DEUTSCHE BANK PRESENTATION 23/24 November 2015
Impact of new competition on existing shopping centre performance
Where are we?
•
7.5% p.a. growth in shopping centre GLA since 2005
•
More than 2000 shopping centres
•
6th highest per capita shopping centre GLA in world
• And
•
2.2mil m² shopping centres on drawing board
•
Mall of Africa, Ballito, Springs, Cornubia, Menlyn et al in the ground: additional 500k+ m2
The disconnect
Why the continuing development?
•
•
•
•
•
•
•
•
•
•
•
Extrapolation by retailers of “unusual” 2004 – 2007 trading performance
Retailer obsession with market share at expense of profitability
Retailer herd mentality
Relative low fixed costs in growing retailer space – labour & rental
Developers subsidizing store development costs
Long lag time between commitment and taking delivery
Poor market-demand research for both retailers and developers
Financial institutions eagerness to “grow” credit book
Availability of “put options” to listed REITS
REITS eagerness to increase exposure to retail assets
Poor/non-existent town planning and local authorities’ eagerness to grow tax base
Consequences:
• Continuing decline in trading densities
• Ongoing retailer cannibalization and margin compression
• Increasing occupancy cost to turnover ratios leading to low rental growth
• Increased operating costs at centre level – marketing
• Over-capitalization in retail assets in order to compete
• Declining values for owners and local authorities
• “Dead Mall” syndrome & “still born” malls
PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES
Excluding Rural and Township centres
PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES
SHOPPING CENTRES BIGGER THAN 30 000m2 DEVELOPED 2000 - 2008
MOFFET RETAIL PARK
2000
3
GARDEN ROUTE
MIMOSA MALL
2000
4
WILLOWBRIDGE
KEY WEST
2000
4
TRADE ROUTE
PRINCESS CROSSING
2000
2
CENTURION LIFESTYLE
CANAL WALK
2000
6
VAAL MALL
GATEWAY
2001
6
KOLONNADE RETAIL PARK
LONGBEACH MALL
2001
2
MOUNTAIN MILL WORCESTER
MALL @ REDS
2003
4
GREENSTONE
LIBERTY MIDLANDS MALL
2003
6
MAPONYA MALL
BALITO LIFESTYLE
2003
4
CEDAR SQUARE
LIBERTY PROMENADE
2003
6
IRENE MALL
PAARL MALL
2003
3
HIGHVELD MALL
CLEARWATER
2004
5
FOUNTAINS MALL - J/BAY
FESTIVAL MALL
2004
4
WOODMEAD RETAIL
WOODLANDS
2004
4
MELROSE ARCH
CARNIVAL MALL
2005
4
STONERIDGE
ECO BOULEVARD
2005
1
WONDERBOOM JUNCTION
EAST RAND RETAIL PARK
2005
3
ARBOUR CROSSING
ZAMBESI RETAIL PARK
2005
1
WESTWOOD MALL
SOUTHCOAST MALL
2005
2
MOOIRIVER MALL
CAPE GATE
2005
3
ZEVENWACHT MALL
2005
2005
2006
2006
2006
2006
2006
2007
2007
2007
2007
2007
2008
2008
2008
2008
2008
2008
2008
2008
2008
3
2
2
2
5
2
2
4
2
2
2
5
1
4
1
1
3
2
1
4
2
PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES
SHOPPING CENTRES BIGGER THAN 30 000m2 DEVELOPED POST 2008
HEMMINGWAYS
2009 1 BRITS MALL
THE GROVE
2009 2 CRADLESTONE
PARKVIEW PTA
2009 1 SUNWARD LIFESTYLE
GALLERIA
2009 3 TUBATSE CROSSING BURGERSFORT
WESKUS MALL
2009 2 SECUNDA MALL
GOLDFIELDS MALL
2010 3 KALAHARI MALL
L'LANGA NELSPRUIT
2010 2 FOREST HILL
PLATINUM SQUARE
2010 1 NEWTOWN JUNCTION
MALL OF THE NORTH
2011 4 HEIDELBERG MALL
NEWCASTLE MALL
2012 3 MATLOSANA MALL
MIDDELBURG MALL
2012 4 BAY WEST
2012
2013
2013
2013
2013
2013
2014
2014
2014
2014
2015
1
2
2
1
5
2
1
1
2
1
1
COMPETING SHOPPING CENTRES: RUSTENBURG
Analysis of competition impact: Growthpoint Portfolio
Date of Development
GLA - m2
Current Trading density
Waterfall Mall & Value Centre
1998 & 2007
59518
R2850/m2
Major Tenants
PnP, GAME, Woolworths, Clicks, Ster
Kinekor, Truworths, Foschini, Mr Price,
Corricraft, The Hub, Waltons
Platinum Square
Nov-12
32300
Checkers Hyper, Foodlovers Market,
Sportsmans warehouse, MRP Home,
Dion Wired, House & Home, Toys-RUs, UFO Furniture
Performance also impacted by platinum mine strike in 2014
Level of Competition
Competition limited to non fashion retailers
2011 - 2012
2012 - 2013
2013 - 2014
2014 - current
Overall Trading Density change
8.0%
-8.0%
-5.0%
5.0%
Trading Density change excl PicknPay & GAME
7.0%
-3.5%
-4.2%
7.1%
PicknPay
GAME
Incredible Connection
Identity
Ster Kinekor
Clicks
Edgars
Trading Density change : 2012 to current
-32%
-30%
-25%
-18%
-16%
-9%
-7%
Foot Counts
Change
-5%
-6%
-2%
R80 mil p.a.
COMPETING SHOPPING CENTRES: KRUGERSDORP/ROODEPOORT
Analysis of competition impact: Growthpoint Portfolio
Keywest Krugersdorp
Date of Development
GLA - m2
Current Trading Density
Major tenants
2000
52000
R2100/m2
PnP, GAME, Woolworths, Clicks, NuMetro,
Truworths, Foschini, Mr Price, Virgin Active
Cradle Stone
Nov-13
76422
Checkers, PnP, Woolworths,
Foodlovers Market, GAME, Dion
Wired, Edgars, Truworths,
Foschini, Mr Price, Dischem, Ster
Kinekor
Level of Competition
Competition across all retailers
Overall Trading Density change
Foot Counts
Trading Density change excl national retailers Change
2012 - 2013
7.0%
7.4%
2013 - 2014
-3.0%
1.0%
-3%
2014 - current
6.0%
10.0%
-3%
Decline in Trading Density: Yr 1
Decline in Trading Density: Current year
GAME
-22%
Maxi's
-17%
Edgars
-11%
Foschini
-9%
Jewellery
-10%
GAME
-5%
Foschini
-8%
Ackermans
-7%
PEP
-7%
Woolworths
-6%
PicknPay
-5%
COMPETING SHOPPING CENTRES: KLERKSDORP
Analysis of competition impact: Growthpoint Portfolio
City Mall Klerksdorp
Matlosana Mall
Nov-14
63000
Flamwood
Date of Development
GLA - m2
Current Trading Density
1997
24638
R1400/m2
2014
19396
Major tenants
Hi-Fi Corporation, Dischem, Fruit &
Veg City, Sportsmans Warehouse,
Woolworths, The Hub, JET, Clicks, PicknPay, Checkers, Woolworths,
Mr Price, Ackermans, Foschini,
Foschini, Truworths, MrPrice, Edgars, Checkers, Incredible Connection,
Truworths
Ackermans, Ster Kinekor
GAME
Level of competition
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Full competition across all retailers
Trading
Density
Trading
Density
Rand value Impact ex
Impact
loss - Rmil
WW
-28.0%
13
-25%
-23.0%
15.3
-19%
-24.0%
8
-17%
-22%
6.5
-17%
-21%
6.7
-19%
-28%
12.5
-25%
-20%
7.9
-13%
-19%
6.6
-13%
-18%
6.8
-14%
-19%
6.8
-17%
-28%
10.2
-21%
Foot
counts
-22%
-18%
-20%
-19%
-18%
-23%
-24%
-15%
-10%
-15%
-15%
Analysis of competition impact: Port Elizabeth
Walmer Park
Date of Development
GLA - m2
Current Trading Density
Major tenants
1988
43020
R 2,750
Woolworths, Edgars, Nu
Metro, Zara, Clicks, Mr
Price, Ackermans,
Foschini, Truworths
Greenacres
1981
40398
R 2,400
Checkers, Woolworths,
Edgars, Ackermans,
Truworths, Foschini
The Bridge
1991
45708
R 1,750
Shoprite, GAME, Mr Price, Ster
Kinekor
Baywest
2015
86995
PicknPay, Checkers Hyper,
Woolworths, Edgars, Ster
Kinekor, Ice Rink, GAME,
Truworths, Foschini
Level of Competition
Competition across all retailers
WALMER PARK
GREENACRES
THE BRIDGE
Jun-15 -0.3%
-8.0%
-1.4%
Jul-15 7.0%
-10.0%
0.6%
Aug-15 -0.8%
-5.0%
4.5%
Sep-15 -1.3%
-4.0%
1.9%
SIGNIFICANT TURNOVER CHANGE OVER PERIOD
WALMER PARK
Edgars
-21%
GREENACRES
THE BRIDGE
-17%
Shoprite
-5.10%
Truworths
-9%
Jet
-7%
Cinemas
-18%
-29%
Cotton On
-26%
Duplicated stores
Lecreuset
-25%
Duplicated stores
Restaurants
-18%