ANNUAL RESULTS PRESENTATION
2016
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SALIENT FEATURES AND FINANCIAL HIGHLIGHTS
MARKET ENVIRONMENT
PORTFOLIO REVIEW
FINANCIAL REVIEW
CAPITAL RESTRUCTURE
TSOGO TRANSACTION
STRATEGY AND FUND OUTLOOK
AGENDA
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3
• Like-for-like rental income growth of 13.7% (adjusted for disposals)
• Strong results in Cape Town node and improved performance at Mount Grace
Rental income growth of 9.3%
• A-shares 155.62cps: up 5.0%
• B-shares 34.81cps: up 164.7%
Combined distribution per share increased 18.0%
• Disposal of seven non-core properties for net proceeds of R189.9 million
• Restructure of asset management team
• Shareholder approval: Conversion to shares and simplication to single share class
• Competition tribunal approval for Tsogo transaction (post balance sheet)
Strategic highlights
SALIENT FEATURES
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SALIENT FEATURES
Occupancy ADR RevPAR
Traditional hotel portfolio* Up 5.2% Up 8.1% Up 13.7%
Conference portfolio* Up 13.3% Up 13.8% Up 29.0%
* Portfolio excluding fixed properties
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June 2015 June 2016
Gross Rental Income
R434 million 9.3% R475 million
Portfolio Value
R5.1 billion 3.9% R5.3 billion
Weighted Average Cost of Debt
9.12% 46 bps 9.58%
Total Debt
R1,86 billion 7.0% R1,73 billion
June 2015 June 2016
Net Asset Value per Share
1 174 cents 10.2% 1 293 cents
Distribution
R233 million 16.8% R272 million
Gearing (% of asset value)
36.6%4%
points32.6%
Interest Cover Ratio
2.45x 11.0% 2. 72x
YEAR ENDED 30 JUNE 2016
FINANCIAL HIGHLIGHTS
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UNCERTAINTY IN LAST SIX MONTHS: POTENTIAL UPSIDE GOING FORWARD
MARKET ENVIRONMENT
Period in review Year ahead
Global GDP in low single digits, supported by
growth in China and IndiaGlobal economic uncertainties: US elections and Brexit
Minimal economic growth in South Africa: Weak
commodity prices, currency volatility and policy
uncertainties
0% growth forecast in 2016 and 1.0% forecast in 2017
Impact of municipal election results still to be felt
Possible sovereign downgrade
Domestic inflation edged up: Impact of weakening
currency and drought
Continued currency volatility expected
Interest rate cycle peaking
Weakening Rand: Enhances affordability for foreign
travellers and encourages domestic leisure travel by
South Africans
Sustainability of Rand’s recent recovery?
New visa regulation in process of being reviewed:
Foreign arrivals in SA down 7% in 2015 vs 4% global
growth in tourist numbers
Reversal of recent trend (first 5 months of 2016)
Relaxation of certain visa regulations, increased
affordability for foreigners, SA seen as safer destination
in context of global terrorism
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Persistent poor growth in SA economy limiting hospitality sector
Public sector spending constraints slowdown in conferencing demand prior to elections
• Enhancing affordability for foreign travellers
• Driving local tourism by South Africans
• Higher cost of foreign currency-based management, marketing and incentive fees to international hotel operators
Recent currency weakness
• Support improvement in ADR
• Limited availability of new attractive developments
Supply of new rooms up by cumulative 1% in last 4 years (PWC Hospitality Outlook)
• Salaries and wages
• Administered costs
• Food and beverage costs
Inflationary pressure
SA HOSPITALITY OUTLOOK
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63.34c 66.51c 69.83c 73.33c 77.00c
49.74c68.12c 71.53c 74.88c
78.62c
-
50
100
150
200
2012 2013 2014 2015 2016
A Share Distribution
7.91c 9.19c 19.25c 9.12c 16.87c
8.89c
14.20c
4.03c
17.94c
-
10
20
30
40
50
2012 2013 2014 2015 2016
B Share Distribution
DISTRIBUTION HISTORY
+165%
+5%
First half Second half
Combined share distribution increased 18,0%
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STRATEGIC DIRECTION
1.2
1.7
2.3
3.4 3.3
4.0 3.9
4.64.8
5.15.3*
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Property value (Rbn)
The Fund’s assets have grown since listing:
• R1.2 billion in June 2006
• R5.3 billion in June 2016
16.4%
CAGR
* As at 30 June 2016: Excludes disposals valued at R203 million during F2016
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PORTFOLIO STRATEGY: PROGRESS DURING 2016
Progress during period under review
Acquisitions:
Hotel properties in major urban
areas with diverse source markets
and strong brands
Radisson Blu Waterfront: 3 additional units acquired
(ownership increased to 55.8% of rental pool)
Acquisition of 10 properties from Tsogo valued at R1.78bn
(expected effective date 1st September 2016)
Disposals:
Non-core properties in tertiary
zones
PH The Richards: R44.8m PH Hluhluwe & Safaris: R13.9m
Premier King David: R27.9m PH Imperial: R23.8m
PH Richards Bay: R28.9m PH The Winkler: R25.1m
The Bayshore Inn: R25.6m
Investments:
Continually investing in existing
properties to enhance value
proposition of portfolio
PH Edward: 30 new rooms at a cost of R19.8m
Birchwood Hotel: R14.0m invested to refurbish 82 rooms to form part of
Silverbirch hotel section
Champagne Sports Resort: Movables acquired for R14m
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CAPEX INVESTMENTS
SILVERBIRCH AT BIRCHWOOD
PROTEA HOTEL EDWARD
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DIVIDER SLIDE LAYOUT
PORTFOLIO REVIEW
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STR GLOBAL – SOUTH AFRICA HOTEL REVIEW
64%65%
63%
68% 67% 66%
69%71%
72%70%
59%
56% 56%
60%62% 63%
64%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Occupancy Growth
OCCUPANCY (CY)
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AVERAGE DAILY RATE (CY)
STR GLOBAL – SOUTH AFRICA HOTEL REVIEW
R368
R389R418 R486
R522
R511R537
R583
R671
R791R843
R937
R855R888
R968R1 020
R1 086
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ADR Growth
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STR GLOBAL – SOUTH AFRICA HOTEL REVIEW
R 235
R 253 R 264
R 328R 349 R 336
R 370 R 414
R 484
R 554
R 497 R 527
R 479
R 531
R 602
R 638
R 691
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
RevPAR Growth
Growth
REVENUE PER AVAILABLE ROOM (CY)
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HPF TRADITIONAL HOTELS - JULY 2015 TO JUNE 2016*
OCCUPANCY INCREASE AHEAD OF INDUSTRY
65.7%69.1%
62.6%64.6%
HPF'15 HPF'16 STR'15 STR'16
Occupancy HPF vs STR
*this excludes fixed and conference hotel properties. Disposals before 30 June 2016 have also been excluded.
+5.2%+3.2%
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INCREASED ROOM RATES: BIG BOX STRATEGY PAYING OFF
R 1 348
R 1 457
R 1 049
R 1 133
HPF'15 HPF'16 STR'15 STR'16
ADR HPF vs STR
*this excludes fixed and conference hotel properties. Disposals before 30 June 2016 have also been excluded.
+8.1%
+8.0%
HPF TRADITIONAL HOTELS - JULY 2015 TO JUNE 2016*
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INCREASED REVPAR: UNDERPINNED BY ADR
R 886
R 1 007
R 658
R 733
HPF'15 HPF'16 STR'15 STR'16
RevPAR HPF vs STR
*this excludes fixed and conference hotel properties. Disposals before 30 June 2016 have also been excluded.
+13.7%+11.4%
HPF TRADITIONAL HOTELS - JULY 2015 TO JUNE 2016*
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66.3% 66.0%68.3%
55.6%53.4% 51.4%
57.5%60.1% 61.4%
65.7%69.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
HPF’S OCCUPANCY*
POSITIVE TREND CONFIRMED SINCE 2011
From YE June 2014 onwards data for traditional F&V and Variable hotels excluding conference hotels and Fixed hotels
2016 also excludes properties disposed of prior to 30 June 2016
CAGR:
6.1%
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THE WESTIN CAPE TOWN
• Scale and location (483 keys)
• Foreign business and leisure travellers to Western Cape
• Global brand
Positioned in the sweet spot
• Revenue continues to grow
Strong rental income growth
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RADISSON BLU WATERFRONT
• Majority foreign business and leisure travellers
• Global brand
Iconic location on Western Seaboard
Refurb of spa and kitchen in progress
• Ownership increased to 55.8% of rental pool
Acquired three additional units
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RADISSON BLU GAUTRAIN
Prime location in competitive Sandton market supports occupancy
Potential upside to rental with modified strategy
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BIRCHWOOD HOTEL & OR TAMBO CONFERENCE CENTRE
Achieved budget
Diversification of client base
Lower public sector conferencing demand
Silverbirch refurb attracting corporate traveller
Restructured to enhance ongoing sustainability
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MOUNT GRACE COUNTRY HOUSE & SPA
• Sales and marketing strategies bedded down
Strong rental income growth
Restaurant undergoing refurbishment
Upgraded WIFI infrastructure
Kids club is popular
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CROWNE PLAZA JOHANNESBURG - THE ROSEBANK
Tsogo acquired existing tenant and operates hotel
Strategy to diversify client base with wider base of second tier corporates
Competitively positioned in the marketplace
Rosebank node undergoing significant redevelopment
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HOLIDAY INN SANDTON – RIVONIA ROAD
Tsogo acquired existing tenant and operates hotel
Performance impacted by adjacent construction
New development should boost occupancy after completion of Phase I in 2017
Confirmed tenant – ENS and Momentum
Location in Sandton central secures long term value proposition
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PROTEA HOTEL EDWARD
Strong growth in 2016
30 new rooms added (total 131 keys) in time for peak December 2015 trading period
Two new conference rooms completed
Immediate positive impact with improved occupancy and ADR
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DIVIDER SLIDE LAYOUT
FINANCIAL REVIEW
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434.140.4 (44.8)
(158.1)
(47.3)
(224.5)
Renta
l in
com
e
(F2015)
Renta
l in
com
e
grow
th
Fund e
xpense
s
Net
finan
ce
cost
s
Tota
l A
shar
e
dis
trib
ution
Tota
l B
shar
e
dis
trib
ution
INCOME STATEMENT (MAJOR COMPONENTS)
+5.0%
+149.5%
+1.7%
+9.3% +10.3%
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30
ALL PROPERTIES EXCLUDING FIXED RENTAL PROPERTIES – R1.6 BILLION GROSS REVENUE AT HOTEL
LEVEL
MARGIN ANALYSIS
34% 34% 35% 36% 37%39%
24% 24% 25%27% 26%
29%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2011 2012 2013 2014 2015 2016
Rooms Revenue F&B Revenue Other Revenue MCP EBITDA
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GROSS RENTAL INCOME PER PORTFOLIO SEGMENTATION
RENTAL INCOME CONTRIBUTION
Gross rental income (R’000)
Total Portfolio 474 552 100.0%
Traditional hotel portfolio 410 260 86.5%
Conference portfolio 64 292 13.5%
Portfolio excl.
conferencing
properties (85.6%)
Conferencing
(14.4%)
PORTFOLIO VALUATION
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DEBT PROFILE AS AT 30 JUNE 2016 (R’MILLION)
DEBT PROFILE
63%
37%
Hedged Unhedged
• Successful issue of secured and unsecured notes to replace R230 million expired notes (April 2016)
• Increased Nedbank facility by R100 million
• R600 million secured notes expire February 2017: Have commenced noteholder engagement
0
100
200
300
400
500
600
700
Q3:2
016
Q4:2
016
Q1:2
017
Q2:2
017
Q3:2
017
Q4:2
017
Q1:2
018
Q2:2
018
Q3:2
018
Q4:2
018
Q1:2
019
Q2:2
019
Q3:2
019
Q4:2
019
Q1:2
020
Nedbank Secured Note Unsecured Note
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33
14 16 18 20 22 24 26 28 30 32 34 36 38 40 42
Champagne SportsResort
Kopanong Hotel &Conference Centre
Radisson BluWaterfront
Inn on the Square
Protea HotelEdward
Protea HotelMarine
Crowne PlazaJohannesburg -…
Holiday InnSandton -…
Arabella Hotel andSpa
Protea HotelHazyview
BirchwoodExecutive Hotel…
Mount GraceCountry House &…
Protea HotelVictoria Junction
Radisson BluGautrain Hotel
Westin Cape Town
Financial Year
Initial Option period 1 Option period 2
THE PERIOD IN REVIEW
LEASE EXPIRY PROFILE (CY) – WEIGHTED AVERAGE EXPIRY 10.72 YEARS*
*Portfolio as at 30 June 2016
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CAPITAL EXPENDITURE
• Protea Hotel Edward: 30 new rooms increasing number of keys to 131 keys: R19.8 million
• Birchwood Hotel: 82 additional rooms comprising part of Silverbirch hotel section (now 235 keys) : R14.0 million
• Movable assets acquired at Champagne Sports Resort: R14.0 million
• Other small projects
R102.9 million capex in 2016
• Refurbishment of spa and kitchen facilities at Radisson Waterfront
• Restaurant at Mount Grace
• Room refurbishments and kids club at Champagne Sports
• Other smaller projects
F2017 capex budget: R100 million (excl. Tsogo transaction)
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STRATEGY AND WAY FORWARD
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• In excess of 85% support on all resolutions (August 2015)
Conversion from debenture to shares
Shareholders’ interests misaligned due to dual share structure
• Shareholder approval obtained on 11 April 2016
• In excess of 75% support on all resolutions
A and B share structure to collapse into single class of shares
Resolves conflicts of interests between shareholders
CAPITAL STRUCTURE
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A SHAREHOLDERS
B SHAREHOLDERS
June 2016
Actual
After 3.5:1 conversion
(Ordinary Share)
Variance
NAV per share R12.93* R20.12* +55.6%
Voting rights 50.0% 77.8% +55.6%
Distribution growth Capped at 5% Uncapped
Distribution YE 2016 155.62c 148.46c -4.6%
* As at June 2016
June 2016
Actual
After 3.5:1 conversion
(Ordinary Share)
B share equivalent Variance
NAV per share R12.93* R20.12* R5.75* -55.6%
Voting rights 50.0% 22.2% - -55.6%
Distribution growth Uncapped
(only residual)
Uncapped -
Distribution YE 2016 34.81c 148.46c 42.42c +21.8%
SIMULATION
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TSOGO TRANSACTION
• Initial acquisition of 55% of B shares from existing shareholders in 2015
• Injection of ten hotel properties valued at R1.78 billion into Hospitality
• Will result in Tsogo owning 51% of Hospitality on completion
Tsogo acquisition of a controlling stake in HPF
• 10 successful and established mid scale hotel properties
• Expanded diversification: Brand / Operator / Geography / Market Segmentation
• Strong domestic brands as well as sales and marketing networks
Enhances Hospitality’s property portfolio
Debt free acquisition and potential cost of funding benefits
Broader earnings base ensuring greater stability of cash flows
Strategy to acquire additional properties from Tsogo Sun
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OVERVIEW OF TSOGO PORTFOLIO
PROPERTY ROOMS VALUATION
(Rm)
Garden Court Kimberley 135 129.1
Garden Court Milpark 252 240.0
Garden Court OR Tambo 253 287.4
Garden Court Polokwane 180 159.2
Garden Court South Beach 414 453.6
StayEasy Century City 175 178.4
StayEasy Rustenburg 125 85.1
SunSquare Cape Town 136 39.3
Southern Sun Bloemfontein 147 89.9
Southern Sun Newlands 162 117.9
All properties have F&V leases and mid scale grading
Gauteng
34%
KwaZulu-
Natal
26%
Western
Cape
19%
Limpopo
9%
Northern
Cape
7%
Free State
5%
Value by locality
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TSOGO PORTFOLIO: GARDEN COURT
POLOKWANE
KIMBERLEY SOUTH BEACH
OR TAMBOMILPARK
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41
TSOGO PORTFOLIO: STAYEASY
RUSTENBURGCENTURY CITY
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TSOGO PORTFOLIO: SUN SQUARE / SOUTHERN SUN
SOUTHERN SUN NEWLANDS
SUNSQUARE CAPE TOWN
SOUTHERN SUN BLOEMFONTEIN
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SA hospitality sector buoyed by increased demand from international travellers
• Partially offset lower travel frequency
Increased rate allowance on public sector travel budgets
• Pressure on hotel operating costs
Inflation expected to remain high
• Upside potential for rates at hotels in high tourist areas
• Stable domestic business and leisure demand
• Normalisation of public sector conferencing post municipal elections
Hospitality property fund well-positioned
• Political, economic and social
Continued uncertainty in South Africa
Focus on implementing Tsogo transaction
• Broader earnings based and increased critical mass
F2017 outlook
FUND OUTLOOK
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LAST DAY TO TRADE CUM DISTRIBUTION TUESDAY, 13 SEPTEMBER 2016
SHARES WILL TRADE EX-DISTRIBUTION WEDNESDAY, 14 SEPTEMBER 2016
RECORD DATE FRIDAY, 16 SEPTEMBER 2016
PAYMENT DATE TUESDAY, 19 SEPTEMBER 2016
DIVIDEND DISTRIBUTION DATES
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FINANCIAL YEAR END 30 JUNE 2016
INTEGRATED REPORT POSTED TO SHAREHOLDERS 29 SEPTEMBER 2016
ANNUAL GENERAL MEETING 22 NOVEMBER 2016
ANNOUNCEMENT OF INTERIM RESULTS FEBRUARY 2017
ANNOUNCEMENT OF ANNUAL RESULTS AUGUST 2017
SHAREHOLDER DIARY
ANNUAL RESULTS PRESENTATION
2016
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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.
DISCLAIMER