYE 2017 LTM 31-Dec-2017

Gross Assets (ZAR billion, RHS) % Portfolio Growth (LHS)

Source: Moody's Investor Services



Hyprop's investment in shopping centres is focused on those that are dominant in their catchment area, where the vast majorityof tenants' revenues are generated from higher LSM (living standards measure) customers, making the centres more resilient todownturns in consumer spending and supportive of stable, long-term occupancy rates, rental income growth and property values. Thesuccess of this strategy is demonstrated by the maintenance of a high overall occupancy rate over the past few years, 98.4% as of 31December 2017 across the South African portfolio, despite general economic weakness in South Africa.

Hyprop's South African property portfolio is independently valued on a semi-annual basis, which is more frequent compared to itslocal peer group. The valuations are performed using the discounted cash flow method and was last carried out in December 2017. Theportfolio value increased by 2.5% on a like-for-like basis from 30 June 2017, given low vacancies and above inflationary rental growth(South African consumer price inflation for February 2018 was 3.8% year-on-year).

We consider Hyprop as having a well diversified tenant mix with a high proportion of key anchor tenants. At 31 December 2017, Hyprophad approximately 1725 tenants in South Africa, with the top 10 tenants contributing approximately 36.7% of annual rental income(c.49.7% of GLA). Hyprop has a large amount of high-quality tenants, predominantly large national and blue chip tenants.

Exhibit 4

Retail malls supported by key anchor tenants and a well-diversified tenant mix by GLA

A Grade Tenants68%

B Grade Tenants21%

C Grade Tenants11%

Tenant classifications are as follows: “A” quality - large national tenants, large listed tenants, government and major franchisees; “B” quality - national tenants, smaller listed tenants,franchisees and medium to large sized professional firms; and “C” quality - smaller tenantsSource: Company information

We expect Hyprop to continue to actively engage with all its tenants particularly given the weak macro-economic environment andlow growth prospects in South Africa, and take comfort that given the properties' prime locations, Hyprop is best positioned to benefitfrom higher demand for prime retail space from both local and international brands. Contractual escalation in rents is at 7.8% peryear while rental growth on new leases slowed down to 4.1% reflecting difficult economic conditions and the pressure on retailers andconsumers.

Scale and concentration risk constrain the ratingHyprop's scale, as measured by the number and value of its property assets, is relatively small compared with similarly rated peersboth in South Africa and globally. Hyprop's diversification has improved but is limited in terms of (1) the relatively small number ofproperties under management (11 in South Africa and 6 in Eastern Europe); (2) predominant focus on retail property sector (97% ofrentable area); and (3) geographic concentration in two major metropolitan areas within South Africa, namely Gauteng (59% of SouthAfrican GLA) and Cape Town (41% of South African GLA).

Hyprop's exposure into Sub-Saharan African (excluding South Africa) through its investment in AttAfrica and Manda Hill Mauritius andmore recently into Central and Eastern Europe is viewed positively from a diversification and scale point of view, representing around22% (ZAR8.2 billion) of Hyprop's total portfolio value as of 31 December 2017. Hyprop is targeting further investments in emergingmarket Europe over the next 5 years which could increase its exposure outside of South Africa to between 20% to 30% of the totalproperty portfolio.



Cash generation sustained by high occupancy rates and moderate lease expiry profileThe stability of Hyprop's cash flow and earnings is credit positive and is due in large part to Hyprop's high occupancy rates in SouthAfrica, currently 98.4%.

Exhibit 5

Low vacancy rates in South Africa support stable cash flows

2.5%

2.7%

2.4%

2.0%

1.1%

2.4%

1.6%

1.0%

1.5%

2.0%

2.5%

3.0%

FYE2012 FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 LTM 31-Dec-2017

vacancy r

ate

s (

%)

Source: Company results presentation

In addition, rental income is underpinned by medium to long-term tenancy agreements, with a weighted average lease expiry (WALE)across the portfolio of approximately 4.0 years. In South Africa, commercial property leases contain annual rent escalation clauses,which in Hyprop's portfolio is currently around 7.8%, providing rental growth and inflation protection.

Hyprop's EBITDA margin of 94.1% (according to our standard definitions and adjustments) is relatively high compared with that ofglobal peers. We anticipate Hyprop to continue to maintain its high EBITDA margins given the defensive nature of its portfolio andability to pass on above average rental increases to renewing and new tenants.

We also recognise Hyprop's conservative approach to new developments, focusing on expanding and rejuvenating the existingportfolio. A moderately sized development and/or redevelopment pipeline can help grow the portfolio and improve quality, whichare credit positives. However, this needs to be managed in the context of exposing Hyprop to potential volatile cash flows and/ormistiming the market demand. Hyprop's development pipeline equates to ZAR248 million ($19 million), representing 0.6% of grossassets, which includes committed capital expenditure for development.

Limited headroom in credit metrics following recent acquisitionsHyprop's leverage, as measured by adjusted total debt/gross assets increased to 35% as of 31 December 2017 (33% FYE2017), whileadjusted net debt/EBITDA increased to 5.2x (4.7x FYE2017) as a result of debt repayment and improving EBITDA. Furthermore,following the proposed purchase of two shopping centers in Croatia during February 2018 through Hystead Limited (Moody's fullyconsolidates its 60% joint venture in Hystead Limited), we expect adjusted debt / gross assets to weaken beyond our rating guidanceof 35% for the Baa3 rating. As a result, we consider Hyprop to have limited flexibility to pursue debt funded acquisitions and/orwithstand potential moderate declines in property values. The board has determined that reported leverage, as defined by net debt/property assets (21% as of 31 December 2017), can be increased to levels between 30%-40%, mainly through corporate activity anddevelopments, but will limit increasing leverage further given the current marco-economic environment.

Recent debt funded acquisitions include the 60% interest in the Serbian mall, Delta City Belgrade and Montenegrin mall, Delta CityPodgorica, for EUR202 million, the 60% interest in Skopje City Mall in Macedonia, and a EUR92 million 100% interest in a shoppingcentre in Sofia for EUR156m.



Exhibit 6

Limited headroom within rating guidance following debt funded acquisitions

0%

5%

10%

15%

20%

25%

30%

35%

40%

FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 LTM 31-Dec-2017

Debt/Gross Assets (LHS) Upward Rating Guidance Downward Rating Guidance

Source: Moody's Financial Metrics

South African property companies have traditionally financed their assets with secured bank loans. Hyprop has followed the sameapproach. However, on a reported basis, since the rating was assigned, Hyprop has reduced its secured debt exposure from 100% to73%. Conversion of existing secured bank debt to unsecured debt capital market funding will also go some way towards reducing theencumbered assets ratio.

Expansion into the rest of Africa and Central & Eastern Europe increases geographic diversification but exposes thecompany to higher riskHyprop has grown its presence in Sub-Saharan African (excluding South Africa) through its 37.5% interest in AttAfrica (four retail mallsin Ghana), as well as through its effective 68.8% interest (direct interest of 50%) in Manda Hill Mauritius (Zambia), and a 75% stakein Ikeja City Mall (Nigeria). This broadens Hyprop's geographic footprint outside of South Africa into Ghana, Nigeria and Zambia andis projected to be yield enhancing. Hyprop has since November 2012 invested ZAR4.1 billion ($300 million) which equates to around11% of the current total portfolio value, which is not material to have a notable effect on the overall performance in the next 12 to18 months. In addition, Hyprop’s more recent retail property acquisitions in Serbia, Montenegro, Macedonia and Bulgaria furtherdiversifies its retail portfolio outside of South Africa, and represents about 11% of Hyprop’s total property portfolio as of December2017. Hyprop's investment strategy is to partner with local investors which spreads the investment risk and provides local expertise inthe respective markets.

Exhibit 7

Geographic diversification by property value (outer circle) and distributable income (inner circle) as reported

91%

3%6%

78%

11%

11%

South Africa Sub-Saharan Africa (excl SA) Central & Eastern Europe

Source: Company interim results presentation



Although Hyprop is improving its geographic diversification and scale, this strategy must be viewed in the context of increasingexposure to markets which have higher risk profiles compared to South Africa (Baa3 stable), particularly Ghana (B3 stable), Nigeria(B2 stable), Zambia (B3 stable), Serbia (Ba3 stable), Montenegro (B1 stable), Macedonia (not rated), Bulgaria (Baa2) and Croatia (Ba2stable). We are aware of the unique risks and challenges inherent in investing into these markets, but we also recognise a numberof opportunities that they offer, most notably higher economic growth rates. We view Hyprop's expansionary approach to investingin emerging markets as increasing its business risk, however this is partially mitigated through joint ventures and partnerships withexperienced management companies, which spreads the risk of operating in these markets. We also note that Hyprop targets highquality retail malls, large urban areas where there is sufficient infrastructure and population densities to support its malls.

As Hyprop pursues its growth strategy into other markets, especially into countries with weaker credit profiles, we will review how thisimpacts Hyprop’s overall credit profile and ratings.

Liquidity analysisHyprop's has ZAR2.0 billion debt maturing in the next two years, including its Nedbank RCF, RMB term loan and capital market debt,which we expect will be refinanced in the next few months. Hyprop’s liquidity is supported by (1) available committed liquidity facilitiesof ZAR325 million ($25 million); and (2) stable internal cash flow generation as of 31 December 2017. Hyprop's current credit facilitiesare provided by a variety of domestic banks and are subject to covenants and material adverse change clauses. At present, there is goodheadroom in the covenants and Hyprop has in the past successfully managed to renegotiate its bank facilities.

Structural considerationsHyprop through its 100% holding in Hyprop Investments Mauritius has a 37.5% equity stake in AttAfrica (a joint venture betweenHyprop, Attacq Limited and Atterbury Group) and a 50% equity holding in Manda Hill Mauritius (a further 18.75% is held throughAttAfrica). As a result Hyprop's consolidated financials reflect Hyprop Investments Mauritius which includes the equity value of itsinvestment and ZAR3.0 billion of shareholder loans to fund development activity of its investments in Sub-Saharan African (excludingSouth Africa), as well as Manda Hill. Hyprop's consolidated financials thus ignores Hyprop's effective share of any in-country debtand the current property asset values (with exception of Ikeja City Mall in Lagos, Nigeria where 75% of the in country debt ($56.5million) is consolidated into Hyprop's balance sheet. We estimate if Hyprop's share of in-country debt and current property values wereconsolidated into Hyprop's operation leverage, as measured by debt to gross assets, would have a marginal impact on leverage. AsHyprop's proportion of properties outside of South Africa increases to a more meaningful percentage, we may consider consolidatingHyprop's effective stakes for the basis of our credit assessment.

Regarding Hyprop's eastern European property investments in which it owns a 60% stake in 6 malls via Hystead Limited, we notethat IFRS accounts for it as an investment in a financial asset. As a result, the respective debt and property values are not reflected inHyprop's consolidated balance sheet and credit metrics. In our analysis, we have fully consolidated these investments and respectivedebt which has lead to higher overall gross debt to gross assets.

Rating methodology and scorecard factorsThe principal methodology used in rating Hyprop was our “Approach for REITs and Other Commercial Property Firms”, published 30July 2010. Based on the most recent published accounts as of 31 December 2017, Hyprop's overall performance measurements fromthe rating grid indicate a rating outcome of Baa3, which is in line with Moody's assigned issuer rating. Hyprop's relatively small scalecombined with income concentration risk, increasing exposure to riskier markets is not fully factored in the rating methodology grid.



Exhibit 8

Rating Factors

Hyprop Investments Limited

REITs and Other Commercial Property Firms Industry Grid [1][2] Current

LTM 12/31/2017

Moody's 12-18

Month Forward

View

As of 3/27/2018 [3]

Factor 1: Liquidity and Funding (24.5%) Measure Score Measure Score

a) Liquidity Coverage Ba Ba Ba Ba

b) Debt Maturities B B B B

c) FFO Payout 87.0% Baa 86% - 88% Baa

d) Amount of Unencumbered Assets 27.0% B 32% - 34% B

Factor 2: Leverage and Capital Structure (30.5%)

a) Debt / Gross Assets 35.2% Baa 35% - 40% Baa

b) Net Debt / EBITDA 5.2x Baa 3x - 5x Baa

c) Secured Debt / Gross Assets 30.2% B 25% - 30% Ba

d) Access to Capital Ba Ba Ba Ba

Factor 3: Market Position and Asset Quality (22%)

a) Franchise / Brand Name Baa Baa Baa Baa

b) Gross Assets(USD Million) $3,278.4 Baa $3100 - $3300 Baa

c) Diversity: Location / Tenant / Industry / Economic B B B B

d) Development Pipeline 0.6% Aa 0.5% - 1% Aa

e) Asset Quality A A A A

Factor 4: Cash Flows and Earnings (23%)

a) EBITDA Margin (YTD) 75.8% Aa 90% - 95% Aa

b) EBITDA Margin Volatility 5.1% Baa 3% - 6% Baa

c) EBITDA / Fixed Charges (YTD) [4] 3.7x A 3x - 4x A

d) Joint Venture Exposure (YTD) 5.3% A 5% - 6% A

Rating:

a) Indicated Rating from Grid Baa3 Baa2

b) Actual Rating Assigned Baa3

[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] As of 12/31/2017(L)[3] This represents Moody's forward view; not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures.[4] Fixed Charges includes capitalized interests explained in Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporationsrevised December 2010.Source: Moody’s Financial Metrics™



Appendix

Exhibit 9

Peer comparison table

(in USD million)

FYE

Jun-16

FYE

Jun-17

LTM

Dec-17

FYE

Jun-16

FYE

Jun-17

LTM

Dec-17

FYE

Aug-16

FYE

Aug-17

LTM

Aug-17

FYE

Jun-16

FYE

Jun-17

LTM

Dec-17

Real Estate Gross Assets $2,552 $2,966 $3,278 $3,764 $4,723 $5,642 $5,417 $7,031 $7,031 $8,110 $9,684 $10,678

Total Debt $914 $990 $1,153 $865 $1,133 $1,393 $1,925 $2,773 $2,773 $2,666 $3,264 $3,541

EBITDA Margin (YTD) 92.0% 92.0% 93.3% 164.5% 174.5% 187.3% 105.3% 113.9% 113.9% 83.1% 80.7% 81.2%

EBITDA Margin Vol 4.7% 4.7% 4.3% 19.1% 16.9% 9.8% 8.5% 11.8% 11.8% 3.8% 3.3% 2.1%

EBITDA / Fix. Charges (YTD) 3.4x 3.9x 3.7x 3.2x 3.1x 3.3x 2.4x 2.4x 2.4x 3.2x 3.3x 3.4x

FFO Payout 100.4% 84.8% 87.0% 128.5% 146.0% 54.0% 109.2% 118.8% 118.8% 85.4% 123.9% 132.3%

Debt / RE Gross Assets 35.8% 33.4% 35.2% 23.0% 24.0% 24.7% 35.5% 39.4% 39.4% 32.9% 33.7% 33.2%

Net Debt / EBITDA 5.5x 4.7x 5.2x 4.6x 3.4x 3.6x 5.1x 5.4x 5.4x 4.4x 4.6x 4.6x

Sec. Debt / RE Gross Assets 30.3% 26.4% 30.2% 18.9% 20.4% 19.5% 20.5% 24.0% 24.0% 25.8% 23.6% 22.1%

Hyprop Investments Limited Fortress REIT Limited Redefine Properties Limited Growthpoint Properties Limited

Baa3 Negative Baa3 Stable Baa3 Stable Baa3 Stable

All figures and ratios are calculated using Moody's estimates and standard adjustments.FYE = financial year-end; LTM = last twelve months.Source: Moody's Financial Metrics™

Exhibit 10

Moody's-adjusted debt breakdown

(in ZAR thousand)

FYE

Jun-13

FYE

Jun-14

FYE

Jun-15

FYE

Jun-16

FYE

Jun-17

LTM Ending

Dec-17

As Reported Debt 11,206,983 12,917,972 6,691,909 9,926,088 8,900,638 8,344,351

Operating Leases 50,944 6,920 6,136 12,372 9,652 9,652

Hybrid Securities -5,822,497 -5,719,119 0 0 0 0

Non-Standard Adjustments 0 0 0 3,444,476 4,062,355 5,920,000

Moody's-Adjusted Debt 5,435,430 7,205,773 6,698,045 13,382,936 12,972,645 14,274,003

All figures and ratios are calculated using Moody's estimates and standard adjustments.Source: Moody's Financial Metrics™

Exhibit 11

Moody's-adjusted EBITDA breakdown

(in ZAR thousand)

FYE

Jun-13

FYE

Jun-14

FYE

Jun-15

FYE

Jun-16

FYE

Jun-17

LTM Ending

Dec-17

As Reported EBITDA 2,234,999 3,609,828 4,331,924 3,532,763 3,436,814 3,293,075

Operating Leases 12,736 1,730 1,534 3,093 2,413 2,413

Unusual -1,497,789 -1,974,368 -2,480,901 -1,318,850 -1,143,406 -988,053

Non-Standard Adjustments -4,262 -462 16,795 162,478 216,381 216,477

Moody's-Adjusted EBITDA 745,684 1,636,728 1,869,352 2,379,484 2,512,202 2,523,912

All figures and ratios are calculated using Moody's estimates and standard adjustments.Source: Moody's Financial Metrics™



Ratings

Exhibit 12Category Moody's RatingHYPROP INVESTMENTS LIMITED

Outlook NegativeIssuer Rating -Dom Curr Baa3ST Issuer Rating -Dom Curr P-3NSR LT Issuer Rating Aa1.zaNSR ST Issuer Rating P-1.za

Source: Moody's Investors Service



© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDITRISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THERELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITYMAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGSDO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’SOPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVEMODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’SPUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOTPROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THESUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATIONAND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FORPURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FORRETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACTYOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW,AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTEDOR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANYPERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSESAND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCHRATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating,agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintainpolicies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO andrated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually atwww.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion asto the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be recklessand inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or otherprofessional adviser.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it feesranging from JPY200,000 to approximately JPY350,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

REPORT NUMBER 1101475


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