results presentation 2013 · 2020. 3. 23. · results presentation. august 2013 2 agenda • the...
TRANSCRIPT
2013
RESULTS PRESENTATION
August 2013 2
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time Frame
Westin Cape Town
August 2013 3
THE YEAR IN REVIEW
Global economy showing signs of recovery
• Eurozone showing signs of recovery with annualized GDP growth of 1.1% in Q2 2013;
• Growth expectations of BRIC economies better than rest of the world but slowing;
• US timing & strategy of unwinding its quantitative easing will be crucial to global financial markets;
• Global GDP forecasts lowered to 3.1% and 3.8% for 2013 and 2014 respectively.
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2008 2009 2010 2011 2012 2013e 2014e
GDP Growth*
World Developed Emerging* IMF Forecasts July 2013
August 2013 4
THE YEAR IN REVIEW
Outlook on domestic economic conditions
• GDP growth expectation for 2013 lowered to 2.2% (Reuters consensus)
› Service delivery protests
› Electricity supply challenges
• Inflationary pressures due to depreciating rand and potentially high wage settlements
• Rand depreciation benefiting foreign inbound travel
• Interest rates likely to remain low until mid 2014
August 2013 5
THE YEAR IN REVIEW
3.1%
-2.0%
2.8%
3.9%
2.5%2.0%
3.2%3.6%
9.5%
6.3%
4.3%5.0%
5.7% 6.0% 5.8% 5.9%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2008 2009 2010 2011 2012 2013e 2014e 2015e
Real GDP CPI
Sources: Stats SA & Nedbank Forecasts
SA Economic Indicators
August 2013 6
THE YEAR IN REVIEW
2.1%-3.8%
6.4%4.6% 4.0% 3.5%
5.7%3.8%
15.1%
3.3%
10.2%9.0%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2008 2009 2010 2011 2012 2013e
International Tourist Arrivals (growth %)
Global South Africa
Sources: Stats SA & UNWTOHPF estimate
South African tourism market
• SA Tourism 2020 Vision aims to increase international tourist arrivals to 15 million by 2020
August 2013 7
INDUSTRY TRENDS
March 2012 – April 2013: Source Market Overseas Arrivals
-
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
Overseas Arrivals Mar 2012 –Apr 2013
2012 2013
4%
15%
10%
45% 44%
19%
14% 14%
27%
11%
18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Overseas Arrivals Growth Mar 2012 –Apr 2013
Sources: Stats SA
August 2013 8
INDUSTRY TRENDS
March 2012 – April 2013: Source Market Tourist Arrivals
-
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
7 000 000
Tourist Arrivals Mar 2012 –Apr 2013
2012 2013
4%
15%
10%
45% 44%
19%
14% 14%
27%
11%
18%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Tourist Arrivals Growth Mar 2012 –Apr 2013
Sources: Stats SA
August 2013 9
INDUSTRY TRENDS
2012 Tourism Bednight Market Mix – South Africa
89% 11%
Tourist Bednights in SA non-Hotel vs. Hotel stays
Bednights non-Hotel
Bednights Hotel
2011: 91% bednights non-Hotel9% bednights Hotel
75%
25%
HPF Market Mix
Domestic
Overseas
*Source: SA Tourism Annual Report and HPF
August 2013 10
INDUSTRY TRENDS
Nominal GDP and South Africa RevPAR growth rates
-20%
-10%
0%
10%
20%
30%
40%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -Q1
2013 -Q2
% Change
GDP Growth RevPAR
FIFA World Cup 2010
Global Recession
WSSD,ZAR depreciation
August 2013 11
DIVIDER SLIDE LAYOUT
August 2013 12
THE YEAR IN REVIEW
Strategic Achievements – 2013 Highlights
• Distribution growth YE June 2013 ahead of rights issue forecast
• Successful launch of Domestic Medium-Term Note Programme
• Acquisition of Radisson Blu Gautrain Hotel
• REIT status approval
• Implementation of staff long-term incentive scheme
• New independent Non-Executive Board Members
August 2013 13
THE YEAR IN REVIEW
Strategic Achievements – Domestic Medium-Term Note (“DMTN”) Programme
• Registered a R2 billion DMTN Programme
• Secured notes rating of A3(za)(sf) from GCR
• On 10 April 2013, Hospitality concluded its debut auction of
› R150 million secured notes (maturity 3 years); and
› R120 million unsecured notes (maturity 2 & 3 years).
• Secured Notes were 2.6x oversubscribed
• Margins:
› Secured Note: 3 month Jibar plus 182bps;
› Unsecured notes (2 years): 3 month Jibar plus 240bps for R40 million;
› Unsecured notes (3 years): 3 month Jibar plus 270bps for R80 million.
August 2013 14
THE YEAR IN REVIEW
Strategic Achievements – Radisson Blu Gautrain Hotel Acquisition
• Purchase Consideration R443 million
• 5-Star business & conferencing hotel
• 216 keys
• Close proximity to Gautrain Sandton
• Strategic fit: transport hub, major metropolitan area, global brand
• Revenue underpin from vendor & management company
• Anticipated forward yield of 8.15% (year 1)
• Estimated rental growth 15% (year 2)
Radisson Blu Gautrain Hotel
August 2013 15
THE YEAR IN REVIEW
Strategic Achievements – Sustainable Development
• Radisson BluWaterfront received Think Planet Recognition;
› 230 staff received a bicycle
• Holiday Inn & Carte Blanche Making A Difference Trust;
• Utility saving interventions continue to yield significant reductions:
› 11% decrease in KWH/RNS and a 6% increase in Litres/RNS.
KWH perRNS11%
Litres per RNS6%
August 2013 16
THE YEAR IN REVIEW
Strategic Achievements – Competitive Advantage
• Largest multi-branded hotel property portfolio in South Africa
• Strong partnerships with local and international hotel operators
• Benefits of global brands:
› Loyalty programs
› Distribution platforms
› Strategic alliances – car hire & airlines
› Training programs & staff development
› Strong financial controls & risk management
August 2013 17
THE YEAR IN REVIEW
Corporate Social Investment
No. Amount
UJ Bursary Students 9 R 240k
Traineeships, internship program ±100 R 660 k
Habitat for Humanity R 94k
Container Library Donation R 208k
Number of employees 2735*
Habitat for Humanity
Container Library Donation
Hospitality Bursary Students*excl. Radisson Blu Gautrain Hotel
August 2013 18
THE YEAR IN REVIEW
Awards and accolades
• Arabella Hotel and Spa
› No1 ranked Golf Course in the Western Cape and 4th in SA for 2012 by Golf Digest
› Winner of the Lilian Terry Spa of the Year Award for 2102
• Radisson Blu Gautrain Hotel
› Business Traveller Awards 2013: Winner Best Business Hotel in South Africa
• Mount Grace Country House & Spa
› Finalist in the Resort / Hotel Spa Category Les Nouvelle 2012
› World Luxury Hotel Awards Country Winner: 2012 Best Luxury day spa
› Best Conference Venue 2012 by West Rand Tourism
› Best Fine Dining Restaurant SA by Eat Out
August 2013 19
DIVIDER SLIDE LAYOUT
August 2013 20
THE YEAR IN REVIEW
Competitive Advantage
• Highly diversified in terms of:
› star grading;
› fixed and variable income;
› market mix. 48%
4%31%
16%
2%
Gross rental income
by province
August 2013 21
THE YEAR IN REVIEW
Trading figures in line with the overall market (July 2012 – June 2013)
57.5% 58.3%60.1% 61.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
HPF'12 STR'12 HPF'13 STR'13
Occupancy HPF vs STR
R 974
R 871
R 1 020
R 930
R 0
R 200
R 400
R 600
R 800
R 1 000
R 1 200
HPF'12 STR'12 HPF'13 STR'13
ADR HPF vs STR
August 2013 22
THE YEAR IN REVIEW
HPF’s occupancy cycle on the up
66.3% 66.0% 68.3%
55.6%53.4%
51.4%
57.5% 60.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2006 2007 2008 2009 2010 2011 2012 2013
Peak Occupancy
August 2013 23
THE YEAR IN REVIEW
Westin Performance compared to CompSet (July – June)
121.4
99.4
120.6119.8
103.2
123.6118.1
99.9
117.9
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: The Mount Nelson Hotel, Southern Sun Cape Town Waterfront Hotel, Sun International Table Bay Hotel, Radisson Blu Hotel Waterfront, Legacy The Commodore, Southern Sun the Cullinan, Hilton Cape Town City Centre
August 2013 24
THE YEAR IN REVIEW
Radisson BluWaterfront Performance compared to CompSet (July – June)
122.5
103.1
126.3
107.8113
121.8
105.5
116.3122.6
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: The Mount Nelson Hotel, Cape Grace Hotel, Sun International Table Bay Hotel, The Westin Cape Town , Legacy The Commodore, Victoria & Alfred Hotel, Cape Royale Luxury Hotel & Resort
August 2013 25
THE YEAR IN REVIEW
Holiday Inn Sandton Performance compared to CompSet (July – June)
107.6111.9
120.5118.4 116.2
137.6
112.8 111.4
125.6
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: Sun International The Maslow Hotel, Garden Court Sandton, Protea Hotel Balalaika Sandton, Courtyard Hotel Sandton, Southern Sun Katherine Street Sandton, Protea Hotel Wanderers, Park Inn Sandton
August 2013 26
THE YEAR IN REVIEW
Crowne Plaza Rosebank Performance compared to CompSet (July – June)
104.2 100.4104.6
114.4
97.9
112
98.1 96.7 94.8
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: Legacy Sunnyside Park, Courtyard Hotel Rosebank, Courtyard Hotel Sandton, Protea Hotel Wanderers, Southern Sun Hyde Park, Protea Hotel Fire & Ice Melrose Arch, Holiday Inn Johannesburg Rosebank
August 2013 27
THE YEAR IN REVIEW
Mount Grace Performance compared to CompSet (July – June)
106.991.7 98.1
89.3
105.193.893.4 96.4 90.1
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: The Westcliff,, 54 On Bath, Kwa Maritane Bush Lodge, Legacy Bakubung Bush Lodge, African Pride Melrose Arch Hotel
August 2013 28
THE YEAR IN REVIEW
PH Victoria Junction Performance compared to CompSet (July – June)
102.9
85.1 87.5
105.8
90.1
95.399.2
92.391.5
0
20
40
60
80
100
120
140
Occupancy Index (MPI) ADR Index (AGI) RevPAR Index (RGI)
FY 2011 FY 2012 FY 2013
Par vs. Competitor
set
Comp Set: Southern Sun Cape Town Waterfront Hotel, City Lodge Victoria & Alfred Waterfront, Legacy The Commodore, Cape Royale Luxury Hotel & Resort, Park Inn by Radisson Cape Town Foreshore
August 2013 29
THE YEAR IN REVIEW
Consolidated Income Statement
2010 2011 2012 2013
Rooms Revenue 66% 61% 63% 64%
F&B Revenue 27% 27% 29% 29%
Other Revenue 8% 12% 8% 7%
Total Revenue 100% 100% 100% 100%
Rooms 79% 76% 77% 77%
F&B 26% 26% 33% 33%
Other 63% 72% 45% 38%
Departmental Profit 63% 62% 61% 62%
Total Other Expenses 26% 28% 27% 27%
MCP 37% 34% 34% 35%
Fixed expenses 4% 6% 5% 5%
Mgmt & Incentive fee 5% 5% 5% 5%
EBITDA 29% 24% 24% 25%
August 2013 30
THE YEAR IN REVIEW
Lease expiry profile –Weighted average expiry 9.04 years
10 12 14 16 18 20 22 24 26 28 30 32 34 36 38
Mount Grace Country House & Spa
Courtyard Cape Town
Inn on the Square
Premier Hotel King David
Champagne Sports Resort
Protea Hotel - The Winkler
Protea Hotel - The Richards
The Bayshore Inn
Protea Hotel Imperial
Kopanong Hotel & Conference Centre
Protea Hotel Hazyview
Protea Hotel Hluhluwe & Safaris
Holiday Inn Sandton - Rivonia Road
Crowne Plaza Johannesburg - The Rosebank
Protea Hotel Edward
Protea Hotel Marine
Protea Hotel Richards Bay
Courtyard Arcadia
Courtyard Eastgate
Courtyard Rosebank
Courtyard Sandton
Arabella Hotel and Spa
Birchwood Executive Hotel & OR Tambo…
Protea Hotel Victoria Junction
Radisson Blu Gautrain
Radisson Blu Waterfront
Westin Cape Town
Initial Period Option Period(s)
* Birchwood to convert from fixed lease to F&V lease on 1 July 2014
August 2013 31
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time FrameChampagne Sports Resort
August 2013 32
FINANCIAL FEATURES
Year End 30 June 2013
YE2012 YE2013
Gross Rental Income
R 326 million 9.1% R 356 million
Portfolio Value
R 3,86 billion 18.3% R 4,57 billion
Weighted Average Cost of Debt
9.74% -12.1% 8.56%
Total Debt
R 1,36bn 15.4% R 1,57bn
YE2012 YE2013
Net Asset Value per Linked Unit
1 015 cents 7.9% 1 095cents
Distributable Debenture Interest
R125 million 59.8% R200 million
Gearing (% of asset value)
35.2% -2.3% 34.4%
Interest Cover Ratio
1.61x 53.4% 2.47x
August 2013 33
FINANCIAL FEATURES
Year End 30 June 2013
57.46c 60.32c 63.34c 66.51c
58.84c 61.79c 49.74c68.12c
-
50
100
150
200
2010 2011 2012 2013
A Linked Unit Distribution
Final
Interim
-42% -33%-87%
129%
-100%
-50%
0%
50%
100%
150%Y-on-Y Growth
5% 5%
-7%
19%
-20%
-10%
0%
10%
20%Y-on-Y Growth
36.30c 38.45c 7.91c
9.19c
51.68c20.45c
0.00c
8.89c
-
50
100
150
200
2010 2011 2012 2013
B Linked Unit Distribution
August 2013 34
FINANCIAL FEATURES
Year End 30 June 2013
-42% -33%-87%
129%
48%
-100%
-50%
0%
50%
100%
150%
5% 5%
-7%
19%
5%
-20%
-10%
0%
10%
20%Y-on-Y Growth
57.46c 60.32c 63.34c 66.51c
58.84c 61.79c 49.74c68.12c
141.36c
-
50
100
150
200
2010 2011 2012 2013 2014e
A Linked Unit Distribution
Fcst Total
Final
Interim
36.30c 38.45c 7.91c9.19c
51.68c20.45c
0.00c
8.89c
26.72c -
50
100
150
200
2010 2011 2012 2013 2014e
B Linked Unit Distribution
Y-on-Y Growth
ForecastForecast
August 2013 35
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time FrameArabella Hotel & Spa
August 2013 36
LINKED UNIT PERFORMANCE
Linked unit price performance
-
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Jul-09 Nov-09 Mar-10 Jul-10 Dec-10 Apr-11 Aug-11 Jan-12 May-12 Sep-12 Feb-13 Jun-13
HPA HPB
August 2013 37
LINKED UNIT PERFORMANCE
Linked unit price relative to Listed Property Sector
-
1
2
3
4
5
6
7
8
9
Feb-06 Aug-06 Feb-07 Aug-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13
HPA/J253 HPB/J253
August 2013 38
LINKED UNIT PERFORMANCE
Linked unit price relative to Tourism & Leisure Index
60%
80%
100%
120%
140%
160%
180%
200%
Jul-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13
Combined Unit Tourism & Leisure Index
August 2013 39
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time Frame
Westin Cape Town
August 2013 40
PROPERTY PORTFOLIO
Radisson Blu Cape Town
• The refurbishment of 106 standard rooms was completed in August 2012;
• The 71 business class suites were refurbished during first phase of the renovation;
• 2013 – Introduction of Amani Spa and upgrade of spa facilities;
• 2014 – Consideration been given to upgrade public areas.
Standard Room
August 2013 41
PROPERTY PORTFOLIO
Westin Cape Town
• Conversion of administration office into revenue
generating meeting rooms
• Construction of outside swimming pool to enhance
leisure offering to be completed in Q1 2014
Public Area
Small Boardroom
Outside Swimming Pool
August 2013 42
PROPERTY PORTFOLIO
Arabella Hotel & Spa
• Upgrade of the irrigation system for a total consideration of R10,5 million;
• Water savings due to more efficient watering programs;
• Administration areas converted to revenue generating conference facilities;
• Restaurant upgrade.
August 2013 43
PROPERTY PORTFOLIO
Protea Hotel Hluhluwe Hotel & Safaris (KwaZulu Natal)
• Soft refurbishment of the 76 bedrooms as well as a complete bathroom fit out for a total
consideration of R6 million
• Renovation introduces a number of new innovations into the bedrooms adopting most of the
environmental best practices
• To be completed in September 2013
Before refurbishment After refurbishment
August 2013 44
PROPERTY PORTFOLIO
Protea Hotel The Richards (KwaZulu Natal)
• Soft refurbishment exercise of the initial 97 bedrooms for a total consideration of R4 million
• To be completed in September 2013
Before refurbishment After refurbishment
August 2013 45
DISPOSALS
Properties held for sale
• 7 non-core properties at total of R319 million (excl. break fees)
Bayshore Inn PH Hazyview
PH HluhluwePH Imperial PH The Richards
PH The Winkler
Kopanong
August 2013 46
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time Frame
Radisson Blu Waterfront – Cape Town
August 2013 47
MARKET OUTLOOK
SA Hospitality outlook
• Overseas Arrivals YTD April up 5.5%;
• Non-traditional source markets continue above average growth;
• Domestic demand – volume based growth;
• Hotel oversupply diminishing paving way for next development cycle;
• Travellers remain rate sensitive and techno-savy;
• 65% occupancies trigger point for above inflation rate increases.
August 2013 48
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time Frame
Holiday Inn SandtonTrip Advisor Certificates of Excellence in
2013
August 2013 49
FUND STRATEGY
• Bedding down all properties in the Fund;
• Focus on optimization of hotel revenues;
• Driving value of existing portfolio;
• Financing strategy:
› Hedging;
› Debt maturity policy.
Crowne Plaza RosebankTrip Advisor Certificates of Excellence in 2013
August 2013 50
FUND STRATEGY
Hedging Strategy
• R693.34 million or 44% of total liabilities are fixed through interest rate swaps
• Current swap agreements:
R’million Nominal Rate Maturity
Swap 2 R346.7 7.75% June 2014
Swap 3 R346.7 7.98% June 2015
• Hedging strategy: fixed interest rates for 50% of total liabilities
August 2013 51
FUND STRATEGY
Debt Maturity Profile
0
100
200
300
400
500
600
700
800
900
1000
Absa Nedbank Secured Note Unsecured Note
August 2013 52
AGENDA
• The Year in Review
• Financial Features
• Linked Unit Performance
• Property Portfolio
• Market Outlook
• Fund Strategy
• Distribution Time FrameMount Grace Country House and Spa
August 2013 53
DISTRIBUTION TIMEFRAME
November
S M T W T F S
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
September
S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
Last day to trade cum interest 6 September
Linked units trade ex-interest 9 September
Record date 13 September
Payment date 16 September
Annual general meeting 8 November
2013
RESULTS PRESENTATION
August 2013 55
DISCLAIMER
The announcements and information in this presentation do not constitute an offer to sell or issue or the solicitation of
an offer to buy or acquire securities of Hospitality Property Fund (Pty) Ltd ('Hospitality') or any of its affiliates in any
jurisdiction or an inducement to enter into investment activity. This presentation may include "forward-looking
statements". These statements may contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of
similar meaning. All statements other than statements of historical facts included in these announcements, including,
without limitation, those regarding Hospitality's financial position, business strategy, plans and objectives of management
for future operations (including development plans and objectives relating to Hospitality's products and services) are
forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or achievements of Hospitality to be materially
different from future results, performance or achievements expressed or implied by such forward-looking statements.
These forward-looking statements are based on numerous assumptions regarding Hospitality's present and future
business strategies and the environment in which Hospitality will operate in the future. These forward-looking
statements speak only as at the date of these announcements. Neither Hospitality nor any affiliate, nor any of their
respective officers, directors, partners, or employees claim any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statements contained in these announcements to reflect any change in Hospitality's
expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is
based. Any information contained in these announcements on the price at which Hospitality's securities have been
bought or sold in the past, or on the yield on such securities, should not be relied upon as a guide to future
performance.