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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
139
35.
Capital management
Hyprop’s capital consists of equity and long-term debt in the form of bank debt and debt capital market funding. The company’s capital management
objective is to maintain a strong capital base to provide sustainable returns to shareholders over the long term. The company’s borrowings are limited
by its Memorandum of Incorporation and the JSE Listings Requirements to 60% (2016: 60%) of the directors’ bona fide valuation of the consolidated
property portfolio.
Hyprop’s (theoretical) unutilised borrowing capacity can be summarised as follows
(1)
:
June 2017
R000
June 2016
R000
Value of property portfolio
(1)(2)
33 249 951
33 368 587
60% thereof
19 949 971
20 021 152
Total gross borrowings (long term and short term)
(3)
8 900 638
9 926 088
Unutilised borrowing capacity
(4)
11 049 332
10 095 064
(1)
Excludes investments in South-Eastern Europe
(2)
Refer to
Segmental analysis
(3)
Excludes Euro debt
(4)
In practice the board would not be comfortable to allow gearing levels to increase to 60% or even close to 60% (in the absence of a specific transaction). The
long-term preferred gearing level is approximately 35%
At year-end, long-term borrowings may become payable in accordance with the terms of the loan arrangements. The company’s policy is to refinance
the capital portion of the borrowings (in line with its capital objective above), while servicing interest.
The group is subject to various capital covenants imposed by lenders, which are managed as part of the overall funding and capital management
process. The company has complied with all capital covenants specified in the debt agreements.
36.
Events after the reporting date
Acquisition of The Mall, Sofia Bulgaria
In July 2017 it was announced that Hystead, through its subsidiary Balkan Retail, had reached agreement to acquire The Mall shopping centre in Sofia,
Bulgaria, for EUR155 million. Approval for the transaction from the Bulgarian competition authority is still pending. It is anticipated that the transaction
will be effective from October 2017. The transaction will be funded by external debt funding, supported by a guarantee from Hyprop.