28 May - 8 min read

Pre-close investor update

Pre-close investor update

LIBERTY TWO DEGREES LIMITED
(Registration number: 2018/388906/06)
JSE share code: L2D
ISIN: ZAE000260576
(“L2D” or “the Company”)



Pre-close investor update
L2D presents this pre-close investor update ahead of the interim closed period which commences on 1 June
2021. This pre-close investor update follows on from our operational update, which was released on 7 May
2021, and provided an update on the operational performance of the property portfolio of L2D for the first
quarter of 2021.




Encouraging signs of a retail recovery
The most recent announcement of the move to adjusted lockdown level 1 on 1 March 2021, which further
relaxed restrictions on the movement and economic activity of South Africans, has stimulated early signs of a
retail recovery. L2D’s key indicators are measured through tracking customers visiting our malls, tenant
occupancies, rental collections, turnover growth and occupational health and safety and encouragingly, there
has been a notable monthly improvement in operational performance in 2021.

In this report, the latest monthly turnover data is provided for April 2021 and occupancy rates at 30 April 2021
are disclosed. In addition, we provide an update on our new customer behaviour system, rent relief, and
commentary on the latest leasing initiatives.

Footcount and customer count
The monthly portfolio footcount at April 2021 improved to 101.6% of the comparative 2019 level. The table
below reflects the footcount for the four months ended April 2021, compared to the relative 2019 levels, and
comparisons with 2020 have been avoided due to the impact of the lockdown.

Footcount

         Month               Footcount as a % of 2019
         Jan-21                        82.4%
         Feb-21                        84.7%
         Mar-21                        79.5%
         Apr-21                        101.6%


Our improved customer counting software was implemented on 1 April 2021 and allows us to count customers
and analyse their shopping patterns within the shopping centres, in addition to traditional footcount. Customer
count measures the number of people by identifying unique patterns, whereas footcount tracks the customer
flow at specific points. The system is fully compliant with the privacy principles as set out in the POPIA
legislation.



Additional operational metrics tracked by the software in April 2021 include customer count zones, dwell times,
vehicle counts and gender and demographic distribution. High customer count zones across our retail portfolio
include the apparel, food service and electronics categories. Stationery, entertainment and eyewear and
optometry were shown to be low customer count zones.The customer counting software is also able to assist
from a safety aspect by identifying stolen cars, weapons, or persons banned from the centres and the improved
analysis will be beneficial in the strategic management of the centres.
Retail turnover update
The quarterly turnover graph below reflects the portfolio’s recovery post the onset of Covid-19 with Q1 2021
only down 3.9% compared to Q1 2020 which substantiates encouraging signs of retail recovery and a further
improvement from Q4 2020.


                                                                  Q1                  Q2            Q3           Q4
 Turnover 2019 (Rm)                                             3,971             4,345            4,197        5,504
 Turnover 2020 (Rm)                                             3,735             1,991            3,294        4,992
 Quarterly turnover growth vs prior year (%)                    -6.0%            -54.2%            -21.5%       -9.3%
 Turnover 2021 (Rm)                                             3,589
 Quarterly turnover growth vs prior year (%)                    -3.9%


From a monthly perspective, April turnover has continued the 2021 trend of improvement as illustrated in the
monthly turnover graph below, with turnover up 2.3% from March 2021. Furthermore, turnover for April 2021
was down by only 5.9% compared to April 2019, an improvement from March 2021 which was down 6.4%
compared to March 2019.



                      Turnover 2019 (Rm)                Turnover 2020 (Rm)                 Turnover 2021 (Rm)
 Jan                            1,269                             1,342                          1,064
 Feb                            1,285                             1,349                          1,198
 Mar                            1,417                             1,044                          1,327
 Apr                            1,442                              166                           1,358


Note: March 2020 and April 2020 were impacted by the Level 5 Lockdown restrictions.


Super-regional centres in general were severely impacted across South Africa during lockdown, however
Sandton City and Eastgate combined has shown resilience through these uncertain times with turnover for
March 2021 at 95.2% and April at 96.9% of 2019 levels respectively. Strong performing categories across the
portfolio include technology as well as homeware and furniture which achieved monthly trading density growth
of 29.8% and 1.2% respectively compared to April 2019.




Hospitality
At the end of April 2021, the Sandton Sun hotel was the only hotel in the portfolio that was operational, with
the Garden Court resuming trade in early May 2021. The Sandton Sun’s occupancy rate was 54.6% in April
2021, up from the December 2020 occupancy rate of 46.5%. The improvement in April highlights the positive
impact on local travel due to lighter restrictions. The Sandton Intercontinental Towers has been closed for
operations since March 2020 to minimize the cost impact and the lease remains suspended with no rental
payable until the hotel reaches viable levels of operation.

The Sandton Convention Centre’s lease with Tsogo Sun Hotels was converted to a management agreement
in 2020, on a management fee basis and a new lease will be negotiated when market conditions are stable
enough to enter into a long-term agreement. The Convention Centre is still bound by Covid-19 restrictions
limiting the size of conferences, however, there were five events that took place during March and April 2021.

Occupancy update
The portfolio occupancies have not changed significantly since December 2020, demonstrating the quality and
robust nature of our portfolio. The portfolio occupancy rate showed a slight improvement from 92.8% in March
2021 to 92.9% in April 2021. Good leasing activity during the period improved the portfolio occupancy rate to
        93.6% when future pre-lets are taken into account. Pre-lets refer to offers signed by both the tenant and
        landlord, for a future start date.

        At April 2021, the retail portfolio had an occupancy of 95.3% which remains ahead of the SAPOA Q4 2020
        occupancy benchmark of 93.9%. The office sector continues to remain under pressure with an occupancy of
        86.4% in April 2021, slightly below the SAPOA Q4 occupancy benchmark of 86.7%. The marginal decrease
        from March 2021 is driven by additional vacancies at Atrium on 5th.

        Occupancy rate – April 2021 vs March 2021 vs December 2020


                         Portfolio                       Retail                       Office                        Specialised

Description   April 21    Mar 21     Dec 20   April 21   Mar 21   Dec 20   April 21   Mar 21   Dec 20    April 21     Mar 21      Dec 20


Overall       92.9%       92.8%      93.3%    95.3%      95.0%    95.3%    86.4%      86.7%    87.6%     100%         100%        100%
 occupancy
 rate

Pre-let       93.6%       93.4%      94.1%    96.3%      95.9%    96.8%    86.8%      86.8%    87.4%     100%         100%        100%
  occupancy
  rate




        Leasing initiatives
        Strong leasing activity has highlighted the demand for space with thirty one new deals successfully secured
        by 30 April 2021.In addition to the Adidas Halo concept store, Arc Cosmetics, Alexander McQueen, and Chanel
        will be joining the tenant mix at Sandton City, highlighting the strong demand for health and beauty, and further
        substantiating how luxury brands continue to be a unique differentiator in our portfolio. Enhancing the tenant
        mix, Eastgate has encouragingly introduced a number of new tenants including Armani Exchange. Total space
        of 18,681 m2 has been successfully renewed in 2021, 9,578 m2 within the retail portfolio and 9,103 m2 within
        the office portfolio.

        Aligned to our strategy of meeting the changing needs of our customers, Eastgate has introduced a drive-in
        cinema on its rooftop which has attracted favorable interest, with Sandton City scheduled to follow suit in early
        June 2021. Midlands Mall has opened an iStore pop up in May, the first in the Pietermaritzburg community.

        Sandton City and Nelson Mandela Square will be introducing a host of new additions, amplifying the consumer
        experience with unparalleled offerings. Luxity will be opening its first flagship store in Nelson Mandela Square
        in June. Bringing a family favourite home to Sandton City, Gap will be opening their second store in South
        Africa in early winter. New food offerings include Chiapas Eat Mexican and Tang, a luxury Asian restaurant
        and bar. Additionally, an exciting pop-up curated collection of the finest South African artists will be presented
        by True Story.

        Rental relief and collections update
        Rent relief still under negotiation largely pertains to the restaurant and fast food categories. As at 30 April
        2021, 89.9% of negotiations with tenants have been concluded (December 71.7%). Rent relief remains a
        critical focus and L2D continues to work with the tenant categories most impacted. Additional rental relief has
        been granted in 2021 to movie theatres, gyms and restaurants as these sectors continued to be impacted and
        required additional support.

        Rental collections, based on the full amounts due and before any rental relief, have continued to increase on
        a monthly basis and are reported at 104% for May 2021 (April 2021: 94%). The high collections in May are a
        result of the settlement of arrears balances as further rent relief negotiations are finalised.

Liquidity
In terms of liquidity, as at 30 April 2021 L2D remains well capitalised with a Group LTV of 23.6% and unutilised
RCF facilities totalling R247 million.




Conclusion
We remain focused in our ongoing response to Covid-19 and reaffirm our commitment in building strong
property fundamentals and continue to invest in the communities in which we operate in a responsible,
sustainable, constructive and empowering manner.

Good progress has been made in concluding the rental relief negotiations with tenants. The monthly
improvement in both footcount and turnover is encouraging, especially as L2D is predominantly invested in
retail focused assets.

The Company enters a closed period as at 1 June 2021. L2D’s interim results for the six months ending 30
June 2021 will be released on SENS on Monday, 26 July 2021. A presentation of the results is scheduled to
take place on the same day.

The financial information contained in this trading statement has not been reviewed or reported on by L2D’s
external auditors.

This Pre-close investor update is also available at:

https://www.liberty2degrees.co.za/investors/results-centre/

Johannesburg
28 May 2021

Corporate information
Liberty Two Degrees Limited
Date of registration: 10 July 2018
JSE share code: L2D
ISIN: ZAE000260576
(Approved as a REIT by the JSE)
(Liberty Two Degrees or L2D)

Registered Office
3rd Floor, West Office Block
Nelson Mandela Square
Corner of Maude and 5th Street
Sandton
2196
(Postnet Suite 202, Private Bag X9, Benmore, 2010)

Investor Relations
Gareth Rees
Email address: investors@liberty2degrees.co.za

Company Secretary
Ben Swanepoel
Contact information
Telephone: +27 11 448 5500
Email: info@liberty2degrees.co.za
www.liberty2degrees.co.za

Auditors
PricewaterhouseCoopers Inc.
Waterfall City
4 Lisbon Lane
Jukskei View
Midrand
2090
(Private Bag X36, Sunnighill, 2157)

Sponsor
The Standard Bank of South Africa Ltd
(Registration number: 1962/000738/06)
30 Baker Street, Rosebank, 2196
PO Box 61344, Marshalltown, 2107
Tel: +27 11 721 6125

Date: 28-05-2021 08:00:00
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