PRESS OFFICE

Hyprop's focused approach delivers steady growth

Strong trading metrics across Hyprop's portfolio of dominant retail properties in mixed-use precincts in key economic nodes in the six months to 31 December 2022 have confirmed the centres' recovery from Covid-19 and their relevance to consumers.

Distributable income for the six months ended 31 December 2022 increased by 36% to R728 million and distributable income per share grew by 30% to 203 cents compared to 156.9 cents in December 2021. Eastern Europe delivered R243 million of distributable income during the six months, exceeding the FY2023 forecast by about 15%.

Hyprop CEO Morné Wilken said, "The positive momentum across the South African and Eastern European portfolios demonstrates our responsiveness to our tenants' and shoppers' needs, whilst embracing relevant technologies - despite the current challenging operating environment. This set of results is testament that we are well on our way to delivering on our purpose of creating spaces and connecting people."

In the six months period, Hyprop continued to focus on strengthening its balance sheet and liquidity position. The Group raised R500 million in additional capital through the FY2022 DRIP and reduced its euro borrowings by €29 million. At 31 December 2022, the Group held R1.4 billion in cash and R2 billion in available bank facilities. Loan to value (LTV) was 37.2% at end-December from 36.4% at end-June, largely as a result of the weakening of the Rand against the Euro.

As recently announced, Hyprop will be raising R500 million (with potential upside to R750 million) via a bond auction on 31 March 2023. Proposals have been received to refinance the R1.46 billion of debt that matures in June 2023, and are being adjudicated.

South African portfolio

Tenant turnover rose 15.5% year-on-year, and December trading was particularly impressive, with Canal Walk reaching record turnover of over R1 billion in that month. Trading density lifted by 14.4% and foot count rose by 5.9% to 39.6 million people. Demand for retail space remained robust during HY2023, with retail vacancies reducing to 1.5%, from 2% in June 2022.

Some of the highlights were: Canal Walk welcomed a diverse range of new tenants, such as Ted Baker, Samsonite and Yuppiechef; Somerset Mall remains fully let and extensions to the gross letting area (GLA) are being considered to accommodate additional demand; at Rosebank Mall, new stores included Footgear, Hi-Fi Corporation and Volpes; and the upgrade of the Clearwater Mall food court has delivered a notable increase in turnover of restaurant and entertainment tenants.

In line with our sustainability targets and to combat the high cost of the heightened and longer periods of loadshedding outages, the Group continues to prioritise further capital investment to include additional solar-PV installations. This includes the next phase of solar-PV installations at Woodlands, Rosebank Mall and Clearwater Mall. Additionally, new solar installations at Canal Walk and CapeGate are underway. Hyprop also plans to integrate its existing solar and generator capacity with battery storage at its centres.

Eastern European portfolio

The Eastern European centres performed well, with tenant turnover up 14.1% year-on-year and foot count 16.1% higher at 13.9 million. The vacancy rate was only 0.6% at end-December.

Highlights across the portfolio included two new tenant openings at Skopje City Mall, while others relocated to right-sized spaces or undertook refurbishments; City Center one East also welcomed new tenants and extensions to the centre are being considered to cement its dominance in the catchment area; and The Mall in Sofia celebrated the opening of a number of new stores, including Jack and Jones, Cool Club, Robert James Whisky, Brilliant Furniture and My Geisha, while several other stores were refurbished.

All four properties in the portfolio are undergoing BREAAM audits, a science-based certification system that rates buildings' sustainability performance, and these will be concluded by June 2023.

Sub-Saharan Africa (excluding South Africa) portfolio

Overall, portfolio vacancies in the SSA centres have decreased to 7.8% in December 2022 from 10.1% in FY2022. Although Game exited Ghana at the end of the period, there has been progress in identifying replacement tenants. Foot count across the portfolio decreased by 7% year on year, with turnover and trading density in Ghana being impacted by the depreciation of the Ghanaian Cedi against the dollar.

At Accra Mall, new openings included Maestro, Chocolate Sayari and Yetra E-Gaming, a world-class e-gaming centre and at Kumasi City Mall, Kidsville and Tecno have been added to the tenant mix.

The lack of dollar liquidity in Nigeria continues to delay the completion of the sale of Ikeja City Mall.

ESG priorities

Hyprop rolled out a zero wet waste programme in the six-month period and, as the centres are improving their recycling of wet waste, the recyclable dry waste is less contaminated, so the level of dry waste recycling is increasing steadily. Various programmes were implemented to manage water usage, such as the installation of Propelair toilets at CapeGate and Woodlands, while the second phase of the programme to convert air conditioning units at some of the Hyde Park stores from water to air-cooled condenser units has commenced.

Looking ahead

As part of Hyprop's strategic priorities, the management team continues to pursue to: find sustainable solutions to loadshedding and its effects; repositioning the South African portfolio; retaining the dominance of the Eastern European (EE) portfolio; conducting annual reviews of the portfolio to consider recycling assets and growth opportunities; protecting value in the sub-Saharan Africa (SSA) portfolio, pending an exit; developing non-tangible assets; and ensuring the balance sheet is robust.

"In light of the difficult global economic environment and unique challenges in each of the regions in which we operate, such as the deteriorating infrastructure in SA, high inflation and energy costs in EE and unavailability of US Dollars in SSA, we remain cautious in terms of our short to medium-term prospects. However, we believe that we have created a solid base from which we will continue to execute our key strategic objectives and deliver long-term value for all our stakeholders," Wilken concluded.

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