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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