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Retail Update
LIBERTY TWO DEGREES
JSE share code: L2D
ISIN: ZAE000230553
(Approved as a REIT by the JSE)
(“CISIP”)
a portfolio established under the Liberty Two Degrees Scheme, a collective investment scheme in
property established in terms of the Collective Investment Schemes Control Act, No 45 of 2002, as
amended (CISCA),
and managed by STANLIB REIT Fund Managers (RF) Proprietary Limited
(Registration number: 2007/029492/07)
(the “Manager”)
LIBERTY TWO DEGREES LIMITED
(Registration number: 2018/388906/06)
JSE share code: L2D
ISIN: ZAE000260576
(“New L2D”)
Liberty Two Degrees Retail Update
21 September 2018
This voluntary report provides an update on the trading performance of the portfolio as
reported in the Liberty Two Degrees (L2D) interim results announcement released on 23 July
2018. Trading density information for June 2018 is provided as well as vacancy rates as at
August 2018. In addition there is commentary on the latest leasing initiatives. The information
has not been reviewed or reported on by L2D’s external auditors.
The trading performance of the portfolio has seen a general upward trend, with Sandton City
and Eastgate Shopping Centre reporting good growth. Vacancies have reduced for August,
largely driven by pre-let vacancies at Eastgate taking beneficial occupation during the month
of August. Lastly, there are some exciting store openings across the portfolio during the
remainder of 2018 which we believe will further improve the tenant mix and optimise trade of
our centres.
Retail Trading Update as at 30 June 2018
• 2017 was undoubtedly one of the toughest retail environments for L2D with the downturn
in the economic environment which resulted in consumer spending coming under
pressure. The closure of Stuttafords as well as the major increase in assessment rates at
Eastgate shopping centre were contributing factors.
• Towards the end of 2017 the L2D portfolio began to recover which was evident in the
slowdown in the rate of decline in trading densities.
• For the 12 months to June 2018, the portfolio reported a positive trading density growth
of 2.8%. This excluded Botshabelo Mall and Midlands Lifestyle Centre.
• Trading densities across most centres have shown considerable improvement with
Sandton City and Eastgate shopping centre reporting growth of 5.4% and 3.1%
respectively. Nelson Mandela Square is slowly recovering from a -9.5% trading density
decline in December 2017 to a -4.7% at June 2018.
• The Midlands Mall Lifestyle Centre (Lifestyle Centre) opened in March 2018. The Lifestyle
Centre has a lower trading density than the existing mall as it has larger box tenants.
Midlands Mall’s trading density has declined by 2.3% as a result of the development
activities and the enlargement of some key retail stores and is expected to recover upon
completion of the development.
• Botshabelo has been included in the reporting for the portfolio from May 2018.
Accordingly the high growth of 14.1% is attributable to 8 months trading in the base data
vs 12 months data in the current period. Additionally, certain categories particularly
grocery/supermarket and unisex wear have contributed positively to growth.
• Luxury brands remain a driver of consumer spend at Sandton City and have generated
exceptional trading density growth of 18.7% for the 12 months to June 2018.
Annualised Annualised
IPD2 Q2 Centre vs.
Trading Trading
CENTRE Growth % ATD IPD
Density June Density June
Benchmark Variance %
2017 20181
Sandton City 50 645 53 369 5.4% 37 517 42.3%
Eastgate 35 801 36 919 3.1% 37 517 -1.6%
Nelson Mandela Square 56 932 54 262 -4.7% 33 057 64.1%
Liberty Midlands Mall 38 701 37 797 -2.3% 33 057 14.3%
(Excl. LC)
Liberty Promenade Mall 38 369 39 928 4.1% 33 057 20.8%
Melrose Arch 26 927 27 334 1.5% 29 671 -7.9%
Botshabelo 24 878 28 382 14.1% - -
1
Annualised Trading Densities are extracted from the Clur Research Report
2
Botshabelo is not included in the IPD Quarterly Retail Analysis.
• The L2D retail portfolio continues to outperform the IPD benchmark in terms of annualised
trading density with Sandton City and Nelson Mandela Square posting a significant positive
variance to the benchmark.
• While Eastgate shopping centre may appear marginally below the benchmark it must be
noted that the significantly higher trading density of Sandton City does skew the
benchmark. When Sandton City is excluded from the super-regional benchmark,
Eastgate’s annualised trading density of R36,919m2 is higher than the adjusted benchmark
for the annual trading density of the super-regionals of R35,096/m2.
• This report provides an update on June 2018 trading data, however, it is pleasing to note
that the overall performance for July 2018 has improved further with annualised trading
density growth for the portfolio of 3.5%. At an asset level, Sandton City grew by 5.8% and
Eastgate by 4.6% for July 2018.
Vacancy update
• There has been good leasing activity within the portfolio, with vacancies decreasing from
June to August 2018. The overall vacancy rates as well as the vacancy rates including
pre-let deals are presented in the table below.
August 2018 Portfolio Retail Office Specialised
Overall vacancy rate 5.1% 2.9% 9.2% 0.0%
Pre-let vacancy rate 4.1% 1.4% 8.8% 0.0%
Further leasing initiatives
L2D’s retail centres continue to attract a wide range of exciting new brands. The following are
some of the new tenancies over the next quarter. These new brands enhance the tenant mix
of the respective centres and cater to the demand of their customers.
• Sandton City – Coach, Sportsmans Warehouse, Armani Exchange, LC Waikiki and Burger
Rack.
• Nelson Mandela Square – True Story (a Nelson Mandela Foundation retail initiative), JM
Legazel and Wolf & Maiden.
• Midlands Mall – LTD Kids, Chateau Gateaux, Krispy Kreme and Toy Kingdom
• Promenade – Crosstrainer and JAM Clothing
• Botshabelo – Shoe City
• Eastgate – H&M, Dischem and Lindt
Edcon update
As at 31 July 2018, the portfolio exposure to Edcon in terms of GLA is as follows:
July 2018 July 2017 Exposure Reduction
Edcon Exposure - Portfolio 5.75% 6.21% - 0.46%
The management of L2D continues to engage with Edcon, on both a strategic and operational
level specifically regarding the space rationalisation plans. As indicated in the above table,
exposure to Edcon has been reduced where possible, an example being the closure of Top
Shop in Sandton and the subsequent re-tenanting of that space to Sportmans Warehouse. At
Sandton City, the trading performance of Edcon grew by 4.48% and in our overall portfolio by
1%.
Conclusion
Management is pleased with the recent performance of the portfolio and specifically the
growth in trading densities in the current retail environment. A continued focus is placed on
ensuring the centres are positioned as the place of choice for both tenants and shoppers alike,
as a result of the quality of environments L2D manages.
Sponsor:
The Standard Bank of South Africa Limited
Date: 25/09/2018 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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