Fund Managers & Analysts

Presentation

May 2019

Certain statements in this document may constitute ’forward looking statements’. Such forward looking statements reflect the company’s beliefs and expectations and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Hospitality Property Fund Limited and its subsidiaries to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this document, or to reflect the occurrence of anticipated events. 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 document. You are cautioned not to place any undue reliance on such forward looking statements. No statement in this document is intended to be a profit forecast.

This document is being supplied to you for informational purposes only. This document is not a prospectus or an offer or invitation or inducement to subscribe for or purchase any securities, and nothing contained herein shall form the basis of any contract or commitment whatsoever. This document does not constitute a recommendation regarding the securities of the company.

No representation or warranty, express or implied, is given by the company, its subsidiaries or any of their respective directors, officers, employees and affiliates or any other person as to the fairness, accuracy or completeness of the information (including data obtained from external sources) or opinions contained in this document, nor have they independently verified such information, and any reliance you place thereon will be at your sole risk. Without prejudice to the foregoing, no liability whatsoever for any loss howsoever arising, directly or indirectly, from any use of information contained in this document, or otherwise arising in connection therewith is accepted by any such person in relation to such information. None of the data in this document has been reviewed or reported on by the group’s auditors and no guarantee or warranty as to the data’s accuracy, expressed or implied, is given.

2

DISCLAIMER

40.8%59.2%

Public

3

SHAREHOLDING STRUCTURE

Distribution of shareholder Number

%

Shareholding

Collective investment schemes 140 23%

Foundations & charities 21 8%

Retirement benefits 148 4%

Retail shareholders 395 1%

Assurance companies 18 1%

Other 150 4%

HOTEL BRAND PORTFOLIO

Luxury Upscale Midscale Economy

4

HOTEL OPERATOR PORTFOLIO

5

OperatorTotal

HotelsLuxury Upscale Midscale Economy

Tsogo Sun 41 - 4 18 19

Marriott International 7 3 4 - -

Radisson Hotel Group 2 1 1 - -

Birchwood Hotel 1 - - 1 -

Champagne Sports Resort 1 - - 1 -

aha Hotels & Lodges 1 - - 1 -

HOTEL PORTFOLIO

Geographic locations

9

13

12

19

Western Cape

Gauteng

Rest of South Africa

Sun1 Hotels

Eastern Cape

Northern Cape

Western Cape

KwaZulu-Natal

Limpopo

North West

Free State

MpumalangaGauteng

Polokwane

HazyviewTshwane

Johannesburg

Drakensburg

Durban

Nelspruit Richards Bay

Bloemfontein

Kimberley

Cape Town Port Elizabeth

Rustenberg

9

13

1

3

1

1

10

2

1

1

1

1

6

1

1

1

6

7

HOTEL PORTFOLIO

OPERATING SEGMENTS BY ROOMS HOTEL GRADE BY ROOMS

26%

34%

23%

17% Western Cape

Gauteng

Rest of SA

Sun1

8%

31%

44%

17% Luxury

Upscale

Midscale

Economy

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HOTELS PORTFOLIO AND STATISTICS

31 March 2019

Hotels Keys

Luxury 4 926

Upscale 8 2 216

Midscale 22 4 354

Economy 19 1 508

Total 53 9 004

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INCOME STATEMENT

Rm

12 months

to

March 2019

12 months

to

March 2018

Gross Revenue and Income 830 867

Net operating costs (56) (47)

EBITDAR 774 820

Net finance costs (167) (164)

Profit before tax & adjustments 607 656

Fair value on interest rate swaps 6 (5)

Fair value decrease on investment property (787) (538)

Transaction Costs (20) -

Adjusted Earnings (194) 113

Less fair value adjustments & transactions costs 800 538

Distributable Earnings 606 651

No. of shares (excluding appraisal right & treasury shares) 575 576

Dividend per share (cents) 105.39 120.29

10

CASH FLOW STATEMENT

Rm

12 months

to

March 2019

12 months

to

March 2018

EBITDAR per income statement 774 820

Working capital adjusted for non-cash and exceptional items (4) (94)

Cash generated from operations 770 726

Net finance costs (167) (164)

Maintenance capex (212) (146)

Free cash flow 391 416

Distributions to shareholders (688) (351)

Disposal Proceeds - 1

Investment activities (net of transaction costs) - (1 306)

Rights issue - 1 000

Dividends from associates 1

Move in net IBD (296) (240)

Opening net IBD (1 545) (1 508)

Acquired with acquisitions - 203

Closing net IBD (1 841) (1 545)

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INTEREST BEARING DEBT

Rm

as at

March

2019

as at

March

2018

Bank Facilities 1 046 1 046

Corporate Bonds (notes) 890 890

Gross Interest bearing debt 1 936 1 936

Cash on hand (95) (391)

Net Interest bearing debt 1 841 1 545

Loan to Value 16.1% 15.4%

Weighted average cost of debt 9.6% 10.3%

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DEBT PROFILE

0

200

400

600

800

1000

1200

Q1:

2019

Q2:

2019

Q3:

2019

Q4:

2019

Q1:

2020

Q2:

2020

Q3:

2020

Q1:

2022

Q2:

2022

Q3:

2022

Q4:

2022

Q1:

2023

Q2:

2023

SBSA Secured Note Unsecured Note

60%

40%

Net Debt Hedged

Hedged Unhedged

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TRADING : RENTAL INCOME BY REGION

Rm

F2019

H1

F2019

H2

F2019

12 Months

F2018

12 Months

Western Cape 84 228 312 368

Gauteng 129 122 251 249

Rest of South Africa 91 95 186 187

SUN 1 32 30 62 52

Sub-Total 336 475 811 856

Radisson Gautrain Retail 8 8 16 10

Other income, including lease straight lining 1 2 3 1

Total Gross Revenue and Income 345 485 830 867

F2018 includes Cullinan and Merway from 1 July 2017

F2018 includes Radisson Gautrain Retail from 22 August 2017

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HOTELS PORTFOLIO AND STATISTICS

Statistics 12 Months

March 2019

12 Months

March 2019

Change

%

Occupancy (%) 61.1% 62.9% (2.8%)

Average room rate (R) 1 100 1 089 1.0%

RevPar (R) 673 685 (1.8%)

Excluding Sun 1 :

Statistics 12 Months

March 2019

12 Months

March 2019

Change

%

Occupancy (%) 62.6% 64.1% (2.3%)

Average room rate (R) 1 204 1 198 0.5%

RevPar (R) 753 768 (2.0%)

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CAPE TOWN TRADING PERFORMANCE

General Market Factors

• Structural oversupply with more than 1200 new rooms completed in the past 18 months.

• Growth in small scale hotel operations partly driven by the Section 12J tax regime.

• Negative sentiment brought about by the drought.

• Increased domestic and economic uncertainty.

HPF Property Specific Factors• Decline in association and contracted business, compounded by shortened booking lead

times.

• Increase in 3-4 star room stock, disproportionately impacting HPF’s performance. 74% of

HPF’s Cape Town portfolio comprises of 3 and 4 star hotels, versus a market weighting

of 67%.

HPF Trading Summary

• Operators of the HPF hotels held their rates through difficult trading conditions.

• The fund continued to reinvest in their hotels to ensure product quality and relevance.

HPF: Trading Information – April to March (12 Months)

Occupancy Average Room Rate RevPAR

F2019

Actual

F2018

Actual

%

on PY

Relative

GI

F2019

Actual

F2018

Actual

%

on PY

Relative

GI

F2019

Actual

F2018

Actual

%

on PY

Relative

GI

Western Cape 61.8% 67.0% (7.8%) 96.5 1 647 1 647 0.0% 101.8 1 018 1 104 (7.8%) 98.2

Gauteng 59.9% 59.6% 0.5% 100.9 1 025 1 009 1.7% 98.8 614 601 2.2% 99.7

Rest of South Africa 67.3% 67.3% (0.1%) 100.3 970 933 4.0% 100.7 653 628 3.9% 101.0

Total 62.6% 64.1% (2.4%) 99.1 1 204 1 198 0.5% 99.4 753 768 (2.0%) 98.5

Sun 1 54.0% 56.6% (4.7%) - 504 476 5.9% - 272 269 1.0% -

Total 61.1% 62.9% (2.8%) 98.8 1 100 1 089 1.0% 100.0 673 685 (1.8%) 98.7

STR: Trading Information – April to March (12 Months)

Occupancy Average Room Rate RevPAR

F2019

Actual

F2018

Actual

%

on PY

F2019

Actual

F2018

Actual

%

on PY

F2019

Actual

F2018

Actual

%

on PY

Western Cape 63.8% 66.8% (4.4%) 1 581 1 610 (1.8%) 1 009 1 075 (6.1%)

Gauteng 61.1% 61.3% (0.4%) 1 126 1094 2.9% 688 671 2.5%

Rest of South Africa 62.7% 63.0% (0.4%) 1 064 1 030 3.9% 668 649 2.9%

South Africa 62.4% 63.3% (1.6%) 1 237 1 224 1.1% 771 775 (0.5%)

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HOTELS PORTFOLIO AND STATISTICS

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PORTFOLIO AND COMPARATIVE TRADING

Rooms Occ % ARR RevPAR

F2019

Rent

(Rm)

F2018

Rent

(Rm)

Western Cape Region 2 381 61.8% 1 647 1 018 312 368

Gauteng Region 3 019 59.9% 1 025 614 266 259

Rest of South Africa 2 096 67.3% 970 653 186 187

Subtotal 7 496 62.6% 1 204 753 765 814

Sun 1 1 508 54.0% 504 272 62 52

Total 9 004 61.1% 1 100 673 827 866

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F2019 CAPEX : KEY PROJECTS

Westin• Bedroom FF&E refurbishment

• R145 million over 2 years

• 7/16 floors completed in F2019

Arabella Hotel & Spa• Bedroom Soft Refurbishment

• R29 million over 2 years

• 2/5 floors completed in F2019

Birchwood Hotel & Conferencing• Conference Rooms Refurbishment – completed

• Additional 1,000sqm event and conferencing created

with purchase of Marquee

Maintenance Capex F2020• Total expected expenditure of R263 million

• Includes the remainder of the Westin and the Arabella

bedroom refurbishment

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WATER RESILIENCE

Water Resilience Projects

• Capex committed on water resilience projects have been spent, barring some administrative procedures. All plant and machinery is in place on all the water resilience projects.

• The following hotels are off the grid:

• Westin

• Southern Sun Cullinan

• Southern Sun Waterfront

• Radisson Blu Waterfront

• The following hotels will be off the grid shortly pending local authority procedures:

• Stay Easy Century City

• Sun Square Gardens

• Garden Court Kings Beach

• Protea Hotel Marine

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MANAGEMENT AND BOARD as at 31 March 2019

Board of Directors

• Executive Directors

• Rob Nicolella – CEO

• Mara de Lima – CFO

• Non-Executive Directors

• John Copelyn – Chairman

• Gerald Nelson – Lead Independent

• Mac Gani – Audit and Risk Chairman

• Mohamed Ahmed – RemCo Chairman

• Syd Halliday

• Marcel von Aulock

• Laurelle McDonald

• Zibusiso Kganyago

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MANAGEMENT AND BOARD post 1 June 2019

Board of Directors

• Executive Directors

• Mara de Lima – CEO

• Riaan Erasmus - CFO

• Non-Executive Directors

• Marcel von Aulock – Chairman

• Mohamed Ahmed *

• Rob Nicolella

• Laurelle McDonald

• Moretlo Molefi

• Jabulani Ngcobo

• Chris Gina

* Lead Independent / Audit and Risk / RemCo Chairman

Thank you

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