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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
17
Capital expenditure
Extensions and refurbishments at Rosebank Mall, The Glen and Canal Walk
are on schedule and within budget:
Shopping centre Project
Amount
(Hyprop share)
Completion
date
Rosebank Mall
Additional 4 300m²
rentable area
R127,0 million
April 2018
The Glen
Food court
enclosure and
additional 1 200m²
rentable area
R90,9 million
April 2018
Canal Walk
Additional retail in
La Piazza area
R41,6 million November 2017
The extension to the Rosebank Mall will accommodate H&M and a
number of other tenants, while refurbishments at Canal Walk and The
Glen will strengthen the retail offering in specific areas. The estimated
average forward yield for the three projects is 7%.
In line with our focus on improving the quality and sustainability of
our shopping centres, R178 million (2016: R178 million) was spent on
refurbishments, tenant installations, new equipment and technology.
The third phase of the solar photovoltaic plant at Clearwater Mall was
completed in September 2017, after which approximately 15% of
Clearwater Mall’s electricity requirements will be met by solar power.
Disposals
We disposed of four non-core assets for a total of R867 million, at an
average yield of approximately 9%. The disposal of non-core assets has
improved the overall quality of the portfolio, with a reduced exposure to
the higher risk office sector. We anticipate selling the remaining non-core
asset, Lakefield Office Park, during the 2018 financial year.
Security
Crime in South Africa is at disturbing levels and customer security in our
shopping centres is a priority. We have increased the physical security
presence in the shopping centres, where appropriate, and have invested
in relevant technology, including facial and licence plate-recognition
software, with pleasing results.
Sub-Saharan Africa (excluding SA)
Improved macro-economic conditions are starting to benefit our African
operations with an improvement in rental collections, although there is
no significant growth in rental levels.
Distributable earnings from the investments in sub-Saharan Africa
(excluding SA) reduced to R57,0 million (30 June 2016: R83,7 million), largely
due to the exclusion of distributable earnings from Ikeja City Mall,
replacement of tenants at lower rentals in Manda Hill Centre and Rand
appreciation against the US Dollar.
In light of the improved US Dollar liquidity in Nigeria, we expect to resume
distributions from Ikeja City Mall during the 2018 financial year. During the
current year R65 million (Hyprop share: R48,7 million) was applied to the
reduction of senior in-country US Dollar debt in Nigeria.
The core malls, Ikeja, Manda Hill and Accra Mall, are performing solidly
and while there has been some level of tenant rotation and resetting
of rentals, they are high quality properties and the outlook for them is
positive. The malls that have been developed, West Hills Mall, Achimota
Retail Centre and Kumasi City Mall, are stabilising and vacancy levels are
Chairman and CEO’s
review
continued