Hyprop's business model
GROUP OVERVIEW

In doing business, we understand that the six capitals (financial, operational, human, natural, social and relationship, and intellectual) influence the group and its impact on society, the environment and the economy. We have considered our activities against these capitals and believe that we operate responsibly in the best interest of stakeholders, as a good corporate citizen.

The goal of this integrated report is to enable stakeholders to ascertain Hyprop’s short, medium and long-term sustainability, which can be viewed from two perspectives: value created for the company and value created for stakeholders.

While providers of financial capital are interested in the value the group creates for itself, the value it creates for stakeholders may affect Hyprop’s ability to create value for itself. Our business model illustrates how the company balances this value creation for the benefit of all stakeholders, based on the core principles of our mission.

Vision Hyprop’s goal is to preserve its status as the leading specialist shopping centre REIT in sub-Saharan Africa, offering shareholders access to income and capital growth through a specialist portfolio of premium shopping centres in a transparent, sustainable investment vehicle.

Mission The partner of choice for tenants, shoppers, employees and investors Provide a trustworthy, transparent and sustainable investment Promote social and environmental sustainability A world-class REIT that adheres to global best practice

Inputs		Outputs		Outcomes
Financial − Sources of funding: debt and equity − Economic climate		− Capital investment growth − Regular and progressive distribution growth − Low and responsible loan to value − Disposal of non-core assets		− Like-for-like increase in NAV of 13,4% − Low loan to value of 22,9% − Proceeds from disposals used to reduce debt − Provide a trustworthy and transparent investment
Operational − High-quality, dominant shopping centres in metropolitan areas in strong economic nodes − Internal asset and property management		− Rising property values − Strong contractual rental escalations − Extracting synergies, eg national service contracts − Well-contained cost structure − Geographic diversification in high-growth countries		− Sustainable income growth − Improved cost-to-income ratio of 33,6% − Occupancy rate improved to 98,0% − Arrears constitute 0,6% of rent roll − Distributions for the year up 15% − Expansion into sub-Saharan Africa, with R5 billion previously approved for investment
Intellectual − IT systems − Regulatory compliance		− Integrated electronic property management system − Internal functions such as human resources driven by technology − Dedicated national legal executive		− Reliable controls and processes supporting transparent disclosure − Strong compliance with regulatory requirements − Strong leases
Human − Experienced board of directors − Hands-on executive management − Employee development programme in place		− Sound investments providing long-term superior investment returns − Implemented share incentive scheme − Training targets exceeded during the year − Well-managed portfolio of properties generating growing income		− Continuity and synergy − Implemented share incentive scheme to retain low turnover of executive management and to align company vision and strategy − Develop staff productivity and retain low staff turnover
Social and relationship − Black economic empowerment and employment equity − Education and training − Hyprop Foundation		− Sustainable social responsibility through education, training and enterprise development		− Addressing skills shortage − Reliable succession plan − Opportunity to give back to stakeholders − Improved reputation
Natural − Environmental, social and corporate governance strategy		− Environmentally efficient properties − Second year of participating in Global Real Estate Sustainability Benchmark (GRESB) − Institute of Directors (IoD) governance assessment		− Reduced environmental footprint − A number of projects aimed at improving energy efficiency were completed during the year. To date, these have saved 14,2 million kWh with cost savings of R15,9 million − AAA rating in IoD governance instrument