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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
23
The total Rand equivalent value of Hyprop’s share of investment property in South-Eastern Europe increased due to the acquisition of Skopje City Mall. The
Rand equivalent value of the Delta City centres reduced due to the appreciation of the Rand against the Euro.
The investments in South-Eastern Europe are accounted for as an investment in a financial asset with the gain on initial recognition of the financial asset
being deferred. Accordingly, the investments do not appear on the consolidated statement of financial position.
This accounting treatment results from the IFRS interpretation of the Hystead shareholder agreement. In order to address this accounting anomaly and to
provide more meaningful information, the debt figures and loan-to-value ratio (under Borrowings below), have been disclosed on a see-through basis. The
see-through basis takes into account 60% of the underlying assets and 60% of the Euro debt.
Funding
Euro debt is supported by a guarantee from Hyprop, as well as back-to-back security provided by the other shareholder in Hystead. Hyprop funding support
results in the recognition of a financial guarantee on the Hyprop statement of financial position. Hyprop receives credit enhancement fees for this support.
The underlying properties in the South-Eastern European portfolio are currently unencumbered.
The investments in South-Eastern Europe were initially funded with short-term bridge loans. The intention is to (during the 2018 financial year) refinance
a portion of the bridge loans with asset-backed finance, with loan-to-value ratios of approximately 45%. The credit enhancement fees currently being
received by Hyprop for its funding support will reduce, proportionately and concurrently, with implementation of the asset-backed finance.
Net asset value
Net asset value (NAV) per share at 30 June 2017 rose by 5,6% to R99,78 (2016: R94,50). This was primarily due to an increase in the independent valuation of
the South African investment property portfolio, as well as issuing new shares at a premium to NAV per share in August 2016, offset by the impact of the
stronger Rand on the sub-Saharan Africa portfolio.
At 30 June 2017, the closing share price of R116,76 represented a premium of 17,0% to NAV per share.
Borrowings
30 June
2017
Rm
30 June
2016
Rm
South African debt
4 114
4 632
Bank debt
1 814
2 992
Corporate bonds
2 300
1 200
Commercial paper
440
USD debt (Rand equivalent)
4 391
4 842
EUR debt (Rand equivalent)
2 674
1 510
Cash and cash equivalents
(1 126)
(239)
Net borrowings
10 052
10 745
Loan to value (%)
28,9
30,8
Debt at fixed rates (%)
(1)
South African debt (%)
100,9
89,6
USD debt (%)
70,4
72,4
Maturity of fixes (years)
(1)
3,4
4,4
South African debt (years)
3,9
4,9
USD debt (years)
2,7
3,7
Cost of funding (%)
5,7
6,0
South African debt (%)
8,9
8,9
USD debt (%)
4,7
4,6
EUR debt (%)
2,2
1,7
Debt capital market (DCM) % of total debt
21
15
(1)
Interest rate on Euro debt is not fixed