2020 Integrated Annual Report

and Consolidated & Separate
Financial Statements

Executives' report

Hyprop is a retail-focused REIT listed on the JSE with interests in a R48.5 billion portfolio of shopping centres in South Africa, Eastern Europe and sub-Saharan Africa.

The Company's purpose is to create safe environments and opportunities for people to connect and have authentic and meaningful experiences. It does so by owning and managing dominant retail centres in mixed-used precincts, in key economic nodes in South Africa and Eastern Europe, and more recently, through its new non-tangible asset strategy of investing in disruptive technologies that will benefit our business.

The revision of the Group's strategy during the 2019 financial year will allow Hyprop to adapt to the rapidly evolving retail landscape, disruptive technologies and market conditions. The priorities for the 2020 financial year are depicted below:

We were making progress towards achieving these objectives in the first nine months of the year, before the outbreak of Covid-19 and the national lockdowns in all jurisdictions where the Group operates. The strategy and strategic objectives remain in place, however, and we are committed as a team to achieving these objectives.


The 2020 financial year has been the most difficult in Hyprop's 32-year history, yet there is much to be positive about.

Despite the moribund South African economy, progress was made in the first half of the financial year towards achieving the Group's strategic objectives, which include growing trading densities by repositioning the South African portfolio and introducing capital light revenue streams.

The Hystead assets are held in economies that exhibit better economic metrics than South Africa and significant progress was made in increasing the dominance of the centres in the Eastern European portfolio.

The disposal of the sub-Saharan Africa investments has progressed significantly, albeit in a difficult transacting environment.

Notwithstanding the challenges presented by Covid-19, the Group's focus remains to implement the revised strategy and good progress was made on certain key priorities.

Key terms have been agreed for the disposal of Ikeja City Mall in Nigeria and we have reduced the Group's US-Dollar-denominated debt by over $271 million. Exposure to Edcon was reduced by 15 640m2 through relettings and terms have been agreed with the new owners of the Edgars, CNA and Jet stores. Three new Checkers FreshX stores were secured as anchor tenants in the SA portfolio. Three of the six solar projects were completed in Gauteng and Canal Walk secured a 5-star Green rating. Projects aimed at increasing the dominance of our European malls continued during the lockdown periods and the reaction from shoppers since the malls re-opened has been positive. The first SOKO District, which is part of the Group's non-tangible asset strategy, is scheduled to open in the Rosebank Mall in the first quarter of 2021.

Positive progress implementing revised strategy

  • Distributable income in line with guidance before Covid-19
  • Successful implementation of Covid-19 provisions at all malls and re-opening as lockdowns lifted
  • Covid-19 direct impact on distributable income – negative R434 million
  • Retained R1.2 billion of cash distributions to repay debt
  • Reduced USD denominated borrowings by $271 million
  • All banking covenants met as at 30 June 2020
  • Trading density to February 2020 up 1% year on year
  • Finalised repositioning strategy on each asset
  • Reduced Edcon exposure by 15 640m2
  • Agreed terms with buyers of CNA, Edgars and Jet over 48 369m2 of GLA
  • 3 new Checkers FreshX stores (The Glen, Rosebank Mall and Woodlands)
  • 3 solar projects completed (Woodlands, The Glen and Atterbury Value Mart)
  • 5-Star Green rating on Canal Walk
  • YOY Trading density up:
    • 1.9% at The Glen
    • 4.9% at Atterbury Value Mart
  • Successful opening of Hyper extension of The Mall in Sofia, Bulgaria
  • Acquisition of remaining 10% in the two malls in Zagreb, Croatia
  • On track with the repositioning of Skopje City Mall, North Macedonia
  • Refinanced portion of in-country debt on more favorable terms
  • Asset management function internalised
  • Simplified shareholders' arrangements in AttAfrica
  • Secured conditional deal on Ikeja, Nigeria
  • Successful implementation of two disposals (Manda Hill and Achimota)
  • SOKO district in development and first pilot to open in the first quarter of 2021

Effects of the Covid-19 pandemic became meaningful from March 2020 and are likely to continue for some time. The lockdowns imposed by governments severely impacted economies and businesses, and global financial markets reacted with unprecedented volatility due to the uncertainty over the financial and social impacts of the pandemic.

Hyprop established Covid-19 task teams for each of our South African, Eastern European and sub- Saharan Africa operations. These teams monitored and managed the risks and challenges presented by Covid-19, and ensured the implementation of the relevant guidelines, protocols and preventative measures recommended by the World Health Organization, local health authorities and governments. The health and safety of our staff, tenants and customers is a priority and we continue to partner with our tenants and other stakeholders to find solutions that will enable all of us to emerge from Covid-19 with our businesses intact. We commend our front-line staff who ensured that our malls remained open for those tenants that could trade throughout the lockdown periods.

The impact of Covid-19 on the South African economy, and the retail sector in particular, has been severe, with both having endured several years of poor growth prior to Covid-19. The relatively stronger Eastern European economies, where the Group's operations are located, were also not spared and, in addition to the impact of Covid-19, the West African economies of Ghana and Nigeria were negatively impacted by the decline in the oil price.

Further details of the impact of Covid-19 on the Group are included in Response to Covid-19 of the integrated annual report.

As the stringent Covid-19 lockdowns are relaxed, we are seeing an increase in foot counts at our malls, and more activity and enquiries from potential new tenants. After months of lockdown, we are reaffirming that we are social beings who like to interact and experience life, justifying our strategy of creating safe environments and opportunities for people to connect and have authentic and meaningful experiences.


The financial performance of our portfolios was adversely impacted by Covid-19, and the consequent lockdowns, as we assisted tenants by granting discounts on contractual rentals, and earned little or no rental income, especially in Eastern Europe, where approximately 15% of rentals are linked to tenant turnovers and/or their ability to trade. Certain tenants will require ongoing support and we will endeavour to strike the right balance between maintaining occupancy levels and accepting negative reversions.

Distributable income
      30 June 2020          30 June 2019    
   R'000  R'000  R'000  R'000    R'000  R'000  R'000  R'000 
Net income before fair value adjustments  1 362 612  142 956  (94 542) 1 411 026    1 627 268  266 016  (95 513) 1 797 771 
Adjustments to calculate distributable income  (175 049) –  22 064  (152 985)   67 743  -  37 154  104 897 
Straight-line rental income accrual  (125 927) –  7 641  (118 286)   81 399  -  6 488  87 887 
Non-controlling interest  –  –  21 449  21 449    -  -  30 959  30 959 
Taxation paid  –  –  –    -  -  (427) (427)
Net interest adjustments  –  –  (4 036) (4 036)   -  -  134  134 
Other fair value adjustments – Edcon  (45 172) –  (45 172)   (12 705) -  -  (12 705)
Capital items for distribution purposes  (3 950) –  2 049  (1 901)   (951) -  -  (951)
Gruppo non-remittable income  –  –  (5 039) (5 039)   -  -  -  - 
Distributable income  1 187 563  142 956  (72 478) 1 258 041    1 695 011  266 016  (58 359) 1 902 668 
Weighted average number of shares for calculating distributable income per share  254 985 466    255 429 272 
Distributable income per share  465.9  56.0  (28.5) 493.4    663.6  104.1  (22.9) 744.9 
% change  (29.8%) (46.2%) (33.8%)  


Impact of Covid-19 on distributable income (R’m)

Distributable income for the year was R1 258 million, 34% down from R1 903 million for the year ended 30 June 2019. The decrease reflects:

Distributable income per share for the full year was 493.4 cents (2019: 744.9 cents), and 664 cents per share before the direct impact of Covid-19, a decrease of 11% from 2019 and in line with the guidance given for the 2020 financial year.

The board of directors has deferred the decisions on the settlement of the interim dividend and the declaration of the final dividend until later in the calendar year.

Distributable income per share (cps)

Cash-backed distributions

One of the Group's key priorities is that distributable income should be underpinned by strong operating cashflows.

Reconciliation of cash generated from operations to distributable income
      30 June 2020          30 June 2019    
   R'000  R'000  R'000  R'000    R'000  R'000  R'000  R'000 
Cash generated from operations  1 599 372  22 326  111 741  1 733 439    1 989 011  44 826  116 095  2 149 932 
Net interest  (357 028) –  (191 367) (548 395)   (239 190) –  (221 965) (461 155)
Dividends  –  120 630  –  120 630    –  221 190  –  221 190 
Net operating cashflow  1 242 344  142 956  (79 626) 1 305 674    1 749 821  266 016  (105 870) 1 909 967 
Distributable income  1 187 563  142 956  (72 478) 1 258 041    1 695 011  266 016  (58 359) 1 902 668 
Ratio of NOC/DI  104.6%  100%  103.8%    103.2%  100%  100.4% 

Despite the deteriorating economic environments, the impact of Covid-19 and increases in arrears in most portfolios, net operating cashflow (calculated as cash generated from operations, less interest paid plus dividends received) for the year was R1 305 million compared to distributable income of R1 258 million, reinforcing the quality and highly cash generative nature of the Group's operations and its ability to meet its ongoing operating and other financial obligations.



The uncertainty and volatility in financial markets as a result of Covid-19, coupled with the weak South African economy, has put property valuations under pressure. The valuation of the South African investment property portfolio decreased from R28.6 billion at 30 June 2019 to R24.7 billion at 30 June 2020, as a result of increases in capitalisation and discount rates, and reduced forecast net property income. Similarly, the valuation of Ikeja City Mall reduced from $141 million to $115 million at 30 June 2020.

Investment property valuations

The Eastern European properties reflect the Hystead directors' valuations and were maintained at the 31 December 2019 external valuations, in line with the Group policy of carrying investment properties at external valuation amounts. The Rand value of these properties increased by R2.8 billion as a result of the depreciation of the Rand against the Euro over the course of the financial year. Given the manner in which the Hystead investment is accounted for, the fair value of the properties is not reflected on the balance sheet. However, the Hystead financial asset was revalued to reflect, inter alia, the acquisition of the additional 10% of the Croatian properties and applicable exchange rate fluctuations.

Investment property
30 June 2020  30 June 2019 
South Africa  R27.0bn (56%) R31.3bn (61%)
   Hyprop share  R24.7bn  R28.6bn 
   Exit cap rate range  6.8% – 9.0%  6.5% – 8.8% 
   Weighted average exit cap rate  7.4%  6.8% 
   Implied forward yield  7.6%  7.2% 
Eastern Europe  R15.7bn (32%) R13.0bn (25%)
   Hyprop share  R9.4bn  R7.4bn 
   Exit cap rate range  7.0% – 9.3%  7.0% – 9.3% 
   Weighted average exit cap rate  7.6%  7.6% 
   Implied forward yield  7.8%  8.0% 
Sub-Saharan Africa  R5.8bn (12%) R7.2bn (14%)
   Hyprop share  R2.4bn  R3.5bn 
   Exit cap rate range  7.8% – 9.0%  7.8% – 9.0% 
   Weighted average exit cap rate  8.4%  8.2% 
   Implied forward yield  7.9%  7.0% 
   Total portfolio  R48.5bn  R51.5bn 

Notwithstanding the decrease in property valuations and the increase in the value of borrowings (specifically the Euro denominated borrowings guaranteed by Hyprop that were affected by the weaker Rand), all banking covenants were met at 30 June 2020. Steps to be taken to withhold Hystead dividends, to preserve cash on South African distributions and to apply the proceeds from asset disposals to reduce debt, will further strengthen the balance sheet.





The portfolio in South Africa includes super-regional centre Canal Walk, large regional centres Clearwater, The Glen, Woodlands, CapeGate, Somerset and Rosebank malls, regional centre Hyde Park Corner and value centre, Atterbury Value Mart. In addition, the Company has interests in office blocks attached to Canal Walk, Rosebank Mall and Hyde Park Corner, and owns standalone offices Cradock Heights and 17 Baker Street, which form part of the Rosebank precinct.

South African portfolio contribution to Group


Financial performance
Year ended 
30 June 2020 
Year ended 
30 June 2019 
Revenue  2 890 219  3 003 847    
   Contractual revenue  3 132 644  3 003 847    
   Covid-19 discounts and relief  (242 425) –    
Expenses  (1 105 351) (1 092 420)   
Net property income  1 784 868  1 911 427    
Other operating income  22 705  26 544    
Other operating expenses  (87 933) (71 513)   
Net interest  (357 028) (239 190)   
Net operating income before fair value adjustments  1 362 612  1 627 268    
Adjustments to calculate distributable income  (175 049) 67 743    
Distributable income  1 187 563  1 695 011    

Distributable income from the South African portfolio decreased by 30%. Revenue lost due to Covid-19 amounted to R267 million, comprising R242 million of rental discounts and deferrals granted between April and June 2020, and an estimated R25 million in lost parking, marketing and promotions income during the same quarter. Turnover rental income was also negatively impacted.

Other contributors to the decrease in distributable income included the R45 million discount granted to Edcon for the 2020 financial year as part of Edcon's restructuring in March 2019, the impact of rent reversions due to the deteriorating economic conditions prior to Covid-19, and the increase in interest costs following the refinancing of $100 million of sub-Saharan Africa loans in June 2019 (R130 million).

Trading density for the South African retail portfolio to the end of February 2020 increased by 1% year on year, evidence of the progress made towards achieving this key strategic objective for the 2020 financial year. Unfortunately, as a result of the lockdown restrictions imposed during March, April, May and June 2020, trading conditions were poor for the majority of tenants during this period. Notably, trading densities for the 2020 financial year for The Glen and Atterbury Value Mart increased by 1.9% and 4.9% respectively, from 2019, despite the impact of Covid-19.

Property and other operating expenses increased by 1% over the prior year, partly due to reduced utility and other costs during the lockdown periods. The gross cost to income ratio increased from 35.4% to 36.8% and 40.0%, before and after the impact of Covid-19, respectively, mainly as a result of the reduction in revenue.

In light of the impact of Covid-19 and ongoing rent reversions, all costs are being reviewed, benchmarked and rebased to ensure that operations remain efficient. Executive and senior management salaries and bonuses have been frozen for the next year and the fees paid to non-executive directors will not be increased.

Trading density (R / m2) Cost to income (%) Collections (% of average billing)


Tenant arrears increased to R137m (2019: R32m), reflecting the difficulties tenants are facing, and the reduction in cash collections during Covid-19 lockdown periods. Reducing these arrears is a key priority for the new financial year.

Lettings and vacancies

The average level of rent reversions on the retail portfolio for the eight months ended February 2020 was negative 13.1% on 119 713m' of GLA. By comparison, rent reversions during the last quarter of the year were negative 14.5% on 20 687m' of GLA, an indication of the compounding impact that Covid-19 is having on tenants and on Hyprop's revenue. On a positive note, annual rental escalations were maintained at 7.1% and the tenant retention ratio was 91%.

Notwithstanding the relaxation of lockdown conditions post 30 June 2020, rental rates remain under pressure as tenants look to rebuild their businesses. We will continue to assist key tenants, where appropriate, to ensure we have functional malls and acceptable occupancy levels. Projects are underway to introduce new offerings and tenants in order to differentiate our malls and satisfy community demands in a fast-changing retail and digital environment. These offerings include the introduction of storage facilities in deep store spaces and excess parking areas, and collection points for online retailers.

Retail vacancies increased from 0.8% at 30 June 2019 to 2.4% at 30 June 2020, a function of Covid-19 and tenants reassessing their business models and the amount of space they require.

Retail new lettings and renewals Retail vacancy


Total rentable area (m2) Vacant Vacancy %
30 June 2020 30 June 2019 30 June 2020 30 June 2019 30 June 2020 30 June 2019
Retail 664 609 663 197 15 648 5 103 2.4% 0.8%
Office 45 956 43 429 6 111 4 638 13.3% 10.7%
Total 710 565 706 626 21 759 9 741 3.1% 1.4%

Despite the difficult economic environment, our malls remain popular among South Africa's leading retail groups and independent retailers.

A Checkers FreshX opened at The Glen in October 2019 and was a key contributor to the growth in trading density and foot count until February 2020. Construction of the new Checkers FreshX store at Rosebank Mall is progressing well and the store is anticipated to commence trading before the end of the 2020 calendar year. The Checkers board has approved a third Checkers FreshX store at Woodlands, with construction starting on 1 October 2020 and an anticipated opening in the first week of April 2021.

At 30 June 2019 the Edcon Group occupied 59 701m2 in the SA portfolio. This was successfully reduced through relettings to 50 791m2 by February 2020. Subsequently, the Edcon business rescue practitioner has given notice of termination of leases covering 3 972m2 , with the remaining 48 369m2 being taken over by the buyers of the CNA, Edgars and Jet brands, albeit at reduced rentals.

We successfully concluded a portfolio deal with Massmart and agreed new 7-year leases on the Game stores, combined with upgrades to the new Game concept store, and new 10-year leases and upgrades to the latest specification for the Builders Warehouse stores at Atterbury Value Mart and Woodlands. The space vacated by the closure of Dion Wired has been relet, at Somerset Mall to Toys R Us, at Hyde Park Corner to PNA, and at Canal Walk to a new look flagship store for PEP.

The Glen welcomed a number of new tenants including Torga Optical, Daily Caf' Coffee Shop, Estoril Books and the Repair Desk, while the Mr Price Group renewed all their leases for a further five years.

Atterbury Value Mart continues to attract value and premium retailers with Kappa and Timberland becoming new tenants during the year.

Yokiko, a new South African stationery retailer, opened stores at Woodlands and Clearwater, and international coffee chain Starbucks opened in Clearwater. Their first store in the Western Cape will open at Canal Walk at the end of November 2020.

At Hyde Park Corner, the former Standard Bank premises are being renovated for a new restaurant concept that will open at the end of 2020. Kamers Makers, which has taken over the former Edgars Cosmetics Gallery space on a four-month trial, has traded well since opening in September 2020.

Vacancies left by the Edcon brands at Clearwater Mall were filled by Volpes, Coricraft and Incredible Connection who relocated their stores, and Hi-Fi Corporation which will open in October 2020.

CapeGate celebrated its 15-year anniversary with renewals/relets on 74 leases covering 26 700m2 , including upgrades to the Mr Price Home, Sport and apparel stores and a latest specification Cotton-On. The first Ackermans Woman was opened.

Property valuations

At 30 June 2020, the valuation of the South African investment property portfolio was R24.7 billion, a decrease of R4.0 billion (13.9%) from 30 June 2019.

SA valuations bridge (R’m)

The decrease reflects, inter alia, the impact of rent reversions on net property income, and increases in the discount, capitalisation and exit capitalisation rates. The overall implied forward yield of the portfolio at 30 June 2020 was 7.6% (2019: 7.2%).

   Value attributable to
Value per m2 
Rentable area 
30 June 2020 
30 June 2019 
30 June 2020 
% change
Shopping centres  655 078  23 307 964  27 089 718  39 093  (14.0%)
Value centres  48 631  1 178 000  1 411 000  24 223  (16.5%)
Total retail  703 709  24 485 964  28 500 718  38 065  (14.1%)
Stand-alone offices  6 856  180 000  136 000  26 254  32.4% 
Total investment property  710 565  24 665 964  28 636 718  38 143  (13.9%)
Building appurtenances  (206 236) (162 288)
Own use asset adjustment  (12 897) – 
Centre management assets  2 377  1 808 
Investment property – statement of financial position  24 449 208  28 476 238 
Reversionary capitalisation rate range  6.8% – 9.0%  6.5% – 8.8% 
Weighted average reversionary capitalisation rate  7.4%  6.8% 
Implied effective forward yield  7.6%  7.2% 

Capital expenditure

Total capital expenditure for the year was R212 million, including R44 million for the acquisition of 17 Baker Street, Rosebank (an 8% initial yield). The office block was the last property required for Hyprop to control the corner between Bath and Baker streets, and is adjacent to the vacant site next to the Rosebank Mall. The combined sites will improve efficiency from a development perspective, provide more flexibility in terms of the building structure, and most importantly, provide access from Baker Street.

Planned capital expenditure for 2020 was significantly curtailed in the last quarter of the year to preserve cashflow and only critical projects were advanced. Projects valued at R148 million, including the solar projects at the Gauteng malls, generator installations/replacements at various malls, major tenant installation projects and the portfolio wide wi-fi project, have been rolled into the 2021 financial year. Critical capital expenditure projects for 2021 are estimated at R238 million and include replacing the ceiling and air-conditioning at Somerset Mall, tenant fit-outs linked to new leases with major retail groups, and unavoidable replacements of lifts, escalators and generators. Without detracting from the decision that only critical projects will be undertaken, we remain mindful of the need for planned maintenance, end-of-lifecycle replacement of assets and the general upkeep of our properties to ensure they remain fully operational and relevant to tenants and consumers.




Hyprop's EE investments, held via a 60% interest in UK-based Hystead Limited (Hystead), include interests in Delta City in Belgrade, Serbia; Delta City in Podgorica, Montenegro; Skopje City Mall in Skopje, North Macedonia; The Mall in Sofia, Bulgaria; and City Center One East and City Center One West, both in Zagreb, Croatia. Hystead acquired the remaining 10% interest in the Croatian assets in December 2019.

Eastern European portfolio contribution to Group

The key priority for the EE portfolio is to continue to increase the dominance of the malls through asset management initiatives, upgrading of facilities, securing new tenants, rightsizing existing tenants and extending the malls, where appropriate. Good progress was made prior to March 2020, after which the Balkan countries were placed under Covid-19 lockdown. Easing of the lockdowns commenced in March 2020 with the last of the malls reopening in mid May 2020.

The current arrangement with PDI Investment Holdings Limited (PDI), the 40% shareholder in Hystead, in terms of which Hyprop provides guarantees to Hystead in excess of its 60% interest in Hystead, ends in May 2021, with a 12 month long stop date to implement revised terms. An announcement will be made once negotiations regarding the future structure of the Company have been completed.

Should the outcome of these negotiations result in Hyprop gaining control of Hystead and having to consolidate Hystead's financial results, it may result in the Group's LTV ratio increasing above the current 50% group LTV covenant applied by the Group's major lenders. Discussions with lenders to address this have commenced, and their feedback has been supportive. Any transaction with PDI will be subject to agreement being reached with the lenders on appropriate covenants and calculations to ensure all banking covenants are met.

Financial performance

Hystead's pleasing financial performance for the first half of the year was overshadowed by the impact of the lockdowns imposed by the governments of the countries in which the malls are located. Foot counts and trading densities were negatively impacted.

Trading density (€ / m2)  


As a large proportion of the portfolio's rental income is tenant turnover/trading based, despite continuing rentals from essential services tenants, income reduced by circa €11 million from March to June 2020. With the relaxation of lockdown restrictions, tenants' turnovers and foot counts at the malls have recovered, albeit to levels below those of the previous year.

No dividends were declared by Hystead during the second half of the year with cash retained to ensure that operating and borrowing commitments would be met during the Covid-19 lockdowns and the recovery period. The guarantee fee paid by PDI to Hyprop (as a result of Hyprop having guaranteed more than its pro-rata share of Hystead's equity debt) is based on the dividends declared by Hystead and reduced accordingly. The dividend and guarantee fee income for the year was R143 million, comprising the dividends and guarantee fees to 31 December 2019. The payment of management fees to Hyprop and PDI by Hystead was suspended in the last quarter of the year.

Financial performance
Year ended
30 June 2020
Year ended
30 June 2019
Year ended
30 June 2020
Year ended
30 June 2019
€' 000
Dividend income 120 630 221 190 7 020 13 080
Guarantee fees 22 111 40 542 1 287 2 397
Foreign exchange gains 215 4 284
Distributable income 142 956 266 016 8 307 15 477
Average exchange rate realised 17.18 16.91

Consideration is being given to withholding Hystead dividends until after December 2021 and using the available cash to reduce the Euro-denominated equity debt. This will have a positive impact on Hyprop's overall LTV ratio and reduce the currency exposure arising from the use of Rand assets to guarantee Euro borrowings. A decision to retain Hystead dividends will require the agreement of both Hystead shareholders, and negotiations in that regard are in progress.

The financial asset which represents Hyprop's investment in Hystead increased from R218 million at 30 June 2019 to R533 million at 30 June 2020, as a result of the acquisition by Hystead of the additional 10% interest in the Croatian assets in December 2019, and the weakening of the Rand against the Euro.

Investment property

Hystead's investment property portfolio is independently valued at 31 December each year for purposes of Hystead's financial year end. The property valuations at 30 June 2020 reflect Hystead's directors' valuations, and based on market feedback from the independent valuers, have been retained at the 31 December 2019 valuations.

Investment property valuations
  Year ended 30 June 
Investment property – independent value December 2019 / June 2019 (100%) €804 000 €795 732
Hyprop attributable share (1) €482 400 €458 539
Hyprop attributable share (1) R9 381 378 R7 386 292
Rentable area m2 247 002 241 326
Value per m2 €3 255 €3 297
Cap rate range 7.0% – 9.3% 7.0% – 9.3%
Weighted average cap rate 7.6% 7.6%
Implied effective forward yield 7.8% 8.0%

(1) Based on Hyprop's 60% effective interest in Hystead. (June 2019: Based on Hyprop's 60% effective interest in Hystead, other than Hystead's Croatian assets in which Hyprop had a 54% effective interest due to the 10% minority shareholder in Croatia).

Lettings and vacancies

The vacancy level in Hystead's malls at 30 June 2020 was 0.9%. New lettings were secured on 12 129 m2 of GLA at an average rental increase of 16.5%, and leases over 21 580m2 were renewed at an average rental increase of 1.1%, resulting in a weighted average overall rental increase of 6.1%. Contractual escalations were 1.4%.

Retail new lettings and renewals Retail vacancy


City Center One West in Zagreb concluded a deal with Peek and Cloppenburg, which invested €1.5 million to convert 475m2 of office and storage space to retail space, expanding the store to 3 390m2 . Massimo Dutti rented an additional 81m2 to enlarge their store and Drogerie Markt (DM) completed a refurbishment in March 2020.

City Center One East in Zagreb relocated Sancta Domenica (a successful electronics store) to double their footprint to 475m2 . Varteks also doubled their footprint to 242m2 and Guess opened their first store in the mall.

The following new stores were opened in Delta City Belgrade – Skechers, Yves Rocher, Waycon and Roberto Baressi. Fashion & Friends relocated to their latest concept store of 550m2 in May 2020, doubling their turnover in June 2020. Cineplexx, La Coste, Jasmin and Adidas all refurbished their stores to their latest concepts.

The Mall in Sofia welcomed KIK, a leading German discount retailer and a new entry to Bulgaria. Arena Cinema partially upgraded its cinema (including state of the art recliner chairs) and refurbished the common and concession areas. Raffy Bar and Gelato, one of the top restaurant brands in the market, will open in the food court following completion of the food court refurbishment in 2020. Peek and Cloppenburg enlarged their sales area to include brands such as Joop! and
Hugo Boss in a new men's section. Madame Coco, which received an award for the best expansion in Europe (Mapic 2019), will open their full concept store in September.

The two-year refurbishment of Skopje City Mall continued throughout the lockdown period. At a total cost of €6.2 million, the project included the acquisition of an adjacent portion of land (completed in December 2019) on which an outside play area will be created. Public areas, restrooms and corridors are being upgraded and the traffic flow will be improved by adding an additional escalator, creating an additional entrance on the ground floor and introducing rotating doors at the entrances. Positive feedback on the improvements was received from shoppers and tenants as the mall reopened post lockdown. Rightsizing of various tenants and the introduction of new brands is almost complete. Koton and Neptune Electronics opened their first flagship store in the centre, and international mono brands including Guess, Tommy Hilfiger, Ted Baker and Asics opened their latest design concepts for the first time in the Macedonian market. Literatura MK,
an ultra-modern bookstore concept, opened on 500m2 including a caf € and terrace. SETEC electronics opened their first Premium IT store in Macedonia. The final stages of the mall's refurbishment will be completed in 2021 and will include upgrades to the food court and interior design, and new Hugo Boss, Max & Co, Polleo and Reserved stores.

Delta City Podgorica renewed all expiring leases for a further 3 to 5 years and new stores were opened by Replay, Diamond Store and Avangardia. Paid parking and a new Skidata parking system were introduced in September 2019, with 60% of the capital cost already recovered through parking income.




At 30 June 2020 the SSA portfolio included a 75% interest in Ikeja City Mall in Lagos, Nigeria, and interests in Accra Mall and West Hills Mall in Accra, Ghana, and Kumasi City Mall in Kumasi, Ghana, held via the Group's 50% interest in AttAfrica.

Sub-Saharan African portfolio contribution to Group

Hyprop is committed to disposing of its SSA interests in an orderly manner and the SSA interests are classified as "held-for-sale" on the statement of financial position. As a result of the part disposal of its SSA interests, the total SSA investment property exposure has reduced from $550 million in June 2019 to $327 million at 30 June 2020. This will reduce by a further $115 million to $212 million on the successful disposal of Ikeja City Mall.

The outstanding proceeds from the sale of Manda Hill, concluded in the 2019 financial year, were received during the year and used to settle
US Dollar-denominated debt. In addition, $222 million of Dollar-denominated equity debt in the sub-Saharan Africa portfolio was refinanced from South Africa between June 2019 and September 2020, reducing the total Dollar-denominated equity debt from $344 million to $73 million over this period.

Sub-Saharan African investment property exposure
(USD’ millions)
USD bank debt exposure
(USD’ millions)

Subsequent to 30 June 2020, key terms have been agreed for the disposal of Ikeja City Mall based on a valuation of $115 million. The purchasers have concluded their due diligence. However, the sale remains subject to regulatory approvals and the purchasers raising the necessary finance to settle 70% of the purchase price. Appropriate security will be registered for the remaining 30% of the purchase price. The outstanding balance will accrue interest at 8% per annum, payable quarterly, until settled. Net proceeds from the disposal will be applied to reduce the Group's remaining US Dollar-denominated debt of $18 million and thereafter Rand debt. The investment in Ikeja City Mall has been valued based on the anticipated sale proceeds.

Steps have been taken to preserve and enhance the value of the SSA interests until the remaining disposals can be concluded. An agreement was reached between the AttAfrica shareholders for Attacq Limited (Attacq) and Hyprop to acquire the other AttAfrica shareholders' interests in AttAfrica, effective 1 January 2020. Hyprop and Attacq now each hold 50% of the ordinary shares in AttAfrica and have joint control of AttAfrica in terms of a new shareholder agreement. The shareholding structure and loans to AttAfrica have since been simplified and restructured in the context of the performance of the underlying AttAfrica investments. AttAfrica continues to be equity accounted by Hyprop.

The AttAfrica asset management function was internalised in AttAfrica, an Africa Exco team was established and key operational changes were made to the management of the Ghanaian portfolio. There is a strong focus on growing revenue streams, recovering outstanding debts and controlling costs. These actions should stabilise the performance of the malls.

Trading density (Cedi/ m2)  


The in-country debt at Kumasi City Mall and West Hills Mall has been reduced and is in the process of being refinanced on a portfolio basis to lower the cost of borrowings.

Financial performance
   Year ended 30 June  
Revenue  212 123  214 001    
      Contractual revenue  234 812  214 001    
      Covid-19 discounts and relief  (22 689) –    
Expenses  (112 052) (86 634)   
Net property income  100 071  127 367    
Other operating expenses  (3 246) (915)   
Net interest paid  (191 367) (221 965)   
Net operating loss before fair value adjustments  (94 542) (95 513)   
Adjustments to calculate distributable income  22 064  37 154    
Distributable income  (72 478) (58 359)   

Net property income from Ikeja was impacted by a $1.4 million decline in revenue as a result of Covid-19, and an additional $1.6 million of expected credit losses. Year on year net operating income in US Dollars, before the effect of Covid-19, increased 9.4%. The performance in Rands benefited from the devaluation of the Rand against the Dollar over the year. Due to liquidity constraints in the Nigerian foreign exchange market, Ikeja has been unable to secure US Dollars to remit income to its shareholders since December 2019, which has been taken into account in calculating distributable income.

Interest income decreased from 2019 to 2020 as interest income from AttAfrica is only recognised to the extent it is received in cash. $1.7 million of interest income was received from AttAfrica prior to 31 December 2019. From 1 January 2020 Hyprop no longer has a preferential right to income from AttAfrica, with no further amounts received in the second half of the financial year. The interest expense decreased as a result of the repayment of $171 million of borrowings between 1 June 2019 and 30 June 2020.

The Group's investment in AttAfrica was impaired by R290 million following a decrease in the valuations of the AttAfrica properties and raising of a provision for tax recoupments.




Despite the move towards online shopping, there remains significant demand by customers for authentic and meaningful shopping experiences, including tangibly experiencing products previously sold only by online retailers. Many online retailers have realised the opportunity this presents, and there is growing demand for the right exposure to the physical retail environment. SOKO District (previously Retail.nxt) is a digital-based platform that will enable retailers to integrate online and traditional retail strategies.

In the first major initiative under its non-tangible asset strategy, Hyprop has partnered with EmpiriQ Technologies, a technology-based business incubator, for the development of the SOKO District. EmpiriQ Technologies has founded and developed multiple successful technology enabled businesses, with INDLU being the most notable. INDLU is the world's first fully integrated digital property platform that digitally facilitates the complete residential rental property value chain (financing, developments and leasing).

SOKO means "market" in Swahili, and the SOKO District will be a marketplace where retailers can rent space and reusable shopfittings via a flexible digital leasing platform, without the significant financial commitments of the traditional retail environment. The leasing platform is powered by data-driven shopper, product and trend analyses, resulting in location recommendations that will match retailers, products and shoppers, across our portfolio.

Although SOKO will initially target online retailers seeking to promote and market their products, the platform will also be relevant to traditional retailers, particularly emerging and smaller businesses, looking to bring their products to market in an affordable manner. The SOKO digital platform will include an online shopping portal, which will facilitate online transactions and distribution via the SOKO District, and will allow traditional retailers to select the most appropriate location from which to launch and market their products.

Development of the SOKO software platform is progressing well, with a pilot SOKO District scheduled to be operational at the Rosebank Mall in the first quarter of 2021.


The Group's net asset value at 30 June 2020 was R76.09 (2019: R95.78) per share. The share price at that date was R22.39 (2019: R69.87).


The Company met all of its borrowing covenants at 30 June 2020 and we continue to work closely with our major lenders.

Reducing the loan-to-value (LTV) ratio and the Company's exposure to Euro and US Dollar-denominated borrowings, that are secured by Rand denominated assets, are high priorities. These objectives will, inter alia, be achieved through the planned withholding of Hystead dividends, reduced cash distributions by Hyprop and application of proceeds on the sale of assets (including specifically Ikeja City Mall) to debt.

Hyprop's LTV and interest cover (ICR) ratios at 30 June 2020 were as follows:

Loan to value and interest cover ratios
Banking covenant 30 June 2020 30 June 2019
Interest cover (times) 1.8 – 2 3.0 4.1
LTV – see-through calculation (1) 50% 41.4% 35.2%
LTV – fully consolidated (2) N/A 51.7% 44.0%
(1) Calculated taking into account Hyprop's attributable share of the net assets of Hystead, the Hystead debt guaranteed by Hyprop and the back-to-back security Hyprop holds from PDI in relation to the guarantees. Methodology used by the majority of Hyprop's lender banks.
(2) Calculated taking into account 100% of Hystead's assets and borrowings.

LTV calculations
30 June 2020 (R'000) 30 June 2019 (R'000)
Hyprop total assets 28 426 731 28 426 731 33 432 597 33 432 597
Hystead total assets 16 444 700 13 570 002
Hystead NAV (total assets – in-country debt) x 60% 5 341 233 4 604 241
Total assets 33 767 964 44 871 431 38 036 838 47 002 600
Hyprop gross debt 7 850 346 7 850 346 8 385 363 8 385 363
Hystead bank debt 15 351 465 12 289 038
Hystead debt guaranteed by all shareholders (gross) 7 808 821 6 392 771
Hystead debt guaranteed by PDI (EUR 40m) (777 892) (644 332)
Security from PDI held by Hyprop (EUR 46.8m) (910 453) (754 133)
Total debt 13 970 822 23 201 811 13 379 670 20 674 401
Gross debt / total assets 41.4% 51.7% 35.2% 44.0%

Details and key metrics relating to the Group's borrowings (including Hystead borrowings guaranteed by Hyprop) are set out in the accompanying graphs:

Interest cover ratio (ICR) Loan to value %
Movement in see-through LTV from June 2019 to June 2020 (%) Forward looking see-through LTV (%)

Hyprop debt exposure by currency (R’m)

Despite the net repayment of R1.2 billion of Rand and Dollar-denominated debt over the financial year, the LTV ratio was negatively impacted by the decrease in the value of investment property and the increase in the Rand value of the Euro and US Dollar-denominated loans guaranteed by the Company.

The ICR reduced from 4.1 times cover at 30 June 2019 to 3.0 times cover at 30 June 2020, due to the impact of Covid-19 on net income, an increase in the Group's interest expense following the conversion of US Dollar-denominated debt to Rand-denominated debt at the end of the 2019 financial year, and the devaluation of the Rand against the US Dollar. The benefit of the reduction in Rand interest rates in the last quarter was limited by the interest rate hedges in place.

Group debt maturity profile Rand equivalent (R'm) (31 August 2020)

The Group’s total debt maturity profile at 31 August 2020, after the changes in borrowings set out above, reflects no debt maturities for the remainder of the 2020 calendar year. The Dollar-denominated debt which matures in Q1 and Q2 of 2021, will be settled from the proceeds on disposal of Ikeja, or refinanced. Other Rand and Dollar debt maturing in 2021 will be settled from operating cashflows or available revolving credit facilities. €188m of equity debt matures in Q4 of 2021 and presents an opportunity to restructure the Group’s overall Euro-denominated debt exposure pursuant to our intention to restructure the Hystead funding arrangements and withhold distributions from Hystead to reduce debt.

Liquidity post the year end remains positive, with available cash and revolving credit facilities of R1.5 billion in 30 September 2020.

Rand-denominated debt

June 2020 June 2019
Property value (Rbn) 24.4bn 28.5bn
LTV 17.6% 15.6%
Weighted average cost of debt (incl. hedges) 9.0% 9.3%
Weighted average loan tenor (yrs) 2.5 2.8
Proportion of debt hedged 84.6% 101.1%
Interest cover ratio (gross) 3.0 4.1
Interest cover ratio (net) 3.4 5.2

The South African bank debt is secured against South African investment properties, while the DCM funding is mainly unsecured.

In the second quarter of the financial year, loans and bonds totaling R1.4 billion were repaid from available cash resources, and R950 million of new bonds were issued with an average maturity of 3 years and an interest rate margin of 1.5%. In June 2020 an 18-month bond of R100 million was issued at a margin of 2.05% to bolster cash resources.

At 30 June 2020 Hyprop had a total of R700 million of revolving credit facilities, of which R200 million were drawn. The proceeds were held as part of the on-balance sheet cash of R835 million.

Subsequent to 30 June 2020, Rand-denominated borrowings changed as follows:

  • The HILB06 bond of R425 million was settled on maturity (11 July 2020);
  • A new two-year secured revolving credit facility of R450 million was raised, which increased the total revolving credit facilities to R1.15 billion;
  • An 18-month secured bank term loan of R800 million was drawn. Any residual proceeds from the disposal of the sub-Saharan Africa investments will be applied to the repayment of this loan;
  • A 3.5 year secured term loan of R925 million was drawn.

The net proceeds from the above loans were used to settle US Dollar debt as explained on the following page. 

The average interest rate on the above new facilities is 5.7%.

Euro-denominated debt

Euro debt (EUR’m) – including in-country debt  
 June 2020
Guaranteed Non-recourse
Property value (EUR'm) 804m
LTV 49.9% 48.4%
Weighted average cost of debt (incl. hedges) 2.0% 2.9%
Weighted average loan tenor (years) 2.15 3.52
Proportion of debt hedged 100% 55%
Interest cover ratio (gross) 2.25



At 30 June 2020, Hyprop had guaranteed €361 million of interest-bearing loans advanced by banks to Hystead. This debt is not consolidated in Hyprop's statement of financial position. However, the financial support results in the recognition of a financial liability by Hyprop. Hyprop's obligations under the guarantees are secured against South African investment property. In exchange for providing guarantees which exceed Hyprop's 60% shareholding in Hystead, Hyprop receives a credit enhancement fee from PDI, currently equivalent to 11% of the dividends declared by Hystead.

The devaluation of the Rand against the Euro had a significant effect on the Group's LTV ratio.

The following steps are being taken to address the risks posed by the funding structure:

  • Restructuring the current Hystead funding arrangements between Hyprop and PDI;
  • Subject to an agreement between the Hystead shareholders, withholding distributions by Hystead to Hyprop for the 2020 and 2021 calendar years, and utilising the retained cash to settle Euro-denominated equity debt; and
  • Refinancing a portion of the Euro-denominated equity debt with Rand-denominated debt.

US Dollar-denominated debt

Sub-Saharan African debt (USD’m)  
June 2020 June 2019
Property assets (Rbn) 2.78bn 3.7bn
LTV 116.9% 103.4%
Weighted average cost of debt (incl. hedges) 4.7% 5.4%
Weighted average loan tenor (years) 0.43 1.35
Proportion of debt hedged 36.9% 44.6%


USD-denominated debt reduced from $244 million at 30 June 2019 to $172 million at 30 June 2020 (both amounts include the liabilities associated with assets held for sale) following receipt of the net proceeds of $63 million from the disposal of the interests in Manda Hill and Achimota, and a further $26 million of capital contributed by Hyprop to Hyprop Mauritius.

Outstanding USD-denominated debt at 30 June 2020 comprises:

  • $117 million of debt guaranteed by Hyprop and secured against South African investment property;
  • $55 million of in-country asset backed finance in Gruppo Investments (the owner of Ikeja City Mall), which will be transferred on disposal of the property. Alternatively, in the event that the Ikeja disposal does not proceed, bank credit approval has been received to refinance this debt.
  • $99 million of this debt was settled in July and August 2020 from the above Rand-denominated loan facilities. The remaining $18 million will be settled from the proceeds on disposal of Ikeja City Mall;

The reduction of the $244 million US Dollar-denominated debt to $73 million in August 2020 has significantly reduced the Company's exposure to fluctuations in exchange rates and its effect on the LTV ratio.


We will continue to implement our long-term strategy and pursue the key priorities of repositioning our SA portfolio, increasing the dominance of the properties in the European portfolio, and implementing the non-tangible asset strategy through projects such as SOKO District. Until trading conditions stabilise, capital expenditure will be limited to those projects that are already committed or are absolutely necessary.

Additional focus will be given to preserving cash and strengthening the balance sheet through the following:

  1. Finalising and implementing the 2020 distributions. Any cash retained will be used to reduce debt;
  2. Subject to Hystead shareholder approval, no dividends will be declared by Hystead and the retained funds will be utilised to repay a portion of the
    Euro-denominated debt. Should any revised terms be agreed relating to the future structure of Hystead, this would constitute a related party transaction and be subject to Hyprop shareholder approval;
  3. Completing the sale of Ikeja City Mall and applying the net proceeds to settle the remaining $18 million of US Dollar debt, with the balance being applied to local debt;
  4. Recycling non-core assets and utilising the proceeds to settle Rand debt; and
  5. Persuing selective acquisitions / transactions in line with the revised strategy.


The Group's long-term strategies for creating sustainable returns for shareholders will continue, having regard to prevailing market conditions and industry risks. Focus will be on generating a total return for shareholders through balanced and sustainable long-term growth in distributable income and net asset value, coupled with conservative balance sheet management. Remuneration policies will align with these objectives.

While the rate of new Covid-19 infections is declining, we remain wary of the possibility of a second wave and the long term effects of the pandemic on what was already a weak local economy. We anticipate further negative rent reversions, although at a lower level than in the last two financial years, the possibility of further decreases in investment property values and increases in administered costs at rates exceeding CPI. Consumer spending is also expected to remain under pressure and consumer behaviour will continue to evolve.

Our strategy remains relevant in the uncertain environment in which we are currently operating. We will continue implementing the strategy and build on the good progress made during the first 9 months of the 2020 financial year – which includes repositioning our South African malls by securing new leases with leading retail groups and growing trading density, extending and repositioning our Eastern European malls, disposal of our sub-Saharan Africa investments, developing our non-tangible asset strategy through projects like SOKO District, and strengthening the Group's balance sheet by reducing hard currency and Rand denominated debt. We believe that our strategy will create value in the long term and that Hyprop is well positioned to navigate the uncertain times.

Having regard to the current economic conditions and the further uncertainty brought about by the continuing impact of Covid-19, the board has resolved not to provide guidance on distributable income or dividends for the financial year ending 30 June 2021.


Our thanks and appreciation go to all of the Group's staff in South Africa, Eastern Europe and sub-Saharan Africa – "the Hyperformers" – for their continuous hard work and commitment during a very challenging year. We also thank our fellow directors for their guidance, and all our stakeholders for their ongoing support.

Morné Wilken
Brett Till
Wilhelm Nauta