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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
Chairman and CEO’s
review
Overview
Hyprop is exposed to a number of economies that performed
very differently during the year under review. South Africa
continues to produce low levels of growth and there are no
apparent catalysts to change that. The African economies to
which we are exposed, other than South Africa, evidenced
some level of improvement over the period, albeit off low
bases. The greater European economy improved over the
period and, at the time of writing, has a more positive outlook
than has been the case for a considerable period.
The South African portfolio performed solidly during the
period despite difficult economic conditions. While our
properties displayed pleasing resilience, we were affected by
weak consumer spend and the much reported closure of three
Stuttafords stores. A large portion of the resultant vacancy had
been anticipated based on prior discussions with the tenant,
and the majority of the space has been filled. We again
invested in our assets with particular focus on the Rosebank
Mall, The Glen, Canal Walk and Clearwater Mall, and will
continue to do so to ensure that our malls remain destinations
of choice for shoppers.
In the absence of fundamental changes to the South African
economy consumers and retailers will face a difficult future
and that will impact the growth available from the South
African portfolio.
We made significant progress on the disposal of non-core
assets and anticipate the final disposals in the 2018 financial
year.
The African portfolio produced differing results. Accra Mall,
Ikeja City Mall and Manda Hill performed soundly at an
operational level, even after the impact of some tenant
rotation and vacancies, although their results were affected by
the macro-economic conditions in the countries in which they
are located. The improvement in commodity prices in recent
months has had a positive impact on the countries concerned
with significant improvements in access to hard currency in
Nigeria, continued progress in the Ghanaian economy and
pleasing levels of economic growth in Zambia. The properties
will benefit from any continuation of these trends.
The West Hills, Achimota and Kumasi malls produced muted
performances. Although the tenant mixes are improving and
vacancies are reducing, the malls will require time to stabilise
and produce the expected returns.
A number of the African properties are being refinanced and
that process should be completed early in the new financial
year.
We continued our expansion into South-Eastern Europe
by acquiring a 60% effective stake in Skopje City Mall in
Macedonia, and subsequent to the year-end, a 60% effective
stake in The Mall, Sofia.
We are now invested in Serbia, Montenegro, Macedonia
and Bulgaria. While Bulgaria is the only one of those countries
that is a member of the European Union, the economic
fundamentals in the other countries are sound and compare
favourably to what we face domestically.
We ensure that our business
model is sustainable and
relevant to the economies
in which we operate.
Left:
Gavin Tipper,
Chairman
Right:
Pieter Prinsloo,
Chief executive officer