Response to Covid-19
Hyprop supports the actions taken by the governments in the countries where we operate to mitigate the spread of Covid-19. Our top priority has been to protect the health, safety and wellbeing of our tenants, customers and personnel. Our response focused on awareness and educational campaigns in terms of best practices outlined by the World Health Organization.
Under the supervision of Hyprop’s risk committee, we established Covid-19 task teams covering our South African, Eastern European and sub-Saharan Africa (excluding South Africa) operations. The teams implemented the relevant guidelines, protocols and preventative measures recommended by the World Health Organization, local health authorities and governments.
Weekly meetings were held by the Audit and Risk committee and executive management throughout the Covid-19 lockdown periods to monitor and manage the risk and impact of Covid-19 on the Group, and the operational and financial responses required to manage these risks. Weekly meetings were also held with the Group’s major lenders to discuss cashflows and strategies to deal with the Covid-19 risks.
We worked (and continue working) with all service providers to maintain the highest standards of safety and hygiene in our malls to safeguard against the potential transmission of Covid-19. Precautionary measures implemented include enhanced cleaning procedures and hygiene protocols. We have installed hand sanitisers at mall entrances, customer care kiosks, restrooms and other high traffic areas.
Cleaning and disinfecting protocols have been enhanced, with particular attention being paid to high touch zones, public contact points, back of house and delivery areas. All tenants are encouraged to implement precautionary measures for their stores and personnel, as we have done for our own staff through the provision of masks and hand sanitisers, encouraging staff to work from home where possible, and accommodating staff who need to look after children and other vulnerable family members.
Our response campaigns have been flighted across all the malls’ social media handles and are accompanied by strong in-centre media campaigns (via LCD screens, PA systems and physical advertising mediums).
The direct impact of Covid-19 on the Group’s distributable income for the year was R434 million, which includes discounts on contractual rentals in South Africa (R242 million) and Nigeria (R17 million), reduced parking and other income of R25 million in South Africa and no dividend and management fee income from Hystead in the second half of the financial year (anticipated R150 million). Covid-19 had a further indirect impact of R58 million on distributable income as a result of an increase in expected credit losses on the outstanding rentals in South Africa and Nigeria, and reduced turnover rentals in South Africa.
Impact of Covid-19 on distributable income (Rm)
Subsequent to President Ramaphosa’s announcement on 23 March 2020, South Africa entered a 21 day lockdown (level 5) period from 27 March 2020 to 16 April 2020, aimed at curbing the spread of the Covid-19 virus. The lockdown was extended by a further 14 days to 30 April 2020. The impact on the retail sector, and the resultant trading restrictions, was severe with only stores providing essential products and services allowed to trade.
With the easing to Lockdown Level 4 from 1 May 2020, more categories of stores were permitted to trade. Under Lockdown Level 3 (effective 1 June 2020) all tenants were able to trade, other than cinemas, entertainment and personal care tenants.
Subsequent to the year end, trading conditions for many tenants remain difficult as they struggle to rebuild their businesses in a weak SA economy. We continue to assist key tenants where appropriate.
Trading density (R / m2)
The impact of Covid-19 on key operating metrics for the SA portfolio was severe.
Daily foot count (thousands) and spend per head (R/person)
Collections (% of average billing)
Lockdowns were imposed by governments of the Eastern European countries where the Group operates from mid March to mid May 2020. Most tenants resumed trading immediately lockdowns were lifted, other than cinemas and restaurants in some of the regions. Food court tenants were only permitted to serve take-aways and remain subject to strict physical distancing restrictions.
Rent relief packages were agreed with approximately 91% of tenants accepting our proposals. As compensation for these concessions, lease periods have been extended.
Trading conditions post 30 June 2020 remain challenging with foot counts and trading densities at most malls below 2019 levels.
Trading density (€ / m2)
Foot count and trading density at all Hystead malls were impacted by the national lock downs, as were cash collections from tenants.
Daily foot count (thousands) and spend per head (€/person)
Collections (% of average billing)
Ghana (Accra Mall, West Hills Mall, Kumasi City Mall)
The lockdown introduced in Ghana on 30 March 2020 was lifted on 21 April 2020. At 30 June all centres were operational and almost all tenants were trading, save for the cinemas. Restrictions in respect of physical distancing and social gatherings remain in place and although restaurants are allowed to trade, restrictions on the number of customers allowed in restaurants and eateries are hampering the ability of food tenants to trade optimally.
Nigeria (Ikeja City Mall)
In Nigeria a lockdown was implemented on 30 March 2020 and lifted on 4 May 2020. Borders and ports remained closed. Ikeja City Mall is operational however, food operators may offer takeaways only, with no in-dining allowed. All health and hygiene protocols remain in place.
Trading density ($ / m2)
Notwithstanding a sharp rebound in trading densities at the Ghana malls foot counts and cash collections remained below 2019 levels.
Foot count (thousands)
Collections (% of average billing)
OVERCOMING THE CHALLENGE
To overcome the challenges we face as a result of Covid-19, we are working in partnership with all our stakeholders to find solutions that will give our stakeholders a chance to emerge from these challenges with their businesses intact. A number of our tenants are reviewing their business models in light of the Covid-19 pandemic and we are working closely with them to design a collective offering that appeals to shoppers who frequent our malls. We will continue to assist key tenants, where appropriate, to ensure we have functional malls and acceptable occupancy levels.
Our staff have returned to work on a rotational basis to lower the risk of the possible spread of Covid-19. Strict hygiene and physical distancing protocols remain in place.
We commend our front-line staff who ensured that our malls remained open for those tenants that could trade throughout the lockdown periods.
Our vision remains to create safe environments for people to connect and have authentic and meaningful experiences.