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Contractual lease escalation, which is the support base for annual distributable income growth, was maintained at 8,2%. Rental growth on

new leases and renewals slowed to 7,6% (2014: 8,3%) due to the high vacancy and weak demand for space in the office portfolio. Excluding

the office portfolio, rental growth was 8,1%.

0

2

4

6

8

10

12

Leasing terms

2011

2012

2013

2014

2015

7,6%

8,2%

8,3%

8,2%

6,3%

7,4%

8,0%

4,3%

8,8%

3,4%

Q

Rental growth

Q

Contractual escalation

Leasing

2015 was a busy period with 576 leases signed in South Africa,

representing 176 350m² (22,6% of total portfolio by rentable area).

Significant focus is placed on the continuous improvement of the

tenant mix, and the high renewal profile gave us the ideal opportunity

to replace weaker tenants. The business failures of the African Bank/

Ellerines Group and the LooknListen group enabled us to relet this

space to much stronger and sought-after tenants. We increased the

size of some local national tenants keen to expand their store sizes

while capitalising on the interest from international brands seeking

to establish their presence in South Africa. We concluded leases with

international groups like H&M, River Island, Top Shop and introduced

luxury brands in Hyde Park Corner’s new Cortina Court, including

Versace, Longchamp and Armani.

Much has been reported in the media on the financial stability of

the Edcon Group, which is the largest tenant group in our portfolio

(page 37). The issues relate mainly to high debt levels in the group

and its ability to provide credit to customers. On closer analysis, the

performance of most of the group’s stores in our portfolio – in terms

of trading density and profitability – ranges from average to good. We

have prepared contingency plans and will closely monitor the situation.

The Platinum Group, with brands Jenni Button, Aca Joe, Hilton Weiner,

Urban Degree and Vertigo, occupied 19 stores or 2 700m² in our

portfolio. This group ran into financial trouble towards the end of

the financial year. We have taken legal action to recover unpaid rent

and, depending on the outcome of the court process, this group will

probably be replaced with new tenants. Most of these stores occupy

prime areas and replacing them with new tenants will not be unduly

difficult.

Developments

After a two-year redevelopment period, Rosebank Mall was

successfully relaunched at the end of September 2014, with the

opening of the Woolworths store as the final phase. The shopping

centre has won a number of design awards and has traded successfully

since opening.

Various refurbishment projects were undertaken during the year,

including:

Canal Walk

Mr Price relocation and introduction of Forever 21.

Woolworths store extended.

Somerset Mall

Refurbishment of food court with new tenants.

Extension to the Woolworths store.

Hyde Park

Relocation of Dion Wired and introduction of new

luxury brands.

Willowbridge Relocation of the Dis-Chem store.

CapeGate

Refurbishment of food court with new tenants.

9

Hyprop Investments Limited

Integrated Report 2015