26 Jul - 11 min read

Summarised Group Results for the Six Months ended 30 June 2021

Summarised Group Results for the Six Months ended 30 June 2021

(Registration number: 2018/388906/06)
JSE share code: L2D
ISIN: ZAE000260576
("L2D" or "the Company")

for the six months ended 30 June 2021



20 303 m2
in new deals and
23 803 m2
in renewals




15.79 cents


The comparative half-year results must be seen within the
context of strong trading in the first quarter of 2020, followed
by the impact of the first lockdown; this severely affected
trading and necessitated rental rebates and discounts for
the remainder of the year. The steady recovery in trading
in the first half of 2021 allowed a consequent reduction in
rental rebates and discounts. Accordingly, the interim periods
are not directly comparable, and in some cases, we refer to
2019 as a base. We saw a monthly improvement in operational
performance in 2021, despite the uncertain socioeconomic
environment. Key operational indicators, including customer
visits to our malls, tenant occupancies, rental collections,
turnover growth and occupational health and safety, have been
encouraging. We continue to work with our security team,
business partners and government to safeguard our assets,
and with our tenants and customers to restore confidence.

The first six months of the year showed promise, buoyed
by the easing of restrictions from March 2021, with a steady
improvement in footcount and turnover at our malls. This
encouraging start to the year contributed to better occupancy
rates and good leasing activity in the period. Pleasingly,
we saw an improvement in the rental arrears position, with
almost all rental relief negotiations related to the 2020 period
now concluded. However, the impact on the economy of the
ongoing Covid-19 pandemic, along with the recent social
unrest, are contributing to a difficult trading environment for
the property sector.


Despite challenging trading conditions, demand for L2D
space remains strong. Portfolio occupancy improved to 93.7%
at June 2021 (December 2020: 93.3%). This highlights the
portfolio's resilience and our ability to attract new tenants,
especially in the retail portfolio. At June 2021, the retail
portfolio occupancy rate had improved to 96.7% (December
2020: 95.3%), remaining ahead of the MSCI Q1 2021 retail
occupancy benchmark of 93.2%. The office sector remains
under pressure, however, with the industry oversupply
further impacted by the shift to working from home. Office
occupancies declined to 86.6% at June 2021 (December 2020:
87.6%) but remain above the SAPOA Q2 2021 office occupancy
benchmark of 85%. Our leasing strategy continues to pay off,
with 133 leases (renewals and new deals) concluded in the first
six months, equating to 44 106 m2. Rental reversions remain
negative for both the retail and office sector, down 26.6% and
21.0% respectively; however, these are slightly ahead of our
expectation for the year. The negative reversions are due to the
challenging operating environment as a result of the ongoing
Covid-19 impact.

The retail portfolio showed significantly better turnover
and footcount over the period following the easing of the
lockdown restrictions. The latest monthly turnover data
is provided for May 2021. L2D's turnover after the hard
lockdown grew consistently over the first five months of the
year. Tenant trading and turnover showed a positive trend,
with monthly turnover up 88.1% and 3.7%, compared to May
2020 and May 2019 respectively. Monthly trading density in
May 2021 grew 50.2% and 5.2% compared to May 2020 and
May 2019 respectively. Portfolio footcount followed a similar
recovery, up 106% and 55% in May and June 2021, compared to
May and June 2020 respectively.

Improved rental collection supported good cash flow
management. Based on the full amounts due and before any
rental relief, rental collections showed monthly increases and
reached 112% in June 2021. The high collections in June were
a result of the settlement of arrears balances as further rent
relief negotiations were finalised. At 30 June 2021, 93.2% of
negotiations with tenants related to the 2020 period had been
concluded (December 71.7%). We continue to provide critical
focus and support for tenants most affected by the ongoing
Covid-19 pandemic, largely in the restaurant, fast-food,
hospitality, gyms and entertainment categories.

The hospitality sector continues to be severely impacted. Only
the Sandton Southern Sun hotel is trading, while the Sandton
Convention Centre closed following the move to adjusted
level 4. This continues to negatively impact the rental income
derived from these operations.
FINANCIAL RESULTS                                                                            Restated
                                                                    Unaudited               Unaudited
                                                                      30 June                 30 June
R'000                                                                    2021                    2020                % Change
Revenue (1)                                                           438 800                 476 354                     (8%)
Net property income                                                   240 738                 201 797                     19%
Profit from operations                                                215 209                 182 120                     18%
Net interest expense                                                  (71 047)                (78 430)                     9%
Profit before fair value adjustments                                  144 162                 103 690                     39%
Profit/(loss) before tax (3)                                          181 917              (1 405 811)                  >100%
Headline earnings                                                     136 654                 103 690                     32%
Basic and diluted earnings/(loss) per share (cents)                     19,59                 (155,27)                  >100%
Headline earnings per share (cents)                                     15,35                   11,45                     34%
Distribution per share (cents)                                          15,79                       -                   >100%
Net asset value per share (Rand) (2)                                     7,62                    7,72                     (1%)

1. In line with IFRS 9 financial instruments and IFRS 16 leases - The rental rebate is recognised in the change in expected credit
   losses rather than in property portfolio revenue and the comparative interim period has been restated.
2. Calculated based on total equity divided by the number of shares in issue (908 403 334) excluding treasury shares (21 356 549).
3. R1.4 billion loss reported in 2020 results from the significant devaluation of the property portfolio.

Our conservatively managed balance sheet is one of our
key strengths. With an LTV of 23.97% at 30 June 2021
(31 December 2020: 20.51%), we have sufficient liquidity
and remain well within our bank covenants. Our interest
cover ratio is healthy at 3.4x with 79.2% of our interest
rate exposure hedged. The average cost of debt remains
relatively low at 7.92%. Total unutilised revolving credit
facilities amounted to R247 million at 30 June 2021.

L2D's property portfolio was valued at R8.5 billion at
30 June 2021. This is marginally up from the December
2020 valuation, following the significant write down of
the property valuation by R1.7 billion in 2020. The values
are based on independent property valuations performed
at 30 June 2021, which is in line with L2D's policy to
have external independent valuations performed at both
the interim and final reporting date. The Standard Bank
Centre has been classified as a non-current asset held for
sale and is reflected at net selling price, following the signing
of a binding offer to purchase. The divestment process
is underway. L2D's net asset value per share at 30 June
2021 was R7.62.


The revenue decline of 8% compared to the prior year period
is mainly as a result of the ongoing closure of the hospitality
sector and the Century City sale.

Reported net property income (NPI) grew 19% compared to
the comparative period. The improved trading environment
resulted in lower levels of rental discount in comparison to
the prior period. Coupled with lower vacancies, this resulted
in improved rental revenue, albeit off a lower base given
the impact of hard lockdowns on rental revenue in the
comparative period. On a net basis, lower utility consumption
and other cost reductions contributed to savings in property
operating expenses, which bolstered NPI for the six-month
period. Above-inflation increases in rates and municipal
charges remain a concern.
Profit from operations of R215.2 million was up 18%
compared to the prior year period. Lower operating costs
in line with our strategic response to Covid-19 supported
this result. Net interest expense decreased 9% from 30 June
2020 due to the lower JIBAR base rate for floating rate debt.
Fair value adjustments include the positive R29.2 million
mark to market on the interest rate hedges in place at the
end of June 2021, the marginal property valuation uplift of
R1.8 million in June 2021, and a R6.8 million adjustment for
the straight-lining of operating lease income. The taxation
expense of R7.5 million resulted from temporary differences
on the deferred tax asset gradually unwinding as provisions
are utilised. Including positive fair value adjustments of
R37.8 million (30 June 2020: negative R1.5 billion), we
recorded profit after taxation of R174.4 million for the six
months ended 30 June 2021 (30 June 2020: R1.4 billion
loss due to the devaluation of the property portfolio).


The Covid-19 third wave, coupled with the recent spate of
social unrest, has made the outlook for the rest of the year
more uncertain. Given this context, the board has resolved
not to provide earnings and distribution guidance for the
remainder of the 2021 financial year.

The safety, security and wellbeing of our employees,
customers, tenants, service providers and other stakeholders
remains our top priority. Despite the climate of uncertainty,
our quality assets and tenants should continue to underpin
resilient demand for L2D space and trading levels, as
evidenced in the first half of the year. The focus of our
capital and risk management strategies will be to protect
and preserve our balance sheet and control costs, while
we carefully pursue the growth opportunities aligned with
our strategic value drivers. We have a clear and focused
operational strategy, grounded in property fundamentals,
and we remain committed to executing our business in a
sustainable manner and remaining flexible as we rebuild for

In the light of the improved trading performance and the
strength of the balance sheet, the board has declared a
mid-year distribution of 15.79 cents per share. No interim
distribution was paid in 2020.


The Board has approved, and notice is hereby given of a
distribution of 15.79 cents per share for the six months ended
30 June 2021 (the distribution).

The distribution is payable to L2D shareholders in accordance
with the timetable set out below.

Last date to trade cum dividend              Tuesday,   24   August
Shares trade ex-dividend                   Wednesday,   25   August
Record date                                   Friday,   27   August
Payment date                                  Monday,   30   August

L2D uses distribution per share as a relevant measure
of financial performance. Share certificates may not be
dematerialised or rematerialised between Wednesday,
25 August 2021 and Friday, 27 August 2021, both days
inclusive. Payment of the distribution will be made to
shareholders on Monday, 30 August 2021. In respect of
dematerialised shares, the distribution will be transferred
to the Central Securities Depository Participant (CSDP)
accounts/broker accounts on Monday, 30 August 2021.
Certificated shareholders' dividend payments will be posted
on or about Monday, 30 August 2021.

Shares in issue at the date of declaration of this distribution:
908 443 335, inclusive of 21 356 549 treasury shares.

L2D's income tax reference number: 9178869237.

In accordance with L2D's status as a REIT, shareholders are
advised that the distribution meets the requirements of a
"qualifying distribution" for the purposes of section 25BB of
the Income Tax Act, No. 58 of 1962 (Income Tax Act).

The distribution on the shares will be deemed to be a dividend,
for South African tax purposes, in terms of section 25BB of
the Income Tax Act. The distribution received by or accrued
to South African tax residents must be included in the gross
income of such shareholders and will not be exempt from
income tax in terms of the exclusion to the general dividend
exemption, contained in paragraph (aa) of section 10(1)(k)(i)
of the (Income Tax Act) because it is a distribution distributed
by a REIT. This distribution is, however, exempt from dividend
withholding tax in the hands of South African tax resident
shareholders, provided that the South African resident
shareholders provide the following forms to their CSDP or
broker, as the case may be, in respect of uncertificated shares,
or the company, in respect of certificated shares:

- a declaration that the distribution is exempt from dividends
  tax; and

- a written undertaking to inform the CSDP, broker or the
  company, as the case may be, should the circumstances
  affecting the exemption change or the beneficial owner
  cease to be the beneficial owner, both in the form
  prescribed by the Commissioner for the South African
  Revenue Service. Shareholders are advised to contact
  their CSDP, broker or the company, as the case may be,
  to arrange for the abovementioned documents to be
  submitted prior to payment of the distribution, if such
  documents have not already been submitted.

Distributions received by non-resident shareholders will
not be taxable as income and instead will be treated as an
ordinary dividend which is exempt from income tax in terms
of the general dividend exemption in section 10(1) (k)(i) of the
Income Tax Act.

Assuming dividend withholding tax will be withheld at a rate
of 20%, unless the rate is reduced in terms of any applicable
agreement for the avoidance of double taxation (DTA)
between South Africa and the country of residence of the
shareholder, the net dividend amount due to non-resident
shareholders is 12.632 cents per share. A reduced dividend
withholding rate in terms of the applicable DTA may only be
relied on if the non-resident shareholder has provided the
following forms to their CSDP or broker, as the case may be, in
respect of uncertificated shares, or the company, in respect of
certificated shares:

- a declaration that the distribution is subject to a reduced
  rate as a result of the application of a DTA; and

- a written undertaking to inform their CSDP, broker or the
  company, as the case may be, should the circumstances
  affecting the reduced rate change or the beneficial
  owner cease to be the beneficial owner, both in the form
  prescribed by the Commissioner for the South African
  Revenue Service. Non-resident shareholders are advised
  to contact their CSDP, broker or the company, as the case
  may be, to arrange for the abovementioned documents to
  be submitted prior to payment of the distribution if such
  documents have not already been submitted, if applicable.

Any forecast or forward-looking statements have not been
reviewed or audited by L2D's external auditors.

On behalf of the Board of Directors

Angus Band             Amelia Beattie       Jose Snyders
Chairman               Chief Executive      Financial Director

26 July 2021

The full long-form announcement is available at: 

The contents of this short-form announcement are the responsibility of the Board of Directors of L2D. This short-form
announcement is only a summary of the information in the full announcement and does not contain full or complete details.
Any investment decisions made by investors and/or shareholders should be based on consideration of the full announcement
as a whole. Shareholders are encouraged to review the full announcement which is available on SENS and on L2D's website.
The full announcement is also available on request at: investors@liberty2degrees.co.za or from the sponsor at:
JSESponsor@standardbank.co.za from Monday, 26 July 2021.

The Standard Bank of South Africa Limited

Date: 26-07-2021 07:32:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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 information disseminated through SENS.

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